U.S. Income Tax Return of a Foreign Sales Corporation OMB No. 1545-0935

Form 1120-FSC

© See separate instructions. Please type or print. Department of the Treasury

Internal Revenue Service

For calendar year 1995 or other tax year beginning , 1995, and ending , 19

D Date incorporated

Country or U.S. possession

of incorporation (See page

5 of the instructions.)

Name A C Employer identification number

B Number, street, and room or suite no. (See page 5 of the instructions.)

City or town, state, ZIP code, or country E Total assets (See page 6 of the instructions.)

Check type of election made:

FSC Small FSC

$

1 Principal shareholder. Complete for the shareholder that at the beginning of the FSC tax year was the principal shareholder. If two or more shareholders

own equal amounts of stock, complete for the shareholder that has the same tax year as the FSC. (See page 6 of the instructions.)

a Name b Identifying number

c Address (number, street, and room or suite no., city or town, state, ZIP code, or country) d Total assets (corporations only)

$

Percentage of voting stock of the f Tax year ends (month and year) g Service Center where return is filed h Foreign owner (check one)

principal shareholder

e

Yes No

Parent-subsidiary controlled group. Is the FSC a subsidiary in a parent-subsidiary controlled group? ©

Total assets (consolidated, if applicable)

a Name of common parent

d

b Identifying number

c

e Percentage of voting stock of the common parent f Tax year ends (month and year) g Service Center where return is filed

3 Administrative pricing rules

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.

a

23% of combined taxable income (3) Marginal costing

(4)

(1)

Section 482 method

1.83% of foreign trading gross receipts

b Check the box if the FSC and the related supplier(s) have met the payment requirements of Temporary Regulations section 1.925(a)-1T(b)(2)(ii) and

they elect to use the administrative pricing rules ©

Tax and Payments

1 Total tax (Schedule J, line 8) 1

2 Payments:

2h

3 Estimated tax penalty (See page 6 of the instructions). Check if Form 2220 is attached © 3

4 Tax due. If line 2h is smaller than the total of lines 1 and 3, enter amount owed 4

5 Overpayment. If line 2h is larger than the total of lines 1 and 3, enter amount overpaid 5

6 Enter amount of line 5 you want: Credited to 1996 estimated tax © Refunded © 6

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

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

Sign

Here

Signature of officer Date Title

Date Preparer’s social security no. Preparer’s

signature Check if selfemployed © Paid

Preparer’s

Use Only Firm’s name (or yours

if self-employed)

and address

EIN ©

ZIP code ©

For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11531K Form 1120-FSC (1995)

Enter the effective date of

the election:

© ©

©

©

F Check applicable boxes:

a 1994 overpayment credited to 1995 2a

b 1995 estimated tax payments 2b

( ) 2c 2d d Bal ©

Less 1995 refund applied for on

Form 4466

c

e Tax deposited with Form 7004 2e

Credit for Federal tax paid on fuels (attach Form 4136) 2f f

g U.S. income tax paid or withheld at source (attach Form 1042-S) 2g

If “Yes,” and the principal shareholder (described in 1 above) is not the common parent of the group, complete

lines 2a through 2g below for the common parent. (See page 6 of the instructions.)

h Add lines 2d through 2g

2

(1) Initial return (2) Final return (3) Change of address (4) Amended return

Yes No

(5)

Address (number, street, and room or suite no., city or town, state, ZIP code, or country)

Transactions at arm’s length with unrelated supplier(s)

(2)

$
Form 1120-FSC (1995) Page 2

Cost of Goods Sold Related to Foreign Trading Gross Receipts (See page 6 of the instructions.)

(a) Using administrative pricing rules (b) Not using administrative pricing rules

1 Inventory at beginning of year 1

2 Purchases 2

3 Cost of labor 3

4 Additional section 263A costs (attach schedule) 4

Other costs (attach schedule) 5

6 Total. Add lines 1 through 5 6

7 Inventory at end of year 7

Cost of goods sold. Subtract line 7 from line 6. Enter here and on

line 7 of Schedule B. Small FSCs, see instructions for Schedule A

8

8

9a Check all methods used for valuing closing inventory:

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

9d

d If the LIFO inventory method was used for this tax year, enter percentage (or amounts) of closing

inventory computed under LIFO

e Do the rules of section 263A (for property produced or acquired for resale) apply to the FSC? Yes No

f Was there any change in determining quantities, cost, or valuations between opening and closing inventory?

If “Yes,” attach explanation Yes No

Additional Information (See page 7 of the instructions.) Note: Small FSCs, skip questions 7g, 8, and 9.

Yes No

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

4 Is the FSC a foreign personal holding company or a personal holding company? (See page 7 of the instructions.)

1 See page 12 of the instructions and enter the principal:

9

a Business activity code no. ©

b Business activity © c Product or service ©

d During the tax year, did the FSC maintain the records required under section 6001 at a location within the U.S.?

e At all times during the tax year, did the FSC have at least one non-U.S. resident on its board of directors?

Small FSCs: Check the applicable box if during the tax year the small FSC was a member of a controlled group

of corporations that included a DISC or a FSC.

f

Foreign management requirements (not for small FSCs):

a Did all formally convened meetings of the board of directors and of the shareholders occur outside the U.S.?

b (1) Were all cash dividends, legal and accounting fees, salaries of officers, and salaries or fees of members of

the board of directors disbursed from bank accounts maintained outside the U.S.? (If “Yes,” these accounts

are considered to be the FSC’s principal bank accounts.)

(2) At all times during the tax year, did the FSC maintain its principal bank accounts in a qualifying foreign

country or U.S. possession? (See page 2 of the instructions.)

Name of bank(s) © 

Foreign economic process requirements (not for small FSCs):

a Check the applicable box to make the annual election to group sales activities (Regulations section 1.924(d)-1(c)(5)):

Customer grouping

b Check the applicable box(es) to indicate how the FSC met the foreign direct costs requirement: (See page 2 of the instructions.)

The FSC (or any person under contract with the FSC) met the 50% test of section 924(d)(1).

The FSC (or any person under contract with the FSC) met the alternative 85% test of section 924(d)(2). Check to indicate the

activity number listed in section 924(e) for which this alternative test was met:

d Check the applicable box to elect under Regulations section 1.924(d)-1(e) to group foreign direct costs on one of the following bases:

If box (5) in Item 9b is checked, enter which of the five methods listed in Regulations section 1.924(e)-1(e)(1) (i) through (v)

describes how the risk is to be borne by the FSC ©

Other (Specify method used and attach explanation.) ©

Lower of cost or market as described in Regulations section 1.471-4

Cost as described in Regulations section 1.471-3

Schedule A

5

2 Enter the amount of tax-exempt interest received or accrued during the tax year © $

8

FSC qualification requirements (See pages 1 and 2 of the instructions.):

a Enter the largest number of shareholders the FSC had at any time during the tax year ©

b Did the FSC have any preferred stock outstanding at any time during the tax year?

During the tax year, did the FSC maintain an office in a qualifying foreign country or U.S. possession in which

a complete set of books and records was maintained? (See page 1 of the instructions.)

c

5

7

Check if the FSC has an NOL for the tax year and is electing under sec. 172(b)(3) to forego the carryback period ©

Account number(s) ©

(1) (2) (3) (4) (5)

Customer grouping Contract grouping Product or product line grouping

Contract grouping Product or product line grouping Product or product line subgroupings

Enter the available NOL carryover from prior tax years. (Do not reduce it by any deduction in Schedule B, Part

II, line 19a.) ©

6

$

c

Check the applicable box if during the tax year the FSC was a member of a controlled group of corporations

that included a DISC or a small FSC.

g

(1)

(2)

(3)

b Check if there was a writedown of subnormal goods as described in Regulations section 1.471-2(c) ©
20

Form 1120-FSC (1995) Page 3

Taxable Income or (Loss) (See page 7 of the instructions.)

Part I—Net Income Attributable to Nonexempt Foreign Trade Income

(a) Using administrative

pricing rules

(b) Not using administrative

pricing rules

Sale, exchange, or other disposition of export property. (Enter 50% of

military property sales. Enter the other 50% on Schedule F, line 1.)

1

2 Lease or rental of export property for use outside the U.S.

3 Services related and subsidiary to:

Sale, exchange, or other disposition of export property. (Enter 50% of

services related to the sale or other disposition of military property. Enter

the other 50% on Schedule F, line 1.)

a

b Lease or rental of export property

4 Engineering or architectural services for construction projects outside the U.S.

5 Managerial services for an unrelated FSC or DISC

6 Total foreign trading gross receipts:

a Add lines 1 through 5. (Small FSCs, complete lines 6b through 6h.)

b Small FSC limitation (section 924(b)(2)(B))

c Controlled group member’s share of line 6b

Enter 1. (For a short tax year: Divide the number of

days in the short tax year by the number of days in

the full tax year, and enter as a decimal less than

1.00000.) 

d

e Multiply line 6b or line 6c (whichever applies) by line 6d

Enter the total of line 6a, columns (a) and (b). (If

commission income is included on line 6a, see special

computation rule in the instructions for line 6f.)

f

g Enter the smaller of line 6e or line 6f

Note: If line 6f exceeds line 6e, enter the excess on line 7 of Schedule F.

See the instructions for line 6h if commission income is involved.

h Allocate the amount from line 6g to columns (a) and (b)

Cost of goods sold (Schedule A, line 8). (Small FSCs, enter only the part

of cost of goods sold from the receipts on line 6h above. See instructions

for Schedule A on page 6.)

7

8 Foreign trade income. Subtract line 7 from line 6a or line 6h (whichever applies)

9a Exemption percentage from Schedule E, line 3d %

b Exemption percentage from Schedule E, line 2d %

10 Exempt foreign trade income. Multiply line 8 (column (a)) by line 9a and line

8 (column (b)) by line 9b

11 Nonexempt foreign trade income. Subtract line 10 from line 8

Deductions attributable to nonexempt foreign trade income. Enter amount

from Schedule G, line 18

12

Net income attributable to nonexempt foreign trade income. Subtract line

12 from line 11

13

Net income attributable to nonexempt foreign trade income from Schedule

F, line 6

14

Total net income attributable to nonexempt foreign trade income. Add

lines 13 and 14

15

Part II—Taxable Income or (Loss)

Taxable income from foreign trade income. Enter total of line 15, columns (a) and (b), minus any

nontaxable income included in line 15, column (b). Attach a schedule that shows the computation

of the taxable part of line 15, column (b)

16

17 Taxable nonforeign trade income from Schedule F, line 19

Taxable income or (loss) before net operating loss deduction and dividends-received deduction.

Add lines 16 and 17

18

Net operating loss deduction (attach schedule)

Dividends-received deduction (attach schedule)

Add lines 19a and 19b

Taxable income or (loss). Subtract line 19c from line 18. (See instructions for Schedule J on

page 10 to figure the tax on this income.)

20

Schedule B

19a

b

c

1

2

3a

3b

4

5

6a

6b

6c

6d

6e

6f

6g

6h

7

8

9a

9b

10

11

12

13

14

15

16

17

18

19a

19b

19c

$5,000,000 00
Form 1120-FSC (1995) Page 4

Percentages Used in Figuring Exempt Foreign Trade Income—Sections 923(a)(2) and (3), and 291(a)(4)

(See page 8 of the instructions.)

Note: If all shareholders of the FSC 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 (round to five decimal places) of voting stock owned by shareholders that are C

corporations

1

2 Exemption percentage 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 2b .32000

c Multiply line 1 by line 2a 2c

Exemption percentage. Subtract line 2c from line 2b. Enter here and on Schedule B, line 9b,

and on Schedule G, line 16b

d

2d

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

Difference between section 923(a)(3) fraction and section 291(a)(4)(B) fraction (16/23 – 15/23 =

1/23) shown as a decimal

a

3a .04348

b Section 923(a)(3) fraction (16/23) shown as a decimal 3b .69565

c 3c

Exemption percentage. Subtract line 3c from line 3b. Enter here and on Schedule B, line 9a,

and on Schedule G, line 16a

d

3d

Net Income from Nonexempt Foreign Trade Income and Taxable Nonforeign Trade Income

(See page 8 of the instructions.)

Part I—Net Income from Nonexempt Foreign Trade Income

(b) Not using administrative

pricing rules

(a) Using administrative

pricing rules Enter 50% of total receipts from the sale, exchange, or other disposition of

military property and related services. Note: Enter the other 50% on lines

1 and 3a of Schedule B

1

2 International boycott income

3 Illegal bribes and other payments

4 Total. Add lines 1, 2, and 3

Enter cost of goods sold and other costs related to above income (attach

schedule)

5

Net income from nonexempt foreign trade income. Subtract line 5 from

line 4. Enter here and on Schedule B, line 14, columns (a) and (b)

6

Part II—Taxable Nonforeign Trade Income

Small FSCs: If line 6f of Schedule B exceeds line 6e of Schedule B, enter the excess. (Include

the deduction for cost of goods sold attributable to the excess on line 18 below.)

7

7

8 Interest income 8

9 Dividend income (attach schedule—see page 8 of the instructions) 9

10 Carrying charges 10

11 Royalties 11

12 Other investment income 12

Receipts excluded under section 924(f) on basis of use, subsidized receipts, and receipts from

related parties

13

13

14 Income from excluded property under sections 927(a)(2) and (3) 14

15 Income from transactions that did not meet the Foreign economic process requirements (page

2, item 9 of Additional Information). (See Foreign Trading Gross Receipts on page 2 of the

instructions.) 15

16 Other income 16

17 Total. Add lines 7 through 16 17

18 Enter deductions allocated or apportioned to line 17 income (attach schedule) 18

19 Taxable nonforeign trade income. Subtract line 18 from line 17. Enter here and on

Schedule B, line 17 19

Schedule E

Schedule F

2

3

4

5

6

1

Multiply line 1 by line 3a
Form 1120-FSC (1995) Page 5

Deductions Allocated or Apportioned to Foreign Trade Income Other than Foreign Trade Income

Reported on Schedule F (See instructions on page 9 for limitations before completing lines 1 through 14.)

(b) Not using administrative

pricing rules

(a) Using administrative

pricing rules

1 Foreign direct costs:

a Advertising and sales promotion (section 924(e)(1)) 1a

b Certain processing and arranging costs (section 924(e)(2)) 1b

c Certain transportation costs (section 924(e)(3)) 1c

d Certain determination and transmittal costs (section 924(e)(4)) 1d

e Assumption of credit risk (section 924(e)(5)) 1e

Total. 1f f Add lines 1a through 1e

2 Advertising 2

3 Interest 3

4 Depreciation from Form 4562 (less any depreciation claimed elsewhere on

this return) (attach Form 4562) 4

5 Salaries and wages 5

6 Rents 6

7 Sales commissions 7

8 Warehousing 8

9 Freight 9

10 Compensation of officers 10

11 Bad debts (See page 10 of the instructions.) 11

12 Pension, profit-sharing, etc., plans 12

13 Employee benefit programs 13

14 Other deductions (attach list) 14

15 Total. Add lines 1f through 14 15

16a Exemption percentage from Schedule E, line 3d 16a %

b Exemption percentage from Schedule E, line 2d 16b %

17 Deductions attributable to exempt foreign trade income. Multiply line 15,

column (a) by line 16a and line 15, column (b) by line 16b 17

Deductions attributable to nonexempt foreign trade income other than

foreign trade income reported on Schedule F. Subtract line 17 from line

15. Enter here and on Schedule B, line 12, columns (a) and (b)

18

18

Tax Computation (See page 10 of the instructions.)

1 Check if the FSC is a member of a controlled group (see section 927(d)(4)) ©

If the box on line 1 is checked, enter the FSC’s share of the $50,000, $25,000, and

$9,925,000 taxable income brackets (in that order):

2a

(1) $ (2) $

b Enter the FSC’s share of: 

Income tax. Check this box if the FSC is a qualified personal service corporation as defined in

section 448(d)(2). (See page 11 of the instructions.) ©

3

3

4 Foreign tax credit (attach Form 1118) 4

5 Subtract line 4 from line 3 5

6 Personal holding company tax (attach Schedule PH (Form 1120)) 6

7a Alternative minimum tax (attach Form 4626) 7a

b Environmental tax (attach Form 4626) 7b

8 Total tax. Add lines 5 through 7b. Enter here and on line 1, page 1 8

Schedule J

Schedule G

(3) $

(1) Additional 5% tax (not more than $11,750)

(2) Additional 3% tax (not more than $100,000)

$

$

Important: Members of a controlled group, see page 10 of the instructions.
Form 1120-FSC (1995) Page 6

Balance Sheets Beginning of tax year End of tax year

(a) (b) (c) (d) Assets

1 Cash

2a Trade notes and accounts receivable

b Commissions receivable

c Less allowance for bad debts

3 Inventories

4 U.S. government obligations

5 Tax-exempt securities (See page 11 of the instructions.)

6 Other current assets (attach schedule)

7 Loans to stockholders

8 Mortgage and real estate loans

9 Other investments (attach schedule)

10a Buildings and other depreciable assets

( ) ( ) b Less accumulated depreciation

11a Depletable assets

b Less accumulated depletion ( ) ( )

12 Land (net of any amortization)

13a Intangible assets (amortizable only)

( ) ( ) b Less accumulated amortization

14 Other assets (attach schedule)

15 Total assets

Liabilities and Stockholders’ Equity

16 Accounts payable

17 Mtges., notes, bonds payable in less than 1 year

18 Transfer prices payable

19 Other current liabilities (attach schedule)

20 Loans from stockholders

21 Mtges., notes, bonds payable in 1 year or more

22 Other liabilities (attach schedule)

23 Capital stock

24 Paid-in or capital surplus

25 Retained earnings—Appropriated (attach schedule)

26 Retained earnings—Unappropriated

( ) ( ) 27 Less cost of treasury stock

28 Total liabilities and stockholders’ equity

Reconciliation of Income (Loss) per Books With Income per Return (See page 11 of the instructions.)

1 Net income (loss) per books Income recorded on books this year not

included on this return (itemize):

7

2 Federal income tax

3 Excess of capital losses over capital gains a Tax-exempt interest

Income subject to tax not recorded on

books this year (itemize):

4 b Exempt foreign trade

income

Expenses recorded on books this year not

deducted on this return (itemize):

5

Deductions on this return not charged

against book income this year (itemize):

8

a Depreciation

Deductions attributable to Depreciation

exempt foreign trade income

b

c Travel and entertainment

9 Add lines 7 and 8

Taxable income (line 18, Schedule B)—

line 6 less line 9

10

6 Add lines 1 through 5

Analysis of Unappropriated Retained Earnings per Books (Line 26, Schedule L)

1 Balance at beginning of year 5 Distributions: a Cash

2 Net income (loss) per books b Stock

3 Other increases (itemize): c Property

6 Other decreases (itemize):

7 Add lines 5 and 6

4 Add lines 1, 2, and 3 8 Balance at end of year (line 4 less line 7)

Schedule L

Schedule M-1

Schedule M-2

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