Summary
Tax Executives Institute's International Tax Committee
Restriction of the export-source rules under IRC section 863(b) would increase compliance burdens on US corporations using foreign sales subsidiaries and would be contrary to the intent of the General Agreement on Tariffs and Trade. Section 863 has allowed two methods, the independent factory method and the 50-50 method to be used to determine the source of foreign income. The Tax Court found that the independent factory price method was not mandated for most taxpayers in Intel v. Commissioner. Congress is trying to reverse Intel while the case is still on appeal.See the full content of this document
Extract
Proposed amendment of export-source rule.
Tax Executives Institute (TEI) understands that there is a proposal in pending Uruguay Round GATT funding legislation that would amend the export-source rule under section 863(b) of the Internal Revenue Code. The proposal, which reportedly has been approved by the House Ways and Means Committee, would effectively reverse the Tax Court's 1993 pro-taxpayer decision in Intel Corp. v. Commissioner.
As the p...See the full content of this document
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