Application of this section.
Application of this section. It is necessary to determine whether a foreign corporation is a related foreign export corporation with respect to a DISC for the following two purposes:
(i) Qualified export assets. Under § 1.993–2(g), the stock or securities of a related foreign export corporation held by the DISC are qualified export assets.
(ii) Qualified export receipts. Under § 1.993–1 (e), (f), and (g), certain receipts of the DISC with respect to stock or securities of a related foreign export corporation held by the DISC are qualified export receipts.
(b) Foreign international sales corporation—(1) In general. A foreign corporation is a foreign international sales corporation with respect to a taxable year of a DISC if—
(i) On each day during such taxable year of the DISC on which the foreign corporation has stock issued and outstanding, the DISC owns directly stock of the foreign corporation possessing more than 50 percent of the total combined voting power of all classes of stock of the foreign corporation entitled to vote as determined under the principles of § 1.957–1(b) (relating to definition of controlled foreign corporation),
(ii) 95 percent or more of such foreign corporation's gross receipts (as defined in § 1.993–6) for its taxable year ending with or within such taxable year of the DISC consists of qualified export receipts described in § 1.993–1 (b) through (e) or interest described in § 1.993–1(g) derived from any obligations described in § 1.993–2 (d) or (e), and
(iii) The sum of the adjusted bases of the assets of the foreign corporation which are qualified export assets described in § 1.993–2 (b) through (e) and which are held by the foreign corporation at the close of its taxable year which ends with or within such taxable year of the DISC equals or exceeds 95 percent of the sum of the adjusted bases of all assets held by the foreign corporation at the close of such taxable year.