1. Phillipe is a United States citizen. In 20Y1, Phillipe pays $1 million for 1% of the stock of Hco, a foreign corporation that qualifies as a passive foreign investment company but is not a controlled foreign corporation. Phillipe does not make a qualified electing fund election with respect to his interest in Hco. During 20Y1 to 20Y4, Hco makes no distributions to Phillipe. On December 31, 20Y4, Phillipe sells all of his Hco stock for $5 million. Assume the highest United States individual income tax rate in 20Y1 to 20Y4 was 40%, and the interest rate for computing the Code Sec. 1291(c) deferred tax amount is 3% for a tax due 1 year ago, 6% for a tax due 2 years ago, and 9% for a tax due 3 years ago.
   1. Determine Phillipe's United States tax on his sale of shares in Hco.