Page 401 - Large Business IRS Training Guides

Special
Rules on Foreign Use for Intermediary

Transactions

• Property sold to an unrelated foreign person for further

manufacture or modification within the U.S.:

considered a foreign use
• NOT
true even if the unrelated person subsequently uses such
• this i s
property
for a foreign use (IRC §250(b)(5)(B)(i))

• Service provided to an unrelated person located in the U.S.:

considered foreign-derived
• NOT

• this i s
true even if the unrelated person uses the services in
to any person, or with respect to property, located
providing services
outside of
the U.S. (IRC §250(b)(5)(B)(ii) )

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