[Title 26 CFR 1.993-6]
[Code of Federal Regulations (annual edition) - April 1, 2002 Edition]
[Title 26 - INTERNAL REVENUE]
[Chapter I - INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY]
[Subchapter A - INCOME TAX (CONTINUED)]
[Part 1 - INCOME TAXES]
[Sec. 1.993-6 - Definition of gross receipts.]
[From the U.S. Government Printing Office]
26INTERNAL REVENUE102002-04-012002-04-01falseDefinition of gross receipts.1.993-6Sec. 1.993-6INTERNAL REVENUEINTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURYINCOME TAX (CONTINUED)INCOME TAXES
Sec. 1.993-6 Definition of gross receipts.
(a) General rule. Under section 993(f), for purposes of sections 991
through 996, the gross receipts of a person for a taxable year are--
(1) The total amounts received or accrued by the person from the
sale or lease of property held primarily for sale or lease in the
ordinary course of a trade or business, and
(2) Gross income recognized from all other sources, such as, for
example, from--
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(i) The furnishing of services (whether or not related to the sale
or lease of property described in subparagraph (1) of this paragraph),
(ii) Dividends and interest,
(iii) The sale at a gain of any property not described in
subparagraph (1) of this paragraph, and
(iv) Commission transactions as and to the extent described in
paragraph (e) of this section.
(b) Nongross receipts items. For purposes of paragraph (a) of this
section, gross receipts do not include amounts received or accrued by a
person from--
(1) The proceeds of a loan or of the repayment of a loan, or
(2) A receipt of property in a transaction to which section 118
(relating to contribution to capital) or 1032 (relating to exchange of
stock for property) applies.
(c) Nonreduction of total amounts. For purposes of paragraph (a) of
this section, the total amounts received or accrued by a person are not
reduced by returns and allowances, costs of goods sold, expenses,
losses, a deduction for dividends received under section 243, or any
other deductible amounts.
(d) Method of accounting. For purposes of paragraph (a) of this
section, the total amounts received or accrued by a person shall be
determined under the method of accounting used in computing its taxable
income. If, for example, a DISC receives advance or installment payments
for the sale or lease of property described in paragraph (a)(1) of this
section, for the furnishing of services, or which represent recognized
gain from the sale of property not described in paragraph (a)(1) of this
section, any amount of such advance payments is considered to be gross
receipts of the DISC for the taxable year for which such amount is
included in the gross income of the DISC.
(e) Commission transactions. (1) In the case of transactions which
give rise to a commission on the sale or lease of property or the
furnishing of services by a principal, the amount recognized by the
commission agent as gross income from all such transactions shall be the
gross receipts derived by the principal from the sale or lease of the
property, or the gross income derived by the principal from the
furnishing of services, with respect to which the commissions are
derived. In the case of a commission agent for a related supplier (as
defined in Sec. 1.994-1(a)(3)(ii)), the gross receipts or gross income
of such agent shall be determined as if it used the same method of
accounting as its related supplier. In the case of a commission agent
for a principal other than a related supplier, the gross receipts or
gross income of such principal shall be determined as if such principal
used the same method of accounting as its agent.
(2) If the commission arrangement provides that the commission agent
will receive a commission only with respect to sales or leases of export
property, or the furnishing of services, which result in qualified
export receipts, the commission agent will not take into account the
gross receipts or gross income, as the case may be, derived by the
principal from any transaction for which the commission agent would not
be entitled to a commission under the commission arrangement.
(f) Example. The provisions of this section may be illustrated by
the following example:
Example. During 1973, M, a related supplier (as defined in
Sec. 1.994-1(a)(3)(ii)) of N, is engaged in the manufacture of machines
in the United States. N, a calendar year taxpayer, is engaged in the
sale and lease of such machines in foreign countries. N furnishes
services which are related and subsidiary to its sale and lease of such
machines. N also acts as a commission agent in foreign countries for Z,
an unrelated supplier, with respect to Z's sale of products. N receives
dividends on stock owned by it in a related foreign export corporation
(as defined in Sec. 1.993-5), interest on producer's loans made to M,
and proceeds from sales of business assets located outside the United
States resulting in a recognized gains and losses. N's gross receipts
for 1973 are $3,550, computed on the basis of the additional facts
assumed in the table below:
(1) N's sales receipts for machines manufactured by M (without $1,500
reduction for cost of goods sold and selling expenses)........
(2) N's lease receipts for machines manufactured by M (without 500
reduction for depreciation and leasing expenses)..............
(3) N's gross income from services for machines manufactured by 400
M (without reduction for service expenses)....................
(4) Z's sale receipts for products manufactured by Z (without 550
reduction for Z's cost of goods sold, commissions on sales,
and commission sales expenses)................................
(5) Dividends received by N.................................... 150
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(6) Interest received by N on producer's loans................. 200
(7) Proceeds received by N representing recognized gain (but 250
not losses) from sales of business assets located outside the
United States.................................................
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(8) N's gross receipts......................................... 3,550
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[T.D. 7514, 42 FR 55468, Oct. 17, 1977]