Andrew Mitchel LLC

International Tax Blog - New and Interesting International Tax Issues


IRS Rules Commission Income From Sales is Not FBCSI

2013-08-16

Last week the IRS published PLR 201332007 which concluded that commissions received by the disregarded entity of a controlled foreign corporation was not foreign base company sales income (“FBCSI”) because the disregarded entity made a substantial contribution through the activities of its employees to the manufacture of Products that were manufactured by unrelated parties. See Treas. Reg. §1.954-3(a)(4)(i) and (iv).

A chart of the structure is shown below (click on the image to enlarge):

PLR 201332007

Tags: 951 Subpart F Income, Authority - PLRs / CCAs, Charts - Situational Charts