Page:United States Statutes at Large Volume 85.djvu/573

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[85 STAT. 543]
[85 STAT. 543]
PUBLIC LAW 92-000—MMMM. DD, 1971

85 STAT. ]

PUBLIC LAW 92-178-DEC. 10, 1971

" (A) less than 10 percent of the total combined voting power of all classes of stock entitled to vote of such foreign corporation is owned (within the meaning of section 1563 (d) and (e)) by the domestic corporation or by a controlled group of corporations (within the meaning of section 1563) of which the domestic corporation is a member, and " (B) the ownership of stock or securities in such foreign corporation by the domestic corporation is determined (under regulations prescribed by the Secretary or his delegate) to be reasonably in furtherance of a transaction or transactions giving rise to qualified export receipts of the domestic corporation. " (f) GROSS RECEIPTS.—For purposes of this part, the term 'gross receipts' means the total receipts from the sale, lease, or rental of property held primarily for sale, lease, or rental in the ordinary course of trade or business, and gross income from all other sources. I n the case of commissions on the sale, lease, or rental of property, the amount taken into account for purposes of this part as gross receipts shall be the gross receipts on the sale, lease, or rental of the property on M'hich such commissions arose. " (g) UNITED STATES DEFINED.—For purposes of this part, the term 'Laiited States' includes the Commonwealth of Puerto Rico and the possessions of the United States. "SEC. 994. INTER-COMPANY PRICING RULES. " (a) IN GENERAL.—In the case of a sale of export property to a D I S C by a person described in section 482, the taxable income of such D I S C and such person shall be based upon a transfer price which would allow such D I S C to derive taxable income attributable to such sale (regardless of the sales price actually charged) in an amount which does not exceed the greatest of— "(1) 4 percent of the oualified export receipts on the sale of such property by the D I S C plus 10 percent of the export promotion expenses of such D I S C attributable to such receipts, "(2) 50 percent of the combined taxable income of such D I S C and such person which is attributable to the qualified export receipts on such property derived as the result of a sale by the D I S C plus 10 percent of the export promotion expenses of such D I S C attributable to such receipts, or "(3) taxable income based upon the sale price actually charged (but subject to the rules provided in section 482). "(b)


The Secretary or his delegate shall prescribe regulations setting forth— "(1) rules which are consistent with the rules set forth in subsection (a) for the application of this section in the case of commissions, rentals, and other income, and "(2) rules for the allocation of expenditures in computing combined taxable income under subsection (a)(2) in those cases where a D I S C is seeking to establish or maintain a market for export property. "(c) EXPORT PROMOTION EXPENSES.—For purposes of this section, the term 'export promotion expenses' means those expenses incurred to advance the distribution or sale of export property for use, consumption, or distribution outside of the United States, but does not include income taxes. Such expenses shall also include freight expenses to the extent of 50 percent of the cost of shipping export property aboard airplanes owned and operated by United States persons or ships documented under the laws of the United States in those cases where law or regulations does not require that such property be shipped aboard such airplanes or ships.


78 Stat. 120, 26 USC 1563,

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