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):
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