SOI Tax Stats - International Boycott Report Study Terms and Concepts
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This page contains information about selected terms and concepts used in SOI's International Boycott Report articles and tables.
Please visit International Boycott Report Statistics to access these articles and tables.
Boycott agreements as a percentage of requests received
Number of boycott agreements divided by number of requests, multiplied by 100.
Denial of Foreign Sales Corporation benefits
A foreign sales corporation (FSC) was a company incorporated abroad, created to promote U.S. exports and usually controlled by a U.S. person. A portion of the FSC “foreign trade income” was exempt from U.S. taxation. Congress repealed all remaining FSC provisions in 2006.
Denial of Interest Charged Domestic International Sales Corporation (IC-DISC) benefits
The amount of IC-DISC benefits denied due to boycott participation. A corporation whose “qualified export receipts” constitute at least 95 percent of its gross receipts and which can classify at least 95 percent of its assets as “qualified export assets” can claim IC-DISC status. This allows the company to defer paying tax on some of the income earned by these corporations. Essentially, a small portion of the IC-DISC’s income is deemed distributed to the shareholder. The rest is not subject to U.S. taxation until it is actually distributed, at which time both the tax and interest on the tax are due.
Increase of Subpart F income
The increase in subpart F income due to boycott participation. Subpart F income is income subject to U.S. tax from a controlled foreign corporation (CFC). A CFC is any foreign corporation in which U.S. shareholders own directly, indirectly, or constructively, more than 50 percent of either the total combined voting power or total value of all stock on any day of the taxable year of the corporation. Generally, earnings from a controlled foreign corporation are not subject to tax in the United States until they are distributed to the U.S. parent. To compute the loss of tax benefits, shareholders of CFCs must convert some of their CFCs undistributed income into a “deemed distribution,” thereby subjecting the distribution to U.S. tax.
Method and calendar year
Taxpayers must compute the loss of extraterritorial exclusion using the international boycott factor. For all other benefits, taxpayers may use either the international boycott factor method or the specifically attributable method. Under the specifically attributable method, taxpayers reduce each benefit by the foreign taxes paid or foreign income earned that is associated with the operation in the boycotting countries with whom the agreement was made and that would otherwise be eligible for the tax benefits. Under the international boycott factor, the loss of tax benefit is determined by the taxpayer’s ratio of purchases, sales, and payroll in boycotting countries to the taxpayer’s total foreign purchases, sales, and payroll. Taxpayers reduce each benefit by the same proportion as the boycott factor.
Any country not on the list of boycotting countries maintained by the U.S. Treasury Department.
Number of boycott agreements
The number of requests to participate in an unsanctioned international boycott the taxpayer agreed to cooperate with. The number is overstated to the extent that many taxpayers do not report the exact number of agreements. An unknown number of agreements is counted as one in the tables.
Number of boycott requests received
The number of requests to participate in an unsanctioned international boycott the taxpayer received. The number is understated to the extent that many taxpayers do not report the exact number of requests. An unknown number of requests is counted as one in the tables.
Number of persons receiving requests
The number of taxpayers who received a request to participate in an unsanctioned international boycott.
Number of persons with agreements
The number of taxpayers who agreed to participate in an unsanctioned international boycott.
Reduction of extraterritorial income exclusion
The reduction of the extraterritorial income exclusion due to the presence of operations in countries known to participate in an international boycott. The extraterritorial income exclusion allowed businesses to deduct qualifying foreign trade income from their U.S. gross incomes. Qualifying foreign trade income was defined as the greatest of the following income, that when excluded would reduce taxable income by (1) 1.2 percent of foreign trading gross receipts, or (2) 15 percent of foreign trade income, or (3) 30 percent of foreign sales and leasing income. In the American Jobs Act of 2004, Congress enacted a gradual repeal of the extraterritorial income exclusion. Taxpayers could claim 80% of their eligible exclusion for 2005 and 60 percent for 2006.
Reduction of foreign taxes or foreign tax credit
The reduction in foreign taxes eligible for the foreign tax credit (under the specifically attributable method) and the reduction of foreign tax credit (under the international factor method.)
Taxable gifts, current period
These are the amount of taxable gifts—total gifts less exclusions and deductions—for the current tax year.
The U.S. Department of Treasury maintains a list, published quarterly, of those countries known to participate in unsanctioned boycotts.