,,ii  #aac? ,,congress  #b;d ,session   
,s4 #bedj  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,june #bf1 #bjad ,mr4  
,durb9 7= himself1 ,mr4 ,br[n1 ,mr4     
,re$1 ,ms4 ,w>r51 ,ms4 ,baldw91 & ,mr4  
,s&]s7 introduc$ ! foll[+ bill2 :i* 0   
read twice & ref]r$ to ! ,committee on  
,f9ance  ,a ,,bill  ,to am5d ! ,int]nal 
,rev5ue ,code ( #aihf to provide a tax  
cr$it to ,patriot employ]s1 & = o!r     
purposes4  #a4 ,%ort title  ,?is ,act   
may be cit$ z ! ,patriot ,employ] ,tax  
,cr$it ,act4  #b4 ,patriot employ] tax  
cr$it  7a7 ,9 g5]al ,subp>t ,d ( "p ,,iv
 ( sub*apt] ,a ( *apt] #a ( ! ,int]nal  
,rev5ue ,code ( #aihf is am5d$ by add+  
at ! end ! foll[+ new section3  #de,s4  
,patriot employ] tax cr$it  7a7         
,det]m9ation ( am\nt  7#a7 ,9 g5]al ,=  
purposes ( section #ch1 ! ,patriot      
employ] cr$it det]m9$ "u ?is section )  
respect to any taxpay] :o is a ,patriot 
employ] = any taxable ye> %all be equal 
to #aj p]c5t ( ! qualifi$ wages paid or 
incurr$ by ! ,patriot employ]4  7#b7    

,limitation ,! am\nt ( qualifi$ wages   
:i* may be tak5 into acc\nt "u p>agraph 
7#a7 ) respect to any employee = any    
taxable ye> %all n exce$ #ae1jjj4  7b7  
,patriot employ]  7#a7 ,9 g5]al ,=      
purposes ( subsection 7a71 ! t]m        
,patriot employ] means1 ) respect to any
 taxable ye>1 any taxpay]-- 7,a7 :i*--  
7i7 ma9ta9s its headqu>t]s 9 ! ,unit$   
,/ates if ! taxpay] 7or any pr$ecessor7 
has ev] be5 headqu>t]$ 9 ! ,unit$       
,/ates1 &  7ii7 is n 7& no pr$ecessor ( 
:i* is7 an expatriat$ entity 7z def9$ 9 
section #ghgd7;a77#b77 = ! taxable ye>  
or any prec$+ taxable ye> end+ aft] ,m>*
 #d1 #bjjc1  7,b7 ) respect to :i* no   
assessable paym5t has be5 impos$ "u     
section #dihj;,h ) respect to any mon?  
occurr+ dur+ ! taxable ye>1 &  7,c7 9 ! 
case (-- 7i7 a taxpay] :i* employs an   
av]age ( m ?an #ej employees on bus9ess 
days dur+ ! taxable ye>1 :i*-- 7,i7     
provides comp5sation = at lea/ #ij p]c5t
 ( its employees = s]vices provid$ by   
su* employees dur+ ! taxable ye> at an  

h\rly rate 7or equival5t !re(7 n less   
?an an am\nt equal to #aej p]c5t ( !    
,f$]al pov]ty level = a family ( ?ree = 
! cal5d> ye> 9 :i* ! taxable ye> beg9s  
divid$ by #b1jhj1  7,,ii7 meets !       
retirem5t plan requirem5ts ( subsection 
7c7 ) respect to at lea/ #ij p]c5t ( its
 employees provid+ s]vices dur+ !       
taxable ye> :o are n highly comp5sat$   
employees1 &  7,,iii7 meets ! additional
 requirem5ts ( subp>agraphs 7,a7 & 7,b7 
( p>agraph 7#b71 or  7ii7 any o!r       
taxpay]1 :i* meets ! requirem5ts ( ei!r 
subclause 7,i7 or 7,,ii7 ( clause 7i7 = 
! taxable ye>4  7#b7 ,additional        
requirem5ts = l>ge employ]s  7,a7 ,unit$
 ,/ates employm5t ,! requirem5ts ( ?is  
subp>agraph are met = any taxable ye>   
if-- 7i7 9 any case 9 :i* ! taxpay]     
increases ! numb] ( employees p]=m+     
sub/antially all ( _! s]vices = !       
taxable ye> outside ! ,unit$ ,/ates1 !  
taxpay] ei!r-- 7,i7 increases ! numb] ( 
employees p]=m+ sub/antially all ( _!   
s]vices inside ! ,unit$ ,/ates by an    

am\nt n less ?an ! increase 9 su* numb] 
= employees outside ! ,unit$ ,/ates1 or 
7,,ii7 has a p]c5tage increase 9 su*    
employees inside ! ,unit$ ,/ates :i* is 
n less ?an ! p]c5tage increase 9 su*    
employees outside ! ,unit$ ,/ates1  7ii7
 9 any case 9 :i* ! taxpay] decreases ! 
numb] ( employees p]=m+ sub/antially all
 ( _! s]vices = ! taxable ye> inside !  
,unit$ ,/ates1 ! taxpay] ei!r-- 7,i7    
decreases ! numb] ( employees p]=m+     
sub/antially all ( _! s]vices outside ! 
,unit$ ,/ates by an am\nt n less ?an !  
decrease 9 su* numb] = employees inside 
! ,unit$ ,/ates1 or  7,,ii7 has a       
p]c5tage decrease 9 employees outside ! 
,unit$ ,/ates :i* is n less ?an !       
p]c5tage decrease 9 su* employees inside
 ! ,unit$ ,/ates1 &  7iii7 !re is n a   
decrease 9 ! numb] ( employees p]=m+    
sub/antially all ( _! s]vices = !       
taxable ye> inside ! ,unit$ ,/ates by   
reason ( ! taxpay] contract+ out su*    
s]vices to p]sons :o are n employees ( !
 taxpay]4  7,b7 ,treatm5t ( individuals 

9 ! uni=m$ s]vices & ! disabl$ ,!       
requirem5ts ( ?is subp>agraph are met = 
any taxable ye> if-- 7i7 ! taxpay]      
provides diff]5tial wage paym5ts 7z     
def9$ 9 section #cdja7;h77#b77 to ea*   
employee describ$ 9 section             
#cdja7;h77#b77;,a7 = any p]iod dur+ !   
taxable ye> 9 an am\nt n less ?an !     
diff]5ce betwe5 ! wages :i* w\ld h be5  
receiv$ f ! employ] dur+ su* p]iod & !  
am\nt ( pay & all[ances :i* ! employee  
receives = s]vice 9 ! uni=m$ s]vices    
dur+ su* p]iod1 &  7ii7 ! taxpay] has 9 
place at all times dur+ ! taxable ye> a 
writt5 policy = ! recruitm5t ( employees
 :o h s]v$ 9 ! uni=m$ s]vices or :o are 
disabl$4  7#c7 ,special rules = apply+ !
 m9imum wage & retirem5t plan           
requirem5ts  7,a7 ,m9imum wage ,9       
det]m9+ :e!r ! m9imum wage requirem5ts (
 p>agraph 7#a77;,c77i77,i7 are met )    
respect to #ij p]c5t ( a taxpay]'s      
employees = any taxable ye>-- 7i7 a     
taxpay] may elect to exclude f su*      
det]m9ation appr5tices or le>n]s t an   

employ] may exclude "u ! regulations "u 
section #ad7;a7 ( ! ,fair ,labor ,/&>ds 
,act ( #aich1 &  7ii7 if a taxpay] meets
 ! requirem5ts ( p>agraph 7#b77;,b77i7 )
 respect to provid+ diff]5tial wage     
paym5ts to any employee = any p]iod 7)\t
 reg>d to :e!r su* requirem5ts apply to 
! taxpay]71 ! h\rly rate 7or equival5t  
!re(7 = su* paym5ts %all be det]m9$ on !
 basis ( ! wages :i* w\ld h be5 paid by 
! employ] dur+ su* p]iod if ! employee  
_h n be5 provid+ s]vice 9 ! uni=m$      
s]vices4  7,b7 ,retirem5t plan ,9       
det]m9+ :e!r ! retirem5t plan           
requirem5ts ( p>agraph                  
7#a77;,c77i77,,ii7 are met ) respect to 
#ij p]c5t ( a taxpay]'s employees = any 
taxable ye>1 a taxpay] may elect to     
exclude f su* det]m9ation-- 7i7         
employees n meet+ ! age or s]vice       
requirem5ts "u section #daj7;a77#a7 7or 
su* l[] age or s]vice requirem5ts z !   
employ] provides71 &  7ii7 employees    
describ$ 9 section #daj7;b77#c74  7c7   
,retirem5t plan requirem5ts  7#a7 ,9    

g5]al ,! requirem5ts ( ?is subsection   
are met = any taxable ye> ) respect to  
an employee ( ! taxpay] :o is n a highly
 comp5sat$ employee if ! employee is    
eligible to p>ticipate 9 #a or m        
applicable eligible retirem5t plans     
ma9ta9$ by ! employ] = a plan ye> end+ )
 or )9 ! taxable ye>4  7#b7 ,applicable 
eligible retirem5t plan ,= purposes (   
?is subsection1 ! t]m applicable        
eligible retirem5t plan means an        
eligible retirem5t plan :i*1 ) respect  
to ! plan ye> describ$ 9 p>agraph 7#a71 
is ei!r-- 7,a7 a def9$ contribution plan
 :i*--  7i7 requires ! employ] to make  
nonelective contributions ( at lea/ #e  
p]c5t ( ! comp5sation ( ! employee1 or  
7ii7 bo?-- 7,i7 includes an eligible    
automatic contribution arrangem5t 7z    
def9$ 9 section #dad7w77#c77 "u :i* !   
uni=m p]c5tage describ$ 9 section       
#dad7w77#c77;,b7 is at lea/ #e p]c5t1 & 
7,,ii7 requires ! employ] to make mat*+ 
contributions ( #ajj p]c5t ( ! elective 
def]rals 7z def9$ 9 section             

#dad7u77#b77;,c77 ( ! employee to !     
ext5t su* def]rals d n exce$ ! p]c5tage 
specifi$ by ! plan 7n less ?an #e p]c5t7
 ( ! employee's comp5sation1 or  7,b7 a 
def9$ b5efit plan-- 7i7 ) respect to :i*
 ! accru$ b5efit ( ! employee d]iv$ f   
employ] contributions1 :5 express$ z an 
annual retirem5t b5efit1 is n less ?an !
 product (-- 7,i7 ! less] ( #b p]c5t    
multipli$ by ! employee's ye>s ( s]vice 
7det]m9$ "u ! rules ( p>agraphs 7#d71   
7#e71 & 7#f7 ( section #daa7;a77 ) !    
employ] or #bj p]c5t1 multipli$ by      
7,,ii7 ! employee's f9al av]age pay1 or 
7ii7 :i* is an applicable def9$ b5efit  
plan 7z def9$ 9 section                 
#daa7;a77#ac77;,b77-- 7,i7 :i* meets !  
int]e/ cr$it requirem5ts ( section      
#daa7;b77#e77;,b77i7 ) respect to ! plan
 ye>1 &  7,,ii7 "u :i* ! employee       
receives a pay cr$it = ! plan ye> :i* is
 n less ?an #e p]c5t ( comp5sation4     
7#c7 ,def9itions & special rules ,=     
purposes ( ?is subsection-- 7,a7        
,eligible retirem5t plan ,! t]m eligible

 retirem5t plan has ! mean+ giv5 su* t]m
 by section #djb7;c77#h77;,b71 except t 
9 ! case ( an acc\nt or annuity describ$
 9 clause 7i7 or 7ii7 !re(1 su* t]m %all
 only include an acc\nt or annuity :i*  
is a simplifi$ employee p5sion 7z def9$ 
9 section #djh7k774  7,b7 ,f9al av]age  
pay ,= purposes ( p>agraph              
7#b77;,b77i77,,ii71 f9al av]age pay %all
 be det]m9$ us+ ! p]iod ( consecutive   
ye>s 7n exce$+ #e7 dur+ :i* ! employee  
_h ! greate/ comp5sation f ! taxpay]4   
7,c7 ,alt]native plan designs ,!        
,secret>y may prescribe regulations = a 
taxpay] to meet ! requirem5ts ( ?is     
subsection ?r\gh a comb9ation ( def9$   
contribution plans or def9$ b5efit plans
 describ$ 9 p>agraph 7#a7 or ?r\gh a    
comb9ation ( bo? su* types ( plans4     
7,d7 ,plans mu/ meet requirem5ts )\t    
tak+ into acc\nt ,social ,security &    
simil> contributions & b5efits ,a rule  
simil> to ! rule ( section #daf7;e7 %all
 apply4  7d7 ,qualifi$ wages &          
comp5sation ,= purposes ( ?is section-- 

7#a7 ,9 g5]al ,! t]m qualifi$ wages     
means wages 7z def9$ 9 section #ea7;c71 
det]m9$ )\t reg>d to p>agraph 7#d7 !re(7
 paid or incurr$ by ! ,patriot employ]  
dur+ ! taxable ye> to employees-- 7,a7  
:o p]=m sub/antially all ( _! s]vices = 
su* ,patriot employ] inside ! ,unit$    
,/ates1 &  7,b7 ) respect to :om-- 7i7 9
 ! case ( a ,patriot employ] :i* employs
 an av]age ( m ?an #ej employees on     
bus9ess days dur+ ! taxable ye>1 !      
requirem5ts ( subclauses 7,i7 & 7,,ii7 (
 subsection 7b77#a77;,c77i7 are met1 &  
7ii7 9 ! case ( any o!r ,patriot        
employ]1 ! requirem5ts ( ei!r subclause 
7,i7 or 7,,ii7 ( subsection             
7b77#a77;,c77i7 are met4  7#b7 ,special 
rules = agricultural labor & railway    
labor ,rules simil> to ! rules ( section
 #ea7;h7 %all apply4  7#c7 ,comp5sation 
,= purposes ( subsections               
7b77#a77;,c77i77,i7 & 7c71 ! t]m        
comp5sation has ! same mean+ z qualifi$ 
wages1 except t section #ea7;c77#b7 %all
 be disreg>d$ 9 det]m9+ ! am\nt ( su*   

wages4  7e7 ,aggregation ,rules ,=      
purposes ( ?is section-- 7#a7 ,9 g5]al  
,all p]sons treat$ z a s+le employ] "u  
subsection 7a7 or 7b7 ( section #eb %all
 be treat$ z a s+le taxpay]4  7#b7      
,special rules = c]ta9 requirem5ts ,=   
purposes ( apply+ p>agraphs 7#a77;,a7 & 
7#b77;,a7 ( subsection 7b7-- 7,a7 !     
det]m9ation "u subsections 7a7 & 7b7 (  
section #eb = purposes ( p>agraph 7#a7  
%all be made )\t reg>d to section       
#aefc7;b77#b77;,c7 7relat+ to exclusion 
( =eign corporations71 &  7,b7 if any   
p]son treat$ z a s+le taxpay] "u ?is    
subsection 7aft] application (          
subp>agraph 7,a771 or any pr$ecessor (  
su* p]son1 0 an expatriat$ entity 7z    
def9$ 9 section #ghgd7;a77#b77 = any    
taxable ye> end+ aft] ,m>* #d1 #bjjc1 !n
 all p]sons treat$ z a s+le taxpay] )   
su* p]son %all be treat$ z expatriat$   
entities4  7f7 ,election ,to h cr$it n  
apply  7#a7 ,9 g5]al ,a taxpay] may     
elect to h ?is section n apply = any    
taxable ye>4  7#b7 ,"t = mak+ election  

,an election "u p>agraph 7#a7 = any     
taxable ye> may be made 7or revok$7 at  
any "t be=e ! expiration ( ! #c-ye>     
p]iod beg9n+ on ! la/ date prescrib$ by 
law = fil+ ! return = su* taxable ye>   
7det]m9$ )\t reg>d to ext5sions74  7#c7 
,mann] ( mak+ election ,an election "u  
p>agraph 7#a7 7or revocation !re(7 %all 
be made 9 su* mann] z ! ,secret>y may by
 regulations prescribe4  4  7b7         
,all[ance z g5]al bus9ess cr$it ,section
 #ch7;b7 ( ! ,int]nal ,rev5ue ,code (   
#aihf is am5d$ by /rik+ plus at ! end ( 
p>agraph 7#ce71 by /rik+ ! p]iod at !   
end ( p>agraph 7#cf7 & ins]t+ 1 plus1 & 
by add+ at ! end ! foll[+3  7#cg7 9 !   
case ( a ,patriot employ] 7z def9$ 9    
section #de,s7b77 = any taxable ye>1 !  
,patriot employ] cr$it det]m9$ "u       
section #de,s7a74  4  7c7 ,d5ial ( d\ble
 b5efit ,subsection 7a7 ( section       
#bhj;,c ( ! ,int]nal ,rev5ue ,code (    
#aihf is am5d$ by ins]t+ #de,s7a71 aft] 
#de,p7a74  7d7 ,effective date ,!       
am5dm5ts made by ?is section %all apply 

to taxable ye>s beg9n+ aft] ,decemb]    
#ca1 #bjad4  #c4 ,def] d$uction ( int]e/
 exp5se relat$ to def]r$ income  7a7 ,9 
g5]al ,section #afc ( ! ,int]nal ,rev5ue
 ,code ( #aihf 7relat+ to d$uctions =   
int]e/ exp5se7 is am5d$ by r$esignat+   
subsection 7n7 z subsection 7o7 & by    
ins]t+ aft] subsection 7m7 ! foll[+ new 
subsection3  7n7 ,def]ral ( d$uction =  
int]e/ exp5se relat$ to def]r$ income   
7#a7 ,g5]al rule ,! am\nt ( =eign-relat$
 int]e/ exp5se ( any taxpay] all[$ z a  
d$uction "u ?is *apt] = any taxable ye> 
%all n exce$ an am\nt equal to !        
applicable p]c5tage ( ! sum (-- 7,a7 !  
taxpay]'s =eign-relat$ int]e/ exp5se = !
 taxable ye>1 plus  7,b7 ! taxpay]'s    
def]r$ =eign-relat$ int]e/ exp5se4  ,=  
purposes ( ! p>agraph1 ! applicable     
p]c5tage is ! p]c5tage equal to ! curr5t
 inclusion ratio4  7#b7 ,treatm5t (     
def]r$ d$uctions ,if1 = any taxable ye>1
 ! am\nt ( ! limitation det]m9$ "u      
p>agraph 7#a7 exce$s ! taxpay]'s        
=eign-relat$ int]e/ exp5se = ! taxable  

ye>1 !re %all be all[$ z a d$uction = ! 
taxable ye> an am\nt equal to ! less]   
(-- 7,a7 su* excess1 or  7,b7 !         
taxpay]'s def]r$ =eign-relat$ int]e/    
exp5se4  7#c7 ,def9itions & special rule
 ,= purposes ( ?is subsection--  7,a7   
,=eign-relat$ int]e/ exp5se ,! t]m      
=eign-relat$ int]e/ exp5se means1 )     
respect to any taxpay] = any taxable    
ye>1 ! am\nt :i* be>s ! same ratio to ! 
am\nt ( int]e/ exp5se = su* taxable ye> 
allocat$ & apportion$ "u sections #hfa1 
#hfd7;e71 & #hfd7;f7 to income f s\rces 
outside ! ,unit$ ,/ates z-- 7i7 ! value 
( all /ock held by ! taxpay] 9 all      
section #ijb corporations ) respect to  
:i* ! taxpay] meets ! own]%ip           
requirem5ts ( subsection 7a7 or 7b7 (   
section #ijb1 be>s to  7ii7 ! value (   
all assets ( ! taxpay] :i* g5]ate gross 
income f s\rces outside ! ,unit$ ,/ates4
  7,b7 ,def]r$ =eign-relat$ int]e/      
exp5se ,! t]m def]r$ =eign-relat$ int]e/
 exp5se means ! excess1 if any1 ( !     
aggregate =eign-relat$ int]e/ exp5se =  

all prior taxable ye>s beg9n+ aft]      
,decemb] #ca1 #bjad1 ov] ! aggregate    
am\nt all[$ z a d$uction "u p>agraphs   
7#a7 & 7#b7 = all su* prior taxable     
ye>s4  7,c7 ,value ( assets ,except z   
o!rwise provid$ by ! ,secret>y1 =       
purposes ( subp>agraph 7,a77ii71 ! value
 ( any asset %all be ! am\nt ) respect  
to su* asset det]m9$ = purposes (       
allocat+ & apportion+ int]e/ exp5se "u  
sections #hfa1 #hfd7;e71 & #hfd7;f74    
7,d7 ,curr5t inclusion ratio ,! t]m     
curr5t inclusion ratio means1 ) respect 
to any dome/ic corporation :i* meets !  
own]%ip requirem5ts ( subsection 7a7 or 
7b7 ( section #ijb ) respect to "o or m 
section #ijb corporations = any taxable 
ye>1 ! ratio 7express$ z a p]c5tage7 (--
  7i7 ! sum ( all divid5ds receiv$ by ! 
dome/ic corporation f all su* section   
#ijb corporations dur+ ! taxable ye>    
plus am\nts includible 9 gross income "u
 section #iea7;a7 f all su* section #ijb
 corporations1 9 ea* case comput$ )\t   
reg>d to section #gh1 divid$ by  7ii7 ! 

aggregate am\nt ( po/-#aihf undi/ribut$ 
e>n+s4  7,e7 ,aggregate am\nt (         
po/-#aihf undi/ribut$ e>n+s ,! t]m      
aggregate am\nt ( po/-#aihf undi/ribut$ 
e>n+s means1 ) respect to any dome/ic   
corporation :i* meets ! own]%ip         
requirem5ts ( subsection 7a7 or 7b7 (   
section #ijb ) respect to "o or m       
section #ijb corporations1 ! dome/ic    
corporation's pro rata %>e ( ! po/-#aihf
 undi/ribut$ e>n+s 7z def9$ 9 section   
#ijb7;c77#a77 ( all su* section #ijb    
corporations4  7,f7 ,=eign curr5cy      
conv]sion ,= purposes ( det]m9+ ! curr5t
 inclusion ratio1 & except z o!rwise    
provid$ by ! ,secret>y1 ! aggregate     
am\nt ( po/-#aihf undi/ribut$ e>n+s = ! 
taxable ye> %all be det]m9$ by translat+
 ea* section #ijb corporation's         
po/-#aihf undi/ribut$ e>n+s into doll>s 
us+ ! av]age ex*ange rate = su* ye>4    
7,g7 ,section #ijb corporation ,! t]m   
section #ijb corporation has ! mean+    
giv5 to su* t]m by section #iji7;d77#e74
  7#d7 ,treatm5t ( affiliat$ gr\ps ,!   

curr5t inclusion ratio ( ea* memb] ( an 
affiliat$ gr\p 7z def9$ 9 section       
#hfd7;e77#e77;,a77 %all be det]m9$ z if 
all memb]s ( su* gr\p 7 a s+le          
corporation4  7#e7 ,application to      
sep>ate categories ( income ,?is        
subsection %all be appli$ sep>ately )   
respect to ! categories ( income        
specifi$ 9 section #ijd7;d77#a74  7#f7  
,regulations ,! ,secret>y may prescribe 
su* regulations or o!r guidance z is    
necess>y or appropriate to c>ry out !   
purposes ( ?is subsection1 includ+      
regulations or o!r guidance provid+--   
7,a7 = ! prop] application ( ?is        
subsection ) respect to *anges 9 own]%ip
 ( a section #ijb corporation1  7,b7 t  
c]ta9 corporations t o!rwise w\ld n be  
memb]s ( ! affiliat$ gr\p w be treat$ z 
memb]s ( ! affiliat$ gr\p = purposes (  
?is subsection1  7,c7 = ! prop]         
application ( ?is subsection ) respect  
to ! taxpay]'s %>e ( a deficit 9 e>n+s &
 pr(its ( a section #ijb corporation1   
7,d7 = appropriate adju/m5ts to !       

det]m9ation ( ! value ( /ock 9 any      
section #ijb corporation = purposes (   
?is subsection or to ! =eign-relat$     
int]e/ exp5se to acc\nt = income t is   
subject to tax "u section #hhb7;a77#a71 
&  7,e7 = ! prop] application ( ?is     
subsection ) respect to int]e/ exp5se t 
is directly allocable to income )       
respect to c]ta9 assets4  4  7b7        
,effective date ,! am5dm5ts made by ?is 
section %all apply to taxable ye>s      
beg9n+ aft] ,decemb] #ca1 #bjad4