Our last public meeting before the present session was held on December 9th and 1Oth, the very days the Revenue Act of 1971, embodying the DISC provisions, was passed by Congress and signed into law by the President. Since that time, the IRS has issued Rev. Proc. 72-12 providing instructions for 1972 DISC elections, and the Treasury has been hard at work preparing Regulations.
The great complexity of DISC, combined with the extremely short time allotted the government to interpret the statue and write Regulations may leave some problems in the "fringe areas" of DISC unresolved. Yet it "is these problems, or rather their solution, which because of their complexity are of interest to the International Tax Institute members.
Let me take this opportunity to mention what I believe to be problems of interest or importance, and some possible solutions. Time permits an inquiry only into problems dealing with the four DISC qualification requirements of capital structure, election, assets, and gross receipts, as well as certain related problems pertaining to export promotion expenses.
1. Sales Of Promotional Materials To Foreign Affiliates
The eligibility of promotional materials such as store displays, bill- boards, and miniatures to be distributed free to prospective customers as qualified export assets, and their sale as qualified export receipts, presents problems because of the interrelationship between these items and the goods to which they relate. Consider four possibilities:
