Question

Which of the following is a principle used in applying the income-sourcing rules under U.S. tax law?

a.The rules should apply to income items only; deductions need not be sourced in this way.

b.The rules should favor the treasury of the non-U.S. country.

c.The rules should favor the U.S. Treasury.

d.The rules should be acceptable to both countries.

Which of the following statements is true, concerning the sourcing of income from inventory produced by the taxpayer in the United States and sold outside the United States?

a.Because the inventory is manufactured in the United States, all of the inventory income is U.S. source.

b.The taxpayer may source one-half the income based on title passage and one-half the income based on location of production assets.

c.If title passes on the inventory outside the United States, all of the inventory income is foreign source.

d.The taxpayer may source one-half the income based on title passage and one-half the income based on where the sale negotiation takes place.

Answer 1

Which of the following is a principle used in applying the income-sourcing rules under U.S. tax law?

Correct answer is d.The rules should be acceptable to both countries.

Which of the following statements is true, concerning the sourcing of income from inventory produced by the taxpayer in the United States and sold outside the United States?

Correct answer is a.Because the inventory is manufactured in the United States, all of the inventory income is U.S. source.