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zzz [600]
3 years ago
9

Santa Fe Corporation manufactured inventory in the United States and sold the inventory to customers in Mexico. Gross profit fro

m 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
Business
1 answer:
igomit [66]3 years ago
4 0

Answer: $0

Explanation:

None of this income should be treated as foreign source income as they are all U.S. based/ sourced income.

FOB shipping point means that the seller takes responsibility of the goods as soon as the goods are shipped. This is essentially saying that the Santa Fe Corporation should recognize the sale as soon as they ship the goods.

The goods were shipped in the United States so the sale should be recognized as having happened in the United States which means that it is a U.S. sourced income.

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