Identify which of the following statements is true.
A)Foreign-base company sales income is earned when personal property is purchased by a Country X controlled foreign corporation (CFC)from its U.S.parent corporation and is sold to unrelated persons in Country Z.
B)Section 482 permits the IRS to restructure transactions between related parties as if the transactions were conducted at arm's length.
C)One tax avoidance practice which Sec.482 attempts to prevent is the transfer of tangible property to a foreign subsidiary at a price which is below the arm's-length price that would be used by unrelated parties.
D)All of the above are true.

Question

Quizplus · Accepted Answer

All three statements are true.

Statement A refers to the concept of foreign-base company sales income, which occurs when a CFC purchases personal property from its U.S. parent corporation and resells it to unrelated persons in a foreign country. This type of income is subject to certain tax rules and regulations.

Statement B is referring to Section 482 of the Internal Revenue Code, which allows the IRS to restructure transactions between related parties to ensure that they are conducted at arm's length. This helps prevent related parties from unfairly shifting profits between entities.

Statement C is also true; Sec. 482 is used to prevent tax avoidance practices such as transferring tangible property to a foreign subsidiary at a price below the arm's length price, which could result in artificially lower profits or losses for tax purposes.

Identify Which of the Following Statements Is True