Santa Fe Corporation manufactured inventory in the United States and sold the inventory to customers in Mexico. Gross profit from the sale of the inventory was $200,000. Title to the inventory passed FOB: shipping point. How much of the gross profit is treated as foreign source income for purposes of computing the corporation's foreign tax credit in the current year?

Question

Quizplus · Accepted Answer

The sale of inventory is sourced in the country where title passes. Title passed FOB shipping point, which means that title passed in the United States. Therefore, the gross profit is sourced in the United States and is not foreign source income.

Santa Fe Corporation Manufactured Inventory in the United States and Sold