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 Rev. Rul. 73-68

1973-1 C.B. 336

Sec. 861

IRS Headnote

Extent to which dividends received from a DISC or former DISC will be treated as income from sources without the United States for purposes of the 20 percent test under section 861(a)(1)(B) and 861(a)(2)(A) of the Code.

Full Text

Rev. Rul. 73-68

Sections 862(a)(1) and (2) of the Internal Revenue Code of 1954, by reference to sections 861(a)(1)(B) and 861(a)(2)(A) of the Code, provide, in part, that interest and dividends paid by United States corporations will be treated as income from sources without the United States if less than 20 percent of the gross income of such corporations is derived from United States sources for the 3-year period ending with the close of the taxable year of the corporation preceding the payment of such interest or the declaration of such dividends.

Section 862(a)(2), by reference to section 861(a)(2)(D) of the Code, provides that amounts received as dividends from a Domestic International Sales Corporation ("DISC") or former DISC will be treated as income from sources without the United States to the extent attributable, as determined under regulations prescribed by the Secretary or his delegate, to qualified export receipts of the DISC (other than certain interest and gains). Held, for purposes of determining whether interest or dividends paid by United States corporations will be treated as income from sources within or without the United States under the 20 percent tests of sections 861(a)(1)(B) and 861(a)(2)(A), amounts received by United States corporations as dividends from a DISC or former DISC will be treated as income of the United States corporations derived from sources without the United States to the extent such dividends are attributable to qualified export receipts of the DISC or former DISC (other than the interest or gains specifically excluded under section 861(a)(2)(D)).