(6) gains from the sale or exchange of stock or securities, (7) gains from futures transactions in any commodity on, or subject to the rules of, a board of trade or commodity exchange (other than gains which arise out of bona fide hedging transaction reasonably necessary to conduct the business of the FSC in the manner in which such business is customarily conducted by other),

(8) amounts includible in computing the taxable income of the corporation under part I of subchapter J, and

(9) gains from the sale or other disposition of any interest in an estate or trust.

(d) OTHER DEFINITIONS.-For purposes of this subpart

(1) CARRYING CHARGES.-The term "carrying charges'

means

(A) carrying charges, and

(B) under regulations prescribed by the Secretary, any amount in excess of the price for an immediate cash sale and any other unstated interest.

(2) TRANSACTION.

(A) IN GENERAL.—The term "transaction" means

(i) any sale, exchange or other disposition,

(ii) any lease or rental, and

(iii) any furnishing of services

(B) GROUPING OF TRANSACTIONS.-To the extent provided in regulations, any provision of this subpart which, but for this subparagraph, would be applied on a transaction-bytransaction basis may be applied by the taxpayer on the basis of groups of transactions based on product lines or recognized industry or trade usage. Such regulations may permit different groupings for different purposes.

(3) UNITED STATES DEFINED.-The term "United States" in cludes the Comnmonwealth of Puerto Rico.

(4) CONTROLLED GROUP OF CORPORATIONS.-The term "con trolled group of corporations" has the meaning given to such term by section 1563(a), except that

(A) "more than 50 percent" shall be substituted for "at least 80 percent" each place it appears therein, and

(B) section 1563(b) shall not apply.

(5) POSSESSIONS.-The term "possession of the United States" means Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and the Virgin Islands of the United States.

(6) SECTION 923 (a) (2) NON-EXEMPT INCOME.-The term "sec tion 923(a)(2) nonexempt income" means any foreign trade income from a transaction with respect to which paragraph (1) or (2) of section 925(a) does not apply and which is not exempt foreign trade income.

(e) SPECIAL RULES.

(1) SOURCE RULES FOR RELATED PERSONS.-Under regulations, the income of a person described in section 482 from a transaction giving rise to foreign trading gross receipts of a FSC which is treated as from sources outside the United States shall not exceed the amount which would be treated as foreign source income earned by such person if the pricing rule under section

994 which corresponds to the rule used under section 925 with respect to such transaction applied to such transaction.

(2) PARTICIPATION IN INTERNATIONAL BOYCOTTS, ETC.-Under regulations prescribed by the Secretary, the exempt foreign trade income of a FSC for any taxable year shall be limited under rules simlar to the rules of clauses (i) and (ii) of section 995(b)(1)(F).

(3) EXCHANGE OF INFORMATION REQUIREMENTS.-For purposes of this title, the term "FSC" shall not include any corporation which was created or organized under the laws of any foreign country unless, at the time such corporation was created or organized, there was in effect between such country and the United States

(A) a bilateral or multilateral agreement described in section 274(h)(6)(C), or

(B) an income tax treaty with respect to which the Secretary certifies that the exchange of information program with such country under such treaty carries out the purposes of this paragraph.

(4) DISALLOWANCE OF TREATY BENEFITS.-Any corporation electing to be treated as a FSC under subsection (f)(1) may not claim any benefits under any income tax treaty between the United States and any foreign country.

(5) EXEMPTION FROM CERTAIN OTHER TAXES.-No tax shall be imposed by any jurisdiction described in subsection (d)(5) on any foreign trade income derived before January 1, 1987. (f) ELECTION OF STATUS AS FSC (AND AS SMALL FSC).

(1) ELECTION.

(A) TIME FOR MAKING.-An election by a corporation under section 922(a)(2) to be treated as a FSC, and an election under section 922(b)(1) to be a small FSC, shall be made by such corporation for a taxable year at any time during the 90-day period immediately preceding the beginning of the taxable year, except that the Secretary may give his consent to the making of an election at such other times as he may designate.

(B) MANNER OF ELECTION.-An election under subparagraph (A) shall be made in such manner as the Secretary shall prescribe and shall be valid only if all persons who are shareholders in such corporation on the first day of the first taxable year for which such election is effective consent to such election.

(2) EFFECT OF ELECTION.-If a corporation makes an election under paragraph (1), then the provisions of this subpart shall apply to such corporation for the taxable year of the corporation for which made and for all succeeding taxable years. (3) TERMINATION OF ELECTION.—

(A) REVOCATION.-An election under this subsection made by any corporation may be terminated by revocation of such election for any taxable year of the corporation after the first taxable year of the corporation for which the election is effective. A termination under this paragraph shall be effective with respect to such election

(i) for the taxable year in which made, if made at any time during the first 90 days of such taxable year,

or

(ii) for the taxable year following the taxable year in which made, if made after the close of such 90 days, and for all succeeding taxable years of the corporation. Such termination shall be made in such manner as the Secretary shall prescribe by regulations.

(B) CONTINUED FAILURE TO BE A FSC.-If a corporation is not a FSC for each of any 5 consecutive taxable years of the corporation for which an election under this subsection is effective, the election to be a FSC shall be terminated and not be in effect for any taxable year of the corporation after such 5th year.

E. EXPORT TRADING COMPANIES

Export Trading Company Act of 1982, as amended

[15 U.S.C. 4001, 12 U.S.C. 1843, 15 U.S.C. 4011, 15 U.S.C. 6a, P.L. 97-290, as amended by P.L. 98-181 and P.L. 100-418]

TITLE I-GENERAL PROVISIONS

SHORT TITLE

SEC. 101. This title may be cited as the "Export Trading Compaly Act of 1982".

FINDINGS; DECLARATION OF PURPOSE

SEC. 102. (a) The Congress finds that

(1) United States exports are responsible for creating and maintaining one out of every nine manufacturing jobs in the United States and for generating one out of every seven dollars of total United States goods produced;

(2) the rapidly growing service-related industries are vital to the well-being of the United States economy inasmuch as they create jobs for seven out of every ten Americans, provide 65 per centum of the Nation's gross national product, and offer the greatest potential for significantly increasing industrial trade involving finished products;

(3) trade deficits contribute to the decline of the dollar on international currency markets and have an inflationary impact on the United States economy;

(4) tens of thousands of small- and medium-sized United States businesses produce exportable goods or services but do not engage in exporting;

(5) although the United States is the world's leading agricultural exporting nation, many farm products are not marketed as widely and effectively abroad as they could be through export trading companies;

(6) export trade services in the United States are fragmented into a multitude of separate functions, and companies attempting to offer export trade services lack financial leverage to reach a significant number of potential United States export

ers;

(7) the United States needs well-developed export trade intermediaries which can achieve economies of scale and acquire expertise enabling them to export goods and services profitably, at low per unit cost to producers;

(8) the development of export trading companies in the United States has been hampered by business attitudes and by Government regulations;

(9) those activities of State and local governmental authori ties which initiate, facilitate, or expand exports of goods and services can be an important source for expansion of total United States exports, as well as for experimentation in the de velopment of innovative exports programs keyed to local State, and regional economic needs;

(10) if United States trading companies are to be successfu in promoting United States exports and in competing with for eign trading companies, they should be able to draw on the re sources, expertise, and knowledge of the United States bankin system, both in the United States and abroad; and

(11) the Department of Commerce is responsible for the de velopment and promotion of United States exports, and esp cially for facilitating the export of finished products by Unite States manufacturers.

(b) It is the purpose of this Act to increase United States expor of products and services by encouraging more efficient provision export trade services to United States producers and suppliers, particular by establishing an office within the Department of Co merce to promote the formation of export trade associations a export trading companies, by permitting bank holding companie bankers' banks, and Edge Act corporations and agreement corpor tions that are subsidiaries of bank holding companies to invest export trading companies, by reducing restrictions on trade finan ing provided by financial institutions, and by modifying the app cation of the antitrust laws to certain export trade.

DEFINITIONS

SEC. 103. (a) For purposes of this title

(1) the term "export trade" means trade or commerce goods or services produced in the United States which are ported, or in the course of being exported, from the Unit States to any other country;

(2) the term "services" includes, but is not limited to, counting, amusement, architectural, automatic data proces ing, business, communications, construction franchising and censing, consulting, engineering, financial, insurance, lega management, repair, tourism, training, and transportatio services;

(3) the term "export trade services" includes, but is not limi ed to, consulting, international market research, advertising marketing, insurance, product research and design, legal a sistance, transportation, including trade documentation an freight forwarding, communication and processing of foreig orders to and for exporters and foreign purchasers, warehous ing, foreign exchange, financing, and taking title to goods when provided in order to facilitate the export of goods or serv ices produced in the United States;

(4) the term "export trading company" means a person, part nership, association, or similar organization, whether operated for profit or as a nonprofit organization, which does business under the laws of the United States or any State and which is organized and operated principally for purposes of