Page:United States Statutes at Large Volume 98 Part 1.djvu/1039

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 991

"(f) SPECIAL RULE FOR COOPERATIVES.—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). "SEC. 926. DISTRIBUTIONS TO SHAREHOLDERS.

.. '26 USC 926.

"(a) DISTRIBUTIONS MADE FIRST OUT OF FOREIGN TRADE INCOME.—

For purposes of this title, any distribution to a shareholder of a FSC by such FSC which is made out of earnings and profits shall be treated as made— "(1) first, out of earnings and profits attributable to foreign trade income, to the extent thereof, and "(2) then, out of any other earnings and profits. "(b) DISTRIBUTIONS BY FSC TO NONRESIDENT ALIENS AND FOREIGN CORPORATIONS TREATED AS UNITED STATES CONNECTED.—For pur-

poses of this title, any distribution by a FSC which is made out of earnings and profits attributable to foreign trade income to any shareholder of such corporation which is a foreign corporation or a nonresident alien individual shall be treated as a distribution— "(1) which is effectively connected with the conduct of a trade 1 or business conducted through a permanent establishment of such shareholder within the United States, and "(2) of income which is derived from sources within the United States. "(c) FSC INCLUDES FORMER FSC.—For purposes of this section, the term 'FSC includes a former FSC. "SEC. 927. OTHER DEFINITIONS AND SPECIAL RULES.

"(a) EXPORT PROPERTY.—For purposes of this subpart— "(1) IN GENERAL.—The term 'export property' means property— "(A) manufactured, produced, grown, or extracted in the United States by a person other than a FSC, "(B) held primarily for sale, lease, or rental, in the ordinary course of trade or business, by, or to, a FSC, for direct use, consumption, or disposition outside the United States, and "(C) not more than 50 percent of the fair market value of which is attributable to articles imported into the United States. For purposes of subparagraph (C), the fair market value of any article imported into the United States shall be its appraised value, as determined by the Secretary under section 402 of the Tariff Act of 1930 (19 U.S.C. 1401a) in connection with its importation. t "(2) EXCLUDED PROPERTY.—The term 'export property' shall not include— "(A) property leased or rented by a FSC for use by any member of a controlled group of corporations of which such FSC is a member, "(B) patents, inventions, models, designs, formulas, or processes whether or not patented, copyrights (other than films, tapes, records, or similar reproductions, for commer-

26 USC 927.

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