USAco, a domestic corporation, operates two lines of business. The first line of business is concession sales at U.S. major league baseball games, which generate annual gross income of $1 million. The second line of business is concession sales at German professional soccer games, which generate annual gross income of $4 million. Each year, USAco's combined general and administrative expenses for both lines of business total $500,000 annually. These expenses should be allocated:

		all to U.S.-source income.
		all to foreign-source income.
		$250,000 to U.S.-source income and $250,000 to foreign-source income.
		$100,000 to U.S.-source income and $400,000 to foreign-source income.