Clario, S.A., a Peruvian corporation, manufactures furniture in Peru. It sells the furniture to independent distributors in the United States. Because title to the furniture passes to the purchasers in the United States, Clario reports $2 million in U.S.-source income. Clario has no employees or operations in the United States related to its furniture business.
As a separate line of business, Clario buys and sells antique toys. Clario has a single employee operating a booth on weekends at a flea market in Waldo, Florida. The antique toy business generated $85,000 in net profits from U.S. sources during the current year.
What is Clario’s effectively connected income for the current year?