I
119THCONGRESS
1
STSESSION H. R. 363
To amend the Internal Revenue Code of 1986 to exclude certain amounts
from the tested income of controlled foreign corporations, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY13, 2025
Ms. P
LASKETTintroduced the following bill; which was referred to the
Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to exclude
certain amounts from the tested income of controlled
foreign corporations, and for other purposes.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘Territorial Economic 4
Recovery Act’’. 5
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SEC. 2. INCOME OF CERTAIN QUALIFIED POSSESSION COR-1
PORATIONS EXCLUDED FROM TESTED IN-2
COME. 3
(a) I
NGENERAL.—Section 951A of the Internal Rev-4
enue Code of 1986 is amended— 5
(1) in subsection (c)(2)(A)(i), by striking ‘‘and’’ 6
at the end of subclause (IV), by striking ‘‘over’’ at 7
the end of subclause (V) and inserting ‘‘and’’, and 8
by adding at the end the following new subclause: 9
‘‘(VI) any income of a qualified 10
possession corporation that is effec-11
tively connected with the active con-12
duct of a trade or business within a 13
possession of the United States, 14
over’’; and 15
(2) by adding at the end the following new sub-16
sections: 17
‘‘(g) P
OSSESSION OF THE UNITEDSTATES.—For 18
purposes of this section, the term ‘possession of the United 19
States’ means Puerto Rico, the Virgin Islands, and any 20
specified possession described in section 931(c). 21
‘‘(h) Q
UALIFIEDPOSSESSIONCORPORATION.—For 22
purposes of this section, the term ‘qualified possession cor-23
poration’ means any controlled foreign corporation for any 24
taxable year, if, for the 3-year period (or the period during 25
which the controlled foreign corporation has been in exist-26
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ence, if shorter) ending in the taxable year preceding the 1
taxable year in which the determination is made— 2
‘‘(1) 80 percent or more of the gross income of 3
such corporation was derived from sources within a 4
possession of the United States, and 5
‘‘(2) 75 percent or more of the gross income of 6
such corporation was effectively connected with the 7
active conduct of a trade or business within a pos-8
session of the United States.’’. 9
(b) E
FFECTIVEDATE.—The amendments made by 10
this section shall apply to taxable years of foreign corpora-11
tions beginning after December 31, 2023, and to taxable 12
years of United States shareholders in which or with which 13
such taxable years of foreign corporations end. 14
Æ
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