Which of the following transactions engaged in by a Swiss controlled foreign corporation creates foreign base company sales income?
A)Purchase of inventory from an unrelated person in Germany and sale to a related person in Poland.
B)Purchase of inventory from a related person in Germany and sale to an unrelated person in Switzerland.
C)Purchase of inventory from a related person in Germany and sale to a related person in Poland.
D)Purchase of inventory from an unrelated person in Germany and sale to an unrelated person in Poland.

Question

Quizplus · Accepted Answer

Foreign base company sales income typically arises from transactions involving the purchase of inventory from a related person and the sale of that inventory to another related person, especially when these transactions cross international borders without substantially altering the inventory in the country of the controlled foreign corporation (CFC). In this case, option C describes a transaction where a Swiss CFC purchases inventory from a related person in Germany and sells it to a related person in Poland, fitting the criteria for foreign base company sales income under U.S. tax law, specifically Subpart F of the Internal Revenue Code.

Which of the Following Transactions Engaged in by a Swiss