I.R.C. § 925(a) In General [Repealed] —
In the case of a sale of export property to a FSC by a person described in section
482, the taxable income of such FSC and such person shall be based upon a transfer price
which would allow such FSC 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—
I.R.C. § 925(a)(1) —
1.83 percent of the foreign trading gross receipts derived from the sale of such
property by such FSC,
I.R.C. § 925(a)(2) —
23 percent of the combined taxable income of such FSC and such person which is attributable
to the foreign trading gross receipts derived from the sale of such property by such
FSC, or
I.R.C. § 925(a)(3) —
taxable income based upon the sale price actually charged (but subject to the rules
provided in section 482).
Paragraphs (1) and (2) shall apply only if the FSC meets
the requirements of subsection (c) with respect to the sale.
I.R.C. § 925(b) Rules For Commissions, Rentals, And Marginal Costing [Repealed] —
The Secretary shall prescribe regulations setting forth—
I.R.C. § 925(b)(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
I.R.C. § 925(b)(2) —
rules for the allocation of expenditures in computing combined taxable income under
subsection (a)(2) in those cases where a FSC is seeking to establish or maintain
a market for export property.
I.R.C. § 925(c) Requirements For Use Of Administrative Pricing Rules [Repealed] —
A sale by a FSC meets the requirements of this subsection if—
I.R.C. § 925(c)(1) —
all of the activities described in section 924(e)
attributable to such sale, and
I.R.C. § 925(c)(2) —
all of the activities relating to the solicitation (other than advertising), negotiation,
and making of the contract for such sale, have been performed by such FSC (or by
another person acting under a contract with such FSC).
I.R.C. § 925(d) Limitation On Gross Receipts Pricing Rule [Repealed] —
The amount determined under subsection (a)(1) with respect to any transaction shall
not exceed 2 times the amount which would be determined under subsection (a)(2) with
respect to such transaction.
I.R.C. § 925(e) Taxable Income [Repealed] —
For purposes of this section, the taxable income of a FSC shall be determined without
regard to section 921.
I.R.C. § 925(f) Special Rule For Cooperatives [Repealed] —
In any case in which a qualified cooperative sells export property to a FSC, in
computing the combined taxable income of such FSC and such organization for purposes
of subsection (a)(2), there shall not be taken into account any deduction allowable
under subsection (b) or (c) of section 1382
(relating to patronage dividends, per-unit retain allocations, and
nonpatronage distributions).
(Added Pub. L. 98-369, div. A, title VIII, 801(a), July 18, 1984, 98 Stat. 990; repealed by Pub. L. 106-519, Sec. 2, Nov. 15, 2000.)
BACKGROUND NOTES
AMENDMENT
2000--Sec. 925. Pub. L. 106-519, Sec. 2, repealed Sec. 925.
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
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.
