Question

Jumper Inc., which has a 34 percent marginal tax rate, owns 40 percent of the stock of a CFC. At the beginning of 2014, Jumper’s basis in its stock was $660,000. The CFC’s 2014 income was $1 million, $800,000 of which was subpart F income. The CFC paid no foreign income tax and distributed no dividends.
a. Compute Jumper’s 2014 constructive dividend and related tax cost as a result of its investment in the CFC.
b. Compute Jumper’s basis in its CFC stock at the beginning of 2015.


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  • CreatedNovember 03, 2015
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