Question

The following persons own Schlecht Corporation, a non-U.S.entity.

Jim, U.S. individual 35%
Gina, U.S. individual 15%
Marina, U.S. individual 8%
Pedro, U.S. individual 12%
Chee, non-U.S. individual 30%

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?

a. Schlecht is not a CFC.
b. Chee includes $90,000 in gross income.
c. Marina is not a U.S. shareholder for purposes of determining whether Schlecht is a CFC.
d. Marina includes $24,000 in gross income.

Answer 1

Answer: Marina is not a U.S. shareholder for purposes of determining whether Schlecht is a CFC.

Step-by-step explanation:

From the options given, the correct statement is that "Marina is not a U.S. shareholder for purposes of determining whether Schlecht is a CFC".

A controlled foreign corporation (CFC) refers to a corporate entity which is duly registered and then conducts business in a different country than where it was registered and where the controlling owners lives.

A controlled foreign corporation (CFC) is a foreign corporation whereby more than 50% of the total voting power is owned by the person.