---
kind: "section"
citation: "26 U.S.C. § 994"
title: "26"
title_heading: "Internal Revenue Code"
number: "994"
heading: "Inter-company pricing rules"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/994"
units:
  - "Subtitle A — Income Taxes"
  - "Chapter 1 — Normal Taxes and Surtaxes"
  - "Subchapter N — Tax Based on Income From Sources Within or Without the United States"
  - "Part IV — Domestic International Sales Corporations"
  - "Subpart A — Treatment of Qualifying Corporations"
---

# §994. Inter-company pricing rules

- (a) **In general—** In the case of a sale of [export property](/usc/26/971.md?p=e) to a DISC by a person described in [section 482](/usc/26/482.md), the [taxable income](/usc/26/63.md?p=a) of such DISC and such person shall be based upon a transfer price which would allow such DISC to derive [taxable income](/usc/26/63.md?p=a) attributable to such sale (regardless of the sales price actually charged) in an amount which does not exceed the greatest of—
  - (1) 4 percent of the qualified export receipts on the sale of such [property](/usc/26/317.md?p=a) by the DISC plus 10 percent of the [export promotion expenses](/usc/26/971.md?p=d) of such DISC attributable to such receipts,
  - (2) 50 percent of the combined [taxable income](/usc/26/63.md?p=a) of such DISC and such person which is attributable to the qualified export receipts on such [property](/usc/26/317.md?p=a) derived as the result of a sale by the DISC plus 10 percent of the [export promotion expenses](/usc/26/971.md?p=d) of such DISC attributable to such receipts, or
  - (3) [taxable income](/usc/26/63.md?p=a) based upon the sale price actually charged (but subject to the rules provided in [section 482](/usc/26/482.md)).
- (b) **Rules for commissions, rentals, and marginal costing—** The Secretary shall prescribe regulations setting forth—
  - (1) rules which are consistent with the rules set forth in [subsection (a)](#a) for the application of this section in the case of commissions, rentals, and other income, and
  - (2) rules for the allocation of expenditures in computing combined [taxable income](/usc/26/63.md?p=a) under [subsection (a)(2)](#a-2) in those cases where a DISC is seeking to establish or maintain a market for [export property](/usc/26/971.md?p=e).
- (c) **Export promotion expenses—** For purposes of this section, the term “[export promotion expenses](/usc/26/971.md?p=d)” means those expenses incurred to advance the distribution or sale of [export property](/usc/26/971.md?p=e) for use, consumption, or distribution outside of the [United States](/usc/26/993.md?p=g), but does not include income taxes. Such expenses shall also include freight expenses to the extent of 50 percent of the cost of shipping [export property](/usc/26/971.md?p=e) aboard airplanes owned and operated by [United States](/usc/26/993.md?p=g) persons or ships documented under the laws of the [United States](/usc/26/993.md?p=g) in those cases where law or regulations does not require that such [property](/usc/26/317.md?p=a) be shipped aboard such airplanes or ships.

## Source credit

(Added Pub. L. 92–178, title V, § 501, Dec. 10, 1971, 85 Stat. 543; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

## Notes

### Editorial Notes

### Amendments

1976—Subsec. (b). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.