### Question
How is the term qualifying foreign trade property defined?


### Answer
The term **qualifying foreign trade property** is defined in *26 U.S.C. § 943* as the following:

> property—


(A) manufactured, produced, grown, or extracted within or outside the United States,


(B) held primarily for sale, lease, or rental, in the ordinary course of trade or business for direct use, consumption, or disposition outside the United States, and


(C) not more than 50 percent of the fair market value of which is attributable to—


(i) articles manufactured, produced, grown, or extracted outside the United States, and


(ii) direct costs for labor (determined under the principles of section 263A) performed outside the United States

#### Citation:
  - *26 U.S.C. § 943*
  - Heading: **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 III-INCOME FROM SOURCES WITHOUT THE UNITED STATES > Subpart E-Qualifying Foreign Trade Income**

