26 U.S.C. § 994
Inter-company pricing rules
# (a) In general
In the case of a sale of export property to a DISC by a person described in section 482, the taxable income of such DISC and such person shall be based upon a transfer price which would allow such DISC 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) 4 percent of the qualified export receipts on the sale of such property by the DISC plus 10 percent of the export promotion expenses of such DISC attributable to such receipts, (2) 50 percent of the combined taxable income of such DISC and such person which is attributable to the qualified export receipts on such property derived as the result of a sale by the DISC plus 10 percent of the export promotion expenses of such DISC attributable to such receipts, or (3) taxable income based upon the sale price actually charged (but subject to the rules provided in section 482).
# (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 DISC is seeking to establish or maintain a market for export property.
# (c) Export promotion expenses
For purposes of this section, the term “export promotion expenses” means those expenses incurred to advance the distribution or sale of export property for use, consumption, or distribution outside of the United States, but does not include income taxes. Such expenses shall also include freight expenses to the extent of 50 percent of the cost of shipping export property aboard airplanes owned and operated by United States persons or ships documented under the laws of the United States in those cases where law or regulations does not require that such property be shipped aboard such airplanes or ships.
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Cited by 7
- 26 CFR § 1.861-8 — Computation of taxable income from sources within the United States and from other sources and activities.
- 26 CFR § 1.992-1 — Requirements of a DISC.
- 26 CFR § 1.993-1 — Definition of qualified export receipts.
- 26 CFR § 1.993-2 — Definition of qualified export assets.
- 26 CFR § 1.993-4 — Definition of producer's loans.
- 26 CFR § 1.994-1 — Inter-company pricing rules for DISC's.
- 26 CFR § 1.994-2 — Marginal costing rules.
Nearby sections (25 sections)
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- 972 · Repealed. Pub. L. 94–455, title XIX, § 1901(a)(120), Oct. 4,…
- 981 · Repealed. Pub. L. 94–455, title X, § 1012(b)(2), Oct. 4, 1976, 90…
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- 988 · Treatment of certain foreign currency transactions
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- 991 · Taxation of a domestic international sales corporation
- 992 · Requirements of a domestic international sales corporation
- 993 · Definitions and special rules
- 994 · Inter-company pricing rules
- 995 · Taxation of DISC income to shareholders
- 996 · Rules for allocation in the case of distributions and losses
- 997 · Special subchapter C rules
- 999 · Reports by taxpayers; determinations
- 1000 · Reserved
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