A DISC can own two types of tangible assets: export property and business assets.2 In general, export property is inventory that will be exported 3 and business assets are ordinarily tangible personal and real property. However, both types of assets must satisfy technical requirements in order to constitute qualified export assets.
Export property can be owned by a DISC only if the DISC is engaged in the sale or lease of these assets. Thus, a DISC that owns inventory must operate on a buy-sell basis as to that inventory. The DISC can operate on a commission basis for other transactions, how- ever, and the related supplier can handle the actual export functions even when the DISC uses the buy-sell method of operation. 4
A DISC can own business assets only when it is an active corporation, as opposed to a shell. The business assets can be used in the generation of any type of export gross receipts,5 such as receipts from sales,6 leases,7 related and subsidiary services,8 engineering and architectural services,9 and managerial services. 10
1. §§ 993(b)(1), 993(c);
Prop. Reg. §§ 1.993-2(a)(1), 1.993-2(b), 1.993-3.
2. § 993 (b ) (2) ; Prop. Reg. §§ 1.993-2 (a) (2)
,1.993-2 (c).
3. § 993 (c) ( 1) (B) ; Prop. Reg. § 1.993-3 (d).
4. Prop. Reg. § 1.993-1 (1) ( 4) , Example ( 1 ).
5. §§993(a)(1),995.
6. §§993(a)(1)(A),993(b)(2).
7. §§993(a)(1)(B),993(b)(2).
8. §§993(a)(1)(C),993(b)(2).
9. §§993(a)(1)(G),993(b)(2).
10. §§993(a)(1)(H),993(b)(2).
