Page:United States Statutes at Large Volume 98 Part 1.djvu/1038

 98 STAT. 990

PUBLIC LAW 98-369—JULY 18, 1984 "(A) the export property or services— "(i) are for ultimate use in the United States, or "(ii) are for use by the United States or any instrumentality thereof and such use of export property or services is required by law or regulation, "(B) such transaction is accomplished by a subsidy granted by the United States or any instrumentality thereof, or "(C) such receipts are from another FSC which is a member of the same controlled group of corporations of which such corporation is a member. "(2) INVESTMENT INCOME; CARRYING CHARGES.—The term 'foreign trading gross receipts' shall not include any investment income or carrying charges.

26 USC 925.

"SEC. 925. TRANSFER PRICING RULES.

"(a) IN GENERAL.—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— "(1) 1.83 percent of the foreign trading gross receipts derived from the sale of such property by such FSC, "(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 "(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. "(b) RULES FOR COMMISSIONS, RENTALS, AND MARGINAL COSTING.—

The Secretary 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 FSC is seeking to establish or maintain a market for export property. "(c) REQUIREMENTS FOR USE OF ADMINISTRATIVE PRICING RULES.—

Ante, p. 987.

Ante, p. 985.

A sale by a FSC meets the requirements of this subsection if— "(1) all of the activities described in section 924(e) attributable to such sale, and "(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). "(d) LIMITATION ON GROSS RECEIPTS PRICING RULE.—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. "(e) TAXABLE INCOME.—For purposes of this section, the taxable income of a FSC shall be determined without regard to section 921.

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