Eligibility
The loan must be designated as a producer's loan, have a maturity of 5 years or less, and the borrower must be engaged in U.S. manufacturing of export property.
Frequently Asked Questions
Who is eligible for the DISC Producer's Loans?
The loan must be designated as a producer's loan, have a maturity of 5 years or less, and the borrower must be engaged in U.S. manufacturing of export property.
How does the DISC Producer's Loans work?
A DISC can lend its accumulated tax-deferred income back to the U.S. manufacturing parent (the borrower) to fund export-related assets, R&D, and inventory without triggering a deemed distribution.
What law authorizes the DISC Producer's Loans?
The DISC Producer's Loans is authorized under IRC §993 of the Internal Revenue Code (Title 26, United States Code).
Statutory Text — IRC §993
Source: Internal Revenue Code, Title 26, United States Code
§ 993. Definitions and special rules(a) Qualified export receipts(1) General ruleFor purposes of this part, except as provided by regulations under paragraph (2), the qualified export receipts of a corporation are—(A) gross receipts from the sale, exchange, or other disposition of export property,
(B) gross receipts from the lease or rental of export property, which is used by the lessee of such property outside the United States,
(C) gross receipts for services which are related and subsidiary to any qualified sale, exchange, lease, rental, or other disposition of export property by such corporation,
(D) gross receipts from the sale, exchange, or other disposition of qualified export assets (other than export property),
(E) dividends (or amounts includible in gross income under section 951) with respect to stock of a related foreign export corporation (as defined in subsection (e)),
(F) interest on any obligation which is a qualified export asset,
(G) gross receipts for engineering or architectural services for construction projects located (or proposed for location) outside the United States, and
(H) gross receipts for the performance of managerial services in furtherance of the production of other qualified export receipts of a DISC.
(2) Excluded receiptsThe Secretary may under regulations designate receipts from the sale, exchange, lease, rental, or other disposition of export property, and from services, as not being receipts described in paragraph (1) if he determines that such sale, exchange, lease, rental, or other disposition, or furnishing of services—(A) is for ultimate use in the United States;
(B) is accomplished by a subsidy granted by the United States or any instrumentality thereof;
(C) is for use by the United States or any instrumentality thereof where the use of such export property or services is required by law or regulation.
For purposes of this part, the term “qualified export receipts” does not include receipts from a corporation which is a DISC for its taxable year in which the receipts arise and which is a member of a controlled group (as defined in paragraph (3)) which includes the recipient corporation.
(3) Definition of controlled groupFor purposes of this part, the term “controlled group” has the meaning assigned to the term “controlled group of corporations” by section 1563(a), except that the phrase “more than 50 percent” shall be substituted for the phrase “at least 80 percent” each place it appears therein, and section 1563(b) shall not apply.
(b) Qualified export assetsFor purposes of this part, the qualified export assets of a corporation are—(1) export property (as defined in subsection (c));
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