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By Robert Feinschreiber, Attorney (New York and Florida), Partner: ExportDISC Management Company, Key Biscayne, Florida.

A foreign sales corporation (FSC) almost always needs an offshore trust or management company, since it probably can't operate offshore on its own. The management company functions as the FSC's agent, ensuring that it meets the requirements of the Internal Revenue Code, and performing other business-related services. This analysis examines 10 fundamental criteria for an exporter to consider in selecting an FSC management company.
(I) Background
--" For the gross receipts of the FSC (unless it is a small FSC) to qualify as foreign trading gross receipts under the Code, the FSC must satisfy both a foreign management test and a foreign economic processes test. The foreign management test is satisfied if:

The foreign economic processes test is satisfied for gross receipts from certain
categories of activities relating to export property if the FSC participates outside the United States in solicitation, negotiation, or making of the contract for the transaction, and either

The activities relating to export property are as follows:4

These and other FSC requirements can be overseen and handled by the FSC management company.

(2) Business Experience

A management company to an FSC must offer many different services to exporters with diverse business practices and financial needs. So when selecting a management company, the exporter should strongly weigh the breadth and depth of the management company's business and financial experience.

Historically, management companies often were established as trust companies by international financial institutions, and many still are such trust companies. But recently, more management companies have been formed by private individuals who don't meet the requirements of the financial institutions. Because these ...

Footnote references start at the end of this analysis.
II @ 1985 P-H Inc.-U.S. Taxation of International Operations: Tax Ideas ~9S13

For a copy of the entire article please contact us:
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
foreign sales corporation, fsc, DISC, export, robert feinschreiber, margaret kent