Tax Drill Allocation of Deductions Khan, Inc. a domestic corporation, reports $650,000 of gross income and an $80,000 expense, all related to real estate activities. Determine the expense allocation and apportionment using gross income as a basis. When required, round any division to three decimal places. Use rounded amounts in subsequent computations. Apportionment Foreign Apportionment U.S. Foreign Gross Income U.S. Gross Income Allocation Sales income $500,000 $85,000 72,000 $ 61,538.462 X $10,461.538 X 8,000 6,153.846 X $ 1,846.154 X Rental Income 50,000 15,000 $550,000 $100,000 $80,000 67,692.308 X 12,307.692 X Feedback Check My Work The United States levies a tax on taxable income. Deductions and losses, therefore, must be allocated and apportioned betwee foreign-source gross income to determine U.S. and foreign-source taxable income.