Camellia Corporation, a U

Multiple Choice

Camellia Corporation, a U.S. corporation, incurred $600,000 of research and experimental (R&E) expenses during 2014. Camellia sells inventory within the United States and abroad. Camellia conducted all of the research related to the inventory within the United States. Gross sales of the inventory were $20,000,000, of which $12,000,000 was from foreign source sales. Gross profit from sale of the inventory was $8,000,000, of which $2,000,000 was from foreign source sales. What is the minimum amount of R&E expense that can be apportioned to the company's foreign source income for foreign tax credit purposes, assuming this is the first year the company makes this computation?

A) $360,000
B) $180,000
C) $150,000
D) $112,500