Us Congress 2025-2026 Regular Session

Us Congress Senate Bill SB409 Compare Versions

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

Old	New	Differences
1	1	II
2	2	119THCONGRESS
3	3	1
4	4	STSESSION S. 409
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 SENATE OF THE UNITED STATES
8	8	FEBRUARY5, 2025
9	9	Mr. W
10	10	HITEHOUSE(for himself, Mr. DURBIN, Mr. MURPHY, Mr. REED, Ms.
11	11	B
12	12	ALDWIN, Ms. WARREN, Mr. MERKLEY, Mr. MARKEY, Mr. SCHATZ, Mr.
13	13	F
14	14	ETTERMAN, Mr. BLUMENTHAL, Mr. VANHOLLEN, Mr. GALLEGO, Ms.
15	15	H
16	16	IRONO, Mr. HEINRICH, Mr. BOOKER, Ms. SMITH, and Ms.
17	17	D
18	18	UCKWORTH) introduced the following bill; which was read twice and re-
19	19	ferred to the Committee on Finance
20	20	A BILL
21	21	To amend the Internal Revenue Code of 1986 to provide
22	22	for current year inclusion of net CFC tested income,
23	23	and for other purposes.
24	24	Be it enacted by the Senate and House of Representa-1
25	25	tives of the United States of America in Congress assembled, 2
26	26	SECTION 1. SHORT TITLE, ETC. 3
27	27	(a) S
28	28	HORTTITLE.—This Act may be cited as the 4
29	29	‘‘No Tax Breaks for Outsourcing Act’’. 5
30	30	(b) A
31	31	MENDMENT OF 1986 CODE.—Except as other-6
32	32	wise expressly provided, whenever in this Act an amend-7
33	33	ment or repeal is expressed in terms of an amendment 8
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36	36	•S 409 IS
37	37	to, or repeal of, a section or other provision, the reference 1
38	38	shall be considered to be made to a section or other provi-2
39	39	sion of the Internal Revenue Code of 1986. 3
40	40	(c) T
41	41	ABLE OFCONTENTS.—The table of contents of 4
42	42	this Act is as follows: 5
43	43	Sec. 1. Short title, etc.
44	44	Sec. 2. Current year inclusion of net CFC tested income.
45	45	Sec. 3. Country-by-country application of limitation on foreign tax credit based
46	46	on taxable units.
47	47	Sec. 4. Limitation on deduction of interest by domestic corporations which are
48	48	members of an international financial reporting group.
49	49	Sec. 5. Modifications to rules relating to inverted corporations.
50	50	Sec. 6. Treatment of foreign corporations managed and controlled in the United
51	51	States as domestic corporations.
52	52	SEC. 2. CURRENT YEAR INCLUSION OF NET CFC TESTED IN-
53	53	6
54	54	COME. 7
55	55	(a) R
56	56	EPEAL OFTAX-FREEDEEMEDRETURN ONIN-8
57	57	VESTMENTS.— 9
58	58	(1) I
59	59	N GENERAL.—Section 951A(a) is amended 10
60	60	by striking ‘‘global intangible low-taxed income’’ and 11
61	61	inserting ‘‘net CFC tested income’’. 12
62	62	(2) C
63	63	ONFORMING AMENDMENTS .— 13
64	64	(A) Section 951A is amended by striking 14
65	65	subsections (b) and (d). 15
66	66	(B) Section 951A(e)(1) is amended by 16
67	67	striking ‘‘subsections (b), (c)(1)(A), and’’ and 17
68	68	inserting ‘‘subsections (c)(1)(A) and’’. 18
69	69	(C) Section 951A(f) is amended by strik-19
70	70	ing ‘‘global intangible low-taxed income’’ each 20
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73	73	•S 409 IS
74	74	place it appears and inserting ‘‘net CFC tested 1
75	75	income’’. 2
76	76	(D) Section 960(d)(2)(A) is amended by 3
77	77	striking ‘‘global intangible low-taxed income (as 4
78	78	defined in section 951A(b))’’ and inserting ‘‘net 5
79	79	CFC tested income (as defined in section 6
80	80	951A(c))’’. 7
81	81	(b) C
82	82	OUNTRY-BY-COUNTRYAPPLICATION OF SEC-8
83	83	TIONBASED ONCFC TAXABLEUNITS.—Section 951A is 9
84	84	amended by adding at the end the following new sub-10
85	85	section: 11
86	86	‘‘(g) C
87	87	OUNTRY-BY-COUNTRYAPPLICATION OFSEC-12
88	88	TIONBASED ONCFC TAXABLEUNITS.— 13
89	89	‘‘(1) I
90	90	N GENERAL.—If any CFC taxable unit of 14
91	91	a United States shareholder is a tax resident of (or, 15
92	92	in the case of a branch, is located in) a country 16
93	93	which is different from the country with respect to 17
94	94	which any other CFC taxable unit of such United 18
95	95	States shareholder is a tax resident (or, in the case 19
96	96	of a branch, is located in)— 20
97	97	‘‘(A) such shareholder’s net CFC tested in-21
98	98	come for purposes of subsection (a) shall be the 22
99	99	sum of the amounts of net CFC tested income 23
100	100	determined separately with respect to each such 24
101	101	country, and 25
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104	104	•S 409 IS
105	105	‘‘(B) for purposes of determining such sep-1
106	106	arate amounts of net CFC tested income— 2
107	107	‘‘(i) except as otherwise provided by 3
108	108	the Secretary, any reference in subsection 4
109	109	(c) to a controlled foreign corporation of 5
110	110	such shareholder shall be treated as ref-6
111	111	erence to a CFC taxable unit of such 7
112	112	shareholder, and 8
113	113	‘‘(ii) net CFC tested income and such 9
114	114	other items and amounts as the Secretary 10
115	115	may provide, shall be determined sepa-11
116	116	rately with respect to each such country by 12
117	117	determining such amounts with respect to 13
118	118	the CFC taxable units of such shareholder 14
119	119	which are a tax resident of such country. 15
120	120	‘‘(2) D
121	121	EFINITIONS.—For purposes of this sub-16
122	122	section— 17
123	123	‘‘(A) CFC
124	124	TAXABLE UNIT.—The term 18
125	125	‘CFC taxable unit’ means any taxable unit de-19
126	126	scribed in clause (ii), (iii), or (iv) of section 20
127	127	904(e)(2)(B), determined— 21
128	128	‘‘(i) by substituting ‘controlled foreign 22
129	129	corporation’ for ‘foreign corporation’ each 23
130	130	place it appears in such clauses, and 24
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133	133	•S 409 IS
134	134	‘‘(ii) without regard to the references 1
135	135	to the taxpayer in clauses (iii) and (iv) of 2
136	136	such section. 3
137	137	‘‘(B) A
138	138	PPLICATION OF OTHER DEFINI -4
139	139	TIONS.—Terms used in this subsection which 5
140	140	are also used in section 904(e) shall have the 6
141	141	same meaning as when used in section 904(e). 7
142	142	‘‘(3) S
143	143	PECIAL RULES.—For purposes of this 8
144	144	subsection— 9
145	145	‘‘(A) A
146	146	PPLICATION OF CERTAIN RULES .— 10
147	147	Except as otherwise provided by the Secretary, 11
148	148	rules similar to the rules of section 904(e) shall 12
149	149	apply. 13
150	150	‘‘(B) A
151	151	LLOCATION OF NET CFC TESTED 14
152	152	INCOME TO CONTROLLED FOREIGN CORPORA -15
153	153	TIONS.—Except as otherwise provided by the 16
154	154	Secretary, subsection (f)(2) shall be applied 17
155	155	separately with respect to each CFC taxable 18
156	156	unit.’’. 19
157	157	(c) R
158	158	EGULATORY AUTHORITY.—Section 951A, as 20
159	159	amended by subsection (b), is amended by adding at the 21
160	160	end the following new subsection: 22
161	161	‘‘(h) R
162	162	EGULATIONS.—The Secretary shall issue such 23
163	163	regulations or other guidance as may be necessary or ap-24
164	164	propriate to carry out, or prevent the avoidance of, the 25
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167	167	•S 409 IS
168	168	purposes of this section, including regulations or guidance 1
169	169	which provide for— 2
170	170	‘‘(1) the treatment of property if such property 3
171	171	is transferred, or held, temporarily, 4
172	172	‘‘(2) the treatment of property if the avoidance 5
173	173	of the purposes of this section is a factor in the 6
174	174	transfer or holding of such property, 7
175	175	‘‘(3) appropriate adjustments to the basis of 8
176	176	stock and other ownership interests, and to earnings 9
177	177	and profits, to reflect tested losses (whether or not 10
178	178	taken into account in determining net CFC tested 11
179	179	income), 12
180	180	‘‘(4) rules similar to the rules provided under 13
181	181	the regulations or guidance issued under section 14
182	182	904(e)(4), 15
183	183	‘‘(5) other appropriate basis adjustments, 16
184	184	‘‘(6) appropriate adjustments to be made, and 17
185	185	appropriate tax attributes and records to be main-18
186	186	tained, separately with respect to CFC taxable units, 19
187	187	and 20
188	188	‘‘(7) appropriate adjustments in determining 21
189	189	tested income or tested loss if property is trans-22
190	190	ferred between related parties or amounts are paid 23
191	191	or accrued between related parties.’’. 24
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194	194	•S 409 IS
195	195	(d) COORDINATIONWITHOTHERPROVISIONS.—Sec-1
196	196	tion 951A(f)(1) is amended by adding at the end the fol-2
197	197	lowing new subparagraph: 3
198	198	‘‘(C) T
199	199	REATMENT OF CERTAIN REF -4
200	200	ERENCES.—Except as otherwise provided by the 5
201	201	Secretary, references to section 951 or section 6
202	202	951(a) in sections 959, 961, 962, and such 7
203	203	other provisions as the Secretary may identify 8
204	204	shall include references to section 951A or sec-9
205	205	tion 951A(a), respectively.’’. 10
206	206	(e) R
207	207	EPEAL OFREDUCEDRATE OFTAX ONNET 11
208	208	CFC T
209	209	ESTEDINCOME AND FOREIGN-DERIVEDINTAN-12
210	210	GIBLEINCOME.— 13
211	211	(1) I
212	212	N GENERAL.—Part VIII of subchapter B 14
213	213	of chapter 1 is amended by striking section 250 (and 15
214	214	by striking the item relating to such section in the 16
215	215	table of sections of such part). 17
216	216	(2) C
217	217	ONFORMING AMENDMENTS .— 18
218	218	(A) Section 59A(c)(4)(B)(i) is amended by 19
219	219	striking ‘‘section 172, 245A, or 250’’ and in-20
220	220	serting ‘‘section 172 or 245A’’. 21
221	221	(B) Section 172(d) is amended by striking 22
222	222	paragraph (9). 23
223	223	(C) Section 246(b)(1) is amended— 24
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226	226	•S 409 IS
227	227	(i) by striking ‘‘subsection (a) and (b) 1
228	228	of section 245, and section 250’’ and in-2
229	229	serting ‘‘and subsection (a) and (b) of sec-3
230	230	tion 245’’; and 4
231	231	(ii) by striking ‘‘subsection (a) and 5
232	232	(b) of section 245, and 250’’ and inserting 6
233	233	‘‘and subsection (a) and (b) of section 7
234	234	245’’. 8
235	235	(D) Section 469(i)(3)(E)(iii) is amended 9
236	236	by striking ‘‘, 221, and 250’’ and inserting 10
237	237	‘‘and 221’’. 11
238	238	(f) R
239	239	EPEAL OFCERTAINEXCLUSIONSFROM THE 12
240	240	D
241	241	ETERMINATION OF TESTED INCOME.—Section 13
242	242	951A(c)(2)(A)(i) is amended— 14
243	243	(1) by striking subclauses (III) and (V), 15
244	244	(2) by redesignating subclause (IV) as sub-16
245	245	clause (III), 17
246	246	(3) by adding ‘‘and’’ at the end of subclause 18
247	247	(II), and 19
248	248	(4) by striking ‘‘and’’ at the end of subclause 20
249	249	(III) (as so redesignated) and inserting ‘‘over’’. 21
250	250	(g) I
251	251	NCREASE INDEEMEDPAIDCREDIT FORTAXES 22
252	252	P
253	253	ROPERLYATTRIBUTABLE TOTESTEDINCOME.— 23
254	254	(1) I
255	255	N GENERAL.—Section 960(d) is amended 24
256	256	by striking ‘‘80 percent of’’. 25
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259	259	•S 409 IS
260	260	(2) CONFORMING AMENDMENT .—Section 78 is 1
261	261	amended by striking ‘‘(determined without regard to 2
262	262	the phrase ‘‘80 percent of’’ in subsection (d)(1) 3
263	263	thereof)’’. 4
264	264	(h) R
265	265	EPEAL OFHIGHTAXEXCLUSION FORFOREIGN 5
266	266	B
267	267	ASECOMPANYINCOME ANDINSURANCEINCOME.— 6
268	268	(1) I
269	269	N GENERAL.—Section 954(b) is amended 7
270	270	by striking paragraph (4). 8
271	271	(2) C
272	272	ONFORMING AMENDMENT .—Section 9
273	273	904(d)(3)(E) is amended by striking the last sen-10
274	274	tence. 11
275	275	(i) E
276	276	LIMINATION OFCARRYBACK OFFOREIGNTAX 12
277	277	C
278	278	REDIT.— 13
279	279	(1) I
280	280	N GENERAL.—Section 904(c) is amended— 14
281	281	(A) by striking ‘‘in the first preceding tax-15
282	282	able year, and in any of the first 10 succeeding 16
283	283	taxable years, in that order’’ and inserting ‘‘in 17
284	284	any of the first 10 succeeding taxable years, in 18
285	285	order’’, 19
286	286	(B) by striking ‘‘preceding or’’ each place 20
287	287	it appears, and 21
288	288	(C) by striking ‘‘C
289	289	ARRYBACK AND’’ in the 22
290	290	heading thereof. 23
291	291	(2) A
292	292	PPLICATION TO LIMITATION ON FOREIGN 24
293	293	OIL AND GAS TAXES.—Section 907(f) is amended— 25
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296	296	•S 409 IS
297	297	(A) in paragraph (1), by striking ‘‘in the 1
298	298	first preceding taxable year and’’, 2
299	299	(B) in paragraph (2), by striking ‘‘pre-3
300	300	ceding or’’ in the matter preceding subpara-4
301	301	graph (A), 5
302	302	(C) in paragraph (3)(B)— 6
303	303	(i) by striking ‘‘in a preceding or suc-7
304	304	ceeding’’ and inserting ‘‘in a succeeding’’, 8
305	305	and 9
306	306	(ii) by striking ‘‘in such preceding or 10
307	307	succeeding’’ both places it appears and in-11
308	308	serting ‘‘in such succeeding’’, and 12
309	309	(D) in the heading, by striking 13
310	310	‘‘C
311	311	ARRYBACK AND’’. 14
312	312	(j) T
313	313	REATMENT OF FOREIGNBASECOMPANYOIL 15
314	314	R
315	315	ELATEDINCOME ASSUBPARTF INCOME.— 16
316	316	(1) I
317	317	N GENERAL.—Section 954(a) is amended 17
318	318	by striking ‘‘and’’ at the end of paragraph (2), by 18
319	319	striking the period at the end of paragraph (3) and 19
320	320	inserting ‘‘, and’’, and by adding at the end the fol-20
321	321	lowing new paragraph: 21
322	322	‘‘(4) the foreign base company oil related in-22
323	323	come for the taxable year (determined under sub-23
324	324	section (f) and reduced as provided in subsection 24
325	325	(b)(5)).’’. 25
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328	328	•S 409 IS
329	329	(2) FOREIGN BASE COMPANY OIL RELATED IN -1
330	330	COME.—Section 954 is amended by inserting after 2
331	331	subsection (e) the following new subsection: 3
332	332	‘‘(f) F
333	333	OREIGNBASECOMPANYOILRELATEDIN-4
334	334	COME.—For purposes of this section, the term ‘foreign 5
335	335	base company oil related income’ means foreign oil related 6
336	336	income (within the meaning of paragraphs (2) and (3) of 7
337	337	section 907(c)) other than income derived from a source 8
338	338	within a foreign country in connection with— 9
339	339	‘‘(1) oil or gas which was extracted from an oil 10
340	340	or gas well located in such foreign country, or 11
341	341	‘‘(2) oil, gas, or a primary product of oil or gas 12
342	342	which is sold by the foreign corporation or a related 13
343	343	person for use or consumption within such country 14
344	344	or is loaded in such country on a vessel or aircraft 15
345	345	as fuel for such vessel or aircraft. 16
346	346	Such term shall not include any foreign personal holding 17
347	347	company income (as defined in subsection (c)).’’. 18
348	348	(3) C
349	349	ONFORMING AMENDMENTS .— 19
350	350	(A) Section 952(c)(1)(B)(iii) is amended 20
351	351	by redesignating subclauses (III) and (IV) as 21
352	352	subclauses (IV) and (V), respectively, and by 22
353	353	inserting after subclause (II) the following new 23
354	354	subclause: 24
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357	357	•S 409 IS
358	358	‘‘(III) foreign base company oil 1
359	359	related income.’’. 2
360	360	(B) Section 954(b) is amended— 3
361	361	(i) by striking ‘‘and the foreign base 4
362	362	company services income’’ in paragraph 5
363	363	(5) and inserting ‘‘the foreign base com-6
364	364	pany services income, and the foreign base 7
365	365	company oil related income’’, and 8
366	366	(ii) by adding at the end the following 9
367	367	new paragraph: 10
368	368	‘‘(6) F
369	369	OREIGN BASE COMPANY OIL RELATED IN -11
370	370	COME NOT TREATED AS ANOTHER KIND OF FOREIGN 12
371	371	BASE COMPANY INCOME .—Income of a corporation 13
372	372	which is foreign base company oil related income 14
373	373	shall not be considered foreign base company income 15
374	374	of such corporation under paragraph (2) or (3) of 16
375	375	subsection (a).’’. 17
376	376	(k) E
377	377	FFECTIVEDATES.— 18
378	378	(1) I
379	379	N GENERAL.—Except as otherwise pro-19
380	380	vided in this subsection, the amendments made by 20
381	381	this section shall apply to taxable years of foreign 21
382	382	corporations beginning after December 31, 2024, 22
383	383	and to taxable years of United States shareholders 23
384	384	in which or with which such taxable years of foreign 24
385	385	corporations end. 25
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388	388	•S 409 IS
389	389	(2) REGULATORY AUTHORITY AND COORDINA -1
390	390	TION WITH OTHER PROVISIONS .—The amendments 2
391	391	made by subsections (c) and (d) shall apply to tax-3
392	392	able years of foreign corporations beginning after 4
393	393	the date of the enactment of this Act, and to taxable 5
394	394	years of United States shareholders in which or with 6
395	395	which such taxable years of foreign corporations 7
396	396	end. 8
397	397	(3) R
398	398	EPEAL OF REDUCED RATE OF TAX ; IN-9
399	399	CREASE IN DEEMED PAID CREDIT .—The amend-10
400	400	ments made by subsections (e) and (g) shall apply 11
401	401	to taxable years beginning after December 31, 2024. 12
402	402	(4) E
403	403	LIMINATION OF CARRYBACK OF FOREIGN 13
404	404	TAX CREDIT.—The amendment made by subsection 14
405	405	(i) shall apply to credits arising in taxable years be-15
406	406	ginning after December 31, 2024. 16
407	407	(l) N
408	408	OINFERENCEREGARDINGCERTAINMODIFICA-17
409	409	TIONS.—The amendments made by subsections (c) and 18
410	410	(d) shall not be construed to create any inference with re-19
411	411	spect to the proper application of any provision of the In-20
412	412	ternal Revenue Code of 1986 with respect to any taxable 21
413	413	year beginning before the taxable years to which such 22
414	414	amendments apply. 23
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417	417	•S 409 IS
418	418	SEC. 3. COUNTRY-BY-COUNTRY APPLICATION OF LIMITA-1
419	419	TION ON FOREIGN TAX CREDIT BASED ON 2
420	420	TAXABLE UNITS. 3
421	421	(a) I
422	422	NGENERAL.—Section 904 is amended by insert-4
423	423	ing after subsection (d) the following new subsection: 5
424	424	‘‘(e) C
425	425	OUNTRY-BY-COUNTRYAPPLICATIONBASED ON 6
426	426	T
427	427	AXABLEUNITS.— 7
428	428	‘‘(1) I
429	429	N GENERAL.—Subsection (d) (and the 8
430	430	provisions of this title referred to in paragraph (1) 9
431	431	of such subsection) shall be applied separately with 10
432	432	respect to each country by taking into account the 11
433	433	aggregate income properly attributable or otherwise 12
434	434	allocable to a taxable unit of the taxpayer which is 13
435	435	a tax resident of (or, in the case of a branch, is lo-14
436	436	cated in) such country. 15
437	437	‘‘(2) T
438	438	AXABLE UNITS.— 16
439	439	‘‘(A) I
440	440	N GENERAL.—Except as otherwise 17
441	441	provided by the Secretary, each item shall be 18
442	442	attributable or otherwise allocable to exactly 19
443	443	one taxable unit of the taxpayer. 20
444	444	‘‘(B) D
445	445	ETERMINATION OF TAXABLE 21
446	446	UNITS.—Except as otherwise provided by the 22
447	447	Secretary, the taxable units of a taxpayer are 23
448	448	as follows: 24
449	449	‘‘(i) G
450	450	ENERAL TAXABLE UNIT .—The 25
451	451	person that is the taxpayer and that is not 26
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454	454	•S 409 IS
455	455	otherwise described in a separate clause of 1
456	456	this subparagraph. 2
457	457	‘‘(ii) C
458	458	ERTAIN FOREIGN CORPORA -3
459	459	TIONS.—Each foreign corporation with re-4
460	460	spect to which the taxpayer is a United 5
461	461	States shareholder. 6
462	462	‘‘(iii) I
463	463	NTERESTS IN PASS -THROUGH 7
464	464	ENTITIES.—Each interest held (directly or 8
465	465	indirectly) by the taxpayer or any foreign 9
466	466	corporation referred to in clause (ii) in a 10
467	467	pass-through entity if such pass-through 11
468	468	entity is a tax resident of a country other 12
469	469	than the country with respect to which 13
470	470	such taxpayer or foreign corporation (as 14
471	471	the case may be) is a tax resident. 15
472	472	‘‘(iv) B
473	473	RANCHES.—Each branch (or 16
474	474	portion thereof) the activities of which are 17
475	475	directly or indirectly carried on by the tax-18
476	476	payer or any foreign corporation referred 19
477	477	to in clause (ii) and which give rise to a 20
478	478	taxable presence in a country other than 21
479	479	the country with respect to which such tax-22
480	480	payer or foreign corporation (as the case 23
481	481	may be) is a tax resident. 24
482	482	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
483	483	kjohnson on DSK7ZCZBW3PROD with $$_JOB 16
484	484	•S 409 IS
485	485	‘‘(3) DEFINITIONS AND SPECIAL RULES .—For 1
486	486	purposes of this subsection— 2
487	487	‘‘(A) T
488	488	AX RESIDENT.—Except as otherwise 3
489	489	provided by the Secretary, the term ‘tax resi-4
490	490	dent’ means a person or entity subject to tax 5
491	491	under the tax law of a country as a resident. If 6
492	492	an entity is organized under the law of a coun-7
493	493	try, or resident in a country, that does not im-8
494	494	pose an income tax with respect to such enti-9
495	495	ties, such entity shall, except as provided by the 10
496	496	Secretary, be treated as subject to tax under 11
497	497	the tax law of such country for the purposes of 12
498	498	the preceding sentence. 13
499	499	‘‘(B) P
500	500	ASS-THROUGH ENTITY .—Except as 14
501	501	otherwise provided by the Secretary, the term 15
502	502	‘pass-through entity’ includes any partnership 16
503	503	or other entity to the extent that income, gain, 17
504	504	deduction, or loss of the entity is taken into ac-18
505	505	count in determining the income or loss of a 19
506	506	person that owns (directly or indirectly) an in-20
507	507	terest in such entity. 21
508	508	‘‘(C) B
509	509	RANCH.—Except as otherwise pro-22
510	510	vided by the Secretary, the term ‘branch’ means 23
511	511	a taxable presence of a tax resident in a coun-24
512	512	try other than its country of residence as deter-25
513	513	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
514	514	kjohnson on DSK7ZCZBW3PROD with $$_JOB 17
515	515	•S 409 IS
516	516	mined under such other country’s tax law. The 1
517	517	Secretary shall provide regulations or other 2
518	518	guidance applying such term to activities in a 3
519	519	country that do not give rise to a taxable pres-4
520	520	ence. 5
521	521	‘‘(D) T
522	522	REATMENT OF FISCALLY AUTONO -6
523	523	MOUS JURISDICTIONS .—Any fiscally autono-7
524	524	mous jurisdiction shall be treated as a separate 8
525	525	country. Any possession of the United States 9
526	526	shall also be treated as a separate country. 10
527	527	‘‘(E) P
528	528	OSSESSION OF THE UNITED 11
529	529	STATES.—The term ‘possession of the United 12
530	530	States’ means each of American Samoa, the 13
531	531	Commonwealth of the Northern Mariana Is-14
532	532	lands, the Commonwealth of Puerto Rico, 15
533	533	Guam, and the Virgin Islands. 16
534	534	‘‘(4) R
535	535	EGULATIONS.—The Secretary shall issue 17
536	536	such regulations or other guidance as may be nec-18
537	537	essary or appropriate to carry out, or prevent avoid-19
538	538	ance of, the purposes of this subsection, including 20
539	539	regulations or other guidance— 21
540	540	‘‘(A) providing for the application of this 22
541	541	subsection to an entity or arrangement that is 23
542	542	considered a tax resident of more than one 24
543	543	country or of no country, 25
544	544	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
545	545	kjohnson on DSK7ZCZBW3PROD with $$_JOB 18
546	546	•S 409 IS
547	547	‘‘(B) providing for the application of this 1
548	548	subsection to hybrid entities or hybrid trans-2
549	549	actions (as such terms are used for purposes of 3
550	550	section 267A), pass-through entities, passive 4
551	551	foreign investment companies, trusts, and other 5
552	552	entities or arrangements not otherwise de-6
553	553	scribed in this subsection, and 7
554	554	‘‘(C) providing for the assignment of any 8
555	555	item (including foreign taxes and deductions) to 9
556	556	taxable units, including in the case of amounts 10
557	557	not otherwise taken into account in determining 11
558	558	taxable income under this chapter.’’. 12
559	559	(b) T
560	560	REATMENT OF INADEQUATE SUBSTAN-13
561	561	TIATION.—Section 904(d)(4)(C)(ii) is amended by strik-14
562	562	ing ‘‘paragraph (1)(A)’’ and inserting ‘‘paragraph 15
563	563	(1)(C)’’. 16
564	564	(c) A
565	565	PPLICATION OFFOREIGNTAXCREDITLIMITA-17
566	566	TIONWITHRESPECT TOFOREIGNBRANCHES.—Section 18
567	567	904(d)(2)(J)(i) is amended— 19
568	568	(1) by striking ‘‘qualified business units (as de-20
569	569	fined in section 989(a)) in 1 or more foreign coun-21
570	570	tries’’ and inserting ‘‘foreign branches described in 22
571	571	section 904(e)(2)(B)(iv)’’, and 23
572	572	(2) by striking ‘‘a qualified business unit’’ and 24
573	573	inserting ‘‘a foreign branch’’. 25
574	574	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00018 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
575	575	kjohnson on DSK7ZCZBW3PROD with $$_JOB 19
576	576	•S 409 IS
577	577	(d) EFFECTIVEDATE.—The amendments made by 1
578	578	this section shall apply to taxable years beginning after 2
579	579	December 31, 2024. 3
580	580	SEC. 4. LIMITATION ON DEDUCTION OF INTEREST BY DO-4
581	581	MESTIC CORPORATIONS WHICH ARE MEM-5
582	582	BERS OF AN INTERNATIONAL FINANCIAL RE-6
583	583	PORTING GROUP. 7
584	584	(a) I
585	585	NGENERAL.—Section 163 is amended by redes-8
586	586	ignating subsection (n) as subsection (p) and by inserting 9
587	587	after subsection (m) the following new subsection: 10
588	588	‘‘(n) L
589	589	IMITATION ONDEDUCTION OFINTEREST BY 11
590	590	D
591	591	OMESTICCORPORATIONS IN INTERNATIONAL FINAN-12
592	592	CIALREPORTINGGROUPS.— 13
593	593	‘‘(1) I
594	594	N GENERAL.—In the case of any domestic 14
595	595	corporation which is a member of any international 15
596	596	financial reporting group, the deduction under this 16
597	597	chapter for interest paid or accrued during the tax-17
598	598	able year shall not exceed the sum of— 18
599	599	‘‘(A) the allowable percentage of 110 per-19
600	600	cent of the excess (if any) of— 20
601	601	‘‘(i) the amount of such interest so 21
602	602	paid or accrued, over 22
603	603	‘‘(ii) the amount described in subpara-23
604	604	graph (B), plus 24
605	605	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00019 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
606	606	kjohnson on DSK7ZCZBW3PROD with $$_JOB 20
607	607	•S 409 IS
608	608	‘‘(B) the amount of interest includible in 1
609	609	gross income of such corporation for such tax-2
610	610	able year. 3
611	611	‘‘(2) I
612	612	NTERNATIONAL FINANCIAL REPORTING 4
613	613	GROUP.— 5
614	614	‘‘(A) For purposes of this subsection, the 6
615	615	term ‘international financial reporting group’ 7
616	616	means, with respect to any reporting year, any 8
617	617	group of entities which— 9
618	618	‘‘(i) includes— 10
619	619	‘‘(I) at least one foreign corpora-11
620	620	tion engaged in a trade or business 12
621	621	within the United States, or 13
622	622	‘‘(II) at least one domestic cor-14
623	623	poration and one foreign corporation, 15
624	624	‘‘(ii) prepares consolidated financial 16
625	625	statements with respect to such year, and 17
626	626	‘‘(iii) reports in such statements aver-18
627	627	age annual gross receipts (determined in 19
628	628	the aggregate with respect to all entities 20
629	629	which are part of such group) for the 3-re-21
630	630	porting-year period ending with such re-22
631	631	porting year in excess of $100,000,000. 23
632	632	‘‘(B) R
633	633	ULES RELATING TO DETERMINA -24
634	634	TION OF AVERAGE GROSS RECEIPTS .—For pur-25
635	635	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00020 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
636	636	kjohnson on DSK7ZCZBW3PROD with $$_JOB 21
637	637	•S 409 IS
638	638	poses of subparagraph (A)(iii), rules similar to 1
639	639	the rules of section 448(c)(3) shall apply. 2
640	640	‘‘(3) A
641	641	LLOWABLE PERCENTAGE .—For purposes 3
642	642	of this subsection— 4
643	643	‘‘(A) I
644	644	N GENERAL.—The term ‘allowable 5
645	645	percentage’ means, with respect to any domestic 6
646	646	corporation for any taxable year, the ratio (ex-7
647	647	pressed as a percentage and not greater than 8
648	648	100 percent) of— 9
649	649	‘‘(i) such corporation’s allocable share 10
650	650	of the international financial reporting 11
651	651	group’s reported net interest expense for 12
652	652	the reporting year of such group which 13
653	653	ends in or with such taxable year of such 14
654	654	corporation, over 15
655	655	‘‘(ii) such corporation’s reported net 16
656	656	interest expense for such reporting year of 17
657	657	such group. 18
658	658	‘‘(B) R
659	659	EPORTED NET INTEREST EX -19
660	660	PENSE.—The term ‘reported net interest ex-20
661	661	pense’ means— 21
662	662	‘‘(i) with respect to any international 22
663	663	financial reporting group for any reporting 23
664	664	year, the excess of— 24
665	665	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00021 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
666	666	kjohnson on DSK7ZCZBW3PROD with $$_JOB 22
667	667	•S 409 IS
668	668	‘‘(I) the aggregate amount of in-1
669	669	terest expense reported in such 2
670	670	group’s consolidated financial state-3
671	671	ments for such taxable year, over 4
672	672	‘‘(II) the aggregate amount of in-5
673	673	terest income reported in such group’s 6
674	674	consolidated financial statements for 7
675	675	such taxable year, and 8
676	676	‘‘(ii) with respect to any domestic cor-9
677	677	poration for any reporting year, the excess 10
678	678	of— 11
679	679	‘‘(I) the amount of interest ex-12
680	680	pense of such corporation reported in 13
681	681	the books and records of the inter-14
682	682	national financial reporting group 15
683	683	which are used in preparing such 16
684	684	group’s consolidated financial state-17
685	685	ments for such taxable year, over 18
686	686	‘‘(II) the amount of interest in-19
687	687	come of such corporation reported in 20
688	688	such books and records. 21
689	689	‘‘(C) A
690	690	LLOCABLE SHARE OF REPORTED 22
691	691	NET INTEREST EXPENSE .—With respect to any 23
692	692	domestic corporation which is a member of any 24
693	693	international financial reporting group, such 25
694	694	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00022 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
695	695	kjohnson on DSK7ZCZBW3PROD with $$_JOB 23
696	696	•S 409 IS
697	697	corporation’s allocable share of such group’s re-1
698	698	ported net interest expense for any reporting 2
699	699	year is the portion of such expense which bears 3
700	700	the same ratio to such expense as— 4
701	701	‘‘(i) the EBITDA of such corporation 5
702	702	for such reporting year, bears to 6
703	703	‘‘(ii) the EBITDA of such group for 7
704	704	such reporting year. 8
705	705	‘‘(D) EBITDA.— 9
706	706	‘‘(i) I
707	707	N GENERAL .—The term 10
708	708	‘EBITDA’ means, with respect to any re-11
709	709	porting year, earnings before interest, 12
710	710	taxes, depreciation, and amortization— 13
711	711	‘‘(I) as determined in the inter-14
712	712	national financial reporting group’s 15
713	713	consolidated financial statements for 16
714	714	such year, or 17
715	715	‘‘(II) for purposes of subpara-18
716	716	graph (A)(i), as determined in the 19
717	717	books and records of the international 20
718	718	financial reporting group which are 21
719	719	used in preparing such statements if 22
720	720	not determined in such statements. 23
721	721	‘‘(ii) T
722	722	REATMENT OF DISREGARDED 24
723	723	ENTITIES.—The EBITDA of any domestic 25
724	724	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00023 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
725	725	kjohnson on DSK7ZCZBW3PROD with $$_JOB 24
726	726	•S 409 IS
727	727	corporation shall not fail to include the 1
728	728	EBITDA of any entity which is dis-2
729	729	regarded for purposes of this chapter. 3
730	730	‘‘(iii) T
731	731	REATMENT OF INTRA -GROUP 4
732	732	DISTRIBUTIONS.—The EBITDA of any do-5
733	733	mestic corporation shall be determined 6
734	734	without regard to any distribution received 7
735	735	by such corporation from any other mem-8
736	736	ber of the international financial reporting 9
737	737	group. 10
738	738	‘‘(E) S
739	739	PECIAL RULES FOR NON -POSITIVE 11
740	740	EBITDA.— 12
741	741	‘‘(i) N
742	742	ON-POSITIVE GROUP EBITDA .— 13
743	743	In the case of any international financial 14
744	744	reporting group the EBITDA of which is 15
745	745	zero or less, paragraph (1) shall not apply 16
746	746	to any member of such group the EBITDA 17
747	747	of which is above zero. 18
748	748	‘‘(ii) N
749	749	ON-POSITIVE ENTITY 19
750	750	EBITDA.—In the case of any group mem-20
751	751	ber the EBITDA of which is zero or less, 21
752	752	paragraph (1) shall be applied without re-22
753	753	gard to subparagraph (A) thereof. 23
754	754	‘‘(4) C
755	755	ONSOLIDATED FINANCIAL STATEMENT .— 24
756	756	For purposes of this subsection, the term ‘consoli-25
757	757	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00024 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
758	758	kjohnson on DSK7ZCZBW3PROD with $$_JOB 25
759	759	•S 409 IS
760	760	dated financial statement’ means any consolidated 1
761	761	financial statement described in paragraph (2)(A)(ii) 2
762	762	if such statement is— 3
763	763	‘‘(A) a financial statement which is cer-4
764	764	tified as being prepared in accordance with gen-5
765	765	erally accepted accounting principles, inter-6
766	766	national financial reporting standards, or any 7
767	767	other comparable method of accounting identi-8
768	768	fied by the Secretary, and which is— 9
769	769	‘‘(i) a 10–K (or successor form), or 10
770	770	annual statement to shareholders, required 11
771	771	to be filed with the United States Securi-12
772	772	ties and Exchange Commission, 13
773	773	‘‘(ii) an audited financial statement 14
774	774	which is used for— 15
775	775	‘‘(I) credit purposes, 16
776	776	‘‘(II) reporting to shareholders, 17
777	777	partners, or other proprietors, or to 18
778	778	beneficiaries, or 19
779	779	‘‘(III) any other substantial 20
780	780	nontax purpose, 21
781	781	but only if there is no statement described 22
782	782	in clause (i), or 23
783	783	‘‘(iii) filed with any other Federal or 24
784	784	State agency for nontax purposes, but only 25
785	785	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
786	786	kjohnson on DSK7ZCZBW3PROD with $$_JOB 26
787	787	•S 409 IS
788	788	if there is no statement described in clause 1
789	789	(i) or (ii), or 2
790	790	‘‘(B) a financial statement which— 3
791	791	‘‘(i) is used for a purpose described in 4
792	792	subclause (I), (II), or (III) of subpara-5
793	793	graph (A)(ii), or 6
794	794	‘‘(ii) filed with any regulatory or gov-7
795	795	ernmental body (whether domestic or for-8
796	796	eign) specified by the Secretary, 9
797	797	but only if there is no statement described in 10
798	798	subparagraph (A). 11
799	799	‘‘(5) R
800	800	EPORTING YEAR.—For purposes of this 12
801	801	subsection, the term ‘reporting year’ means, with re-13
802	802	spect to any international financial reporting group, 14
803	803	the year with respect to which the consolidated fi-15
804	804	nancial statements are prepared. 16
805	805	‘‘(6) A
806	806	PPLICATION TO CERTAIN ENTITIES .— 17
807	807	‘‘(A) P
808	808	ARTNERSHIPS.—Except as other-18
809	809	wise provided by the Secretary in paragraph 19
810	810	(7), this subsection and subsection (o) shall 20
811	811	apply to any partnership which is a member of 21
812	812	any international financial reporting group 22
813	813	under rules similar to the rules of section 23
814	814	163(j)(4). 24
815	815	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
816	816	kjohnson on DSK7ZCZBW3PROD with $$_JOB 27
817	817	•S 409 IS
818	818	‘‘(B) FOREIGN CORPORATIONS ENGAGED 1
819	819	IN TRADE OR BUSINESS WITHIN THE UNITED 2
820	820	STATES.—Except as otherwise provided by the 3
821	821	Secretary in paragraph (7), any deduction for 4
822	822	interest paid or accrued by a foreign corpora-5
823	823	tion engaged in a trade or business within the 6
824	824	United States shall be limited in a manner con-7
825	825	sistent with the principles of this subsection. 8
826	826	‘‘(C) C
827	827	ONSOLIDATED GROUPS .—For pur-9
828	828	poses of this subsection, the members of any 10
829	829	group that file (or are required to file) a con-11
830	830	solidated return with respect to the tax imposed 12
831	831	by chapter 1 for a taxable year shall be treated 13
832	832	as a single corporation. 14
833	833	‘‘(7) R
834	834	EGULATIONS.—The Secretary may issue 15
835	835	such regulations or other guidance as are necessary 16
836	836	or appropriate to carry out the purposes of this sub-17
837	837	section.’’. 18
838	838	(b) C
839	839	ARRYFORWARD OF DISALLOWEDINTEREST.— 19
840	840	(1) I
841	841	N GENERAL.—Section 163 is amended by 20
842	842	inserting after subsection (n), as added by sub-21
843	843	section (a), the following new subsection: 22
844	844	‘‘(o) C
845	845	ARRYFORWARD OF CERTAINDISALLOWEDIN-23
846	846	TEREST.—The amount of any interest not allowed as a 24
847	847	deduction for any taxable year by reason of subsection 25
848	848	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
849	849	kjohnson on DSK7ZCZBW3PROD with $$_JOB 28
850	850	•S 409 IS
851	851	(j)(1) or (n)(1) (whichever imposes the lower limitation 1
852	852	with respect to such taxable year) shall be treated as inter-2
853	853	est (and as business interest for purposes of subsection 3
854	854	(j)(1)) paid or accrued (and as interest expense reported 4
855	855	as described in clause (i)(I) or (ii)(I) of subsection 5
856	856	(n)(3)(B), as the case may be) in the succeeding taxable 6
857	857	year. Interest paid or accrued in any taxable year (deter-7
858	858	mined without regard to the preceding sentence) shall not 8
859	859	be carried past the fifth taxable year following such tax-9
860	860	able year, determined by treating interest as allowed as 10
861	861	a deduction on a first-in, first-out basis.’’. 11
862	862	(2) C
863	863	ONFORMING AMENDMENTS .— 12
864	864	(A) Section 163(j)(2) is amended to read 13
865	865	as follows: 14
866	866	‘‘(2) C
867	867	ARRYFORWARD CROSS -REFERENCE.—For 15
868	868	carryforward treatment, see subsection (o).’’. 16
869	869	(B) Section 163(j)(4)(B)(i)(I) is amended 17
870	870	by striking ‘‘paragraph (2)’’ and inserting ‘‘sub-18
871	871	section (o)’’. 19
872	872	(C) Section 381(c)(20) is amended to read 20
873	873	as follows: 21
874	874	‘‘(20) C
875	875	ARRYFORWARD OF DISALLOWED INTER -22
876	876	EST.—The carryover of disallowed interest described 23
877	877	in section 163(o) to taxable years ending after the 24
878	878	date of distribution or transfer.’’. 25
879	879	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00028 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
880	880	kjohnson on DSK7ZCZBW3PROD with $$_JOB 29
881	881	•S 409 IS
882	882	(D) Section 382(d)(3) is amended to read 1
883	883	as follows: 2
884	884	‘‘(3) A
885	885	PPLICATION TO CARRYFORWARD OF DIS -3
886	886	ALLOWED INTEREST .—The term ‘pre-change loss’ 4
887	887	shall include any carryover of disallowed interest de-5
888	888	scribed in section 163(o) under rules similar to the 6
889	889	rules of paragraph (1).’’. 7
890	890	(c) E
891	891	FFECTIVEDATE.—The amendments made by 8
892	892	this section shall apply to taxable years beginning after 9
893	893	December 31, 2024. 10
894	894	SEC. 5. MODIFICATIONS TO RULES RELATING TO IN-11
895	895	VERTED CORPORATIONS. 12
896	896	(a) I
897	897	NGENERAL.—Subsection (b) of section 7874 is 13
898	898	amended to read as follows: 14
899	899	‘‘(b) I
900	900	NVERTEDCORPORATIONSTREATED ASDO-15
901	901	MESTICCORPORATIONS.— 16
902	902	‘‘(1) I
903	903	N GENERAL.—Notwithstanding section 17
904	904	7701(a)(4), a foreign corporation shall be treated for 18
905	905	purposes of this title as a domestic corporation if— 19
906	906	‘‘(A) such corporation would be a surro-20
907	907	gate foreign corporation if subsection (a)(2) 21
908	908	were applied by substituting ‘80 percent’ for 22
909	909	‘60 percent’, or 23
910	910	‘‘(B) such corporation is an inverted do-24
911	911	mestic corporation. 25
912	912	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
913	913	kjohnson on DSK7ZCZBW3PROD with $$_JOB 30
914	914	•S 409 IS
915	915	‘‘(2) INVERTED DOMESTIC CORPORATION .—For 1
916	916	purposes of this subsection, a foreign corporation 2
917	917	shall be treated as an inverted domestic corporation 3
918	918	if, pursuant to a plan (or a series of related trans-4
919	919	actions)— 5
920	920	‘‘(A) the entity completes after December 6
921	921	22, 2017, the direct or indirect acquisition of— 7
922	922	‘‘(i) substantially all of the properties 8
923	923	held directly or indirectly by a domestic 9
924	924	corporation, or 10
925	925	‘‘(ii) substantially all of the assets of, 11
926	926	or substantially all of the properties consti-12
927	927	tuting a trade or business of, a domestic 13
928	928	partnership, and 14
929	929	‘‘(B) after the acquisition, either— 15
930	930	‘‘(i) more than 50 percent of the stock 16
931	931	(by vote or value) of the entity is held— 17
932	932	‘‘(I) in the case of an acquisition 18
933	933	with respect to a domestic corpora-19
934	934	tion, by former shareholders of the 20
935	935	domestic corporation by reason of 21
936	936	holding stock in the domestic corpora-22
937	937	tion, or 23
938	938	‘‘(II) in the case of an acquisition 24
939	939	with respect to a domestic partner-25
940	940	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00030 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
941	941	kjohnson on DSK7ZCZBW3PROD with $$_JOB 31
942	942	•S 409 IS
943	943	ship, by former partners of the do-1
944	944	mestic partnership by reason of hold-2
945	945	ing a capital or profits interest in the 3
946	946	domestic partnership, or 4
947	947	‘‘(ii) the management and control of 5
948	948	the expanded affiliated group which in-6
949	949	cludes the entity occurs, directly or indi-7
950	950	rectly, primarily within the United States, 8
951	951	and such expanded affiliated group has 9
952	952	significant domestic business activities. 10
953	953	‘‘(3) E
954	954	XCEPTION FOR CORPORATIONS WITH 11
955	955	SUBSTANTIAL BUSINESS ACTIVITIES IN FOREIGN 12
956	956	COUNTRY OF ORGANIZATION .—A foreign corporation 13
957	957	described in paragraph (2) shall not be treated as an 14
958	958	inverted domestic corporation if after the acquisition 15
959	959	the expanded affiliated group which includes the en-16
960	960	tity has substantial business activities in the foreign 17
961	961	country in which or under the law of which the enti-18
962	962	ty is created or organized when compared to the 19
963	963	total business activities of such expanded affiliated 20
964	964	group. For purposes of subsection (a)(2)(B)(iii) and 21
965	965	the preceding sentence, the term ‘substantial busi-22
966	966	ness activities’ shall have the meaning given such 23
967	967	term under regulations in effect on December 22, 24
968	968	2017, except that the Secretary may issue regula-25
969	969	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00031 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
970	970	kjohnson on DSK7ZCZBW3PROD with $$_JOB 32
971	971	•S 409 IS
972	972	tions increasing the threshold percent in any of the 1
973	973	tests under such regulations for determining if busi-2
974	974	ness activities constitute substantial business activi-3
975	975	ties for purposes of this paragraph. 4
976	976	‘‘(4) M
977	977	ANAGEMENT AND CONTROL .—For pur-5
978	978	poses of paragraph (2)(B)(ii)— 6
979	979	‘‘(A) I
980	980	N GENERAL.—The Secretary shall 7
981	981	prescribe regulations for purposes of deter-8
982	982	mining cases in which the management and 9
983	983	control of an expanded affiliated group is to be 10
984	984	treated as occurring, directly or indirectly, pri-11
985	985	marily within the United States. The regula-12
986	986	tions prescribed under the preceding sentence 13
987	987	shall apply to periods after December 22, 2017. 14
988	988	‘‘(B) E
989	989	XECUTIVE OFFICERS AND SENIOR 15
990	990	MANAGEMENT.—Such regulations shall provide 16
991	991	that the management and control of an ex-17
992	992	panded affiliated group shall be treated as oc-18
993	993	curring, directly or indirectly, primarily within 19
994	994	the United States if substantially all of the ex-20
995	995	ecutive officers and senior management of the 21
996	996	expanded affiliated group who exercise day-to- 22
997	997	day responsibility for making decisions involving 23
998	998	strategic, financial, and operational policies of 24
999	999	the expanded affiliated group are based or pri-25
1000	1000	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00032 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
1001	1001	kjohnson on DSK7ZCZBW3PROD with $$_JOB 33
1002	1002	•S 409 IS
1003	1003	marily located within the United States. Indi-1
1004	1004	viduals who in fact exercise such day-to-day re-2
1005	1005	sponsibilities shall be treated as executive offi-3
1006	1006	cers and senior management regardless of their 4
1007	1007	title. 5
1008	1008	‘‘(5) S
1009	1009	IGNIFICANT DOMESTIC BUSINESS ACTIVI -6
1010	1010	TIES.—For purposes of paragraph (2)(B)(ii), an ex-7
1011	1011	panded affiliated group has significant domestic 8
1012	1012	business activities if at least 25 percent of— 9
1013	1013	‘‘(A) the employees of the group are based 10
1014	1014	in the United States, 11
1015	1015	‘‘(B) the employee compensation incurred 12
1016	1016	by the group is incurred with respect to employ-13
1017	1017	ees based in the United States, 14
1018	1018	‘‘(C) the assets of the group are located in 15
1019	1019	the United States, or 16
1020	1020	‘‘(D) the income of the group is derived in 17
1021	1021	the United States, 18
1022	1022	determined in the same manner as such determina-19
1023	1023	tions are made for purposes of determining substan-20
1024	1024	tial business activities under regulations referred to 21
1025	1025	in paragraph (3) as in effect on December 22, 2017, 22
1026	1026	but applied by treating all references in such regula-23
1027	1027	tions to ‘foreign country’ and ‘relevant foreign coun-24
1028	1028	try’ as references to ‘the United States’. The Sec-25
1029	1029	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00033 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
1030	1030	kjohnson on DSK7ZCZBW3PROD with $$_JOB 34
1031	1031	•S 409 IS
1032	1032	retary may issue regulations decreasing the thresh-1
1033	1033	old percent in any of the tests under such regula-2
1034	1034	tions for determining if business activities constitute 3
1035	1035	significant domestic business activities for purposes 4
1036	1036	of this paragraph.’’. 5
1037	1037	(b) C
1038	1038	ONFORMINGAMENDMENTS.— 6
1039	1039	(1) Clause (i) of section 7874(a)(2)(B) is 7
1040	1040	amended by striking ‘‘after March 4, 2003,’’ and in-8
1041	1041	serting ‘‘after March 4, 2003, and before December 9
1042	1042	23, 2017,’’. 10
1043	1043	(2) Subsection (c) of section 7874 is amend-11
1044	1044	ed— 12
1045	1045	(A) in paragraph (2)— 13
1046	1046	(i) by striking ‘‘subsection 14
1047	1047	(a)(2)(B)(ii)’’ and inserting ‘‘subsections 15
1048	1048	(a)(2)(B)(ii) and (b)(2)(B)(i)’’; and 16
1049	1049	(ii) by inserting ‘‘or (b)(2)(A)’’ after 17
1050	1050	‘‘(a)(2)(B)(i)’’ in subparagraph (B); 18
1051	1051	(B) in paragraph (3), by inserting ‘‘or 19
1052	1052	(b)(2)(B)(i), as the case may be,’’ after 20
1053	1053	‘‘(a)(2)(B)(ii)’’; 21
1054	1054	(C) in paragraph (5), by striking ‘‘sub-22
1055	1055	section (a)(2)(B)(ii)’’ and inserting ‘‘sub-23
1056	1056	sections (a)(2)(B)(ii) and (b)(2)(B)(i)’’; and 24
1057	1057	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00034 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
1058	1058	kjohnson on DSK7ZCZBW3PROD with $$_JOB 35
1059	1059	•S 409 IS
1060	1060	(D) in paragraph (6), by inserting ‘‘or in-1
1061	1061	verted domestic corporation, as the case may 2
1062	1062	be,’’ after ‘‘surrogate foreign corporation’’. 3
1063	1063	(c) E
1064	1064	FFECTIVEDATE.—The amendments made by 4
1065	1065	this section shall apply to taxable years ending after De-5
1066	1066	cember 22, 2017. 6
1067	1067	(d) E
1068	1068	XTENSION OFLIMITATION ONASSESSMENT.— 7
1069	1069	If the period of limitation on assessment of tax resulting 8
1070	1070	from the amendments made by subsection (a) expires be-9
1071	1071	fore the end of the 3-year period beginning on the date 10
1072	1072	of the enactment of this Act, such assessment (to the ex-11
1073	1073	tent attributable to such amendments) may, nevertheless, 12
1074	1074	be made before the close of such 3-year period. 13
1075	1075	SEC. 6. TREATMENT OF FOREIGN CORPORATIONS MAN-14
1076	1076	AGED AND CONTROLLED IN THE UNITED 15
1077	1077	STATES AS DOMESTIC CORPORATIONS. 16
1078	1078	(a) I
1079	1079	NGENERAL.—Section 7701 is amended by re-17
1080	1080	designating subsection (p) as subsection (q) and by insert-18
1081	1081	ing after subsection (o) the following new subsection: 19
1082	1082	‘‘(p) C
1083	1083	ERTAINCORPORATIONSMANAGED ANDCON-20
1084	1084	TROLLED IN THE UNITEDSTATESTREATED ASDOMES-21
1085	1085	TIC FORINCOMETAX.— 22
1086	1086	‘‘(1) I
1087	1087	N GENERAL.—Notwithstanding subsection 23
1088	1088	(a)(4), in the case of a corporation described in 24
1089	1089	paragraph (2) if— 25
1090	1090	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00035 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
1091	1091	kjohnson on DSK7ZCZBW3PROD with $$_JOB 36
1092	1092	•S 409 IS
1093	1093	‘‘(A) the corporation would not otherwise 1
1094	1094	be treated as a domestic corporation for pur-2
1095	1095	poses of this title, but 3
1096	1096	‘‘(B) the management and control of the 4
1097	1097	corporation occurs, directly or indirectly, pri-5
1098	1098	marily within the United States, 6
1099	1099	then, solely for purposes of chapter 1 (and any other 7
1100	1100	provision of this title relating to chapter 1), the cor-8
1101	1101	poration shall be treated as a domestic corporation. 9
1102	1102	‘‘(2) C
1103	1103	ORPORATION DESCRIBED .— 10
1104	1104	‘‘(A) I
1105	1105	N GENERAL.—A corporation is de-11
1106	1106	scribed in this paragraph if— 12
1107	1107	‘‘(i) the stock of such corporation is 13
1108	1108	regularly traded on an established securi-14
1109	1109	ties market, or 15
1110	1110	‘‘(ii) the aggregate gross assets of 16
1111	1111	such corporation (or any predecessor there-17
1112	1112	of), including assets under management 18
1113	1113	for investors, whether held directly or indi-19
1114	1114	rectly, at any time during the taxable year 20
1115	1115	or any preceding taxable year is 21
1116	1116	$50,000,000 or more. 22
1117	1117	‘‘(B) G
1118	1118	ENERAL EXCEPTION .—A corpora-23
1119	1119	tion shall not be treated as described in this 24
1120	1120	paragraph if— 25
1121	1121	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00036 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
1122	1122	kjohnson on DSK7ZCZBW3PROD with $$_JOB 37
1123	1123	•S 409 IS
1124	1124	‘‘(i) such corporation was treated as a 1
1125	1125	corporation described in this paragraph in 2
1126	1126	a preceding taxable year, 3
1127	1127	‘‘(ii) such corporation— 4
1128	1128	‘‘(I) is not regularly traded on an 5
1129	1129	established securities market, and 6
1130	1130	‘‘(II) has, and is reasonably ex-7
1131	1131	pected to continue to have, aggregate 8
1132	1132	gross assets (including assets under 9
1133	1133	management for investors, whether 10
1134	1134	held directly or indirectly) of less than 11
1135	1135	$50,000,000, and 12
1136	1136	‘‘(iii) the Secretary grants a waiver to 13
1137	1137	such corporation under this subparagraph. 14
1138	1138	‘‘(3) M
1139	1139	ANAGEMENT AND CONTROL .— 15
1140	1140	‘‘(A) I
1141	1141	N GENERAL.—The Secretary shall 16
1142	1142	prescribe regulations for purposes of deter-17
1143	1143	mining cases in which the management and 18
1144	1144	control of a corporation is to be treated as oc-19
1145	1145	curring primarily within the United States. 20
1146	1146	‘‘(B) E
1147	1147	XECUTIVE OFFICERS AND SENIOR 21
1148	1148	MANAGEMENT.—Such regulations shall provide 22
1149	1149	that— 23
1150	1150	‘‘(i) the management and control of a 24
1151	1151	corporation shall be treated as occurring 25
1152	1152	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00037 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
1153	1153	kjohnson on DSK7ZCZBW3PROD with $$_JOB 38
1154	1154	•S 409 IS
1155	1155	primarily within the United States if sub-1
1156	1156	stantially all of the executive officers and 2
1157	1157	senior management of the corporation who 3
1158	1158	exercise day-to-day responsibility for mak-4
1159	1159	ing decisions involving strategic, financial, 5
1160	1160	and operational policies of the corporation 6
1161	1161	are located primarily within the United 7
1162	1162	States, and 8
1163	1163	‘‘(ii) individuals who are not executive 9
1164	1164	officers and senior management of the cor-10
1165	1165	poration (including individuals who are of-11
1166	1166	ficers or employees of other corporations in 12
1167	1167	the same chain of corporations as the cor-13
1168	1168	poration) shall be treated as executive offi-14
1169	1169	cers and senior management if such indi-15
1170	1170	viduals exercise the day-to-day responsibil-16
1171	1171	ities of the corporation described in clause 17
1172	1172	(i). 18
1173	1173	‘‘(C) C
1174	1174	ORPORATIONS PRIMARILY HOLDING 19
1175	1175	INVESTMENT ASSETS .—Such regulations shall 20
1176	1176	also provide that the management and control 21
1177	1177	of a corporation shall be treated as occurring 22
1178	1178	primarily within the United States if— 23
1179	1179	‘‘(i) the assets of such corporation (di-24
1180	1180	rectly or indirectly) consist primarily of as-25
1181	1181	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00038 Fmt 6652 Sfmt 6201 E:\BILLS\S409.IS S409
1182	1182	kjohnson on DSK7ZCZBW3PROD with $$_JOB 39
1183	1183	•S 409 IS
1184	1184	sets being managed on behalf of investors, 1
1185	1185	and 2
1186	1186	‘‘(ii) decisions about how to invest the 3
1187	1187	assets are made in the United States.’’. 4
1188	1188	(b) E
1189	1189	FFECTIVEDATE.—The amendments made by 5
1190	1190	this section shall apply to taxable years beginning on or 6
1191	1191	after the date which is 2 years after the date of the enact-7
1192	1192	ment of this Act, whether or not regulations are issued 8
1193	1193	under section 7701(p)(3) of the Internal Revenue Code 9
1194	1194	of 1986, as added by this section. 10
1195	1195	Æ
1196	1196	VerDate Sep 11 2014 22:23 Mar 04, 2025 Jkt 059200 PO 00000 Frm 00039 Fmt 6652 Sfmt 6301 E:\BILLS\S409.IS S409
1197	1197	kjohnson on DSK7ZCZBW3PROD with $$_JOB