Which of the Following Statements Is True,concerning the Sourcing of Income

question 35

Multiple Choice

Which of the following statements is true,concerning the sourcing of income from inventory produced by the taxpayer in the U.S.and sold outside the U.S.?

• A)Because the inventory is manufactured in the U.S., all of the inventory income is U.S. source.
• B)If title passes on the inventory outside the U.S., all of the inventory income is foreign source.
• C)The taxpayer may use the 50-50 method to source one-half the income based on title passage and one-half the income based on where the sale negotiation takes place.
• D)The taxpayer may use the 50-50 method to source one-half the income based on title passage and one-half the income based on location of production assets.

---

Definitions:

Useful Life

The period of time over which an asset is expected to be useful in the operations of a business.

Traceable Fixed Expense

A fixed expense that can be directly linked to a specific department, project, or segment of a business.

Net Operating Income

The amount of profit realized from a company's operations after subtracting operating expenses but before interest and taxes.

Price Hike

An increase in the selling price of goods or services, often due to higher costs or improved demand.