Windmill Corporation, a UK corporation, is owned by the following unrelated persons: 50 percent by a U.S. corporation, 5 percent by a U.S. individual, and 45 percent by a French corporation. During the year, Windmill earned $3,000,000 of subpart F income. Which of the following statements is true about the application of subpart F to the income earned by Windmill?
Question 38 options:
Windmill is a Controlled Foreign Corporation (CFC) and the U.S. corporation and U.S. individual will have a deemed dividend of $1,500,000 and $150,000, respectively.
Windmill is a Controlled Foreign Corporation (CFC) and the U.S. corporation, U.S. individual, and Swiss corporation will have a deemed dividend of $1,500,000, $100,000, and $900,000, respectively.
Windmill is a Controlled Foreign Corporation (CFC) and only the U.S. corporation will have a deemed dividend of $1,500,000.
Windmill is not a Controlled Foreign Corporation (CFC) and none of the shareholders will have a deemed dividend under subpart F.