Us Congress 2025-2026 Regular Session

Us Congress House Bill HB995 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	I
2	2	119THCONGRESS
3	3	1
4	4	STSESSION H. R. 995
5	5	To amend the Internal Revenue Code of 1986 to provide for current year
6	6	inclusion of net CFC tested income, and for other purposes.
7	7	IN THE HOUSE OF REPRESENTATIVES
8	8	FEBRUARY5, 2025
9	9	Mr. D
10	10	OGGETT(for himself, Ms. ADAMS, Ms. ANSARI, Ms. BALINT, Ms.
11	11	B
12	12	ARRAGA´N, Mrs. BEATTY, Mr. BISHOP, Ms. BONAMICI, Mr. BOYLEof
13	13	Pennsylvania, Ms. B
14	14	ROWN, Ms. BROWNLEY, Ms. BUDZINSKI, Mr. CAR-
15	15	SON, Mr. CARTERof Louisiana, Mr. CASAR, Mr. CASE, Ms. CHU, Ms.
16	16	C
17	17	LARKEof New York, Mr. CLEAVER, Mr. COHEN, Mr. CONAWAY, Ms.
18	18	C
19	19	ROCKETT, Mr. CROW, Mr. DAVISof Illinois, Mr. DAVISof North Caro-
20	20	lina, Ms. D
21	21	EANof Pennsylvania, Mrs. MCCLAINDELANEY, Ms.
22	22	D
23	23	ELAURO, Ms. DELBENE, Mr. DELUZIO, Mr. DESAULNIER, Ms. DEX-
24	24	TER, Mrs. DINGELL, Ms. ESCOBAR, Mr. ESPAILLAT, Mr. EVANSof Penn-
25	25	sylvania, Ms. L
26	26	EGERFERNANDEZ, Mr. FOSTER, Mrs. FOUSHEE, Ms.
27	27	L
28	28	OISFRANKELof Florida, Mr. FROST, Mr. GARAMENDI, Mr. GARCI´Aof
29	29	Illinois, Mr. G
30	30	ARCIAof California, Ms. GARCIAof Texas, Mr. GOLDEN
31	31	of Maine, Mr. G
32	32	OLDMANof New York, Mr. GOMEZ, Mr. GREENof Texas,
33	33	Mr. G
34	34	RIJALVA, Mrs. HAYES, Mr. HORSFORD, Ms. HOYLEof Oregon, Mr.
35	35	H
36	36	UFFMAN, Mr. IVEY, Mr. JACKSONof Illinois, Ms. JAYAPAL, Mr. JOHN-
37	37	SONof Georgia, Ms. KAPTUR, Ms. KELLYof Illinois, Mr. KENNEDYof
38	38	New York, Mr. K
39	39	HANNA, Mr. LANDSMAN, Mr. LARSONof Connecticut,
40	40	Ms. L
41	41	EEof Pennsylvania, Mr. LIEU, Mr. LYNCH, Mr. MAGAZINER, Mrs.
42	42	M
43	43	CBATH, Ms. MCBRIDE, Ms. MCCOLLUM, Mr. MCGARVEY, Mr. MCGOV-
44	44	ERN, Mr. MEEKS, Mr. MENENDEZ, Ms. MENG, Mr. MFUME, Mr.
45	45	M
46	46	OULTON, Mr. MRVAN, Mr. NADLER, Mr. NEGUSE, Mr. NORCROSS, Ms.
47	47	N
48	48	ORTON, Ms. OCASIO-CORTEZ, Ms. OMAR, Mr. PALLONE, Ms. PEREZ,
49	49	Ms. P
50	50	INGREE, Mr. POCAN, Ms. PRESSLEY, Mrs. RAMIREZ, Mr. RASKIN,
51	51	Mr. R
52	52	ILEYof New York, Ms. ROSS, Mr. RYAN, Ms. SALINAS, Ms. SCAN-
53	53	LON, Ms. SCHAKOWSKY, Mr. SHERMAN, Mr. SMITHof Washington, Mr.
54	54	S
55	55	OTO, Ms. STANSBURY, Ms. STEVENS, Mrs. SYKES, Mr. TAKANO, Mr.
56	56	T
57	57	HANEDAR, Mr. THOMPSONof Mississippi, Ms. TITUS, Ms. TLAIB, Ms.
58	58	T
59	59	OKUDA, Mr. TONKO, Mrs. TORRESof California, Mrs. TRAHAN, Mr.
60	60	T
61	61	URNERof Texas, Mr. VARGAS, Ms. VELA´ZQUEZ, Ms. WASSERMAN
62	62	S
63	63	CHULTZ, Ms. WATERS, Mrs. WATSONCOLEMAN, Ms. WILLIAMSof
64	64	Georgia, and Ms. W
65	65	ILSONof Florida) introduced the following bill; which
66	66	was referred to the Committee on Ways and Means
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69	69	•HR 995 IH
70	70	A BILL
71	71	To amend the Internal Revenue Code of 1986 to provide
72	72	for current year inclusion of net CFC tested income,
73	73	and for other purposes.
74	74	Be it enacted by the Senate and House of Representa-1
75	75	tives of the United States of America in Congress assembled, 2
76	76	SECTION 1. SHORT TITLE, ETC. 3
77	77	(a) S
78	78	HORTTITLE.—This Act may be cited as the 4
79	79	‘‘No Tax Breaks for Outsourcing Act’’. 5
80	80	(b) A
81	81	MENDMENT OF 1986 CODE.—Except as other-6
82	82	wise expressly provided, whenever in this Act an amend-7
83	83	ment or repeal is expressed in terms of an amendment 8
84	84	to, or repeal of, a section or other provision, the reference 9
85	85	shall be considered to be made to a section or other provi-10
86	86	sion of the Internal Revenue Code of 1986. 11
87	87	(c) T
88	88	ABLE OFCONTENTS.—The table of contents of 12
89	89	this Act is as follows: 13
90	90	Sec. 1. Short title, etc.
91	91	Sec. 2. Current year inclusion of net CFC tested income.
92	92	Sec. 3. Country-by-country application of limitation on foreign tax credit based
93	93	on taxable units.
94	94	Sec. 4. Limitation on deduction of interest by domestic corporations which are
95	95	members of an international financial reporting group.
96	96	Sec. 5. Modifications to rules relating to inverted corporations.
97	97	Sec. 6. Treatment of foreign corporations managed and controlled in the United
98	98	States as domestic corporations.
99	99	SEC. 2. CURRENT YEAR INCLUSION OF NET CFC TESTED IN-
100	100	14
101	101	COME. 15
102	102	(a) R
103	103	EPEAL OFTAX-FREEDEEMEDRETURN ONIN-16
104	104	VESTMENTS.— 17
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107	107	•HR 995 IH
108	108	(1) IN GENERAL.—Section 951A(a) is amended 1
109	109	by striking ‘‘global intangible low-taxed income’’ and 2
110	110	inserting ‘‘net CFC tested income’’. 3
111	111	(2) C
112	112	ONFORMING AMENDMENTS .— 4
113	113	(A) Section 951A is amended by striking 5
114	114	subsections (b) and (d). 6
115	115	(B) Section 951A(e)(1) is amended by 7
116	116	striking ‘‘subsections (b), (c)(1)(A), and’’ and 8
117	117	inserting ‘‘subsections (c)(1)(A) and’’. 9
118	118	(C) Section 951A(f) is amended by strik-10
119	119	ing ‘‘global intangible low-taxed income’’ each 11
120	120	place it appears and inserting ‘‘net CFC tested 12
121	121	income’’. 13
122	122	(D) Section 960(d)(2)(A) is amended by 14
123	123	striking ‘‘global intangible low-taxed income (as 15
124	124	defined in section 951A(b))’’ and inserting ‘‘net 16
125	125	CFC tested income (as defined in section 17
126	126	951A(c))’’. 18
127	127	(b) C
128	128	OUNTRY-BY-COUNTRYAPPLICATION OF SEC-19
129	129	TIONBASED ONCFC TAXABLEUNITS.—Section 951A is 20
130	130	amended by adding at the end the following new sub-21
131	131	section: 22
132	132	‘‘(g) C
133	133	OUNTRY-BY-COUNTRYAPPLICATION OFSEC-23
134	134	TIONBASED ONCFC TAXABLEUNITS.— 24
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137	137	•HR 995 IH
138	138	‘‘(1) IN GENERAL.—If any CFC taxable unit of 1
139	139	a United States shareholder is a tax resident of (or, 2
140	140	in the case of a branch, is located in) a country 3
141	141	which is different from the country with respect to 4
142	142	which any other CFC taxable unit of such United 5
143	143	States shareholder is a tax resident (or, in the case 6
144	144	of a branch, is located in)— 7
145	145	‘‘(A) such shareholder’s net CFC tested in-8
146	146	come for purposes of subsection (a) shall be the 9
147	147	sum of the amounts of net CFC tested income 10
148	148	determined separately with respect to each such 11
149	149	country, and 12
150	150	‘‘(B) for purposes of determining such sep-13
151	151	arate amounts of net CFC tested income— 14
152	152	‘‘(i) except as otherwise provided by 15
153	153	the Secretary, any reference in subsection 16
154	154	(c) to a controlled foreign corporation of 17
155	155	such shareholder shall be treated as ref-18
156	156	erence to a CFC taxable unit of such 19
157	157	shareholder, and 20
158	158	‘‘(ii) net CFC tested income and such 21
159	159	other items and amounts as the Secretary 22
160	160	may provide, shall be determined sepa-23
161	161	rately with respect to each such country by 24
162	162	determining such amounts with respect to 25
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165	165	•HR 995 IH
166	166	the CFC taxable units of such shareholder 1
167	167	which are a tax resident of such country. 2
168	168	‘‘(2) D
169	169	EFINITIONS.—For purposes of this sub-3
170	170	section— 4
171	171	‘‘(A) CFC
172	172	TAXABLE UNIT.—The term 5
173	173	‘CFC taxable unit’ means any taxable unit de-6
174	174	scribed in clause (ii), (iii), or (iv) of section 7
175	175	904(e)(2)(B), determined— 8
176	176	‘‘(i) by substituting ‘controlled foreign 9
177	177	corporation’ for ‘foreign corporation’ each 10
178	178	place it appears in such clauses, and 11
179	179	‘‘(ii) without regard to the references 12
180	180	to the taxpayer in clauses (iii) and (iv) of 13
181	181	such section. 14
182	182	‘‘(B) A
183	183	PPLICATION OF OTHER DEFINI -15
184	184	TIONS.—Terms used in this subsection which 16
185	185	are also used in section 904(e) shall have the 17
186	186	same meaning as when used in section 904(e). 18
187	187	‘‘(3) S
188	188	PECIAL RULES.—For purposes of this 19
189	189	subsection— 20
190	190	‘‘(A) A
191	191	PPLICATION OF CERTAIN RULES .— 21
192	192	Except as otherwise provided by the Secretary, 22
193	193	rules similar to the rules of section 904(e) shall 23
194	194	apply. 24
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197	197	•HR 995 IH
198	198	‘‘(B) ALLOCATION OF NET CFC TESTED 1
199	199	INCOME TO CONTROLLED FOREIGN CORPORA -2
200	200	TIONS.—Except as otherwise provided by the 3
201	201	Secretary, subsection (f)(2) shall be applied 4
202	202	separately with respect to each CFC taxable 5
203	203	unit.’’. 6
204	204	(c) R
205	205	EGULATORY AUTHORITY.—Section 951A, as 7
206	206	amended by subsection (b), is amended by adding at the 8
207	207	end the following new subsection: 9
208	208	‘‘(h) R
209	209	EGULATIONS.—The Secretary shall issue such 10
210	210	regulations or other guidance as may be necessary or ap-11
211	211	propriate to carry out, or prevent the avoidance of, the 12
212	212	purposes of this section, including regulations or guidance 13
213	213	which provide for— 14
214	214	‘‘(1) the treatment of property if such property 15
215	215	is transferred, or held, temporarily, 16
216	216	‘‘(2) the treatment of property if the avoidance 17
217	217	of the purposes of this section is a factor in the 18
218	218	transfer or holding of such property, 19
219	219	‘‘(3) appropriate adjustments to the basis of 20
220	220	stock and other ownership interests, and to earnings 21
221	221	and profits, to reflect tested losses (whether or not 22
222	222	taken into account in determining net CFC tested 23
223	223	income), 24
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226	226	•HR 995 IH
227	227	‘‘(4) rules similar to the rules provided under 1
228	228	the regulations or guidance issued under section 2
229	229	904(e)(4), 3
230	230	‘‘(5) other appropriate basis adjustments, 4
231	231	‘‘(6) appropriate adjustments to be made, and 5
232	232	appropriate tax attributes and records to be main-6
233	233	tained, separately with respect to CFC taxable units, 7
234	234	and 8
235	235	‘‘(7) appropriate adjustments in determining 9
236	236	tested income or tested loss if property is trans-10
237	237	ferred between related parties or amounts are paid 11
238	238	or accrued between related parties.’’. 12
239	239	(d) C
240	240	OORDINATIONWITHOTHERPROVISIONS.—Sec-13
241	241	tion 951A(f)(1) is amended by adding at the end the fol-14
242	242	lowing new subparagraph: 15
243	243	‘‘(C) T
244	244	REATMENT OF CERTAIN REF -16
245	245	ERENCES.—Except as otherwise provided by the 17
246	246	Secretary, references to section 951 or section 18
247	247	951(a) in sections 959, 961, 962, and such 19
248	248	other provisions as the Secretary may identify 20
249	249	shall include references to section 951A or sec-21
250	250	tion 951A(a), respectively.’’. 22
251	251	(e) R
252	252	EPEAL OFREDUCEDRATE OFTAX ONNET 23
253	253	CFC T
254	254	ESTEDINCOME AND FOREIGN-DERIVEDINTAN-24
255	255	GIBLEINCOME.— 25
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258	258	•HR 995 IH
259	259	(1) IN GENERAL.—Part VIII of subchapter B 1
260	260	of chapter 1 is amended by striking section 250 (and 2
261	261	by striking the item relating to such section in the 3
262	262	table of sections of such part). 4
263	263	(2) C
264	264	ONFORMING AMENDMENTS .— 5
265	265	(A) Section 59A(c)(4)(B)(i) is amended by 6
266	266	striking ‘‘section 172, 245A, or 250’’ and in-7
267	267	serting ‘‘section 172 or 245A’’. 8
268	268	(B) Section 172(d) is amended by striking 9
269	269	paragraph (9). 10
270	270	(C) Section 246(b)(1) is amended— 11
271	271	(i) by striking ‘‘subsection (a) and (b) 12
272	272	of section 245, and section 250’’ and in-13
273	273	serting ‘‘and subsection (a) and (b) of sec-14
274	274	tion 245’’; and 15
275	275	(ii) by striking ‘‘subsection (a) and 16
276	276	(b) of section 245, and 250’’ and inserting 17
277	277	‘‘and subsection (a) and (b) of section 18
278	278	245’’. 19
279	279	(D) Section 469(i)(3)(E)(iii) is amended 20
280	280	by striking ‘‘, 221, and 250’’ and inserting 21
281	281	‘‘and 221’’. 22
282	282	(f) R
283	283	EPEAL OFCERTAINEXCLUSIONSFROM THE 23
284	284	D
285	285	ETERMINATION OF TESTED INCOME.—Section 24
286	286	951A(c)(2)(A)(i) is amended— 25
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289	289	•HR 995 IH
290	290	(1) by striking subclauses (III) and (V), 1
291	291	(2) by redesignating subclause (IV) as sub-2
292	292	clause (III), 3
293	293	(3) by adding ‘‘and’’ at the end of subclause 4
294	294	(II), and 5
295	295	(4) by striking ‘‘and’’ at the end of subclause 6
296	296	(III) (as so redesignated) and inserting ‘‘over’’. 7
297	297	(g) I
298	298	NCREASE INDEEMEDPAIDCREDIT FORTAXES 8
299	299	P
300	300	ROPERLYATTRIBUTABLE TOTESTEDINCOME.— 9
301	301	(1) I
302	302	N GENERAL.—Section 960(d) is amended 10
303	303	by striking ‘‘80 percent of’’. 11
304	304	(2) C
305	305	ONFORMING AMENDMENT .—Section 78 is 12
306	306	amended by striking ‘‘(determined without regard to 13
307	307	the phrase ‘‘80 percent of’’ in subsection (d)(1) 14
308	308	thereof)’’. 15
309	309	(h) R
310	310	EPEAL OFHIGHTAXEXCLUSION FORFOREIGN 16
311	311	B
312	312	ASECOMPANYINCOME ANDINSURANCEINCOME.— 17
313	313	(1) I
314	314	N GENERAL.—Section 954(b) is amended 18
315	315	by striking paragraph (4). 19
316	316	(2) C
317	317	ONFORMING AMENDMENT .—Section 20
318	318	904(d)(3)(E) is amended by striking the last sen-21
319	319	tence. 22
320	320	(i) E
321	321	LIMINATION OFCARRYBACK OFFOREIGNTAX 23
322	322	C
323	323	REDIT.— 24
324	324	(1) I
325	325	N GENERAL.—Section 904(c) is amended— 25
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328	328	•HR 995 IH
329	329	(A) by striking ‘‘in the first preceding tax-1
330	330	able year and in any of the first 10 succeeding 2
331	331	taxable years, in that order’’ and inserting ‘‘in 3
332	332	any of the first 10 succeeding taxable years, in 4
333	333	order’’, 5
334	334	(B) by striking ‘‘preceding or’’ each place 6
335	335	it appears, and 7
336	336	(C) by striking ‘‘C
337	337	ARRYBACK AND’’ in the 8
338	338	heading thereof. 9
339	339	(2) A
340	340	PPLICATION TO LIMITATION ON FOREIGN 10
341	341	OIL AND GAS TAXES.—Section 907(f) is amended— 11
342	342	(A) in paragraph (1), by striking ‘‘in the 12
343	343	first preceding taxable year and’’, 13
344	344	(B) in paragraph (2), by striking ‘‘pre-14
345	345	ceding or’’ in the matter preceding subpara-15
346	346	graph (A), 16
347	347	(C) in paragraph (3)(B)— 17
348	348	(i) by striking ‘‘in a preceding or suc-18
349	349	ceeding’’ and inserting ‘‘in a succeeding’’, 19
350	350	and 20
351	351	(ii) by striking ‘‘in such preceding or 21
352	352	succeeding’’ both places it appears and in-22
353	353	serting ‘‘in such succeeding’’, and 23
354	354	(D) in the heading, by striking 24
355	355	‘‘C
356	356	ARRYBACK AND’’. 25
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359	359	•HR 995 IH
360	360	(j) TREATMENT OF FOREIGNBASECOMPANYOIL 1
361	361	R
362	362	ELATEDINCOME ASSUBPARTF INCOME.— 2
363	363	(1) I
364	364	N GENERAL.—Section 954(a) is amended 3
365	365	by striking ‘‘and’’ at the end of paragraph (2), by 4
366	366	striking the period at the end of paragraph (3) and 5
367	367	inserting ‘‘, and’’, and by adding at the end the fol-6
368	368	lowing new paragraph: 7
369	369	‘‘(4) the foreign base company oil related in-8
370	370	come for the taxable year (determined under sub-9
371	371	section (f) and reduced as provided in subsection 10
372	372	(b)(5)).’’. 11
373	373	(2) F
374	374	OREIGN BASE COMPANY OIL RELATED IN -12
375	375	COME.—Section 954 is amended by inserting after 13
376	376	subsection (e) the following new subsection: 14
377	377	‘‘(f) F
378	378	OREIGNBASECOMPANYOILRELATEDIN-15
379	379	COME.—For purposes of this section, the term ‘foreign 16
380	380	base company oil related income’ means foreign oil related 17
381	381	income (within the meaning of paragraphs (2) and (3) of 18
382	382	section 907(c)) other than income derived from a source 19
383	383	within a foreign country in connection with— 20
384	384	‘‘(1) oil or gas which was extracted from an oil 21
385	385	or gas well located in such foreign country, or 22
386	386	‘‘(2) oil, gas, or a primary product of oil or gas 23
387	387	which is sold by the foreign corporation or a related 24
388	388	person for use or consumption within such country 25
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391	391	•HR 995 IH
392	392	or is loaded in such country on a vessel or aircraft 1
393	393	as fuel for such vessel or aircraft. 2
394	394	Such term shall not include any foreign personal holding 3
395	395	company income (as defined in subsection (c)).’’. 4
396	396	(3) C
397	397	ONFORMING AMENDMENTS .— 5
398	398	(A) Section 952(c)(1)(B)(iii) is amended 6
399	399	by redesignating subclauses (III) and (IV) as 7
400	400	subclauses (IV) and (V), respectively, and by 8
401	401	inserting after subclause (II) the following new 9
402	402	subclause: 10
403	403	‘‘(III) foreign base company oil 11
404	404	related income.’’. 12
405	405	(B) Section 954(b) is amended— 13
406	406	(i) by striking ‘‘and the foreign base 14
407	407	company services income’’ in paragraph 15
408	408	(5) and inserting ‘‘the foreign base com-16
409	409	pany services income, and the foreign base 17
410	410	company oil related income’’, and 18
411	411	(ii) by adding at the end the following 19
412	412	new paragraph: 20
413	413	‘‘(6) F
414	414	OREIGN BASE COMPANY OIL RELATED IN -21
415	415	COME NOT TREATED AS ANOTHER KIND OF FOREIGN 22
416	416	BASE COMPANY INCOME .—Income of a corporation 23
417	417	which is foreign base company oil related income 24
418	418	shall not be considered foreign base company income 25
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421	421	•HR 995 IH
422	422	of such corporation under paragraph (2) or (3) of 1
423	423	subsection (a).’’. 2
424	424	(k) E
425	425	FFECTIVEDATES.— 3
426	426	(1) I
427	427	N GENERAL.—Except as otherwise pro-4
428	428	vided in this subsection, the amendments made by 5
429	429	this section shall apply to taxable years of foreign 6
430	430	corporations beginning after December 31, 2024, 7
431	431	and to taxable years of United States shareholders 8
432	432	in which or with which such taxable years of foreign 9
433	433	corporations end. 10
434	434	(2) R
435	435	EGULATORY AUTHORITY AND COORDINA -11
436	436	TION WITH OTHER PROVISIONS .—The amendments 12
437	437	made by subsections (c) and (d) shall apply to tax-13
438	438	able years of foreign corporations beginning after 14
439	439	the date of the enactment of this Act, and to taxable 15
440	440	years of United States shareholders in which or with 16
441	441	which such taxable years of foreign corporations 17
442	442	end. 18
443	443	(3) R
444	444	EPEAL OF REDUCED RATE OF TAX ; IN-19
445	445	CREASE IN DEEMED PAID CREDIT .—The amend-20
446	446	ments made by subsections (e) and (g) shall apply 21
447	447	to taxable years beginning after December 31, 2024. 22
448	448	(4) E
449	449	LIMINATION OF CARRYBACK OF FOREIGN 23
450	450	TAX CREDIT.—The amendment made by subsection 24
451	451	VerDate Sep 11 2014 02:17 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\H995.IH H995
452	452	kjohnson on DSK7ZCZBW3PROD with $$_JOB 14
453	453	•HR 995 IH
454	454	(i) shall apply to credits arising in taxable years be-1
455	455	ginning after December 31, 2024. 2
456	456	(l) N
457	457	OINFERENCEREGARDINGCERTAINMODIFICA-3
458	458	TIONS.—The amendments made by subsections (c) and 4
459	459	(d) shall not be construed to create any inference with re-5
460	460	spect to the proper application of any provision of the In-6
461	461	ternal Revenue Code of 1986 with respect to any taxable 7
462	462	year beginning before the taxable years to which such 8
463	463	amendments apply. 9
464	464	SEC. 3. COUNTRY-BY-COUNTRY APPLICATION OF LIMITA-10
465	465	TION ON FOREIGN TAX CREDIT BASED ON 11
466	466	TAXABLE UNITS. 12
467	467	(a) I
468	468	NGENERAL.—Section 904 is amended by insert-13
469	469	ing after subsection (d) the following new subsection: 14
470	470	‘‘(e) C
471	471	OUNTRY-BY-COUNTRYAPPLICATIONBASED ON 15
472	472	T
473	473	AXABLEUNITS.— 16
474	474	‘‘(1) I
475	475	N GENERAL.—Subsection (d) (and the 17
476	476	provisions of this title referred to in paragraph (1) 18
477	477	of such subsection) shall be applied separately with 19
478	478	respect to each country by taking into account the 20
479	479	aggregate income properly attributable or otherwise 21
480	480	allocable to a taxable unit of the taxpayer which is 22
481	481	a tax resident of (or, in the case of a branch, is lo-23
482	482	cated in) such country. 24
483	483	‘‘(2) T
484	484	AXABLE UNITS.— 25
485	485	VerDate Sep 11 2014 02:17 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\H995.IH H995
486	486	kjohnson on DSK7ZCZBW3PROD with $$_JOB 15
487	487	•HR 995 IH
488	488	‘‘(A) IN GENERAL.—Except as otherwise 1
489	489	provided by the Secretary, each item shall be 2
490	490	attributable or otherwise allocable to exactly 3
491	491	one taxable unit of the taxpayer. 4
492	492	‘‘(B) D
493	493	ETERMINATION OF TAXABLE 5
494	494	UNITS.—Except as otherwise provided by the 6
495	495	Secretary, the taxable units of a taxpayer are 7
496	496	as follows: 8
497	497	‘‘(i) G
498	498	ENERAL TAXABLE UNIT .—The 9
499	499	person that is the taxpayer and that is not 10
500	500	otherwise described in a separate clause of 11
501	501	this subparagraph. 12
502	502	‘‘(ii) C
503	503	ERTAIN FOREIGN CORPORA -13
504	504	TIONS.—Each foreign corporation with re-14
505	505	spect to which the taxpayer is a United 15
506	506	States shareholder. 16
507	507	‘‘(iii) I
508	508	NTERESTS IN PASS -THROUGH 17
509	509	ENTITIES.—Each interest held (directly or 18
510	510	indirectly) by the taxpayer or any foreign 19
511	511	corporation referred to in clause (ii) in a 20
512	512	pass-through entity if such pass-through 21
513	513	entity is a tax resident of a country other 22
514	514	than the country with respect to which 23
515	515	such taxpayer or foreign corporation (as 24
516	516	the case may be) is a tax resident. 25
517	517	VerDate Sep 11 2014 02:17 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\H995.IH H995
518	518	kjohnson on DSK7ZCZBW3PROD with $$_JOB 16
519	519	•HR 995 IH
520	520	‘‘(iv) BRANCHES.—Each branch (or 1
521	521	portion thereof) the activities of which are 2
522	522	directly or indirectly carried on by the tax-3
523	523	payer or any foreign corporation referred 4
524	524	to in clause (ii) and which give rise to a 5
525	525	taxable presence in a country other than 6
526	526	the country with respect to which such tax-7
527	527	payer or foreign corporation (as the case 8
528	528	may be) is a tax resident. 9
529	529	‘‘(3) D
530	530	EFINITIONS AND SPECIAL RULES .—For 10
531	531	purposes of this subsection— 11
532	532	‘‘(A) T
533	533	AX RESIDENT.—Except as otherwise 12
534	534	provided by the Secretary, the term ‘tax resi-13
535	535	dent’ means a person or entity subject to tax 14
536	536	under the tax law of a country as a resident. If 15
537	537	an entity is organized under the law of a coun-16
538	538	try, or resident in a country, that does not im-17
539	539	pose an income tax with respect to such enti-18
540	540	ties, such entity shall, except as provided by the 19
541	541	Secretary, be treated as subject to tax under 20
542	542	the tax law of such country for the purposes of 21
543	543	the preceding sentence. 22
544	544	‘‘(B) P
545	545	ASS-THROUGH ENTITY .—Except as 23
546	546	otherwise provided by the Secretary, the term 24
547	547	‘pass-through entity’ includes any partnership 25
548	548	VerDate Sep 11 2014 02:17 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 E:\BILLS\H995.IH H995
549	549	kjohnson on DSK7ZCZBW3PROD with $$_JOB 17
550	550	•HR 995 IH
551	551	or other entity to the extent that income, gain, 1
552	552	deduction, or loss of the entity is taken into ac-2
553	553	count in determining the income or loss of a 3
554	554	person that owns (directly or indirectly) an in-4
555	555	terest in such entity. 5
556	556	‘‘(C) B
557	557	RANCH.—Except as otherwise pro-6
558	558	vided by the Secretary, the term ‘branch’ means 7
559	559	a taxable presence of a tax resident in a coun-8
560	560	try other than its country of residence as deter-9
561	561	mined under such other country’s tax law. The 10
562	562	Secretary shall provide regulations or other 11
563	563	guidance applying such term to activities in a 12
564	564	country that do not give rise to a taxable pres-13
565	565	ence. 14
566	566	‘‘(D) T
567	567	REATMENT OF FISCALLY AUTONO -15
568	568	MOUS JURISDICTIONS .—Any fiscally autono-16
569	569	mous jurisdiction shall be treated as a separate 17
570	570	country. Any possession of the United States 18
571	571	shall also be treated as a separate country. 19
572	572	‘‘(E) P
573	573	OSSESSION OF THE UNITED 20
574	574	STATES.—The term ‘possession of the United 21
575	575	States’ means each of American Samoa, the 22
576	576	Commonwealth of the Northern Mariana Is-23
577	577	lands, the Commonwealth of Puerto Rico, 24
578	578	Guam, and the Virgin Islands. 25
579	579	VerDate Sep 11 2014 02:17 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\H995.IH H995
580	580	kjohnson on DSK7ZCZBW3PROD with $$_JOB 18
581	581	•HR 995 IH
582	582	‘‘(4) REGULATIONS.—The Secretary shall issue 1
583	583	such regulations or other guidance as may be nec-2
584	584	essary or appropriate to carry out, or prevent avoid-3
585	585	ance of, the purposes of this subsection, including 4
586	586	regulations or other guidance— 5
587	587	‘‘(A) providing for the application of this 6
588	588	subsection to an entity or arrangement that is 7
589	589	considered a tax resident of more than one 8
590	590	country or of no country, 9
591	591	‘‘(B) providing for the application of this 10
592	592	subsection to hybrid entities or hybrid trans-11
593	593	actions (as such terms are used for purposes of 12
594	594	section 267A), pass-through entities, passive 13
595	595	foreign investment companies, trusts, and other 14
596	596	entities or arrangements not otherwise de-15
597	597	scribed in this subsection, and 16
598	598	‘‘(C) providing for the assignment of any 17
599	599	item (including foreign taxes and deductions) to 18
600	600	taxable units, including in the case of amounts 19
601	601	not otherwise taken into account in determining 20
602	602	taxable income under this chapter.’’. 21
603	603	(b) T
604	604	REATMENT OF INADEQUATE SUBSTAN-22
605	605	TIATION.—Section 904(d)(4)(C)(ii) is amended by strik-23
606	606	ing ‘‘paragraph (1)(A)’’ and inserting ‘‘paragraph 24
607	607	(1)(C)’’. 25
608	608	VerDate Sep 11 2014 02:17 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00018 Fmt 6652 Sfmt 6201 E:\BILLS\H995.IH H995
609	609	kjohnson on DSK7ZCZBW3PROD with $$_JOB 19
610	610	•HR 995 IH
611	611	(c) APPLICATION OFFOREIGNTAXCREDITLIMITA-1
612	612	TIONWITHRESPECT TOFOREIGNBRANCHES.—Section 2
613	613	904(d)(2)(J)(i) is amended— 3
614	614	(1) by striking ‘‘qualified business units (as de-4
615	615	fined in section 989(a)) in 1 or more foreign coun-5
616	616	tries’’ and inserting ‘‘foreign branches described in 6
617	617	section 904(e)(2)(B)(iv)’’, and 7
618	618	(2) by striking ‘‘a qualified business unit’’ and 8
619	619	inserting ‘‘a foreign branch’’. 9
620	620	(d) E
621	621	FFECTIVEDATE.—The amendments made by 10
622	622	this section shall apply to taxable years beginning after 11
623	623	December 31, 2024. 12
624	624	SEC. 4. LIMITATION ON DEDUCTION OF INTEREST BY DO-13
625	625	MESTIC CORPORATIONS WHICH ARE MEM-14
626	626	BERS OF AN INTERNATIONAL FINANCIAL RE-15
627	627	PORTING GROUP. 16
628	628	(a) I
629	629	NGENERAL.—Section 163 is amended by redes-17
630	630	ignating subsection (n) as subsection (p) and by inserting 18
631	631	after subsection (m) the following new subsection: 19
632	632	‘‘(n) L
633	633	IMITATION ONDEDUCTION OFINTEREST BY 20
634	634	D
635	635	OMESTICCORPORATIONS IN INTERNATIONAL FINAN-21
636	636	CIALREPORTINGGROUPS.— 22
637	637	‘‘(1) I
638	638	N GENERAL.—In the case of any domestic 23
639	639	corporation which is a member of any international 24
640	640	financial reporting group, the deduction under this 25
641	641	VerDate Sep 11 2014 02:17 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00019 Fmt 6652 Sfmt 6201 E:\BILLS\H995.IH H995
642	642	kjohnson on DSK7ZCZBW3PROD with $$_JOB 20
643	643	•HR 995 IH
644	644	chapter for interest paid or accrued during the tax-1
645	645	able year shall not exceed the sum of— 2
646	646	‘‘(A) the allowable percentage of 110 per-3
647	647	cent of the excess (if any) of— 4
648	648	‘‘(i) the amount of such interest so 5
649	649	paid or accrued, over 6
650	650	‘‘(ii) the amount described in subpara-7
651	651	graph (B), plus 8
652	652	‘‘(B) the amount of interest includible in 9
653	653	gross income of such corporation for such tax-10
654	654	able year. 11
655	655	‘‘(2) I
656	656	NTERNATIONAL FINANCIAL REPORTING 12
657	657	GROUP.— 13
658	658	‘‘(A) For purposes of this subsection, the 14
659	659	term ‘international financial reporting group’ 15
660	660	means, with respect to any reporting year, any 16
661	661	group of entities which— 17
662	662	‘‘(i) includes— 18
663	663	‘‘(I) at least one foreign corpora-19
664	664	tion engaged in a trade or business 20
665	665	within the United States, or 21
666	666	‘‘(II) at least one domestic cor-22
667	667	poration and one foreign corporation, 23
668	668	‘‘(ii) prepares consolidated financial 24
669	669	statements with respect to such year, and 25
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671	671	kjohnson on DSK7ZCZBW3PROD with $$_JOB 21
672	672	•HR 995 IH
673	673	‘‘(iii) reports in such statements aver-1
674	674	age annual gross receipts (determined in 2
675	675	the aggregate with respect to all entities 3
676	676	which are part of such group) for the 3-re-4
677	677	porting-year period ending with such re-5
678	678	porting year in excess of $100,000,000. 6
679	679	‘‘(B) R
680	680	ULES RELATING TO DETERMINA -7
681	681	TION OF AVERAGE GROSS RECEIPTS .—For pur-8
682	682	poses of subparagraph (A)(iii), rules similar to 9
683	683	the rules of section 448(c)(3) shall apply. 10
684	684	‘‘(3) A
685	685	LLOWABLE PERCENTAGE .—For purposes 11
686	686	of this subsection— 12
687	687	‘‘(A) I
688	688	N GENERAL.—The term ‘allowable 13
689	689	percentage’ means, with respect to any domestic 14
690	690	corporation for any taxable year, the ratio (ex-15
691	691	pressed as a percentage and not greater than 16
692	692	100 percent) of— 17
693	693	‘‘(i) such corporation’s allocable share 18
694	694	of the international financial reporting 19
695	695	group’s reported net interest expense for 20
696	696	the reporting year of such group which 21
697	697	ends in or with such taxable year of such 22
698	698	corporation, over 23
699	699	VerDate Sep 11 2014 02:17 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00021 Fmt 6652 Sfmt 6201 E:\BILLS\H995.IH H995
700	700	kjohnson on DSK7ZCZBW3PROD with $$_JOB 22
701	701	•HR 995 IH
702	702	‘‘(ii) such corporation’s reported net 1
703	703	interest expense for such reporting year of 2
704	704	such group. 3
705	705	‘‘(B) R
706	706	EPORTED NET INTEREST EX -4
707	707	PENSE.—The term ‘reported net interest ex-5
708	708	pense’ means— 6
709	709	‘‘(i) with respect to any international 7
710	710	financial reporting group for any reporting 8
711	711	year, the excess of— 9
712	712	‘‘(I) the aggregate amount of in-10
713	713	terest expense reported in such 11
714	714	group’s consolidated financial state-12
715	715	ments for such taxable year, over 13
716	716	‘‘(II) the aggregate amount of in-14
717	717	terest income reported in such group’s 15
718	718	consolidated financial statements for 16
719	719	such taxable year, and 17
720	720	‘‘(ii) with respect to any domestic cor-18
721	721	poration for any reporting year, the excess 19
722	722	of— 20
723	723	‘‘(I) the amount of interest ex-21
724	724	pense of such corporation reported in 22
725	725	the books and records of the inter-23
726	726	national financial reporting group 24
727	727	which are used in preparing such 25
728	728	VerDate Sep 11 2014 02:17 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00022 Fmt 6652 Sfmt 6201 E:\BILLS\H995.IH H995
729	729	kjohnson on DSK7ZCZBW3PROD with $$_JOB 23
730	730	•HR 995 IH
731	731	group’s consolidated financial state-1
732	732	ments for such taxable year, over 2
733	733	‘‘(II) the amount of interest in-3
734	734	come of such corporation reported in 4
735	735	such books and records. 5
736	736	‘‘(C) A
737	737	LLOCABLE SHARE OF REPORTED 6
738	738	NET INTEREST EXPENSE .—With respect to any 7
739	739	domestic corporation which is a member of any 8
740	740	international financial reporting group, such 9
741	741	corporation’s allocable share of such group’s re-10
742	742	ported net interest expense for any reporting 11
743	743	year is the portion of such expense which bears 12
744	744	the same ratio to such expense as— 13
745	745	‘‘(i) the EBITDA of such corporation 14
746	746	for such reporting year, bears to 15
747	747	‘‘(ii) the EBITDA of such group for 16
748	748	such reporting year. 17
749	749	‘‘(D) EBITDA.— 18
750	750	‘‘(i) I
751	751	N GENERAL .—The term 19
752	752	‘EBITDA’ means, with respect to any re-20
753	753	porting year, earnings before interest, 21
754	754	taxes, depreciation, and amortization— 22
755	755	‘‘(I) as determined in the inter-23
756	756	national financial reporting group’s 24
757	757	VerDate Sep 11 2014 02:17 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00023 Fmt 6652 Sfmt 6201 E:\BILLS\H995.IH H995
758	758	kjohnson on DSK7ZCZBW3PROD with $$_JOB 24
759	759	•HR 995 IH
760	760	consolidated financial statements for 1
761	761	such year, or 2
762	762	‘‘(II) for purposes of subpara-3
763	763	graph (A)(i), as determined in the 4
764	764	books and records of the international 5
765	765	financial reporting group which are 6
766	766	used in preparing such statements if 7
767	767	not determined in such statements. 8
768	768	‘‘(ii) T
769	769	REATMENT OF DISREGARDED 9
770	770	ENTITIES.—The EBITDA of any domestic 10
771	771	corporation shall not fail to include the 11
772	772	EBITDA of any entity which is dis-12
773	773	regarded for purposes of this chapter. 13
774	774	‘‘(iii) T
775	775	REATMENT OF INTRA -GROUP 14
776	776	DISTRIBUTIONS.—The EBITDA of any do-15
777	777	mestic corporation shall be determined 16
778	778	without regard to any distribution received 17
779	779	by such corporation from any other mem-18
780	780	ber of the international financial reporting 19
781	781	group. 20
782	782	‘‘(E) S
783	783	PECIAL RULES FOR NON -POSITIVE 21
784	784	EBITDA.— 22
785	785	‘‘(i) N
786	786	ON-POSITIVE GROUP EBITDA .— 23
787	787	In the case of any international financial 24
788	788	reporting group the EBITDA of which is 25
789	789	VerDate Sep 11 2014 02:17 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00024 Fmt 6652 Sfmt 6201 E:\BILLS\H995.IH H995
790	790	kjohnson on DSK7ZCZBW3PROD with $$_JOB 25
791	791	•HR 995 IH
792	792	zero or less, paragraph (1) shall not apply 1
793	793	to any member of such group the EBITDA 2
794	794	of which is above zero. 3
795	795	‘‘(ii) N
796	796	ON-POSITIVE ENTITY 4
797	797	EBITDA.—In the case of any group mem-5
798	798	ber the EBITDA of which is zero or less, 6
799	799	paragraph (1) shall be applied without re-7
800	800	gard to subparagraph (A) thereof. 8
801	801	‘‘(4) C
802	802	ONSOLIDATED FINANCIAL STATEMENT .— 9
803	803	For purposes of this subsection, the term ‘consoli-10
804	804	dated financial statement’ means any consolidated 11
805	805	financial statement described in paragraph (2)(A)(ii) 12
806	806	if such statement is— 13
807	807	‘‘(A) a financial statement which is cer-14
808	808	tified as being prepared in accordance with gen-15
809	809	erally accepted accounting principles, inter-16
810	810	national financial reporting standards, or any 17
811	811	other comparable method of accounting identi-18
812	812	fied by the Secretary, and which is— 19
813	813	‘‘(i) a 10–K (or successor form), or 20
814	814	annual statement to shareholders, required 21
815	815	to be filed with the United States Securi-22
816	816	ties and Exchange Commission, 23
817	817	‘‘(ii) an audited financial statement 24
818	818	which is used for— 25
819	819	VerDate Sep 11 2014 02:17 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\H995.IH H995
820	820	kjohnson on DSK7ZCZBW3PROD with $$_JOB 26
821	821	•HR 995 IH
822	822	‘‘(I) credit purposes, 1
823	823	‘‘(II) reporting to shareholders, 2
824	824	partners, or other proprietors, or to 3
825	825	beneficiaries, or 4
826	826	‘‘(III) any other substantial 5
827	827	nontax purpose, 6
828	828	but only if there is no statement described 7
829	829	in clause (i), or 8
830	830	‘‘(iii) filed with any other Federal or 9
831	831	State agency for nontax purposes, but only 10
832	832	if there is no statement described in clause 11
833	833	(i) or (ii), or 12
834	834	‘‘(B) a financial statement which— 13
835	835	‘‘(i) is used for a purpose described in 14
836	836	subclause (I), (II), or (III) of subpara-15
837	837	graph (A)(ii), or 16
838	838	‘‘(ii) filed with any regulatory or gov-17
839	839	ernmental body (whether domestic or for-18
840	840	eign) specified by the Secretary, 19
841	841	but only if there is no statement described in 20
842	842	subparagraph (A). 21
843	843	‘‘(5) R
844	844	EPORTING YEAR.—For purposes of this 22
845	845	subsection, the term ‘reporting year’ means, with re-23
846	846	spect to any international financial reporting group, 24
847	847	VerDate Sep 11 2014 02:17 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\H995.IH H995
848	848	kjohnson on DSK7ZCZBW3PROD with $$_JOB 27
849	849	•HR 995 IH
850	850	the year with respect to which the consolidated fi-1
851	851	nancial statements are prepared. 2
852	852	‘‘(6) A
853	853	PPLICATION TO CERTAIN ENTITIES .— 3
854	854	‘‘(A) P
855	855	ARTNERSHIPS.—Except as other-4
856	856	wise provided by the Secretary in paragraph 5
857	857	(7), this subsection and subsection (o) shall 6
858	858	apply to any partnership which is a member of 7
859	859	any international financial reporting group 8
860	860	under rules similar to the rules of section 9
861	861	163(j)(4). 10
862	862	‘‘(B) F
863	863	OREIGN CORPORATIONS ENGAGED 11
864	864	IN TRADE OR BUSINESS WITHIN THE UNITED 12
865	865	STATES.—Except as otherwise provided by the 13
866	866	Secretary in paragraph (7), any deduction for 14
867	867	interest paid or accrued by a foreign corpora-15
868	868	tion engaged in a trade or business within the 16
869	869	United States shall be limited in a manner con-17
870	870	sistent with the principles of this subsection. 18
871	871	‘‘(C) C
872	872	ONSOLIDATED GROUPS .—For pur-19
873	873	poses of this subsection, the members of any 20
874	874	group that file (or are required to file) a con-21
875	875	solidated return with respect to the tax imposed 22
876	876	by chapter 1 for a taxable year shall be treated 23
877	877	as a single corporation. 24
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879	879	kjohnson on DSK7ZCZBW3PROD with $$_JOB 28
880	880	•HR 995 IH
881	881	‘‘(7) REGULATIONS.—The Secretary may issue 1
882	882	such regulations or other guidance as are necessary 2
883	883	or appropriate to carry out the purposes of this sub-3
884	884	section.’’. 4
885	885	(b) C
886	886	ARRYFORWARD OF DISALLOWEDINTEREST.— 5
887	887	(1) I
888	888	N GENERAL.—Section 163 is amended by 6
889	889	inserting after subsection (n), as added by sub-7
890	890	section (a), the following new subsection: 8
891	891	‘‘(o) C
892	892	ARRYFORWARD OF CERTAINDISALLOWEDIN-9
893	893	TEREST.—The amount of any interest not allowed as a 10
894	894	deduction for any taxable year by reason of subsection 11
895	895	(j)(1) or (n)(1) (whichever imposes the lower limitation 12
896	896	with respect to such taxable year) shall be treated as inter-13
897	897	est (and as business interest for purposes of subsection 14
898	898	(j)(1)) paid or accrued (and as interest expense reported 15
899	899	as described in clause (i)(I) or (ii)(I) of subsection 16
900	900	(n)(3)(B), as the case may be) in the succeeding taxable 17
901	901	year. Interest paid or accrued in any taxable year (deter-18
902	902	mined without regard to the preceding sentence) shall not 19
903	903	be carried past the fifth taxable year following such tax-20
904	904	able year, determined by treating interest as allowed as 21
905	905	a deduction on a first-in, first-out basis.’’. 22
906	906	(2) C
907	907	ONFORMING AMENDMENTS .— 23
908	908	(A) Section 163(j)(2) is amended to read 24
909	909	as follows: 25
910	910	VerDate Sep 11 2014 02:17 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00028 Fmt 6652 Sfmt 6201 E:\BILLS\H995.IH H995
911	911	kjohnson on DSK7ZCZBW3PROD with $$_JOB 29
912	912	•HR 995 IH
913	913	‘‘(2) CARRYFORWARD CROSS -REFERENCE.—For 1
914	914	carryforward treatment, see subsection (o).’’. 2
915	915	(B) Section 163(j)(4)(B)(i)(I) is amended 3
916	916	by striking ‘‘paragraph (2)’’ and inserting ‘‘sub-4
917	917	section (o)’’. 5
918	918	(C) Section 381(c)(20) is amended to read 6
919	919	as follows: 7
920	920	‘‘(20) C
921	921	ARRYFORWARD OF DISALLOWED INTER -8
922	922	EST.—The carryover of disallowed interest described 9
923	923	in section 163(o) to taxable years ending after the 10
924	924	date of distribution or transfer.’’. 11
925	925	(D) Section 382(d)(3) is amended to read 12
926	926	as follows: 13
927	927	‘‘(3) A
928	928	PPLICATION TO CARRYFORWARD OF DIS -14
929	929	ALLOWED INTEREST .—The term ‘pre-change loss’ 15
930	930	shall include any carryover of disallowed interest de-16
931	931	scribed in section 163(o) under rules similar to the 17
932	932	rules of paragraph (1).’’. 18
933	933	(c) E
934	934	FFECTIVEDATE.—The amendments made by 19
935	935	this section shall apply to taxable years beginning after 20
936	936	December 31, 2024. 21
937	937	SEC. 5. MODIFICATIONS TO RULES RELATING TO IN-22
938	938	VERTED CORPORATIONS. 23
939	939	(a) I
940	940	NGENERAL.—Subsection (b) of section 7874 is 24
941	941	amended to read as follows: 25
942	942	VerDate Sep 11 2014 02:17 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\H995.IH H995
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944	944	•HR 995 IH
945	945	‘‘(b) INVERTEDCORPORATIONSTREATED ASDO-1
946	946	MESTICCORPORATIONS.— 2
947	947	‘‘(1) I
948	948	N GENERAL.—Notwithstanding section 3
949	949	7701(a)(4), a foreign corporation shall be treated for 4
950	950	purposes of this title as a domestic corporation if— 5
951	951	‘‘(A) such corporation would be a surro-6
952	952	gate foreign corporation if subsection (a)(2) 7
953	953	were applied by substituting ‘80 percent’ for 8
954	954	‘60 percent’, or 9
955	955	‘‘(B) such corporation is an inverted do-10
956	956	mestic corporation. 11
957	957	‘‘(2) I
958	958	NVERTED DOMESTIC CORPORATION .—For 12
959	959	purposes of this subsection, a foreign corporation 13
960	960	shall be treated as an inverted domestic corporation 14
961	961	if, pursuant to a plan (or a series of related trans-15
962	962	actions)— 16
963	963	‘‘(A) the entity completes after December 17
964	964	22, 2017, the direct or indirect acquisition of— 18
965	965	‘‘(i) substantially all of the properties 19
966	966	held directly or indirectly by a domestic 20
967	967	corporation, or 21
968	968	‘‘(ii) substantially all of the assets of, 22
969	969	or substantially all of the properties consti-23
970	970	tuting a trade or business of, a domestic 24
971	971	partnership, and 25
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974	974	•HR 995 IH
975	975	‘‘(B) after the acquisition, either— 1
976	976	‘‘(i) more than 50 percent of the stock 2
977	977	(by vote or value) of the entity is held— 3
978	978	‘‘(I) in the case of an acquisition 4
979	979	with respect to a domestic corpora-5
980	980	tion, by former shareholders of the 6
981	981	domestic corporation by reason of 7
982	982	holding stock in the domestic corpora-8
983	983	tion, or 9
984	984	‘‘(II) in the case of an acquisition 10
985	985	with respect to a domestic partner-11
986	986	ship, by former partners of the do-12
987	987	mestic partnership by reason of hold-13
988	988	ing a capital or profits interest in the 14
989	989	domestic partnership, or 15
990	990	‘‘(ii) the management and control of 16
991	991	the expanded affiliated group which in-17
992	992	cludes the entity occurs, directly or indi-18
993	993	rectly, primarily within the United States, 19
994	994	and such expanded affiliated group has 20
995	995	significant domestic business activities. 21
996	996	‘‘(3) E
997	997	XCEPTION FOR CORPORATIONS WITH 22
998	998	SUBSTANTIAL BUSINESS ACTIVITIES IN FOREIGN 23
999	999	COUNTRY OF ORGANIZATION .—A foreign corporation 24
1000	1000	described in paragraph (2) shall not be treated as an 25
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1002	1002	kjohnson on DSK7ZCZBW3PROD with $$_JOB 32
1003	1003	•HR 995 IH
1004	1004	inverted domestic corporation if after the acquisition 1
1005	1005	the expanded affiliated group which includes the en-2
1006	1006	tity has substantial business activities in the foreign 3
1007	1007	country in which or under the law of which the enti-4
1008	1008	ty is created or organized when compared to the 5
1009	1009	total business activities of such expanded affiliated 6
1010	1010	group. For purposes of subsection (a)(2)(B)(iii) and 7
1011	1011	the preceding sentence, the term ‘substantial busi-8
1012	1012	ness activities’ shall have the meaning given such 9
1013	1013	term under regulations in effect on December 22, 10
1014	1014	2017, except that the Secretary may issue regula-11
1015	1015	tions increasing the threshold percent in any of the 12
1016	1016	tests under such regulations for determining if busi-13
1017	1017	ness activities constitute substantial business activi-14
1018	1018	ties for purposes of this paragraph. 15
1019	1019	‘‘(4) M
1020	1020	ANAGEMENT AND CONTROL .—For pur-16
1021	1021	poses of paragraph (2)(B)(ii)— 17
1022	1022	‘‘(A) I
1023	1023	N GENERAL.—The Secretary shall 18
1024	1024	prescribe regulations for purposes of deter-19
1025	1025	mining cases in which the management and 20
1026	1026	control of an expanded affiliated group is to be 21
1027	1027	treated as occurring, directly or indirectly, pri-22
1028	1028	marily within the United States. The regula-23
1029	1029	tions prescribed under the preceding sentence 24
1030	1030	shall apply to periods after December 22, 2017. 25
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1033	1033	•HR 995 IH
1034	1034	‘‘(B) EXECUTIVE OFFICERS AND SENIOR 1
1035	1035	MANAGEMENT.—Such regulations shall provide 2
1036	1036	that the management and control of an ex-3
1037	1037	panded affiliated group shall be treated as oc-4
1038	1038	curring, directly or indirectly, primarily within 5
1039	1039	the United States if substantially all of the ex-6
1040	1040	ecutive officers and senior management of the 7
1041	1041	expanded affiliated group who exercise day-to- 8
1042	1042	day responsibility for making decisions involving 9
1043	1043	strategic, financial, and operational policies of 10
1044	1044	the expanded affiliated group are based or pri-11
1045	1045	marily located within the United States. Indi-12
1046	1046	viduals who in fact exercise such day-to-day re-13
1047	1047	sponsibilities shall be treated as executive offi-14
1048	1048	cers and senior management regardless of their 15
1049	1049	title. 16
1050	1050	‘‘(5) S
1051	1051	IGNIFICANT DOMESTIC BUSINESS ACTIVI -17
1052	1052	TIES.—For purposes of paragraph (2)(B)(ii), an ex-18
1053	1053	panded affiliated group has significant domestic 19
1054	1054	business activities if at least 25 percent of— 20
1055	1055	‘‘(A) the employees of the group are based 21
1056	1056	in the United States, 22
1057	1057	‘‘(B) the employee compensation incurred 23
1058	1058	by the group is incurred with respect to employ-24
1059	1059	ees based in the United States, 25
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1062	1062	•HR 995 IH
1063	1063	‘‘(C) the assets of the group are located in 1
1064	1064	the United States, or 2
1065	1065	‘‘(D) the income of the group is derived in 3
1066	1066	the United States, 4
1067	1067	determined in the same manner as such determina-5
1068	1068	tions are made for purposes of determining substan-6
1069	1069	tial business activities under regulations referred to 7
1070	1070	in paragraph (3) as in effect on December 22, 2017, 8
1071	1071	but applied by treating all references in such regula-9
1072	1072	tions to ‘foreign country’ and ‘relevant foreign coun-10
1073	1073	try’ as references to ‘the United States’. The Sec-11
1074	1074	retary may issue regulations decreasing the thresh-12
1075	1075	old percent in any of the tests under such regula-13
1076	1076	tions for determining if business activities constitute 14
1077	1077	significant domestic business activities for purposes 15
1078	1078	of this paragraph.’’. 16
1079	1079	(b) C
1080	1080	ONFORMINGAMENDMENTS.— 17
1081	1081	(1) Clause (i) of section 7874(a)(2)(B) is 18
1082	1082	amended by striking ‘‘after March 4, 2003,’’ and in-19
1083	1083	serting ‘‘after March 4, 2003, and before December 20
1084	1084	23, 2017,’’. 21
1085	1085	(2) Subsection (c) of section 7874 is amend-22
1086	1086	ed— 23
1087	1087	(A) in paragraph (2)— 24
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1090	1090	•HR 995 IH
1091	1091	(i) by striking ‘‘subsection 1
1092	1092	(a)(2)(B)(ii)’’ and inserting ‘‘subsections 2
1093	1093	(a)(2)(B)(ii) and (b)(2)(B)(i)’’; and 3
1094	1094	(ii) by inserting ‘‘or (b)(2)(A)’’ after 4
1095	1095	‘‘(a)(2)(B)(i)’’ in subparagraph (B); 5
1096	1096	(B) in paragraph (3), by inserting ‘‘or 6
1097	1097	(b)(2)(B)(i), as the case may be,’’ after 7
1098	1098	‘‘(a)(2)(B)(ii)’’; 8
1099	1099	(C) in paragraph (5), by striking ‘‘sub-9
1100	1100	section (a)(2)(B)(ii)’’ and inserting ‘‘sub-10
1101	1101	sections (a)(2)(B)(ii) and (b)(2)(B)(i)’’; and 11
1102	1102	(D) in paragraph (6), by inserting ‘‘or in-12
1103	1103	verted domestic corporation, as the case may 13
1104	1104	be,’’ after ‘‘surrogate foreign corporation’’. 14
1105	1105	(c) E
1106	1106	FFECTIVEDATE.—The amendments made by 15
1107	1107	this section shall apply to taxable years ending after De-16
1108	1108	cember 22, 2017. 17
1109	1109	(d) E
1110	1110	XTENSION OFLIMITATION ONASSESSMENT.— 18
1111	1111	If the period of limitation on assessment of tax resulting 19
1112	1112	from the amendments made by subsection (a) expires be-20
1113	1113	fore the end of the 3-year period beginning on the date 21
1114	1114	of the enactment of this Act, such assessment (to the ex-22
1115	1115	tent attributable to such amendments) may, nevertheless, 23
1116	1116	be made before the close of such 3-year period. 24
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1119	1119	•HR 995 IH
1120	1120	SEC. 6. TREATMENT OF FOREIGN CORPORATIONS MAN-1
1121	1121	AGED AND CONTROLLED IN THE UNITED 2
1122	1122	STATES AS DOMESTIC CORPORATIONS. 3
1123	1123	(a) I
1124	1124	NGENERAL.—Section 7701 is amended by re-4
1125	1125	designating subsection (p) as subsection (q) and by insert-5
1126	1126	ing after subsection (o) the following new subsection: 6
1127	1127	‘‘(p) C
1128	1128	ERTAINCORPORATIONSMANAGED ANDCON-7
1129	1129	TROLLED IN THE UNITEDSTATESTREATED ASDOMES-8
1130	1130	TIC FORINCOMETAX.— 9
1131	1131	‘‘(1) I
1132	1132	N GENERAL.—Notwithstanding subsection 10
1133	1133	(a)(4), in the case of a corporation described in 11
1134	1134	paragraph (2) if— 12
1135	1135	‘‘(A) the corporation would not otherwise 13
1136	1136	be treated as a domestic corporation for pur-14
1137	1137	poses of this title, but 15
1138	1138	‘‘(B) the management and control of the 16
1139	1139	corporation occurs, directly or indirectly, pri-17
1140	1140	marily within the United States, 18
1141	1141	then, solely for purposes of chapter 1 (and any other 19
1142	1142	provision of this title relating to chapter 1), the cor-20
1143	1143	poration shall be treated as a domestic corporation. 21
1144	1144	‘‘(2) C
1145	1145	ORPORATION DESCRIBED .— 22
1146	1146	‘‘(A) I
1147	1147	N GENERAL.—A corporation is de-23
1148	1148	scribed in this paragraph if— 24
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1151	1151	•HR 995 IH
1152	1152	‘‘(i) the stock of such corporation is 1
1153	1153	regularly traded on an established securi-2
1154	1154	ties market, or 3
1155	1155	‘‘(ii) the aggregate gross assets of 4
1156	1156	such corporation (or any predecessor there-5
1157	1157	of), including assets under management 6
1158	1158	for investors, whether held directly or indi-7
1159	1159	rectly, at any time during the taxable year 8
1160	1160	or any preceding taxable year is 9
1161	1161	$50,000,000 or more. 10
1162	1162	‘‘(B) G
1163	1163	ENERAL EXCEPTION .—A corpora-11
1164	1164	tion shall not be treated as described in this 12
1165	1165	paragraph if— 13
1166	1166	‘‘(i) such corporation was treated as a 14
1167	1167	corporation described in this paragraph in 15
1168	1168	a preceding taxable year, 16
1169	1169	‘‘(ii) such corporation— 17
1170	1170	‘‘(I) is not regularly traded on an 18
1171	1171	established securities market, and 19
1172	1172	‘‘(II) has, and is reasonably ex-20
1173	1173	pected to continue to have, aggregate 21
1174	1174	gross assets (including assets under 22
1175	1175	management for investors, whether 23
1176	1176	held directly or indirectly) of less than 24
1177	1177	$50,000,000, and 25
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1180	1180	•HR 995 IH
1181	1181	‘‘(iii) the Secretary grants a waiver to 1
1182	1182	such corporation under this subparagraph. 2
1183	1183	‘‘(3) M
1184	1184	ANAGEMENT AND CONTROL .— 3
1185	1185	‘‘(A) I
1186	1186	N GENERAL.—The Secretary shall 4
1187	1187	prescribe regulations for purposes of deter-5
1188	1188	mining cases in which the management and 6
1189	1189	control of a corporation is to be treated as oc-7
1190	1190	curring primarily within the United States. 8
1191	1191	‘‘(B) E
1192	1192	XECUTIVE OFFICERS AND SENIOR 9
1193	1193	MANAGEMENT.—Such regulations shall provide 10
1194	1194	that— 11
1195	1195	‘‘(i) the management and control of a 12
1196	1196	corporation shall be treated as occurring 13
1197	1197	primarily within the United States if sub-14
1198	1198	stantially all of the executive officers and 15
1199	1199	senior management of the corporation who 16
1200	1200	exercise day-to-day responsibility for mak-17
1201	1201	ing decisions involving strategic, financial, 18
1202	1202	and operational policies of the corporation 19
1203	1203	are located primarily within the United 20
1204	1204	States, and 21
1205	1205	‘‘(ii) individuals who are not executive 22
1206	1206	officers and senior management of the cor-23
1207	1207	poration (including individuals who are of-24
1208	1208	ficers or employees of other corporations in 25
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1211	1211	•HR 995 IH
1212	1212	the same chain of corporations as the cor-1
1213	1213	poration) shall be treated as executive offi-2
1214	1214	cers and senior management if such indi-3
1215	1215	viduals exercise the day-to-day responsibil-4
1216	1216	ities of the corporation described in clause 5
1217	1217	(i). 6
1218	1218	‘‘(C) C
1219	1219	ORPORATIONS PRIMARILY HOLDING 7
1220	1220	INVESTMENT ASSETS .—Such regulations shall 8
1221	1221	also provide that the management and control 9
1222	1222	of a corporation shall be treated as occurring 10
1223	1223	primarily within the United States if— 11
1224	1224	‘‘(i) the assets of such corporation (di-12
1225	1225	rectly or indirectly) consist primarily of as-13
1226	1226	sets being managed on behalf of investors, 14
1227	1227	and 15
1228	1228	‘‘(ii) decisions about how to invest the 16
1229	1229	assets are made in the United States.’’. 17
1230	1230	(b) E
1231	1231	FFECTIVEDATE.—The amendments made by 18
1232	1232	this section shall apply to taxable years beginning on or 19
1233	1233	after the date which is 2 years after the date of the enact-20
1234	1234	ment of this Act, whether or not regulations are issued 21
1235	1235	under section 7701(p)(3) of the Internal Revenue Code 22
1236	1236	of 1986, as added by this section. 23
1237	1237	Æ
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