Orono Corporation manufactured inventory in the United States and sold the inventory to customers in Canada.Gross profit from the sale of the inventory was $300,000.Title to the inventory passed FOB: destination.Under the 50/50 method,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?
A) $300,000.
B) $150,000.
C) $0.
D) The answer cannot be determined with the information provided.

Question

Quizplus · Accepted Answer

Under the 50/50 method, half of the gross profit is treated as foreign source income and half as U.S. source income. Therefore, the foreign source income is $150,000.

Orono Corporation Manufactured Inventory in the United States and Sold