U.S. shareholders of a controlled foreign corporation (CFC) are currently taxed by the United States on their ratable shares of the CFC's subpart F income, even if the CFC distributes none of its earnings to shareholders as dividends. The Treasury, in late 2008, revised its regulations on one category of subpart F income, foreign base company (FBC) sales income. The revisions address contract manufacturing arrangements, which U.S. multinationals often use in overseas production, at least sometimes with a purpose of avoiding the impact of the U.S. CFC rules. The revisions also restate some of the rules on branches of CFCs, which often operate in conjunction with the rules on contract manufacturing. This paper describes U.S. law on FBC sales income, after the regulation revisions. It is a draft of material that will be published in Boris I. Bittker & Lawrence Lokken, Federal Taxation of Income, Estates & Gifts (Warren, Gorham & Lamont).