26 U.S.C. § 971 : US Code - Section 971: Definitions

Search 26 U.S.C. § 971 : US Code - Section 971: Definitions

(a) Export trade corporations
For purposes of this subpart, the term "export trade corporation"
means -
(1) In general
A controlled foreign corporation (as defined in section 957)
which satisfies the following conditions:
(A) 90 percent or more of the gross income of such
corporation for the 3-year period immediately preceding the
close of the taxable year (or such part of such period
subsequent to the effective date of this subpart during which
the corporation was in existence) was derived from sources
without the United States, and
(B) 75 percent or more of the gross income of such
corporation for such period constituted gross income in respect
of which such corporation derived export trade income.
(2) Special rule
If 50 percent or more of the gross income of a controlled
foreign corporation in the period specified in subsection
(a)(1)(A) is gross income in respect of which such corporation
derived export trade income in respect of agricultural products
grown in the United States, it may qualify as an export trade
corporation although it does not meet the requirements of
subsection (a)(1)(B).
(3) Limitation
No controlled foreign corporation may qualify as an export
trade corporation for any taxable year beginning after October
31, 1971, unless it qualified as an export trade corporation for
any taxable year beginning before such date. If a corporation
fails to qualify as an export trade corporation for a period of
any 3 consecutive taxable years beginning after such date, it may
not qualify as an export trade corporation for any taxable year
beginning after such period.
(b) Export trade income
For the purposes of this subpart, the term "export trade income"
means net income from -
(1) the sale to an unrelated person for use, consumption, or
disposition outside the United States of export property (as
defined in subsection (e)), or from commissions, fees,
compensation, or other income from the performance of commercial,
industrial, financial, technical, scientific, managerial,
engineering, architectural, skilled, or other services in respect
to such sales or in respect of the installation or maintenance of
such export property;
(2) commissions, fees, compensation, or other income from
commercial, industrial, financial, technical, scientific,
managerial, engineering, architectural, skilled, or other
services performed in connection with the use by an unrelated
person outside the United States of patents, copyrights, secret
processes and formulas, goodwill, trademarks, trade brands,
franchises, and other like property acquired or developed and
owned by the manufacturer, producer, grower, or extractor of
export property in respect of which the export trade corporation
earns export trade income under paragraph (1);
(3) commissions, fees, rentals, or other compensation or income
attributable to the use of export property by an unrelated person
or attributable to the use of export property in the rendition of
technical, scientific, or engineering services to an unrelated
person; and
(4) interest from export trade assets described in subsection
(c)(4).
For purposes of paragraph (3), if a controlled foreign corporation
receives income from an unrelated person attributable to the use of
export property in the rendition of services to such unrelated
person together with income attributable to the rendition of other
services to such unrelated person, including personal services, the
amount of such aggregate income which shall be considered to be
attributable to the use of the export property shall (if such
amount cannot be established by reference to transactions between
unrelated persons) be that part of such aggregate income which the
cost of the export property consumed in the rendition of such
services (including a reasonable allowance for depreciation) bears
to the total cost and expenses attributable to such aggregate
income.
(c) Export trade assets
For purposes of this subpart, the term "export trade assets"
means -
(1) working capital reasonably necessary for the production of
export trade income,
(2) inventory of export property held for use, consumption, or
disposition outside the United States,
(3) facilities located outside the United States for the
storage, handling, transportation, packaging, or servicing of
export property, and
(4) evidences of indebtedness executed by persons, other than
related persons, in connection with payment for purchases of
export property for use, consumption, or disposition outside the
United States, or in connection with the payment for services
described in subsections (b)(2) and (3).
(d) Export promotion expenses
For purposes of this subpart, the term "export promotion
expenses" means the following expenses paid or incurred in the
receipt or production of export trade income -
(1) a reasonable allowance for salaries or other compensation
for personal services actually rendered for such purpose,
(2) rentals or other payments for the use of property actually
used for such purpose,
(3) a reasonable allowance for the exhaustion, wear and tear,
or obsolescence of property actually used for such purpose, and
(4) any other ordinary and necessary expenses of the
corporation to the extent reasonably allocable to the receipt or
production of export trade income.
No expense incurred within the United States shall be treated as an
export promotion expense within the meaning of the preceding
sentence, unless at least 90 percent of each category of expenses
described in such sentence is incurred outside the United States.
(e) Export property
For purposes of this subpart, the term "export property" means
any property or any interest in property manufactured, produced,
grown, or extracted in the United States.
(f) Unrelated person
For purposes of this subpart, the term "unrelated person" means a
person other than a related person as defined in section 954(d)(3).