,,ii #aad? ,,congress #a/ ,session ,s4 #ibb ,,9 ,,! ,,s5ate ,,( ,,! ,,unit$ ,,/ates ,april #ad1 #bjae,mr4 ,s&]s introduc$ ! foll[+ bill2 :i* 0 read twice & ref]r$ to ! ,committee on ,f9ance ,a ,,bill ,to am5d ! ,int]nal ,rev5ue ,code ( #aihf to modify ! treatm5t ( =eign corporations1 & = o!r purposes4 #a4 ,%ort title ,?is ,act may be cit$ z ! ,corporate ,tax ,dodg+ ,prev5tion ,act4 #b4 ,def]ral ( ,active ,income ( ,controll$ ,=eign ,corporations ,section #ieb ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by add+ at ! end ! foll[+ new subsection3 7e7 ,special ,application ( ,subp>t 7#a7 ,9 g5]al ,= taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjae1 not)/&+ any o!r provision ( ?is subp>t1 ! t]m subp>t ,f income means1 9 ! case ( any controll$ =eign corporation1 ! income ( su* corporation d]iv$ f any =eign c\ntry4 7#b7 ,applicable rules ,rules simil> to ! rules "u ! la/ s5t5ce ( subsection 7a7 & subsection 7d7 %all apply to ?is subsection4 4 #c4 ,modifications ( =eign tax cr$it rules applicable to l>ge integrat$ oil companies :i* are dual capacity taxpay]s 7a7 ,9 g5]al ,section #ija ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by r$esignat+ subsection 7n7 z subsection 7o7 & by ins]t+ aft] subsection 7m7 ! foll[+ new subsection3 7n7 ,special rules relat+ to l>ge integrat$ oil companies :i* are dual capacity taxpay]s 7#a7 ,g5]al rule ,not)/&+ any o!r provision ( ?is *apt]1 any am\nt paid or accru$ by a dual capacity taxpay] :i* is a l>ge integrat$ oil company to a =eign c\ntry or possession ( ! ,unit$ ,/ates = any p]iod %all n be consid]$ a tax-- 7,a7 if1 = su* p]iod1 ! =eign c\ntry or possession does n impose a g5]ally applicable income tax1 or 7,b7 to ! ext5t su* am\nt exce$s ! am\nt 7det]m9$ 9 accordance ) regulations7 :i*-- 7i7 is paid by su* dual capacity taxpay] pursuant to ! g5]ally applicable income tax impos$ by ! c\ntry or possession1 or 7ii7 w\ld be paid if ! g5]ally applicable income tax impos$ by ! c\ntry or possession 7 applicable to su* dual capacity taxpay]4 ,no?+ 9 ?is p>agraph %all be con/ru$ to imply ! prop] treatm5t ( any su* am\nt n 9 excess ( ! am\nt det]m9$ "u subp>agraph 7,b74 7#b7 ,dual capacity taxpay] ,= purposes ( ?is subsection1 ! t]m dual capacity taxpay] means1 ) respect to any =eign c\ntry or possession ( ! ,unit$ ,/ates1 a p]son :o-- 7,a7 is subject to a levy ( su* c\ntry or possession1 & 7,b7 receives 7or w receive7 directly or indirectly a specific economic b5efit 7z det]m9$ 9 accordance ) regulations7 f su* c\ntry or possession4 7#c7 ,g5]ally applicable income tax ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m g5]ally applicable income tax means an income tax 7or a s]ies ( income taxes7 :i* is g5]ally impos$ "u ! laws ( a =eign c\ntry or possession on income d]iv$ f ! conduct ( a trade or bus9ess )9 su* c\ntry or possession4 7,b7 ,exceptions ,su* t]m %all n include a tax unless x has sub/antial application1 by its t]ms & 9 practice1 to-- 7i7 p]sons :o are n dual capacity taxpay]s1 & 7ii7 p]sons :o are citiz5s or resid5ts ( ! =eign c\ntry or possession4 7#d7 ,l>ge integrat$ oil company ,= purposes ( ?is subsection1 ! t]m l>ge integrat$ oil company means1 ) respect to any taxable ye>1 an integrat$ oil company 7z def9$ 9 section #bia7;b77#d77 :i*-- 7,a7 _h gross receipts 9 excess ( #a1jjj1jjj1jjj = su* taxable ye>1 & 7,b7 has an av]age daily worldwide production ( crude oil ( at lea/ #ejj1jjj b>rels = su* taxable ye>4 4 7b7 ,effective date 7#a7 ,9 g5]al ,! am5dm5ts made by ?is section %all apply to taxes paid or accru$ 9 taxable ye>s beg9n+ aft] ! date ( ! enactm5t ( ?is ,act4 7#b7 ,contr>y treaty obligations upheld ,! am5dm5ts made by ?is section %all n apply to ! ext5t contr>y to any treaty obligation ( ! ,unit$ ,/ates4 #d4 ,re9/itution ( p] c\ntry =eign tax cr$it 7a7 ,9 g5]al ,subsection 7a7 ( section #ijd ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ to read z foll[s3 7a7 ,limitation ,! am\nt ( ! cr$it 9 respect ( ! tax paid or accru$ to any =eign c\ntry or possession ( ! ,unit$ ,/ates %all n exce$ ! same proportion ( ! tax aga9/ :i* su* cr$it is tak5 :i* ! taxpay]'s taxable income f s\rces )9 su* c\ntry or possession 7b n 9 excess ( ! taxpay]'s entire taxable income7 be>s to su* taxpay]'s entire taxable income = ! same taxable ye>4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjae4 #e4 ,treatm5t ( =eign corporations manag$ & controll$ 9 ! ,unit$ ,/ates z dome/ic corporations 7a7 ,9 g5]al ,section #ggja ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by r$esignat+ subsection 7p7 z subsection 7q7 & by ins]t+ aft] subsection 7o7 ! foll[+ new subsection3 7p7 ,c]ta9 corporations manag$ & controll$ 9 ! ,unit$ ,/ates treat$ z dome/ic = income tax 7#a7 ,9 g5]al ,not)/&+ subsection 7a77#d71 9 ! case ( a corporation describ$ 9 p>agraph 7#b7 if-- 7,a7 ! corporation w\ld n o!rwise be treat$ z a dome/ic corporation = purposes ( ?is title1 b 7,b7 ! managem5t & control ( ! corporation occurs1 directly or indirectly1 prim>ily )9 ! ,unit$ ,/ates1 !n1 solely = purposes ( *apt] #a 7& any o!r provision ( ?is title relat+ to *apt] #a71 ! corporation %all be treat$ z a dome/ic corporation4 7#b7 ,corporation describ$ 7,a7 ,9 g5]al ,a corporation is describ$ 9 ?is p>agraph if-- 7i7 ! /ock ( su* corporation is regul>ly trad$ on an e/abli%$ securities m>ket1 or 7ii7 ! aggregate gross assets ( su* corporation 7or any pr$ecessor !re(71 includ+ assets "u managem5t = inve/ors1 :e!r held directly or indirectly1 at any "t dur+ ! taxable ye> or any prec$+ taxable ye> is #ej1jjj1jjj or m4 7,b7 ,g5]al exception ,a corporation %all n be treat$ z describ$ 9 ?is p>agraph if-- 7i7 su* corporation 0 treat$ z a corporation describ$ 9 ?is p>agraph 9 a prec$+ taxable ye>1 7ii7 su* corporation-- 7,i7 is n regul>ly trad$ on an e/abli%$ securities m>ket1 & 7,,ii7 has1 & is reasonably expect$ to cont9ue to h1 aggregate gross assets 7includ+ assets "u managem5t = inve/ors1 :e!r held directly or indirectly7 ( less ?an #ej1jjj1jjj1 & 7iii7 ! ,secret>y grants a waiv] to su* corporation "u ?is subp>agraph4 7#c7 ,managem5t & control 7,a7 ,9 g5]al ,! ,secret>y %all prescribe regulations = purposes ( det]m9+ cases 9 :i* ! managem5t & control ( a corporation is to be treat$ z occurr+ prim>ily )9 ! ,unit$ ,/ates4 7,b7 ,executive (fic]s & s5ior managem5t ,su* regulations %all provide t-- 7i7 ! managem5t & control ( a corporation %all be treat$ z occurr+ prim>ily )9 ! ,unit$ ,/ates if sub/antially all ( ! executive (fic]s & s5ior managem5t ( ! corporation :o ex]cise day-to-day responsibility = mak+ decisions involv+ /rategic1 f9ancial1 & op]ational policies ( ! corporation are locat$ prim>ily )9 ! ,unit$ ,/ates1 & 7ii7 individuals :o are n executive (fic]s & s5ior managem5t ( ! corporation 7includ+ individuals :o are (fic]s or employees ( o!r corporations 9 ! same *a9 ( corporations z ! corporation7 %all be treat$ z executive (fic]s & s5ior managem5t if su* individuals ex]cise ! day-to-day responsibilities ( ! corporation describ$ 9 clause 7i74 7,c7 ,corporations prim>ily hold+ inve/m5t assets ,su* regulations %all also provide t ! managem5t & control ( a corporation %all be treat$ z occurr+ prim>ily )9 ! ,unit$ ,/ates if-- 7i7 ! assets ( su* corporation 7directly or indirectly7 consi/ prim>ily ( assets be+ manag$ on behalf ( inve/ors1 & 7ii7 decisions ab\t h[ to inve/ ! assets are made 9 ! ,unit$ ,/ates4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ on or aft] ! date :i* is #b ye>s aft] ! date ( ! enactm5t ( ?is ,act4 #f4 ,re/rictions on d$uction = int]e/ exp5se ( memb]s ( f9ancial report+ gr\ps ) excess dome/ic indebt$ness 7a7 ,9 g5]al ,section #afc ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by r$esignat+ subsection 7n7 z subsection 7o7 & by ins]t+ aft] subsection 7m7 ! foll[+ new subsection3 7n7 ,re/riction on d$uction = int]e/ exp5se ( memb]s ( f9ancial report+ gr\ps ) excess dome/ic indebt$ness 7#a7 ,9 g5]al ,9 ! case ( any corporation :i* is a memb] ( an applicable f9ancial report+ gr\p ! common p>5t ( :i* is a =eign corporation1 ! d$uction all[$ "u ?is *apt] = int]e/ paid or accru$ by ! corporation dur+ ! taxable ye> %all n exce$ ! applicable limitation = ! taxable ye>4 7#b7 ,c>ry=w>d ,any am\nt disall[$ "u p>agraph 7#a7 = any taxable ye> %all be treat$ z int]e/ paid or accru$ 9 ! succe$+ taxable ye>4 7#c7 ,applicable limitation ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! applicable limitation ) respect to a taxpay] = any taxable ye> is ! sum (-- 7i7 ! great] (-- 7,i7 ! taxpay]'s allocable %>e ( ! applicable f9ancial report+ gr\p's net int]e/ exp5se = ! taxable ye>1 or 7,,ii7 #aj p]c5t ( ! taxpay]'s adju/$ taxable income = ! taxable ye>1 plus 7ii7 ! excess limitation c>ry=w>ds to ! taxable ye> f any prec$+ taxable ye>4 7,b7 ,limitation n less ?an includible int]e/ ,! applicable limitation "u subp>agraph 7,a7 = any taxable ye> %all n be less ?an ! am\nt ( int]e/ includible 9 ! gross income ( ! taxpay] = ! taxable ye>4 7,c7 ,excess limitation c>ry=w>d ,if ! applicable limitation ( a taxpay] = any taxable ye> 7det]m9$ )\t reg>d to c>ry=w>ds "u subp>agraph 7,a77ii77 exce$s ! int]e/ paid or accru$ by ! taxpay] dur+ ! taxable ye>1 su* excess %all be an excess limitation c>ry=w>d to ! #a/ succe$+ taxable ye> & ! #bnd & #crd succe$+ taxable ye>s to ! ext5t n previ\sly tak5 into acc\nt "u ?is p>agraph4 7#d7 ,allocable %>e ( net int]e/ exp5se ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,a taxpay]'s allocable %>e ( an applicable f9ancial report+ gr\p's net int]e/ exp5se = any taxable ye> %all be ! am\nt 7n less ?an z]o7 :i* be>s ! same ratio to su* net int]e/ exp5se z-- 7i7 ! net e>n+s ( ! taxpay]1 be>s to 7ii7 ! aggregate net e>n+s ( all memb]s ( ! applicable f9ancial report+ gr\p4 7,b7 ,net e>n+s ,! t]m net e>n+s means1 ) respect to any taxpay]1 ! e>n+s ( ! taxpay]-- 7i7 comput$ )\t reg>d to any r$uction all[able =-- 7,i7 net int]e/ exp5se1 7,,ii7 taxes1 or 7,,iii7 depreciation1 amortization1 or depletion1 & 7ii7 comput$ ) su* o!r adju/m5ts z ! ,secret>y may by regulations prescribe4 7,c7 ,burd5 on taxpay] ,if a taxpay] elects n to compute its allocable %>e1 or fails to e/abli% to ! satisfaction ( ! ,secret>y ! am\nt ( its allocable %>e1 = any taxable ye>1 ! allocable %>e %all be z]o4 7#e7 ,net int]e/ exp5se & net e>n+s det]m9ations ,= purposes ( ?is subsection-- 7,a7 ,net int]e/ exp5se ,any det]m9ation ( net int]e/ exp5se = any taxable ye> %all be made-- 7i7 on ! basis ( ! applicable f9ancial /atem5t ( ! applicable f9ancial report+ gr\p = ! la/ f9ancial report+ ye> end+ ) or )9 ! taxable ye>1 & 7ii7 "u ,unit$ ,/ates tax pr9ciples4 7,b7 ,net e>n+s ,any det]m9ation ( net e>n+s = any taxable ye> %all be made on ! basis ( ! applicable f9ancial /atem5t ( ! applicable f9ancial report+ gr\p = ! la/ f9ancial report+ ye> end+ ) or )9 ! taxable ye>4 7,c7 ,applicable f9ancial /atem5t ,! t]m applicable f9ancial /atem5t means a /atem5t = f9ancial report+ purposes :i* is made on ! basis (-- 7i7 g5]ally accept$ acc\nt+ pr9ciples1 7ii7 int]national f9ancial report+ /&>ds1 or 7iii7 any o!r me?od specifi$ by ! ,secret>y 9 regulations4 ,a /atem5t "u clause 7ii7 or 7iii7 may be us$ z an applicable f9ancial /atem5t by a gr\p only if !re is no /atem5t ( ! gr\p "u any prec$+ clause4 7#f7 ,applicable f9ancial report+ gr\p ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m applicable f9ancial report+ gr\p means1 ) respect to any corporation1 a gr\p ( :i* su* corporation is a memb] & :i* files an applicable f9ancial /atem5t4 7,b7 ,exception = gr\ps ) m9imal dome/ic net int]e/ exp5se ,su* t]m %all n include a gr\p if ! aggregate net int]e/ exp5se = :i* a d$uction is all[able to all memb]s ( ! gr\p "u ?is *apt] 7det]m9$ )\t reg>d to ?is subsection or any o!r limitation on d$uctibility ( int]e/ "u ?is *apt]7 is less ?an #e1jjj1jjj4 7,c7 ,exception = c]ta9 f9ancial entities ,a corporation :i* is describ$ 9 section #hfd7;f77#d77;,b71 or is treat$ z describ$ 9 section #hfd7;f77#d77;,b7 by reason ( p>agraph 7#d77;,c7 or 7#e77;,a7 ( section #hfd7;f7 7)\t reg>d to :e!r an election is made "u su* p>agraph 7#e77;,a771 %all n be treat$ z a memb] ( an applicable f9ancial report+ gr\p ( :i* x is o!rwise a memb] & ?is subsection %all n apply to su* corporation4 7#g7 ,o!r def9itions & rules ,= purposes ( ?is subsection-- 7,a7 ,adju/$ taxable income ,! t]m adju/$ taxable income has ! mean+ giv5 su* t]m by subsection 7j77#f77;,a74 7,b7 ,net int]e/ exp5se ,! t]m net int]e/ exp5se has ! mean+ giv5 su* t]m by subsection 7j77#f77;,b74 7,c7 ,treatm5t ( affiliat$ gr\p ,all memb]s ( ! same affiliat$ gr\p 7)9 ! mean+ ( section #aejd7;a77 %all be treat$ z #a taxpay]4 7#h7 ,regulations ,! ,secret>y %all prescribe su* regulations z may be necess>y to c>ry out ! purposes ( ?is section1 includ+ regulations provid+-- 7,a7 = ! coord9ation ( ! application ( ?is subsection & o!r provisions ( ?is *apt] relat+ to ! d$uctibility ( int]e/1 7,b7 = ! waiv] ( c]ta9 adju/m5ts requir$ "u ,unit$ ,/ates tax pr9ciples 9 appropriate cases = purposes ( apply+ ?is subsection1 7,c7 = ! det]m9ation ( :i* f9ancial in/itutions are eligible = ! exception f memb]%ip 9 an applicable f9ancial report+ gr\p "u p>agraph 7#f77;,c7 & ! application ( ?is subsection to ! o!r memb]s ( ! gr\p :i* are n s except$1 & 7,d7 = ! application ( ?is subsection 9 ! case ( pass ?ru entities & = ! treatm5t ( pass ?ru entities z corporations 9 cases :]e necess>y to prev5t ! avoidance ( ! purposes ( ?is subsection4 4 7b7 ,coord9ation ) limitation on relat$ p>ty indebt$ness ,p>agraph 7#b7 ( section #afc7;j7 ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by add+ at ! end ! foll[+ new subp>agraph3 7,d7 ,coord9ation ) limitation on excess dome/ic indebt$ness ,?is subsection %all n apply to any corporation = any taxable ye> to :i* subsection 7n7 applies to su* corporation4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjae4 #g4 ,modifications to rules relat+ to inv]t$ corporations 7a7 ,9 g5]al ,subsection 7b7 ( section #ghgd ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ to read z foll[s3 7b7 ,inv]t$ corporations treat$ z dome/ic corporations 7#a7 ,9 g5]al ,not)/&+ section #ggja7;a77#d71 a =eign corporation %all be treat$ = purposes ( ?is title z a dome/ic corporation if-- 7,a7 su* corporation w\ld be a surrogate =eign corporation if subsection 7a77#b7 7 appli$ by sub/itut+ #hj p]c5t = #fj p]c5t1 or 7,b7 su* corporation is an inv]t$ dome/ic corporation4 7#b7 ,inv]t$ dome/ic corporation ,= purposes ( ?is subsection1 a =eign corporation %all be treat$ z an inv]t$ dome/ic corporation if1 pursuant to a plan 7or a s]ies ( relat$ transactions7-- 7,a7 ! entity completes aft] ,may #h1 #bjad1 ! direct or indirect acquisition (-- 7i7 sub/antially all ( ! prop]ties held directly or indirectly by a dome/ic corporation1 or 7ii7 sub/antially all ( ! assets (1 or sub/antially all ( ! prop]ties con/itut+ a trade or bus9ess (1 a dome/ic p>tn]%ip1 & 7,b7 aft] ! acquisition1 m ?an #ej p]c5t ( ! /ock 7by vote or value7 ( ! entity is held-- 7i7 9 ! case ( an acquisition ) respect to a dome/ic corporation1 by =m] %>ehold]s ( ! dome/ic corporation by reason ( hold+ /ock 9 ! dome/ic corporation1 or 7ii7 9 ! case ( an acquisition ) respect to a dome/ic p>tn]%ip1 by =m] p>tn]s ( ! dome/ic p>tn]%ip by reason ( hold+ a capital or pr(its int]e/ 9 ! dome/ic p>tn]%ip4 7#c7 ,exception = corporations ) sub/antial bus9ess activities 9 =eign c\ntry ( organization ,a =eign corporation describ$ 9 p>agraph 7#b7 %all n be treat$ z an inv]t$ dome/ic corporation if aft] ! acquisition ! exp&$ affiliat$ gr\p :i* includes ! entity has sub/antial bus9ess activities 9 ! =eign c\ntry 9 :i* or "u ! law ( :i* ! entity is creat$ or organiz$ :5 comp>$ to ! total bus9ess activities ( su* exp&$ affiliat$ gr\p4 ,= purposes ( subsection 7a77#b77;,b77iii7 & ! prec$+ s5t5ce1 ! t]m sub/antial bus9ess activities %all h ! mean+ giv5 su* t]m "u regulations 9 effect on ,may #h1 #bjad1 except t ! ,secret>y may issue regulations increas+ ! ?re%old p]c5t 9 any ( ! te/s "u su* regulations = det]m9+ if bus9ess activities con/itute sub/antial bus9ess activities = purposes ( ?is p>agraph4 4 7b7 ,con=m+ am5dm5ts 7#a7 ,clause 7i7 ( section #ghgd7;a77#b77;,b7 ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by /rik+ aft] ,m>* #d1 #bjjc1 & ins]t+ aft] ,m>* #d1 #bjjc1 & be=e ,may #i1 #bjad14 7#b7 ,subsection 7c7 ( section #ghgd ( su* ,code is am5d$-- 7,a7 9 p>agraph 7#b7-- 7i7 by /rik+ subsection 7a77#b77;,b77ii7 & ins]t+ subsections 7a77#b77;,b77ii7 & 7b77#b77;,b71 & 7ii7 by ins]t+ or 7b77#b77;,a7 aft] 7a77#b77;,b77i7 9 subp>agraph 7,b71 7,b7 9 p>agraph 7#c71 by ins]t+ or 7b77#b77;,b71 z ! case may be1 aft] 7a77#b77;,b77ii71 7,c7 9 p>agraph 7#e71 by /rik+ subsection 7a77#b77;,b77ii7 & ins]t+ subsections 7a77#b77;,b77ii7 & 7b77#b77;,b71 & 7,d7 9 p>agraph 7#f71 by ins]t+ or inv]t$ dome/ic corporation1 z ! case may be1 aft] surrogate =eign corporation4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s end+ aft] ,may #h1 #bjad4