Instructions For Form 1120-Ic-Disc - 2005 (Page 4 of 15) in pdf

Qualified export assets are any of the

had at the start of the month in which it

See Pub. 538 for more information on

following:

made the loan.

accounting periods and tax years.

3. Be evidenced by a note (or other

1. Export property (see below).

Rounding Off to Whole

written evidence of indebtedness) with a

2. Assets used primarily in connection

stated maturity date no more than 5 years

with the sale, lease, rental, storage,

Dollars

after the date of the loan.

handling, transportation, packaging,

4. Be made to a person engaged in a

The IC-DISC may round off cents to whole

assembly, or servicing of export property, or

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

dollars on its return and schedules. If the

the performance of engineering or

or extracting export property.

IC-DISC does round to whole dollars, it must

architectural services described in item 7 of

5. Be designated as a producer’s loan

round all amounts. To round, drop amounts

Qualified export receipts above or

when made.

under 50 cents and increase amounts from

managerial services in furtherance of the

50 to 99 cents to the next dollar (for

production of qualified export receipts

example, $1.39 becomes $1 and $2.50

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

For more information, see Schedule Q

becomes $3).

3. Accounts receivable produced by

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

transactions listed under Qualified export

of Compliance With the Rules for Producer’s

If two or more amounts must be added to

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

Loans, and Regulations section 1.993-4.

figure the amount to enter on a line, include

4. Temporary investments, such as

cents when adding the amounts and round

A related foreign export corporation

money and bank deposits, in an amount

off only the total.

includes the following:

reasonable to meet the IC-DISC’s needs for

1. A foreign international sales

working capital.

Recordkeeping

5. Obligations related to a producer’s

corporation is a related foreign export

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

corporation if:

loan.

•

they may be needed for the administration

6. Stock or securities of a related foreign

The IC-DISC directly owns more than

of any provision of the Internal Revenue

export corporation (defined below).

50% of the total voting power of the foreign

Code. Usually, records that support an item

7. Certain obligations that are issued or

corporation’s stock;

•

of income, deduction, or credit on the return

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

For the tax year that ends with or

must be kept for 3 years from the date the

the Foreign Credit Insurance Association

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

return is due or filed, whichever is later.

and that the IC-DISC acquires from such

of the foreign corporation’s gross receipts

Keep records that verify the IC-DISC’s basis

Bank or Association or from the person who

consists of the qualified export receipts

in property for as long as they are needed to

sold or bought the goods or services from

described in items 1-4 of Qualified export

figure the basis of the original or

which the obligations arose.

receipts above and interest on the qualified

replacement property.

8. Certain obligations held by the

export assets listed in items 3 and 4 of

The IC-DISC should keep copies of all

IC-DISC that were issued by a domestic

Qualified export assets above; and

•

filed returns. They help in preparing future

corporation organized to finance export

The adjusted basis of the qualified

and amended returns.

property sales under an agreement with the

export assets in items 1-4 of Qualified

Export-Import Bank under which the

export assets that the foreign corporation

Definitions

domestic corporation makes export loans

held at the end of the tax year is at least

that the Export-Import Bank guarantees.

95% of the adjusted basis of all assets it

The following definitions are based on

9. Amounts (other than reasonable

held then.

sections 993 and 994.

working capital) on deposit in the United

2. A real property holding company is

Note. “United States,” as used in the

States used to acquire qualified export

a related foreign export corporation if:

following instructions, includes Puerto Rico

•

assets within the time provided by

The IC-DISC directly owns more than

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

Regulations section 1.993-2(j).

50% of the total voting power of the foreign

states and the District of Columbia.

corporation’s stock and

•

See Regulations section 1.993-2 for

Its exclusive function is to hold title to

Section 993

more information.

real property located outside the United

Qualified export receipts are any of the

States for the exclusive use (under lease or

Export property must be:

following:

otherwise) of the IC-DISC and applicable

1. Made, grown, or extracted in the

foreign law forbids the IC-DISC to hold title

1. Gross receipts from selling,

United States by a person other than an

to the property.

exchanging, or otherwise disposing of

IC-DISC.

3. An associated foreign corporation

export property.

2. Neither excluded under section

is a related foreign export corporation if:

2. Gross receipts from leasing or renting

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

•

The IC-DISC or a controlled group of

export property that the lessee uses outside

section 993(c)(3).

corporations to which the IC-DISC belongs

the United States.

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

owns less than 10% of the total voting

3. Gross receipts from supporting

the ordinary course of a trade or business,

power of the foreign corporation’s stock

services related to any qualified sale,

by or to an IC-DISC for direct use,

(section 1563 defines a controlled group in

exchange, lease, rental, or other disposition

consumption, or disposition outside the

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

of export property by the IC-DISC.

United States.

define ownership) and

4. Gross receipts from selling,

4. Property not more than 50% of the

•

The IC-DISC’s ownership of the

exchanging, or otherwise disposing of

fair market value of which is attributable to

qualified export assets that are not export

foreign corporation’s stock or securities

articles imported into the United States.

reasonably furthers transactions that lead to

property, but only if there is a recognized

5. Neither sold nor leased by or to

qualified export receipts for the IC-DISC.

gain.

another IC-DISC that, immediately before or

5. Dividends (or amounts includible in

after the transaction, either belongs to the

gross income under section 951) with

See Regulations section 1.993-5 for

same controlled group (defined in section

respect to stock of a related foreign export

more information about related foreign

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

corporation (defined below).

export corporations.

your IC-DISC in a way that would result in

6. Interest on any obligation that is a

losses being denied under section 267.

Gross receipts are the IC-DISC’s total

qualified export asset.

receipts from selling, leasing, or renting

7. Gross receipts for engineering or

See Regulations section 1.993-3 for

property that the corporation holds for sale,

architectural services for construction

details.

lease, or rent in the ordinary course of its

projects outside the United States.

A producer’s loan must meet all the

trade or business and gross income from all

8. Gross receipts for the performance of

following terms:

other sources. For commissions on selling,

managerial services in furtherance of the

1. Satisfy the requirements of sections

leasing, or renting property, include gross

production of other qualified export receipts

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

receipts from selling, leasing, or renting the

of an IC-DISC.

2. Not raise the unpaid balance due the

property on which the commissions arose.

For more information, see Regulations

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

See Regulations section 1.993-6 for more

section 1.993-1.

the level of accumulated IC-DISC income it

information.

-4-

Instructions for Form 1120-IC-DISC

Instructions For Form 1120-Ic-Disc - 2005 Page 4

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