103 KAR 16:370. Corporation income tax

treatment of foreign sales corporations and domestic international sales corporations.

 

      RELATES TO: KRS 141.010, 141.040, 141.050

      STATUTORY AUTHORITY: KRS 131.130(1)

      NECESSITY, FUNCTION AND CONFORMITY: KRS

131.130(1) authorizes the department to promulgate administrative regulations

to administer and enforce Kentucky's tax laws. KRS 141.040(1) imposes the

corporation income tax on corporations that are doing business in this state.

Foreign sales corporations and domestic international sales corporations are

special corporate entity designations for federal income tax purposes under the

Internal Revenue Code. This administrative regulation establishes the

requirements for the Kentucky corporation income tax treatment of foreign sales

corporations and domestic international sales corporations.

 

      Section 1. Definitions. (1) “Domestic

international sales corporation” means a DISC as defined in Section 992 of the

Internal Revenue Code, 26 U.S.C. 992.

      (2) “Foreign sales corporation” means a

foreign sales corporation as defined in Section 922 of the Internal Revenue

Code, 26 U.S.C. 922 in effect prior to its repeal by Pub.L. 106-519.

 

      Section 2. Kentucky Corporation Income

Tax Treatment of Foreign Sales Corporations. A foreign sales corporation that has

transactions that arise from contracts that were binding on September 30, 2000 shall

be subject to Kentucky’s corporation income tax if the foreign sales

corporation is doing business in Kentucky as defined by KRS 141.010(25).

 

      Section 3. Kentucky Corporation Income

Tax Treatment of Domestic International Sales Corporations. A corporation

recognized as a domestic international sales corporation for federal income tax

purposes shall be recognized as a domestic international sales corporation for Kentucky income tax purposes if the corporation is doing business in Kentucky as defined by

KRS 141.010(25). (33 Ky.R. 1195; Am. 1518; eff. 1-5-2007.)