Form 1120-FSC (1988) Page 5
Schedule G| Deductions Allocated or Apportioned to Foreign Trade Income (See instructions for limitations on
deductions before completing lines 1 through 14.)

(a) UsingAdministrative  |(b) Not Using Administrative
Pricing Rules Pricing Rules

1 Foreign direct costs:
a Section 924(e)(1) (advertising andsalespromotion). . . . . . ... la
b Section 924(e)(2) (certain processing and arrangingcosts). . . . . . . . Lab
¢ Section 924(e)(3) (certain transportation costs) . . . . woe ee LAC
d Section 924(e)(4) (certain determination and transmittal costs) woe. Lad
e Section 924(e)(5) (assumption of creditrisk) . . . . ...... . . Lle
f Addlineslathroughle. . . 2... see ee. bt

Advertsing RR

Interest. 2. 3

Depreciation from Form. 4562 (less depreciation claimed elsewhere on this

return) (attach Form 4562) . Le See
5 Salaries and wages.
6 Rents .
7
8

wn

a

Sales commissions.

Warehousing

4

5

6

7

8

9 Freight . Be 9
10 Compensation of officers. Bo .. . 10
11

12

13

11 Bad debts (see instructions).

12 Pension, profit-sharing, etc., plans (see instructions) .
13 Employee benefit programs . ee
14 Other (list): >

14

15 Total(addlines 1fthrough 14). . . . a oe ©)
16a Exemption percentage from line 3d, Schedule E Soe ee ey [Ga
b Exemption percentage from line 2d,ScheduleE . . . . 16b
17 Deductions relating to exempt foreign trade income—Line 15 (column @) times
line 16a and line 15 (column (b)) times line 16b . . 17

18 Total deductions relating to nonexempt foreign trade income—Line 15 less line
17. (Enter here and on line 14, columns (a)and(b),ScheduleB.) . . | ss | 18

Tax Computation (See instructions.)

1 Check if you are a member of a controlled group (see section 927(d)(4)). . . . . . eO
2 Ifline 1 is checked:

a Enter your portion of the $50,000 amount and $25,000 amount (in that order) in each taxable income
bracket:

ols. L | ws in| ]/ ]/
b Enter your share of the additional 5% tax (not to exceed $11,750)ml6_—= | 7/ Ti

3 Income tax (see instructions to figure the tax). Check this box if the FSC is a qualified personal service
corporation (see instructions) Oo. ..  L8

4 Foreign tax credit (attach Form 1118)(seeinstructions) . . . . . .. . 2. ee eee La

5 Line3lessline4. 2 6. we EB

6 Personal holding company tax (attach Schedule PH(Form1120)). . ...........E6

7a Alternative minimum tax (see instructions—attach Form 4626) . ........... .(7a

b Environmental tax (see instructions—attach Form 4626). . . . . 2... 2... . . . {2B

8 Total tax—aAdd lines 5, 6, 7a, and 7b. Enterhereandonlinel,pagel . . . . ..... . .| 8



Form 1120-FSC (1988)

Page 4

Percentages (expressed as decimals to 5 places) To Be Used in Figuring Exempt Foreign Trade

Income—Sections 923(a)(2) and (3), and 291(a)(4)

Note: /f all shareholders are C corporations, enter .30000 on line 2d and .65217 on line 3d and skip all other lines.

If all shareholders are other than C corporations, enter .32000 on line 2d and .69565 on line 3d and skip all other lines.

1 Percentage (express as decimal to 5 places) of voting stock owned by shareholders that are C corporations [1 |

2 Exemption for foreign trade income determined without regard to administrative pricing rules:

a Difference between section 923(a)(2) and section 291(a)(4)(A) percentage... ..... ~. {2a +02000
b Section 923(a)(2) percentage 2 2. 2 ww ee PR +32000
cLine2atimeslinel. . . . . . Le
d Exemption percentage—Line 2b less ss line : 2c. enter here and on line 9b, Schedule B; and line 16b,

ScheduleG.). . . . . . 2d

3 Exemption percentage for foreign trade i income determined under administrative p pricing rules:

a Difference between section 923(a)(3) | fraction and section 29 29 1Ca)CAXB) fraction lad - 18/23-= =

1/23) expressedasadecimal . . . . L3a 204348
b Section 923(a)(3) fraction (16/23) expressedasadecimal. . . ........ 2... . (3b ~69565
cline3atimeslinel. . . . oa coe . . [3c
d Exemption percentage—Line 3b less line 3c. (Enter he here and on line 9a, Schedule 8; and line 16a,

ScheduleG.) . . 3d

Nonexempt Foreign Trade Income (Excluded from section 923) and Nonforeign Trade Income

Part I—Nonexempt Foreign Trade Income (excluded from section 923)

(a) Using Administrative
Pricing Rules

(b) Not Using Administrative
Pricing Rules

1 Enter 50% of total receipts attributable to the sale, exchange, or other disposition of
military property and related services (see instructions for line 1 of Schedule B) .

International boycott income (see instructions).

Illegal bribes and other payments (see instructions)

Add lines 1,2,and3 .

Enter cost of goods sold and other e expenses related to above income.

Anawn

Nonexempt foreign trade income—Line 4 less line 5. (Enter here and on line 12,
columns (a) and (b), Schedule B.) . oo

Part T—Nonforeign Trade income

7 Small FSCs—'f line 6f of Schedule B exceeds line 6e of Schedule B, enter the excess. a the

deduction for cost of goods sold attributable to the excess on line 18 below.) . . . 7
8 Interest income . 8
9 Dividend income (attach schedule—see instructions). . . . . 2... ee ee ee ee LY
10 Carrying charges . 10
11 Royalties © 2 2 ee LD
12 Otherinvestmentincome. . . Le 12
13 Receipts excluded under section 9240) 0 on basis of use, subsidized cei and rect from related 13

parties. . 2. a oe :
14 Income from excluded property under sections 927(a\(2)and(3). . . . . . 14
15 Income from transactions that did not qualify as foreign trade income because the frig economic

process test of section 924(d) was notmet . . . Lo ee ow . LAS
16 Other income . 16
17 Total—Addlines7through16 . . . . Co ee . . L472
18 Enter deductions allocated or apportioned to line 17 income (attach schedule—see instructions) . . . [38

19 Taxable nonforeign trade _income—Line 17 less line 18. (Enter here and on line 17, Schedule B.) | 19



Page 6

Form 1120-FSC (1988)
[Schedule L EAEIEORIS

Beginning of tax year

End of tax year

Assets
1Cash. . . . . ee ee
2a Trade notes and accounts receivable
b Commissions receivable .

c Less allowance for bad debts
Inventories . .
Federalandstate government obligations
Other current assets (attach schedule) .
Loans to stockholders
Mortgage and real estate loans
Other investments (attach schedule).
Buildings and other fixed depreciable assets

a Less accumulated depreciation

10 Depletable assets .
Less accumulated depletion
11 Land (net of any amortization) .
12. Intangible assets (amortizable only) .
Less accumulated amortization

13 Other assets (attach schedule),
14 Total assets .

CanaunaAW

o

(a)

() (©)

@)

_

Liabilities and Stockholders’ Equity
15 Accounts payable .
16 Mtges., notes, bonds payable in less than Ly year
17 Transfer prices payable . on
18 Other current liabilities (attach schedule)
19 Loans from stockholders. .
20 = Mtges., notes, bonds payable in 1 year or more.
21 Other liabilities (attach schedule) .
22 Capital stock
23 > Paid-in or capital surplus
24 Retained earnings—Appropriated (attach schedule)
25 Retained earnings—Unappropriated.
26 Less cost of treasury stock . :
27 Total liabilities and stockholders’ equity

¢ )

Schedule M

Reconciliation of Income per Books With

Income per Return

1 Net income per books

2 Federal income tax

3 Excess of capital losses over capital gains

4 Income subject to tax not recorded on books this year
(itemize),

5 Expenses recorded on books this year
not deducted in this return (itemize):

Depreciation . . . $

b Deductions attributable to
exempt foreign trade income $

¢ Travel andentertainment $

6 Total of lines 1 through 5

7 \ncome recorded on books this year
not included in this return (itemize):

a Tax-exemptinterest. .$

b Exempt foreign trade
income . .

8 Deductions claimed on this tax return not
charged against book income this year (itemize):
aDepreciation. . . .$

9 Totaloflines7and8 .
10 Taxable income —line 6 less line 9

Schedule M-2

Analysis of Unappropri

jated Retained Earnings per Books (line 25 above)

1 Balance at beginning of year
2 Net income per books
3 > Other increases (itemize):

4 Total of lines 1, 2, and3

5 Distributions: a Cash .
b Stock.
c Property.
6 Other decreases (itemize):

7 Total of lines 5a, b,c, and6

8 Balance at end of year (line 4 less line 7)_.



rom 1120-FSC U.S. Income Tax Return of a OMB No. 1545-0995
Foreign Sales Corporation
1988

Department of the Treasury (Please Type or Print)
Internal Revenue Service For calendar year 1988 or other tax year beginning _.... 1988 and ending __

A Date of incorporation Name D Country or U.S. Possession of
Incorporation (See instructions.)

B Date of FSCorSmallFSC | Numberand street (or P.O. box number if mail is not delivered to street address) E Employer identification number
election
© Check type of election made: | Cityor town, state, ZIP code, or country F Total assets (See Specific Instructions.)
Orsc (1 smairse Dollars Cents
$
G Refer to the last page of the instructions and enter the principal
(2) Business code number > (2) Business activity > (3) Product or service >

H Complete the following for the shareholder (individual, corporation, partnership, trust, or estate) who at the beginning of the FSC tax year was the principal shareholder. If two
or more shareholders owned equal amounts of stock, enter the information for the shareholder that has the same tax year as the tax year of the corporation.

@) Name (@) Identifying number
@ Address () Total assets (corporations only)
$
@) Percentage of voting stock owned | (6) Tax year end (month and year) | (7) Service Center where return was (oris tobe filed () Foreign owner?
Oves Ono

Note: if the FSC 1s a member of a controlled group of corporations as defined in section 927(d)(4) and the principal shareholder for which information is provided in H(1) through
(8) above is not the common parent of the group, complete H(9) through (15) below for the common parent of the group. (See instructions.)

(9) Name of common parent (10) Identifying number (11)_ Service Center where return was (or is to be ) filed

(12) Address

(13) Percentage of voting stock owned (14) Tax year end (month and year) (15) Total assets (consolidated if applicable)
$ |
1_Enter the amount of tax-exempt interest income received or accrued duringthetaxyear. . . . . . . .$ .

J Administrative Pricing Rules:
(1) Check the appropriate box(es) to indicate the pricing rule(s) used in determining the taxable income on transactions resulting in foreign trading gross receipts:

(2) F1 1.83% ot gross receipts (6) [] 23% of combined taxable income _(¢) [1] Marginal costingif 23% method isused (a) LI Section 482 method

(2) Check here if the FSC and the related supplier(s) have met the payment arrangement requirements of Temporary Regulations section 1.925(a
17(b)(2)(ii) and are thereby electing under that Regulations section to have met the requirements for use of the administrative pricingrules. . .

Computation of Tax Due or Tax Overpayment

1 Totaltax(ScheduleJ). © 2 6 2 ee ee
2 Payments:

a 1987 overpayment credited to1988 . . | _2a TT /;,»;,eO,

b 1988 estimated tax payments. 2b

¢ Less 1988 refund applied for on Form 4466 | 2c |( )\dBal|_2d

e Tax deposited with Form7004 . . 2... 1... Le

Credit for Federal tax on fuels (attach Form 4136). . . . . . . . . | 2¢

g U.S. income tax paid or withheld at source (attach Form 1042S) . . . . | 2g 2h
3 Enter any penalty for underpayment of estimated tax—check »Llif Form 2220isattached . . . .| 3
4 Tax due—lf the total of lines 1 and 3 is larger than line 2h,enteramountowed . . . ..... .L4
5 Overpayment—f line 2h is larger than the total of lines 1 and 3, enter amount overpaid . . . . . .|_5
6_Enter amount of line 5 you want:_a Credited to 1989 estimated tax > L bRefunded>| 6

Under penalties of perjury, I declare that Ihave examined this return, including accompanying schedules and statements, and to the best of my knowledge and

Please belief, itis true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
Sign

Here » Signature of officer Date » Title
Paid Preparers N Date cheek it Preparers social security no.
Preparer's : self-employed>[_]

Use Only iselernployed) » E.1.No.b

and address ZIP code >

For Paperwork Reduction Act Notice, see page 1 of the instructions. Form 1120-FSC (1988)


Form 1120-FSC (1988) Page 2
Suey §=Cost of Goods Sold and/or Operations Related to Foreign Trading Gross Receipts (See instructions.)

(a) Using Administrative (b) Not Using Administrative
Pricing Rules Pricing Rules
1 Inventory at beginning of year. res a 3
2 Purchases... 2... ee ee ee ee ee  f2
3  Costoflabor . . (3
4a Additional section 263A. costs (see instructions—attach schedule). . [4a
b Other costs (attachschedule). . . . . woe ee ee. Lob
5 Total—Addlines1through4b . . re 2)
6 Inventoryatendoftheyear . . . 6
7 Cost of goods sold and/or operations—Line 5 less I line 6. “(enter here
and on line 7 of Schedule B. Small FSCs, seeinstructions.) . . . 7

8a Check all methods used for valuing closing inventory:

(1 @ Cost ~() (ii) Lower of cost or market as described in Regulations section 1.471-4 (see instructions)
im (iii) Writedown of ‘‘subnormal’’ goods as described in Regulations section 1.47 1-2(c) (see instructions)
CA (iv) Other (Specify method used and attach explanation) >

b Check if the LIFO inventory method was adopted this tax year for any goods (If checked, attach Form 970.)

© If the LIFO inventory method was used for this tax year, enter percentage (or amounts) of closing inventory computed under LIFO 8c

d Do the rules of section 263A (with respect to property produced or acquired for resale) applytothe FSC? . . . . . .LJYes [No

e Was there any change in determining quantities, cost, or valuations between opening and closinginventory? _If Yes,” attach explanation. [_] Yes [7] No

Additional Information Required

Yes | No

Was the FSC at any time during the year engaged in a trade or business in the U.S.?

Is the FSC a foreign personal holding company or a personal holding company? (See instructions. ). :
During the tax year, did the FSC maintain any part of its accounting/tax records on a computerized system? .
FSC Qualification Requirements:

(1) Enter the greatest number of shareholders the FSC had at any time during the tax year MI;
(2) Did the FSC have any preferred stock outstanding at any time during the tax year?

(3) During the tax year, did the FSC maintain an office, in a “qualifying foreign country” or "U, s. possession” (ee Uh
instructions), in which a complete set of books and records (including invoices) for the FSC was maintained? . .

(4) During the tax year, did the FSC maintain the records required under section 6001 at a location within the U.S.? .
(5) At all times during the tax year, did the FSC have at least one non-U.S. resident on its board of directors? .
(6) At any time during the tax year, was the FSC a member of a controlled group of corporations that included a DISC asa Mh
member? Fe
O Foreign Management Tests, These requirements ‘do not t apply to ‘small FSCs, ):
(1) Did all formally convened meetings of the board of directors and all formally convened meetings of the shareholders Mt
take place outside the U.S.? re rn . rs

zEren

(2) Principal bank accounts
(a) Were all dividends, legal and accounting fees, salaries of officers, and salaries or fees of members of the board of 7],
directors disbursed from bank accounts maintained outside the U.S.? (If so, these accounts are considered to be the Ms
FSC’s principal bank accounts.) .

(b) At all times during the tax year, did the FSC maintain its prin bank accounts i ina “aalivng frien county" I
or “U.S. possession” (see instructions)? .
Bank names > Account numbers » Pec eee

P Foreign Economic Process Requirements. (These requirements do not apply to small FSCs.):
(1) Check the appropriate box below to make an annual election to group the sales activities described under Regulations section
1.924(d)-1(c) on one of the following bases:
Ccustomergrouping (1 contract grouping [1 product or product line grouping C1 product or product line subgroupings
(2) Check one or both boxes below to indicate how the FSC met the “foreign direct costs” requirement:
O The FSC (or any person under contract with the FSC) met the 50% test of section 924(d)(1).
OC The FSC (or any person under contract with the FSC) met the alternative 85% test of section 924(d)(2). Check to indicate the
paragraphs of section 924(e) with respect to which this alternative test was satisfied: (1) (20 @0 MO ©O0
(3) Check the appropriate box below to make the annual election described at Regulations section 1.924(d)-1(e) to group foreign
direct costs on one of the following bases: [] customer grouping [J contract grouping [] product or product line grouping
Q Activities relating to disposition of export property:
(1) Check here if the FSC is electing under Regulations section 1.924(e)-1(e)(1) to bear the economic risk of nonpayment of certain
commission contracts . . ».. 0
(2) Indicate here which one of the 5 methods | listed i in that Regulations section describes how the tisk i is to be ‘borne ty the FSC:



Form 1120-FSC (1988)

Page 3

SG Taxable Income (or Loss)

PART I—Income Attributable to Foreign Trade Income

7

9a Exemption percentage from line 3d,ScheduleE . .....

10

ll
12
13

14

Type of Receipt (see instructions) Pricing Rules

(a) Using Administrative

(b) Not Using Administrative
PricingRules

1 Sale, exchange, or other disposition of export property. (Include only 50% of military
property sales. Include the other 50% online 1,ScheduleF.).........-

2 Lease or rental of export property for use outsidetheU.S. .. 2... 2.0.20.

3 Services related and subsidiary to:
a Sale, exchange, or other disposition of export property. (Include only 50% of services
related to the sale or other disposition of military property. Include the other 50% on
line 1,ScheduleF.) 2. 6. ce ee

b Lease orrentalofexport property. . 2 2 ee ee

4 Engineering or architectural services for construction projects outside the U.S.
5 Managerial services for an unrelated FSC or DISC. + (See in instructions for determination

of qualifyingamount.) 2. 6 2 ee ee

6 Total Foreign Trading Gross Receipts:
a All FSCs—Add lines 1 through 5. (FSCs that are not small FSCs, skip lines 6b through
6h and go to line 7. Small FSCs, complete lines 6b through 6h to determine your
foreign trading gross receipts.) . 2 2 6 0. ee

b Small FSC limitation (section 924(b)(2)(B)). . 6 ee $5,000, 000|00

¢ Controlled group member's share of line 6b (see instructions)

d Enter smaller of: ‘@) number of days in tax year divided by 3 365,
or(b)l(one). 2 ee ee

e Proration of limitation—Line 6b or line 6c (whichever cli)
timesline6d. 2... eee

f Enter total of columns (a) and (b), line 6a. (If commission
income is included in line 6a, see special computation rule in
line 6finstruction.) ...... in

g Small FSC foreign trading gross receipts that may be taken into

account in determining exempt foreign trade income (enter the
smaller ofline6eor6f). 2... ....08%

Note: /f line 6f exceeds line 6e, enter the excess on line 7 of
Schedule F. See line 6h instruction if commission income is
involved.

h Allocate the amount from line 6g to columns (a) and (b)—see instructions .

.

Cost of goods sold (Schedule A) (Small FSCs, enter only that portion of cost of goods

sold that is attributable to the receipts on line 6h above.) (See Schedule A instructions.)
Foreign trade income—Line 6a or 6h (whichever applies) lessline7 .......

b Exemption percentage from line 2d,ScheduleE .. .... Se ee

Exempt foreign trade income—Multiply line 8 by lines 9a and 9b. ee ee
Nonexempt foreign trade income—Line 8lesslinel0. . 2... 2. ee ee

Enter nonexempt foreign trade income from line6,ScheduleF .........

Addlineslland12. 2... 2. ee ee ee eee wea

Enter deductions from line 18, Schedule G, that are attributable to honexempt foreign
trade income

15 _Net income attributable to nonexempt foreign trade income—Line 13 less line 14. .
PART Il—Taxable Income (or Loss)
16 Taxable income attributable to foreign trade income—Enter total of columns (a) and (b), line 15, reduced by

17
18
19

20

any nontaxable income included in column (b). Attach a schedule that shows the computation of the taxable
portion ofline 15,column(b) . 2 6. ee

Taxable income from line 19,ScheduleF. . 6. ee
Taxable income (or loss) before net operating loss deduction and dividends-received deduction—Add lines 16 and 17

Less: a Net operating loss deduction (see instructions—attach schedule) . . . . .
b Dividends-received deduction (see instructions—attach schedule). . . . .

cAddlines19aand19b . 2... ee wee

Taxable income (or loss)—Line 18 less line 19¢ (Enter here and see instructions for Schedule J for figuring
the tax on this income.) .. - ee