Boomerang Corporation, a New Zealand corporation, is owned by the following unrelated persons: 40 percent by a U.S. corporation, 15 percent by a U.S. individual, and 45 percent by an Australian corporation. During the year, Boomerang earned $6,400,000 of sub part F income. Which of the following statements is true about the application of sub part F to the income earned by Boomerang?

• Boomerang is a CFC and the U.S. corporation and U.S. individual will have a deemed dividend of $2,560,000 and $960,000, respectively.
• Boomerang is a CFC and only the U.S. corporation will have a deemed dividend of $2,560,000.
• Boomerang is a CFC and the U.S. corporation, U.S. individual, and Australian corporation will have a deemed.
• Dividend of $2,560,000, $960,000, and $2,880,000, respectively.

Boomerang is not a CFC and none of the shareholders will have a deemed dividend under sub part F.

Answer rating: 100% (QA)

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