- 18 - royalty income did not arise from transactions in export property (i.e., the income arose from disqualified intangibles). OPINION A. The Statutes In 1971, Congress enacted the domestic international sales corporation (DISC) provisions (sections 991 through 997), see Revenue Act of 1971, Pub. L. 92-178, sec. 501, 85 Stat. 497, 535, to provide an export tax incentive to U.S. businesses and to improve the country’s balance of payments, see S. Rept. 92-437, at 90 (1971), 1972-1 C.B. 559, 609. The DISC provisions attempted to equalize tax treatment between U.S. companies that sold goods in foreign markets regardless of whether the goods were made in the United States. These provisions allowed domestic corporations to defer taxes on a substantial portion of profits from export sales (similar to the tax benefits available to corporations manufacturing abroad through foreign subsidiaries). See H. Rept. 92-533, at 58 (1971), 1972-1 C.B. 498, 529; S. Rept. 92-437, supra at 90, 1972-1 C.B. at 609. In 1984, Congress supplemented the DISC provisions with the foreign sales corporation (FSC) provisions (sections 921 through 927), see Deficit Reduction Act of 1984, Pub. L. 98-369, sec. 801, 98 Stat. 494, 985, in order to comply with the General Agreement on Tariffs and Trade, see S. Prt. 98-169 (Vol. I), at 635 (Comm. Print 1984). Under the FSC provisions, a taxpayer may permanently excludePage: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Next
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