Which of the following items of foreign source income is classified as passive category income for foreign tax credit purposes?
A) Dividend received from a 5 percent owned foreign corporation, all of the income of which is derived from an active business.
B) Dividend received from a 20 percent owned foreign corporation, all of the income of which is derived from an active business.
C) Dividend received from a 100 percent owned foreign corporation, all of the income of which is derived from an active business.
D) None of the dividends in the scenarios listed above are classified as passive category income.

Question

Quizplus · Accepted Answer

Dividends from a 10-50 percent owned corporation and a CFC are subject to the look-through rules (individuals) or are exempt from U.S. taxation because of the 100% dividends received deduction (corporations).

Which of the Following Items of Foreign Source Income Is