,i  #aac? ,,congress  #a/ ,session  ,h4 
,r4 #bfje  ,,9 ,,! ,,h\se ,,(           
,,repres5tatives  ,june #bh1 #bjac ,ms4 
,s*w>tz introduc$ ! foll[+ bill2 :i* 0  
ref]r$ to ! ,committee on ,ways & ,means
  ,a ,,bill  ,to am5d ! ,int]nal ,rev5ue
 ,code ( #aihf to all[ a d$uction =     
pat5t box pr(it f ! use ( ,unit$ ,/ates 
pat5ts4  #a4 ,%ort title ,?is ,act may  
be cit$ z ! ,manufactur+ ,innovation 9  
,am]ica ,act ( #bjac4  #b4 ,d$uction =  
pat5t box pr(its  7a7 ,9 g5]al ,"p ,,vi 
( sub*apt] ,b ( *apt] #a ( ! ,int]nal   
,rev5ue ,code ( #aihf is am5d$ by add+  
at ! end ! foll[+ new section3  #bjj4   
,pat5t box pr(its  7a7 ,all[ance (      
d$uction ,if ! taxpay] elects !         
application ( ?is section1 !re %all be  
all[$ z a d$uction an am\nt equal to #ga
 p]c5t ( ! less] (--  7#a7 ! pat5t box  
pr(it ( ! taxpay] = ! taxable ye>1 or   
7#b7 taxable income 7det]m9$ )\t reg>d  
to ?is section7 = ! taxable ye>4  7b7   
,pat5t box pr(it ,= purposes ( ?is      
section--  7#a7 ,9 g5]al ,except z      

provid$ by p>agraph 7#i71 ! t]m pat5t   
box pr(it means1 ) respect to a taxable 
ye>1 ,,ip pr(it multipli$ by ! ratio--  
7,a7 ! num]ator ( :i* is ! #e-ye> rese>*
 & developm5t exp5ditures ( ! taxpay] ) 
respect to ! taxable ye>1 &  7,b7 !     
d5om9ator ( :i* is ! #e-ye> total co/s (
 ! taxpay] ) respect to ! taxable ye>4  
7#b7 ,,ip pr(it ,! t]m ,,ip pr(it means 
! excess 7if any7 (--  7,a7 pat5t gross 
receipts1 ov]  7,b7 ! sum (--  7i7 !    
taxpay]'s co/ ( goods sold = ! taxable  
ye> t are prop]ly allocable to pat5t    
gross receipts1  7ii7 o!r exp5ses1      
losses1 or d$uctions 7o!r ?an ! d$uction
 all[$ "u ?is section71 :i* are prop]ly 
allocable to pat5t gross receipts1 plus 
7iii7 r\t9e pr(it4  7#c7 ,r\t9e pr(it ,!
 t]m r\t9e pr(it means--  7,a7 !        
taxpay]'s co/ ( goods sold = ! taxable  
ye> prop]ly allocable to pat5t gross    
receipts r$uc$ by ! portion ( co/ (     
goods sold relat$ to ! sum ( co/ ( raw  
mat]ials1 co/ ( items pur*as$ = resale1 
& am\nts incurr$ = intangible prop]ty   

rights 7includ+ royalties &             
amortization71 multipli$ by  7,b7 #ae   
p]c5t4  7#d7 ,allocation me?od ,!       
,secret>y %all prescribe rules = ! prop]
 allocation ( items describ$ 9 ?is      
p>agraph = purposes ( det]m9+ pat5t box 
pr(it4 ,su* rules %all provide = ! prop]
 allocation ( items :e!r or n su* items 
are directly allocable to pat5t gross   
receipts4  7#e7 ,special rules  7,a7    
,det]m9ation ( co/s  7i7 ,9 g5]al ,co/  
%all be det]m9$ 9 accordance ) !        
pr9ciples ( sections #bfc;,a & #dga1 z  
provid$ = by ! ,secret>y "u regulations 
or o!r guidance4  7ii7 ,items br\ght    
into ! ,unit$ ,/ates ,= purposes (      
det]m9+ co/ ( goods sold1 any item or   
s]vice br\ght into ! ,unit$ ,/ates %all 
be treat$ z acquir$ by pur*ase1 & its   
co/ %all be treat$ z n less ?an its     
value imm$iately aft] x ent]$ ! ,unit$  
,/ates4 ,a simil> rule %all apply 9     
det]m9+ ! adju/$ basis ( leas$ or r5t$  
prop]ty :]e ! lease or r5tal gives rise 
to pat5t gross receipts4  7iii7 ,exports

 = fur!r manufacture ,9 ! case ( any    
prop]ty describ$ 9 clause 7ii7 t _h be5 
export$ by ! taxpay] = fur!r            
manufacture1 ! increase 9 co/ or adju/$ 
basis "u subp>agraph 7,a7 %all n exce$ !
 diff]5ce betwe5 ! value ( ! prop]ty :5 
export$ & ! value ( ! prop]ty :5 br\ght 
back into ! ,unit$ ,/ates aft] ! fur!r  
manufacture4  7,b7 #e-ye> rese>* &      
developm5t exp5ditures ,! t]m #e-ye>    
rese>* & developm5t exp5ditures means ) 
respect to a taxable ye> ! rese>* &     
developm5t exp5ditures paid or incurr$  
by ! taxpay] = ! p]=mance ( rese>* &    
developm5t 9 ! ,unit$ ,/ates = :i* a    
d$uction is all[$ "u subsection 7a7 or  
7b7 ( section #agd 7det]m9$ )\t reg>d to
 section #da7 = ! #e-taxable-ye> p]iod  
end+ ) ! taxable ye>4  7,c7 #e-ye> total
 co/s ,! t]m #e-ye> total co/s means )  
respect to a taxable ye> ! excess (--   
7i7 all co/s paid or incurr$ by !       
taxpay] = ! #e-taxable ye> p]iod end+ ) 
su* taxable ye>1 ov]  7ii7 ! sum (--    
7,i7 ! taxpay]'s co/ ( goods sold = su* 

#e-taxable ye> p]iod1  7,,ii7 int]e/    
paid or accru$ = su* #e-taxable ye>     
p]iod1  7,,iii7 taxes paid or accru$ =  
su* #e-taxable ye> p]iod1 &  7,,iv7 !   
net ga9 or loss = su* #e-taxable ye>    
p]iod f ! sale or ex*ange ( capital     
assets4  7,d7 ,rules relat+ to #e-ye>   
p]iod ,= purposes ( ?is p>agraph--  7i7 
,n 9 exi/5ce = entire #e-ye> p]iod ,if !
 taxpay] 0 n 9 exi/5ce = ! entire #e-ye>
 p]iod ref]r$ to 9 subp>agraphs 7,b7 &  
7,c71 su* subp>agraphs %all be appli$ on
 ! basis ( ! p]iod dur+ :i* su* taxpay] 
0 9 exi/5ce4  7ii7 ,treatm5t (          
pr$ecessors ,any ref]5ce 9 ?is p>agraph 
to a taxpay] %all include a ref]5ce to  
any pr$ecessor ( su* taxpay]4  7#f7     
,pat5t gross receipts  7,a7 ,9 g5]al ,! 
t]m pat5t gross receipts means gross    
receipts ( ! taxpay] = ! taxable ye> :i*
 are d]iv$ f ! sale1 lease1 lic5se1 or  
o!r disposition ( qualifi$ pat5t        
prop]ty4  7,b7 ,relat$ p]sons  7i7 ,9   
g5]al ,! t]m pat5t gross receipts %all n
 include any gross receipts ( ! taxpay] 

d]iv$ f prop]ty leas$1 lic5s$1 or r5t$  
by ! taxpay] = use by any relat$ p]son4 
7ii7 ,relat$ p]son ,= purposes ( clause 
7i71 a p]son %all be treat$ z relat$ to 
ano!r p]son if su* p]sons are treat$ z a
 s+le employ] "u subsection 7a7 or 7b7 (
 section #eb or subsection 7m7 or 7o7 ( 
section #dad1 except t det]m9ations "u  
subsections 7a7 & 7b7 ( section #eb %all
 be made )\t reg>d to section #aefc7;b74
  7#g7 ,qualifi$ pat5t prop]ty  7,a7 ,9 
g5]al ,! t]m qualifi$ pat5t prop]ty     
means prop]ty :i* is a product :i*      
incorporates a qualifi$ pat5t or        
pat5ts--  7i7 if m ?an a sub/antial     
p]c5tage ( ! value ( ! product is d]iv$ 
f ! direct or indirect use ( "o or m    
qualifi$ pat5ts1 &  7ii7 ! gross        
receipts ( ! taxpay] f ! sale1 lease1   
lic5se1 or o!r disposition ( ! product  
are dome/ic production gross receipts "u
 section #aii7;c77#d74  7,b7 ,special   
rule relat+ to contract manufactur+ ,=  
purposes ( subp>agraph 7,a77ii71 if !   
product 0 produc$ to ! taxpay]'s        

specifications )9 ! ,unit$ ,/ates "u a  
contract1 ! taxpay]'s gross receipts f !
 sale1 lease1 lic5se or o!r disposition 
( ! product %all be treat$ z dome/ic    
production gross receipts if ! contract 
manufactur] c]tifies to ! taxpay] t !   
contract manufactur]'s sale ( su*       
product to ! taxpay] result$ 9 dome/ic  
production gross receipts ( ! contract  
manufactur]4  7,c7 ,dome/ic production  
gross receipts ,= purposes ( ?is        
p>agraph1 ! t]m dome/ic production gross
 receipts has ! mean+ giv5 su* t]m by   
section #aii7;c77#d71 except t ! t]m    
,unit$ ,/ates z def9$ 9 subsection      
7d77#g7 ( ?is section %all be sub/itut$ 
= ! t]m ,unit$ ,/ates z us$ 9 su*       
section4  7#h7 ,qualifi$ pat5t  7,a7 ,9 
g5]al ,! t]m qualifi$ pat5t means a     
pat5t--  7i7 issu$ or ext5d$ by1 or =   
:i* an application is p5d+ be=e1 !      
,unit$ ,/ates ,pat5t & ,tradem>k ,(fice 
"u title #ce1 ,unit$ ,/ates ,code1  7ii7
 ) respect to :i*--  7,i7 ! taxpay] is !
 pat5t own] or ! hold] ( an exclusive   

lic5se to exploit ! pat5t )9 a specifi$ 
t]ritory or = a specific purpose1       
7,,ii7 ! taxpay] is actively involv$ 9 !
 decisionmak+ connect$ ) exploit+ !     
pat5t1 &  7,,iii7 ei!r ! taxpay] or a   
memb] ( ! affiliat$ gr\p ( :i* ! taxpay]
 is a memb] p]=m$ sub/antial activity to
 develop ! pat5t$ inv5tion1 its         
application1 or a product incorporat+ ! 
pat5t$ inv5tion1 &  7iii7 = any taxable 
ye> beg9n+ aft] ! ?ird taxable ye>      
beg9n+ aft] ! date ( ! enactm5t ( ?is   
section1 m ?an a sub/antial p]c5tage ( !
 activity to develop ! pat5t$ inv5tion  
or its application occurs 9 ! ,unit$    
,/ates4  ,clause 7iii7 %all n apply to a
 pat5t if a memb] ( ! taxpay]'s         
affiliat$ gr\p p]=m$ m ?an a sub/antial 
p]c5tage ( ! activity to develop ! pat5t
 outside ! ,unit$ ,/ates prior to ! end 
( su* ?ird taxable ye>1 & ! taxpay] owns
 ! pat5t 9 ! ,unit$ ,/ates at ! end (   
su* ?ird taxable ye>4  7,b7 ,special    
rule = c]ta9 =eign pat5ts ,if !         
taxpay]--  7i7 is ! pat5t own] or !     

hold] ( an exclusive lic5se to exploit a
 pat5t :i* meets ! requirem5ts (        
subp>agraph 7,a71  7ii7 is issu$ or     
ext5d$ by a =eign c\ntry a pat5t = !    
same or sub/antially simil> inv5tion or 
application z ! pat5t describ$ 9 clause 
7i71 &  7iii7 is ! own] (1 or ! hold] ( 
an exclusive lic5se to exploit1 ! =eign 
pat5t describ$ 9 clause 7ii71  !n !     
=eign pat5t describ$ 9 clause 7ii7 %all 
be treat$ z a qualifi$ pat5t = purposes 
( ?is section4  7,c7 ,special rules     
relat+ to lic5s+  7i7 ,lic5see ,taxpay] 
,9 ! case ( a lic5se ( a pat5t to !     
lic5see taxpay]1 ! pat5t %all n be      
treat$ z a qualifi$ pat5t 9 ! h&s ( !   
lic5see taxpay] unless ! lic5see        
satisfies ! requirem5ts ( subp>agraph   
7,a77ii7 & ! lic5sor--  7,i7 c]tifies to
 ! lic5see 79 su* =m & mann] z !        
,secret>y may prescribe7 t ! pat5t      
satisfies ! requirem5ts ( clauses 7i7 & 
7iii7 ( subp>agraph 7,a71 &  7,,ii7     
provides to ! lic5see su* in=mation z ! 
,secret>y may require to det]m9e :e!r ! 

pat5t is a qualifi$ pat5t4  7ii7        
,lic5sor taxpay] ,9 ! case ( a lic5se ( 
a qualifi$ pat5t by ! lic5sor taxpay]1 !
 am\nt ( royalties1 pr(it %>es1 & simil>
 am\nts receiv$ f ! lic5se t directly   
relate to ! production ( qualifi$ pat5t 
prop]ty by ! lic5see taxpay] %all be    
treat$ z pat5t gross receipts if--  7,i7
 ! lic5sor meets ! requirem5ts ( clause 
7i71  7,,ii7 ! lic5sor develop$ or      
acquir$ & add$ sub/antial value to !    
qualifi$ pat5t1 b only s long z !       
lic5sor is regul>ly engag$ 9 !          
developm5t & addition ( sub/antial value
 to prop]ty ( su* k9d1 &  7,,iii7 !     
lic5see c]tifies to ! lic5sor 79 su* =m 
& mann] z ! ,secret>y may prescribe7 t !
 royalty relates to ! production (      
qualifi$ pat5t prop]ty by ! lic5see     
taxpay]4  7,d7 ,special rules relat+ to 
pat5t claims d5i$ or rul$ invalid  7i7  
,recapture ,if--  7,i7 !re is a         
recapture ev5t ) respect to any claim   
conta9$ 9 a qualifi$ pat5t1 &  7,,ii7 a 
d$uction 0 all[$ "u subsection 7a7 = any

 taxable ye> ) respect to su* claim1  ! 
tax impos$ by ?is *apt] = ! taxable ye> 
9 :i* su* recapture ev5t occurs %all be 
increas$ by ! recapture am\nt4  7ii7    
,recapture ev5t ,= purposes ( clause    
7i71 ! t]m recapture ev5t means1 )      
respect to a claim t--  7,i7 ! pat5t    
does n issue on ! basis 79 :ole or 9 "p7
 ( su* claim1 or  7,,ii7 su* claim is   
det]m9$ by ! ,unit$ ,/ates ,pat5t &     
,tradem>k ,(fice or a c\rt ( compet5t   
jurisdiction n to be valid4  7iii7      
,recapture am\nt ,= purposes ( clause   
7i71 ! recapture am\nt ) respect to a   
claim is ! sum (--  7,i7 ! excess ( !   
am\nt by :i*--  7aa7 ! total tax        
7det]m9$ )\t reg>d to subsection 7a77 t 
w\ld be %[n on returns ( tax ( ! taxpay]
 = all taxable ye>s = :i* a d$uction 0  
all[$ "u subsection 7a7 ) respect to su*
 claim1 exce$s  7bb7 ! total tax %[n on 
all returns ( tax ( ! taxpay] = all     
taxable ye>s = :i* a d$uction 0 all[$ "u
 subsection 7a7 ) respect to su* claim1 
det]m9$ ) reg>d to subsection 7a71 plus 

7,,ii7 9 ! case ( a recapture ev5t      
describ$ 9 clause 7ii77,i71 int]e/ at ! 
und]paym5t rate e/abli%$ "u section     
#ffba on ! am\nt det]m9$ "u subclause   
7,i7 = ea* prior taxable ye> = ! p]iod  
beg9n+ on ! due date = fil+ ! return = !
 prior taxable ye> involv$4  7#i7       
,alt]native det]m9ation ( pat5t box     
pr(it  7,a7 ,9 g5]al ,9 accordance )    
regulations or o!r guidance provid$ by !
 ,secret>y1 ! taxpay] may elect to      
det]m9e pat5t box pr(it z ! am\nt equal 
to ! net income d]iv$ f pat5t gross     
receipts relat$ to exploitation ( !     
qualifi$ pat5t t w\ld be receiv$ = !    
taxable ye> if all transactions ( !     
taxpay] = ! taxable ye> 7 conduct$ at   
arm's l5g? "u ! pr9ciples ( section     
#dhb4  7,b7 ,election ,an election "u   
subp>agraph 7,a7 = a taxable ye> %all   
apply ) respect to all qualifi$ pat5ts4 
,su* election1 once made1 may be revok$ 
only ) ! cons5t ( ! ,secret>y4  7c7     
,alt]native me?od = c]ta9 taxpay]s ,9 ! 
case ( a taxpay] :i* meets ! #e1jjj1jjj 

gross receipts te/ ( section #ddh7;c7 = 
! taxable ye>1 pat5t box pr(it %all be !
 great] ( ! am\nt det]m9$ "u subsection 
7b7 or #ej p]c5t ( ,,ip pr(it4  7d7     
,def9itions & special rules ,= purposes 
( ?is section--  7#a7 ,application (    
section to pass-?ru entities  7,a7      
,p>tn]%ips & ,s corporations ,9 ! case (
 a p>tn]%ip or ,s corporation--  7i7 !  
d$uction "u subsection 7a7 %all be      
det]m9$ at ! p>tn] or %>ehold] level1   
7ii7 except z provid$ 9 clause 7i71 all 
det]m9ations relat+ to receipts1        
exp5ses1 & :e!r a pat5t is a qualifi$   
pat5t %all be made at ! entity level1 & 
7iii7 ea* p>tn] or %>ehold] %all take   
into acc\nt su* p]son's allocable %>e ( 
ea* item describ$ 9 clause 7i7 or 7ii7 (
 subsection 7b77#b77;,a7 7det]m9$ )\t   
reg>d to :e!r ! items describ$ 9 su*    
clause 7i7 exce$ ! items describ$ 9 su* 
clause 7ii774  7,b7 ,tru/s & e/ates ,9 !
 case ( a tru/ or e/ate--  7i7 ! items  
ref]r$ to 9 subp>agraph 7,a77ii7 7z     
det]m9$ !re97 %all be apportion$ betwe5 

! b5efici>ies & ! fiduci>y 7& among !   
b5efici>ies7 "u regulations prescrib$ by
 ! ,secret>y1 &  7ii7 = purposes (      
p>agraph 7#b71 adju/$ gross income ( !  
tru/ or e/ate %all be det]m9$ z provid$ 
9 section #fg7;e7 ) ! adju/m5ts describ$
 9 su* p>agraph4  7,c7 ,application to  
individuals ,9 ! case ( an individual1  
subsection 7a77#b7 %all be appli$ by    
sub/itut+ adju/$ gross income = taxable 
income4 ,= purposes ( ! prec$+ s5t5ce1  
adju/$ gross income %all be det]m9$--   
7i7 aft] application ( sections #hf1    
#ace1 #acg1 #aii1 #bai1 #bba1 #bbb1 &   
#dfi1 &  7ii7 )\t reg>d to ?is section4 
7,d7 ,agricultural & horticultural      
coop]atives  7i7 ,d$uction all[$ to     
patrons ,any p]son :o receives a        
qualifi$ paym5t f a specifi$            
agricultural or horticultural coop]ative
 %all be all[$ = ! taxable ye> 9 :i* su*
 paym5t is receiv$ a d$uction "u        
subsection 7a7 equal to ! portion ( !   
d$uction all[$ "u subsection 7a7 to su* 
coop]ative :i* is--  7,i7 all[$ )       

respect to ! portion ( ! pat5t box pr(it
 to :i* su* paym5t is attributable1 &   
7,,ii7 id5tifi$ by su* coop]ative 9 a   
writt5 notice mail$ to su* p]son dur+ ! 
paym5t p]iod describ$ 9 section         
#achb7;d74  7ii7 ,coop]ative d5i$       
d$uction = portion ( qualifi$ paym5ts ,!
 taxable income ( a specifi$            
agricultural or horticultural coop]ative
 %all n be r$uc$ "u section #achb by    
reason ( t portion ( any qualifi$ paym5t
 z does n exce$ ! d$uction all[able "u  
clause 7i7 ) respect to su* paym5t4     
7iii7 ,taxable income ( coop]atives     
det]m9$ )\t reg>d to c]ta9 d$uctions ,= 
purposes ( ?is section1 ! taxable income
 ( a specifi$ agricultural or           
horticultural coop]ative %all be comput$
 )\t reg>d to any d$uction all[able "u  
subsection 7b7 or 7c7 ( section #achb   
7relat+ to patronage divid5ds1 p]-unit  
reta9 allocations1 & nonpatronage       
di/ributions74  7iv7 ,special rule =    
m>ket+ coop]atives ,= purposes ( ?is    
section1 a specifi$ agricultural or     

horticultural coop]ative describ$ 9     
clause 7vi77,,ii7 %all be treat$ z hav+ 
manufactur$1 produc$1 gr[n1 or extract$ 
9 :ole or significant "p any qualify+   
production prop]ty m>ket$ by !          
organization :i* its patrons h s        
manufactur$1 produc$1 gr[n1 or extract$4
  7v7 ,qualifi$ paym5t ,= purposes ( ?is
 p>agraph1 ! t]m qualifi$ paym5t means1 
) respect to any p]son1 any am\nt :i*-- 
7,i7 is describ$ 9 p>agraph 7#a7 or 7#c7
 ( section #ache7;a71  7,,ii7 is receiv$
 by su* p]son f a specifi$ agricultural 
or horticultural coop]ative1 &  7,,iii7 
is attributable to pat5t box pr(its )   
respect to :i* a d$uction is all[$ to   
su* coop]ative "u subsection 7a74  7vi7 
,specifi$ agricultural or horticultural 
coop]ative ,= purposes ( ?is p>agraph1 !
 t]m specifi$ agricultural or           
horticultural coop]ative means an       
organization to :i* "p ,i ( sub*apt] ,t 
applies :i* is ! own] (1 or ! hold] ( an
 exclusive lic5se to exploit1 a qualifi$
 pat5t4  7,e7 ,regulations ,! ,secret>y 

may prescribe rules requir+ or re/rict+ 
! allocation ( items "u ?is p>agraph &  
may prescribe su* report+ requirem5ts z 
! ,secret>y det]m9es appropriate4  7#b7 
,special rule = affiliat$ gr\ps  7,a7 ,9
 g5]al ,all memb]s ( an exp&$ affiliat$ 
gr\p %all be treat$ z a s+le corporation
 = purposes ( ?is section4  7,b7 ,exp&$ 
affiliat$ gr\p ,= purposes ( ?is        
section1 ! t]m exp&$ affiliat$ gr\p     
means an affiliat$ gr\p z def9$ 9       
section #aejd7;a71 det]m9$--  7i7 by    
sub/itut+ m ?an #ej p]c5t = at lea/ #hj 
p]c5t ea* place x appe>s1 &  7ii7 )\t   
reg>d to p>agraphs 7#b7 & 7#d7 ( section
 #aejd7;b74  7,c7 ,allocation ( d$uction
 ,except z provid$ 9 regulations1 !     
d$uction "u subsection 7a7 %all be      
allocat$ among ! memb]s ( ! exp&$       
affiliat$ gr\p 9 proportion to ea*      
memb]'s respective am\nt 7if any7 (     
pat5t box pr(it4  7#c7 ,coord9ation )   
m9imum tax ,= purposes ( det]m9+        
alt]native m9imum taxable income "u     
section #ee--  7,a7 pat5t box pr(it %all

 be det]m9$ )\t reg>d to any adju/m5ts  
"u sections #ef ?r\gh #ei1 &  7,b7 9 !  
case ( a corporation1 subsection 7a77#b7
 %all be appli$ by sub/itut+ alt]native 
m9imum taxable income = taxable income4 
7#d7 ,coord9ation ) dome/ic production  
activities d$uction ,?is section %all be
 appli$ )\t reg>d to ! d$uction all[$ "u
 section #aii4  7#e7 ,unrelat$ bus9ess  
taxable income ,= purposes ( det]m9+ !  
tax impos$ by section #eaa1 subsection  
7a77#b7 %all be appli$ by sub/itut+     
unrelat$ bus9ess taxable income =       
taxable income4  7#f7 ,acquisitions &   
dispositions ,! ,secret>y %all provide =
 ! application ( ?is subsection 9 cases 
:]e ! taxpay] acquires1 or disposes (1 !
 major portion ( a trade or bus9ess or !
 major portion ( a sep>ate unit ( a     
trade or bus9ess dur+ ! taxable ye>4    
7#g7 ,unit$ ,/ates ,! t]m ,unit$ ,/ates 
includes ! ,di/rict ( ,columbia1 ,pu]to 
,rico1 ! ,virg9 ,isl&s1 ,guam1 ,am]ican 
,samoa1 ! ,commonweal? ( ! ,nor!rn      
,m>iana ,isl&s1 ! ,f$]at$ ,/ates (      

,micronesia1 ! ,republic ( ! ,m>%all    
,isl&s1 & ,palau4  7e7 ,election  7#a7  
,9 g5]al ,! taxpay] may make an election
 to h ?is section apply = any taxable   
ye>4  7#b7 ,pass-?ru entities ,9 ! case 
( a pass-?ru entity1 ! election %all be 
made at ! p>tn] or %>ehold] level4  7#c7
 ,revocation ,an election "u p>agraph   
7#a71 once made1 may be revok$ only ) ! 
cons5t ( ! ,secret>y4  7f7 ,regulations 
,! ,secret>y %all prescribe su*         
regulations z may be appropriate to c>ry
 out ?is section1 includ+ regulations   
:i* prev5t ! abuse ( ! purposes ( ?is   
section4  4  7b7 ,con=m+ am5dm5ts  7#a7 
,section #ef7;d77#a77;,a7 ( su* ,code is
 am5d$ by /rik+ d$uction "u section #aii
 bo? places x appe>s & ins]t+ d$uctions 
"u sections #aii & #bjj4  7#b7 ,section 
#ef7;g77#d77;,c7 ( su* ,code is am5d$ by
 add+ at ! end ! foll[+ new clause3     
7vii7 ,d$uction = dome/ic bus9ess income
 ,clause 7i7 %all n apply to any am\nt  
all[able z a d$uction "u section #bjj4  
4  7#c7 ,! foll[+ provisions ( su* ,code

 are ea* am5d$ by ins]t+ #bjj1 aft]     
#aii14  7,a7 ,section #hf7;b77#b77;,a74 
7,b7 ,section #ace7;c77#d77;,a74  7,c7  
,section #acg7;b77#c77;,a74  7,d7       
,section #bai7;g77#c77;,a77ii74  7,e7   
,section #bba7;b77#b77;,c77i74  7,f7    
,section #bbb 7b77#b77;,c77i74  7,g7    
,section #bdf7;b77#a74  7,h7 ,section   
#dfi7;i77#c77;,f77iii74  7#d7 ,section  
#afc7;j77#f77;,a77i7 ( su* ,code is     
am5d$ by /rik+ & at ! end ( subclause   
7,,iii7 & by ins]t+ aft] subclause      
7,,iv7 ! foll[+ new subclause3  7,v7 any
 d$uction all[able "u section #bjj1 &  4
  7#e7 ,section #agj7;b77#b77;,c7 ( su* 
,code is am5d$ by /rik+ & at ! end (    
clause 7iv71 by /rik+ ! p]iod at ! end (
 clause 7v7 & ins]t+ 1 &1 & by ins]t+   
aft] clause 7v7 ! foll[+ new clause3    
7vi7 section #bjj4  4  7#f7 ,section    
#agb7;d7 ( su* ,code is am5d$ by add+ at
 ! end ! foll[+ new p>agraph3  7#h7     
,dome/ic bus9ess income ,! d$uction "u  
section #bjj %all n be all[$4  4  7#g7  
,section #aii7;c7 ( su* ,code is am5d$  

by add+ at ! end ! foll[+ new p>agraph3 
7#h7 ,coord9ation ) pat5t box pr(its    
d$uction ,qualifi$ production activities
 income1 taxable income1 & dome/ic      
production gross receipts %all be       
det]m9$ )\t reg>d to section #bjj4  4   
7#h7 ,section #aii7;d77#b77;,b7 ( su*   
,code is am5d$ by /rik+ ?is section &   
ins]t+ ?is section & section #bjj4  7#i7
 ,section #fac7;a7 ( su* ,code is am5d$ 
by /rik+ d$uction "u section #aii &     
ins]t+ d$uctions "u sections #aii &     
#bjj4  7#aj7 ,section #fac;,a7d77#a7 (  
su* ,code is am5d$ by r$esignat+        
subp>agraphs 7,c71 7,d71 & 7,e7 z       
subp>agraphs 7,d71 7,e71 & 7,f71        
respectively1 & by ins]t+ aft]          
subp>agraph 7,b7 ! foll[+ new           
subp>agraph3  7,c7 any d$uction all[able
 "u section #bjj1  4  7#aa7 ,section    
#adjb7;a7 ( su* ,code is am5d$ by /rik+ 
& at ! end ( p>agraph 7#af71 by         
r$esignat+ p>agraph 7#ag7 z p>agraph    
7#ah71 & by ins]t+ aft] p>agraph 7#af7 !
 foll[+ new p>agraph3  7#ag7 ! d$uction 

provid$ by section #bjj %all n be all[$2
 &  4  7c7 ,cl]ical am5dm5t ,! table (  
sections = "p ,,vi ( sub*apt] ,b ( *apt]
 #a ( su* ,code is am5d$ by add+ at !   
end ! foll[+ new item3  ,sec4 #bjj4     
,pat5t box pr(its4  4  7d7 ,effective   
date ,! am5dm5ts made by ?is section    
%all apply to taxable ye>s beg9n+ aft] !
 date ( ! enactm5t ( ?is ,act4