26 U.S.C. § 991: Taxation of a domestic international sales corporation

For purposes of the taxes imposed by this subtitle upon a DISC (as defined in section 992(a)), a DISC shall not be subject to the taxes imposed by this subtitle. For purposes of applying the Internal Revenue Code of 1986 [formerly I.R.C. 1954], the taxable year of each DISC which begins before January 1, 1985 , and which (but for this paragraph) would include January 1, 1985 , shall close on December 31, 1984 . For purposes of such Code, the requirements of section 992(a)(1)(B) of such Code (relating to percentage of qualified export assets on last day of the taxable year) shall not apply to any taxable year ending on December 31, 1984 . To the extent provided in regulations prescribed by the Secretary of the Treasury or his delegate, no addition to tax shall be made under section 6654 or 6655 of such Code with respect to any underpayment of any installment required to be paid before April 13, 1985 , to the extent the underpayment was created or increased by reason of subparagraph (A). For purposes of applying the Internal Revenue Code of 1986 with respect to actual distributions made after December 31, 1984 , by a DISC or former DISC which was a DISC on December 31, 1984 , any accumulated DISC income of a DISC or former DISC (within the meaning of section 996(f)(1) of such Code) which is derived before January 1, 1985 , shall be treated as previously taxed income (within the meaning of section 996(f)(2) of such Code) with respect to which there had previously been a deemed distribution to which section 996(e)(1) of such Code applied. For purposes of the preceding sentence, the term ‘actual distribution’ includes a distribution in liquidation, and the earnings and profits of any corporation receiving a distribution not included in gross income by reason of the preceding sentence shall be increased by the amount of such distribution. Subparagraph (A) shall not apply to the distribution of any accumulated DISC income of a DISC or former DISC to which section 995(b)(2) of such Code applied by reason of any revocation or disqualification (other than a revocation which under regulations prescribed by the Secretary results solely from the provisions of this title [title VIII, §§ 801–805, of Pub. L. 98–369 , see Effective Date of 1984 Amendment note set out under section 245 of this title ]. such amount shall not be included in the gross income of any member of such organization when distributed in the form of a patronage dividend or otherwise, and no deduction shall be allowed to such organization by reason of any such distribution. Notwithstanding section 995(b) of such Code, if a shareholder of a DISC elects the application of this paragraph, any qualified distribution shall be treated, for purposes of such Code, as received by such shareholder in 10 equal installments on the last day of each of the 10 taxable years of such shareholder which begins after the first taxable year of such shareholder beginning in 1984. The preceding sentence shall apply without regard to whether the DISC exists after December 31, 1984 . in 1984, and after the date in 1984 on which the taxable year of such shareholder begins. The Secretary of the Treasury or his delegate may by regulations provide for the election by any shareholder to be treated as receiving a qualified distribution over such shorter period as the taxpayer may elect. Any election under this paragraph shall be made at such time and in such manner as the Secretary of the Treasury or his delegate may prescribe. Except to the extent provided in regulations, section 367 of such Code shall not apply to transfers made before January 1, 1986 (or, if later, the date 1 year after the date on which the corporation ceases to be a DISC), to a FSC of qualified export assets (as defined in section 993(b) of such Code) held on August 4, 1983 , by a DISC in a transaction described in section 351 or 368(a)(1) of such Code. Under regulations prescribed by the Secretary, if any controlled group of corporations of which a DISC is a member establishes a FSC, then any DISC which is a member of such group shall be treated as having terminated its DISC status. For purposes of this subsection, the terms ‘DISC’ and ‘former DISC’ have the respective meanings given to such terms by section 992 of such Code.” makes an election under [former] section 927(f)(1) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] to be treated as a FSC, or elects not to be treated as an export trade corporation with respect to taxable years beginning after December 31, 1984 , makes an election described in paragraph (1), and transfers before January 1, 1986 , any portion of its property to a FSC in a transaction described in section 351 or 368(a)(1), For purposes of this subsection, the term ‘export trade corporation’ has the meaning given such term by section 971 of the Internal Revenue Code of 1986.”