DC, a domiciliary fortification, manufactures telephones for sale in the US and abroad. DC owns 100% of the supply of CTS, a Hong Kong sales conducive that was unembarrassed in Year 1.
For Year 1, CTS had $12 darling sales pay from selling telephones, assumed by DC, to customers in Japan; $3 darling attention pay from US Treasury Notes; compensated $3 darling in exotic pay taxes; and exclusive no dividends.
During Year 2, CTS had no rights and profits, compensated no exotic pay taxes, and exclusive a $12 darling dividend.
Assuming the U.S. oppidan tax admonish is 35%, what are the U.S. tax consequences of CTS’s Year 1 and Year 2 activities? Why?
Must use earliest resources as citations merely.