International Tax

US Golf (“USG”), a US corporation, manufactures red golf balls and blue golf balls in the US and sells them to EuroCo, a Netherlands corporation which is 100% owned by USG.  EuroCo packages the red balls and sells them to independent distributors outside of the Netherlands for a gain of $100.  EuroCo packages the blue balls and sells them to independent distributors in the Netherlands for a gain of $200.  EuroCo buys white golf balls from an unrelated Japanese manufacturer and sells them to an independent distributor outside of the Netherlands for a gain of $300.

How much, if any, of this income is Subpart F income?  Please explain why it is, or is not, Subpart F income?

EuroCo enters into a contract manufacturing agreement with Callahan, an Irish golf club manufacturer.  Under the agreement, Callahan agrees to manufacture golf clubs for EuroCo.  EuroCo pays for Callahan’s expenses and is responsible for all risk of loss.  EuroCo then sells the golf clubs to unrelated buyers throughout Europe.

Is the income from the sale of golf clubs Subpart F income?  Please explain why it is, or is not, Subpart F income and what body of law you are relying upon to reach your conclusion?

Business & Finance

HealthWest, a US Corporation owns 100% of EuroHealth, a Luxembourg holding corporation.  EuroHealth is a holding company and does not conduct any business activities.  EuroHealth owns 100% of two subsidiaries: BelHealth, a Belgian corporation, and LuxHealth, a Luxembourg corporation.   EuroHealth’s only assets are shares of its two subsidiaries.  EuroHealth’s only income is dividend payments from its subsidiaries of $120 each.  LuxHealth buys exercise equipment manufactured by HealthWest and sells it in France and the Netherlands and realizes a gain of $500 on the sale of the equipment.  BelHealth purchases exercise equipment from HealthWest and sells it in Belgium and realizes a gain of $400 on the sale of the equipment.

How much of EuroHealth’s income is Subpart F income?  How much of BelHealth’s income is Subpart F income?  How much of LuxHealth’s income is Subpart F income?  What is the total amount of Subpart F income that HealthWest must include as income in the current year?