FC, a foreign corporation, has $120 of interest expense allocated to effectively connected income for Year 1. FC's branch interest for Year 1 consists of $55 of portfolio interest payable to NRA, a nonresident alien not engaged in a domestic trade or business; $25 of interest to UKFC, a foreign corporation owning 15 percent of FC's voting stock; and $20 to DC, a domestic corporation. Which, if any, of the payments to subject to withholding?

:

All the payments are subject to tax under871 or881and are subject to withholding tax.

The payments made to NRA and DC are subject to tax under 871 or 881 and are subject to withholding tax.

The payment made to UKFC is subject to tax under881 and is subject to withholding tax.

None of the payments are subject to tax under 871 or 881 and are not subject to withholding tax.