U)S.Corporation,a domestic corporation,owns all of Foreign Corporation's stock.Foreign Corporation is incorporated in France.This year,Foreign Corporation suffers a $100,000 net operating loss (NOL)in France.What amount of the $100,000 NOL can U.S.Corporation use to reduce its current-year U.S.taxable income?
A)$100,000
B)$50,000
C)$0
D)none of the above

Question

Quizplus · Accepted Answer

As a domestic corporation, U.S. Corporation cannot directly use Foreign Corporation's NOL to reduce its U.S. taxable income. The rules for using foreign NOLs are complex and depend on various factors such as whether the foreign corporation is a controlled foreign corporation (CFC) or a passive foreign investment company (PFIC), and whether the U.S. corporation has any income or gains from foreign sources. However, none of these exceptions apply in this scenario, and as such, U.S. Corporation cannot use any of Foreign Corporation's NOL to reduce its U.S. taxable income.

U)SCorporation,a Domestic Corporation,owns All of Foreign Corporation's Stock