The following persons own Schlecht Corporation,a foreign corporation. None of the shareholders are related.Subpart F income for the tax year is $300,000.No distributions are made.Which of the following statements is correct?

Question

The following persons own Schlecht Corporation,a foreign corporation.  None of the shareholders are related.Subpart F income for the tax year is $300,000.No distributions are made.Which of the following statements is correct?

Quizplus · Accepted Answer

Since none of the shareholders are related, Schlecht Corporation is not a controlled foreign corporation (CFC). Therefore, there is no Subpart F income inclusion for any U.S. shareholders. Marina may be a shareholder, but since Schlecht is not a CFC, she is not a U.S. shareholder subject to Subpart F income inclusion. Therefore, options B and D are incorrect. Option A is incorrect because it assumes that Schlecht Corporation is a CFC, which is not the case. Therefore, the only correct option is C, which states that Marina is not a U.S. shareholder and is therefore not subject to Subpart F income inclusion.

The Following Persons Own Schlecht Corporation,a Foreign Corporation