1. Effects or qualifications as a FISC
A. . Investment in a FISC is a qualified export asset in the hands of a DISC for purposes the Disc's 95 percent assets test. Sec. 993(b) (6), Sec. 993 (e) (1), ~e.g. Sec. 1.993-5 (a)(2)(i), Reg. Sec. 1.993-2 (g)
1. Both debt and equity investments (stock and securities) qualify. Sec. 993 (b) (6), Reg. Sec. .1.993-5(a)(2(i).
2. A combination of debt and equity investments including corn.1lon stock, preferred stock, and debt would be possible.
3. Short term debt does not constitute securities and may therefore not be a qualified DISC asset.
4. Securities do not include obligations Which are repaid, in whole or in part, at any time during, the taxable year of the DISC following the taxab1e year of the DISC during Which such obligations were acquired by the DISC or were issued, unless the DISC demonstrates to the satisfaction of the district director that the repayment was for bona fide business purposes and not for the purpose of avoidance of federal income taxes. Reg. Sec. 1.993-2 (g).