I.R.C. § 923(a) Exempt Foreign Trade Income [Repealed] —
For purposes of this subpart—
I.R.C. § 923(a)(1) In General —
The term “exempt foreign trade income” means the aggregate amount of all foreign
trade income of a FSC for the taxable year which is described in paragraph (2) or
(3).
I.R.C. § 923(a)(2) Income Determined Without Regard To Administrative Pricing Rules —
In the case of any transaction to which paragraph (3)
does not apply, 32 percent of the foreign trade income derived from such transaction
shall be treated as described in this paragraph. For purposes of the preceding sentence,
foreign trade income shall not include any income properly allocable to excluded
property described in subparagraph (B) of section 927(a)(2) (relating to intangibles).
I.R.C. § 923(a)(3) Income Determined With Regard To Administrative Pricing Rules —
In the case of any transaction with respect to which paragraph (1) or (2) of section
925(a) (or the corresponding provisions of the regulations prescribed under section 925(b))
applies, 16/23 of the foreign trade income derived from such transaction shall be
treated as described in this paragraph.
I.R.C. § 923(a)(4) Special Rule For Foreign Trade Income Allocable To A Cooperative
I.R.C. § 923(a)(4)(A) In General —
In any case in which a qualified cooperative is a shareholder of a FSC, paragraph
(3) shall be applied with respect to that portion of the foreign trade income of
such FSC for any taxable year which is properly allocable to the marketing of agricultural
or horticultural products (or the providing of related services) by such cooperative
by substituting “100 percent” for “16/23”.
I.R.C. § 923(a)(4)(B) Paragraph Only To Apply To Amounts FSC Distributes —
Subparagraph (A) shall not apply for any taxable year unless the FSC distributes
to the qualified cooperative the amount which (but for such subparagraph) would
not be treated as exempt foreign trade income. Any distribution under this subparagraph
for any taxable year—
I.R.C. § 923(a)(4)(B)(i) —
shall be made before the due date for filing the return of tax for such taxable year,
but
I.R.C. § 923(a)(4)(B)(ii) —
shall be treated as made on the last day of such taxable year.
I.R.C. § 923(a)(5) Special Rule For Military Property —
Under regulations prescribed by the Secretary, that portion of the foreign trading
gross receipts of the FSC for the taxable year attributable to the disposition of,
or services relating to, military property (within the meaning of section 995(b)(3)(B)) which may be treated as exempt foreign trade income shall equal 50 percent of the
amount which (but for this paragraph) would be treated as exempt foreign trade income.
I.R.C. § 923(a)(6) Cross Reference —
For reduction in amount of exempt foreign trade income, see section 291(a)(4).
I.R.C. § 923(b) Foreign Trade Income Defined [Repealed] —
For purposes of this subpart, the term “foreign trade income” means the gross income
of a FSC attributable to foreign trading gross receipts.
(Added Pub. L. 98-369, div. A, title VIII, 801(a), July 18, 1984, 98 Stat. 986, and amended Pub. L. 99-514, title XVIII, 1876(b)(3), Oct. 22, 1986, 100 Stat. 2898; repealed by Pub. L. 106-519, Sec. 2, Nov. 15, 2000.)
BACKGROUND NOTES
AMENDMENTS
2000--Sec. 923. Pub. L. 106-519, Sec. 2, repealed Sec. 923.
1986--Subsec. (a)(6). Pub. L. 99-514 added par. (6).
EFFECTIVE DATE OF REPEAL
Section 5 of Pub. L. 106-519 provided:
“(a) IN GENERAL.--The amendments made by this Act shall apply to transactions after
September 30, 2000.
“(b) NO NEW FSCs; TERMINATION OF INACTIVE FSCs.--
“(1) No NEW FSCS.-- No corporation may elect after September 30, 2000, to be a FSC
(as defined in section 922 of the Internal Revenue Code of 1986, as in effect before the amendments made by this Act).
“(2) TERMINATION OF INACTIVE FSCS.-- If a FSC has no foreign trade income (as defined
in section 923(b) of such Code, as so in effect) for any period of 5 consecutive taxable
years beginning after December 31, 2001, such FSC shall cease to be treated as a FSC
for purposes of such Code for any taxable year beginning after such period.
“(c) TRANSITION PERIOD FOR EXISTING FOREIGN SALES CORPORATIONS.--
Editor's Note: Sec. 513(a) of Pub. L. 109-222 amended Sec. 5(c)(1)
of Pub. L. 106-519, effective on the date of the enactment of Pub. L. 109-222 [Enacted: May 17, 2006]. Before amendment, Sec. 5(c)(1) read as follows:
“(1) IN GENERAL.-- In the case of a FSC (as so defined) in existence on September
30, 2000, and at all times, thereafter, the amendments made by this Act shall not
apply to any transaction in the ordinary course of trade or business involving a FSC
which occurs--
“(A) before January 1, 2002; or
“(B) after December 31, 2001, pursuant to a binding contract
“(i) which is between the FSC (or any related person)
and any person which is not a related person; and
“(ii) which is in effect on September 30, 2000, and at all times thereafter.
“For purposes of this paragraph, a binding contract shall include a purchase option,
renewal option, or replacement option which is included in such contract and which
is enforceable against the seller or lessor.
Editor's Note: Sec. 513(a) of Pub. L. 109-222 amended Sec. 5(c)(1)
of Pub. L. 106-519, effective May 17, 2006, to read as follows:
“(1) IN GENERAL.-- In the case of a FSC (as so defined) in existence on September
30, 2000, and at all times, thereafter, the amendments made by this Act shall not
apply to any transaction in the ordinary course of trade or business involving a FSC
which occurs before January 1, 2002.
“(2) ELECTION TO HAVE AMENDMENTS APPLY EARLIER.--
A taxpayer may elect to have the amendments made by this Act apply to any transaction
by a FSC or any related person to which such amendments would apply but for the application
of paragraph (1). Such election shall be effective for the tmxable year for which
made and all subsequent taxable years, and, once made, may be revoked only with the
consent of the Secretary of the Treasury.
“(3) EXCEPTION FOR OLD EARNINGS AND PROFITS OF CERTAIN CORPORATIONS.--
“(A) IN GENERAL.-- In the case of a foreign corporation to which this paragraph applies--
“(i) earnings and profits of such corporation accumulated in taxable years ending
before October 1, 2000, shall not be included in the gross income of the persons holding
stock in such corporation by reason of section 943(e)(4)(B)(i), and
“(ii) rules similar to the rules of clauses (ii),
(iii), and (iv) of section 953(d)(4)(B) shall apply with respect to such earnings
and profits.
“The preceding sentence shall not apply to earnings and profits acquired in a transaction
after September 30, 2000, to which section 381 applies unless the distributor or transferor
corporation was immediately before the transaction a foreign corporation to which
this paragraph applies.
“(B) EXISTING FSCS.--This paragraph shall apply to any controlled foreign corporation
(as defined in section 957)
if--
“(i) such corporation is a FSC (as so defined)
in existence on September 30, 2000.
“(ii) such corporation is eligible to make the election under section 943(e) by reason
of being described in paragraph
(2)(B) of such section, and
“(iii) such corporation makes such election not later than for its first taxable year
beginning after December 31, 2001
“(C) OTHER CORPORATIONS.--This paragraph shall apply to any controlled foreign corporation
(as defined in section 957), and such corporation shall (notwithstanding any provision
of section 943(e)) be treated as an applicable foreign corporation for purposes of
section 943(e), if--
“(i) such corporation is in existence on September 30, 2000,
“(ii) as of such date, such corporation is wholly owned (directly or indirectly) by
a domestic corporation (determined without regard to any election under section 943(e)),
“(iii) for each of the 3 taxable years preceding the first taxable year to which the
election under section 943(e)
by such controlled foreign corporation applies--
“(I) all of the gross income of such corporation is subpart F income (as defined in
section 952), including by reason of section 954(b)(3)(B), and
“(II) in the ordinary course of such corporation's trade or business, such corporation
regularly sold (or paid commissions)
to a FSC which on September 30, 2000, was a related person to such corporation,
“(iv) such corporation has never made an election under section 922(a)(2) (as in effect
before the date of the enactment of this paragraph) to be treated as a FSC, and
“(v) such corporation makes the election under section 943(e) not later than for its
first taxable year beginning after December 31, 2001.
“The preceding sentence shall cease to apply as of the date that the domestic corporation
referred to in clause (ii)
ceases to wholly own (directly or indirectly) such controlled foreign corporation.
“(4) RELATED PERSON.--For purposes of this subsection, the term related person has
the meaning given to such term by section 943(b)(3).
“(5) SECTION REFERENCES.--Except as otherwise expressly provided, any reference in
this subsection to a section or other provision shall be considered to be a reference
to a section or other provision of the Internal Revenue Code of 1986, as amended by
this Act.
“(d) SPECIAL RULES RELATING TO LEASING TRANSACTIONS.--
“(1) SALES INCOME.--If foreign trade income in connection with the lease or rental
of property described in section 927(a)(1)(B) of such Code (as in effect before the
amendments made by this Act) is treated as exempt foreign trade income for purposes
of section 921(a) of such Code (as so in effect), such property shall be treated as
property described in section 941(c)(1)(B) of such Code
(as added by this Act) for purposes of applying section 941(c)(2)
of such Code (as so added) to any subsequent transaction involving such property to
which the amendments made by this Act apply.
“(2) LIMITATION ON USE OF GROSS RECEIPTS METHOD.--If any person computed its foreign
trade income from any transaction with respect to any property on the basis of a transfer
price determined under the method described in section 925(a)(1) of such Code (as
in effect before the amendments made by this Act), then the qualifying foreign trade
income (as defined in section 941(a) of such Code, as in effect after such amendment)
of such person (or any related person)
with respect to any other transaction involving such property (and to which the amendments
made by this Act apply) shall be zero.”
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 effective, except as otherwise provided, as if included in the provisions of the
Tax Reform Act of 1984, Pub. L. 98-369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99-514, set out as a note under section 48 of this title.
EFFECTIVE DATE
Section applicable to transactions after Dec. 31, 1984, in taxable years ending after
such date, see section 805(a)(1)
of Pub. L. 98-369, set out as a note under section 921 of this title.
