¹ For a detailed background, see Tax Education, "The ETI Dispute..." p. 328, this issue.

² Rev. Proc. 2001-37, IRB 2001-23, 1327, provides guidance on how the election is to be made. Under 6, for transactions occurring after Sept. 30, 2000, a taxpayer may elect to apply the ETI provisions in lieu of the FSC provisions on a transaction-by-transaction basis.

³A taxpayer that chooses to calculate QFTI using the 30%-of-foreign-sale-and-leasing-income method will have to calculate its foreign-trade income attributable to such activities performed outside the U.S. (similar to the calculation required for an FSC that computes its income under the Sec. 482 pricing method).

⁴See Rev. Proc. 2001-37, note 2 supra.

⁵Id.

⁶This inclusion is limited to post-Sept. 30, 2000 E&P for foreign corporations that meet certain tests set forth in the statute; however, this exception was targeted at a particular taxpayer and, in practice, may apply to only a handful of companies.

⁷It is customary for the U.S. to send persons from the U.S. Trade Representative's office to argue disputes before the WTO.

⁸As was discussed, with the exception for certain taxpayers, only ETI benefits are available for tax years after 2001; see note 2 supra and the accompanying text. Taxpayers electing ETI benefits for 2001 file Form 8873, Extraterritorial Income Exclusion.

⁹This may not be the case, however, for small FSC users.

¹⁰See Secs. 927(e) and 943(c).