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Internal Revenue Code · 26 U.S.C.

§ 994. Inter-company pricing rules

In force Text current through Public Law 119-121 (October 9, 2026) release point 119-121

Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).

Cite as 26 U.S.C. § 994

At a glance

Read from the text, the source credit and the official notes. Not part of the law.

Status
In force
Added
December 10, 1971 by Pub. L. 92–178
Last amended
October 4, 1976 by Pub. L. 94–455
Amendments
1 dated changes in the source credit
Length
3 subsections · 366 words · about 2 min to read
Defines
1 term
Cross-references
cites 1; cited by 0 Code sections and 5 other regulations
Regulations
2 issued under this section
(a) In general In the case of a sale of export property to a DISC by a person described in section 482, the taxable income of such DISC and such person shall be based upon a transfer price which would allow such DISC to derive taxable income attributable to such sale (regardless of the sales price actually charged) in an amount which does not exceed the greatest of—
(1) 4 percent of the qualified export receipts on the sale of such property by the DISC plus 10 percent of the export promotion expenses of such DISC attributable to such receipts,
(2) 50 percent of the combined taxable income of such DISC and such person which is attributable to the qualified export receipts on such property derived as the result of a sale by the DISC plus 10 percent of the export promotion expenses of such DISC attributable to such receipts, or
(3) taxable income based upon the sale price actually charged (but subject to the rules provided in section 482).
(b) Rules for commissions, rentals, and marginal costing The Secretary shall prescribe regulations setting forth—
(1) rules which are consistent with the rules set forth in subsection (a) for the application of this section in the case of commissions, rentals, and other income, and
(2) rules for the allocation of expenditures in computing combined taxable income under subsection (a)(2) in those cases where a DISC is seeking to establish or maintain a market for export property.
(c) Export promotion expenses

For purposes of this section, the term “export promotion expenses” means those expenses incurred to advance the distribution or sale of export property for use, consumption, or distribution outside of the United States, but does not include income taxes. Such expenses shall also include freight expenses to the extent of 50 percent of the cost of shipping export property aboard airplanes owned and operated by United States persons or ships documented under the laws of the United States in those cases where law or regulations does not require that such property be shipped aboard such airplanes or ships.

(Added Pub. L. 92–178, title V, § 501, Dec. 10, 1971, 85 Stat. 543; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

Terms defined here

Where the text says “the term … means”. Select a term to jump to its definition.

Regulations under this section

Treasury regulations (26 CFR) issued under § 994

Cross-references

Computed from the citations in the text of Title 26 and 26 CFR.

This section cites 1 other section

Cited in 5 regulations not issued under it

Amendment history

From the source credit and the official notes, newest first.

  1. Amended by Pub. L. 94–455Parts changed in 1976: (b)
  2. Added by Pub. L. 92–178

Where it sits in the Code

  1. Subtitle A Income Taxes
  2. Chapter 1 NORMAL TAXES AND SURTAXES
  3. Subchapter N Tax Based on Income From Sources Within or Without the United States
  4. Part IV DOMESTIC INTERNATIONAL SALES CORPORATIONS
  5. Subpart A Treatment of Qualifying Corporations

Nearby sections

Official notes

Show the Law Revision Counsel's notes (amendments, effective dates)

Editorial Notes

Amendments

1976—Subsec. (b). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.