- 57 -
12(...continued)
(ii) Definition.--For purposes of this
subparagraph, an electing corporation has a
“significant business presence” in a
possession for a taxable year with respect to
a product or type of service if:
(I) the total production costs
(other than direct material costs and
other than interest excluded by
regulations prescribed by the Secretary)
incurred by the electing corporation in
the possession in producing units of
that product sold or otherwise disposed
of during the taxable year by the
affiliated group to persons who are not
members of the affiliated group are not
less than 25 percent of the difference
between (a) the gross receipts from
sales or other dispositions during the
taxable year by the affiliated group to
persons who are not members of the
affiliated group of such units of the
product produced, in whole or in part,
by the electing corporation in the
possession, and (b) the direct material
costs of the purchase of materials for
such units of that product by all
members of the affiliated group from
persons who are not members of the
affiliated group; or
(II) no less than 65 percent of the
direct labor costs of the affiliated
group for units of the product produced
during the taxable year in whole or in
part by the electing corporation or for
the type of service rendered by the
electing corporation during the taxable
year, is incurred by the electing
corporation and is compensation for
services performed in the possession; or
(III) with respect to purchases and
sales by an electing corporation of all
(continued...)
Page: Previous 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 NextLast modified: May 25, 2011