Jonesy is a United States citizen and 100 percent shareholder of FX Corp, a calendar year foreign corporation. Jonesy also wholly owns Opco, a domestic corporation. For its first five years of operations, FX Corp accumulates earnings and profits of $200,000, none of which is included in Jonesy's gross income under §§ 951(a) or 951A. FX Corp also earns $50,000 of income during Year 6, none of which is includible in Jonesy's gross income under §§ 951(a)(1)(A) or 951A. On January 1, Year 6, FX Corp deposits $100,000 of its assets in a United States bank account.

(a) Does Jonesy have a § 956 inclusion during Year 6 and, if so, how much? 

(b) How would your answers to  change if FX Corp loans Jonesy $100,000 on January 1, Year 6? 

(c) How would your answers to change if, on September 30, Year 6, FX Corp acquires five percent of Opco's common stock for $100,000? 

(d) How would your answer to change if FX Corp were owned entirely by DomCo, a Delaware corporation, and FX Corp loans DomCo $100,000 on January 1, Year 6?

Answer rating: 100% (QA)

a During Year 6 Jonesy would have a 956 inclusion if FX Corps earnings and profits are invested in c... View the full answer