Question 13. Pursco is a domestic corporation that distributes scientific equipment worldwide. During the current year, Pursco 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. Pursco's sales include $20 million of sales to foreign customers. The gross profit on these foreign sales was $10 million. Pursco transferrred title abroad on all foreign sales, and therefore the entire $10 million is classified as foreign source income. A time management survey was recently completed and indicates 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 Pursco's $10 million of taxable income is subject to U.S. tax at a 35% rate. Compute Pursco's foreign tax credit limitation under the assumption that Pursco determines the amount of SG&A expenses allocable to foreign source income using only gross sales as an apportionment base. A)$875,000 B)$1,400,000 C)$2,100,000 D) None of the above