The first issue to solve is to determine if Popping is a controlled foreign company or (CFC). By definition a CFC is any non-US Corp. in which more than 50% of the total combined voting power of all classes of stock entitled to vote, or the total value of the stock of the corporation, is owned by U.S. shareholders on any day during the taxable year of the foreign corporation (Page 25-21). By the facts presented, there are five unrelated U.S. individuals who own all the shares, therefore separately they each own 20% and combined they own 100% of Popping. Since all five individuals own more than 10% of the shares (they own 20%) they are all considered U.S. shareholders. This means that Popping is indeed a Controlled Foreign Company. The second