### Question
How is the "covered sales" defined?


### Answer
The term **covered sales** is defined in *26 U.S.C. § 936* as follows -

> sales by members of the affiliated group (other than foreign affiliates) to persons who are not members of the affiliated group or to foreign affiliates

#### Citation:
  - *26 U.S.C. § 936*
  - 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 D-Possessions of the United States**

