then organized as a separate legal entity; or

(B) by the existing U.S. affiliate of a foreign person when it acquires a U.S. business enterprise, or a business segment or operating unit of a U.S. business enterprise, that the existing U.S. affiliate merges into its own operations rather than continuing or organizing as a separate legal entity.

EXEMPTIONS

Total

(a) Real estate held exclusively for personal use and not for profitmaking purposes is exempt from being reported. A residence that is leased by an owner who intends to reoccupy it is considered real estate held for personal use.

(b) An existing U.S. affiliate is totally exempt from reporting the acquisition of a U.S. business enterprise, or a business segI ment or operating unit of a U.S. business enterprise, that it then merges into its own operations, if the total cost of the acquisition was $500,000.00 or less.

Partial

An established or acquired U.S. business enterprise, as consolidated, is partially exempt if its total assets (not the foreign parent's or existing U.S. affiliate's share) at the time of acquisition or immediately after being established, were $500,000.00 or less and it does not own 200 acres or more of . U.S. land. (If it owns 200 acres or more of U.S. land, it must report regardless of the value of total assets.) If partially exempt, the established or acquired U.S. business enterprise must still file a Form BE-13A, but only Part I and items 5 through 19 of Part III need be completed, and a notation made giving the value of assets and the number of acres of U.S. land owned.

(ii) Form BE-13B: Form for Foreign Person, or Existing U.S. Affiliate of a Foreign Person, that Establishes or Acquires a U.S. Business Enterprise, or a Business Segment or Operating Unit of a U.S. Business Enterprise-to be completed either:

(A) By a foreign person when it establishes or acquires a direct voting interest in a U.S. business enterprise that become its U.S. affiliate, or for the foreign person by the established or acquired U.S. business enterprise to the extent it has or can secure the information; or

(B) By an existing U.S. affiliate of a foreign person when it establishes or acquires a direct voting interest in a

U.S. business enterprise of such a magnitude that the established or acquired enterprise becomes a U.S. affiliate of the foreign person, i.e., the foreign person thereby acquires an indirect (or direct and indirect) voting interest of 10 percent or more in the established or acquired U.S. business enterprise; or

(C) By an existing U.S. affiliate of a foreign person when it acquires a U.S. business enterprise, or a business segment or operating unit of a U.S. business enterprise, and merges it into its own operations.

A separate Form BE-13B must be completed by or for each foreign parent, or by each existing U.S. affiliate, that has established or acquired a direct voting interest in a U.S. business enterprise.

Total Exemption-The foreign parent or existing U.S. affiliate is exempt from filing a BE-13B if:

(a) The entity established or acquired consists of real estate held exclusively for personal use and not for profitmaking purposes. A residence that is leased by an owner who intends to reoccupy it is considered real estate held for personal use.

(b) The total cost of the U.S. business enterprise, or business segment or operating unit of a U.S. business enterprise, that is acquired by an existing U.S. affiliate and merged into its own operations is $500,000.00 or less.

(c) The established or acquired U.S. business enterprise, as consolidated, has total assets (not the foreign parent's or existing U.S. affiliate's share) at the time of acquisition or immediatley after being established, of $500,000.00 or less and does not own 200 acres or more of U.S. land. (If the established or acquired U.S. business enterprise owns 200 acres or more of U.S. land, the foreign parent or existing U.S. affiliate must report regardless of the value of total assets.)

(4) Form BE-14-Report by a U.S. Person Who Assists or Intervenes in the Acquisition of a U.S. Business Enterprise by, or Who Enters into a Joint Venture With, a Foreign Person-to be completed either by:

(A) a U.S. person-including, but not limited to, an intermediary, a real estate broker, business broker, and a brokerage house-who assists or intervenes in the sale to, or purchase by, a foreign person or a U.S. affiliate of a foreign person, of a 10 percent or more

voting interest in a U.S. business enterprise, including real estate; or

(B) a U.S. person who enters into a joint venture with a foreign person to create a U.S. business enterprise.

A U.S. person is required to report only when such a foreign involvement is known; it is not incumbent upon the U.S. person to ascertain the foreign status of a person involved in an acquisition unless the U.S. person has reason to believe the acquiring party may be a foreign person.

If a U.S. person required to file a Form BE-14 files either Form BE-13A or Form BE-13B relating to the acquisition of the U.S. business enterprise by a foreign person, then Form BE-14 is not required.

Total Exemptions-(a) Real estate held exclusively for personal use and not for profitmaking purposes is exempted from being reported. A residence that is leased by an owner who intends to reoccupy it is considered real estate held for personal use.

(b) If the U.S. business enterprise acquired has total assets of, or if the capitalization (including loans from the joint venturers) of the joint venture to be established is, $500,000.00 or less, than no report is required, provided the enterprise does not own 200 acres or more of U.S. land. (If it owns 200 acres or more of U.S. land, a report is required regardless of the value of total assets.)

(Pub. L. 94-472, 22 U.S.C. 3101-3108.)

[42 FR 64315, Dec. 22, 1977; 43 FR 2169, Jan. 16, 1978, as amended at 43 FR 54624, Nov. 22, 1978; 44 FR 32586, June 6, 1979]

§ 806.16 Rules and regulations for BE-10, Benchmark Survey of U.S. Direct Investment Abroad-1977.

A BE-10, Benchmark Survey of U.S. Direct Investment Abroad, will be conducted covering calendar year 1977. All legal authorities, provisions, definitions, and requirements contained in §§ 806.1 through 806.13, 806.14 (a), (b), (c), (d), and (g)(2) are applicable to this Survey. Specific additional rules and regulations for the BE-10 Survey concerning who must report and forms required are given below.

BE-10

an incorporated foreign business enterprise, or an equivalent interest in an unincorporated foreign business enterprise-at any time during the year ending December 31, 1977. Reports are required even though the foreign business enterprise may have been established, acquired, seized, liquidated, sold, expropriated, or inactivated during the reporting period.

(b) Form BE-10A (Report for U.S. Reporter). (1) Filing-A completed Form BE-10A is required from each U.S. Reporter (see definition). Exception: When a U.S. business enterprise owns a foreign affiliate and the U.S. business enterprise is owned more than 50 per centum by a U.S. individual, the report should be filed by, and Form BE-10A should be for, the business enterprise rather than the individual. Direct transactions or positions, if any, with the foreign affiliate by the individual must be included in the U.S. business enterprise's report.

(2) Partial exemption when all foreign affilates are exempt-When the U.S. Reporter has foreign affiliates, but all are exempt from filing Form BE-10B, then only items 1 through 7 of Form BE-10A, and Form BE-10A Supplement, which lists exempt foreign affiliates, must be completed and filed.

(3) Partial exemption based on type of reporter-U.S. Reporters which are religious, charitable, or other nonprof it organizations and individuals who directly own a foreign affiliate, are required to file a Form BE-10A, but are exempt from completing Part II, Financial and Operating Data of U.S. Reporter, of the form.

(c) Form BE-10B (Report for Foreign Affiliate). (1) Filing-A U.S. person is required to file one Form BE-10B for each foreign affiliate which is not exempt pursuant to (c)(2) below. (Under those limited conditions where foreign affiliates may be consolidated, the consolidated entity is considered to be one foreign affiliate.) All direct and indirect lines of ownership interest held by a U.S. person in the given foreign business enterprise must be summed to determine whether the enterprise is a foreign affiliate of the U.S. person for purposes of reporting. (A U.S. person's percentage of indirect

(a) Basic requirement-A report is required from every U.S. person having a foreign affiliate-that is, every U.S. person having direct or indirect ownership or control of a least 10 per centum of the voting stock of

voting ownership in a given foreign business enterprise is the product of the direct voting ownership percentage of the U.S. person in the first foreign business enterprise in the ownership chain times that first enterprise's I direct voting ownership percentage in I the second foreign business enterprise times each succeeding direct voting ownership percentage of each other intervening foreign business enterprise in the ownership chain between the U.S. person and the given foreign business enterprise.)

(2) Total exemption and inactive foreign affiliates-A Form BE-10B need not be filed if the foreign affiliate's total assets, net sales or gross operating revenues excluding sales taxes, and net income after income taxes, are each less than $500,000.00 (positive or negative), and the foreign affiliate I does not own another foreign affiliate i for which a Form BE-10B must be filed. If the latter condition is not met, then Form BE-10B must be filed for the foreign affiliate holding the equity interest regardless of the value of its assets, sales, or income. That is, all affiliates upward in a chain of ownership must be reported.

Inactive foreign affiliate: A Form BE-10B need not be filed for an affiliate which has no net sales or gross operating revenues excluding sales taxes, has less than $50,000.00 (positive or -negative) of net income after income ; taxes, and for which the change in - total assets during the year was less than $50,000.00, even if its total assets exceed $500,000.00. Such inactive foreign affiliates shall be treated exempt.

as

(3) Number of Form's BE-10B required-if two or more U.S. Reporters jointly own a foreign affiliate, directly or indirectly, each U.S. Reporter must submit a Form BE-10B for the affiliate. The U.S. Reporter having the highest percentage ownership (direct or indirect combined) in the foreign affiliate must file a Form BE-10B in which all Parts, including either Part IV or Part V as required, have been completed; and the other U.S. Reporter(s) must file a Form BE-10B in which only Part I, items 1 through 35, and Part II, if there is direct ownership or transactions, have been com

pleted. If the percentage of ownership is the same, the U.S. Reporters must decide among themselves which one will submit the complete report.

(4) Foreign affiliate consolidationIn cases where the recordkeeping system of the foreign affiliates makes it impossible or extremely difficult to file a separate report for each foreign affiliate, a U.S. Reporter may consolidate affiliates in the same country when the following conditions apply:

(i) The affiliates are in the same BEA 3-digit industry, as defined in the Industry Classifications and Export and Import Trade Classifications Booklet; or

(ii) The affiliates are integral parts of the same business operation. For example, if German affiliate A manufactures tires and a majority of its sales are to German affiliate B which produces autos, then affiliates A and B may be consolidated.

In all other situations, the U.S. Reporter should call this office at 202523-0632 for guidance. Under no circumstances may a U.S. Reporter consolidate foreign affiliates in different countries.

(d) Relationship between Forms BE10A and BE-10B. The term "U.S. Reporter" as defined means the fully consolidated U.S. domestic enterprise; therefore, on Form BE-10B, when data on trade and financial relationships between the U.S. Reporter and the foreign affiliate are requested, the data must reflect the foreign affiliate's relationship with the entire U.S. enterprise, not merely with one division or part.

(e) Specialized report forms for banks-Specialized report forms have been adopted for banks, that is, a business enterprise for which over 50 percent of its total revenues are generated by activities classified in BEA industry code 600, because much of the information on banks' foreign activities which is requested on the standard forms is already being reported on a regular and systematic basis to agencies of the Federal Government. The specialized report forms are designed to yield only such additional information as is deemed necessary. Use of specialized Forms Be-10A Bank and BE-10B Bank rather than the stand

ard forms is at the discretion of BEA; in situations where their possible use is not clear-cut, permission must be secured from BEA in advance of filing.

A specialized report form-BE-10A Bank-has been developed for reporting by a U.S. Reporter which is a bank or a bank holding company. It is not to be used by a U.S. Reporter which may technically be classified as a bank holding company because of an interest in a banking activity, but which has over 50 percent of its revenues generated by non-bank activities. (Activities of subsidiaries which may not be banks but which provide support to the parent company, such as real estate subsidiaries set up to hold the office building occupied by the parent company, are considered bank activities.)

A specialized report form-BE-10Bhas also been developed for reporting of a foreign affiliate which is a bank and in which the U.S. Reporter holds a direct ownership interest. Incorporated foreign bank affiliates in which the U.S. Reporter holds a direct equity interest must be separately reported. All branch banks of the U.S. Reporter in a given foreign country must be consolidated on one Form BE-10B Bank even if it is the Reporter's practice to report data for these branches separately on FR 105f.

A foreign bank affiliate of the U.S. Reporter in which the U.S. Reporter holds no direct ownership interest may be treated as an exempt foreign affiliate and need not be separately reported on Form BE-10B Bank, but must be listed on Form BE-10A Supplement.

A U.S. Reporter which is a bank, but which has a non-bank foreign affiliate, must file a Form BE-10A Bank for itself and a standard Form BE-10B for the non-bank foreign affiliate.

A U.S. Reporter which is not a bank, but which has a bank foreign affiliate, must file a standard Form BE-10A for itself and a Form BE-10B Bank for the bank foreign affiliate.

Banks located on U.S. military bases abroad and servicing base personnel are not considered "foreign" and a Form BE-10B Bank should not be filed for them.

The specialized report forms, where their use is permitted, stand in place of the standard forms, and the regulations and insructions should be so construed.

(f) Due date-BE-10 reports containing both Form BE-10A and Form(s) BE-10B are due on the following dates:

May 31, 1978-U.S. Reporter required to file less than 20 Forms BE-10B. June 30, 1978-U.S. Reporter required to file from 20 to 99 Forms BE-10B. July 31, 1978-U.S. Reporter required to file 100 or more Forms BE-10B.

(g) Inquiries concerning the BE-10 Survey should be directed to:

U.S. Department of Commerce, Bureau of Economic Analysis (BE-50SSB), Washing. ton, D.C. 20230, phone 202-523-0632.

§ 806.17 Rules and regulations for BE-12, Benchmark Survey of Foreign Direct Investment in the United States.