Question

Hart Enterprises, a domestic corporation, owns 100% of OK, Ltd., an Irish corporation. OK's gross income for the year is $10 million. Determine whether any of the following transactions produce Subpart F gross income for the current year.
a. OK earned $600,000 from sales of products purchased from Hart and sold to customers outside Ireland.
b. OK earned $1 million from sales of products purchased from Hart and sold to customers in Ireland.
c. OK earned $400,000 from sales of products purchased from unrelated suppliers and sold to customers in Germany.
d. OK purchased raw materials from Hart, used these materials to manufacture finished goods, and sold these goods to customers in Italy. OK earned $300,000 from these sales.
e. OK earned $100,000 for the performance of warranty services on behalf of Hart.
These services were performed in Japan for customers located in Japan.
f. OK earned $50,000 in dividend income from Canada and Mexico passive investments.


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  • CreatedMay 25, 2015
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