A foreign corporation is a passive foreign investment corporation if at least a

Question

A foreign corporation is a passive foreign investment corporation if at least a certain portion of its annual gross income is passive or at least a certain portion of the average value of its gross assets is held for the production of passive income. What are these minimum requirements? A. 50 percent or more of its gross income must be passive or 50 percent or more of the average value of its gross assets must be held for the production of passive income, B. 50 percent or more of its gross income must be passive or 75 percent or more of the average value of its gross assets must be held for the production of passive income, C. 75 percent or more of its gross income must be passive or 50 percent or more of the average value of its gross assets must be held for the production of passive income, D. 85 percent or more of its gross income must be passive or 60 percent or more of the average value of its gross assets must be held for the production of passive income

Explanation / Answer

Hi,
FYI, this is a definition created/used by United States of America for tax purposes,(and hence cannot have an explanation )
According to the rules, a PFIC (passive foreign investment corporation) should satisfy either of the 2 conditions below:
1.>75% of its gross income is passive
2. >=50% of its assets produced or held are used to produce passive income.
hence its option C
Thumbs up if this was helpful, otherwise let me know in comments

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