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TITLE 26-INTERNAL REVENUE CODE (5) Special rule Under regulations prescribed by the Secre- tary the determinations under this subsection shall be made on a cumulative basis with proper adjustments for amounts previously taken into account. (e) Definitions and special rules relating to computa- tion of taxable income attributable to base period export gross receipts (I) Taxable income attributable to base period export gross receipts For purposes of this section, the taxable income attributable to base period export gross receipts shall be an amount equal to that portion of the adjusted taxable income of a DISC which- (A) the amount of the adjusted base period export grosa receipts, bears to (B) the amount of the export gross re- ceipts of the DISC for the taxable year. (2) Adjusted taxable income For purposes of this section, the term "ad- Justed taxable income" means the income of a DISC for the taxable year, reduced by the amounts described in subparagraphs (A), (B), (C), and (D) of paragraph (1) of subsection (b). (3) Adjusted base period export gross receipts For purposes of this section, the term "ad- justed base period export gross receipts" means 67 percent of the average of the export gross receipts of the DISC for taxable years during the base period (as defined in para- graph (5)). For purposes of the preceding sen- tence, If any property would not qualify during the taxable year as export property by reason of section 993(c)(2), gross receipts from such property shall be excluded from export gross receipts during the taxable years in the base period. (4) Export gross receipts For purposes of this section, the term "export gross receipts" means- (A) qualified export receipts described in subparagraphs (A), (B), (C), (G), and (H), of section 193(a)(1), reduced by (B) 50 percent of such qualified export re- ceipts which are attributable to military property (as defined in subsection (b)(3)(B)). (5) Base period For purposes of paragraph (3)- (A) for any taxable year beginning before 1980, the base period shall be the taxable years beginning in 1972, 1973, 1974, and 1975, and (B) for any taxable year beginning in any calendar year after 1979, the base period shall be the taxable years beginning in the fourth, fifth, sixth, and seventh calendar years preceding such calendar year. (6) No base period year If a DISC did not have a taxable year begin- ning in a calendar year specified in paragraph (5), then, for purposes of computing the ad- Justed base period export gross receipts, such DISC is deemed to have a taxable year and export gross receipts of zero for that year. (7) Short taxable year The Secretary shall prescribe such regula- tions as he deems necessary with respect to a short taxable year for purposes of computing base period export gross receipts of a DISC, or a short taxable year In which deemed dis- tributions (as described in subsection (b)) are made, including the circumstances under which the short taxable year shall be annua- lized, and the proper method of annualiza- tion. (8) Controlled group If more than one member of a controlled group (as defined in section 993(a)(3)) for the taxable year qualifies as a DISC, then subsec- tion (b)(1)(E), this subsection, and subsection (f) shall each be applied in a manner provided by regulations prescribed by the Secretary by aggregating the export gross receipts and tax- able income of such DISCs for the' taxable year and by aggregating the export gross re- ceipts of sur-h DISCs for each taxable year in the base period. (9) Special rule where the ownership of DISC stock and the trade or business giving rise to export gross receipts of the DISC are separated (A) In general If, at any time after the beginning of the base period, there has been a separation of the ownership of the stock in the DISC from the ownership of the trade or business which (during the base period) produced the export gross receipts of the DISC, then the persons who own the trade or business during the taxable year shall be treated as having had additional export gross receipts during the base period attributable to such trade or business. (B) Exceptions Subparagraph (A) shall not apply- (i) where the stock in the DISC and the trade or business are owned throughout the taxable year by members of the same controlled group; and (ii) to the extent that the taxpayer's ownership of the stock in the DISC for the taxable year is proportionate to his ownership during the taxable year of the trade or business. (10) DISC base period attributed through share- holders in certain cases (A) In general If- (I) any person owns 5 percent or more of the stock of a DISC (hereinafter in this paragraph referred to as "first DISC"), and (ii) such person at any time during the base period of the first DISC owned 5 per- cent or more of the stock of a second DISC, then, to the extent provided in such regula- tions as the Secretary may prescribe to pre- vent circumvention of the application of subsection (b)(1)(E), an amount equal to such shareholder's share of the base period export gross receipts of the second DISC shall be added to the base period export gross receipts of the first DISC. Page 627 § 995