Which of the Following Statements Concerning the Sourcing of Income

question 80

Multiple Choice

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

• A)If title passes on the inventory outside the U.S., all of the inventory income is foreign source.
• B)Because the inventory is manufactured in the U.S., all of the inventory income is U.S.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 location of production assets.
• 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 where the sale negotiation takes place.

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Definitions:

Toronto Stock Exchange

A primary stock exchange in Canada where stocks, bonds, and other securities are bought and sold.

Vancouver Stock Exchange

A defunct stock exchange that was located in Vancouver, Canada, historically known for trading in small-cap stocks.

Aggregate Expenditure

The total amount of spending in an economy, consisting of consumer spending, investment, government spending, and net exports.

Marginal Propensity

The ratio of the change in an economic variable (such as consumption spending) to the change in another variable (such as income).