Final answer:
The gross income from the sale of inventory is usually sourced to where the title passes, which indicates the transfer of legal ownership of the property.
Step-by-step explanation:
Gross income from the sale of inventory is generally sourced to the location where title passes. The concept of title refers to the legal ownership of the property. In many tax jurisdictions, the gross income is sourced to the location where the title of the goods is transferred from the seller to the buyer. This point can vary depending on the agreement between both parties. For instance, if a sale is made with terms FOB (Free on Board) shipping point, the title often passes to the buyer when the goods are shipped. Conversely, with FOB destination, title may not pass until the goods reach the buyer's location.