Question

In: Accounting

Manila Corporation is organized in Country J. All of Manila’s stock is owned by Simpson, a...

Manila Corporation is organized in Country J. All of Manila’s stock is owned by Simpson, a U.S. corporation. Indicate which of the following transactions generate Subpart F income.

a. Manila purchases a product from Simpson and sells it to unrelated parties in Countries J and X.parties in Count

ries J and X.

b. Manila receives a dividend from Manila-Sub, a foreign corporation organized and operating exclusively in Country J. All of Manila-Sub’s stock has been owned by Manila since its incorporation.

c. Manila purchases raw materials locally, manufactures products in Country J, and sells the products to an unrelated purchaser for use in Country Z.

d. Manila services machinery manufactured by an unrelated Country J corporation. Revend sells the product to unrelated persons in Country Z.ues from servicing this machinery outside of Country J constitute 80% of Manila’s gross income.

e. Manila purchases a product from a related U.S. corporation annd sells the product to unrelated persons in Country Z.

Solutions

Expert Solution

Any income earned by a Controlled Foreign Corporation (CFC) that is not distributed or otherwise taxed for the tax year in which it was earned is considered constructively repatriated, and therefore, US persons — which includes citizens, residents, domestic corporations, partnerships, estates, and trusts of the US — must include the pro rata share of their CFC Subpart F income in their gross income. IRC §951.

A CFC is considered any foreign corporation where US persons own more than 50% of the total voting power or value of the corporate stock and who individually also own at least 10% of the CFC voting stock

Accordingly,

a. Manila purchases a product from Simpson and sells it to unrelated parties in Countries J and X.parties in Countries J and X generates subpart income F

b. Does not generate subpart income F

c. generate subpart income F

d. generate subpart income F

e. generate subpart income F

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

The following is a summary of all relevant transactions of Martinez Corporation since it was organized...
The following is a summary of all relevant transactions of Martinez Corporation since it was organized in 2017. In 2017, 14,000 shares were authorized and 7,000 shares of common stock ($50 par value) were issued at a price of $57. In 2018, 1,100 shares were issued as a stock dividend when the stock was selling for $60. 290 shares of common stock were bought in 2019 at a cost of $64 per share. These 290 shares are still in the...
Simpson is a single individual who is employed full-time by Duff Corporation. This year Simpson reports...
Simpson is a single individual who is employed full-time by Duff Corporation. This year Simpson reports AGI of $57,000 and has incurred the following medical expenses: Dentist charges $ 1,215 Physician's charges 2,165 Optical charges 935 Cost of eyeglasses 660 Hospital charges 2,300 Prescription drugs 455 Over-the-counter drugs 895 Medical insurance premiums (not through an exchange) 1,045 a. Calculate the amount of medical expenses that will be included with Simpson’s itemized deductions after any applicable limitations. b. Suppose that Simpson...
A corporation was organized on January 1 and issued the following shares of stock: 1) 2,500...
A corporation was organized on January 1 and issued the following shares of stock: 1) 2,500 shares of $100 par value, 8% non-participating preferred stock. 2) 20,000 shares of $20 par value common stock. All shares were issued and outstanding throughout the next three years. The corporation declared and paid a cash dividend in each of those years as follows: Year 1 - $25,000 Year 2 - $8,000 Year 3 - $75,000 Calculate the dividends paid to each class of...
A large corporation organized a ballot for all its workers on a new bonus plan. It...
A large corporation organized a ballot for all its workers on a new bonus plan. It was found that 65% of all night-shift workers favored the plan and that 40% of all female workers favored the plan. Also, 50% of all employees are night shift workers and 30% of all employees are women. Finally, 20% of all night-shift workers are women. question E) e. If 50% of all male employees favor the plan, what is the probability that a randomly...
B&J Corporation was established in 2016. B&J has authorized 50,000 shares of common stock, par value...
B&J Corporation was established in 2016. B&J has authorized 50,000 shares of common stock, par value $2 per share, and 10,000 authorized shares of 6% preferred stock, par value $10 per share. Net Income for 2016 was $210,000. The following transactions took place during 2016: January 1 Issued 30,000 shares of common stock for cash at $20 per share. February 1 Issued 8,000 shares of preferred stock for cash of $50 per share. June 1 Repurchased 4,000 shares of L&D...
Hill Corporation is organized with two classes of voting common stock: Class A and Class B....
Hill Corporation is organized with two classes of voting common stock: Class A and Class B. Shares in each class of stock have an equal right to Hill’s assets and earnings and profits. Frank owns 100 shares of Class A stock, and Fay and Joyce each own 50 shares of Class B stock. Assuming that Hill Corporation has ample earnings and profits, determine whether the following distributions are taxable under § 301 or excludable under § 305(a): Answer for d-i?...
Hill Corporation is organized with two classes of voting common stock: Class A and Class B....
Hill Corporation is organized with two classes of voting common stock: Class A and Class B. Shares in each class of stock have an equal right to Hill’s assets and earnings and profits. Frank owns 100 shares of Class A stock, and Fay and Joyce each own 50 shares of Class B stock. Assuming that Hill Corporation has ample earnings and profits, determine whether the following distributions are taxable under § 301 or excludable under § 305(a): (a)A pro rata...
Hill Corporation is organized with two classes of voting common stock: Class A and Class B....
Hill Corporation is organized with two classes of voting common stock: Class A and Class B. Shares in each class of stock have an equal right to Hill’s assets and earnings and profits. Frank owns 100 shares of Class A stock, and Fay and Joyce each own 50 shares of Class B stock. Assuming that Hill Corporation has ample earnings and profits, determine whether the following distributions are taxable under § 301 or excludable under § 305(a): Answer for d-i?...
5) Olivia is the sole shareholder in Western Corporation and has owned the stock for five...
5) Olivia is the sole shareholder in Western Corporation and has owned the stock for five years. The basis in her stock is $50,000. Western distributes $35,000 to Olivia. Accumulated earnings and profits at the beginning of the year equal $25,000 and current earnings and profits equal $5,000. Required: What are the tax consequences of this information? What are the tax consequences of this information if, instead of distributing $35,000 to Olivia, Western distributes $100,000 to Olivia?
The stock in Black Corporation is owned by Sam and Susan, who are unrelated. Sam owns...
The stock in Black Corporation is owned by Sam and Susan, who are unrelated. Sam owns 70% and Susan owns 30% of the stock in Black Corporation. The following assets are to be distributed in complete liquidation of Black Corporation: Adjusted Fair Market Basis Value Cash $100,000 $100,000 Inventory 120,000 140,000 Equipment 220,000 180,000 Land 150,000 180,000 a. What gain or loss would Black Corporation recognize if it distributes the cash, inventory, and equipment to Sam and the land to...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT