Form 1120-FSC (1986)

Page 5

Sirsiixes Deductions Allocated or Apportioned to Foreign Trade Income

(a) Using Administrative |(b) Not Using Administrative
Pricing Rules Pricing Rules
1 Foreign direct costs:
a Section 924(e)(1) (advertising, etc.). . . . . . . . ee ee Loa
b Section 924(e)(2)(processing,etc.) . . . 2... . ee Lab
¢ Section 924(e) (3) (transportation,etc.). . . . 2... 2. Lae
d= Section 924(e)(4) (transmittal,etc.). 2 2 2 2 2. ee L
e Section 924(e)(5) (assumption of credit risk). . oe wo... phe
f Totaloflineslathroughlinele . . . if
Enter all other applicable costs on lines 2 through 4 below. Do not enter a cost on
more than one line. Mh
Bcvertsing ES
3 Interest So . 13
4 Depreciation from Form 4562 (less. depreciation claimed elsewhere on this
return) (attach Form 4562) . ee
5 Salaries and wages . 5
6 Rents oe 6
7 Sales commissions . 7
8 Warehousing . 8
9 Freight . . . 9
10 Compensation of officers rr 10
11 Bad debts (see instructions). . . Lo ee 11
12 Pension, profit-sharing, etc., plans (see instructions) : . 12
13 Employee benefit programs rs 13
14 Other (list): >
. 114
15 Total (add lines 1fthrough 14). . . . 6)
16 a Exemption percentage from line 3d, Schedule E woe ee ee ee. [6a
b Exemption percentage from line 2d, Schedule E : toe . . . [6b
17 Deductions relating to exempt foreign trade income—Line 15 times line 16a and 7
6b. . 2. .
18 Total deductions relating to nonexempt foreign trade income—tine 18 less line
17. (Enter here and on line 14, columns (a) and(b), ScheduleB.). . . . . . [18
Tax Computation (See instructions.)
1 Check if you are a member of a controlled group (see section 927(d)(4)). . . 2 1. im
2 a If line 1 is checked, see instructions. Enter your portion of each $25,000 taxable income bracket
amount:
C) $oocecceeceeeeeeeeeeeee (ii) $...
b If your tax year includes July 1, 1987, see instructions and enter share of tax bracket amounts:
OB oecececceeceeeeeeeee (i) $ Ms

3 Income tax (see instructions to figure the tax; enter this tax or alternative tax, whichever is less). Check if
alternative tax is used >

4 Foreign tax credit (attach Form 1118) (see instructions)

5 Line 3 less line 4

6 Minimum tax (see instructions—attach Form 4626)

7 Personal holding company tax (attach Schedule PH (Form 1120)) .

8 Total tax—Add lines 5, 6, and 7. Enterhereandonlinel,pagel_. . |... |

00 |S Jon Jon | few



Form 1120-FSC (1986) Page 4

Additional Information (continued from page 2).

S Foreign Economic Process Requirements (these requirements do not apply to small FSCs):
Check the box or boxes below to indicate that the FSC (or any person acting under contract with the FSC) met the requirements of
section 924(d) for all transactions relating to foreign trading gross receipts reported on lines 1 through 5 of Schedule B.
(1) (1 The FSC (or any person acting under contract with the FSC) met the 50% test of section 924(d)(1) for transactions relating to
foreign trading gross receipts reported on lines 1 through 5 of Schedule B.
(2) ©) The FSC (or any person acting under contract with the FSC) met the alternative 85% test of section 924(d)(2) for
transactions relating to foreign trading gross receipts reported on lines 1 through 5 of Schedule B.
If the section 924(d)(1) or (d)(2) requirements are not met for any transaction(s), attach a separate schedule showing the income and
expenses relating to the transaction(s). Report the income as nonforeign trade income on line 11 of Schedule F. Enter related expenses
on line 14 of Schedule F.
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) percentage . 2a .02000
b Section 923(a)(2) percentage 2b -32000
¢ Line 2atimesline1 . . [ee
d Exemption percentage—Line 2b | less line 2c. “(Enter he here and on line ‘9b, Schedule B; 3: and | line 2 16b,
Schedule G.) . Le -.. . [2d
3 Exemption percentage for foreign trade i income e determined under administrative pricing rules:
a Difference between section 923(a)(3) fraction and section 291(2X4) f fraction n (16/23 - 15/23 = 3a 04348

1/23) expressed asadecimal. . . . .

b Section 923(a)(3) fraction (16/23) expressed as a decimal So ee ee ee LB 69565

¢ Line 3atimesline1 . . [8c
d Exemption percentage—Line ‘3b less line ‘3c. (Enter here and ir in line 9a, Schedule 8; and line 16a,
ScheduleG.) . . 2... dL

Saiticam Nonforeign Trade Income

1 International boycott income (see instructions) 1
2 Illegal bribes and other payments (see instructions) . . 2
3 Small FSCs—If line 6f of Schedule B exceeds line 6e of Schedule B, enter the excess. Unc the
deduction for cost of goods sold attributable to the excess on line 14 below.) . 3
4 Interest income . 4
5 Dividend income (attach schedule—see instructions). 5
6 Carrying charges . 6
7 Royalties. 7
8 Other investment income . Ls
9 Receipts excluded under section 924(h on basis of use, subsidized rece and recep from related 9
parties . : :
10 Income from excluded property under sections 927(a\2) and (3) eee. L210
11 Income from transactions that did not qualify as foreign trade income because the foreign economic
process test of section 924(d) was not met . ee ee ee Pa
12 Otherincome . . . Fe 12
13

13 Total—Add lines 1 through 12.

14 Enter deductions allocated or apportioned to above in income items (attach schedule—see instructions) . (44

15 Taxable income from nonforeign trade income—Line 13 less line 14. (Enter here and on line 17,
ScheduleB.) 2...) | 15



Form 1120-FSC (1986) Page 6

Sitti Balance Sheets Beginning of tax year End of tax year
ASSETS (a) (b) (c) (@)
1 Cash

2 a Trade notes, and accounts receivable on
b Commissions receivable . . - . .
¢ Less allowance for bad debts .
3 Inventories
4 Federal and state government obligations
5 Other current assets (attach schedule)
6 Loans to stockholders .
7 Mortgage and real estate loans .
8 Other investments (attach schedule) .
9 Buildings and other fixed depreciable assets
a Less accumulated depreciation .
10 Depletable assets oo
a Less accumulated depletion .
11 Land (net of any amortization) .
12 Intangible assets (amortizable only)
a Less accumulated amortization
13 Other assets (attach schedule) «
14 Totalassets . |.
LIABILITIES AND STOCKHOLDERS’ Equi MMM
15 Accounts payable .
16 Mtges., notes, bonds payable in less than ly year
17 Transfer prices payable
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-inorcapitalsurplus. . . .
24 Retained earnings—Appropriated (attach schedule).
25 Retained earnings—Unappropriated . foo
26 Less cost of treasury stock... . ( ) ay
27 Total liabilities and stockholders’ equity -

Schedule M Reconciliation of Income per Books With Income per Return

1 Netincomeon books . tone . 7 Income recorded on books this year
2 Federalincometax. . . . not included in this return (itemize)
3 Excess of capital losses over capital gains a Tax-exemptinterest $
4 Income subject to tax not recorded on books this year b Exempt foreign

(itemize) _ tradeincome . $

5 Expenses recorded on books this year not
deducted in this return (itemize) 8 Deductions in this tax return not charged
.$ against book income this year (itemize)

a Depreciation
b Deductions attributable to a Depreciation . . $
exempt foreign trade income $

9 Total of lines 7 and 8 .
10 Taxable income —line 6 less line9_-

Analysis of Unappropriated Retained Earnings per Books (line 25 above)

1 Balance at beginningofyear. . . . . 5 Distributions: a Cash
2 .Netincomeonbooks . . ... . . b Stock
3 Other increases (itemize) ¢ Property
6 Other decreases (itemize)

. 7 Total of lines 5 and 6 . ns
4 Totaloflines1,2,and3. . . . . 8 Balance at end of year (line 4 less line 2).



rom 1 120-FSC

Department of the Treasury
Internal Revenue Service

U.S. Income Tax Return of a

Foreign Sales Corporation

(Please Type or Print)
For calendar year 1986 or other tax year beginning ___

1986 and ending.

OMB No. 1545-0935

‘| 1986

A Date of FSC or Small FSC
election

Name

D_ Business code number (See page 11 of
Instructions)

B Check type of election made
C1 esc
C1 smatirsc

Number and street

€ Employer identification number

€ Country or U.S. Possession of
Incorporation (see instruc:
tions)

City or town, state, ZIP code, or country

F Date incorporated

G Enter total assets from line 14, column (d), Schedule L (see specific instructions)

Dollars Cents

> {s

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.

(1) Name (2) Identifying number

(3) Address (4) Total assets (corporations only)
$

(5) Percentage of voting stock owned (6) Tax year ends (month) (7) Foreign owner

O ves C1 no

1 Check the appropriate box(es) to indicate the pricing rule(s) that was used in determining the taxable income on transactions resulting in foreign trading gross receipts:
1) L_1.83% of gross receipts (2) LF) 23% of combined taxable income

(3)L Section 482 method

Tax

1 Total tax from Schedule J, line 8

2 Payments:

a Overpayment from 1985 allowed as a credit

i
W/ WY,
rn YY Yj
b 1986 estimated tax payment . Foe |
c Less refund of 1986 estimated tax applied for on Form ( )

4466

d= Tax deposited with Form 7004
e Federal tax on gasoline and special fuels (attach Form 4136)

f U.S. income tax paid or withheld at the source from Form 1042S

CC

3  Total—add lines 2c through 2f.

4 Tax Due—Line 1 less line 3. (See General Instruction E.) .

5 Overpayment—Line 3 less line 1.
6 Enter amount of line 5 you want:

a_Credited to 1987 tax year's estimated tax >

b Refunded P| 6

5

‘Under penalties of perjury, I declare that | have 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
ie re » Date »

Signature of officer Title
. Preparer’s Date Check if Preparer's social security no.
Paid , signature Ser ove o>
Preparer’s -
Use Onl Firm’s name (or LN. >
y yours, if self-employed)
and address ZIP code >

For Paperwork Reduction Act Notice, s

page 1 of the instructions.

Form 1120-FSC (i986)


Form 1120-FSC (1986) Page 2

Siiiczas Cost of Goods Sold and/or Operations Relating to Foreign Trading Gross Receipts (See Instructions.)

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

1 Inventory at the beginning of the year . Ce ee .
2 Purchases . 2
3 Costoflabor 2... ee
4 Other costs (attach schedule) 4
5 Total (add lines 1 through 4) a)
6 = Inventory at the end of the year 6
7 Cost of goods sold and/or operations—Line 5 less line 6. “(Enter here.

and on line 7 of Schedule B. Small FSC, see instructions.) . . . . LZ
8 a Check all methods used for valuing closing inventory:

@ Cost

(ii) Lower of cost or market as described in Regulations section 1.471-4 (see instructions)

oO (iii) Writedown of ‘‘subnormal"’ goods as described in Regulations section 1.471-2(c) (see instructions)
oO (iv) Other (Specify method used and attach explanation) >

b Check if the LIFO inventory method was adopted this tax year for any goods (If checkea, attach Form970.). . . . . OO
c If the LIFO inventory method was used for this tax year, enter er percentage (or amounts) of
closing inventory computed under LIFO . . . 8c
d_ Was there any change in determining quantities, cost, or valuations between opening and closing inventory? »..C Yves 0 No

if “Yes,” attach explanation.

Additional Information Required
Check the appropriate box in answering the following questions.

Yes | No

Highest number of shareholders in the corporation at any time during the tax year p //
Do you maintain an office outside the U.S. in a “designated” country or U.S. possession in which a complete set of books I]
and records (including invoices) for the corporation is maintained? Ce

Mi

me

L Doyou have at least one non-U.S. resident on your board of directors?

Mh
M_ During this tax year, did you maintain any part of your accounting tax records on a computerized system? .
N_ Foreign management tests (These questions do not apply to Small FSCs):
(1) Did all formally convened meetings of the board of directors of the corporation and all formally convened meetings of Yj,

the shareholders of the corporation take place outside the UnitedStates? . . 2. 2. 1. ww,

(2) Did the corporation maintain its principal bank account in a country which satisfies the exchange of information
requirements of section 927(e)(3) or in a U.S. possession as defined in section 927(d)(5) at all times during the tax
year from which all dividends, legal and accounting fees, salaries of officers, and salaries or fees of members of the f
board of directors were disbursed? .

0 Refer to page 11 of the instructions and state the m main:
Business activity pm =
Product or service PB —________ 1];

P Did you have any preferred stock issued and outstanding at any time during the tax year?

Ms

Q> Were you at any time during the tax year engaged in a trade or businessintheU.S.? . 2...

Us

R_ Are you a foreign personal holding company or a personal holding company? (See instructions.)
Continued on page 4.



Form 1120-FSC (1986)

Page 3

Sieg Taxable Income

PART I—Income Attributable to Foreign Trade

Income

Type of Receipt (see instructions)

a

Sale, exchange, or other disposition of export property. (Include only 50% of military
property sales. Include the other 50% online 12 below.) . . 2... eee eee

2 Lease or rental of export property for use outsidetheU.S. 2... 1... ee eee
3 Services related and subsidiary to:

a Sale, exchange, or other disposition of export property. (Include only 50% of services
relating to the sale or other disposition of military property. Include the other 50% on
linel2below.) 2 2. 2

b Lease orrentalofexportproperty 2... 1. 1 ee ee ee ee

4 Engineering or architectural services for construction projects outside the U.S.
Managerial services for an unrelated FSC or IC-DISC. (See instructions for determination
ofqualifyingamount.) 6 6 6 we 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 deter-
mine their foreign trading gross receipts.). . - -- +. +--+ 222 ee

Small FSC limitation (section 924(b\(2(B)). - ee $5,000,000

a

(a) Using Administrative
Pricing Rules

(b) Not Using Administrative
Pricing Rules

¢ Controlled group member's share of line 6b (see instruc-

d_ Enter smaller of (a) number of days in tax year divided by
365o0r(b)l(one). . 2 2 ee ee ee

e Proration of limitation—Line 6b or line 6c (whichever

applies) timesline6d 2... 1. ee ee ee
f Enter total of columns (a) and (b), line 6a (If commission

income is included in line 6a, see special computation rule

inline 6finstruction.) ........-.-.-2.4-

g Small FSC foreign trading gross receipts:
Enter smaller of line6eor6f. . ©... ewe

Note: /f line 6f exceeds line 6e, enter the excess on fine 3 of Schedule F. See line
6h instruction if commission income is involved.
h_ Allocate the amount from line 6g to columns (a) and (b) but do not enter in either
column more than that shown for the column on line 6a above (see instructions).
7 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)
8 Foreign Trade Income—Line 6a or 6h (whichever applies) lessline7 . ......-
9 a Exemption percentage from line 3d,ScheduleE .... 2... 2.2008
b Exemption percentage fromline2d,ScheduleE ...........040-
10 Exempt foreign trade income—Multiply line 8 bylines9aand9b. . ... 2...
11 Nonexempt foreign trade income—Line 8lesslinel0 ..... 2... rrr
12 Enter 50% of total receipts attributable to the sale, exchange, or other disposition of
military property and related services reduced by cost of goods sold and other expenses
relating to the receipts (see Schedule A instructions) ..........00-
13 Addlineslland12 2. 1. ee

14 Allowable deductions from line 18,ScheduleG .. .. 2... 1... ee eee
15 Net income attributable to nonexempt foreign trade income—Line 13 less line 14

_.

PART I|—Total Taxable Income

16 Taxable income attributable to foreign trade income—Enter total of columns (a) and ©.
any nontaxable income included in column (b). (See instructions.) . wee

17 Taxable income from line 15,ScheduleF . 2... 1 2 eee ee ee ay

line 15, reduced by

18 Taxable income or (loss) before net operating loss deduction and special deductions— Add lines 16 and 7

19 Less: a Net operating loss deduction (see instructions—attach schedule)
b Special deductions—(see instructions—attach schedule) ........
cAddlines19aand19b. . 2 2. 2. ee ee ee eee .

20 Taxable income or (loss)—Line 18 less line 19c (Enter here and see instructions for Schedule J for figuring

thetaxonthisincome. . . ee ee ee