- 54 -
vides in pertinent part:
(d) Foreign Base Company Sales Income.--
(1) In General.--For purposes of subsection
(a)(2), the term "foreign base company sales income"
means income (whether in the form of profits, commis-
sions, fees, or otherwise) derived in connection with
the purchase of personal property from a related person
and its sale to any person * * * where--
(A) the property which is purchased * * * is
manufactured, produced, grown, or extracted out-
side the country under the laws of which the con-
trolled foreign corporation is created or organiz-
ed, and
(B) the property is sold for use, consump-
tion, or disposition outside such foreign country
* * *.
The legislative history of subpart F provides some guidance
on the meaning of foreign base company sales income. In its
explanation of subpart F, the Senate Finance Committee stated:32
The "foreign base company sales income" referred
to here means income from the purchase and sale of
property, without any appreciable value being added to
the product by the selling corporation. This does not,
for example, include cases where any significant amount
of manufacturing, major assembling, or construction
activity is carried on with respect to the product by
the selling corporation. On the other hand, activity
such as minor assembling, packaging, repackaging or
labeling will not be sufficient to exclude the profits
31(...continued)
"foreign base company sales income" as defined in sec. 954(d).
Sec. 954(a)(2).
32 The House Ways and Means Committee used similar language in
its report on subpart F. H. Rept. 1447, 87th Cong., 2d Sess.
(1962), 1962-3 C.B. 402, 466.
Page: Previous 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 NextLast modified: May 25, 2011