114 STAT. 2426 PUBLIC LAW 106-519—NOV. 15, 2000 to excluded property described in subparagraph (B) of section 943(a)(3) (relating to intangibles). "(B) ONLY DIRECT EXPENSES TAKEN INTO ACCOUNT. — For purposes of this subsection, any expense other than a directly allocable expense shall not be taken into account in computing foreign trade income. "SEC. 942. FOREIGN TRADING GROSS RECEIPTS. " (a) FOREIGN TRADING GROSS RECEIPTS. — "(1) IN GENERAL.— Except as otherwise provided in this section, for purposes of this subpart, the term 'foreign trading gross receipts' means the gross receipts of the taxpayer which are— "(A) from the sale, exchange, or other disposition of qualifying foreign trade property, "(B) from the lease or rental of C3^ualifying foreign trade property for use by the lessee outside the United States, "(C) for services which are related and subsidiary to— "(i) any sale, exchange, or other disposition of qualifying foreign trade property by such taxpayer, or "(ii) any lease or rental of qualifying foreign trade property described in subparagraph (B) by such taxpayer, "(D) for engineering or architectural services for construction projects located (or proposed for location) outside the United States, or "(E) for the performance of managerial services for a person other than a related person in furtherance of the production of foreign trading gross receipts described in subparagraph (A), (B), or (C). Subparagraph (E) shall not apply to a taxpayer for any taxable year unless at least 50 percent of its foreign trading gross receipts (determined without regard to this sentence) for such taxable year is derived from activities described in subparagraph (A), (B), or (C). " (2) CERTAIN RECEIPTS EXCLUDED ON BASIS OF USE; SUB- SIDIZED RECEIPTS EXCLUDED. —The term 'foreign trading gross receipts' shall not include receipts of a taxpayer from a transaction if— "(A) the qualifying foreign trade property or services— "(i) are for ultimate use in the United States, or "(ii) are for use by the United States or any instrumentality thereof and such use of qualifying foreign trade property or services is required by law or regulation, or "(B) such transaction is accomplished by a subsidy granted by the government (or any instrumentality thereof) of the country or possession in which the property is manufactured, produced, grown, or extracted. "(3) ELECTION TO EXCLUDE CERTAIN RECEIPTS. — The term 'foreign trading gross receipts' shall not include gross receipts of a taxpayer from a transaction if the taxpayer elects not to have such receipts taken into account for purposes of this subpart. " (b) FOREIGN ECONOMIC PROCESS REQUIREMENTS.—
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