To amend the Internal Revenue Code of 1986 to restore the limitation on downward attribution of stock ownership in applying constructive ownership rules.
Impact
The proposed amendments by HB2186 affect Section 958(b) of the Internal Revenue Code, fundamentally altering who is considered to own stock based on attribution rules. By excluding foreign persons from being attributed as stock owners to U.S. shareholders, the bill aims to clarify the tax obligations of foreign-controlled entities. This could empower U.S. tax authorities to more efficiently manage tax revenue from foreign investments and convoluted corporate structures that might exploit existing loopholes. The application of such a restriction suggests a broader aim to mitigate tax avoidance related to foreign ownership.
Summary
House Bill 2186 aims to amend the Internal Revenue Code of 1986 by restoring the limitations on downward attribution of stock ownership as applied under the constructive ownership rules. The bill highlights a significant modification in how stock ownership is treated, particularly concerning foreign-controlled entities. This legislative change is expected to have implications for how U.S. tax law regulates entities that have foreign ownership components, potentially increasing compliance requirements for U.S. shareholders of foreign corporations.
Contention
There are points of contention expected as discussions around this bill progress. Some stakeholders may argue that the changes could negatively impact U.S. companies which have foreign partnerships, potentially hampering international investment and cooperation. Conversely, proponents of the bill might argue that it creates a fairer tax environment by reducing the ability of foreign entities to influence U.S. corporations through stock ownership structures that previously circumvented taxation. The long-term consequences of these amendments could lead to an ongoing debate over the balance between maintaining a competitive business environment and ensuring fair tax practices.
To amend the Internal Revenue Code of 1986 to restore the limitation on downward attribution of stock ownership in applying constructive ownership rules.
To amend the Internal Revenue Code of 1986 for purposes of the tax on private foundation excess business holdings to treat as outstanding any employee-owned stock purchased by a business enterprise pursuant to certain employee stock ownership retirement plans.
To amend the Internal Revenue Code of 1986 to determine global intangible low-taxed income without regard to certain income derived from services performed in the Virgin Islands.
To amend the Internal Revenue Code of 1986 to establish an elective residency-based income tax for nonresident citizens of the United States, and for other purposes.