The gross profit from a sale of inventory manufactured in the United States and sold in Spain will always be treated as 100 percent U.S. source income.
Under §863(b), special apportionment rules apply. Under the 50/50 method, which is one of three elective methods of apportioning gross income, 50 percent of the gross profit will be treated as foreign source income if title passes outside the United States.

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Under §863(b), the 50/50 method allows for 50 percent of the gross profit to be treated as foreign source income if the title passes outside the United States, not 100 percent U.S. source income.

The Gross Profit from a Sale of Inventory Manufactured in the United