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TITLE 26-INTERNAL REVENUE CODE ented, copyrights (other than films, tapes, records, or similar reproductions, for com- mercial or home use), goodwill, trademarks, trade brands, franchises, or other like prop- erty, (C) products of a character with respect to which a deduction for depletion is al- lowable (including oil, gas, coal, or uranium products) under section 613 or 613A, or (D) products the export of which is pro- hibited or curtailed under section 4(b) of the Export Administration Act of 1969 (50 U.S.C. App. 2403(b)) to effectuate the policy set forth in paragraph (2)(A) of section 3 of such Act (relating to the protection of the domestic economy). Subparagraph (C) shall not apply to any com- modity or product at least 50 percent of the fair market value of which is attributable to manufacturing or processing, except that sub- paragraph (C) shall apply to any primary product from oil, gas, coal, or uranium. For purposes of the preceding sentence, the term "processing" does not include extracting or handling, packing, packaging, grading, stor- ing, or transporting. (3) Property in short supply If the President determines that the supply of any property described in paragraph (1) is insufficient to meet the requirements of the domestic economy, he may by Executive order designate the property as in short supply. Any property so designated shall be treated as property not described in para- graph (1) during the period beginning with the date specified in the Executive order and ending with the date specified in an Execu- tive order setting forth the President's deter- mination that the property is no longer in short supply. (d) Producer's loans (1) In general An obligation, subject to the rules provided in paragraphs (2) and (3), shall be treated as arising out of a producer's loan if- (A) the loan, when added to the unpaid balance of all other producer's loans made by the DISC, does not exceed the accumu- lated DISC income at the beginning of the month in which the loan is made; (B) the obligation is evidenced by a note (or other evidence of indebtedness) with a stated maturity date not more than 5 years from the date of the loan; (C) the loan is made to a person engaged in the United States in the manufacturing, production, growing, or extraction of export property determined without regard to sub- paragraph (C) or (D) of subsection (c)(2), (referred to hereinafter as the "borrower"); and (D) at the time of such loan it is designat- ed as a producer's loan. (2) Limitation An obligation shall be treated as arising out of a producer's loan only to the extent that such loan, when added to the unpaid balance of all other producer's loans to the borrower outstanding at the time such loan is made, does not exceed an amount determined by multiplying the sum of- (A) the amount of the borrower's adjusted basis determined at the beginning of the borrower's taxable year in which the loan is made, in plant, machinery, and equipment, and supporting production facilities in the United States; (B) the amount of the borrower's proper- ty held primarily for sale, lease, or rental, to customers in the ordinary course of trade or business, at the beginning of such tax- able year; and (C) the aggregate amount of the borrow- er's research and experimental expendi- tures (within the meaning of section 174) In the United States during all preceding tax- able years beginning after December 31, 1971, by the percentage which the borrower's re- ceipts, during the 3 taxable years immediate- ly preceding the taxable year (but not includ- ing any taxable year commencing prior to 1972) in which the loan is made, from the sale, lease, or rental outside the United States of property which would be export property (determined without regard to subparagraph (C) or (D) of subsection (c)(2)) if held by a DISC is of the gross receipts during such 3 taxable years from the sale, lease, or rental of property held by such borrower primarily for sale, lease, or rental to customers in the ordi- nary course of the trade or business of such borrower. (3) Increased investment requirement An obligation shall be treated as arising out of a producer's loan in a taxable year only to the extent that such loan, when added to the unpaid balance of all other producer's loans to the borrower made during such taxable year, does not exceed an amount equal to- (A) the amount by which the sum of the adjusted basis of assets described in para- graph (2)(A) and (B) on the last day of the taxable year in which the loan is made ex- ceeds the sum of the adjusted basis of such assets on the first day of such taxable year; plus (B) the aggregate amount of the borrow- er's research and experimental expendi- tures (within the meaning of section 174) in the United States during such taxable year. (4) Special limitation in the case of domestic film maker (A) In general In the case of a borrower who is a domes- tic film maker and who incurs an obligation to a DISC for the making of a film, and such DISC Is engaged in the trade or busi- ness of selling, leasing, or renting films which are export property, the limitation described in paragraph (2) may be deter- mined (to the extent provided under regula- tions prescribed by the Secretary) on the basis of- (i) the sum of the amounts described in subparagraphs (A). (B), and (C) thereof plus reasonable estimates of all such amounts to be incurred at any time by the borrower with respect to films which are Page 622