USCo manufactures and markets electrical components. USCo operates outside the United States through a number of CFCs,

Question:

USCo manufactures and markets electrical components. USCo operates outside the United States through a number of CFCs, each of which is organized in a different country. These CFCs derived the following income for the current year. Determine the amount of income that USCo must report as a deemed under subpart F in each scenario.
a. F1 has gross income of $5 million, including $200,000 of foreign personal holding company interest and $4.8 million of gross income from the sale of inventory that F1 manufactured at a factory located within its home country.
b. F2 has gross income of $5 million, including $4 million of foreign personal holding company interest and $1 million of gross income from the sale of inventory that F2 manufactured at a factory located within its home country.
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...