-12- Section 251. This section establishes United States currency as the legal tender of the FAS, but gives each FAS the option to issue its own currency; in which case appropriate transitional arrangements would be agreed upon. Segtion 252. This section recognizes the jurisdiction-of the FAS to tax any United States persons income which is derived from FAS sources, and applies United States tax laws to determine income source. Section 253. All FAS citizens domiciled in the FAS will be exempt from United States income tax on fixed and determinable income and inheritance and gift taxes. It is intended that questions of citizenship and domicile for individual persons in the FAS will be determined under the laws of the respective FAS (See Section 142(a) of the Compact). Section 254. Persons who reside in the FAS will not have to pay any otherwise applicable United States tax on income which is taxed by the FAS, even where such income is derived from sources outside the FAS. Section 255. While Sections 253 and 254 are intended to provide incentives for immigration to and investmennt in the FAS for individuals, this Section provides tax incentives for investments primarily by corporations. The tax incentives provided are those long-standing provisions of the United States Internal Revenue Code applicable to possessions of the United States that were designed, like the tax provisions of the Compact, to generate United States investment in developing areas that enjoy a special relationship with the United States. These incentives, as in effect on January 1, 1980, will apply to the FAS to the extent not in conflict with Compact Sections 253 and 254. If the provisions of the Internal Revenue Code applicable to the FAS under this Section are amended after January 1, 1980, the prior law will continue to apply for two years after the effective date of such amendment while alternative but equivalently beneficial tax arrangements are negotiated. TITLE THREE SECURITY AND DEFENSE RELATIONS Article I, Authority and Responsibility Section 3ll. This section establishes as part of the free association relationship defined in the Compact the full authority and responsibility of the United States for security and defense Matters in or relating to the Marshall Islands and the Federated States of Micronesia. This United States authority and responsiblity includes the foreclosure of any third country access to the FAS for military purposes, and the ability to establish military facilities and the exercise of military operating rights in