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.

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Definitions:

Dull Lectures

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Equilibrium

A situation in a market or model where supply equals demand, and there is no incentive for change.

Lemons

A term used in economics to refer to products of significantly lower quality that cannot be easily distinguished from higher quality products before purchase.

Original Owners

The initial owners of an asset, property, or enterprise before any transfers of ownership.