Broad Limited (Broad) is a Hong Kong incorporated entity that is treated as a foreign corporation for U.S. tax purposes. Broad has 1,000 shares of voting common stock outstanding. Broad has no other outstanding or authorized stock. Accounting Supply, Inc., a domestic C-Corporation, owns 750 shares of Broad. Howard, a U.S. citizen, owns 50 shares of Broad, and he holds no shares in Accounting Supply, Inc.. The remaining 200 shares of Broad are owned by a Brazilian corporation, Rio Ltda., which holds no shares in Accounting Supply, Inc.. Rio Ltda. has 500 shares of a single class of common stock outstanding, which are all owned by a Brazilian individual, Carlos, who is unrelated to Howard and holds no shares in Accounting Supply, Inc.

Alternatively, in 2019, assume Broad generated $3,000,000 of gross income having the following characteristics: $1,800,000 in foreign-source interest income from unrelated persons; $250,000 in gross income from an active foreign business, which constitutes foreign base company sales income; and $950,000 in gross income from an active foreign business, which does not constitute foreign base company sales income. For simplicity purposes, assume that Broad has no allowable deductions for the year with respect to this gross income, and the ownership structure remains unchanged. Also, Hong Kong levied an income tax at an effective rate of fifteen percent (15%) on the gross income derived by Broad - i.e., Hong Kong Income Tax: $450,000 [Gross Income: $3,000,000 * 15%].

In 2019, Broads assets consist of the following: assets producing passive income or held for the production of passive income, which have an average adjusted basis of $11,000,000; and assets that are used to conduct its trade or business activities, which have an average adjusted basis of $9,000,000.

(a.) Is Broad a controlled foreign corporation (CFC) for the current year?

(b.) Is Broad a Passive Foreign Investment Company (PFIC) for the current year?

(c.) Do any of Broads shareholders have a Subpart F income inclusion? If so, please identify the type of Subpart F income and the amount of each shareholders Subpart F income inclusion, if any, as well as how the inclusion will be basketed for foreign tax credit limitation purposes.

(d.) Would the PFIC provisions apply to any of Broads shareholders under these facts? If so, please explain.