During the Current Year, USACo (A Domestic Corporation) Sold Equipment

question 116

Multiple Choice

During the current year, USACo (a domestic corporation) sold equipment to FrenchCo, a non-U.S. corporation, for $350,000 with title passing to the buyer in France. USACo purchased the equipment several years ago for $100,000 and took $80,000 of depreciation deductions on the equipment, all of which were allocated to U.S.-source income. USACo's adjusted basis in the equipment is $20,000 on the date of sale. What is the sourcing of the $330,000 gain on the sale of this equipment?

• A) $330,000 foreign source.
• B) $330,000 U.S. source.
• C) $250,000 foreign source and $80,000 U.S. source.
• D) $250,000 U.S. source and $80,000 foreign source.

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Definitions:

Indirect Business Taxes

Indirect business taxes are taxes levied on goods and services rather than on income or profits, such as sales tax or value-added tax.

Investment

The allocation of resources, usually financial, into assets with the expectation of generating future profit or income.

Per Capita GDP

The gross domestic product of a country divided by its population, indicating the average economic output per person.

Population

The total number of people inhabiting a specific area or the members of a particular species within an ecological community.