,,ii  #aad? ,,congress  #b;d ,session   
,s4 #ceag  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,decemb] #g1 #bjaf,mr4 
,portman 7= himself1 ,ms4 ,/ab5[1 & ,mr4
 ,br[n7 introduc$ ! foll[+ bill2 :i* 0  
read twice & ref]r$ to ! ,committee on  
,f9ance  ,a ,,bill  ,to am5d ! ,int]nal 
,rev5ue ,code ( #aihf to provide        
appropriate rules = ! application ( !   
d$uction = income attributable to       
dome/ic production activities ) respect 
to c]ta9 contract manufactur+ or        
production arrangem5ts4  #a4 ,%ort title
 ,?is ,act may be cit$ z ! ,promot+ ,m  
,am]ican ,manufactur+ ,jobs ,act4  #b4  
,application ( d$uction = income        
attributable to dome/ic production      
activities to c]ta9 contract manufactur+
 or production arrangem5ts  7a7 ,9 g5]al
 ,section #aii7;d7 ( ! ,int]nal ,rev5ue 
,code ( #aihf is am5d$--  7#a7 by ins]t+
 ! same qualifi$ production activities  
income d]iv$ f be=e any activity 9      
p>agraph 7#aj71  7#b7 by r$esignat+     
p>agraph 7#aj7 7z am5d$ by p>agraph     

7#a77 z p>agraph 7#aa71 &  7#c7 by      
ins]t+ aft] p>agraph 7#i7 ! foll[+ new  
p>agraph3  7#aj7 ,contract manufactur+  
or production arrangem5ts  7,a7 ,9 g5]al
 ,except z provid$ 9 subp>agraph 7,b71 9
 ! case ( a contract manufactur+ or     
production arrangem5t "u :i* any p]son  
makes a sub/antial contribution ?r\gh ! 
activities ( its employees )9 ! ,unit$  
,/ates to ! manufacture1 production1    
gr[?1 or extraction ( qualify+          
production prop]ty1 tak+ into acc\nt !  
factors set =? 9 subp>agraph 7,d7--  7i7
 su* p]son %all be treat$ z engag+ 9 !  
manufactur+1 production1 gr[?1 or       
extraction ( su* qualify+ production    
prop]ty1 &  7ii7 ! dome/ic production   
gross receipts ( su* p]son %all include 
! gross receipts ( su* p]son receiv$ "u 
su* arrangem5t = su* activities4  7,b7  
,treatm5t ( c]ta9 writt5 agreem5ts ,9 ! 
case ( a contract manufactur+ or        
production arrangem5t1 if all p>ties to 
su* arrangem5t agree 9 writ+ t only "o  
su* p]son %all be eligible = ! d$uction 

"u ?is section1 su* p]son %all be treat$
 z p]=m+ ! activities describ$ 9        
subclauses 7,i7 & 7,,ii7 ( subsection   
7c77#d77;,a77i7 "u su* arrangem5t & no  
o!r p]son %all be treat$ = purposes (   
?is section z p]=m+ su* activities4     
7,c7 ,contract manufactur+ or production
 arrangem5t ,= purposes ( ?is p>agraph1 
! t]m contract manufactur+ or production
 arrangem5t means any arrangem5t "u     
:i*-- 7i7 a p]son contracts ) "o or m   
unrelat$ p]sons = ! manufacture1        
production1 gr[? or extraction ( an item
 ( qualify+ production prop]ty or a     
qualifi$ film1 &  7ii7 9 ! case (       
qualify+ production prop]ty1 su* item ( 
qualify+ production prop]ty is          
manufactur$1 produc$1 gr[n or extract$ 9
 :ole or significant "p )9 ! ,unit$     
,/ates pursuant to subsection           
7c77#d77;,a77i77,i74  7,d7 ,factors =   
det]m9+ sub/antial contribution ,!      
,secret>y %all prescribe regulations    
sett+ =? activities to be tak5 into     
acc\nt 9 det]m9+ :e!r a p]son makes a   

sub/antial contribution ?r\gh !         
activities ( its employees )9 ! ,unit$  
,/ates to ! manufacture1 production1    
gr[? or extraction ( qualify+ production
 prop]ty = purposes ( subp>agraph 7,a74 
,su* factors %all include--  7i7        
ov]sight & direction ( ! activities or  
process pursuant to :i* ! prop]ty is    
manufactur$1 produc$1 gr[n or extract$2 
7ii7 physical trans=mation ( p]sonal    
prop]ty1 or assembly or conv]sion (     
compon5t p>ts into qualify+ production  
prop]ty1 t does n by itself con/itute   
manufactur+1 production1 gr[? or        
extraction pursuant to subsection       
7c77#d77;,a77i77,i72  7iii7 mat]ial     
selection1 v5dor selection1 or own]%ip &
 control ( ! raw mat]ials1 "w-9-process 
or f9i%$ goods2  7iv7 managem5t ( risk (
 loss1 co/ r$uction or effici5cy        
initiatives associat$ ) ! manufactur+   
process1 dem& plann+1 production s*$ul+1
 h$g+ raw mat]ial co/s & o!r manufactur+
 co/s or capacities2  7v7 control (     
manufactur+ relat$ logi/ics2  7vi7      

sample te/+1 e/abli%m5t ( quality       
control /&>ds & o!r quality control     
activities2  7vii7 develop+1 or direct+ 
! use or developm5t (1 product design & 
design specifications1 z well z trade   
secrets1 te*nology1 & o!r intellectual  
prop]ty = ! purpose ( manufactur+1      
produc+1 gr[+ or extract+ ! qualify+    
production prop]ty2 &  7viii7 su* o!r   
activities z %all be det]m9$ by !       
,secret>y4  7,e7 ,safe h>bor = det]m9+  
sub/antial contribution  7i7 ,9 g5]al ,a
 p]son :i* has economic risk ( loss )   
respect to great] ?an #ej p]c5t ( !     
direct mat]ial co/s necess>y to !       
manufacture1 production1 gr[?1 or       
extraction ( ! qualify+ production 9    
:ole or 9 significant "p )9 ! ,unit$    
,/ates %all be deem$ = purposes (       
subp>agraph 7,a7 to make a sub/antial   
contribution ?r\gh ! activities ( its   
employees )9 ! ,unit$ ,/ates to !       
manufacture1 production1 gr[?1 or       
extraction ( su* qualify+ production    
prop]ty4  7ii7 ,economic risk ( loss ,= 

purposes ( ?is subp>agraph1 a p]son has 
economic risk ( loss if su* p]son be>s !
 ultimate economic responsibility = !   
direct mat]ial co/4 ,! foll[+ factors   
%all n affect ! det]m9ation ( economic  
risk ( loss3  7,i7 ,contractual         
requirem5ts to insure ! direct mat]ials4
  7,,ii7 ,contractual liability = brea* 
( p]=mance4  7iii7 ,direct mat]ial co/  
,= purposes ( ?is subp>agraph1 ! t]m    
direct mat]ial co/ includes ! co/ (     
mat]ials t become an integral "p (      
qualify+ production prop]ty & mat]ials t
 are consum$ 9 ! ord9>y c\rse (         
production & t c be id5tifi$ or         
associat$ ) p>ticul> units or gr\ps (   
units ( prop]ty produc$4  4  7b7        
,effective date  7#a7 ,9 g5]al ,!       
am5dm5ts made by ?is section %all apply 
to taxable ye>s beg9n+ aft] ! date ( !  
enactm5t ( ?is ,act4  7#b7 ,election =  
retroactive application ,if all ( !     
p]sons ent]+ into a writt5 agreem5t     
describ$ 9 section #aii7;d77#aj77;,b7 ( 
! ,int]nal ,rev5ue ,code ( #aihf 7z     

am5d$ by ?is ,act7 elect to h ?is       
p>agraph apply to taxable ye>s beg9n+ on
 or be=e ! date ( ! enactm5t ( ?is ,act 
& c demon/rate1 by provid+ copies (     
timely fil$ tax returns 7includ+ am5d$  
returns7 or o!rwise1 t only "o p]son    
claim$ ! d$uction "u section #aii ( su* 
,code 9 su* taxable ye>s ) respect to ! 
prop]ty describ$ 9 ! agreem5t1 !n !     
am5dm5ts made by ?is section %all apply 
to su* taxable ye>s ( su* p]sons4  7c7  
,no inf]5ce ,! am5dm5ts made by ?is     
section are int5d$ z safe h>bors & %all 
n be con/ru$ z adv]sely affect+ !       
eligibility = a d$uction "u section #aii
 ( ! ,int]nal ,rev5ue ,code ( #aihf (   
any p]son :o contracts ) ano!r p]son to 
manufacture1 produce1 gr[ or extract    
prop]ty describ$ 9 subsection 7c77#e7 or
 7c77#f7 ( su* section4