During the current year, USACo (a domestic corporation) sold equipment to FrenchCo, a foreign corporation, for $350,000, with title passing to the buyer in France. USACo purchased the equipment several years ago for $100,000 and took $80,000 of depreciation deductions on the equipment, all of which were allocated to U.S.-source income. USACo's adjusted basis in the equipment is $20,000 on the
date of sale. What is the source of the $330,000 gain on the sale of this equipment?
a. $330,000 foreign source.
b. $330,000 U.S. source.
c. $250,000 foreign source and $80,000 U.S. source.
d. $250,000 U.S. source and $80,000 foreign source.
c
RATIONALE: $80,000 of the gain is sourced according to prior depreciation deductions (i.e., as U.S. source). The remaining $250,000 is sourced as inventory gain (i.e., where title passed).
You might also like to view...
The regulation of real estate licensees is covered in the
A. Administrative Code. B. Corporation Code. C. Civil Code. D. Business and Professions Code.
Which of the following is true when creating content for social media?
A) Companies can develop posts without fear of criticism from the public. B) Spelling and grammar are not as important. C) All posts are honest and trustworthy because it is easier to verify information. D) Employees can be fired for content on personal media sites. E) Clever, witty headlines attract a larger audience than short, bland headlines.