Chapter 3

A DISC must satisfy two ongoing requirements that are substantially more difficult to satisfy than the initial requirements described in chapter 2. This chapter provides an overview of these requirements and examines the consequences of failure to meet either or both of them. Chapters 4 through 9 examine in detail the specific aspects of the ongoing requirements. I

Overview of the Assets Test and the Receipts Test

Each taxable year, a DISC must satisfy two requirements: 95 percent of its gross receipts must constitute qualified export receipts1 and 95 percent of its assets must constitute qualified export assets.2 The purpose of these requirements is to ensure that substantially all of the DISC's revenues are derived from exporting and that substantially all its assets are devoted to exporting.

The gross-receipts test must be met on an annual basis.3 Thus, all revenues throughout the taxable year are taken into account. Each year stands on its own, unlike the three-year gross-income tests in the Western Hemisphere Trade Corporation provisions.4 The term "gross receipts" is a fundamental aspect of this requirement and is examined in detail later.5

1. § 992 (a) ( 1) (A) ; Reg. §§ 1.992-1 (a) (2), 1.992-1 (b).
2. § 992 (a) ( 1) (B ) ; Reg. §§ 1.992-1 (a) ( 3) , 1.992-1 ( c) .
3. §992(a) (1) (A); Reg. §§ 1.992-1 (a) (2), 1.992-1 (b).
4. §§921(1),921(2);Reg.§§ 1.921-1(a)(2),1.921-1(a)(3).
5. §993(f);Prop.Reg.§ 1.993-6.

For a copy of the entire article please contact:
ExportDISC Management Company
pursuant to Section 993(a)(1)(H) and Section 993(b)(2)
Robert Feinschreiber & Margaret Kent

1121 Crandon Blvd. F301
Key Biscayne, FL 33149
Primary Phone: 305.361.5800
or 305.505.9200
Fax: 305.365.2276
DISC, requirements, export, robert feinschreiber, margaret kent