Identify whether the corporations described below are controlled foreign corporations.Required:a. Shetland PLC, a U.K. corporation, has two classes of stock outstanding, 75 shares of class AA stock and 25 shares ofclass A stock. Each share of stock has equal voting power and value. Angus owns 35 shares of class AA stock and20 shares of class A stock. Angus is a U.S. citizen who resides in England.b. Mihai and Gina, both U.S. citizens, own 5 percent and 10 percent, respectively, of the voting stock and value ofDaVinci S.A., an Italian corporation. Mihai and Gina are also equal partners in Roma Corporation, an Italiancorporation that owns 50 percent of the DaVinci stock.c. Pierre, a U.S. citizen, owns 45 of the 100 shares outstanding in Vino S.A., a French corporation. Pierre's father, Pepe,owns 8 shares in Vino. Pepe also is a U.S. citizen. The remaining 47 shares are owned by non-U.S. individuals.Complete this question by entering your answers in the tabs below.Required Required RequiredABсShetland PLC, a U.K. corporation, has two classes of stock outstanding, 75 shares of classAA stock and 25 shares of class A stock. Each share of stock has equal voting power andvalue. Angus owns 35 shares of class AA stock and 20 shares of class A stock. Angus is aU.S. citizen who resides in England.< Required ARequired B >Show less

United States Shareholder: As defined in section 957(c), the term “United States shareholder” means, with respect to any foreign corporation, a United States person who owns (within the meaning of section 958(a)), or is considered as owning by applying the rules of ownership of section 958(b): 10 percent or more of the total combined voting power of all classes of stock entitled to vote of such foreign corporation, or 10 percent or more of the total value of shares of all classes of stock of such foreign corporation. Controlled Foreign Corporation (CFC): In the County U, the CFC is a foreign corporation in which any of its shareholders own more than 50% of the total combined voting power of all voting stock or the total value of the company's stock.Firstly, determine the combined voting power of A as under: From the above calculation, A will be “U.S. shareholder” because he owns 10% or more of the total combined voting power of S Plc. S Plc. should be considered as a Controlled Foreign Corporation (CFC), as the shareholder A owns more than 50% of the total power or value of stock. A should include the current 55% of the corporation’s subpart F income in his income. Hence, S Plc. It is a Controlled Foreign Corporation (CFC).Firstly, determine the total voting power of T and G as under: From the above calculation, T and G will be “U.S. shareholder’s” because both owns 10% or more of the total combined voting power of Company R. T and G both own their pro-rata share in the stock of D SA owned by Company R. This meets the requirements of §958(b). Hence, D SA is considered as Controlled Foreign Corporation (CFC), as the U.S. shareholders collectively own more than 50 percent of the value or voting power of its stock. T and F should report the 30% and 35% of their income from D SA, as subpart F income in their current income. Hence, D SA. It is a Controlled Foreign Corporation (CFC).Firstly, determine the total voting power of Pierre and Pepe as under: Under the constructive ownership rules of §958(b): Pierre is deemed to own the shares owned by his parent. Pepe is deemed to own the shares owned by his son. From the above calculation, Pierre and Pepe will be “U.S. shareholder’s” because both owns 10% or more of the total combined voting power of the company. On the other hand, the corporation shall be considered as Controlled Foreign Corporation (CFC) as the combined voting power is more than 50%. Pierre and Pepe should report the 45% and 8% of their income from V SA, as subpart F income in their current income. Hence, V SA. It is a Controlled Foreign Corporation (CFC).