McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 8

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:
a.F1 has gross income of $5 million, including $200,000 of foreign personal
holding company interest and $4. 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.Determine the amount of income that USCo must report as a deemed dividend
under subpart F in each scenario.