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is not taxable on its profits. * * * Instead, the
DISC's shareholder is taxed each year on a specified
portion of the DISC's earnings and profits as deemed
distributions, while the remaining portion of profits
is not taxed until actually withdrawn from the DISC or
until the erstwhile DISC ceases to qualify as a DISC.
* * *
To ensure that a DISC’s tax-deferred profits are
used for export activities, Congress provided strict
requirements for qualification as a DISC. * * *
* * * * * * *
Because of minimal capitalization and
organizational requirements, a DISC may be no more than
a corporation that serves primarily as a bookkeeping
device to measure the amount of export earnings that
are subject to tax deferral. [Citation omitted.]
In that case, we concluded that CVI was organized and
operated solely as an accounting device for computing income
subject to deferral under the DISC provisions. Id. at 670.
Based on the record in the instant case, we similarly conclude
that CVI was merely an accounting device to defer taxation of
income during the taxable years in issue by qualifying as a DISC.
The parties agree that the only question in dispute
concerning CVI’s qualification as a DISC for its relevant taxable
years is whether the adjusted basis of CVI's qualified export
assets exceeded 95 percent of all of its assets at the close of
those taxable years (95 percent of assets test). Sec.
992(a)(1)(B). The parties further agree that resolution of that
question depends solely upon whether CVI's transfers of funds to
CV prior to the close of each of those years were effective to
complete (1) the purchase from CV of qualified export
receivables, (2) the reimbursement of CV for certain expenses,
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