§ 1.250(b)-1 Computation of foreign-derived intangible income (FDII). ( a ) *Scope.* This section provides rules for computing FDII. Paragraph (b) of this section defines FDII. Paragraph (c) of this section provides definitions that are relevant for computing FDII. Paragraph (d) of this section provides rules for computing gross income and allocating and apportioning deductions for purposes of computing deduction eligible income (DEI) and foreign-derived deduction eligible income (FDDEI). Paragraph (e) of this section provides rules for computing the DEI and FDDEI of a domestic corporate partner. Paragraph (f) of this section provides a rule for computing the FDII of a member of a consolidated group. Paragraph (g) of this section provides a rule for computing the FDII of a tax-exempt corporation.
( b ) *Definition of FDII.* Subject to the provisions of this section, the term *FDII* means, with respect to a domestic corporation for a taxable year, the corporation's deemed intangible income for the year multiplied by the corporation's foreign-derived ratio for the year.
( c ) *Definitions.* This paragraph (c) provides definitions that apply for purposes of this section and §§ 1.250(b)-2 through 1.250(b)-6. ( 1 ) *Controlled foreign corporation.* The term *controlled foreign corporation* has the meaning set forth in section 957(a) and § 1.957-1(a).
( 2 ) *Deduction eligible income.* The term *deduction eligible income* or *DEI* means, with respect to a domestic corporation for a taxable year, the excess (if any) of the corporation's gross DEI for the year over the deductions properly allocable to gross DEI for the year, as determined under paragraph (d)(2) of this section.
( 3 ) *Deemed intangible income.* The term *deemed intangible income* means, with respect to a domestic corporation for a taxable year, the excess (if any) of the corporation's DEI for the year over the corporation's deemed tangible income return for the year.
( 4 ) *Deemed tangible income return.* The term *deemed tangible income return* means, with respect to a domestic corporation and a taxable year, 10 percent of the corporation's qualified business asset investment for the year.
( 5 ) *Dividend.* The term *dividend* has the meaning set forth in section 316, and includes any amount treated as a dividend under any other provision of subtitle A of the Internal Revenue Code or the regulations in this part (for example, under section 78, 356(a)(2), 367(b), or 1248).
( 6 ) *Domestic corporation.* The term *domestic corporation* has the meaning set forth in § 1.250(a)-1(c)(1).
( 7 ) *Domestic oil and gas extraction income.* The term *domestic oil and gas extraction income* means income described in section 907(c)(1), substituting “within the United States” for “without the United States.” A taxpayer must use a consistent method to determine the amount of its domestic oil and gas extraction income (“DOGEI”) and its foreign oil and gas extraction income (“FOGEI”) from the sale of oil or gas that has been transported or processed. For example, a taxpayer must use a consistent method to determine the amount of FOGEI from the sale of gasoline from foreign crude oil sources in computing the exclusion from gross tested income under § 1.951A-2(c)(1)(v) and the amount of DOGEI from the sale of gasoline from domestic crude oil sources in computing its section 250 deduction.
( 8 ) *FDDEI sale.* The term *FDDEI sale* has the meaning set forth in § 1.250(b)-4(b).
( 9 ) *FDDEI service.* The term *FDDEI service* has the meaning set forth in § 1.250(b)-5(b).
( 10 ) *FDDEI transaction.* The term *FDDEI transaction* means a FDDEI sale or a FDDEI service.
( 11 ) *Foreign branch income.* The term *foreign branch income* has the meaning set forth in section 904(d)(2)(J) and § 1.904-4(f)(2).
( 12 ) *Foreign-derived deduction eligible income.* The term *foreign-derived deduction eligible income* or *FDDEI* means, with respect to a domestic corporation for a taxable year, the excess (if any) of the corporation's gross FDDEI for the year, over the deductions properly allocable to gross FDDEI for the year, as determined under paragraph (d)(2) of this section.
( 13 ) *Foreign-derived ratio.* The term *foreign-derived ratio* means, with respect to a domestic corporation for a taxable year, the ratio (not to exceed one) of the corporation's FDDEI for the year to the corporation's DEI for the year. If a domestic corporation has no FDDEI for a taxable year, the corporation's foreign-derived ratio is zero for the taxable year.
( 14 ) *Gross RDEI.* The term *gross RDEI* means, with respect to a domestic corporation or a partnership for a taxable year, the portion of the corporation or partnership's gross DEI for the year that is not included in gross FDDEI.
( 15 ) *Gross DEI.* The term *gross DEI* means, with respect to a domestic corporation or a partnership for a taxable year, the gross income of the corporation or partnership for the year determined without regard to the following items of gross income— ( i ) Amounts included in gross income under section 951(a)(1);
( ii ) GILTI (as defined in § 1.250(a)-1(c)(3));
( iii ) Financial services income (as defined in section 904(d)(2)(D) and § 1.904-4(e)(1)(ii));
( iv ) Dividends received from a controlled foreign corporation with respect to which the corporation or partnership is a United States shareholder;
( v ) Domestic oil and gas extraction income; and
( vi ) Foreign branch income.
( 16 ) *Gross FDDEI.* The term *gross FDDEI* means, with respect to a domestic corporation or a partnership for a taxable year, the portion of the gross DEI of the corporation or partnership for the year which is derived from all of its FDDEI transactions.
( 17 ) *Modified affiliated group* — ( i ) *In general.* The term *modified affiliated group* means an affiliated group as defined in section 1504(a) determined by substituting “more than 50 percent” for “at least 80 percent” each place it appears, and without regard to section 1504(b)(2) and (3).
( ii ) *Special rule for noncorporate entities.* Any person (other than a corporation) that is controlled by one or more members of a modified affiliated group (including one or more persons treated as a member or members of a modified affiliated group by reason of this paragraph (c)(17)(ii)) or that controls any such member is treated as a member of the modified affiliated group.
( iii ) *Definition of control.* For purposes of paragraph (c)(17)(ii) of this section, the term *control* has the meaning set forth in section 954(d)(3).
( 18 ) *Qualified business asset investment.* The term *qualified business asset investment* or *QBAI* has the meaning set forth in § 1.250(b)-2(b).
( 19 ) *Related party.* The term *related party* means, with respect to any person, any member of a modified affiliated group that includes such person.
( 20 ) *United States shareholder.* The term *United States shareholder* has the meaning set forth in section 951(b) and § 1.951-1(g).
( d ) *Treatment of cost of goods sold and allocation and apportionment of deductions* — ( 1 ) *Cost of goods sold for determining gross DEI and gross FDDEI.* For purposes of determining the gross income included in gross DEI and gross FDDEI of a domestic corporation or a partnership, the cost of goods sold of the corporation or partnership is attributed to gross receipts with respect to gross DEI or gross FDDEI under any reasonable method that is applied consistently. Cost of goods sold must be attributed to gross receipts with respect to gross DEI or gross FDDEI regardless of whether certain costs included in cost of goods sold can be associated with activities undertaken in an earlier taxable year (including a year before the effective date of section 250). A domestic corporation or partnership may not segregate cost of goods sold with respect to a particular product into component costs and attribute those component costs disproportionately to gross receipts with respect to amounts excluded from gross DEI or gross FDDEI, as applicable.
( 2 ) *Deductions properly allocable to gross DEI and gross FDDEI* — ( i ) *In general.* For purposes of determining a domestic corporation's deductions that are properly allocable to gross DEI and gross FDDEI, the corporation's deductions are allocated and apportioned to gross DEI and gross FDDEI under the rules of §§ 1.861-8 through 1.861-14T and 1.861-17 by treating section 250(b) as an operative section described in § 1.861-8(f). In allocating and apportioning deductions under §§ 1.861-8 through 1.861-14T and 1.861-17, gross FDDEI and gross RDEI are treated as separate statutory groupings. The deductions allocated and apportioned to gross DEI equal the sum of the deductions allocated and apportioned to gross FDDEI and gross RDEI. All items of gross income described in paragraphs (c)(15)(i) through (vi) of this section are in the residual grouping.
( ii ) *Determination of deductions to allocate.* For purposes of determining the deductions of a domestic corporation for a taxable year properly allocable to gross DEI and gross FDDEI, the deductions of the corporation for the taxable year are determined without regard to sections 163(j), 170(b)(2), 172, 246(b), and 250.
( 3 ) *Examples.* The following examples illustrate the application of this paragraph (d). ( i ) *Assumed facts.* The following facts are assumed for purposes of the examples— ( A ) DC is a domestic corporation that is not a member of a consolidated group.
( B ) All sales and services are provided to persons that are not related parties.
( C ) All sales and services to foreign persons qualify as FDDEI transactions.
( ii ) *Examples* — ( A ) *Example 1: Allocation of deductions* — ( 1 ) *Facts.* For a taxable year, DC manufactures products A and B in the United States. DC sells products A and B and provides services associated with products A and B to United States and foreign persons. DC's QBAI for the taxable year is $1,000x. DC has $300x of deductible interest expense allowed under section 163. DC has assets with a tax book value of $2,500x. The tax book value of DC's assets used to produce products A and B and services is split evenly between assets that produce gross FDDEI and assets that produce gross RDEI. DC has $840x of supportive deductions, as defined in § 1.861-8(b)(3), attributable to general and administrative expenses incurred for the purpose of generating the class of gross income that consists of gross DEI. DC apportions the $840x of deductions on the basis of gross income in accordance with § 1.861-8T(c)(1). For purposes of determining gross FDDEI and gross DEI under paragraph (d)(1) of this section, DC attributes $200x of cost of goods sold to Product A and $400x of cost of goods sold to Product B, and then attributes the cost of goods sold for each product ratably between the gross receipts of such product sold to foreign persons and the gross receipts of such product sold to United States persons. The manner in which DC attributes the cost of goods sold is a reasonable method. DC has no other items of income, loss, or deduction. For the taxable year, DC has the following income tax items relevant to the determination of its FDII: Table 1 to Paragraph (d)(3)(ii)(A)(*1*)
Product A
Product B
Services
Total Gross receipts from U.S. persons
$200x
$800x
$100x
$1,100x Gross receipts from foreign persons
200x
800x
100x
1,100x Total gross receipts
400x
1,600x
200x
2,200x Cost of goods sold for gross receipts from U.S. persons
100x
200x
0
300x Cost of goods sold for gross receipts from foreign persons
100x
200x
0
300x Total cost of goods sold
200x
400x
0
600x Gross income
200x
1,200x
200x
1,600x Tax book value of assets used to produce products/services
500x
500x
1,500x
2,500x
( 2 ) *Analysis* — ( i ) *Determination of gross FDDEI and gross RDEI.* Because DC does not have any income described in section 250(b)(3)(A)(i)(I) through (VI) and paragraphs (c)(15)(i) through (vi) of this section, none of its gross income is excluded from gross DEI. DC's gross DEI is $1,600x ($2,200x total gross receipts less $600x total cost of goods sold). DC's gross FDDEI is $800x ($1,100x of gross receipts from foreign persons minus attributable cost of goods sold of $300x).
( ii ) *Determination of foreign-derived deduction eligible income.* To calculate its FDDEI, DC must determine the amount of its deductions that are allocated and apportioned to gross FDDEI and then subtract those amounts from gross FDDEI. DC's interest deduction of $300x is allocated and apportioned to gross FDDEI on the basis of the average total value of DC's assets in each grouping. DC has assets with a tax book value of $2,500x split evenly between assets that produce gross FDDEI and assets that produce gross RDEI. Accordingly, an interest expense deduction of $150x is apportioned to DC's gross FDDEI. With respect to DC's supportive deductions of $840x that are related to DC's gross DEI, DC apportions such deductions between gross FDDEI and gross RDEI on the basis of gross income. Accordingly, supportive deductions of $420x are apportioned to DC's gross FDDEI. Thus, DC's FDDEI is $230x, which is equal to its gross FDDEI of $800x less $150x of interest expense deduction and $420x of supportive deductions.
( iii ) *Determination of deemed intangible income.* DC's deemed tangible income return is $100x, which is equal to 10 percent of its QBAI of $1,000x. DC's DEI is $460x, which is equal to its gross DEI of $1,600x less $300x of interest expense deductions and $840x of supportive deductions. Therefore, DC's deemed intangible income is $360x, which is equal to the excess of its DEI of $460x over its deemed tangible income return of $100x.
( iv ) *Determination of foreign-derived intangible income.* DC's foreign-derived ratio is 50 percent, which is the ratio of DC's FDDEI of $230x to DC's DEI of $460x. Therefore, DC's FDII is $180x, which is equal to DC's deemed intangible income of $360x multiplied by its foreign-derived ratio of 50 percent.
( B ) *Example 2: Allocation of deductions with respect to a partnership* — ( 1 ) *Facts* — ( i ) *DC's operations.* DC is engaged in the production and sale of products consisting of two separate product groups in three-digit Standard Industrial Classification (SIC) Industry Groups, hereafter referred to as Group AAA and Group BBB. All of the gross income of DC is included in gross DEI. DC incurs $250x of research and experimental (R&E) expenditures in the United States that are deductible under section 174. None of the R&E is included in cost of goods sold. For purposes of determining gross FDDEI and gross DEI under paragraph (d)(1) of this section, DC attributes $210x of cost of goods sold to Group AAA products and $900x of cost of goods sold to Group BBB products, and then attributes the cost of goods sold with respect to each such product group ratably between the gross receipts with respect to such product group sold to foreign persons and the gross receipts with respect to such product group not sold to foreign persons. The manner in which DC attributes the cost of goods sold is a reasonable method. For the taxable year, DC has the following income tax items relevant to the determination of its FDII: Table 2 to (d)(3)(ii)(B)(*1*)(*i*)
Group AAAproducts
Group BBBproducts
Total Gross receipts from U.S. persons
$200x
$800x
$1,000x Gross receipts from foreign persons
100x
400x
500x Total gross receipts
300x
1,200x
1,500x Cost of goods sold for gross receipts from U.S. persons
140x
600x
740x Cost of goods sold for gross receipts from foreign persons
70x
300x
370x Total cost of goods sold
210x
900x
1,110x Gross income
90x
300x
390x R&E deductions
40x
210x
250x
( ii ) *PRS's operations.* In addition to its own operations, DC is a partner in PRS, a partnership that also produces products described in SIC Group AAA. DC is allocated 50 percent of all income, gain, loss, and deductions of PRS. During the taxable year, PRS sells Group AAA products solely to foreign persons, and all of its gross income is included in gross DEI. PRS has $400 of gross receipts from sales of Group AAA products for the taxable year and incurs $100x of research and experimental (R&E) expenditures in the United States that are deductible under section 174. None of the R&E is included in cost of goods sold. For purposes of determining gross FDDEI and gross DEI under paragraph (d)(1) of this section, PRS attributes $200x of cost of goods sold to Group AAA products, and then attributes the cost of goods sold with respect to such product group ratably between the gross receipts with respect to such product group sold to foreign persons and the gross receipts with respect to such product group not sold to foreign persons. The manner in which PRS attributes the cost of goods sold is a reasonable method. DC's distributive share of PRS taxable items is $100x of gross income and $50x of R&E deductions, and DC's share of PRS's gross receipts from sales of Group AAA products for the taxable year is $200x under § 1.861-17(f)(3).
( iii ) *Application of the sales method to allocate and apportion R&E.* DC applies the sales method to apportion its R&E deductions under § 1.861-17. Neither DC nor PRS licenses or sells its intangible property to controlled or uncontrolled corporations in a manner that necessitates including the sales by such corporations for purposes of apportioning DC's R&E deductions.
( 2 ) *Analysis* — ( i ) *Determination of gross DEI and gross FDDEI.* Under paragraph (e)(1) of this section, DC's gross DEI, gross FDDEI, and deductions allocable to those amounts include its distributive share of gross DEI, gross FDDEI, and deductions of PRS. Thus, DC's gross DEI for the year is $490x ($390x attributable to DC and $100x attributable to DC's interest in PRS). DC's gross income from sales of Group AAA products to foreign persons is $30x ($100x of gross receipts minus attributable cost of goods sold of $70x). DC's gross income from sales of Group BBB products to foreign persons is $100x ($400x of gross receipts minus attributable cost of goods sold of $300x). DC's gross FDDEI for the year is $230x ($30x from DC's sale of Group AAA products plus $100x from DC's sale of Group BBB products plus DC's distributive share of PRS's gross FDDEI of $100x).
( ii ) *Allocation and apportionment of R&E deductions.* To determine FDDEI, DC must allocate and apportion its R&E expense of $300x ($250x incurred directly by DC and $50x incurred indirectly through DC's interest in PRS). In accordance with § 1.861-17, R&E expenses are first allocated to a class of gross income related to a three-digit SIC group code. DC's R&E expenses related to products in Group AAA are $90x ($40x incurred directly by DC and $50x incurred indirectly through DC's interest in PRS) and its expenses related to Group BBB are $210x. See paragraph (d)(2)(i) of this section. Accordingly, all R&E expense attributable to a particular SIC group code is apportioned on the basis of the amounts of sales within that SIC group code. Total sales within Group AAA were $500x ($300x directly by DC and $200x attributable to DC's interest in PRS), $300x of which were made to foreign persons ($100x directly by DC and $200x attributable to DC's interest in PRS). Therefore, the $90x of R&E expense related to Group AAA is apportioned $54x to gross FDDEI ($90x × $300x/$500x) and $36x to gross RDEI ($90x × $200x/$500x). Total sales within Group BBB were $1,200x, $400x of which were made to foreign persons. Therefore, the $210x of R&E expense related to products in Group BBB is apportioned $70x to gross FDDEI ($210x × $400x/$1,200x) and $140x to gross RDEI ($210x × $800x/$1,200x). Accordingly, DC's FDDEI for the tax year is $106x ($230x gross FDDEI minus $124x of R&E ($54x + $70x) allocated and apportioned to gross FDDEI).
( e ) *Domestic corporate partners* — ( 1 ) *In general.* A domestic corporation's DEI and FDDEI for a taxable year are determined by taking into account the corporation's share of gross DEI, gross FDDEI, and deductions of any partnership (whether domestic or foreign) in which the corporation is a direct or indirect partner. For purposes of the preceding sentence, a domestic corporation's share of each such item of a partnership is determined in accordance with the corporation's distributive share of the underlying items of income, gain, deduction, and loss of the partnership that comprise such amounts. See § 1.250(b)-2(g) for rules on calculating the increase to a domestic corporation's QBAI by the corporation's share of partnership QBAI.
( 2 ) *Reporting requirement for partnership with domestic corporate partners.* A partnership that has one or more direct partners that are domestic corporations and that is required to file a return under section 6031 must furnish to each such partner on or with such partner's Schedule K-1 (Form 1065 or any successor form) by the due date (including extensions) for furnishing Schedule K-1 the partner's share of the partnership's gross DEI, gross FDDEI, deductions that are properly allocable to the partnership's gross DEI and gross FDDEI, and partnership QBAI (as determined under § 1.250(b)-2(g)) for each taxable year in which the partnership has gross DEI, gross FDDEI, deductions that are properly allocable to the partnership's gross DEI or gross FDDEI, or partnership specified tangible property (as defined in § 1.250(b)-2(g)(5)). In the case of tiered partnerships where one or more partners of an upper-tier partnership are domestic corporations, a lower-tier partnership must report the amount specified in this paragraph (e)(2) to the upper-tier partnership to allow reporting of such information to any partner that is a domestic corporation. To the extent that a partnership cannot determine the information described in the first sentence of this paragraph (e)(2), the partnership must instead furnish to each partner its share of the partnership's attributes that a partner needs to determine the partner's gross DEI, gross FDDEI, deductions that are properly allocable to the partner's gross DEI and gross FDDEI, and the partner's adjusted bases in partnership specified tangible property.
( 3 ) *Examples.* The following examples illustrate the application of this paragraph (e). ( i ) *Assumed facts.* The following facts are assumed for purposes of the examples— ( A ) DC, a domestic corporation, is a partner in PRS, a partnership.
( B ) FP and FP2 are foreign persons.
( C ) FC is a foreign corporation.
( D ) The allocations under PRS's partnership agreement satisfy the requirements of section 704.
( E ) No partner of PRS is a related party of DC.
( F ) DC, PRS, and FC all use the calendar year as their taxable year.
( G ) PRS has no items of income, loss, or deduction for its taxable year, except the items of income described.
( ii ) *Examples* — ( A ) *Example 1: Sale by partnership to foreign person* — ( 1 ) *Facts.* Under the terms of the partnership agreement, DC is allocated 50 percent of all income, gain, loss, and deductions of PRS. For the taxable year, PRS recognizes $20x of gross income on the sale of general property (as defined in § 1.250(b)-3(b)(10)) to FP, a foreign person (as determined under § 1.250(b)-4(c)), for a foreign use (as determined under § 1.250(b)-4(d)). The gross income recognized on the sale of property is not described in section 250(b)(3)(A)(I) through (VI) or paragraphs (c)(15)(i) through (vi) of this section.
( 2 ) *Analysis.* PRS's sale of property to FP is a FDDEI sale as described in § 1.250(b)-4(b). Therefore, the gross income derived from the sale ($20x) is included in PRS's gross DEI and gross FDDEI, and DC's share of PRS's gross DEI and gross FDDEI ($10x) is included in DC's gross DEI and gross FDDEI for the taxable year.
( B ) *Example 2: Sale by partnership to foreign person attributable to foreign branch* — ( 1 ) *Facts.* The facts are the same as in paragraph (e)(3)(ii)(A)( 1 ) of this section (the facts in *Example 1*), except the income from the sale of property to FP is attributable to a foreign branch of PRS.
( 2 ) *Analysis.* PRS's sale of property to FP is excluded from PRS's gross DEI under section 250(b)(3)(A)(VI) and paragraph (c)(15)(vi) of this section. Accordingly, DC's share of PRS's gross income of $10x from the sale is not included in DC's gross DEI or gross FDDEI for the taxable year.
( C ) *Example 3: Partnership with a loss in gross FDDEI* — ( 1 ) *Facts.* The facts are the same as in paragraph (e)(3)(ii)(A)( 1 ) of this section (the facts in *Example 1*), except that in the same taxable year, PRS also sells property to FP2, a foreign person (as determined under § 1.250(b)-4(c)), for a foreign use (as determined under § 1.250(b)-4(d)). After taking into account both sales, PRS has a gross loss of $30x.
( 2 ) *Analysis.* Both the sale of property to FP and the sale of property to FP2 are FDDEI sales because each sale is described in § 1.250(b)-4(b). DC's share of PRS's gross loss ($15x) from the sales is included in DC's gross DEI and gross FDDEI.
( D ) *Example 4: Sale by partnership to foreign related party of the partnership* — ( 1 ) *Facts.* Under the terms of the partnership agreement, DC has 25 percent of the capital and profits interest in the partnership and is allocated 25 percent of all income, gain, loss, and deductions of PRS. PRS owns 100 percent of the single class of stock of FC. In the taxable year, PRS has $20x of gain on the sale of general property (as defined in § 1.250(b)-3(b)(10)) to FC, and FC makes a physical and material change to the property within the meaning of § 1.250(b)-4(d)(1)(iii)(B) outside the United States before selling the property to customers in the United States.
( 2 ) *Analysis.* The sale of property by PRS to FC is described in § 1.250(b)-4(b) without regard to the application of § 1.250(b)-6, since the sale is to a foreign person (as determined under § 1.250(b)-4(c)) for a foreign use (as determined under § 1.250(b)-4(d)). However, FC is a foreign related party of PRS within the meaning of section 250(b)(5)(D) and § 1.250(b)-3(b)(6), because FC and PRS are members of a modified affiliated group within the meaning of paragraph (c)(17) of this section. Therefore, the sale by PRS to FC is a related party sale within the meaning of § 1.250(b)-6(b)(1). Under section 250(b)(5)(C)(i) and § 1.250(b)-6(c), because FC did not sell the property, or use the property in connection with other property sold or the provision of a service, to a foreign unrelated party before the property was subject to a domestic use, the sale by PRS to FC is not a FDDEI sale. See § 1.250(b)-6(c)(1). Accordingly, the gain from the sale ($20x) is included in PRS's gross DEI but not its gross FDDEI, and DC's share of PRS's gain ($5x) is included in DC's gross DEI but not gross FDDEI. This is the result notwithstanding that FC is not a related party of DC because FC and DC are not members of a modified affiliated group within the meaning of paragraph (c)(17) of this section.
( f ) *Determination of FDII for consolidated groups.* A member of a consolidated group (as defined in § 1.1502-1(h)) determines its FDII under the rules provided in § 1.1502-50.
( g ) *Determination of FDII for tax-exempt corporations.* The FDII of a corporation that is subject to the unrelated business income tax under section 511 is determined only by reference to that corporation's items of income, gain, deduction, or loss, and adjusted bases in property, that are taken into account in computing the corporation's unrelated business taxable income (as defined in section 512). For example, if a corporation that is subject to the unrelated business income tax under section 511 has tangible property used in the production of both unrelated business income and gross income that is not unrelated business income, only the portion of the basis of such property taken into account in computing the corporation's unrelated business taxable income is taken into account in determining the corporation's QBAI. Similarly, if a corporation that is subject to the unrelated business income tax under section 511 has tangible property that is used in both the production of gross DEI and the production of gross income that is not gross DEI, only the corporation's unrelated business income is taken into account in determining the corporation's dual use ratio with respect to such property under § 1.250(b)-2(d)(3).
[T.D. 9901, 85 FR 43080, July 15, 2020, as amended by T.D. 9959, 87 FR 324, Jan. 4, 2022]