Foreign Systems, Inc. (Foreign Systems), a foreign corporation, produces electronic toys in Italy and all of its production, assets are located in Italy. A portion of the production is sold through a branch sales office in the United States to U.S. retailers for $300 per unit. The cost of production is $100 per unit. Foreign systems passes title to the toys to the U.S. retailers in Italy.

1. How much of the income from each unit sold to a U.S. retailer will be treated as foreign-source income?
2. How, if at all, would your answer change if Foreign Systems had no sales office or other fixed place of business in the United States and sold the toys directly to the U.S. retailers, passing title to the U.S. retailer in the United States?
3. What if Foreign Systems is not the producer of the electronic toys, but instead purchases them from the manufacturer in Italy for $100 per unit, and resells them to the U.S. customers for $300 per unit through a branch sales office in the United States, passing title to the U.S. customers in Italy?