Last week the I.R.S. published PLR 201332007 which concluded that commissions received by the disregarded entity of a controlled foreign corporation was not foreign base company sales income (“FBCSI”) because the disregarded entity made a substantial contribution through the activities of its employees to the manufacture of Products that were manufactured by unrelated parties. See Treas. Reg. §1.954-3(a)(4)(i) and (iv).
A chart of the structure is shown below (click on the image to enlarge):