A, B, C and D, each own 25 percent of the stock of XYZ Corporation, a corporation organized in Brazil. A, B and C are U.

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A, B, C and D, each own 25 percent of the stock of XYZ
Corporation, a corporation organized in Brazil. A, B and C are U.S.
citizens and residents. D is a foreign corporation. A, B, C and D
are unrelated parties.
In Year 1, XYZ Corporation earns $400,000 in interest and
$800,000 in dividend income. It also opens a computer service
business in Brazil, which generates $28,000,000 in gross income.
The United States income tax result are:
a. Since no distribution was made there is no U.S. tax
income tax due in Year 1.
b. A, B and C will each include $300,000 in their U.S.
taxable income and pay U.S. income tax.
c. A, B, C and D will each include $300,000 in their U.S.
taxable income and pay U.S. income tax.
d. A, B and C will not include any of the income of XYZ
Corporation because the de minimus exception is met.