RainCo, a U

question 5

Multiple Choice

RainCo, a U.S. corporation, owns a number of patents related to designing umbrellas. RainCo licenses these patents to unrelated parties. TexCo, a domestic corporation, paid RainCo $100,000 in royalties related to these licenses. TexCo uses the patent information in its manufacturing process in its Canadian plant. IrishCo, an Irish corporation, paid RainCo $25,000 in royalties related to the licenses. IrishCo uses the patent information in its manufacturing process in its Michigan manufacturing plant. How much U.S.-source royalty income did RainCo earn from these licenses?

• A) $0
• B) $25,000
• C) $100,000
• D) $125,000

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Definitions:

Long Position

An investment strategy where an investor buys securities with the expectation that their price will rise, aiming to sell them at a higher price in the future.

Maturity

The final payment date of a loan or other financial instrument, at which point the principal (and all remaining interest) is due to be paid.

Profit

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes.

Wheat Futures

Futures contracts that specify the price at which wheat can be sold or bought on a future date, used by farmers and traders for hedging and speculating.