Microsoft Corporation - Page 38




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              Petitioner claims that because computer software involves a             
         creative industry where important jobs are performed in the United           
         States, it belongs in the parenthetical.  Respondent posits that the         
         question is not whether jobs are being performed in the United               
         States but rather whether jobs that also could be performed in the           
         United States are moved offshore because copyrights and other                
         intangibles are exported under license.  We agree with respondent.           
              (2)  The temporary regulation reflects Congress’ decision not           
         to expand export property treatment for intangibles beyond                   
         copyrights in motion pictures and sound recordings.  The 1976 and            
         1982 amendments to the DISC provisions reflected Congress’                   
         continuing concern with the cost and revenue effects of the DISC             
         regime.  Despite pleas from the representatives of the software              
         industry for a change in the statutory language to include computer          
         software as export property, section 993(c)(2)(B) was reenacted9 as          
         section 927(a)(2)(B) without the requested inclusion, apparently on          
         the basis that the requested change would not be revenue neutral and         
         that U.S. jobs would be moved offshore.  See TSR, Inc. & Sub. v.             
         Commissioner, 96 T.C. 903, 916-917 (1991).  Had Congress desired to          
         make FSC benefits available to computer software copyrights in 1984,         



               9    The 1984 FSC legislation replaced many of the tax rules           
          that had been applicable to DISCs.  DISCs were not abolished;               
          however, their tax benefits were limited, and an interest charge            
          on tax-deferred amounts was imposed on DISC shareholders.  See              
          Deficit Reduction Act of 1984, Pub. L. 98-369, sec. 802(b),                 
          98 Stat. 494, 997.                                                          





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