§ 992.
(a)
Definition of “DISC” and “former DISC”
(1)
DISC
For purposes of this title, the term “DISC” means, with respect to any taxable year, a corporation which is incorporated under the laws of any State and satisfies the following conditions for the taxable year:
(A)
95 percent or more of the gross receipts (as defined in section 993(f)) of such corporation consist of qualified export receipts (as defined in section 993(a)),
(B)
the adjusted basis of the qualified export assets (as defined in section 993(b)) of the corporation at the close of the taxable year equals or exceeds 95 percent of the sum of the adjusted basis of all assets of the corporation at the close of the taxable year,
(C)
such corporation does not have more than one class of stock and the par or stated value of its outstanding stock is at least $2,500 on each day of the taxable year, and
(D)
the corporation has made an election pursuant to subsection (b) to be treated as a DISC and such election is in effect for the taxable year.
(2)
Status as DISC after having filed a return as a DISC
(c)
Distributions to meet qualification requirements
(1)
In general
Subject to the conditions provided by paragraph (2), a corporation which for a taxable year does not satisfy a condition specified in paragraph (1)(A) (relating to gross receipts) or (1)(B) (relating to assets) of subsection (a) shall nevertheless be deemed to satisfy such condition for such year if it makes a pro rata distribution of property after the close of the taxable year to its shareholders (designated at the time of such distribution as a distribution to meet qualification requirements) with respect to their stock in an amount which is equal to—
(A)
if the condition of subsection (a)(1)(A) is not satisfied, the portion of such corporation’s taxable income attributable to its gross receipts which are not qualified export receipts for such year,
(B)
if the condition of subsection (a)(1)(B) is not satisfied, the fair market value of those assets which are not qualified export assets on the last day of such taxable year, or
(C)
if neither of such conditions is satisfied, the sum of the amounts required by subparagraphs (A) and (B).
(2)
Reasonable cause for failure
The conditions under paragraph (1) shall be deemed satisfied in the case of a distribution made under such paragraph—
(A)
if the failure to meet the requirements of subsection (a)(1)(A) or (B), and the failure to make such distribution prior to the date on which made, are due to reasonable cause; and
(B)
the corporation pays, within the 30–day period beginning with the day on which such distribution is made, to the Secretary, if such corporation makes such distribution after the 15th day of the 9th month after the close of the taxable year, an amount determined by multiplying (i) the amount equal to 4½ percent of such distribution, by (ii) the number of its taxable years which begin after the taxable year with respect to which such distribution is made and before such distribution is made. For purposes of this title, any payment made pursuant to this paragraph shall be treated as interest.
(3)
Certain distributions made within 8½ months after close of taxable year deemed for reasonable cause
A distribution made on or before the 15th day of the 9th month after the close of the taxable year shall be deemed for reasonable cause for purposes of paragraph (2)(A) if—
(A)
at least 70 percent of the gross receipts of such corporation for such taxable year consist of qualified export receipts, and
(B)
the adjusted basis of the qualified export assets held by the corporation on the last day of each month of the taxable year equals or exceeds 70 percent of the sum of the adjusted basis of all assets held by the corporation on such day.
(d)
Ineligible corporations
The following corporations shall not be eligible to be treated as a DISC—
(1)
a corporation exempt from tax by reason of section 501,
(2)
a personal holding company (as defined in section 542),
(3)
a financial institution to which section 581 applies,
(4)
an insurance company subject to the tax imposed by subchapter L,
(5)
a regulated investment company (as defined in section 851(a)), or
(e)
Coordination with personal holding company provisions in case of certain produced film rents
If—
(1)
a corporation (hereinafter in this subsection referred to as “subsidiary”) was established to take advantage of the provisions of this part, and
(2)
a second corporation (hereinafter in this subsection referred to as “parent”) throughout the taxable year owns directly at least 80 percent of the stock of the subsidiary,
then, for purposes of applying subsection (d)(2) and section 541 (relating to personal holding company tax) to the subsidiary for the taxable year, there shall be taken into account under section 543(a)(5) (relating to produced film rents) any interest in a film acquired by the parent and transferred to the subsidiary as if such interest were acquired by the subsidiary at the time it was acquired by the parent.
(Added [Pub. L. 92–178, title V, § 501], Dec. 10, 1971, [85 Stat. 535]; amended [Pub. L. 94–455, title XIX, § 1906(b)(13)(A)], Oct. 4, 1976, [90 Stat. 1834]; [Pub. L. 97–354, § 5(a)(32)], Oct. 19, 1982, [96 Stat. 1695]; [Pub. L. 98–369, div. A, title VIII, § 802(c)(1)], July 18, 1984, [98 Stat. 999]; [Pub. L. 104–188, title I, § 1616(b)(11)], Aug. 20, 1996, [110 Stat. 1857]; [Pub. L. 110–172, § 11(g)(16)], Dec. 29, 2007, [121 Stat. 2491]; [Pub. L. 115–141, div. U, title IV, § 401(b)(30)], Mar. 23, 2018, [132 Stat. 1203].)