What is a controlled foreign corporation?

Question

Quizplus · Accepted Answer

A controlled foreign corporation (CFC) is a subsidiary in which the parent company holds at least 50 percent of the ownership and control. The parent company typically uses a CFC to defer taxes on foreign income. Option A is incorrect because having one major stockholder does not necessarily make it a CFC. Option C is incorrect because if foreign owners own the corporation fully, it becomes a foreign-owned corporation, not CFC. Option D is incorrect because a centralized structure for foreign ownership does not define a CFC.

What Is a Controlled Foreign Corporation