Page:United States Statutes at Large Volume 96 Part 1.djvu/499

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 457

ence test for commencement in a possession of operations with respect to products or types of service after the date of the enactment of this clause and not described in subparagraph (B)(iiiXD, "(ID a significant business presence test for other appropriate cases, consistent with the tests specified in subparagraph (B)(ii), "(III) rules for the definition of a product or type of service, and "(IV) rules for treating components produced in whole or in part by a related person as materials, and the costs (including direct labor costs) related thereto as a cost of materials, where there is an independent resale price for such components or where otherwise consistent with the intent of the substantial business presence tests. "(C) METHODS OF COMPUTATION OF TAXABLE INCOME.—If

an election of one of the following methods is in effect pursuant to subparagraph (F) with respect to a product or type of service, an electing corporation shall compute its income derived from the active conduct of a trade or business in a possession with respect to such product or type of service in accordance with the method which is elected. "(i) COST SHARING.— "(I) PAYMENT OF COST SHARING.—If an election of

this method is in effect, the electing corporation must make a payment for its share of the cost (if any) of product area research which is paid or accrued by the affiliated group during that taxable year. Such share shall not be less than the same proportion of the cost of such product area research which the amount of 'possession sales' bears to the amount of 'total sales of the affiliated group. The cost of product area research paid or accrued solely by the electing corporation in a taxable year (excluding amounts paid directly or indirectly to or on behalf of related persons and excluding amounts paid under any cost sharing agreements with related persons) will reduce (but not below zero) the amount of the electing corporation's cost sharing payment under this method for that year. "(a) PRODUCT AREA RESEARCH.—For purposes

of this section, the term 'product area research' includes (notwithstanding any provision to the contrary) the research, development and experimental costs, losses, expenses and other related deductions—including amounts paid or accrued for the perfbrmance of research or similar activities by another person; qualified research expenses within the meaning of section 44F(b); amounts paid or 95 Stat. 241. accrued for the use of, or the right to use, research or any of the items specified in subsection (h)(3)(B)(i); and a proper allowance for amounts incurred for the acquisition of any of the items specified in subsection (h)(3)(B)(i)—

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