Instructions For Form 1120-Ic-Disc - 2004 (Page 4 of 15) in pdf

tax year that conforms to the tax year of any

7. Gross receipts for engineering or

A producer’s loan must meet all the

such shareholder. See section 441(h).

architectural services for construction

following terms:

projects outside the United States.

1. Satisfy the requirements of sections

Calendar year. If the IC-DISC is required to

8. Gross receipts for the performance of

993(d)(2) and (3).

use the calendar year as its annual

managerial services in furtherance of the

2. Not raise the unpaid balance due the

accounting period, the IC-DISC must

production of other qualified export receipts

IC-DISC on all of its producer’s loans above

maintain its books and records and report its

of an IC-DISC.

the level of accumulated IC-DISC income it

income and expenses for the period from

had at the start of the month in which it

January 1 through December 31 of each

For more information, see Regulations

made the loan.

year.

section 1.993-1.

3. Be evidenced by a note (or other

Fiscal year. A fiscal year is 12 consecutive

Qualified export assets are any of the

written evidence of indebtedness) with a

months ending on the last day of any month

following:

stated maturity date no more than 5 years

except December. A 52-53-week year is a

1. Export property (see below).

after the date of the loan.

fiscal year that varies from 52 to 53 weeks.

2. Assets used primarily in connection

4. Be made to a person engaged in a

with the sale, lease, rental, storage,

U.S. trade or business of making, growing,

Rounding Off to Whole

handling, transportation, packaging,

or extracting export property.

Dollars

assembly, or servicing of export property, or

5. Be designated as a producer’s loan

the performance of engineering or

when made.

The IC-DISC may round off cents to whole

architectural services described in item 7 of

dollars on its return and schedules. If the

For more information, see Schedule Q

Qualified export receipts above or

IC-DISC does round to whole dollars, it must

managerial services in furtherance of the

(Form 1120-IC-DISC), Borrower’s Certificate

round all amounts. To round, drop amounts

production of qualified export receipts

of Compliance With the Rules for Producer’s

under 50 cents and increase amounts from

described in items 1, 2, 3, and 7 above.

Loans, and Regulations section 1.993-4.

50 to 99 cents to the next dollar (for

3. Accounts receivable produced by

A related foreign export corporation

example, $1.39 becomes $1 and $2.50

transactions listed under Qualified export

includes the following:

becomes $3).

receipts, items 1-4, 7, or 8 above.

1. A foreign international sales

If two or more amounts must be added to

4. Temporary investments, such as

corporation is a related foreign export

figure the amount to enter on a line, include

money and bank deposits, in an amount

corporation if:

cents when adding the amounts and round

reasonable to meet the IC-DISC’s needs for

•

The IC-DISC directly owns more than

off only the total.

working capital.

50% of the total voting power of the foreign

5. Obligations related to a producer’s

corporation’s stock;

Recordkeeping

loan.

•

For the tax year that ends with or

6. Stock or securities of a related foreign

Keep the IC-DISC’s records for as long as

within the IC-DISC’s tax year, at least 95%

export corporation (defined below).

they may be needed for the administration

of the foreign corporation’s gross receipts

7. Certain obligations that are issued or

of any provision of the Internal Revenue

consists of the qualified export receipts

insured by the U.S. Export-Import Bank or

Code. Usually, records that support an item

described in items 1-4 of Qualified export

the Foreign Credit Insurance Association

of income, deduction, or credit on the return

receipts above and interest on the qualified

and that the IC-DISC acquires from such

must be kept for 3 years from the date the

export assets listed in items 3 and 4 of

Bank or Association or from the person who

return is due or filed, whichever is later.

Qualified export assets above; and

sold or bought the goods or services from

•

Keep records that verify the IC-DISC’s basis

The adjusted basis of the qualified

which the obligations arose.

in property for as long as they are needed to

export assets in items 1-4 of Qualified

8. Certain obligations held by the

figure the basis of the original or

export assets that the foreign corporation

IC-DISC that were issued by a domestic

replacement property.

held at the end of the tax year is at least

corporation organized to finance export

The IC-DISC should keep copies of all

95% of the adjusted basis of all assets it

property sales under an agreement with the

filed returns. They help in preparing future

held then.

Export-Import Bank under which the

and amended returns.

2. A real property holding company is

domestic corporation makes export loans

a related foreign export corporation if:

that the Export-Import Bank guarantees.

•

Definitions

The IC-DISC directly owns more than

9. Amounts (other than reasonable

50% of the total voting power of the foreign

working capital) on deposit in the United

The following definitions are based on

corporation’s stock and

States used to acquire qualified export

sections 993 and 994.

•

Its exclusive function is to hold title to

assets within the time provided by

Note. “United States,” as used in the

real property located outside the United

Regulations section 1.993-2(j).

following instructions, includes Puerto Rico

States for the exclusive use (under lease or

and U.S. possessions, as well as the 50

otherwise) of the IC-DISC and applicable

See Regulations section 1.993-2 for

states and the District of Columbia.

foreign law forbids the IC-DISC to hold title

more information.

to the property.

Export property must be:

Section 993

3. An associated foreign corporation

1. Made, grown, or extracted in the

is a related foreign export corporation if:

Qualified export receipts are any of the

United States by a person other than an

•

The IC-DISC or a controlled group of

following:

IC-DISC.

corporations to which the IC-DISC belongs

1. Gross receipts from selling,

2. Neither excluded under section

owns less than 10% of the total voting

exchanging, or otherwise disposing of

993(c)(2) nor declared in short supply under

power of the foreign corporation’s stock

export property.

section 993(c)(3).

(section 1563 defines a controlled group in

2. Gross receipts from leasing or renting

3. Held mainly for sale, lease, or rent in

this sense, and sections 1563(d) and (e)

export property that the lessee uses outside

the ordinary course of a trade or business,

define ownership) and

the United States.

by or to an IC-DISC for direct use,

•

The IC-DISC’s ownership of the

3. Gross receipts from supporting

consumption, or disposition outside the

foreign corporation’s stock or securities

services related to any qualified sale,

United States.

reasonably furthers transactions that lead to

exchange, lease, rental, or other disposition

4. Property not more than 50% of the

qualified export receipts for the IC-DISC.

of export property by the IC-DISC.

fair market value of which is attributable to

4. Gross receipts from selling,

articles imported into the United States.

See Regulations section 1.993-5 for

exchanging, or otherwise disposing of

5. Neither sold nor leased by or to

more information about related foreign

qualified export assets that are not export

another IC-DISC that, immediately before or

export corporations.

property, but only if there is a recognized

after the transaction, either belongs to the

gain.

Gross receipts are the IC-DISC’s total

same controlled group (defined in section

5. Dividends (or amounts includible in

receipts from selling, leasing, or renting

993(a)(3)) as your IC-DISC or is related to

gross income under section 951) with

property that the corporation holds for sale,

your IC-DISC in a way that would result in

respect to stock of a related foreign export

lease, or rent in the ordinary course of its

losses being denied under section 267.

corporation (defined below).

trade or business and gross income from all

6. Interest on any obligation that is a

See Regulations section 1.993-3 for

other sources. For commissions on selling,

qualified export asset.

details.

leasing, or renting property, include gross

-4-

Instructions for Form 1120-IC-DISC

Instructions For Form 1120-Ic-Disc - 2004 Page 4

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