Sparrow:
The 15% exclusion is based up gross profit (sales less cost of goods sold) and for products produced in the US for consumption outside the US. It also applies to some services – including the online casino affiliate business.
I believe from reading some of your posts that you are or have been involved in the travel industry and another adult industry as well. It could apply to all or part of your earnings depending upon the circumstances. What I have outlined for you in this thread are some general guidelines. I would really need to talk to you about specifics in order to give you a better idea of how the exclusion would apply to you. There are other rules and guidelines to be taken into account than what I have previously detailed. This is intended as a general discussion only. You really need to give me a call or contact another competent tax professional before going too far down this road.
The World Trade Organization (WTO) does not like this exclusion from tax. To them it amounts to a US government subsidy of exports. As soon as I posted this information the House passed a bill designed to rework the Corporate tax code. It went to the senate. I do not know if it has passed yet or not or if so, what form the bill has taken. A part of this pending legislation was to address WTO concerns due to Tarrifs imposed by the European Union. I do not know at this time if the 15% exclusion was specifically targeted or affected. I’ll keep you posted as things develop. In any event the exclusion is availiable for transactions occuring from Oct 1 2000 thru 2004.
Steve