I
119THCONGRESS
1
STSESSION H. R. 995
To amend the Internal Revenue Code of 1986 to provide for current year
inclusion of net CFC tested income, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY5, 2025
Mr. D
OGGETT(for himself, Ms. ADAMS, Ms. ANSARI, Ms. BALINT, Ms.
B
ARRAGA´N, Mrs. BEATTY, Mr. BISHOP, Ms. BONAMICI, Mr. BOYLEof
Pennsylvania, Ms. B
ROWN, Ms. BROWNLEY, Ms. BUDZINSKI, Mr. CAR-
SON, Mr. CARTERof Louisiana, Mr. CASAR, Mr. CASE, Ms. CHU, Ms.
C
LARKEof New York, Mr. CLEAVER, Mr. COHEN, Mr. CONAWAY, Ms.
C
ROCKETT, Mr. CROW, Mr. DAVISof Illinois, Mr. DAVISof North Caro-
lina, Ms. D
EANof Pennsylvania, Mrs. MCCLAINDELANEY, Ms.
D
ELAURO, Ms. DELBENE, Mr. DELUZIO, Mr. DESAULNIER, Ms. DEX-
TER, Mrs. DINGELL, Ms. ESCOBAR, Mr. ESPAILLAT, Mr. EVANSof Penn-
sylvania, Ms. L
EGERFERNANDEZ, Mr. FOSTER, Mrs. FOUSHEE, Ms.
L
OISFRANKELof Florida, Mr. FROST, Mr. GARAMENDI, Mr. GARCI´Aof
Illinois, Mr. G
ARCIAof California, Ms. GARCIAof Texas, Mr. GOLDEN
of Maine, Mr. G
OLDMANof New York, Mr. GOMEZ, Mr. GREENof Texas,
Mr. G
RIJALVA, Mrs. HAYES, Mr. HORSFORD, Ms. HOYLEof Oregon, Mr.
H
UFFMAN, Mr. IVEY, Mr. JACKSONof Illinois, Ms. JAYAPAL, Mr. JOHN-
SONof Georgia, Ms. KAPTUR, Ms. KELLYof Illinois, Mr. KENNEDYof
New York, Mr. K
HANNA, Mr. LANDSMAN, Mr. LARSONof Connecticut,
Ms. L
EEof Pennsylvania, Mr. LIEU, Mr. LYNCH, Mr. MAGAZINER, Mrs.
M
CBATH, Ms. MCBRIDE, Ms. MCCOLLUM, Mr. MCGARVEY, Mr. MCGOV-
ERN, Mr. MEEKS, Mr. MENENDEZ, Ms. MENG, Mr. MFUME, Mr.
M
OULTON, Mr. MRVAN, Mr. NADLER, Mr. NEGUSE, Mr. NORCROSS, Ms.
N
ORTON, Ms. OCASIO-CORTEZ, Ms. OMAR, Mr. PALLONE, Ms. PEREZ,
Ms. P
INGREE, Mr. POCAN, Ms. PRESSLEY, Mrs. RAMIREZ, Mr. RASKIN,
Mr. R
ILEYof New York, Ms. ROSS, Mr. RYAN, Ms. SALINAS, Ms. SCAN-
LON, Ms. SCHAKOWSKY, Mr. SHERMAN, Mr. SMITHof Washington, Mr.
S
OTO, Ms. STANSBURY, Ms. STEVENS, Mrs. SYKES, Mr. TAKANO, Mr.
T
HANEDAR, Mr. THOMPSONof Mississippi, Ms. TITUS, Ms. TLAIB, Ms.
T
OKUDA, Mr. TONKO, Mrs. TORRESof California, Mrs. TRAHAN, Mr.
T
URNERof Texas, Mr. VARGAS, Ms. VELA´ZQUEZ, Ms. WASSERMAN
S
CHULTZ, Ms. WATERS, Mrs. WATSONCOLEMAN, Ms. WILLIAMSof
Georgia, and Ms. W
ILSONof Florida) introduced the following bill; which
was referred to the Committee on Ways and Means
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A BILL
To amend the Internal Revenue Code of 1986 to provide
for current year inclusion of net CFC tested income,
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, ETC. 3
(a) S
HORTTITLE.—This Act may be cited as the 4
‘‘No Tax Breaks for Outsourcing Act’’. 5
(b) A
MENDMENT OF 1986 CODE.—Except as other-6
wise expressly provided, whenever in this Act an amend-7
ment or repeal is expressed in terms of an amendment 8
to, or repeal of, a section or other provision, the reference 9
shall be considered to be made to a section or other provi-10
sion of the Internal Revenue Code of 1986. 11
(c) T
ABLE OFCONTENTS.—The table of contents of 12
this Act is as follows: 13
Sec. 1. Short title, etc.
Sec. 2. Current year inclusion of net CFC tested income.
Sec. 3. Country-by-country application of limitation on foreign tax credit based
on taxable units.
Sec. 4. Limitation on deduction of interest by domestic corporations which are
members of an international financial reporting group.
Sec. 5. Modifications to rules relating to inverted corporations.
Sec. 6. Treatment of foreign corporations managed and controlled in the United
States as domestic corporations.
SEC. 2. CURRENT YEAR INCLUSION OF NET CFC TESTED IN-
14
COME. 15
(a) R
EPEAL OFTAX-FREEDEEMEDRETURN ONIN-16
VESTMENTS.— 17
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(1) IN GENERAL.—Section 951A(a) is amended 1
by striking ‘‘global intangible low-taxed income’’ and 2
inserting ‘‘net CFC tested income’’. 3
(2) C
ONFORMING AMENDMENTS .— 4
(A) Section 951A is amended by striking 5
subsections (b) and (d). 6
(B) Section 951A(e)(1) is amended by 7
striking ‘‘subsections (b), (c)(1)(A), and’’ and 8
inserting ‘‘subsections (c)(1)(A) and’’. 9
(C) Section 951A(f) is amended by strik-10
ing ‘‘global intangible low-taxed income’’ each 11
place it appears and inserting ‘‘net CFC tested 12
income’’. 13
(D) Section 960(d)(2)(A) is amended by 14
striking ‘‘global intangible low-taxed income (as 15
defined in section 951A(b))’’ and inserting ‘‘net 16
CFC tested income (as defined in section 17
951A(c))’’. 18
(b) C
OUNTRY-BY-COUNTRYAPPLICATION OF SEC-19
TIONBASED ONCFC TAXABLEUNITS.—Section 951A is 20
amended by adding at the end the following new sub-21
section: 22
‘‘(g) C
OUNTRY-BY-COUNTRYAPPLICATION OFSEC-23
TIONBASED ONCFC TAXABLEUNITS.— 24
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‘‘(1) IN GENERAL.—If any CFC taxable unit of 1
a United States shareholder is a tax resident of (or, 2
in the case of a branch, is located in) a country 3
which is different from the country with respect to 4
which any other CFC taxable unit of such United 5
States shareholder is a tax resident (or, in the case 6
of a branch, is located in)— 7
‘‘(A) such shareholder’s net CFC tested in-8
come for purposes of subsection (a) shall be the 9
sum of the amounts of net CFC tested income 10
determined separately with respect to each such 11
country, and 12
‘‘(B) for purposes of determining such sep-13
arate amounts of net CFC tested income— 14
‘‘(i) except as otherwise provided by 15
the Secretary, any reference in subsection 16
(c) to a controlled foreign corporation of 17
such shareholder shall be treated as ref-18
erence to a CFC taxable unit of such 19
shareholder, and 20
‘‘(ii) net CFC tested income and such 21
other items and amounts as the Secretary 22
may provide, shall be determined sepa-23
rately with respect to each such country by 24
determining such amounts with respect to 25
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the CFC taxable units of such shareholder 1
which are a tax resident of such country. 2
‘‘(2) D
EFINITIONS.—For purposes of this sub-3
section— 4
‘‘(A) CFC
TAXABLE UNIT.—The term 5
‘CFC taxable unit’ means any taxable unit de-6
scribed in clause (ii), (iii), or (iv) of section 7
904(e)(2)(B), determined— 8
‘‘(i) by substituting ‘controlled foreign 9
corporation’ for ‘foreign corporation’ each 10
place it appears in such clauses, and 11
‘‘(ii) without regard to the references 12
to the taxpayer in clauses (iii) and (iv) of 13
such section. 14
‘‘(B) A
PPLICATION OF OTHER DEFINI -15
TIONS.—Terms used in this subsection which 16
are also used in section 904(e) shall have the 17
same meaning as when used in section 904(e). 18
‘‘(3) S
PECIAL RULES.—For purposes of this 19
subsection— 20
‘‘(A) A
PPLICATION OF CERTAIN RULES .— 21
Except as otherwise provided by the Secretary, 22
rules similar to the rules of section 904(e) shall 23
apply. 24
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‘‘(B) ALLOCATION OF NET CFC TESTED 1
INCOME TO CONTROLLED FOREIGN CORPORA -2
TIONS.—Except as otherwise provided by the 3
Secretary, subsection (f)(2) shall be applied 4
separately with respect to each CFC taxable 5
unit.’’. 6
(c) R
EGULATORY AUTHORITY.—Section 951A, as 7
amended by subsection (b), is amended by adding at the 8
end the following new subsection: 9
‘‘(h) R
EGULATIONS.—The Secretary shall issue such 10
regulations or other guidance as may be necessary or ap-11
propriate to carry out, or prevent the avoidance of, the 12
purposes of this section, including regulations or guidance 13
which provide for— 14
‘‘(1) the treatment of property if such property 15
is transferred, or held, temporarily, 16
‘‘(2) the treatment of property if the avoidance 17
of the purposes of this section is a factor in the 18
transfer or holding of such property, 19
‘‘(3) appropriate adjustments to the basis of 20
stock and other ownership interests, and to earnings 21
and profits, to reflect tested losses (whether or not 22
taken into account in determining net CFC tested 23
income), 24
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‘‘(4) rules similar to the rules provided under 1
the regulations or guidance issued under section 2
904(e)(4), 3
‘‘(5) other appropriate basis adjustments, 4
‘‘(6) appropriate adjustments to be made, and 5
appropriate tax attributes and records to be main-6
tained, separately with respect to CFC taxable units, 7
and 8
‘‘(7) appropriate adjustments in determining 9
tested income or tested loss if property is trans-10
ferred between related parties or amounts are paid 11
or accrued between related parties.’’. 12
(d) C
OORDINATIONWITHOTHERPROVISIONS.—Sec-13
tion 951A(f)(1) is amended by adding at the end the fol-14
lowing new subparagraph: 15
‘‘(C) T
REATMENT OF CERTAIN REF -16
ERENCES.—Except as otherwise provided by the 17
Secretary, references to section 951 or section 18
951(a) in sections 959, 961, 962, and such 19
other provisions as the Secretary may identify 20
shall include references to section 951A or sec-21
tion 951A(a), respectively.’’. 22
(e) R
EPEAL OFREDUCEDRATE OFTAX ONNET 23
CFC T
ESTEDINCOME AND FOREIGN-DERIVEDINTAN-24
GIBLEINCOME.— 25
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(1) IN GENERAL.—Part VIII of subchapter B 1
of chapter 1 is amended by striking section 250 (and 2
by striking the item relating to such section in the 3
table of sections of such part). 4
(2) C
ONFORMING AMENDMENTS .— 5
(A) Section 59A(c)(4)(B)(i) is amended by 6
striking ‘‘section 172, 245A, or 250’’ and in-7
serting ‘‘section 172 or 245A’’. 8
(B) Section 172(d) is amended by striking 9
paragraph (9). 10
(C) Section 246(b)(1) is amended— 11
(i) by striking ‘‘subsection (a) and (b) 12
of section 245, and section 250’’ and in-13
serting ‘‘and subsection (a) and (b) of sec-14
tion 245’’; and 15
(ii) by striking ‘‘subsection (a) and 16
(b) of section 245, and 250’’ and inserting 17
‘‘and subsection (a) and (b) of section 18
245’’. 19
(D) Section 469(i)(3)(E)(iii) is amended 20
by striking ‘‘, 221, and 250’’ and inserting 21
‘‘and 221’’. 22
(f) R
EPEAL OFCERTAINEXCLUSIONSFROM THE 23
D
ETERMINATION OF TESTED INCOME.—Section 24
951A(c)(2)(A)(i) is amended— 25
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(1) by striking subclauses (III) and (V), 1
(2) by redesignating subclause (IV) as sub-2
clause (III), 3
(3) by adding ‘‘and’’ at the end of subclause 4
(II), and 5
(4) by striking ‘‘and’’ at the end of subclause 6
(III) (as so redesignated) and inserting ‘‘over’’. 7
(g) I
NCREASE INDEEMEDPAIDCREDIT FORTAXES 8
P
ROPERLYATTRIBUTABLE TOTESTEDINCOME.— 9
(1) I
N GENERAL.—Section 960(d) is amended 10
by striking ‘‘80 percent of’’. 11
(2) C
ONFORMING AMENDMENT .—Section 78 is 12
amended by striking ‘‘(determined without regard to 13
the phrase ‘‘80 percent of’’ in subsection (d)(1) 14
thereof)’’. 15
(h) R
EPEAL OFHIGHTAXEXCLUSION FORFOREIGN 16
B
ASECOMPANYINCOME ANDINSURANCEINCOME.— 17
(1) I
N GENERAL.—Section 954(b) is amended 18
by striking paragraph (4). 19
(2) C
ONFORMING AMENDMENT .—Section 20
904(d)(3)(E) is amended by striking the last sen-21
tence. 22
(i) E
LIMINATION OFCARRYBACK OFFOREIGNTAX 23
C
REDIT.— 24
(1) I
N GENERAL.—Section 904(c) is amended— 25
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(A) by striking ‘‘in the first preceding tax-1
able year and in any of the first 10 succeeding 2
taxable years, in that order’’ and inserting ‘‘in 3
any of the first 10 succeeding taxable years, in 4
order’’, 5
(B) by striking ‘‘preceding or’’ each place 6
it appears, and 7
(C) by striking ‘‘C
ARRYBACK AND’’ in the 8
heading thereof. 9
(2) A
PPLICATION TO LIMITATION ON FOREIGN 10
OIL AND GAS TAXES.—Section 907(f) is amended— 11
(A) in paragraph (1), by striking ‘‘in the 12
first preceding taxable year and’’, 13
(B) in paragraph (2), by striking ‘‘pre-14
ceding or’’ in the matter preceding subpara-15
graph (A), 16
(C) in paragraph (3)(B)— 17
(i) by striking ‘‘in a preceding or suc-18
ceeding’’ and inserting ‘‘in a succeeding’’, 19
and 20
(ii) by striking ‘‘in such preceding or 21
succeeding’’ both places it appears and in-22
serting ‘‘in such succeeding’’, and 23
(D) in the heading, by striking 24
‘‘C
ARRYBACK AND’’. 25
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(j) TREATMENT OF FOREIGNBASECOMPANYOIL 1
R
ELATEDINCOME ASSUBPARTF INCOME.— 2
(1) I
N GENERAL.—Section 954(a) is amended 3
by striking ‘‘and’’ at the end of paragraph (2), by 4
striking the period at the end of paragraph (3) and 5
inserting ‘‘, and’’, and by adding at the end the fol-6
lowing new paragraph: 7
‘‘(4) the foreign base company oil related in-8
come for the taxable year (determined under sub-9
section (f) and reduced as provided in subsection 10
(b)(5)).’’. 11
(2) F
OREIGN BASE COMPANY OIL RELATED IN -12
COME.—Section 954 is amended by inserting after 13
subsection (e) the following new subsection: 14
‘‘(f) F
OREIGNBASECOMPANYOILRELATEDIN-15
COME.—For purposes of this section, the term ‘foreign 16
base company oil related income’ means foreign oil related 17
income (within the meaning of paragraphs (2) and (3) of 18
section 907(c)) other than income derived from a source 19
within a foreign country in connection with— 20
‘‘(1) oil or gas which was extracted from an oil 21
or gas well located in such foreign country, or 22
‘‘(2) oil, gas, or a primary product of oil or gas 23
which is sold by the foreign corporation or a related 24
person for use or consumption within such country 25
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or is loaded in such country on a vessel or aircraft 1
as fuel for such vessel or aircraft. 2
Such term shall not include any foreign personal holding 3
company income (as defined in subsection (c)).’’. 4
(3) C
ONFORMING AMENDMENTS .— 5
(A) Section 952(c)(1)(B)(iii) is amended 6
by redesignating subclauses (III) and (IV) as 7
subclauses (IV) and (V), respectively, and by 8
inserting after subclause (II) the following new 9
subclause: 10
‘‘(III) foreign base company oil 11
related income.’’. 12
(B) Section 954(b) is amended— 13
(i) by striking ‘‘and the foreign base 14
company services income’’ in paragraph 15
(5) and inserting ‘‘the foreign base com-16
pany services income, and the foreign base 17
company oil related income’’, and 18
(ii) by adding at the end the following 19
new paragraph: 20
‘‘(6) F
OREIGN BASE COMPANY OIL RELATED IN -21
COME NOT TREATED AS ANOTHER KIND OF FOREIGN 22
BASE COMPANY INCOME .—Income of a corporation 23
which is foreign base company oil related income 24
shall not be considered foreign base company income 25
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of such corporation under paragraph (2) or (3) of 1
subsection (a).’’. 2
(k) E
FFECTIVEDATES.— 3
(1) I
N GENERAL.—Except as otherwise pro-4
vided in this subsection, the amendments made by 5
this section shall apply to taxable years of foreign 6
corporations beginning after December 31, 2024, 7
and to taxable years of United States shareholders 8
in which or with which such taxable years of foreign 9
corporations end. 10
(2) R
EGULATORY AUTHORITY AND COORDINA -11
TION WITH OTHER PROVISIONS .—The amendments 12
made by subsections (c) and (d) shall apply to tax-13
able years of foreign corporations beginning after 14
the date of the enactment of this Act, and to taxable 15
years of United States shareholders in which or with 16
which such taxable years of foreign corporations 17
end. 18
(3) R
EPEAL OF REDUCED RATE OF TAX ; IN-19
CREASE IN DEEMED PAID CREDIT .—The amend-20
ments made by subsections (e) and (g) shall apply 21
to taxable years beginning after December 31, 2024. 22
(4) E
LIMINATION OF CARRYBACK OF FOREIGN 23
TAX CREDIT.—The amendment made by subsection 24
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(i) shall apply to credits arising in taxable years be-1
ginning after December 31, 2024. 2
(l) N
OINFERENCEREGARDINGCERTAINMODIFICA-3
TIONS.—The amendments made by subsections (c) and 4
(d) shall not be construed to create any inference with re-5
spect to the proper application of any provision of the In-6
ternal Revenue Code of 1986 with respect to any taxable 7
year beginning before the taxable years to which such 8
amendments apply. 9
SEC. 3. COUNTRY-BY-COUNTRY APPLICATION OF LIMITA-10
TION ON FOREIGN TAX CREDIT BASED ON 11
TAXABLE UNITS. 12
(a) I
NGENERAL.—Section 904 is amended by insert-13
ing after subsection (d) the following new subsection: 14
‘‘(e) C
OUNTRY-BY-COUNTRYAPPLICATIONBASED ON 15
T
AXABLEUNITS.— 16
‘‘(1) I
N GENERAL.—Subsection (d) (and the 17
provisions of this title referred to in paragraph (1) 18
of such subsection) shall be applied separately with 19
respect to each country by taking into account the 20
aggregate income properly attributable or otherwise 21
allocable to a taxable unit of the taxpayer which is 22
a tax resident of (or, in the case of a branch, is lo-23
cated in) such country. 24
‘‘(2) T
AXABLE UNITS.— 25
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‘‘(A) IN GENERAL.—Except as otherwise 1
provided by the Secretary, each item shall be 2
attributable or otherwise allocable to exactly 3
one taxable unit of the taxpayer. 4
‘‘(B) D
ETERMINATION OF TAXABLE 5
UNITS.—Except as otherwise provided by the 6
Secretary, the taxable units of a taxpayer are 7
as follows: 8
‘‘(i) G
ENERAL TAXABLE UNIT .—The 9
person that is the taxpayer and that is not 10
otherwise described in a separate clause of 11
this subparagraph. 12
‘‘(ii) C
ERTAIN FOREIGN CORPORA -13
TIONS.—Each foreign corporation with re-14
spect to which the taxpayer is a United 15
States shareholder. 16
‘‘(iii) I
NTERESTS IN PASS -THROUGH 17
ENTITIES.—Each interest held (directly or 18
indirectly) by the taxpayer or any foreign 19
corporation referred to in clause (ii) in a 20
pass-through entity if such pass-through 21
entity is a tax resident of a country other 22
than the country with respect to which 23
such taxpayer or foreign corporation (as 24
the case may be) is a tax resident. 25
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‘‘(iv) BRANCHES.—Each branch (or 1
portion thereof) the activities of which are 2
directly or indirectly carried on by the tax-3
payer or any foreign corporation referred 4
to in clause (ii) and which give rise to a 5
taxable presence in a country other than 6
the country with respect to which such tax-7
payer or foreign corporation (as the case 8
may be) is a tax resident. 9
‘‘(3) D
EFINITIONS AND SPECIAL RULES .—For 10
purposes of this subsection— 11
‘‘(A) T
AX RESIDENT.—Except as otherwise 12
provided by the Secretary, the term ‘tax resi-13
dent’ means a person or entity subject to tax 14
under the tax law of a country as a resident. If 15
an entity is organized under the law of a coun-16
try, or resident in a country, that does not im-17
pose an income tax with respect to such enti-18
ties, such entity shall, except as provided by the 19
Secretary, be treated as subject to tax under 20
the tax law of such country for the purposes of 21
the preceding sentence. 22
‘‘(B) P
ASS-THROUGH ENTITY .—Except as 23
otherwise provided by the Secretary, the term 24
‘pass-through entity’ includes any partnership 25
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or other entity to the extent that income, gain, 1
deduction, or loss of the entity is taken into ac-2
count in determining the income or loss of a 3
person that owns (directly or indirectly) an in-4
terest in such entity. 5
‘‘(C) B
RANCH.—Except as otherwise pro-6
vided by the Secretary, the term ‘branch’ means 7
a taxable presence of a tax resident in a coun-8
try other than its country of residence as deter-9
mined under such other country’s tax law. The 10
Secretary shall provide regulations or other 11
guidance applying such term to activities in a 12
country that do not give rise to a taxable pres-13
ence. 14
‘‘(D) T
REATMENT OF FISCALLY AUTONO -15
MOUS JURISDICTIONS .—Any fiscally autono-16
mous jurisdiction shall be treated as a separate 17
country. Any possession of the United States 18
shall also be treated as a separate country. 19
‘‘(E) P
OSSESSION OF THE UNITED 20
STATES.—The term ‘possession of the United 21
States’ means each of American Samoa, the 22
Commonwealth of the Northern Mariana Is-23
lands, the Commonwealth of Puerto Rico, 24
Guam, and the Virgin Islands. 25
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‘‘(4) REGULATIONS.—The Secretary shall issue 1
such regulations or other guidance as may be nec-2
essary or appropriate to carry out, or prevent avoid-3
ance of, the purposes of this subsection, including 4
regulations or other guidance— 5
‘‘(A) providing for the application of this 6
subsection to an entity or arrangement that is 7
considered a tax resident of more than one 8
country or of no country, 9
‘‘(B) providing for the application of this 10
subsection to hybrid entities or hybrid trans-11
actions (as such terms are used for purposes of 12
section 267A), pass-through entities, passive 13
foreign investment companies, trusts, and other 14
entities or arrangements not otherwise de-15
scribed in this subsection, and 16
‘‘(C) providing for the assignment of any 17
item (including foreign taxes and deductions) to 18
taxable units, including in the case of amounts 19
not otherwise taken into account in determining 20
taxable income under this chapter.’’. 21
(b) T
REATMENT OF INADEQUATE SUBSTAN-22
TIATION.—Section 904(d)(4)(C)(ii) is amended by strik-23
ing ‘‘paragraph (1)(A)’’ and inserting ‘‘paragraph 24
(1)(C)’’. 25
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(c) APPLICATION OFFOREIGNTAXCREDITLIMITA-1
TIONWITHRESPECT TOFOREIGNBRANCHES.—Section 2
904(d)(2)(J)(i) is amended— 3
(1) by striking ‘‘qualified business units (as de-4
fined in section 989(a)) in 1 or more foreign coun-5
tries’’ and inserting ‘‘foreign branches described in 6
section 904(e)(2)(B)(iv)’’, and 7
(2) by striking ‘‘a qualified business unit’’ and 8
inserting ‘‘a foreign branch’’. 9
(d) E
FFECTIVEDATE.—The amendments made by 10
this section shall apply to taxable years beginning after 11
December 31, 2024. 12
SEC. 4. LIMITATION ON DEDUCTION OF INTEREST BY DO-13
MESTIC CORPORATIONS WHICH ARE MEM-14
BERS OF AN INTERNATIONAL FINANCIAL RE-15
PORTING GROUP. 16
(a) I
NGENERAL.—Section 163 is amended by redes-17
ignating subsection (n) as subsection (p) and by inserting 18
after subsection (m) the following new subsection: 19
‘‘(n) L
IMITATION ONDEDUCTION OFINTEREST BY 20
D
OMESTICCORPORATIONS IN INTERNATIONAL FINAN-21
CIALREPORTINGGROUPS.— 22
‘‘(1) I
N GENERAL.—In the case of any domestic 23
corporation which is a member of any international 24
financial reporting group, the deduction under this 25
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chapter for interest paid or accrued during the tax-1
able year shall not exceed the sum of— 2
‘‘(A) the allowable percentage of 110 per-3
cent of the excess (if any) of— 4
‘‘(i) the amount of such interest so 5
paid or accrued, over 6
‘‘(ii) the amount described in subpara-7
graph (B), plus 8
‘‘(B) the amount of interest includible in 9
gross income of such corporation for such tax-10
able year. 11
‘‘(2) I
NTERNATIONAL FINANCIAL REPORTING 12
GROUP.— 13
‘‘(A) For purposes of this subsection, the 14
term ‘international financial reporting group’ 15
means, with respect to any reporting year, any 16
group of entities which— 17
‘‘(i) includes— 18
‘‘(I) at least one foreign corpora-19
tion engaged in a trade or business 20
within the United States, or 21
‘‘(II) at least one domestic cor-22
poration and one foreign corporation, 23
‘‘(ii) prepares consolidated financial 24
statements with respect to such year, and 25
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‘‘(iii) reports in such statements aver-1
age annual gross receipts (determined in 2
the aggregate with respect to all entities 3
which are part of such group) for the 3-re-4
porting-year period ending with such re-5
porting year in excess of $100,000,000. 6
‘‘(B) R
ULES RELATING TO DETERMINA -7
TION OF AVERAGE GROSS RECEIPTS .—For pur-8
poses of subparagraph (A)(iii), rules similar to 9
the rules of section 448(c)(3) shall apply. 10
‘‘(3) A
LLOWABLE PERCENTAGE .—For purposes 11
of this subsection— 12
‘‘(A) I
N GENERAL.—The term ‘allowable 13
percentage’ means, with respect to any domestic 14
corporation for any taxable year, the ratio (ex-15
pressed as a percentage and not greater than 16
100 percent) of— 17
‘‘(i) such corporation’s allocable share 18
of the international financial reporting 19
group’s reported net interest expense for 20
the reporting year of such group which 21
ends in or with such taxable year of such 22
corporation, over 23
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‘‘(ii) such corporation’s reported net 1
interest expense for such reporting year of 2
such group. 3
‘‘(B) R
EPORTED NET INTEREST EX -4
PENSE.—The term ‘reported net interest ex-5
pense’ means— 6
‘‘(i) with respect to any international 7
financial reporting group for any reporting 8
year, the excess of— 9
‘‘(I) the aggregate amount of in-10
terest expense reported in such 11
group’s consolidated financial state-12
ments for such taxable year, over 13
‘‘(II) the aggregate amount of in-14
terest income reported in such group’s 15
consolidated financial statements for 16
such taxable year, and 17
‘‘(ii) with respect to any domestic cor-18
poration for any reporting year, the excess 19
of— 20
‘‘(I) the amount of interest ex-21
pense of such corporation reported in 22
the books and records of the inter-23
national financial reporting group 24
which are used in preparing such 25
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group’s consolidated financial state-1
ments for such taxable year, over 2
‘‘(II) the amount of interest in-3
come of such corporation reported in 4
such books and records. 5
‘‘(C) A
LLOCABLE SHARE OF REPORTED 6
NET INTEREST EXPENSE .—With respect to any 7
domestic corporation which is a member of any 8
international financial reporting group, such 9
corporation’s allocable share of such group’s re-10
ported net interest expense for any reporting 11
year is the portion of such expense which bears 12
the same ratio to such expense as— 13
‘‘(i) the EBITDA of such corporation 14
for such reporting year, bears to 15
‘‘(ii) the EBITDA of such group for 16
such reporting year. 17
‘‘(D) EBITDA.— 18
‘‘(i) I
N GENERAL .—The term 19
‘EBITDA’ means, with respect to any re-20
porting year, earnings before interest, 21
taxes, depreciation, and amortization— 22
‘‘(I) as determined in the inter-23
national financial reporting group’s 24
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consolidated financial statements for 1
such year, or 2
‘‘(II) for purposes of subpara-3
graph (A)(i), as determined in the 4
books and records of the international 5
financial reporting group which are 6
used in preparing such statements if 7
not determined in such statements. 8
‘‘(ii) T
REATMENT OF DISREGARDED 9
ENTITIES.—The EBITDA of any domestic 10
corporation shall not fail to include the 11
EBITDA of any entity which is dis-12
regarded for purposes of this chapter. 13
‘‘(iii) T
REATMENT OF INTRA -GROUP 14
DISTRIBUTIONS.—The EBITDA of any do-15
mestic corporation shall be determined 16
without regard to any distribution received 17
by such corporation from any other mem-18
ber of the international financial reporting 19
group. 20
‘‘(E) S
PECIAL RULES FOR NON -POSITIVE 21
EBITDA.— 22
‘‘(i) N
ON-POSITIVE GROUP EBITDA .— 23
In the case of any international financial 24
reporting group the EBITDA of which is 25
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zero or less, paragraph (1) shall not apply 1
to any member of such group the EBITDA 2
of which is above zero. 3
‘‘(ii) N
ON-POSITIVE ENTITY 4
EBITDA.—In the case of any group mem-5
ber the EBITDA of which is zero or less, 6
paragraph (1) shall be applied without re-7
gard to subparagraph (A) thereof. 8
‘‘(4) C
ONSOLIDATED FINANCIAL STATEMENT .— 9
For purposes of this subsection, the term ‘consoli-10
dated financial statement’ means any consolidated 11
financial statement described in paragraph (2)(A)(ii) 12
if such statement is— 13
‘‘(A) a financial statement which is cer-14
tified as being prepared in accordance with gen-15
erally accepted accounting principles, inter-16
national financial reporting standards, or any 17
other comparable method of accounting identi-18
fied by the Secretary, and which is— 19
‘‘(i) a 10–K (or successor form), or 20
annual statement to shareholders, required 21
to be filed with the United States Securi-22
ties and Exchange Commission, 23
‘‘(ii) an audited financial statement 24
which is used for— 25
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‘‘(I) credit purposes, 1
‘‘(II) reporting to shareholders, 2
partners, or other proprietors, or to 3
beneficiaries, or 4
‘‘(III) any other substantial 5
nontax purpose, 6
but only if there is no statement described 7
in clause (i), or 8
‘‘(iii) filed with any other Federal or 9
State agency for nontax purposes, but only 10
if there is no statement described in clause 11
(i) or (ii), or 12
‘‘(B) a financial statement which— 13
‘‘(i) is used for a purpose described in 14
subclause (I), (II), or (III) of subpara-15
graph (A)(ii), or 16
‘‘(ii) filed with any regulatory or gov-17
ernmental body (whether domestic or for-18
eign) specified by the Secretary, 19
but only if there is no statement described in 20
subparagraph (A). 21
‘‘(5) R
EPORTING YEAR.—For purposes of this 22
subsection, the term ‘reporting year’ means, with re-23
spect to any international financial reporting group, 24
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the year with respect to which the consolidated fi-1
nancial statements are prepared. 2
‘‘(6) A
PPLICATION TO CERTAIN ENTITIES .— 3
‘‘(A) P
ARTNERSHIPS.—Except as other-4
wise provided by the Secretary in paragraph 5
(7), this subsection and subsection (o) shall 6
apply to any partnership which is a member of 7
any international financial reporting group 8
under rules similar to the rules of section 9
163(j)(4). 10
‘‘(B) F
OREIGN CORPORATIONS ENGAGED 11
IN TRADE OR BUSINESS WITHIN THE UNITED 12
STATES.—Except as otherwise provided by the 13
Secretary in paragraph (7), any deduction for 14
interest paid or accrued by a foreign corpora-15
tion engaged in a trade or business within the 16
United States shall be limited in a manner con-17
sistent with the principles of this subsection. 18
‘‘(C) C
ONSOLIDATED GROUPS .—For pur-19
poses of this subsection, the members of any 20
group that file (or are required to file) a con-21
solidated return with respect to the tax imposed 22
by chapter 1 for a taxable year shall be treated 23
as a single corporation. 24
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‘‘(7) REGULATIONS.—The Secretary may issue 1
such regulations or other guidance as are necessary 2
or appropriate to carry out the purposes of this sub-3
section.’’. 4
(b) C
ARRYFORWARD OF DISALLOWEDINTEREST.— 5
(1) I
N GENERAL.—Section 163 is amended by 6
inserting after subsection (n), as added by sub-7
section (a), the following new subsection: 8
‘‘(o) C
ARRYFORWARD OF CERTAINDISALLOWEDIN-9
TEREST.—The amount of any interest not allowed as a 10
deduction for any taxable year by reason of subsection 11
(j)(1) or (n)(1) (whichever imposes the lower limitation 12
with respect to such taxable year) shall be treated as inter-13
est (and as business interest for purposes of subsection 14
(j)(1)) paid or accrued (and as interest expense reported 15
as described in clause (i)(I) or (ii)(I) of subsection 16
(n)(3)(B), as the case may be) in the succeeding taxable 17
year. Interest paid or accrued in any taxable year (deter-18
mined without regard to the preceding sentence) shall not 19
be carried past the fifth taxable year following such tax-20
able year, determined by treating interest as allowed as 21
a deduction on a first-in, first-out basis.’’. 22
(2) C
ONFORMING AMENDMENTS .— 23
(A) Section 163(j)(2) is amended to read 24
as follows: 25
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‘‘(2) CARRYFORWARD CROSS -REFERENCE.—For 1
carryforward treatment, see subsection (o).’’. 2
(B) Section 163(j)(4)(B)(i)(I) is amended 3
by striking ‘‘paragraph (2)’’ and inserting ‘‘sub-4
section (o)’’. 5
(C) Section 381(c)(20) is amended to read 6
as follows: 7
‘‘(20) C
ARRYFORWARD OF DISALLOWED INTER -8
EST.—The carryover of disallowed interest described 9
in section 163(o) to taxable years ending after the 10
date of distribution or transfer.’’. 11
(D) Section 382(d)(3) is amended to read 12
as follows: 13
‘‘(3) A
PPLICATION TO CARRYFORWARD OF DIS -14
ALLOWED INTEREST .—The term ‘pre-change loss’ 15
shall include any carryover of disallowed interest de-16
scribed in section 163(o) under rules similar to the 17
rules of paragraph (1).’’. 18
(c) E
FFECTIVEDATE.—The amendments made by 19
this section shall apply to taxable years beginning after 20
December 31, 2024. 21
SEC. 5. MODIFICATIONS TO RULES RELATING TO IN-22
VERTED CORPORATIONS. 23
(a) I
NGENERAL.—Subsection (b) of section 7874 is 24
amended to read as follows: 25
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‘‘(b) INVERTEDCORPORATIONSTREATED ASDO-1
MESTICCORPORATIONS.— 2
‘‘(1) I
N GENERAL.—Notwithstanding section 3
7701(a)(4), a foreign corporation shall be treated for 4
purposes of this title as a domestic corporation if— 5
‘‘(A) such corporation would be a surro-6
gate foreign corporation if subsection (a)(2) 7
were applied by substituting ‘80 percent’ for 8
‘60 percent’, or 9
‘‘(B) such corporation is an inverted do-10
mestic corporation. 11
‘‘(2) I
NVERTED DOMESTIC CORPORATION .—For 12
purposes of this subsection, a foreign corporation 13
shall be treated as an inverted domestic corporation 14
if, pursuant to a plan (or a series of related trans-15
actions)— 16
‘‘(A) the entity completes after December 17
22, 2017, the direct or indirect acquisition of— 18
‘‘(i) substantially all of the properties 19
held directly or indirectly by a domestic 20
corporation, or 21
‘‘(ii) substantially all of the assets of, 22
or substantially all of the properties consti-23
tuting a trade or business of, a domestic 24
partnership, and 25
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‘‘(B) after the acquisition, either— 1
‘‘(i) more than 50 percent of the stock 2
(by vote or value) of the entity is held— 3
‘‘(I) in the case of an acquisition 4
with respect to a domestic corpora-5
tion, by former shareholders of the 6
domestic corporation by reason of 7
holding stock in the domestic corpora-8
tion, or 9
‘‘(II) in the case of an acquisition 10
with respect to a domestic partner-11
ship, by former partners of the do-12
mestic partnership by reason of hold-13
ing a capital or profits interest in the 14
domestic partnership, or 15
‘‘(ii) the management and control of 16
the expanded affiliated group which in-17
cludes the entity occurs, directly or indi-18
rectly, primarily within the United States, 19
and such expanded affiliated group has 20
significant domestic business activities. 21
‘‘(3) E
XCEPTION FOR CORPORATIONS WITH 22
SUBSTANTIAL BUSINESS ACTIVITIES IN FOREIGN 23
COUNTRY OF ORGANIZATION .—A foreign corporation 24
described in paragraph (2) shall not be treated as an 25
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inverted domestic corporation if after the acquisition 1
the expanded affiliated group which includes the en-2
tity has substantial business activities in the foreign 3
country in which or under the law of which the enti-4
ty is created or organized when compared to the 5
total business activities of such expanded affiliated 6
group. For purposes of subsection (a)(2)(B)(iii) and 7
the preceding sentence, the term ‘substantial busi-8
ness activities’ shall have the meaning given such 9
term under regulations in effect on December 22, 10
2017, except that the Secretary may issue regula-11
tions increasing the threshold percent in any of the 12
tests under such regulations for determining if busi-13
ness activities constitute substantial business activi-14
ties for purposes of this paragraph. 15
‘‘(4) M
ANAGEMENT AND CONTROL .—For pur-16
poses of paragraph (2)(B)(ii)— 17
‘‘(A) I
N GENERAL.—The Secretary shall 18
prescribe regulations for purposes of deter-19
mining cases in which the management and 20
control of an expanded affiliated group is to be 21
treated as occurring, directly or indirectly, pri-22
marily within the United States. The regula-23
tions prescribed under the preceding sentence 24
shall apply to periods after December 22, 2017. 25
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‘‘(B) EXECUTIVE OFFICERS AND SENIOR 1
MANAGEMENT.—Such regulations shall provide 2
that the management and control of an ex-3
panded affiliated group shall be treated as oc-4
curring, directly or indirectly, primarily within 5
the United States if substantially all of the ex-6
ecutive officers and senior management of the 7
expanded affiliated group who exercise day-to- 8
day responsibility for making decisions involving 9
strategic, financial, and operational policies of 10
the expanded affiliated group are based or pri-11
marily located within the United States. Indi-12
viduals who in fact exercise such day-to-day re-13
sponsibilities shall be treated as executive offi-14
cers and senior management regardless of their 15
title. 16
‘‘(5) S
IGNIFICANT DOMESTIC BUSINESS ACTIVI -17
TIES.—For purposes of paragraph (2)(B)(ii), an ex-18
panded affiliated group has significant domestic 19
business activities if at least 25 percent of— 20
‘‘(A) the employees of the group are based 21
in the United States, 22
‘‘(B) the employee compensation incurred 23
by the group is incurred with respect to employ-24
ees based in the United States, 25
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‘‘(C) the assets of the group are located in 1
the United States, or 2
‘‘(D) the income of the group is derived in 3
the United States, 4
determined in the same manner as such determina-5
tions are made for purposes of determining substan-6
tial business activities under regulations referred to 7
in paragraph (3) as in effect on December 22, 2017, 8
but applied by treating all references in such regula-9
tions to ‘foreign country’ and ‘relevant foreign coun-10
try’ as references to ‘the United States’. The Sec-11
retary may issue regulations decreasing the thresh-12
old percent in any of the tests under such regula-13
tions for determining if business activities constitute 14
significant domestic business activities for purposes 15
of this paragraph.’’. 16
(b) C
ONFORMINGAMENDMENTS.— 17
(1) Clause (i) of section 7874(a)(2)(B) is 18
amended by striking ‘‘after March 4, 2003,’’ and in-19
serting ‘‘after March 4, 2003, and before December 20
23, 2017,’’. 21
(2) Subsection (c) of section 7874 is amend-22
ed— 23
(A) in paragraph (2)— 24
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(i) by striking ‘‘subsection 1
(a)(2)(B)(ii)’’ and inserting ‘‘subsections 2
(a)(2)(B)(ii) and (b)(2)(B)(i)’’; and 3
(ii) by inserting ‘‘or (b)(2)(A)’’ after 4
‘‘(a)(2)(B)(i)’’ in subparagraph (B); 5
(B) in paragraph (3), by inserting ‘‘or 6
(b)(2)(B)(i), as the case may be,’’ after 7
‘‘(a)(2)(B)(ii)’’; 8
(C) in paragraph (5), by striking ‘‘sub-9
section (a)(2)(B)(ii)’’ and inserting ‘‘sub-10
sections (a)(2)(B)(ii) and (b)(2)(B)(i)’’; and 11
(D) in paragraph (6), by inserting ‘‘or in-12
verted domestic corporation, as the case may 13
be,’’ after ‘‘surrogate foreign corporation’’. 14
(c) E
FFECTIVEDATE.—The amendments made by 15
this section shall apply to taxable years ending after De-16
cember 22, 2017. 17
(d) E
XTENSION OFLIMITATION ONASSESSMENT.— 18
If the period of limitation on assessment of tax resulting 19
from the amendments made by subsection (a) expires be-20
fore the end of the 3-year period beginning on the date 21
of the enactment of this Act, such assessment (to the ex-22
tent attributable to such amendments) may, nevertheless, 23
be made before the close of such 3-year period. 24
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SEC. 6. TREATMENT OF FOREIGN CORPORATIONS MAN-1
AGED AND CONTROLLED IN THE UNITED 2
STATES AS DOMESTIC CORPORATIONS. 3
(a) I
NGENERAL.—Section 7701 is amended by re-4
designating subsection (p) as subsection (q) and by insert-5
ing after subsection (o) the following new subsection: 6
‘‘(p) C
ERTAINCORPORATIONSMANAGED ANDCON-7
TROLLED IN THE UNITEDSTATESTREATED ASDOMES-8
TIC FORINCOMETAX.— 9
‘‘(1) I
N GENERAL.—Notwithstanding subsection 10
(a)(4), in the case of a corporation described in 11
paragraph (2) if— 12
‘‘(A) the corporation would not otherwise 13
be treated as a domestic corporation for pur-14
poses of this title, but 15
‘‘(B) the management and control of the 16
corporation occurs, directly or indirectly, pri-17
marily within the United States, 18
then, solely for purposes of chapter 1 (and any other 19
provision of this title relating to chapter 1), the cor-20
poration shall be treated as a domestic corporation. 21
‘‘(2) C
ORPORATION DESCRIBED .— 22
‘‘(A) I
N GENERAL.—A corporation is de-23
scribed in this paragraph if— 24
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‘‘(i) the stock of such corporation is 1
regularly traded on an established securi-2
ties market, or 3
‘‘(ii) the aggregate gross assets of 4
such corporation (or any predecessor there-5
of), including assets under management 6
for investors, whether held directly or indi-7
rectly, at any time during the taxable year 8
or any preceding taxable year is 9
$50,000,000 or more. 10
‘‘(B) G
ENERAL EXCEPTION .—A corpora-11
tion shall not be treated as described in this 12
paragraph if— 13
‘‘(i) such corporation was treated as a 14
corporation described in this paragraph in 15
a preceding taxable year, 16
‘‘(ii) such corporation— 17
‘‘(I) is not regularly traded on an 18
established securities market, and 19
‘‘(II) has, and is reasonably ex-20
pected to continue to have, aggregate 21
gross assets (including assets under 22
management for investors, whether 23
held directly or indirectly) of less than 24
$50,000,000, and 25
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‘‘(iii) the Secretary grants a waiver to 1
such corporation under this subparagraph. 2
‘‘(3) M
ANAGEMENT AND CONTROL .— 3
‘‘(A) I
N GENERAL.—The Secretary shall 4
prescribe regulations for purposes of deter-5
mining cases in which the management and 6
control of a corporation is to be treated as oc-7
curring primarily within the United States. 8
‘‘(B) E
XECUTIVE OFFICERS AND SENIOR 9
MANAGEMENT.—Such regulations shall provide 10
that— 11
‘‘(i) the management and control of a 12
corporation shall be treated as occurring 13
primarily within the United States if sub-14
stantially all of the executive officers and 15
senior management of the corporation who 16
exercise day-to-day responsibility for mak-17
ing decisions involving strategic, financial, 18
and operational policies of the corporation 19
are located primarily within the United 20
States, and 21
‘‘(ii) individuals who are not executive 22
officers and senior management of the cor-23
poration (including individuals who are of-24
ficers or employees of other corporations in 25
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•HR 995 IH
the same chain of corporations as the cor-1
poration) shall be treated as executive offi-2
cers and senior management if such indi-3
viduals exercise the day-to-day responsibil-4
ities of the corporation described in clause 5
(i). 6
‘‘(C) C
ORPORATIONS PRIMARILY HOLDING 7
INVESTMENT ASSETS .—Such regulations shall 8
also provide that the management and control 9
of a corporation shall be treated as occurring 10
primarily within the United States if— 11
‘‘(i) the assets of such corporation (di-12
rectly or indirectly) consist primarily of as-13
sets being managed on behalf of investors, 14
and 15
‘‘(ii) decisions about how to invest the 16
assets are made in the United States.’’. 17
(b) E
FFECTIVEDATE.—The amendments made by 18
this section shall apply to taxable years beginning on or 19
after the date which is 2 years after the date of the enact-20
ment of this Act, whether or not regulations are issued 21
under section 7701(p)(3) of the Internal Revenue Code 22
of 1986, as added by this section. 23
Æ
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