USAco manufactures widgets and owns an IC-DISC. USAco incurs 25% of its labor and material costs in the United States, 35% of its labor and material costs in Canada, and 40% of its labor and material costs in Mexico. Do the widgets constitute qualifying production property?

No, because less than half of the labor and material costs are incurred in theUnited States.

No, because the labor and material costs incurred in the United States are not substantial.

Yes, because the labor and material costs incurred in the United States satisfy the safe harbor.

Yes, because 100% of labor and material costs are incurred in North America