Business, 23.03.2020 17:30 lovelylid6969

USco is a domestic corporation that distributes scientific equipment worldwide. During the current year, USco had $100 million of sales, a gross profit of $40 million, and incurred $30 million of selling, general and administrative expenses (SG&A), for taxable income of $10 million. USco’s sales include $20 million of sales to foreign customers. The gross profit on these foreign sales was $10 million. USco transferred title abroad on all foreign sales, and therefore the entire $10 million is classified as foreign-source income. A time management study was recently completed, and indicates that employees devote 90% of their time to the company’s domestic operations and 10% to foreign operations. Compensation expenses account for $20 million of the $30 million of total SG&A expenses. Assume USco’s $10 million of taxable income is subject to U. S. tax at a 21% rate. (Chapter 3)a. USco determines the amount of SG&A expenses allocable to foreign-source income using gross sales as an apportionment base. b. USco determines the amount of SG&A expenses allocable to foreign-source income using gross profi t as an apportionment base. c. USco determines the amount of SG&A expenses allocable to foreign-source income using time as an apportionment base for the compensation component of SG&A, and gross sales as an apportionment base for the all other SG&A expenses.

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USco is a domestic corporation that distributes scientific equipment worldwide. During the current y...

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