Portsmouth Corporation, a British corporation, is a wholly owned subsidiary of Salem Corporation, a U.S. corporation. During the year, Portsmouth reported the following income:$250,000 interest income received from a loan to an unrelated French corporation.$100,000 dividend income received from a less than 1 percent owned unrelated Dutch corporation.$150,000 rent income from an unrelated British corporation on property Portsmouth actively manages.$500,000 gross profit from the sale of inventory manufactured by Portsmouth in Great Britain and sold to a 100 percent owned subsidiary in Germany.What amount of subpart F income does Portsmouth recognize in the current year?
What will be an ideal response?
$350,000.
The interest income and dividend income are foreign personal holding company income. The rent income is excluded from foreign personal holding company income because Portsmouth actively manages the property. The gross profit is not foreign base company sales income because the inventory is manufactured in the country in which Portsmouth is incorporated.
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What will be an ideal response?
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