Kipp, a U.S.shareholder under the CFC provisions, owns 40% of a CFC.If the CFC's Subpart F income for the taxable year is $200,000, Kipp is not taxed on receipt of a constructive dividend of $80,000 because he doesn't own more than 50% of the CFC.

Question

Quizplus · Accepted Answer

Under the CFC provisions, if a U.S. shareholder owns 10% or more of a CFC, they may be subject to taxation on their share of the CFC's Subpart F income. If the CFC has Subpart F income and the shareholder does not receive an actual distribution, they may be subject to a deemed or constructive dividend. In this case, since Kipp owns 40% of the CFC, he would be subject to taxation on his share of the Subpart F income, and if he doesn't receive an actual distribution, he would be subject to taxation on a deemed or constructive dividend. Therefore, the answer is false.

Kipp, a US