,i #aae? ,,congress #a/ ,session ,h4 ,r4 #afgj ,,9 ,,! ,,h\se ,,( ,,repres5tatives ,m>* #bb1 #bjag,mr4 ,delaney 7= himself1 ,mr4 ,yoho1 ,mr4 ,aguil>1 ,mr4 ,b]a1 ,mrs4 ,bu/os1 ,ms4 ,gabb>d1 ,ms4 ,hanabusa1 ,ms4 ,kelly ( ,ill9ois1 ,ms4 ,ku/] ( ,new ,hamp%ire1 ,mr4 ,langev91 ,mr4 ,sean ,patrick ,maloney ( ,new ,york1 ,ms4 ,mc,collum1 ,mr4 ,mc,kinley1 ,mr4 ,m\lton1 ,mr4 ,norcross1 ,mr4 ,p]lmutt]1 ,mr4 ,polis1 ,mr4 ,quigley1 ,mr4 ,rupp]sb]g]1 ,ms4 ,s9ema1 & ,mr4 ,soto7 introduc$ ! foll[+ bill2 :i* 0 ref]r$ to ! ,committee on ,ways & ,means1 & 9 addition to ! ,committees on ,transportation & ,infra/ructure1 & ,rules1 = a p]iod to be subsequ5tly det]m9$ by ! ,speak]1 9 ea* case = consid]ation ( su* provisions z fall )9 ! jurisdiction ( ! committee conc]n$ ,a ,,bill ,to elim9ate ! inc5tive = corporations to cont9ue to hold accumulat$ e>n+s (f%ore1 to inve/ 9 dome/ic infra/ructure1 to provide = int]national tax re=m1 & = o!r purposes4 #a4 ,%ort title2 etc 7a7 ,%ort title ,?is ,act may be cit$ z ! ,infra/ructure #b4j ,act4 7b7 ,am5dm5t ( #aihf ,code ,except z o!rwise expressly provid$1 :5ev] 9 ?is ,act an am5dm5t or repeal is express$ 9 t]ms ( an am5dm5t to1 or repeal (1 a section or o!r provision1 ! ref]5ce %all be consid]$ to be made to a section or o!r provision ( ! ,int]nal ,rev5ue ,code ( #aihf4 7c7 ,table ( cont5ts ,! table ( cont5ts = ?is ,act is z foll[s3 ,sec4 #a4 ,%ort title2 etc4 ,title ,i--,deem$ repatriation & inve/m5t 9 dome/ic infra/ructure ,sec4 #aja4 ,elim9ation ( inc5tive = corporations to cont9ue to hold accumulat$ e>n+s (f%ore4 ,sec4 #ajb4 ,am]ican ,infra/ructure ,fund4 ,sec4 #ajc4 ,d$ication ( rema9+ rev5ues to highway tru/ fund4 ,sec4 #ajd4 ,highway ,tru/ ,fund ,solv5cy ,commission4 ,sec4 #aje4 ,regional infra/ructure accel]ator pilot program4 ,title ,,ii--,deadl9e = int]national tax re=m ,sec4 #bja4 #ah-mon? deadl9e = int]national tax re=m4 ,title ,,iii--,fallback int]national tax re=m ,sec4 #cjj4 ,g5]al effective date ( title4 ,subtitle ,a--,re=m ( taxation ( income e>n$ by controll$ =eign corporations ,"p ,i--,g5]al provisions ,sec4 #cja4 ,modifications to subp>t ,f income4 ,sec4 #cjb4 ,deem$ repatriation ^u transition to fallback int]national tax re=m4 ,"p ,,ii--,=eign tax cr$it limitations ,sec4 #caa4 ,re=m ( =eign tax cr$it limitation4 ,sec4 #cab4 ,d5ial ( cr$it & d$uction = =eign taxes ) respect to exclud$ subp>t ,f income4 ,"p ,,iii--,exp5se disall[ance ,sec4 #cba4 ,disall[ance ( d$uction = exp5ses allocable to exempt income ( a controll$ =eign corporation4 ,"p ,,iv--,o!r provisions relat+ to subp>t ,f ,subp>t ,a--,previ\sly def]r$ =eign income ,sec4 #cca4 ,treatm5t ( previ\sly def]r$ =eign income4 ,subp>t ,b--,o!r provisions ,sec4 #ccf4 ,elim9ation ( #cj-;day requirem5t4 ,sec4 #ccg4 ,modification ( def9ition ( ,unit$ ,/ates %>ehold]4 ,subtitle ,b--,re=m ( =eign tax cr$it provisions ,sec4 #cda4 ,repeal ( section #ijb indirect =eign tax cr$its2 =eign tax cr$it relat$ to subp>t ,f income4 ,sec4 #cdb4 ,repeal ( rule susp5d+ =eign taxes & cr$its until relat$ income is tak5 into acc\nt4 ,i ,deem$ repatriation & inve/m5t 9 dome/ic infra/ructure #aja4 ,elim9ation ( inc5tive = corporations to cont9ue to hold accumulat$ e>n+s (f%ore 7a7 ,9 g5]al ,section #ife is am5d$ to read z foll[s3 #ife4 ,elim9ation ( inc5tive to hold accumulat$ e>n+s & pr(its (f%ore 7a7 ,treatm5t ( def]r$ =eign income z subp>t ,f income ,9 ! case ( ! la/ taxable ye> ( a def]r$ =eign income corporation :i* ends be=e ! date ( ! enactm5t ( ! ,infra/ructure #b4j ,act1 ! subp>t ,f income ( su* =eign corporation 7z o!rwise det]m9$ = su* taxable ye> "u section #ieb7 %all be increas$ by ! accumulat$ po/-#aihf def]r$ =eign income ( su* corporation det]m9$ z ( ! close ( su* taxable ye>4 7b7 ,r$uction 9 am\nts includ$ 9 gross income ( ,unit$ ,/ates %>ehold]s ( specifi$ =eign corporations ) deficits 9 e>n+s & pr(its 7#a7 ,9 g5]al ,9 ! case ( a taxpay] :i* is a ,unit$ ,/ates %>ehold] ) respect to at lea/ "o def]r$ =eign income corporation & at lea/ "o ,e,p deficit =eign corporation1 ! am\nt :i* w\ld 7b = ?is subsection7 be tak5 into acc\nt "u section #iea7;a77#a7 by reason ( subsection 7a7 z su* ,unit$ ,/ates %>ehold]'s pro rata %>e ( ! subp>t ,f income ( ea* def]r$ =eign income corporation %all be r$uc$ 7b n bel[ z]o7 by ! am\nt ( su* ,unit$ ,/ates %>ehold]'s aggregate =eign ,e,p deficit :i* is allocat$ "u p>agraph 7#b7 to su* def]r$ =eign income corporation4 7#b7 ,allocation ( aggregate =eign ,e,p deficit ,! aggregate =eign ,e,p deficit ( any ,unit$ ,/ates %>ehold] %all be allocat$ among ! def]r$ =eign income corporations ( su* ,unit$ ,/ates %>ehold] 9 an am\nt :i* be>s ! same proportion to su* aggregate z-- 7,a7 su* ,unit$ ,/ates %>ehold]'s pro rata %>e ( ! accumulat$ po/-#aihf def]r$ =eign income ( ea* su* def]r$ =eign income corporation1 be>s to 7,b7 ! aggregate ( su* ,unit$ ,/ates %>ehold]'s pro rata %>e ( ! accumulat$ po/-#aihf def]r$ =eign income ( all def]r$ =eign income corporations ( su* ,unit$ ,/ates %>ehold]4 7#c7 ,def9itions relat$ to ,e,p deficits ,= purposes ( ?is subsection-- 7,a7 ,aggregate =eign ,e,p deficit ,! t]m aggregate =eign ,e,p deficit means1 ) respect to any ,unit$ ,/ates %>ehold]1 ! aggregate ( su* %>ehold]'s pro rata %>es ( ! specifi$ ,e,p deficits ( ! ,e,p deficit =eign corporations ( su* %>ehold]4 7,b7 ,e,p deficit =eign corporation ,! t]m ,e,p deficit =eign corporation means1 ) respect to any taxpay]1 any specifi$ =eign corporation ) respect to :i* su* taxpay] is a ,unit$ ,/ates %>ehold]1 if-- 7i7 su* specifi$ =eign corporation has a deficit 9 po/-#aihf e>n+s & pr(its1 & 7ii7 z ( ! date ( ! introduction ( ,infra/ructure #b4j ,act-- 7,i7 su* corporation 0 a specifi$ =eign corporation1 & 7,,ii7 su* taxpay] 0 a ,unit$ ,/ates %>ehold] ( su* corporation4 7,c7 ,specifi$ ,e,p deficit ,! t]m specifi$ ,e,p deficit means1 ) respect to any ,e,p deficit =eign corporation1 ! am\nt ( ! deficit ref]r$ to 9 subp>agraph 7,b74 7c7 ,d$uction = portion ( includ$ income ,9 ! case ( a ,unit$ ,/ates %>ehold] ( a def]r$ =eign income corporation1 !re %all be all[$ z a d$uction = ! taxable ye> 9 :i* an am\nt is includ$ 9 ! gross income ( su* ,unit$ ,/ates %>ehold] "u section #iea7;a77#a7 by reason ( ?is section an am\nt equal to #ge p]c5t ( ! am\nt s includ$ 9 gross income4 7d7 ,def]r$ =eign income corporation2 accumulat$ po/-#aihf def]r$ =eign income ,= purposes ( ?is section-- 7#a7 ,def]r$ =eign income corporation ,! t]m def]r$ =eign income corporation means1 ) respect to any ,unit$ ,/ates %>ehold]1 any specifi$ =eign corporation ( su* ,unit$ ,/ates %>ehold] :i* has accumulat$ po/-#aihf def]r$ =eign income 7z ( ! close ( ! taxable ye> ref]r$ to 9 subsection 7a77 great] ?an z]o4 7#b7 ,accumulat$ po/-#aihf def]r$ =eign income ,! t]m accumulat$ po/-#aihf def]r$ =eign income means ! po/-#aihf e>n+s & pr(its except to ! ext5t su* e>n+s-- 7,a7 are attributable to income ( ! specifi$ =eign corporation :i* is effectively connect$ ) ! conduct ( a trade or bus9ess )9 ! ,unit$ ,/ates & subject to tax "u ?is *apt]1 7,b7 if di/ribut$1 w\ld-- 7i7 9 ! case ( a controll$ =eign corporation1 be exclud$ f ! gross income ( a ,unit$ ,/ates %>ehold] "u section #iei1 or 7ii7 9 ! case ( any passive =eign inve/m5t company 7z def9$ 9 section #abig7 o!r ?an a controll$ =eign corporation1 be treat$ z a di/ribution :i* is n a divid5d1 or 7,c7 9 ! case ( any passive =eign inve/m5t company 7z s def9$71 is prop]ly attributable to an unrev]s$ inclusion ( a ,unit$ ,/ates p]son "u section #abif4 ,to ! ext5t provid$ 9 regulations or o!r guidance prescrib$ by ! ,secret>y1 9 ! case ( any controll$ =eign corporation :i* has %>ehold]s :i* are n ,unit$ ,/ates %>ehold]s1 accumulat$ po/-#aihf def]r$ =eign income %all be appropriately r$uc$ by am\nts :i* w\ld be describ$ 9 subp>agraph 7,b77i7 if su* %>ehold]s 7 ,unit$ ,/ates %>ehold]s4 ,su* regulations or o!r guidance may provide a simil> rule = purposes ( subp>agraphs 7,b77ii7 & 7,c74 7#c7 ,po/-#aihf e>n+s & pr(its ,! t]m po/-#aihf e>n+s & pr(its means ! e>n+s & pr(its ( ! =eign corporation 7comput$ 9 accordance ) sections #ifd7;a7 & #ihf7 accumulat$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #aihf1 & det]m9$-- 7,a7 z ( ! close ! taxable ye> ref]r$ to 9 subsection 7a71 & 7,b7 )\t dim9ution by reason ( divid5ds di/ribut$ dur+ su* taxable ye>4 7e7 ,specifi$ =eign corporation 7#a7 ,9 g5]al ,= purposes ( ?is section1 ! t]m specifi$ =eign corporation means-- 7,a7 any controll$ =eign corporation1 & 7,b7 any section #ijb corporation 7z def9$ 9 section #iji7;d77#e774 7#b7 ,application to section #ijb corporations ,= purposes ( section #iea1 a section #ijb corporation 7z s def9$7 %all be treat$ z a controll$ =eign corporation solely = purposes ( tak+ into acc\nt ! subp>t ,f income ( su* corporation "u subsection 7a7 7& = purposes ( apply+ subsection 7f774 7f7 ,det]m9ations ( pro rata %>e ,= purposes ( ?is section1 ! det]m9ation ( any ,unit$ ,/ates %>ehold]'s pro rata %>e ( any am\nt ) respect to any specifi$ =eign corporation %all be det]m9$ "u rules simil> to ! rules ( section #iea7;a77#b7 by treat+ su* am\nt 9 ! same mann] z subp>t ,f income 7& by treat+ su* specifi$ =eign corporation z a controll$ =eign corporation74 7g7 ,disall[ance ( =eign tax cr$it1 etc 7#a7 ,9 g5]al ,no cr$it %all be all[$ "u section #ija = ! applicable p]c5tage ( any taxes paid or accru$ 7or treat$ z paid or accru$7 ) respect to any am\nt = :i* a d$uction is all[$ "u ?is section4 7#b7 ,applicable p]c5tage ,= purposes ( ?is subsection1 ! t]m applicable p]c5tage means ! p]c5tage specifi$ 9 subsection 7c74 7#c7 ,d5ial ( d$uction ,no d$uction %all be all[$ "u ?is *apt] = any tax = :i* cr$it is n all[able "u section #ija by reason ( p>agraph 7#a7 7det]m9$ by treat+ ! taxpay] z hav+ elect$ ! b5efits ( subp>t ,a ( "p ,,iii ( sub*apt] ,n74 7#d7 ,coord9ation ) section #gh ,section #gh %all n apply to any tax = :i* cr$it is n all[able "u section #ija by reason ( p>agraph 7#a74 7h7 ,election ,to ,pay ,liability 9 ,in/allm5ts 7#a7 ,9 g5]al ,9 ! case ( a ,unit$ ,/ates %>ehold] ( a def]r$ =eign income corporation1 su* ,unit$ ,/ates %>ehold] may elect to pay ! net tax liability "u ?is section 9 #h in/allm5ts ( ! foll[+ am\nts3 7,a7 #h p]c5t ( ! net tax liability 9 ! case ( ea* ( ! fir/ #e ( su* in/allm5ts1 7,b7 #ae p]c5t ( ! net tax liability 9 ! case ( ! #f? su* in/allm5t1 7,c7 #bj p]c5t ( ! net tax liability 9 ! case ( ! #g? su* in/allm5t1 & 7,d7 #be p]c5t ( ! net tax liability 9 ! case ( ! #h? su* in/allm5t4 7#b7 ,date = paym5t ( in/allm5ts ,if an election is made "u p>agraph 7#a71 ! fir/ in/allm5t %all be paid on ! due date 7det]m9$ )\t reg>d to any ext5sion ( "t = fil+ ! return7 = ! return ( tax = ! taxable ye> describ$ 9 subsection 7b7 & ea* succe$+ in/allm5t %all be paid on ! due date 7z s det]m9$7 = ! return ( tax = ! taxable ye> foll[+ ! taxable ye> ) respect to :i* ! prec$+ in/allm5t 0 made4 7#c7 ,accel]ation ( paym5t ,if !re is an addition to tax = failure to pay timely assess$ ) respect to any in/allm5t requir$ "u ?is subsection1 a liquidation or sale ( sub/antially all ! assets ( ! taxpay] 7includ+ 9 a title #aa or simil> case71 a cessation ( bus9ess by ! taxpay]1 or any simil> circum/ance1 !n ! unpaid portion ( all rema9+ in/allm5ts %all be due on ! date ( su* ev5t 7or 9 ! case ( a title #aa or simil> case1 ! day be=e ! petition is fil$74 ,! prec$+ s5t5ce %all n apply to ! sale ( sub/antially all ! assets ( a taxpay] to a buy] if su* buy] ent]s into an agreem5t ) ! ,secret>y "u :i* su* buy] is liable = ! rema9+ in/allm5ts due "u ?is subsection 9 ! same mann] z if su* buy] 7 ! taxpay]4 7#d7 ,proration ( defici5cy to in/allm5ts ,if an election is made "u p>agraph 7#a7 to pay ! net tax liability "u ?is section 9 in/allm5ts & a defici5cy has be5 assess$ ) respect to su* net tax liability1 ! defici5cy %all be prorat$ to ! in/allm5ts payable "u p>agraph 7#a74 ,! "p ( ! defici5cy s prorat$ to any in/allm5t ! date = paym5t ( :i* has n arriv$ %all be collect$ at ! same "t z1 & z a "p (1 su* in/allm5t4 ,! "p ( ! defici5cy s prorat$ to any in/allm5t ! date = paym5t ( :i* has arriv$ %all be paid ^u notice & dem& f ! ,secret>y4 ,?is subsection %all n apply if ! defici5cy is due to neglig5ce1 to int5tional disreg>d ( rules & regulations1 or to fraud ) int5t to evade tax4 7#e7 ,election ,any election "u p>agraph 7#a7 %all be made n lat] ?an ! due date = ! return ( tax = ! taxable ye> describ$ 9 subsection 7a7 & %all be made 9 su* mann] z ! ,secret>y may provide4 7#f7 ,net tax liability "u ?is section ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! net tax liability "u ?is section ) respect to any ,unit$ ,/ates %>ehold] is ! excess 7if any7 (-- 7i7 su* taxpay]'s net income tax = ! taxable ye> describ$ 9 subsection 7a71 ov] 7ii7 su* taxpay]'s net income tax = su* taxable ye> det]m9$ )\t reg>d to ?is section4 7,b7 ,net income tax ,! t]m net income tax means ! regul> tax liability r$uc$ by ! cr$its all[$ "u subp>ts ,a1 ,b1 & ,d ( "p ,,iv ( sub*apt] ,a4 7i7 ,inclusion ( ,def]r$ ,=eign ,income ,"u ,?is ,section ,n ,to ,trigg] ,recapture ( ,ov]all ,=eign ,loss ,= purposes ( section #ijd7;f77#a71 9 ! case ( a ,unit$ ,/ates %>ehold] ( a def]r$ =eign income corporation1 su* ,unit$ ,/ates %>ehold]'s taxable income f s\rces )\t ! ,unit$ ,/ates %all be det]m9$ )\t reg>d to ?is section4 7j7 ,regulations ,! ,secret>y may prescribe su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! provisions ( ?is section4 4 7b7 ,cl]ical am5dm5t ,! table ( sections = subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a ( su* ,code is am5d$ by /rik+ ! item relat+ to section #ife & ins]t+ ! foll[+3 ,sec4 #ife4 ,elim9ation ( inc5tive to hold accumulat$ e>n+s & pr(its (f%ore4 4 #ajb4 ,am]ican ,infra/ructure ,fund 7a7 ,am]ican ,infra/ructure ,fund 7#a7 ,9 g5]al ,!re is e/abli%$ a :olly own$ ,gov]nm5t corporation-- 7,a7 :i* %all be call$ ! ,am]ican ,infra/ructure ,fund 7ref]r$ to 9 ?is ,act z ! ,,aif72 7,b7 :i* %all be head$ by ! ,bo>d ( ,tru/ees e/abli%$ "u subsection 7b72 7,c7 :i* may h sep>ate subacc\nts or subsidi>ies = funds us$ to make loans1 bond gu>antees1 & equity inve/m5ts "u ?is section2 7,d7 :i* %all be available to ! ,,aif to pay = ! co/s ( c>ry+ out ?is section1 includ+ ! comp5sation ( ! ,bo>d & o!r employees ( ! ,,aif2 & 7,e7 ! funds ( :i* may be inve/$ by ! ,bo>d 9 su* mann] z ! ,bo>d det]m9es appropriate4 7#b7 ,deposits to aif ,all funds receiv$ f bond issuances1 loan paym5ts1 bond gu>antee fees1 & any o!r funds receiv$ 9 c>ry+ out ?is section %all be held by ,,aif4 7#c7 ,limitations ,! *>t] ( ! ,,aif %all limit its activities to ^? activities describ$ z ! mission ( ! ,bo>d "u subsection 7b77#b74 7#d7 ,ov]sight ,! ,,aif %all regi/] ) ! ,securities & ,ex*ange ,commission & ! ,*airman %all report to ,congress annually z to :e!r ! ,,aif is fulfill+ ! mission ( ! ,bo>d "u subsection 7b77#b74 7#e7 ,treatm5t ( aif 7,a7 ,acc\nts ,title #ca1 ,unit$ ,/ates ,code1 is am5d$ 9 ea* ( sections #iajg7;c77#c7 & #iajh7;d77#b7-- 7i7 by ins]t+ ! ,am]ican ,infra/ructure ,fund1 aft] ! ,regional ,banks = ,coop]atives12 & 7ii7 by /rik+ ^? banks & ins]t+ ^? entities4 7,b7 ,bonds ,section #adi7;b77#c77;,a77i7 is am5d$ by ins]t+ ,am]ican ,infra/ructure ,fund1 aft] ,f$]al ,home ,loan ,mortgage ,corporation14 7b7 ,bo>d ( tru/ees 7#a7 ,9 g5]al ,!re is e/abli%$ a ,bo>d ( ,tru/ees ( ! ,,aif 7ref]r$ to 9 ?is subsection z ! ,bo>d71 :i* %all be compos$ ( #i memb]s :o-- 7,a7 h sub/antial exp]i5ce 9 bond gu>antees or municipal cr$it2 & 7,b7 to ! greate/ ext5t practicable1 h ext5sive exp]i5ce work+ ) municipal cr$it1 risk managem5t1 & infra/ructure f9ance4 7#b7 ,mission ,! mission ( ! ,bo>d is-- 7,a7 to op]ate ! ,,aif & its subsidi>ies to be a l[ co/ provid] ( bond gu>antees1 loans1 & equity inve/m5ts to ,/ate & local gov]nm5ts & infra/ructure provid]s = urban & rural infra/ructure projects t-- 7i7 provide a positive economic impact2 & 7ii7 meet su* o!r /&>ds z ! ,bo>d may develop2 7,b7 to op]ate ! ,,aif 9 a self-su/a9+ mann]2 7,c7 to n h a pr(it motive1 b to seek at all times to pursue its mission ( provid+ l[ co/ bond gu>antees & loans :ile-- 7i7 cov]+ its co/s2 7ii7 ma9ta9+ su* res]ves z may be ne$$2 & 7iii7 apply+ prud5t und]writ+ /&>ds2 7,d7 to only consid] projects put =? by ,/ate & local gov]nm5ts & n to seek projects directly2 & 7,e7 to engage 9 no o!r activities o!r ?an ^? p]mitt$ "u ?is section4 7#c7 ,memb]%ip 7,a7 ,initial memb]s 7i7 ,appo9tm5t ,n lat] ?an #aej days aft] ! date ( ! enactm5t ( ?is ,act1 ! ,presid5t %all appo9t1 ) ! advice & cons5t ( ! ,s5ate1 z memb]s ( ! ,bo>d-- 7,i7 #b individuals f a li/ ( at lea/ #e individuals select$ by ! ,speak] ( ! ,h\se ( ,repres5tatives2 7,,ii7 #b individuals f a li/ ( at lea/ #e individuals select$ by ! ,m9ority ,lead] ( ! ,h\se ( ,repres5tatives2 7,,iii7 #b individuals f a li/ ( at lea/ #e individuals select$ by ! ,majority ,lead] ( ! ,s5ate2 7,,iv7 #b individuals f a li/ ( at lea/ #e individuals select$ by ! ,m9ority ,lead] ( ! ,s5ate2 & 7,v7 #a individual select$ at w by ! ,presid5t4 7ii7 ,submission ( li/s ,ea* ( ! li/s describ$ 9 clause 7i7 %all be submitt$ to ! ,presid5t n lat] ?an #ij days aft] ! date ( ! enactm5t ( ?is ,act4 ,if any ( su* li/s are submitt$ aft] ! date requir$ "u ?is clause1 ! ,presid5t may appo9t ! #b memb]s ( ! ,bo>d :o 7 to be select$ f su* li/ at w4 7,b7 ,/agg]$ t]ms ,! memb]s ( ! ,bo>d appo9t$ pursuant to subp>agraph 7,a77i7 %all s]ve /agg]$ t]ms1 ) #b ea* ( ! initial memb]s ( ! ,bo>d s]v+ = t]ms ( #e1 #f1 #g1 & #h ye>s1 respectively1 & ! initial ,*air select$ "u subp>agraph 7,d7 s]v+ = #i ye>s4 ,! decision ( :i* ,bo>d memb]s1 o!r ?an ! ,*air1 s]ve = :i* initial t]ms %all be made by ! memb]s ( ! ,bo>d draw+ lots4 7,c7 ,additional memb]s 7i7 ,9 g5]al ,except z provid$ 9 subp>agraph 7,a71 if ! t]m ( a memb] ( ! ,bo>d expires or o!rwise becomes vacant1 ! ,presid5t %all appo9t a replacem5t = su* memb]1 ) ! advice & cons5t ( ! ,s5ate1 f among a li/ ( at lea/ #e individuals submitt$ by ! ,bo>d4 7ii7 ,t]m ( s]vice 7,i7 ,9 g5]al ,ea* memb] ( ! ,bo>d appo9t$ to replace a memb] ^: t]m is expir+ %all s]ve = a #g-ye> t]m4 7,,ii7 ,vacancies ,any memb] ( ! ,bo>d appo9t$ to fill a vacancy occurr+ be=e ! expiration ( ! t]m to :i* t memb]'s pr$ecessor 0 appo9t$ %all be appo9t$ only = ! rema9d] ( ! t]m4 7,d7 ,*air ,! memb]s ( ! ,bo>d %all *oose #a memb] to s]ve z ! ,*air ( ! ,bo>d = a t]m ( #g ye>s1 except t ! initial ,*air %all s]ve = a t]m ( #i ye>s1 pursuant to subp>agraph 7,b74 7,e7 ,cont9uation ( s]vice ,ea* memb] ( ! ,bo>d may cont9ue to s]ve aft] ! expiration ( ! t]m ( (fice to :i* t memb] 0 appo9t$ until a successor has be5 appo9t$4 7,f7 ,conflicts ( int]e/ ,no memb] ( ! ,bo>d may h a f9ancial int]e/ 91 or be employ$ by1 a ,qualifi$ ,infra/ructure ,project 7,,qip7 relat$ to assi/ance provid$ "u ?is section4 ,own+ municipal cr$it ( any ,/ate or local gov]nm5t or own+ ! securities ( a div]sifi$ company t engages 9 infra/ructure activities1 provid$ ^? activities con/itute less ?an #bj p]c5t ( ! company's rev5ues1 or inve/+ 9 broadly held inve/m5t funds %all n be deem$ to create a conflict ( int]e/4 ,! ,bo>d may issue regulations to def9e t]ms us$ "u ?is subp>agraph4 7#d7 ,comp5sation ,! memb]s ( ! ,bo>d %all be comp5sat$ at an am\nt to be set by ! ,bo>d1 b "u no circum/ances may su* comp5sation be high] ?an ! rate prescrib$ = level ,,iv ( ! ,executive ,s*$ule "u section #ecae ( title #e1 ,unit$ ,/ates ,code4 7#e7 ,/aff ,! ,bo>d %all employ & set comp5sation = su* /aff z ! ,bo>d det]m9es z is necess>y to c>ry out ! activities & mission ( ! ,,aif1 & su* /aff may be paid )\t reg>d to ! provisions ( *apt] #ea & sub*apt] ,,iii ( *apt] #ec1 ,unit$ ,/ates ,code1 relat+ to classification & ,g5]al ,s*$ule pay rates4 7#f7 ,proc$ures ,! ,bo>d %all e/abli% su* proc$ures z are necess>y to c>ry out ?is section4 7#g7 ,corporate gov]nance /&>ds 7,a7 ,bo>d committees g5]ally ,! ,bo>d %all ma9ta9 all ( ! committees requir$ to be ma9ta9$ by ! bo>d ( directors ( an issu] li/$ on ! ,new ,york ,/ock ,ex*ange z ( ! date ( ! enactm5t ( ?is section4 7,b7 ,risk managem5t committee ,! ,bo>d %all ma9ta9 a risk managem5t committee1 :i* %all-- 7i7 employ additional /aff :o are c]tifi$ by ! ,bo>d z hav+ significant & relevant exp]i5ce 9 insurance und]writ+ & cr$it risk managem5t2 & 7ii7 e/abli% ! risk managem5t policies us$ by ! ,bo>d4 7,c7 ,/&>ds ,! ,bo>d %all1 to ! ext5t practicable1 foll[ all /&>ds ) respect to corporate gov]nance t are requir$ to be foll[$ by ! bo>d ( directors ( an issu] li/$ on ! ,new ,york ,/ock ,ex*ange z ( ! date ( ! enactm5t ( ?is section4 7#h7 ,bi5nial reports ,n less frequ5tly ?an once e #b ye>s1 ! ,bo>d %all produce a report t describes1 ( ! mat]ials1 goods1 & products t 7 us$ to con/ruct1 or to support ! con/ruction (1 qualifi$ infra/ructure projects 7z describ$ 9 subsection 7c77 & receiv$ f9anc+ f ! ,am]ican ,infra/ructure ,fund )9 ! mo/ rec5t #b cal5d> ye>s1 ! p]c5tage ( su* mat]ials1 goods1 & products t 7 creat$1 s\rc$1 or manufactur$ 9 ! ,unit$ ,/ates4 7c7 ,infra/ructure inve/m5t 7#a7 ,entities eligible = assi/ance ,! ,,aif may provide assi/ance to ,/ate & local gov]nm5t entities1 nonpr(it infra/ructure provid]s1 private p>ties1 & public-private p>tn]%ips 7ref]r$ to 9 ?is section z eligible entities7 to help f9ance qualifi$ infra/ructure projects 7ref]r$ to 9 ?is subsection z ,q,i,ps74 7#b7 ,=ms ( assi/ance ,! ,,aif may-- 7,a7 provide bond gu>antees to debt issu$ by eligible entities2 7,b7 make loans1 includ+ subord9at$ loans1 to eligible entities2 & 7,c7 make equity inve/m5ts 9 ,q,i,ps4 7#c7 ,qualifi$ infra/ructure projects ,a project qualifies z a ,,qip "u ?is section if-- 7,a7 ! project is sponsor$ by a ,/ate or local gov]nm5t2 7,b7 ! infra/ructure is1 or w be1 own$ by a ,/ate or local gov]nm5t2 7,c7 ! project involves ! con/ruction1 ma9t5ance1 improvem5t1 or repair ( a transportation1 en]gy1 wat]1 communications1 or educational facility2 7,d7 ! recipi5t ( bond gu>antees1 loans1 equity inve/m5ts1 or any o!r innovative f9anc+ te*nique au?oriz$ "u ?is ,act provides writt5 assurances prescrib$ by ! ,,aif t ! project w be p]=m$ 9 compliance ) ! requirem5ts ( all ,f$]al laws t w\ld o!rwise apply to simil> projects to :i* ! ,unit$ ,/ates is a p>ty2 & 7,e7 9 ! case ( a public transportation capital project z def9$ 9 section #ecjb ( title #di1 ,unit$ ,/ates ,code1 ! recipi5t ( bond gu>antees1 loans1 equity inve/m5ts1 or any o!r innovative f9anc+ te*nique au?oriz$ "u ?is ,act complies ) ! grant requirem5ts applicable to grants made "u section #ecji ( su* title4 7#d7 ,application = assi/ance 7,a7 ,9 g5]al ,a ,/ate or local gov]nm5t t wi%es to receive a loan or bond gu>antee "u ?is section %all submit an application to ! ,bo>d 9 su* =m & mann] & conta9+ su* in=mation z ! ,bo>d may require4 7,b7 ,requirem5t = public sponsor%ip ( private entities ,a private entity may only receive a bond gu>antee1 loan1 or equity inve/m5t "u ?is section if ! ,/ate or local gov]nm5t = ! jurisdiction 9 :i* ! nonpr(it infra/ructure provid] or private p>tn] is locat$ submits an application pursuant to subp>agraph 7,a7 on behalf ( su* nonpr(it infra/ructure provid] or private p>tn]4 7#e7 ,limitations on s+le /ate aw>ds 7,a7 ,annual limitation ,! ,bo>d %all set an annual limit1 z a p]c5tage ( total assi/ance provid$ "u ?is section dur+ a ye>1 on ! am\nt ( assi/ance a s+le ,/ate 7includ+ local gov]nm5ts & o!r infra/ructure provid]s )9 su* ,/ate7 may receive 9 assi/ance provid$ "u ?is section4 7,b7 ,cumulative limitation ,! ,bo>d %all set a limit1 z a p]c5tage ( total assi/ance provid$ "u ?is section out/&+ at any "o "t1 on ! am\nt ( assi/ance a s+le ,/ate 7includ+ local gov]nm5ts & o!r infra/ructure provid]s )9 su* ,/ate7 may receive 9 assi/ance provid$ "u ?is section4 7#f7 ,loan specifications ,loans made "u ?is section %all h su* maturity & c>ry su* int]e/ rate z ! ,bo>d det]m9es appropriate4 7#g7 ,bond gu>antee ,! ,bo>d %all *>ge su* fees = ,bond gu>antees made "u ?is section z ! ,bo>d det]m9es appropriate4 7#h7 ,equity inve/m5ts ,) respect to a ,,qip1 ! am\nt ( an equity inve/m5t made by ! ,,aif 9 su* ,,qip may n exce$ #bj p]c5t ( ! total co/ ( ! ,,qip4 7#i7 ,public-private p>tn]%ip requirem5ts ,at lea/ #ce p]c5t ( ! assi/ance provid$ "u ?is section %all be provid$ to ,q,i,ps = :i* at lea/ #aj p]c5t ( ! f9anc+ = su* ,q,i,ps comes f private debt or equity4 7#aj7 ,prohibition on pr9cipal =giv5ess ,) respect to a loan made "u ?is section1 ! ,bo>d may n =give any am\nt ( pr9cipal on su* loan4 7d7 ,def9itions ,= purposes ( ?is section3 7#a7 ,infra/ructure provid] ,! t]m infra/ructure provid] means an entity t seeks to f9ance a ,,qip4 7#b7 ,secret>y ,! t]m ,secret>y means ! ,secret>y ( ! ,treasury4 7#c7 ,/ate ,! t]m ,/ate means ea* ( ! sev]al ,/ates1 ! ,di/rict ( ,columbia1 any t]ritory or possession ( ! ,unit$ ,/ates1 & ea* f$]ally recogniz$ ,indian tribe4 7e7 ,appropriation ,out ( money 9 ! ,treasury n o!rwise appropriat$1 !re is h]eby appropriat$ #ej1jjj1jjj1jjj to ! ,am]ican ,infra/ructure ,fund4 ,am\nts appropriat$ "u ?is subsection %all rema9 available )\t fiscal ye> limitation4 #ajc4 ,d$ication ( rema9+ rev5ues to highway tru/ fund 7a7 ,9 g5]al ,section #iejc7;f7 is am5d$ by r$esignat+ p>agraphs 7#e7 ?r\gh 7#aj7 z p>agraphs 7#f7 ?r\gh 7#aa71 respectively1 & by ins]t+ aft] p>agraph 7#d7 ! foll[+ new p>agraph3 7#e7 ,appropriation ( rev5ues attributable to section #ife 7,a7 ,initial appropriation ,out ( money 9 ! ,treasury n o!rwise appropriat$1 !re is h]eby appropriat$ #ajj1jjj1jjj1jjj to ! ,highway ,tru/ ,fund4 7,b7 ,rema9+ rev5ues 7i7 ,9 g5]al ,out ( money 9 ! ,treasury n o!rwise appropriat$1 !re are h]eby appropriat$ to ! ,highway ,tru/ ,fund ! excess (-- 7,i7 am\nts equival5t to ! aggregate net tax liabilities "u section #ife 7z def9$ 9 su* section7 receiv$ 9 ! ,treasury1 ov] 7,,ii7 #aej1jbe1jjj1jjj4 7ii7 ,additional transf]s only aft] rev5ues equal+ initial transf]s h be5 receiv$ 9 ! ,treasury ,= purposes ( apply+ section #ifja to clause 7i71 no transf] %all be made "u clause 7i7 until ! ,secret>y e/imates t ! am\nt describ$ 9 clause 7i77,i7 has exce$$ ! am\nt describ$ 9 clause 7i77,,ii74 4 7b7 ,transf]s to ,mass ,transit ,acc\nt ,section #iejc7;e77#b7 ( su* ,code is am5d$ by /rik+ ! mass transit portion & ins]t+ #bj p]c5t ( ! am\nts appropriat$ to ! ,highway ,tru/ ,fund "u subsection 7f77#e71 & ! mass transit portion4 #ajd4 ,highway ,tru/ ,fund ,solv5cy ,commission 7a7 ,e/abli%m5t ,!re is e/abli%$ 9 ! legislative bran* a commission to be kn[n z ! ,highway ,tru/ ,fund ,solv5cy ,commission 79 ?is section ref]r$ to z ! ,commission74 7b7 ,duty ( ! ,commission ,n lat] ?an #a ye> aft] ! initial meet+ ( ! ,commission1 ! ,commission %all transmit to ,congress a writt5 report t includes recomm5dations & propos$ legislation = a*iev+ long-t]m solv5cy ( ! ,highway ,tru/ ,fund4 7c7 ,memb]s 7#a7 ,numb] & appo9tm5t ,! ,commission %all be compos$ ( #i memb]s4 ,( ! memb]s ( ! ,commission-- 7,a7 #a memb] %all be appo9t$ by ! ,presid5t ( ! ,unit$ ,/ates2 7,b7 #a memb] %all be appo9t$ by ! *airman ( ! ,committee on ,f9ance ( ! ,s5ate2 7,c7 #a memb] %all be appo9t$ by ! rank+ m9ority memb] ( ! ,committee on ,f9ance ( ! ,s5ate2 7,d7 #a memb] %all be appo9t$ by ! *airman ( ! ,committee on ,ways & ,means ( ! ,h\se ( ,repres5tatives2 7,e7 #a memb] %all be appo9t$ by ! rank+ m9ority memb] ( ! ,committee on ,ways & ,means ( ! ,h\se ( ,repres5tatives2 7,f7 #a memb] %all be appo9t$ by ! *airman ( ! ,committee on ,environm5t & ,public ,works ( ! ,s5ate2 7,g7 #a memb] %all be appo9t$ by ! rank+ m9ority memb] ( ! ,committee on ,environm5t & ,public ,works ( ! ,s5ate2 7,h7 #a memb] %all be appo9t$ by ! *airman ( ! ,committee on ,transportation & ,infra/ructure ( ! ,h\se ( ,repres5tatives2 & 7,i7 #a memb] %all be appo9t$ by ! rank+ m9ority memb] ( ! ,committee on ,transportation & ,infra/ructure ( ! ,h\se ( ,repres5tatives4 7#b7 ,tim+ ( appo9tm5ts ,ea* ( ! appo9tm5ts made "u p>agraph 7#a7 %all be made n lat] ?an #de days aft] ! date ( ! enactm5t ( ?is ,act4 7#c7 ,t]ms2 vacancies ,ea* memb] %all be appo9t$ = ! life ( ! ,commission1 & a vacancy 9 ! ,commission %all be fill$ 9 ! mann] 9 :i* ! orig9al appo9tm5t 0 made4 7#d7 ,comp5sation 7,a7 ,9 g5]al ,memb]s ( ! ,commission %all s]ve )\t pay4 7,b7 ,travel exp5ses ,ea* memb] %all receive travel exp5ses1 includ+ p] diem 9 lieu ( subsi/5ce1 9 accordance ) applicable provisions "u sub*apt] ,i ( *apt] #eg ( title #e1 ,unit$ ,/ates ,code4 7d7 ,op]ation & p[]s ( ! ,commission 7#a7 ,*air ,! *airp]son ( ! ,commission %all be elect$ by ! memb]s ( ! ,commission4 7#b7 ,meet+s ,! ,commission %all meet n lat] ?an #cj days aft] ! memb]s ( ! ,commission h be5 appo9t$1 & at su* times !reaft] z ! *airp]son %all det]m9e4 7#c7 ,rules ( proc$ure ,! *airp]son %all1 ) ! approval ( a majority ( ! memb]s ( ! ,commission1 e/abli% writt5 rules ( proc$ure = ! ,commission1 :i* %all include a quorum requirem5t to conduct ! bus9ess ( ! ,commission4 7#d7 ,he>+s ,! ,commission may1 = ! purpose ( c>ry+ out ?is section1 hold he>+s1 sit & act at times & places1 take te/imony1 & receive evid5ce z ! ,commission consid]s appropriate4 7#e7 ,obta9+ (ficial data ,! ,commission may secure directly f any dep>tm5t or ag5cy ( ! ,unit$ ,/ates1 includ+ ! ,congressional ,budget ,(fice & ! ,gov]nm5t ,acc\ntability ,(fice1 any in=mation or te*nical assi/ance necess>y to enable x to c>ry out ?is section4 ,^u reque/ ( ! *airp]son ( ! ,commission1 ! head ( t dep>tm5t or ag5cy %all furni% t in=mation or te*nical assi/ance to ! ,commission4 7#f7 ,contract au?ority ,! ,commission may contract ) & comp5sate gov]nm5t & private ag5cies or p]sons = any purpose necess>y to enable x to c>ry out ?is section4 7#g7 ,mails ,! ,commission may use ! ,unit$ ,/ates mails 9 ! same mann] & "u ! same conditions z o!r dep>tm5ts & ag5cies ( ! ,unit$ ,/ates4 7e7 ,p]sonnel 7#a7 ,director ,! ,commission %all h a ,director :o %all be appo9t$ by ! ,commission4 ,! ,director %all be paid at a rate ( pay equival5t to ! annual rate ( basic pay = a comp>able position paid "u ! ,executive ,s*$ule1 subject to ! approval ( ! *airp]son ( ! ,commission4 7#b7 ,/aff ,! ,director may appo9t & fix ! pay ( additional /aff z ! ,director consid]s appropriate4 7#c7 ,exp]ts & consultants ,! ,commission may procure tempor>y & int]mitt5t s]vices "u section #caji7;b7 ( title #e1 ,unit$ ,/ates ,code1 b at rates = individuals n to exce$ ! daily equival5t ( ! annual rate ( basic pay = a comp>able position paid "u ! ,executive ,s*$ule4 7#d7 ,/aff ( ,f$]al ag5cies ,^u reque/ ( ! ,commission1 ! head ( any ,f$]al dep>tm5t or ag5cy may detail1 )\t reimbursem5t1 any ( ! p]sonnel ( t dep>tm5t or ag5cy to ! ,commission to assi/ x 9 c>ry+ out its duties "u ?is section4 7#e7 ,adm9i/rative support s]vices ,^u ! reque/ ( ! ,commission1 ! ,adm9i/rator ( ,g5]al ,s]vices %all provide to ! ,commission1 on a reimbursable basis1 ! adm9i/rative support s]vices necess>y = ! ,commission to c>ry out its responsibilities "u ?is section4 7f7 ,t]m9ation ,! ,commission %all t]m9ate n lat] ?an #fj days aft] ! submission ( ! report describ$ 9 subsection 7b74 7g7 ,au?orization ( appropriations ,!re is au?oriz$ to be appropriat$ su* sums z may be necess>y to c>ry out ?is section4 7h7 ,exp$it$ consid]ation ( ,commission recomm5dations 7#a7 ,exp$it$ consid]ation 7,a7 ,introduction ( approval bill ,! majority lead] ( ea* ,h\se or a designee %all 7by reque/7 introduce an approval bill z describ$ 9 p>agraph 7#c7 n lat] ?an ! ?ird day ( session ( t ,h\se aft] ! date ( receipt ( ! report transmitt$ to ! ,congress "u subsection 7b74 7,b7 ,consid]ation 9 ! ,h\se ( ,repres5tatives 7i7 ,ref]ral & report+ ,any committee ( ! ,h\se ( ,repres5tatives to :i* an approval bill is ref]r$ %all report x to ! ,h\se )\t am5dm5t n lat] ?an ! ?ird legislative day aft] ! date ( its introduction4 ,if a committee fails to report ! bill )9 t p]iod or ! ,h\se has adopt$ a concurr5t resolution provid+ = adj\rnm5t s9e die at ! end ( a ,congress1 su* committee %all be automatically dis*>g$ f fur!r consid]ation ( ! bill & x %all be plac$ on ! appropriate cal5d>4 7ii7 ,proce$+ to consid]ation ,n lat] ?an #c legislative days aft] ! approval bill is report$ or a committee has be5 dis*>g$ f fur!r consid]ation !re(1 x %all be 9 ord] to move to proce$ to consid] ! approval bill 9 ! ,h\se4 ,su* a motion %all be 9 ord] only at a "t designat$ by ! ,speak] 9 ! legislative s*$ule )9 two legislative days aft] ! day on :i* ! propon5t ann\nces an int5tion to ! ,h\se to (f] ! motion provid$ t su* notice may n be giv5 until ! approval bill is report$ or a committee has be5 dis*>g$ f fur!r consid]ation !re(4 ,su* a motion %all n be 9 ord] aft] ! ,h\se has dispos$ ( a motion to proce$ ) respect to t special message4 ,! previ\s "q %all be consid]$ z ord]$ on ! motion to its adoption )\t int]v5+ motion4 ,a motion to reconsid] ! vote by :i* ! motion is dispos$ ( %all n be 9 ord]4 7iii7 ,consid]ation ,if ! motion to proce$ is agre$ to1 ! ,h\se %all imm$iately proce$ to consid] ! approval bill 9 ! ,h\se )\t int]v5+ motion4 ,! approval bill %all be consid]$ z read4 ,all po9ts ( ord] aga9/ ! approval bill & aga9/ its consid]ation are waiv$4 ,! previ\s "q %all be consid]$ z ord]$ on ! approval bill to its passage )\t int]v5+ motion except #d h\rs ( debate equally divid$ & controll$ by ! propon5t & an oppon5t & "o motion to limit debate on ! bill4 ,a motion to reconsid] ! vote on passage ( ! approval bill %all n be 9 ord]4 7,c7 ,consid]ation 9 ! ,s5ate 7i7 ,committee action ,! appropriate committee ( ! ,s5ate %all report )\t am5dm5t ! approval bill n lat] ?an ! ?ird session day aft] introduction4 ,if a committee fails to report ! approval bill )9 t p]iod or ! ,s5ate has adopt$ a concurr5t resolution provid+ = adj\rnm5t s9e die at ! end ( a ,congress1 ! ,committee %all be automatically dis*>g$ f fur!r consid]ation ( ! approval bill & x %all be plac$ on ! appropriate cal5d>4 7ii7 ,motion to proce$ ,n lat] ?an #c session days aft] ! approval bill is report$ 9 ! ,s5ate or ! committee has be5 dis*>g$ !re(1 x %all be 9 ord] = any ,s5ator to move to proce$ to consid] ! approval bill 9 ! ,s5ate4 ,! motion %all be decid$ )\t debate & ! motion to reconsid] %all be deem$ to h be5 laid on ! table4 ,su* a motion %all n be 9 ord] aft] ! ,s5ate has dispos$ ( a prior motion to proce$ ) respect to ! approval bill4 7iii7 ,consid]ation ,if a motion to proce$ to ! consid]ation ( ! approval bill is agre$ to1 ! ,s5ate %all imm$iately proce$ to consid]ation ( ! approval bill )\t int]v5+ motion1 ord]1 or o!r bus9ess1 & ! approval bill %all rema9 ! unf9i%$ bus9ess ( ! ,s5ate until dispos$ (4 ,consid]ation on ! bill 9 ! ,s5ate "u ?is subsection1 & all debatable motions & appeals 9 connection !re)1 %all n exce$ #aj h\rs equally divid$ 9 ! usual =m4 ,all po9ts ( ord] aga9/ ! approval bill or its consid]ation are waiv$4 ,consid]ation 9 ! ,s5ate on any debatable motion or appeal 9 connection ) ! approval bill %all be limit$ to n m ?an #a h\r4 ,a motion to po/pone1 or a motion to proce$ to ! consid]ation ( o!r bus9ess1 or a motion to recommit ! approval bill is n 9 ord]4 ,a motion to reconsid] ! vote by :i* ! approval bill is agre$ to or disagre$ to is n 9 ord]4 7,d7 ,am5dm5ts prohibit$ ,no am5dm5t to1 or motion to /rike a provision f1 an approval bill consid]$ "u ?is section %all be 9 ord] 9 ei!r ! ,s5ate or ! ,h\se ( ,repres5tatives4 7,e7 ,coord9ation ) action by o!r ,h\se 7i7 ,9 g5]al ,if1 be=e pass+ ! approval bill1 "o ,h\se receives f ! o!r a bill-- 7,i7 ! approval bill ( ! o!r ,h\se %all n be ref]r$ to a committee2 & 7,,ii7 ! proc$ure 9 ! receiv+ ,h\se %all be ! same z if no approval bill _h be5 receiv$ f ! o!r ,h\se until ! vote on passage1 :5 ! bill receiv$ f ! o!r ,h\se %all supplant ! approval bill ( ! receiv+ ,h\se4 7ii7 ,exception ,?is p>agraph %all n apply to ! ,h\se ( ,repres5tatives4 7#b7 ,limitation ,p>agraph 7#a7 %all apply only to an approval bill describ$ 9 p>agraph 7#c7 & introduc$ pursuant to p>agraph 7#a77;,a74 7#c7 ,approval bill describ$ ,= purposes ( p>agraph 7#a71 a bill describ$ 9 ?is p>agraph is a bill-- 7,a7 :i* consi/s ( ! propos$ legislation :i* is includ$ 9 su* report to c>ry out ! recomm5dations made by ! ,commission 9 ! report2 & 7,b7 ! title ( :i* is z foll[s3 ,a bill to c>ry out ! recomm5dations ( ! ,highway ,tru/ ,fund ,solv5cy ,commission44 7#d7 ,ext5d$ "t p]iod ,if ,congress adj\rns at ! end ( a ,congress & an approval bill 0 !n p5d+ 9 ei!r ,h\se ( ,congress or a committee !re(1 or an approval bill _h n yet be5 introduc$ ) respect to a special message1 !n )9 ! fir/ #c days ( session ( ! next ,congress1 ! ,commission %all transmit to ,congress an additional special message conta9+ all ( ! in=mation 9 ! previ\s1 p5d+ special message4 ,an approval bill may be introduc$ )9 ! fir/ five days ( session ( su* next ,congress & %all be treat$ z an approval bill "u ?is section1 & ! "t p]iods describ$ 9 subp>agraphs 7,b7 & 7,c7 ( p>agraph 7#a7 %all comm5ce on ! day ( introduction ( t approval bill4 #aje4 ,regional infra/ructure accel]ator pilot program 7a7 ,9 g5]al ,n lat] ?an #ij days aft] ! date ( enactm5t ( ?is ,act1 ! ,secret>y ( ,transportation %all e/abli% a regional infra/ructure accel]ator pilot program 79 ?is section ref]r$ to z ! ,program7 to assi/ c]ta9 ,/ate1 local1 & regional public entities to develop improv$ priorities & f9anc+ /rategies = ! accel]at$ developm5t ( cov]$ infra/ructure projects4 7b7 ,accel]ator e/abli%m5t au?ority 7#a7 ,9 g5]al ,9 c>ry+ out ! ,program1 ! ,secret>y is au?oriz$ to e/abli% regional infra/ructure accel]ators t w-- 7,a7 s]ve a def9$ geographic area2 & 7,b7 act z a res\rce to ,/ate1 local1 & regional public entities 9 t area 9 accordance ) ?is section4 7#b7 ,applications ,to be eligible = a regional infra/ructure accel]ator "u ! ,program1 ,/ate1 local1 & regional public entities %all submit to ! ,secret>y an application propos+ an accel]ator at su* "t1 9 su* =m1 & conta9+ su* in=mation z ! ,secret>y det]m9es is appropriate4 7#c7 ,numb] ,to ! ext5t practicable1 ! ,secret>y %all e/abli% at lea/ #e regional infra/ructure accel]ators "u ! ,program4 7#d7 ,geographic div]sity ,9 e/abli%+ regional infra/ructure accel]ators "u ! ,program1 ! ,secret>y %all consid] ! ne$ = geographic div]sity among su* accel]ators4 7c7 ,accel]ator composition 7#a7 ,9 g5]al ,ea* regional infra/ructure accel]ator e/abli%$ "u subsection 7b7 %all include a memb]%ip compos$ ( at lea/ ! foll[+3 7,a7 ,a repres5tative ( ea* ,/ate1 local1 or regional public entity 9 ! area s]v$ by ! accel]ator t p>ticipat$ 9 ! application t result$ 9 ! e/abli%m5t ( ! accel]ator4 7,b7 ,a repres5tative ( a ,/ate1 local1 or regional public entity locat$ outside ! area s]v$ by ! accel]ator ) exp]i5ce 9 innovative infra/ructure f9anc+4 7,c7 ,a repres5tative ( a f9anc+ entity t int5ds to f9ance cov]$ infra/ructure projects 9 ! area s]v$ by ! accel]ator4 7,d7 ,a repres5tative ( a con/ruction or developm5t entity t int5ds to develop cov]$ infra/ructure projects 9 ! area s]v$ by ! accel]ator4 7,e7 ,a repres5tative ( ! ,dep>tm5t ( ,transportation4 7,f7 ,a repres5tative ( ! ,dep>tm5t ( ! ,treasury4 7,g7 ,a repres5tative ( ! ,environm5tal ,protection ,ag5cy4 7,h7 ,a repres5tative ( ano!r ,f$]al dep>tm5t or ag5cy ) jurisdiction ov] cov]$ infra/ructure projects int5d$ = ! area s]v$ by ! accel]ator4 7#b7 ,local repres5tation requirem5t ,at lea/ #fj p]c5t ( ! memb]%ip ( ea* regional infra/ructure accel]ator e/abli%$ "u subsection 7b7 %all be compos$ ( repres5tatives ( ,/ate1 local1 & regional public entities locat$ 9 ! area s]v$ by ! accel]ator4 7#c7 ,div]se p]spectives ,ea* regional infra/ructure accel]ator e/abli%$ "u subsection 7b7 %all h a memb]%ip t repres5ts a div]se set ( public & private p]spectives4 7d7 ,regional infra/ructure accel]ation plan ,ea* regional infra/ructure accel]ator e/abli%$ "u subsection 7b7 %all develop & implem5t a regional infra/ructure accel]ation plan = ! area s]v$ by ! accel]ator t-- 7#a7 describes h[ ! accel]ator w promote inve/m5t 9 cov]$ infra/ructure projects1 includ+ ?r\gh-- 7,a7 provid+ guidance & fe$back to ,/ate1 local1 & regional public entities ) respect to infra/ructure priorities1 f9anc+ /rategies1 & o!r matt]s relat+ to su* projects2 7,b7 evaluat+ & promot+ innovative f9anc+ me?ods2 7,c7 connect+ s\rces ( f9anc+ to ! public sponsors ( su* projects2 7,d7 e/abli%+ /&>ds to measure ! life-cycle impacts ( inve/m5ts 9 su* projects2 & 7,e7 provid+ te*nical assi/ance & in=mation on be/ practices ) respect to su* projects f pr$evelopm5t activities ?r\gh ma9t5ance2 7#b7 assesses regional & multimodal approa*es to advanc+ innovative inve/m5t 9 cov]$ infra/ructure projects2 & 7#c7 develops /rategies =-- 7,a7 transp>5cy ) respect to cov]$ infra/ructure project analysis to ensure ! public int]e/ is protect$2 7,b7 pr$evelopm5t capital programs to facilitate ! creation ( a catalog ( cov]$ infra/ructure projects available = inve/m5t2 7,c7 ! bundl+ ( small]-scale & rural projects into project pools = inve/m5t2 & 7,d7 ! multimodal integration ( transportation projects4 7e7 ,program t]m9ation ,! ,program %all t]m9ate on ! date t is #aj ye>s aft] ! date on :i* ! ,program is e/abli%$ "u subsection 7a74 7f7 ,cov]$ infra/ructure project def9$ ,9 ?is section1 ! t]m cov]$ infra/ructure project means a project-- 7#a7 sponsor$ by a ,/ate1 local1 or regional public entity2 & 7#b7 t involves ! con/ruction1 ma9t5ance1 improvem5t1 or repair ( a transportation1 en]gy1 wat]1 communications1 or educational facility t is1 or w be1 own$ by su* an entity4 7g7 ,appropriation ,out ( money 9 ! ,treasury n o!rwise appropriat$1 !re is h]eby appropriat$ #be1jjj1jjj to ! ,dep>tm5t ( ,transportation to c>ry out ! ,program4 ,am\nts appropriat$ "u ?is subsection %all rema9 available )\t fiscal ye> limitation4 ,,ii ,deadl9e = int]national tax re=m #bja4 #ah-mon? deadl9e = int]national tax re=m ,not)/&+ any provision ( title ,,iii1 ! provisions (1 & am5dm5ts made by1 title ,,iii %all n take effect if a bill :i* re=ms ! corporate int]national tax sy/em by elim9at+ ! inc5tive to hold e>n+s 9 l[-tax =eign jurisdictions is enact$ into law dur+ ! #ah-mon? p]iod :i* beg9s on ! date ( ! enactm5t ( ?is ,act4 ,,iii ,fallback int]national tax re=m #cjj4 ,g5]al effective date ( title ,= purposes ( ?is title1 ! t]m applicable date means ! date :i* is #ah mon?s aft] ! date ( ! enactm5t ( ?is ,act4 ,a ,re=m ( taxation ( income e>n$ by controll$ =eign corporations ,i ,g5]al provisions #cja4 ,modifications to subp>t ,f income 7a7 ,9 g5]al ,subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ sections #ieb ?r\gh #ief & ins]t+ ! foll[+3 #ieb4 ,subp>t ,f income def9$ 7a7 ,9 g5]al ,= purposes ( ?is subp>t1 ! t]m subp>t ,f income means1 ) respect to any controll$ =eign corporation1 ! sum (-- 7#a7 ! inclusion p]c5tage ( ! corporation's modifi$ active income1 plus 7#b7 #ajj p]c5t ( ! corporation's modifi$ nonactive income4 7b7 ,modifi$ active income 7#a7 ,9 g5]al ,! t]m modifi$ active income means1 ) respect to any controll$ =eign corporation1 ! excess 7if any7 (-- 7,a7 ! corporation's active =eign m>ket income1 ov] 7,b7 ! am\nt ( ! r$uction "u subsection 7e7 = d$uctions prop]ly allocable to su* income4 7#b7 ,r$uction = c]ta9 losses 7,a7 ,9 g5]al ,! modifi$ active income det]m9$ "u p>agraph 7#a7 = any taxable ye> %all be r$uc$ 7b n bel[ z]o7-- 7i7 fir/ by any active =eign m>ket loss = any prior taxable ye>1 & 7ii7 !n by any qualifi$ loss = su* taxable ye> 7or = any prior taxable ye> to ! ext5t provid$ 9 subsection 7c77#c77;,b774 7,b7 ,limitation ,an active =eign m>ket loss or qualifi$ loss = any prior taxable ye> %all only be tak5 into acc\nt "u subp>agraph 7,a7-- 7i7 if ! prior taxable ye> is a taxable ye> :i* beg9s on or aft] ! applicable date 7z def9$ 9 section #cjj ( ! ,infra/ructure #b4j ,act71 & = :i* ! controll$ =eign corporation 0 a controll$ =eign corporation1 & 7ii7 to ! ext5t su* loss has n be5 previ\sly tak5 into acc\nt "u ?is subsection4 7#c7 ,active =eign m>ket loss ,! t]m active =eign m>ket loss means1 ) respect to any taxable ye>1 ! am\nt by :i* ! am\nt det]m9$ "u p>agraph 7#a77;,b7 exce$s ! am\nt det]m9$ "u p>agraph 7#a77;,a74 7c7 ,modifi$ nonactive income 7#a7 ,9 g5]al ,! t]m modifi$ nonactive income means1 ) respect to any controll$ =eign corporation1 ! excess 7if any7 (-- 7,a7 ! corporation's gross income det]m9$ )\t reg>d to active =eign m>ket income1 ov] 7,b7 ! am\nt ( ! r$uction "u subsection 7e7 = d$uctions prop]ly allocable to su* gross income4 7#b7 ,r$uction = qualifi$ losses ,! am\nt det]m9$ "u p>agraph 7#a7 = any taxable ye> %all be r$uc$ 7b n bel[ z]o7 by any qualifi$ loss = any prior taxable ye> beg9n+ on or aft] ! applicable date 7z def9$ 9 section #cjj ( ! ,infra/ructure #b4j ,act71 = :i* ! controll$ =eign corporation 0 a controll$ =eign corporation1 b only to ! ext5t su* loss has n be5 previ\sly tak5 into acc\nt "u subsection 7b77#b7 or ?is subsection4 7#c7 ,qualifi$ loss ,= purposes ( ?is section-- 7,a7 ,9 g5]al ,! t]m qualifi$ loss means1 ) respect to any taxable ye>1 ! am\nt by :i* ! am\nt det]m9$ "u p>agraph 7#a77;,b7 exce$s ! am\nt det]m9$ "u p>agraph 7#a77;,a74 7,b7 ,ord]+ rule = losses c>ri$ f prior taxable ye>s ,9 ! case ( any qualifi$ losses c>ri$ to a taxable ye> f #a or m prior taxable ye>s1 su* losses %all be tak5 into acc\nt-- 7i7 fir/ "u p>agraph 7#b71 & 7ii7 !n "u subsection 7b77#b77;,b7 to ! ext5t su* losses exce$ ! am\nt det]m9$ "u p>agraph 7#a74 7d7 ,inclusion p]c5tage ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m inclusion p]c5tage means #bj p]c5t increas$ by ! numb] ( p]c5tage po9ts 7if any7 det]m9$ "u p>agraph 7#b74 7#b7 ,additional inclusion = e>n+s n subject to ,,oecd av]age =eign tax ,! numb] ( p]c5tage po9ts det]m9$ "u ?is p>agraph ) respect to any controll$ =eign corporation = any taxable ye>1 is ! numb] ( p]c5tage po9ts 7n less ?an z]o nor m ?an #ae7 :i* be>s ! same ratio to #ae z-- 7,a7 ! numb] ( p]c5tage po9ts by :i* #be p]c5t exce$s ! aggregate =eign rate ( tax impos$ on ! modifi$ active income ( su* controll$ =eign corporation = su* taxable ye>1 be>s to 7,b7 #be4 7e7 ,exclusion ( ,unit$ ,/ates income ,= purposes ( ?is subp>t1 any item ( income ( ! controll$ =eign corporation :i* is effectively connect$ ) ! conduct by su* corporation ( a trade or bus9ess )9 ! ,unit$ ,/ates %all n be tak5 into acc\nt 9 comput+ ! subp>t ,f income ( su* corporation unless su* item is exempt f taxation 7or is subject to a r$uc$ rate ( tax7 pursuant to a treaty obligation ( ! ,unit$ ,/ates4 ,= purposes ( ?is subsection1 any exemption 7or r$uctions7 ) respect to ! tax impos$ by section #hhd %all n be tak5 into acc\nt4 7f7 ,d$uctions ,= purposes ( subsections 7b77#a77;,b7 & 7c77#a77;,b71 ! active =eign m>ket income1 & gross income o!r ?an active =eign m>ket income1 ( a controll$ =eign corporation %all ea* be r$uc$1 "u regulations prescrib$ by ! ,secret>y1 by any d$uctions 7includ+ taxes7 ( su* corporation prop]ly allocable to items ( income tak5 into acc\nt 9 comput+ su* income4 #iec4 ,active =eign m>ket income 7a7 ,active =eign m>ket income def9$ ,= purposes ( ?is subp>t1 ! t]m active =eign m>ket income means1 ) respect to any controll$ =eign corporation1 ! aggregate ( all items ( income :i* are-- 7#a7 attributable to economically significant activities ) respect to a qualifi$ trade or bus9ess1 & 7#b7 d]iv$ 9 connection )-- 7,a7 prop]ty :i* is sold1 ex*ang$1 or o!rwise dispos$ ( = use1 consumption1 or disposition outside ( ! ,unit$ ,/ates1 or 7,b7 s]vices :i* are provid$ outside ( ! ,unit$ ,/ates ) respect to p]sons or prop]ty locat$ outside ( ! ,unit$ ,/ates4 7b7 ,treatm5t ( passive income 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! t]m active =eign m>ket income %all n include ! passive income 7z def9$ 9 section #ied7 ( a controll$ =eign corporation4 7#b7 ,active =eign m>ket income includes c]ta9 income ,! t]m active =eign m>ket income %all include-- 7,a7 if ! controll$ =eign corporation or a qualifi$ bus9ess unit ( ! corporation is an eligible controll$ =eign corporation 7z def9$ 9 section #ied7;c771 any item ( income ( ! corporation or unit :i* is qualifi$ bank+ or f9anc+ income 7z s def9$71 7,b7 if ! controll$ =eign corporation or a qualifi$ bus9ess unit ( ! corporation is a qualify+ insurance company 7z def9$ 9 section #ied7;d77 or a qualify+ insurance company bran* 7z s def9$71 any item ( income ( ! corporation or unit :i* is qualifi$ insurance income 7z s def9$71 7,c7 any item ( income :i* is r5ts or royalties d]iv$ f ! own]%ip & op]ation 7includ+ leas+7 ( real or p]sonal prop]ty :i* is n treat$ z passive income "u section #ied7;a77#b77;,a71 & 7,d7 9 ! case ( a regul> deal] 9 prop]ty :i* is prop]ty describ$ 9 section #ied7;a77#a77;,b71 =w>d contracts1 option contracts1 or simil> f9ancial in/rum5ts 7includ+ notional pr9cipal contracts & all in/rum5ts ref]5c$ to commodities71 any item ( income f any transaction 7includ+ h$g+ transactions & transactions involv+ physical settlem5t7 ent]$ into 9 ! ord9>y c\rse ( su* deal]'s trade or bus9ess z su* a deal]4 7#c7 ,ga9 or loss f sales ( /ock 9 o!r ,c,f,cs ,if a controll$ =eign corporation sells1 ex*anges1 or o!rwise disposes ( /ock 9 ano!r controll$ =eign corporation :i* is a relat$ p]son to ! sell+ corporation-- 7,a7 ga9 f su* sale1 ex*ange1 or disposition %all be treat$ z active =eign m>ket income to ! ext5t t su* ga9 w\ld h be5 exclud$ f gross income "u section #abjc if ! sell+ corporation 7 a ,unit$ ,/ates %>ehold] 9 ! o!r controll$ =eign corporation1 & 7,b7 loss f su* sale1 ex*ange1 or disposition %all n be all[$ to ! ext5t su* loss w\ld h be5 disall[$ "u section #abac if ! sell+ corporation 7 a ,unit$ ,/ates %>ehold] 9 ! o!r controll$ =eign corporation4 7#d7 ,ga9 or loss f sales ( int]e/s 9 #be-p]c5t own$ p>tn]%ips 7,a7 ,9 g5]al 7i7 ,portion treat$ z active =eign m>ket income ,9 ! case ( any sale or ex*ange by a controll$ =eign corporation ( an int]e/ 9 a p>tn]%ip ) respect to :i* su* corporation is a #be-p]c5t own]1 ga9 or loss on su* sale %all be tak5 into acc\nt 9 det]m9+ active =eign m>ket income 9 ! am\nt :i* be>s ! same ratio to ! am\nt ( su* ga9 or loss z ! controll$ =eign corporation's di/ributable %>e ( ! active =eign m>ket income f ! p>tn]%ip ov] ! applicable p]iod be>s to ! controll$ =eign corporation's di/ributable %>e ( gross income f ! p>tn]%ip ov] su* p]iod4 ,! ,secret>y %all prescribe su* regulations z may be appropriate to prev5t abuse ( ! purposes ( ?is p>agraph1 includ+ regulations provid+ = coord9ation ( ?is p>agraph ) ! provisions ( sub*apt] ,k4 7ii7 ,applicable p]iod ,= purposes ( ?is subp>agraph1 ! t]m applicable p]iod means1 ) respect to any int]e/ 9 a p>tn]%ip1 ! %ort] ( ! #c-taxable-ye> p]iod imm$iately prec$+ ! taxable ye> ( ! sale or ex*ange or ! controll$ =eign corporation's hold+ p]iod 9 ! int]e/4 ,9 no ev5t %all ! applicable p]iod include any portion ( any taxable ye> beg9n+ be=e ! applicable date 7z def9$ 9 section #cjj ( ! ,infra/ructure #b4j ,act74 7,b7 #be-,p]c5t own] ,= purposes ( ?is p>agraph1 ! t]m #be-p]c5t own] means a controll$ =eign corporation :i* owns directly #be p]c5t or m ( ! capital or pr(its int]e/ 9 a p>tn]%ip4 ,= purposes ( ! prec$+ s5t5ce1 if a controll$ =eign corporation is a %>ehold] or p>tn] ( a corporation or a p>tn]%ip1 ! controll$ =eign corporation %all be treat$ z own+ directly its proportionate %>e ( any capital or pr(its int]e/ 9 any p>tn]%ip held directly or indirectly by su* corporation or p>tn]%ip4 ,if a controll$ =eign corporation is treat$ z own+ a capital or pr(its int]e/ 9 a p>tn]%ip "u con/ructive own]%ip rules simil> to ! rules ( section #ieh7;b71 ! controll$ =eign corporation %all be treat$ z own+ su* int]e/ directly = purposes ( ?is subp>agraph4 7c7 ,treatm5t ( insurance income 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! t]m active =eign m>ket income %all n include ! insurance income 7z def9$ 9 section #iee7;a77 ( a controll$ =eign corporation4 7#b7 ,active =eign m>ket income includes exempt insurance income ,! t]m active =eign m>ket income %all include exempt insurance income 7z def9$ 9 section #iee7;c77 %all be treat$ z active =eign m>ket income4 7d7 ,treatm5t ( income f prop]ty us$1 consum$1 or dispos$ ( 9 ! ,unit$ ,/ates ,= purposes ( subsection 7a77#b77;,a7-- 7#a7 ,9 g5]al ,! t]m active =eign m>ket income %all n include income d]iv$ 9 connection ) prop]ty :i* is sold1 ex*ang$1 or o!rwise dispos$ ( to any p]son if x 0 reasonable = ! controll$ =eign corporation 7or a relat$ p]son7 to expect t-- 7,a7 su* prop]ty w\ld be us$1 consum$1 or dispos$ ( 9 ! ,unit$ ,/ates1 or 7,b7 su* prop]ty w\ld be us$ 9 ! manufacture or production (1 or z a compon5t "p 91 o!r prop]ty :i* w\ld be us$1 consum$1 or dispos$ ( 9 ! ,unit$ ,/ates4 7#b7 ,*a9 ( relat$ p]sons ,if-- 7,a7 prop]ty is ultimately us$1 consum$1 or dispos$ ( z describ$ 9 subp>agraph 7,a7 or 7,b7 ( p>agraph 7#a71 & 7,b7 all sales1 ex*anges1 or dispositions ( su* prop]ty 7or ( ! o!r prop]ty describ$ 9 p>agraph 7#a77;,b77 be=e ! sale = use1 consumption1 or disposition 9 ! ,unit$ ,/ates are betwe5 relat$ p]sons1 !n1 = purposes ( p>agraph 7#a71 !re %all be deem$ to h be5 a reasonable expectation t ! prop]ty 7or ! o!r prop]ty describ$ 9 p>agraph 7#a77;,b77 w\ld be us$1 consum$1 or dispos$ ( 9 ! ,unit$ ,/ates4 7#c7 ,exception = prop]ty subsequ5tly export$ ,p>agraphs 7#a7 & 7#b7 %all n apply ) respect to prop]ty :i*1 aft] entry into ! ,unit$ ,/ates is-- 7,a7 sold1 leas$1 r5t$1 or lic5s$ by ! controll$ =eign corporation or a relat$ p]son = direct use1 consumption1 or disposition outside ! ,unit$ ,/ates1 or 7,b7 us$ by ! controll$ =eign corporation or a relat$ p]son z a compon5t 9 o!r prop]ty :i* is s sold1 leas$1 r5t$1 or lic5s$4 7#d7 ,relat$ p]son def9$ ,= purposes ( ?is subsection1 ! t]m relat$ p]son has ! mean+ giv5 su* t]m "u section #ied7;b74 7e7 ,economically significant activities ,= purposes ( ?is section1 ! t]m economically significant activities means1 ) respect to any item ( income1 activities-- 7#a7 p]=m$ outside ! ,unit$ ,/ates1 7#b7 p]=m$ by (fic]s or employees ( ! controll$ =eign corporation :i* are "p ( ! managem5t & op]ational functions ( ! corporation1 & 7#c7 :i* make a sub/antial contribution to ! production ( su* item ( income4 7f7 ,qualifi$ trade or bus9ess ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m qualifi$ trade or bus9ess means any trade or bus9ess :i* consi/s (-- 7,a7 manufactur+1 produc+1 gr[+1 or extract+ prop]ty outside ( ! ,unit$ ,/ates1 or 7,b7 provid+ s]vices outside ( ! ,unit$ ,/ates4 7#b7 ,special rule = sub/antial contributions to manufactur+ & s]vices ,if a trade or bus9ess consi/s ( mak+ a sub/antial contribution ?r\gh ! activities ( ! (fic]s & employees ( ! controll$ =eign corporation to a qualifi$ trade or bus9ess :i* is describ$ 9 subp>agraph 7,a7 or 7,b7 ( p>agraph 7#a7 ( ano!r p]son1 !n ! trade or bus9ess %all be treat$ z a qualifi$ trade or bus9ess describ$ 9 subp>agraph 7,a7 or 7,b7 ( p>agraph 7#a71 :i*ev] is applicable4 #ied4 ,def9ition ( passive income 7a7 ,passive income 7#a7 ,9 g5]al ,= purposes ( ?is "p1 ! t]m passive income means ! portion ( ! gross income :i* consi/s (3 7,a7 ,divid5ds1 etc ,divid5ds1 int]e/1 royalties1 r5ts1 & annuities4 7,b7 ,c]ta9 prop]ty transactions ,! excess ( ga9s ov] losses f ! sale or ex*ange ( prop]ty-- 7i7 :i* gives rise to income describ$ 9 subp>agraph 7,a7 7aft] application ( p>agraph 7#b77;,a77 o!r ?an prop]ty :i* gives rise to income n treat$ z passive income by reason ( subsection 7c7 or 7d7 = ! taxable ye>1 7ii7 :i* is an int]e/ 9 a tru/1 p>tn]%ip1 or ,,remic1 or 7iii7 :i* does n give rise to any income4 ,ga9s & losses f ! sale or ex*ange ( any prop]ty :i*1 9 ! h&s ( ! controll$ =eign corporation1 is prop]ty describ$ 9 section #abba7;a77#a7 %all n be tak5 into acc\nt "u ?is subp>agraph4 7,c7 ,commodities transactions ,! excess ( ga9s ov] losses f transactions 7includ+ futures1 =w>d1 & simil> transactions7 9 any commodities4 ,?is subp>agraph %all n apply to ga9s or losses :i*-- 7i7 arise out ( commodity h$g+ transactions 7z def9$ 9 p>agraph 7#e77;,a771 7ii7 are active bus9ess ga9s or losses f ! sale ( commodities1 b only if sub/antially all ( ! controll$ =eign corporation's commodities are prop]ty describ$ 9 p>agraph 7#a71 7#b71 or 7#h7 ( section #abba7;a71 or 7iii7 are =eign curr5cy ga9s or losses 7z def9$ 9 section #ihh7;b77 attributable to any section #ihh transactions4 7,d7 ,=eign curr5cy ga9s ,! excess ( =eign curr5cy ga9s ov] =eign curr5cy losses 7z def9$ 9 section #ihh7;b77 attributable to any section #ihh transactions4 ,?is subp>agraph %all n apply 9 ! case ( any transaction1 o!r ?an a borr[+1 directly relat$ to ! bus9ess ne$s ( ! controll$ =eign corporation4 7,e7 ,income equival5t to int]e/ ,any income equival5t to int]e/1 includ+ income f commitm5t fees 7or simil> am\nts7 = loans actually made4 7,f7 ,income f notional pr9cipal contracts 7i7 ,9 g5]al ,net income f notional pr9cipal contracts4 7ii7 ,coord9ation ) o!r categories ( passive income ,any item ( income1 ga91 d$uction1 or loss f a notional pr9cipal contract ent]$ into = purposes ( h$g+ any item describ$ 9 any prec$+ subp>agraph %all n be tak5 into acc\nt = purposes ( ?is subp>agraph b %all be tak5 into acc\nt "u su* o!r subp>agraph4 7,g7 ,paym5ts 9 lieu ( divid5ds ,paym5ts 9 lieu ( divid5ds :i* are made pursuant to an agreem5t to :i* section #ajeh applies4 7,h7 ,p]sonal s]vice contracts 7i7 ,am\nts receiv$ "u a contract "u :i* ! corporation is to furni% p]sonal s]vices if-- 7,i7 "s p]son o!r ?an ! corporation has ! "r to designate 7by "n or by description7 ! individual :o is to p]=m ! s]vices1 or 7,,ii7 ! individual :o is to p]=m ! s]vices is designat$ 7by "n or by description7 9 ! contract1 & 7ii7 am\nts receiv$ f ! sale or o!r disposition ( su* a contract4 ,?is subp>agraph %all apply ) respect to am\nts receiv$ = s]vices "u a p>ticul> contract only if at "s "t dur+ ! taxable ye> #be p]c5t or m 9 value ( ! out/&+ /ock ( ! corporation is own$1 directly or indirectly1 by or = ! individual :o has p]=m$1 is to p]=m1 or may be designat$ 7by "n or by description7 z ! "o to p]=m1 su* s]vices4 7#b7 ,exception = c]ta9 am\nts 7,a7 ,r5ts & royalties d]iv$ 9 active bus9ess ,passive income %all n include r5ts & royalties :i* are d]iv$ 9 ! active conduct ( a trade or bus9ess & :i* are receiv$ f a p]son o!r ?an a relat$ p]son4 ,= purposes ( ! prec$+ s5t5ce1 r5ts d]iv$ f leas+ an aircraft or vessel 9 =eign comm]ce %all n fail to be treat$ z d]iv$ 9 ! active conduct ( a trade or bus9ess if1 z det]m9$ "u regulations prescrib$ by ! ,secret>y1 ! active leas+ exp5ses are n less ?an #aj p]c5t ( ! pr(it on ! lease4 7,b7 ,exception = deal]s ,except z provid$ by regulations1 9 ! case ( a regul> deal] 9 prop]ty :i* is prop]ty describ$ 9 p>agraph 7#a77;,b71 =w>d contracts1 option contracts1 or simil> f9ancial in/rum5ts 7includ+ notional pr9cipal contracts & all in/rum5ts ref]5c$ to commodities71 !re %all n be tak5 into acc\nt 9 comput+ passive income any item ( income1 ga91 d$uction1 or loss f any transaction 7includ+ h$g+ transactions & transactions involv+ physical settlem5t7 ent]$ into 9 ! ord9>y c\rse ( su* deal]'s trade or bus9ess z su* a deal]4 7#c7 ,look-?ru rule = c]ta9 p>tn]%ip sales 7,a7 ,9 g5]al ,9 ! case ( any sale or ex*ange by a controll$ =eign corporation ( an int]e/ 9 a p>tn]%ip ) respect to :i* su* corporation is a #be-p]c5t own]1 ga9 or loss on su* sale %all be treat$ z be+ describ$ 9 p>agraph 7#a77;,b77ii7 9 ! am\nt :i* be>s ! same ratio to ! am\nt ( su* ga9 or loss z ! controll$ =eign corporation's di/ributable %>e ( passive income f ! p>tn]%ip ov] ! applicable p]iod 7z def9$ 9 section #iec7;b77#d77;,a77ii77 be>s to ! controll$ =eign corporation's di/ributable %>e ( gross income f ! p>tn]%ip ov] su* p]iod4 ,! ,secret>y %all prescribe su* regulations z may be appropriate to prev5t abuse ( ! purposes ( ?is p>agraph1 includ+ regulations provid+ = ! coord9ation ( ?is p>agraph ) ! provisions ( sub*apt] ,k4 7,b7 #be-,p]c5t own] ,= purposes ( ?is p>agraph1 ! t]m #be-p]c5t own] has ! mean+ giv5 su* t]m "u section #iec7;b77#d77;,b74 7#d7 ,def9ition & special rules relat+ to commodity transactions 7,a7 ,commodity h$g+ transactions ,= purposes ( p>agraph 7#a77;,c77i71 ! t]m commodity h$g+ transaction means any transaction ) respect to a commodity if su* transaction-- 7i7 is a h$g+ transaction z def9$ 9 section #abba7;b77#b71 det]m9$-- 7,i7 )\t reg>d to subp>agraph 7,a77ii7 !re(1 7,,ii7 by apply+ subp>agraph 7,a77i7 !re( by sub/itut+ ord9>y prop]ty or prop]ty describ$ 9 section #abca7;b7 = ord9>y prop]ty1 & 7,,iii7 by sub/itut+ controll$ =eign corporation = taxpay] ea* place x appe>s1 & 7ii7 is cle>ly id5tifi$ z su* 9 accordance ) section #abba7;a77#g74 7,b7 ,treatm5t ( deal] activities "u p>agraph 7#a77;,c7 ,commodities ) respect to :i* ga9s & losses are n tak5 into acc\nt "u p>agraph 7#b77;,b7 9 comput+ a controll$ =eign corporation's passive income %all n be tak5 into acc\nt 9 apply+ ! sub/antially all te/ "u p>agraph 7#a77;,c77ii7 to su* corporation4 7,c7 ,regulations ,! ,secret>y %all prescribe su* regulations z are appropriate to c>ry out ! purposes ( p>agraph 7#a77;,c7 9 ! case ( transactions involv+ relat$ p]sons4 7b7 ,relat$ p]son def9$ ,= purposes ( ?is section1 a p]son is a relat$ p]son ) respect to a controll$ =eign corporation1 if-- 7#a7 su* p]son is an individual1 corporation1 p>tn]%ip1 tru/1 or e/ate :i* controls1 or is controll$ by1 ! controll$ =eign corporation1 or 7#b7 su* p]son is a corporation1 p>tn]%ip1 tru/1 or e/ate :i* is controll$ by ! same p]son or p]sons :i* control ! controll$ =eign corporation4 ,= purposes ( ! prec$+ s5t5ce1 control means1 ) respect to a corporation1 ! own]%ip1 directly or indirectly1 ( /ock possess+ m ?an #ej p]c5t ( ! total vot+ p[] ( all classes ( /ock entitl$ to vote or ( ! total value ( /ock ( su* corporation4 ,9 ! case ( a p>tn]%ip1 tru/1 or e/ate1 control means ! own]%ip1 directly or indirectly1 ( m ?an #ej p]c5t 7by value7 ( ! b5eficial int]e/s 9 su* p>tn]%ip1 tru/1 or e/ate4 ,= purposes ( ?is subsection1 rules simil> to ! rules ( section #ieh %all apply4 7c7 ,special rule = income d]iv$ 9 ! active conduct ( bank+1 f9anc+1 or simil> bus9esses 7#a7 ,9 g5]al ,= purposes ( subsection 7a77#a71 passive income %all n include qualifi$ bank+ or f9anc+ income ( an eligible controll$ =eign corporation4 7#b7 ,eligible controll$ =eign corporation ,= purposes ( ?is subsection1 ! t]m eligible controll$ =eign corporation means any controll$ =eign corporation if-- 7,a7 m ?an #hj p]c5t ( ! gross income ( ! controll$ =eign corporation is d]iv$ directly f ! active & regul> conduct ( a l5d+1 f9ance1 or f9ancial s]vices bus9ess f transactions ) cu/om]s :i* are locat$ outside ! ,unit$ ,/ates & are n relat$ p]sons1 or 7,b7 x is a regulat$ f9ancial in/itution4 7#c7 ,qualifi$ bank+ or f9anc+ income ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m qualifi$ bank+ or f9anc+ income means income ( an eligible controll$ =eign corporation :i*-- 7i7 is d]iv$ 9 ! active conduct ( a bank+1 f9anc+1 or simil> bus9ess by su* eligible controll$ =eign corporation1 7ii7 is d]iv$ f "o or m transactions-- 7,i7 ) cu/om]s locat$ 9 a c\ntry o!r ?an ! ,unit$ ,/ates1 & 7,,ii7 sub/antially all ( ! activities 9 connection ) :i* are conduct$ directly by ! corporation 9 its home c\ntry1 & 7iii7 is treat$ z e>n$ by su* corporation 9 its home c\ntry = purposes ( su* c\ntry's tax laws4 7,b7 ,income d]iv$ f cu/om]s to include c]ta9 inve/m5t income ,= purposes ( subp>agraph 7,a71 9 ! case ( a regulat$ f9ancial in/itution1 income d]iv$ f cu/om]s includes income d]iv$ f-- 7i7 res]ves t are requir$ to be held pursuant to bank+ regulations1 7ii7 deposits plac$ ) ! c5tral bank 7or equival5t !re(7 9 ! corporation's home c\ntry1 & 7iii7 inve/m5ts 9 debt in/rum5ts issu$ by ! home c\ntry4 7,c7 ,sub/antial activity requirem5t = cross bord] income ,! t]m qualifi$ bank+ or f9anc+ income %all n include income d]iv$ f #a or m transactions ) cu/om]s locat$ 9 a c\ntry o!r ?an ! home c\ntry ( ! eligible controll$ =eign corporation unless su* corporation conducts sub/antial activity ) respect to a bank+1 f9anc+1 or simil> bus9ess 9 its home c\ntry4 7,d7 ,direct conduct ( activities ,= purposes ( subp>agraph 7,a77ii77,,ii71 an activity %all be treat$ z conduct$ directly by an eligible controll$ =eign corporation 9 its home c\ntry if ! activity is p]=m$ by employees ( a relat$ p]son &-- 7i7 ! relat$ p]son is a resid5t subject to tax "u ! laws ( ! home c\ntry ( ! corporation to :i* subp>agraph 7,a77ii77,,ii7 is be+ appli$1 7ii7 ! activity is p]=m$ 9 su* home c\ntry1 & 7iii7 ! relat$ p]son is comp5sat$ on an arm's-l5g? basis = ! p]=mance ( ! activity by its employees & su* comp5sation is treat$ z e>n$ by su* p]son 9 su* home c\ntry = purposes ( ! home c\ntry's tax laws4 7#d7 ,l5d+1 f9ance1 or f9ancial s]vices bus9ess ,= purposes ( ?is subsection1 except z provid$ 9 regulations1 ! t]m l5d+1 f9ance1 or f9ancial s]vices bus9ess means ! bus9ess (-- 7,a7 mak+ loans1 7,b7 pur*as+1 sell+1 disc\nt+1 or negotiat+ on a regul> basis acc\nts receivable1 notes1 or in/allm5t obligations1 7,c7 engag+ 9 leas+ 7includ+ ent]+ into leases & pur*as+1 s]vic+1 & dispos+ ( leases & leas$ assets71 7,d7 issu+ lett]s ( cr$it or provid+ gu>antees1 7,e7 provid+ *>ge & cr$it c>d s]vices1 7,f7 p]=m+ tru/ s]vices1 includ+ z a fiduci>y1 ag5t1 or cu/odian1 o!r ?an tru/ s]vices provid$ by a brok] or deal] 9 /ock1 securities1 or o!r f9ancial in/rum5ts1 7,g7 arrang+ int]e/ rate or curr5cy futures1 =w>ds1 options1 or notional pr9cipal contracts =1 or ent]+ into su* transactions )1 cu/om]s1 7,h7 provid+ travel]'s *eck & money ord] s]vices = cu/om]s1 7,i7 provid+ correspond5t bank s]vices = cu/om]s1 7,j7 engag+ 9 h$g+ activities directly relat$ to an activity describ$ 9 any o!r subp>agraph ( ?is p>agraph1 7,k7 und]writ+ issues ( /ock1 debt1 or o!r securities = cu/om]s1 7,l7 provid+ f9ancial1 inve/m5t advisory1 or inve/m5t managem5t s]vices1 7,m7 pur*as+ or sell+ /ock1 debt in/rum5ts1 int]e/ rate or curr5cy futures1 or o!r securities or d]ivative f9ancial products 7includ+ notional pr9cipal contracts7 f or to cu/om]s & hold+ su* /ock1 debt in/rum5ts1 futures1 or o!r securities or products z inv5tory = sale to cu/om]s1 unless su* /ock1 debt in/rum5ts1 futures1 or o!r securities or products are n held 9 a deal] capacity1 7,n7 effect+ transactions 9 securities = cu/om]s z a securities brok]1 or 7,o7 r5d]+ s]vices or mak+ facilities available 9 connection ) activities describ$ 9 subp>agraphs 7,a7 ?r\gh 7,n7 c>ri$ on by-- 7i7 ! corporation r5d]+ s]vices or mak+ facilities available1 or 7ii7 ano!r corporation :i* is a memb] ( ! same affiliat$ gr\p 7z def9$ 9 section #aejd1 b det]m9$ )\t reg>d to section #aejd7;b77#c774 7#e7 ,o!r def9itions ,= purposes ( ?is subsection-- 7,a7 ,cu/om] ,! t]m cu/om] means1 ) respect to any controll$ =eign corporation1 any p]son :i* has a cu/om] relation%ip ) su* corporation & :i* is act+ 9 its capacity z su*4 7,b7 ,home c\ntry ,except z provid$ 9 regulations1 ! t]m home c\ntry means1 ) respect to any entity1 ! c\ntry ) respect to :i* ! entity is a resid5t = purposes ( ! c\ntry's income tax laws4 7,c7 ,locat$ ,except z provid$ 9 regulations1 = purposes ( p>agraph 7#c77;,a7-- 7i7 if a cu/om] is a natural p]son1 ! cu/om] is consid]$ to be locat$ 9 ! c\ntry 9 :i* ! cu/om] is physically locat$ :5 ent]+ into ! transaction1 & 7ii7 if a cu/om] is n a natural p]son1 ! cu/om] is consid]$ to be locat$ 9 ! c\ntry f :i* ! cu/om] ent]s into ! transaction4 7,d7 ,qualifi$ bus9ess unit ,! t]m qualifi$ bus9ess unit has ! mean+ giv5 su* t]m by section #ihi7;a74 7,e7 ,regulat$ f9ancial in/itution ,except z provid$ 9 regulations1 ! t]m regulat$ f9ancial in/itution means a controll$ =eign corporation :i*-- 7i7 is engag$ 9 ! active conduct ( a bank+ bus9ess & is an in/itution lic5s$ to d bus9ess z a bank 9 ! ,unit$ ,/ates 7or is any o!r corporation n s lic5s$ :i* is specifi$ by ! ,secret>y 9 regulations71 or 7ii7 satisfies ea* ( ! foll[+ conditions3 7,i7 ,! corporation is directly or indirectly :olly own$ by a dome/ic corporation t is a bank 7z def9$ 9 section #eha7 or a depository in/itution hold+ company 7z def9$ 9 section #c7w77#a7 ( ! ,f$]al ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac7w77#a7774 7,,ii7 ,! corporation is subject to bank regulatory sup]vision 9 a jurisdiction ! c5tral bank ( :i* 7or equival5t !re(7 is a memb] ( ! ,basel ,committee on ,bank+ ,sup]vision4 7,,iii7 ,! corporation is lic5s$ & regulat$ 9 su* jurisdiction z a bank4 7#f7 ,sep>ate application to qualifi$ bus9ess units 7,a7 ,9 g5]al ,if a controll$ =eign corporation has #a or m qualifi$ bus9ess units-- 7i7 ?is subsection %all be appli$ sep>ately to ea* su* unit 9 ! same mann] z if x 7 a controll$ =eign corporation1 & 7ii7 if any su* unit is treat$ z an eligible controll$ =eign corporation aft] application ( clause 7i71 ! qualifi$ bank+ or f9anc+ income ( su* unit %all be treat$ z qualifi$ bank+ or f9anc+ income ( ! controll$ =eign corporation ( :i* su* unit is a "p4 7,b7 ,det]m9ations made sep>ately ,= purposes ( ! sep>ate application ( ?is subsection to a controll$ =eign corporation & its qualifi$ bus9ess units-- 7i7 9 ! case ( ! controll$ =eign corporation1 only activities & items ( income1 d$uction1 ga91 or loss & activities ( su* corporation n prop]ly allocable or attributable to any qualifi$ bus9ess unit ( su* corporation %all be tak5 into acc\nt1 & 7ii7 9 ! case ( a qualifi$ bus9ess unit1 only activities & items ( income1 d$uction1 ga91 or loss & activities prop]ly allocable or attributable to su* unit %all be tak5 into acc\nt4 7,c7 ,home c\ntry ,= purposes ( ?is subsection1 except z provid$ 9 regulations1 not)/&+ p>agraph 7#e77;,b71 ! home c\ntry ) respect to any qualifi$ bus9ess unit treat$ z a controll$ =eign corporation "u subp>agraph 7,a7 %all be ! c\ntry 9 :i* su* unit ma9ta9s its pr9cipal (fice4 7#g7 ,anti-abuse rules ,= purposes ( apply+ ?is subsection-- 7,a7 !re %all be disreg>d$ any item ( income1 ga91 loss1 or d$uction ) respect to any transaction or s]ies ( transactions "o ( ! pr9cipal purposes ( :i* is qualify+ income or ga9 = ! exclusion "u ?is section1 includ+ any transaction or s]ies ( transactions a pr9cipal purpose ( :i* is ! accel]ation or def]ral ( any item 9 ord] to claim ! b5efits ( su* exclusion ?r\gh ! application ( ?is subsection1 7,b7 !re %all be disreg>d$ any item ( income1 ga91 loss1 or d$uction ( an entity :i* is n engag$ 9 regul> & cont9u\s transactions ) cu/om]s :i* are n relat$ p]sons1 7,c7 !re %all be disreg>d$ any item ( income1 ga91 loss1 or d$uction ) respect to any transaction or s]ies ( transactions utiliz+1 or do+ bus9ess )-- 7i7 "o or m entities 9 ord] to satisfy any home c\ntry requirem5t "u ?is subsection1 or 7ii7 a special purpose entity or arrangem5t1 includ+ a securitization1 f9anc+1 or simil> entity or arrangem5t1 if "o ( ! pr9cipal purposes ( su* transaction or s]ies ( transactions is qualify+ income or ga9 = ! exclusion "u ?is subsection1 & 7,d7 a relat$ p]son1 an (fic]1 a director1 or an employee ) respect to any controll$ =eign corporation :i* w\ld o!rwise be treat$ z a cu/om] ( su* corporation ) respect to any transaction %all n be s treat$ if a pr9cipal purpose ( su* transaction is to satisfy any requirem5t ( ?is subsection4 7#h7 ,regulations ,! ,secret>y %all prescribe su* regulations z may be necess>y or appropriate to c>ry out ! purposes ( ?is subsection & subsection 7a77#a77;,b77i74 7d7 ,special rule = income d]iv$ 9 ! active conduct ( insurance bus9ess 7#a7 ,9 g5]al ,= purposes ( subsection 7a77#a71 passive income %all n include qualifi$ insurance income ( a qualify+ insurance company4 7#b7 ,qualifi$ insurance income ,= purposes ( ?is subsection1 ! t]m qualifi$ insurance income means income ( a qualify+ insurance company :i* is-- 7,a7 receiv$ f a p]son o!r ?an a relat$ p]son & d]iv$ f ! inve/m5ts made by a qualify+ insurance company or a qualify+ insurance company bran* ( its res]ves allocable to exempt contracts or ( #hj p]c5t ( its une>n$ premiums f exempt contracts 7z bo? are det]m9$ 9 ! mann] prescrib$ "u p>agraph 7#d771 or 7,b7 receiv$ f a p]son o!r ?an a relat$ p]son & d]iv$ f inve/m5ts made by a qualify+ insurance company or a qualify+ insurance company bran* ( an am\nt ( its assets allocable to exempt contracts equal to-- 7i7 9 ! case ( prop]ty1 casualty1 or heal? insurance contracts1 "o-?ird ( its premiums e>n$ on su* insurance contracts dur+ ! taxable ye> 7z def9$ 9 section #hcb7;b77#d771 & 7ii7 9 ! case ( life insurance or annuity contracts1 #aj p]c5t ( ! res]ves describ$ 9 subp>agraph 7,a7 = su* contracts4 7#c7 ,pr9ciples = det]m9+ qualifi$ insurance income ,except z provid$ by ! ,secret>y1 = purposes ( subp>agraphs 7,a7 & 7,b7 ( p>agraph 7#b7-- 7,a7 9 ! case ( any contract :i* is a sep>ate acc\nt-type contract 7includ+ any v>iable contract n meet+ ! requirem5ts ( section #hag71 income cr$it$ "u su* contract %all be allocable only to su* contract1 & 7,b7 income n allocable "u subp>agraph 7,a7 %all be allocat$ ratably among contracts n describ$ 9 subp>agraph 7,a74 7#d7 ,me?ods = det]m9+ une>n$ premiums & res]ves ,= purposes ( p>agraph 7#b77;,a7-- 7,a7 ,prop]ty & casualty contracts ,! une>n$ premiums & res]ves ( a qualify+ insurance company or a qualify+ insurance company bran* ) respect to prop]ty1 casualty1 or heal? insurance contracts %all be det]m9$ us+ ! same me?ods & int]e/ rates :i* w\ld be us$ if su* company or bran* 7 subject to tax "u sub*apt] ,l1 except t-- 7i7 ! int]e/ rate det]m9$ = ! functional curr5cy ( ! company or bran*1 & :i*1 except z provid$ by ! ,secret>y1 is calculat$ 9 ! same mann] z ! ,f$]al mid-t]m rate "u section #abgd7;d71 %all be sub/itut$ = ! applicable ,f$]al int]e/ rate1 & 7ii7 su* company or bran* %all use ! appropriate =eign loss paym5t patt]n4 7,b7 ,life insurance & annuity contracts 7i7 ,9 g5]al ,except z provid$ 9 clause 7ii71 ! am\nt ( ! res]ve ( a qualify+ insurance company or qualify+ insurance company bran* = any life insurance or annuity contract %all be equal to ! great] (-- 7,i7 ! net surr5d] value ( su* contract 7z def9$ 9 section #hjg7;e77#a77;,a771 or 7,,ii7 ! res]ve det]m9$ "u p>agraph 7#e74 7ii7 ,rul+ reque/1 etc ,! am\nt ( ! res]ve "u clause 7i7 %all be ! =eign /atem5t res]ve = ! contract 7less any cata/rophe1 defici5cy1 equalization1 or simil> res]ves71 if1 pursuant to a rul+ reque/ submitt$ by ! taxpay] or z provid$ 9 publi%$ guidance1 ! ,secret>y det]m9es t ! factors tak5 into acc\nt 9 det]m9+ ! =eign /atem5t res]ve provide an appropriate means ( measur+ income4 7,c7 ,limitation on res]ves ,9 no ev5t %all ! res]ve det]m9$ "u ?is p>agraph = any contract z ( any "t exce$ ! am\nt :i* w\ld be tak5 into acc\nt ) respect to su* contract z ( su* "t 9 det]m9+ =eign /atem5t res]ves 7less any cata/rophe1 defici5cy1 equalization1 or simil> res]ves74 7#e7 ,am\nt ( res]ve ,! am\nt ( ! res]ve det]m9$ "u ?is p>agraph ) respect to any contract %all be det]m9$ 9 ! same mann] z x w\ld be det]m9$ if ! qualify+ insurance company or qualify+ insurance company bran* 7 subject to tax "u sub*apt] ,l1 except t 9 apply+ su* sub*apt]-- 7,a7 ! int]e/ rate det]m9$ = ! functional curr5cy ( ! company or bran*1 & :i*1 except z provid$ by ! ,secret>y1 is calculat$ 9 ! same mann] z ! ,f$]al mid-t]m rate "u section #abgd7;d71 %all be sub/itut$ = ! applicable ,f$]al int]e/ rate1 7,b7 ! highe/ assum$ int]e/ rate p]mitt$ to be us$ 9 det]m9+ =eign /atem5t res]ves %all be sub/itut$ = ! prevail+ ,/ate assum$ int]e/ rate1 & 7,c7 tables = mortality & morbidity :i* reasonably reflect ! curr5t mortality & morbidity risks 9 ! company's or bran*'s home c\ntry %all be sub/itut$ = ! mortality & morbidity tables o!rwise us$ = su* sub*apt]4 ,! ,secret>y may provide t ! int]e/ rate & mortality & morbidity tables ( a qualify+ insurance company may be us$ = #a or m ( its qualify+ insurance company bran*es :5 appropriate4 7#f7 ,def9itions ,= purposes ( ?is section1 any t]m us$ 9 ?is subsection :i* is also us$ 9 section #iee7;c7 %all h ! mean+ giv5 su* t]m "u section #iee7;c74 #iee4 ,def9ition ( insurance income 7a7 ,insurance income 7#a7 ,9 g5]al ,= purposes ( section #iec7;c71 ! t]m insurance income means ! gross income :i*-- 7,a7 is attributable to ! issu+ 7or re9sur+7 ( an insurance or annuity contract1 & 7,b7 is ( a k9d t w\ld be subject to tax "u sub*apt] ,l ( ?is *apt] if su* income 7 ! income ( a dome/ic insurance company4 7#b7 ,exception ,su* t]m %all n include any exempt insurance income 7z def9$ 9 subsection 7c774 7b7 ,special rules = det]m9ation ( gross income & allocable d$uctions ,= purposes ( det]m9+ gross income "u subsection 7a7 & d$uctions allocable to insurance income "u section #ieb7;e71 ! foll[+ rules %all apply3 7#a7 ,c]ta9 d$uctions n all[$ ,! foll[+ provisions ( sub*apt] ,l %all n apply3 7,a7 ,! small life insurance company d$uction4 7,b7 ,section #hje7;a77#e7 7relat+ to op]ations loss d$uction74 7,c7 ,section #hcb7;c77#e7 7relat+ to c]ta9 capital losses74 7#b7 ,special rules = am\nts includ$ 9 income ,! items ref]r$ to 9-- 7,a7 section #hjc7;a77#a7 7relat+ to gross am\nt ( premiums & o!r consid]ations71 7,b7 section #hjc7;a77#b7 7relat+ to net decrease 9 res]ves71 7,c7 section #hje7;a77#b7 7relat+ to net increase 9 res]ves71 & 7,d7 section #hcb7;b77#d7 7relat+ to premiums e>n$ on insurance contracts71 %all be tak5 into acc\nt only to ! ext5t !y are 9 respect ( any re9surance or ! issu+ ( any insurance or annuity contract describ$ 9 subsection 7a77#a74 7#c7 ,treatm5t ( res]ves ,res]ves = any insurance or annuity contract %all be det]m9$ 9 ! same mann] z "u section #ied7;d74 7c7 ,exempt insurance income ,= purposes ( ?is section-- 7#a7 ,exempt insurance income def9$ 7,a7 ,9 g5]al ,! t]m exempt insurance income means income d]iv$ by a qualify+ insurance company :i*-- 7i7 is attributable to ! issu+ 7or re9sur+7 ( an exempt contract by su* company or a qualify+ insurance company bran* ( su* company1 & 7ii7 is treat$ z e>n$ by su* company or bran* 9 its home c\ntry = purposes ( su* c\ntry's tax laws4 7,b7 ,exception = c]ta9 arrangem5ts ,su* t]m %all n include income attributable to ! issu+ 7or re9sur+7 ( an exempt contract z ! result ( any arrangem5t :]eby ano!r corporation receives a sub/antially equal am\nt ( premiums or o!r consid]ation 9 respect ( issu+ 7or re9sur+7 a contract :i* is n an exempt contract4 7,c7 ,det]m9ations made sep>ately ,= purposes ( ?is subsection & section #ied7;d71 ! exempt insurance income & exempt contracts ( a qualify+ insurance company or any qualify+ insurance company bran* ( su* company %all be det]m9$ sep>ately = su* company & ea* su* bran* by tak+ into acc\nt-- 7i7 9 ! case ( ! qualify+ insurance company1 only items ( income1 d$uction1 ga91 or loss1 & activities ( su* company n prop]ly allocable or attributable to any qualify+ insurance company bran* ( su* company1 & 7ii7 9 ! case ( a qualify+ insurance company bran*1 only items ( income1 d$uction1 ga91 or loss & activities prop]ly allocable or attributable to su* bran*4 7#b7 ,exempt contract 7,a7 ,9 g5]al ,! t]m exempt contract means an insurance or annuity contract issu$ or re9sur$ by a qualify+ insurance company or qualify+ insurance company bran* 9 connection ) prop]ty 91 liability aris+ out ( activity 91 or ! lives or heal? ( resid5ts (1 a c\ntry o!r ?an ! ,unit$ ,/ates4 7,b7 ,m9imum non-relat$ income requir$ ,no contract ( a qualify+ insurance company or ( a qualify+ insurance company bran* %all be treat$ z an exempt contract unless su* company or bran* d]ives m ?an #cj p]c5t ( its net writt5 premiums f exempt contracts 7det]m9$ )\t reg>d to ?is subp>agraph7 ) respect to :i* no policyhold]1 insur$1 annuitant1 or b5efici>y is a relat$ p]son 7z def9$ 9 section #ied7;b774 7,c7 ,sub/antial activity requirem5ts ,a contract issu$ by a qualify+ insurance company or qualify+ insurance company bran* %all n be treat$ z an exempt contract unless su* company or bran*1 z ! case may be-- 7i7 conducts sub/antial activity ) respect to an insurance bus9ess 9 its home c\ntry1 & 7ii7 p]=ms 9 its home c\ntry sub/antially all ( ! activities necess>y to give rise to ! income g5]at$ by su* contract4 7#c7 ,qualify+ insurance company 7,a7 ,9 g5]al ,! t]m qualify+ insurance company means any controll$ =eign corporation-- 7i7 :i*-- 7,i7 is subject to regulation z an insurance 7or re9surance7 company by its home c\ntry1 & is lic5s$1 au?oriz$1 or regulat$ by ! applicable insurance regulatory body = its home c\ntry to sell insurance1 re9surance1 or annuity contracts to p]sons o!r ?an relat$ p]sons 7)9 ! mean+ ( section #ied7;b77 9 su* home c\ntry1 & 7,,ii7 is engag$ 9 ! insurance bus9ess & w\ld be subject to tax "u sub*apt] ,l if x 7 a dome/ic corporation1 7ii7 :i* d]ives m ?an #ej p]c5t ( its aggregate net writt5 premiums f ! issuance or re9surance by su* controll$ =eign corporation & ea* ( its qualify+ insurance company bran*es ( contracts ) respect to :i* no policyhold]1 insur$1 annuitant1 or b5efici>y is a relat$ p]son 7z def9$ 9 section #ied7;b771 except t 9 ! case ( a bran*1 su* premiums %all only be tak5 into acc\nt to ! ext5t su* premiums are treat$ z e>n$ by su* bran* 9 its home c\ntry = purposes ( su* c\ntry's tax laws1 7iii7 m ?an #ej p]c5t ( ! gross receipts ( :i* = ! taxable ye>-- 7,i7 consi/ ( premiums = insurance or re9surance 9 connection ) prop]ty1 liability1 or ! lives or heal? ( individuals1 & 7,,ii7 are treat$ z e>n$ by su* controll$ =eign corporation 9 its home c\ntry = purposes ( su* c\ntry's tax laws1 & 7iv7 ! applicable insurance liabilities ( :i* con/itute m ?an #ce p]c5t ( its total assets z report$ on ! company's applicable f9ancial /atem5t = ! ye> ) :i* or 9 :i* ! taxable ye> ends4 7,b7 ,applicable insurance liabilities ,= purposes ( subp>agraph 7,a77iv71 ! t]m applicable insurance liabilities means-- 7i7 loss & loss adju/m5t exp5ses1 7ii7 une>n$ premiums1 & 7iii7 res]ves 7o!r ?an any cata/rophe1 defici5cy1 equalization1 or simil> res]ves7 = life & heal? insurance risks & life & heal? insurance claims ) respect to contracts provid+ cov]age = mortality or morbidity risks 7n to exce$ ! am\nt ( su* res]ve t is requir$ to be report$ to ! home c\ntry insurance regulatory body74 7,c7 ,applicable f9ancial /atem5t ,= purposes ( subp>agraph 7,a77iv71 ! t]m applicable f9ancial /atem5t means a /atem5t = f9ancial report+ purposes :i*-- 7i7 is made on ! basis ( g5]ally accept$ acc\nt+ pr9ciples1 7ii7 is made on ! basis ( int]national f9ancial report+ /&>ds1 b only if !re is no /atem5t t meets ! requirem5t ( clause 7i71 or 7iii7 except z o!rwise provid$ by ! ,secret>y 9 regulations1 is ! annual /atem5t :i* is requir$ to be fil$ ) ! home c\ntry insurance regulatory body1 b only if !re is no /atem5t :i* meets ! requirem5ts ( clause 7i7 or 7ii74 7,d7 ,regulations ,! ,secret>y %all prescribe su* regulations z necess>y to c>ry out ! purposes ( ?is p>agraph4 7#d7 ,qualify+ insurance company bran* ,! t]m qualify+ insurance company bran* means a qualifi$ bus9ess unit 7)9 ! mean+ ( section #ihi7;a77 ( a controll$ =eign corporation if-- 7,a7 su* unit is lic5s$1 au?oriz$1 or regulat$ by ! applicable insurance regulatory body = its home c\ntry to sell insurance1 re9surance1 or annuity contracts to p]sons o!r ?an relat$ p]sons 7)9 ! mean+ ( section #ied7;b77 9 su* home c\ntry1 & 7,b7 su* controll$ =eign corporation is a qualify+ insurance company1 det]m9$ "u p>agraph 7#c7 z if su* unit 7 a qualify+ insurance company bran*4 7#e7 ,life insurance or annuity contract ,= purposes ( ?is section & section #ied1 ! det]m9ation ( :e!r a contract issu$ by a controll$ =eign corporation or a qualify+ insurance company bran* is a life insurance contract or an annuity contract %all be made )\t reg>d to sections #gb7s71 #aja7;f71 #hag7;h71 & #ggjb if-- 7,a7 su* contract is regulat$ z a life insurance or annuity contract by ! corporation's or bran*'s home c\ntry1 & 7,b7 no policyhold]1 insur$1 annuitant1 or b5efici>y ) respect to ! contract is a ,unit$ ,/ates p]son4 7#f7 ,home c\ntry ,= purposes ( ?is subsection1 except z provid$ 9 regulations-- 7,a7 ,controll$ =eign corporation ,! t]m home c\ntry means1 ) respect to a controll$ =eign corporation1 ! c\ntry 9 :i* su* corporation is creat$ or organiz$4 7,b7 ,qualify+ insurance company bran* ,! t]m home c\ntry means1 ) respect to a qualify+ insurance company bran*1 ! c\ntry 9 :i* ! pr9cipal (fice ( su* bran* is locat$ & 9 :i* su* bran* is lic5s$1 au?oriz$1 or regulat$ by ! applicable insurance regulatory body to sell insurance1 re9surance1 or annuity contracts to p]sons o!r ?an relat$ p]sons 7z def9$ 9 section #ied7;b77 9 su* c\ntry4 7#g7 ,anti-abuse rules ,= purposes ( apply+ ?is subsection & section #ied7;d7-- 7,a7 ! rules ( section #ied7;c77#g7 7o!r ?an subp>agraph 7,b7 !re(7 %all apply1 7,b7 !re %all be disreg>d$ any item ( income1 ga91 loss1 or d$uction (1 or d]iv$ f1 an entity :i* is n engag$ 9 regul> & cont9u\s transactions ) p]sons :i* are n relat$ p]sons1 7,c7 !re %all be disreg>d$ any *ange 9 ! me?od ( comput+ res]ves a pr9cipal purpose ( :i* is ! accel]ation or def]ral ( any item 9 ord] to claim ! b5efits ( ?is subsection or section #ied7;d71 7,d7 a contract ( insurance or re9surance %all n be treat$ z an exempt contract 7& premiums f su* contract %all n be tak5 into acc\nt = purposes ( p>agraph 7#b77;,b7 or 7#c77 if-- 7i7 any policyhold]1 insur$1 annuitant1 or b5efici>y is a resid5t ( ! ,unit$ ,/ates & su* contract 0 m>ket$ to su* resid5t & 0 writt5 to cov] a risk outside ! ,unit$ ,/ates1 or 7ii7 ! contract cov]s risks locat$ )9 & )\t ! ,unit$ ,/ates & ! qualify+ insurance company or qualify+ insurance company bran* does n ma9ta9 su* contemporane\s records1 & file su* reports1 ) respect to su* contract z ! ,secret>y may require1 7,e7 ! ,secret>y may prescribe rules = ! allocation ( contracts 7& income f contracts7 among #b or m qualify+ insurance company bran*es ( a qualify+ insurance company 9 ord] to cle>ly reflect ! income ( su* bran*es1 & 7,f7 premiums f a contract %all n be tak5 into acc\nt = purposes ( p>agraph 7#b77;,b7 or 7#c7 if su* contract re9sures a contract issu$ or re9sur$ by a relat$ p]son 7z def9$ 9 section #ied7;b774 7#h7 ,coord9ation ) section #ief7;a7 7,a7 ,9 g5]al ,9 det]m9+ insurance income = purposes ( section #ief7;a71 exempt insurance income %all n include income d]iv$ f exempt contracts :i* cov] risks o!r ?an applicable home c\ntry risks4 7,b7 ,applicable home c\ntry risks ,= purposes ( subp>agraph 7,a71 ! t]m applicable home c\ntry risks means risks 9 connection ) prop]ty 91 liability aris+ out ( activity 91 or ! lives or heal? ( resid5ts (1 ! home c\ntry ( ! qualify+ insurance company or qualify+ insurance company bran*1 z ! case may be1 issu+ or re9sur+ ! contract cov]+ ! risks4 7#i7 ,regulations ,! ,secret>y %all prescribe su* regulations z may be necess>y or appropriate to c>ry out ! purposes ( ?is subsection & section #ied7;d74 7#aj7 ,cross ref]5ce ,= treatm5t ( c]ta9 inve/m5t income d]iv$ by qualify+ insurance companies1 see section #ied7;d74 #ief4 ,special rule = c]ta9 captive insurance companies 7a7 ,treatm5t z controll$ =eign corporations & ,unit$ ,/ates %>ehold]s 7#a7 ,9 g5]al ,= purposes only ( tak+ into acc\nt relat$ p]son insurance income-- 7,a7 ! t]m ,unit$ ,/ates %>ehold] means1 ) respect to any =eign corporation1 a ,unit$ ,/ates p]son 7z def9$ 9 section #ieg7;c77 :o owns 7)9 ! mean+ ( section #ieh7;a77 any /ock ( ! =eign corporation1 7,b7 ! t]m controll$ =eign corporation has ! mean+ giv5 to su* t]m by section #ieg7;a7 det]m9$ by sub/itut+ #be p]c5t or m = m ?an #ej p]c5t1 & 7,c7 ! pro rata %>e ref]r$ to 9 section #iea7;a77#a7 %all be det]m9$ "u p>agraph 7#e7 ( ?is subsection4 7#b7 ,relat$ p]son insurance income ,= purposes ( ?is subsection1 ! t]m relat$ p]son insurance income means any insurance income 7)9 ! mean+ ( section #iee7;a77 attributable to a policy ( insurance or re9surance ) respect to :i* ! p]son 7directly or indirectly7 insur$ is a ,unit$ ,/ates %>ehold] 9 ! =eign corporation or a relat$ p]son to su* a %>ehold]4 7#c7 ,exceptions 7,a7 ,corporations n held by insur$ ,p>agraph 7#a7 %all n apply to any =eign corporation if at all times dur+ ! taxable ye> ( su* =eign corporation-- 7i7 less ?an #bj p]c5t ( ! total comb9$ vot+ p[] ( all classes ( /ock ( su* corporation entitl$ to vote1 & 7ii7 less ?an #bj p]c5t ( ! total value ( su* corporation1 is own$ 7directly or indirectly "u ! pr9ciples ( section #hhc7;c77#d77 by p]sons :o are 7directly or indirectly7 insur$ "u any policy ( insurance or re9surance issu$ by su* corporation or :o are relat$ p]sons to any su* p]son4 7,b7 ,de m9imis exception ,p>agraph 7#a7 %all n apply to any =eign corporation = a taxable ye> ( su* corporation if ! relat$ p]son insurance income 7det]m9$ on a gross basis7 ( su* corporation = su* taxable ye> is less ?an #bj p]c5t ( its insurance income 7z s det]m9$7 = su* taxable ye>4 7,c7 ,election to treat income z effectively connect$ ,p>agraph 7#a7 %all n apply to any =eign corporation = any taxable ye> if-- 7i7 su* corporation elects 7at su* "t & 9 su* mann] z ! ,secret>y may prescribe7-- 7,i7 to treat its relat$ p]son insurance income = su* taxable ye> z income effectively connect$ ) ! conduct ( a trade or bus9ess 9 ! ,unit$ ,/ates1 & 7,,ii7 to waive all b5efits 7o!r ?an ) respect to section #hhd7 ) respect to relat$ p]son insurance income grant$ by ! ,unit$ ,/ates "u any treaty betwe5 ! ,unit$ ,/ates & any =eign c\ntry1 & 7ii7 su* corporation meets su* requirem5ts z ! ,secret>y %all prescribe to ensure t ! tax impos$ by ?is *apt] on su* income is paid4 ,an election "u ?is subp>agraph made = any taxable ye> %all n be effective if ! corporation 7or any pr$ecessor !re(7 0 a disqualifi$ corporation = ! taxable ye> = :i* ! election 0 made or = any prior taxable ye> beg9n+ aft] #aihf4 7,d7 ,special rules = subp>agraph 7,c7 7i7 ,p]iod dur+ :i* election 9 effect 7,i7 ,9 g5]al ,except z provid$ 9 subclause 7,,ii71 any election "u subp>agraph 7,c7 %all apply to ! taxable ye> = :i* made & all subsequ5t taxable ye>s unless revok$ ) ! cons5t ( ! ,secret>y4 7,,ii7 ,t]m9ation ,if a =eign corporation :i* made an election "u subp>agraph 7,c7 = any taxable ye> is a disqualifi$ corporation = any subsequ5t taxable ye>1 su* election %all n apply to any taxable ye> beg9n+ aft] su* subsequ5t taxable ye>4 7ii7 ,exemption f tax impos$ by section #dcga ,! tax impos$ by section #dcga %all n apply ) respect to any relat$ p]son insurance income treat$ z effectively connect$ ) ! conduct ( a trade or bus9ess )9 ! ,unit$ ,/ates "u subp>agraph 7,c74 7,e7 ,disqualifi$ corporation ,= purposes ( ?is p>agraph ! t]m disqualifi$ corporation means1 ) respect to any taxable ye>1 any =eign corporation :i* is a controll$ =eign corporation at any "t dur+ su* taxable ye> 7det]m9$ )\t reg>d to ?is subsection7 b only if a ,unit$ ,/ates %>ehold] 7det]m9$ )\t reg>d to ?is subsection7 owns 7)9 ! mean+ ( section #ieh7;a77 /ock 9 su* corporation at "s "t dur+ su* taxable ye>4 7#d7 ,treatm5t ( mutual insurance companies ,9 ! case ( a mutual insurance company-- 7,a7 ?is subsection %all apply1 7,b7 policyhold]s ( su* company %all be treat$ z %>ehold]s1 & 7,c7 appropriate adju/m5ts 9 ! application ( ?is subp>t %all be made "u regulations prescrib$ by ! ,secret>y4 7#e7 ,det]m9ation ( pro rata %>e 7,a7 ,9 g5]al ,! pro rata %>e det]m9$ "u ?is p>agraph = any ,unit$ ,/ates %>ehold] is ! less] (-- 7i7 ! am\nt :i* w\ld be det]m9$ "u p>agraph 7#b7 ( section #iea7;a7 if-- 7,i7 only relat$ p]son insurance income 7 tak5 into acc\nt1 7,,ii7 /ock own$ 7)9 ! mean+ ( section #ieh7;a77 by ,unit$ ,/ates %>ehold]s on ! la/ day ( ! taxable ye> 7 ! only /ock 9 ! =eign corporation1 & 7,,iii7 only di/ributions receiv$ by ,unit$ ,/ates %>ehold]s 7 tak5 into acc\nt "u subp>agraph 7,b7 ( su* p>agraph 7#b71 or 7ii7 ! am\nt :i* w\ld be det]m9$ "u p>agraph 7#b7 ( section #iea7;a7 if ! entire e>n+s & pr(its ( ! =eign corporation = ! taxable ye> 7 subp>t ,f income4 7,b7 ,coord9ation ) o!r provisions ,! ,secret>y %all prescribe regulations provid+ = su* modifications to ! provisions ( ?is subp>t z may be necess>y or appropriate by reason ( subp>agraph 7,a74 7#f7 ,relat$ p]son ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,except z provid$ 9 subp>agraph 7,b71 ! t]m relat$ p]son has ! mean+ giv5 su* t]m by section #ied7;b74 7,b7 ,treatm5t ( c]ta9 liability insurance policies ,9 ! case ( any policy ( insurance cov]+ liability aris+ f s]vices p]=m$ z a director1 (fic]1 or employee ( a corporation or z a p>tn] or employee ( a p>tn]%ip1 ! p]son p]=m+ su* s]vices & ! entity = :i* su* s]vices are p]=m$ %all be treat$ z relat$ p]sons4 7#g7 ,regulations ,! ,secret>y %all prescribe su* regulations z may be necess>y to c>ry out ! purposes ( ?is subsection1 includ+-- 7,a7 regulations prev5t+ ! avoidance ( ?is subsection ?r\gh cross insurance arrangem5ts or o!rwise1 & 7,b7 regulations :i* may provide t a p]son w n be treat$ z a ,unit$ ,/ates %>ehold] "u p>agraph 7#a7 ) respect to any =eign corporation if nei!r su* p]son 7nor any relat$ p]son to su* p]son7 is 7directly or indirectly7 insur$ "u any policy ( insurance or re9surance issu$ by su* =eign corporation4 7b7 ,election by ,=eign ,insurance ,company ,to ,be ,treat$ z ,dome/ic ,corporation 7#a7 ,9 g5]al ,if-- 7,a7 a =eign corporation is a controll$ =eign corporation 7z def9$ 9 section #ieg7;a7 by sub/itut+ #be p]c5t or m = m ?an #ej p]c5t & by us+ ! def9ition ( ,unit$ ,/ates %>ehold] "u subsection 7a77#a77;,b771 7,b7 su* =eign corporation w\ld qualify "u "p ,i or ,,ii ( sub*apt] ,l = ! taxable ye> if x 7 a dome/ic corporation1 7,c7 su* =eign corporation meets su* requirem5ts z ! ,secret>y %all prescribe to ensure t ! taxes impos$ by ?is *apt] on su* =eign corporation are paid1 & 7,d7 su* =eign corporation makes an election to h ?is p>agraph apply & waives all b5efits to su* corporation grant$ by ! ,unit$ ,/ates "u any treaty1 = purposes ( ?is title1 su* corporation %all be treat$ z a dome/ic corporation4 7#b7 ,p]iod dur+ :i* election is 9 effect 7,a7 ,9 g5]al ,except z provid$ 9 subp>agraph 7,b71 an election "u p>agraph 7#a7 %all apply to ! taxable ye> = :i* made & all subsequ5t taxable ye>s unless revok$ ) ! cons5t ( ! ,secret>y4 7,b7 ,t]m9ation ,if a corporation :i* made an election "u p>agraph 7#a7 = any taxable ye> fails to meet ! requirem5ts ( subp>agraphs 7,a71 7,b71 & 7,c7 ( p>agraph 7#a7 = any subsequ5t taxable ye>1 su* election %all n apply to any taxable ye> beg9n+ aft] su* subsequ5t taxable ye>4 7#c7 ,effect ( election 7,a7 ,9 g5]al ,= purposes ( section #cfg1 any =eign corporation mak+ an election "u p>agraph 7#a7 %all be treat$ z transf]r+ 7z ( ! #a/ day ( ! #a/ taxable ye> to :i* su* election applies7 all ( its assets to a dome/ic corporation 9 connection ) an ex*ange to :i* section #ced applies4 7,b7 ,exception = pre-#aihh e>n+s & pr(its 7i7 ,9 g5]al ,e>n+s & pr(its ( ! =eign corporation accumulat$ 9 taxable ye>s beg9n+ be=e ,janu>y #a1 #aihh1 %all n be includ$ 9 ! gross income ( ! p]sons hold+ /ock 9 su* corporation by reason ( subp>agraph 7,a74 7ii7 ,treatm5t ( di/ributions ,= purposes ( ?is title1 any di/ribution made by a corporation to :i* an election "u p>agraph 7#a7 applies out ( e>n+s & pr(its accumulat$ 9 taxable ye>s beg9n+ be=e ,janu>y #a1 #aihh1 %all be treat$ z a di/ribution made by a =eign corporation4 7iii7 ,c]ta9 rules to cont9ue to apply to pre-#aihh e>n+s ,section #hhd to ! ext5t ! =eign corporation re9ve/$ #aihg e>n+s & pr(its 9 ,unit$ ,/ates assets %all be appli$ )\t reg>d to p>agraph 7#a71 except t1 9 ! case ( a corporation to :i* an election "u p>agraph 7#a7 applies1 only e>n+s & pr(its accumulat$ 9 taxable ye>s beg9n+ be=e ,janu>y #a1 #aihh1 %all be tak5 into acc\nt4 7#d7 ,effect ( t]m9ation ,= purposes ( section #cfg1 if-- 7,a7 an election is made by a corporation "u p>agraph 7#a7 = any taxable ye>1 & 7,b7 su* election ceases to apply = any subsequ5t taxable ye>1 su* corporation %all be treat$ z a dome/ic corporation transf]r+ 7z ( ! #a/ day ( su* subsequ5t taxable ye>7 all ( its prop]ty to a =eign corporation 9 connection ) an ex*ange to :i* section #ced applies4 7#e7 ,additional tax on corporation mak+ election 7,a7 ,9 g5]al ,if a corporation makes an election "u p>agraph 7#a71 ! am\nt ( tax impos$ by ?is *apt] = ! #a/ taxable ye> to :i* su* election applies %all be increas$ by ! am\nt det]m9$ "u subp>agraph 7,b74 7,b7 ,am\nt ( tax ,! am\nt ( tax det]m9$ "u ?is p>agraph %all be equal to ! less] (-- 7i7 #c_/d ( #a p]c5t ( ! aggregate am\nt ( capital & accumulat$ surplus ( ! corporation z ( ,decemb] #ca1 #aihg1 or 7ii7 #a1ejj1jjj4 4 7b7 ,treatm5t ( c]ta9 exclud$ subp>t ,f income z previ\sly tax$ income ,section #iei7;g71 z add$ by section #cca1 is am5d$ to read z foll[s3 7g7 ,special rules = nontax$ portion ( c]ta9 income ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,a ,unit$ ,/ates %>ehold]'s pro rata %>e ( ! excludable portion ( ! controll$ =eign corporation's subp>t ,f income %all be treat$ z an am\nt :i* has be5 includ$ 9 gross income "u section #iea7;a74 7#b7 ,ord]+ rule ,not)/&+ subsection 7c71 = purposes ( subsections 7a7 & 7b71 section #caf7;a7 %all be appli$ by apply+ p>agraph 7#b7 !re( & !n p>agraph 7#a7 !re(-- 7,a7 fir/ to ! d$uctible portion 7z def9$ 9 section #iff7;c77#c77 ( ! increase 9 subp>t ,f income describ$ 9 section #iff7;a77#a7 includ$ 9 ! gross income ( ,unit$ ,/ates %>ehold]s "u section #iea7;a77#a7 7aft] application ( section #ife7;b77#b77;,a771 7,b7 second to ! excludable portion ( ! controll$ =eign corporation's subp>t ,f income1 & 7,c7 !n to ! am\nts describ$ 9 p>agraph 7#a71 7#b71 or 7#c7 ( subsection 7c7 9 accordance ) ! provisions ( subsection 7c74 7#c7 ,def9itions ,= purposes ( ?is subsection-- 7,a7 ,d$uctible portion ,! t]m d$uctible portion has ! mean+ giv5 su* t]m by section #iff7;c77#c74 7,b7 ,excludable portion ,! t]m excludable portion means1 ) respect to ! subp>t ,f income ( a controll$ =eign corporation1 s mu* ( su* controll$ =eign corporation's modifi$ active income z is n tak5 into acc\nt 9 comput+ subp>t ,f income "u section #ieb7;a77#a74 4 7c7 ,ga9s & losses f ! sale ( ,,cfc /ock 7#a7 ,ga9s 7,a7 ,9 g5]al ,"p ,i ( sub*apt] ,p ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new section3 #abjc4 ,ga9s f sales or ex*anges ( /ock 9 controll$ =eign corporations 7a7 ,9 g5]al ,9 ! case ( a ,unit$ ,/ates %>ehold] 7z def9$ 9 section #iea71 !re %all be exclud$ f gross income an am\nt equal to ! applicable portion ( ! am\nt ( any ga9 recogniz$ f ! sale or ex*ange ( /ock 9 a controll$ =eign corporation4 7b7 ,applicable portion ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m applicable portion means ! am\nt :i* be>s ! same ratio to ! ga9 recogniz$ f su* sale or ex*ange z-- 7,a7 ! %>ehold]'s pro rata %>e 7det]m9$ "u section #iea7;a77#b77 ( ! excludable portion ( ! aggregate subp>t ,f income ( ! controll$ =eign corporation = ! applicable p]iod1 be>s to 7,b7 ! sum ( ! am\nt det]m9$ "u subp>agraph 7,a7 plus ! %>ehold]'s pro rata %>e 7det]m9$ "u section #iea7;a77#b77 ( ! aggregate subp>t ,f income ( ! controll$ =eign corporation = ! applicable p]iod4 7#b7 ,excludable portion ,= purposes ( ?is section1 ! t]m excludable portion has ! mean+ giv5 su* t]m by section #iei7;g77#c77;,b74 7#c7 ,applicable p]iod ,! t]m applicable p]iod means1 ) respect to any /ock1 ! %ort] ( ! #c-taxable-ye> p]iod imm$iately prec$+ ! taxable ye> ( ! sale or ex*ange or ! %>ehold]'s hold+ p]iod 9 ! /ock4 ,9 no ev5t %all ! applicable p]iod include any portion ( any taxable ye> beg9n+ be=e ! applicable date 7z def9$ 9 section #cjj ( ! ,infra/ructure #b4j ,act74 4 7,b7 ,cl]ical am5dm5t ,! table ( sections = "p ,i ( sub*apt] ,p ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #abjc4 ,ga9s f sales or ex*anges ( /ock 9 controll$ =eign corporations4 4 7#b7 ,losses 7,a7 ,9 g5]al ,"p ,,ii ( sub*apt] ,p ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new section3 #abac4 ,losses f sales or ex*anges ( /ock 9 controll$ =eign corporations 7a7 ,9 g5]al ,9 ! case ( a ,unit$ ,/ates %>ehold] 7z def9$ 9 section #iea71 any loss f ! sale or ex*ange ( /ock 9 a controll$ =eign corporation %all be r$uc$ 7b n bel[ z]o7 by an am\nt equal to ! %>ehold]'s aggregate pro rata %>e 7det]m9$ "u section #iea7;a77#b77 ( ! excludable portion ( ! subp>t ,f income ( ! controll$ =eign corporation dur+ ! %>ehold]'s hold+ p]iod 9 ! /ock4 7b7 ,excludable portion ,= purposes ( ?is section1 ! t]m excludable portion has ! mean+ giv5 su* t]m by section #iei7;g77#c77;,b74 4 7,b7 ,cl]ical am5dm5t ,! table ( sections = "p ,i ( sub*apt] ,p ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #abac4 ,losses f sales or ex*anges ( /ock 9 controll$ =eign corporations4 4 7d7 ,repeal ( ord9>y income treatm5t = ga9s f ! sale ( /ock 9 c]ta9 =eign corporations 7#a7 ,9 g5]al ,"p ,,iv ( sub*apt] ,p ( *apt] #a is am5d$ by /rik+ section #abdh4 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #bde7;a7 is am5d$ by /rik+ p>agraph 7#aa74 7,b7 ,section #cch7;h7 is am5d$-- 7i7 9 p>agraph 7#f77;,b77ii71 by /rik+ or describ$ 9 section #abdh7;e71 & 7ii7 9 p>agraph 7#af71 by /rik+ ! second s5t5ce4 7,c7 ,section #gea is am5d$-- 7i7 9 subsection 7c71 by /rik+ /ock 9 c]ta9 =eign corporations 7z describ$ 9 section #abdh711 & 7ii7 by /rik+ subsection 7e7 & r$esignat+ subsection 7f7 z subsection 7e74 7,d7 ,section #hfe7k7 is am5d$ to read z foll[s3 7k7 ,cross ref]5ce ,= s\rc+ ( income f c]ta9 =eign curr5cy transactions1 see section #ihh4 4 7,e7 ,section #ijd7;h77#g7 is am5d$ by /rik+ or z a divid5d "u section #abdh4 7,f7 ,section #iea7;a77#b7 is am5d$ by /rik+ ! la/ s5t5ce !re(4 7,g7 ,section #ifd is am5d$ by /rik+ subsection 7e74 7,h7 ,section #ihi7;b7 is am5d$ by /rik+ p>agraph 7#b7 & by r$esignat+ p>agraphs 7#c7 & 7#d7 z p>agraphs 7#b7 & 7#c71 respectively4 7e7 ,coord9ation ) am\nts includ$ 9 gross income ( ,unit$ ,/ates %>ehold]s 7#a7 ,9 g5]al ,p>agraph 7#a7 ( section #iea7;a7 is am5d$ by /rik+ su* taxable ye> ( ! corporation ends-- & all t foll[s ?r\gh ! end p]iod & ins]t+3 su* taxable ye> ( ! corporation ends1 ! %>ehold]'s pro rata %>e 7det]m9$ "u p>agraph 7#b77 ( ! corporation's subp>t ,f income = su* taxable ye>44 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #iea7;a7 is am5d$-- 7i7 by /rik+ p>agraph 7#a77;,a77i7 9 p>agraph 7#b7 & ins]t+ p>agraph 7#a71 & 7ii7 by /rik+ p>agraph 7#c74 7,b7 ,subp>agraph 7,a7 ( section #eab7;b77#ag7 is am5d$ by /rik+ #iea7;a77#a77;,a7 & ins]t+ #iea7;a77#a74 7,c7 ,section #hea7;b7 is am5d$ by /rik+ #iea7;a77#a77;,a77i7 9 ! fir/ s5t5ce foll[+ p>agraph 7#c7 & ins]t+ #iea7;a77#a74 7,d7 ,section #iei7;a7 is am5d$-- 7i7 by /rik+ %all n1 :5 & all t foll[s ?r\gh su* %>ehold] & ins]t+ %all n1 :5 actually di/ribut$ to su* %>ehold]1 & 7ii7 by /rik+ & ! rules ( subsection 7f7 %all apply = purposes ( p>agraph 7#b7 ( ?is subsection4 7,e7 ,section #iei7;c7 is am5d$ by add+ at ! end ! foll[+3 ,ref]5ces 9 ?is subsection & subsection 7f7 to section #iea7;a77#a77;,b7 %all be treat$ z ref]5ces to su* provisions z 9 effect on ! day be=e ! enactm5t ( ! ,infra/ructure #b4j ,act44 7,f7 ,section #iei7;e7 is am5d$ by /rik+ #iea7;a77#a77;,a7 & ins]t+ #iea7;a77#a74 7,g7 ,section #ihi7;b77#c7 is am5d$ by /rik+ #iea7;a77#a77;,a7 & ins]t+ #iea7;a77#a74 7,h7 ,section #abih7;b7 is am5d$ by /rik+ p>agraph 7#h74 7f7 ,application ( anti-,loss importation rules ,section #cfb7;e77#a77;,b7 is am5d$ by add+ at ! end ! foll[+ new s5t5ce3 ,= purposes ( clause 7i71 except z provid$ "u regulations1 a controll$ =eign corporation %all be consid]$ to be subject to tax "u ?is subtitle44 7g7 ,o!r con=m+ am5dm5ts 7#a7 ,sections #afc7;e77#c77;,b77i7 & #bfg7;a77#c77;,b77i7 are ea* am5d$ by /rik+ & qualifi$ deficits "u section #ieb7;c77#a77;,b7 & ins]t+ & loss c>ry=w>ds "u sections #ieb7;d7 & #iec7;b74 7#b7 ,section #cjd7;b77#e77;,b77ii7 is am5d$ by /rik+ #iec7;c7 & ins]t+ #ief7;a74 7#c7 ,section #cee7;g77#b77;,b77ii77,i7 is am5d$ by /rik+ section #ied7;h77#d7 & ins]t+ section #ied7;c77#d74 7#d7 ,section #eab7;b77#ag7 is am5d$ by /rik+ #iec & ins]t+ section #iee4 7#e7 ,section #hfd7;d77#h7 is am5d$ by /rik+ or section #ief7;b77#c74 7#f7 ,section #hfd7;d77#e77;,a7 is am5d$-- 7,a7 by /rik+ clause 7iii7 & r$esignat+ clause 7iv7 z clause 7iii71 & 7,b7 by /rik+ #ied7;c77#c77;,a7 9 clause 7iii7 7z r$esignat$ by subp>agraph 7,a77 & ins]t+ #ied7;a77#c77;,a74 7#g7 ,section #hfd7;d77#g77;,b7 is am5d$ by /rik+ =eign base company income 7z def9$ 9 section #ied7;a71 det]m9$ )\t reg>d to section #ied7;b77#c77;,a77 & ins]t+ passive income 7z def9$ 9 section #ied7;a774 7#h7 ,section #hha7;c77#e77;,a77iii7 is am5d$ by /rik+ #ied7;c77#c77;,a7 & ins]t+ #ied7;a77#c77;,a74 7#i7 ,section #hhd7;d77#b77;,d7 is am5d$ by /rik+ #iec7;c77#c77;,c7 & ins]t+ #ief7;a77#c77;,c74 7#aj7 ,section #hih7;b77#c7 is am5d$-- 7,a7 by /rik+ #iec7;c77#b7 & ins]t+ #ief7;a77#b71 & 7,b7 by /rik+ #iec7;c77#a7 & ins]t+ #ief7;a77#a74 7#aa7 ,section #icf7;h77#e7 is am5d$-- 7,a7 by ins]t+ 7z 9 effect on ! day be=e ! enactm5t ( ! ,infra/ructure #b4j ,act7 aft] section #ied 9 ! la/ s5t5ce ( subp>agraph 7,b77ii71 & 7,b7 9 subp>agraph 7,f77iv77,,ii7-- 7i7 by ins]t+ 7z 9 effect on ! day be=e ! enactm5t ( ! ,infra/ructure #b4j ,act7 aft] section #ied1 & 7ii7 by ins]t+ 7z s 9 effect7 aft] section #ied7;a74 7#ab7 ,section #ieg7;b7 is am5d$-- 7,a7 by /rik+ income describ$ 9 section #iec7;a7 & ins]t+ income describ$ 9 section #iee7;a71 & 7,b7 by /rik+ contracts describ$ 9 section #iec7;a77#a7 & ins]t+ contracts describ$ 9 section #iee7;a77#a74 7#ac7 ,section #ieh7;b7 is am5d$-- 7,a7 by /rik+ #ief7;c77#b71 be=e & #ieg1 7,b7 by /rik+ to treat ! /ock ( a dome/ic corporation z own$ by a ,unit$ ,/ates %>ehold] ( ! controll$ =eign corporation = purposes ( section #ief7;c77#b711 & 7,c7 by /rik+ ! la/ s5t5ce4 7#ad7 ,section #ifd7;b7 is am5d$ by /rik+ sections #ieb1 #iee1 & #ief & ins]t+ section #ieb4 7#ae7 ,section #ifd7;e77#b7 is am5d$ by /rik+ #ied7;c77#c77;,a7 & ins]t+ #ied7;a77#c77;,a74 7#af7 7,a7 ,"p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ subp>t ,g4 7,b7 ,section #hfe7;e77#b77;,a7 is am5d$ by /rik+ ! la/ s5t5ce4 7,c7 ,! table ( subp>ts = "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ ! item relat+ to subp>t ,g4 7#ag7 ,section #iii7;c7 is am5d$-- 7,a7 by /rik+ 1 #ieb7;a77#c7 9 p>agraph 7#a71 & 7,b7 by /rik+ 1 ! addition to subp>t ,f income "u section #ieb7;a77#c71 9 p>agraph 7#b74 7#ah7 ,section #abif7;f77#b7 is am5d$-- 7,a7 by /rik+ =eign p]sonal hold+ company income describ$ 9 section #ied7;c77#a77;,a7 9 subp>agraph 7,a7 & ins]t+ passive income 7z def9$ 9 section #ied7;a771 & 7,b7 by /rik+ =eign p]sonal hold+ company income s describ$ 9 subp>agraph 7,b7 & ins]t+ su* passive income4 7#ai7 ,section #abig7;b7 is am5d$ to read z foll[s3 7b7 ,passive income 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! t]m passive income means any income receiv$ or accru$ by any =eign corporation :i* is ( a k9d :i* w\ld be passive income z def9$ 9 section #ied if ! =eign corporation 7 a controll$ =eign corporation4 7#b7 ,exception ,except z provid$ 9 regulations1 ! t]m passive income does n include any income :i* is int]e/1 a divid5d1 or a r5t or royalty1 :i* is receiv$ or accru$ f a relat$ p]son 7)9 ! mean+ ( section #ied7;b77 to ! ext5t t su* am\nt is prop]ly allocable 7"u regulations prescrib$ by ! ,secret>y7 to income ( su* relat$ p]son :i* is n passive income4 4 7#bj7 ,! foll[+ sections are am5d$ by /rik+ #ied7;d77#c7 ea* place x appe>s & ins]t+ #ied7;b73 7,a7 ,section #ieh7;b74 7,b7 ,section #ihh7;a77#c77;,c74 7,c7 ,subsections 7d77#c77;,a7 & 7e77#b77;,b77i7 ( section #abih4 7,d7 ,section #adga7;e77#b74 7,e7 ,section #caba7z77#b74 7#ba7 ,! table ( sections = subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ ! items relat+ to sections #ieb ?r\gh #ief & ins]t+ ! foll[+3 ,sec4 #ieb4 ,subp>t ,f income def9$4 ,sec4 #iec4 ,active =eign m>ket income4 ,sec4 #ied4 ,def9ition ( passive income4 ,sec4 #iee4 ,def9ition ( insurance income4 ,sec4 #ief4 ,special rule = c]ta9 captive insurance companies4 4 7h7 ,effective dates 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ on or aft] ! applicable date1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s ) or )9 :i* su* taxable ye>s ( =eign corporations end4 7#b7 ,ga9s & losses f ! sale ( ,,cfc /ock2 ,repeal ( section #abdh ,! am5dm5ts made by subsections 7c7 & 7d7 %all apply to sales or ex*anges on or aft] ! applicable date4 #cjb4 ,deem$ repatriation ^u transition to fallback int]national tax re=m 7a7 ,9 g5]al ,subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by add+ at ! end ! foll[+ new section3 #iff4 ,deem$ repatriation ^u transition to fallback int]national tax re=m 7a7 ,treatm5t ( def]r$ =eign income z subp>t ,f income ,9 ! case ( ! la/ taxable ye> ( a def]r$ =eign income corporation :i* beg9s be=e ! applicable date 7z def9$ 9 section #cjj ( ! ,infra/ructure #b4j ,act71 ! subp>t ,f income ( su* =eign corporation 7z o!rwise det]m9$ = su* taxable ye> "u section #ieb7 %all be increas$ by ! inclusion p]c5tage 7z def9$ 9 section #ieb7;d7 z 9 effect = taxable ye>s beg9n+ on or aft] ! applicable date 7z s def9$777 ( ! accumulat$ po/-#aihf def]r$ =eign income ( su* corporation det]m9$ z ( ! close ( su* la/ taxable ye>4 7b7 ,application ( c]ta9 rules ,rules simil> to ! rules ( subsections 7b71 7f71 7g71 7i71 & 7j7 ( section #ife %all apply = purposes ( ?is section4 7c7 ,def9itions ,t]ms us$ 9 ?is section :i* are also us$ 9 section #ife %all h ! same mean+s :5 us$ 9 ?is section z :5 su* t]ms are us$ 9 section #ife4 4 7b7 ,cl]ical am5dm5t ,! table ( sections = subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a ( su* ,code is am5d$ by add+ at ! end ! foll[+3 ,sec4 #iff4 ,deem$ repatriation ^u transition to fallback int]national tax re=m4 4 ,,ii ,=eign tax cr$it limitations #caa4 ,re=m ( =eign tax cr$it limitation 7a7 ,9 g5]al ,subsection 7d7 ( section #ijd is am5d$ to read z foll[s3 7d7 ,sep>ate application ( section ) respect to c]ta9 categories ( income 7#a7 ,9 g5]al ,! provisions ( subsections 7a71 7b71 & 7c7 & sections #ijg & #ifj %all be appli$ sep>ately ) respect to-- 7,a7 am\nts includ$ "u section #iea7;a7 :i* are attributable to active =eign m>ket income 7z def9$ 9 section #iec71 7,b7 passive category income1 & 7,c7 income o!r ?an income describ$ 9 ei!r ( ! prec$+ subp>agraphs4 7#b7 ,def9itions & special rules 7,a7 ,passive category income 7i7 ,9 g5]al ,! t]m passive category income means-- 7,i7 ,unit$ ,/ates taxpay] passive income describ$ 9 subp>agraph 7,b71 & 7,,ii7 income :i* is includ$ 9 gross income ( ! taxpay] "u section #iea7;a77#a7 to ! ext5t su* income is attributable to passive income 7z def9$ 9 section #ied7;a774 7ii7 ,exception = high-tax$ income ,passive category income %all n include any high-tax$ income4 7iii7 ,cl>ification ( application ( section #hfd7;d77#f7 ,9 det]m9+ :e!r any income is passive category income1 ! rules ( section #hfd7;d77#f7 %all apply only 9 ! case ( income ( a controll$ =eign corporation4 7,b7 ,unit$ ,/ates taxpay] passive income ,unit$ ,/ates taxpay] passive income describ$ 9 ?is subp>agraph is income receiv$ or accru$ by ! taxpay] :i* is ( a k9d t w\ld be passive income z def9$ "u section #ied7;a7 if su* taxpay] 7 a controll$ =eign corporation4 7,c7 ,treatm5t ( f9ancial s]vices income & companies 7i7 ,9 g5]al ,f9ancial s]vices income :i* is n active =eign m>ket category income %all be treat$ z income describ$ 9 p>agraph 7#a77;,c7 9 ! case (-- 7,i7 a memb] ( a f9ancial s]vices gr\p1 & 7,,ii7 any o!r p]son if su* p]son is pr$om9antly engag$ 9 ! active conduct ( a bank+1 insurance1 f9anc+1 or simil> bus9ess4 7ii7 ,f9ancial s]vices gr\p ,! t]m f9ancial s]vices gr\p means any affiliat$ gr\p 7z def9$ 9 section #aejd7;a7 )\t reg>d to p>agraphs 7#b7 & 7#c7 ( section #aejd7;b77 :i* is pr$om9antly engag$ 9 ! active conduct ( a bank+1 insurance1 f9anc+1 or simil> bus9ess4 ,9 det]m9+ :e!r su* a gr\p is s engag$1 !re %all be tak5 into acc\nt only ! income ( memb]s ( ! gr\p t are-- 7,i7 ,unit$ ,/ates corporations1 or 7,,ii7 controll$ =eign corporations 9 :i* su* ,unit$ ,/ates corporations own1 directly or indirectly1 at lea/ #hj p]c5t ( ! total vot+ p[] & value ( ! /ock4 7iii7 ,pass-?ru entities ,! ,secret>y %all by regulation specify = purposes ( ?is subp>agraph ! treatm5t ( f9ancial s]vices income receiv$ or accru$ by p>tn]%ips & by o!r pass-?ru entities :i* are n memb]s ( a f9ancial s]vices gr\p4 7,d7 ,f9ancial s]vices income 7i7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subp>agraph1 ! t]m f9ancial s]vices income means any income :i* is receiv$ or accru$ by any p]son pr$om9antly engag$ 9 ! active conduct ( a bank+1 insurance1 f9anc+1 or simil> bus9ess1 & :i* is-- 7,i7 describ$ 9 clause 7ii71 or 7,,ii7 ,unit$ ,/ates taxpay] passive income 7det]m9$ )\t reg>d to subp>agraph 7,a77ii774 7ii7 ,g5]al description ( f9ancial s]vices income ,income is describ$ 9 ?is clause if su* income is-- 7,i7 d]iv$ 9 ! active conduct ( a bank+1 f9anc+1 or simil> bus9ess1 7,,ii7 d]iv$ f ! inve/m5t by an insurance company ( its une>n$ premiums or res]ves ord9>y & necess>y = ! prop] conduct ( its insurance bus9ess1 or 7,,iii7 ( a k9d :i* w\ld be insurance income z def9$ 9 section #iee7;a74 7,e7 ,high-tax$ income ,! t]m high-tax$ income means any income :i* 7b = ?is subp>agraph7 w\ld be passive category income if ! sum (-- 7i7 ! =eign income taxes paid or accru$ by ! taxpay] ) respect to su* income1 & 7ii7 ! =eign income taxes deem$ paid by ! taxpay] ) respect to su* income "u section #ifj1 exce$s ! highe/ rate ( tax specifi$ 9 section #a or #aa 7:i*ev] applies7 multipli$ by ! am\nt ( su* income 7det]m9$ ) reg>d to section #gh74 ,= purposes ( ! prec$+ s5t5ce1 ! t]m =eign income taxes means any income1 w> pr(its1 or excess pr(its tax impos$ by any =eign c\ntry or possession ( ! ,unit$ ,/ates4 7,f7 ,treatm5t ( income tax base diff]5ces 7i7 ,9 g5]al ,9 ! case ( taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjjf1 tax impos$ "u ! law ( a =eign c\ntry or possession ( ! ,unit$ ,/ates on an am\nt :i* does n con/itute income "u ,unit$ ,/ates tax pr9ciples %all be treat$ z impos$ on income describ$ 9 p>agraph 7#a77;,c74 7ii7 ,special rules = ye>s aft] #bjjf & be=e ! applicable date ,9 ! case ( taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjjf1 & on or be=e ! applicable date 7z def9$ 9 section #cjj ( ! ,infra/ructure #b4j ,act71 tax impos$ "u ! law ( a =eign c\ntry or possession ( ! ,unit$ ,/ates on an am\nt :i* does n con/itute income "u ,unit$ ,/ates tax pr9ciples %all be treat$ z impos$ on income describ$ 9 p>agraph 7#a77;,b7 7z 9 effect = taxable ye>s beg9n+ ! day be=e su* applicable date74 7iii7 ,special rule = ye>s be=e #bjjg 7,i7 ,9 g5]al ,9 ! case ( taxes paid or accru$ 9 taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjjd1 & be=e ,janu>y #a1 #bjjg1 a taxpay] may elect to treat tax impos$ "u ! law ( a =eign c\ntry or possession ( ! ,unit$ ,/ates on an am\nt :i* does n con/itute income "u ,unit$ ,/ates tax pr9ciples z tax impos$ on income describ$ 9 subp>agraph 7,c7 or 7,i7 ( p>agraph 7#a7 7z 9 effect = taxable ye>s beg9n+ 9 #bjjf74 7,,ii7 ,revocation ,any su* election %all apply to ! taxable ye> = :i* made & all subsequ5t taxable ye>s describ$ 9 subclause 7,i7 unless revok$ ) ! cons5t ( ! ,secret>y4 7,g7 ,transition rules = c]ta9 c>ry=w>ds & c>rybacks ,= purposes ( p>agraph 7#a7-- 7i7 9 ! case ( any taxes c>ri$ f any taxable ye> beg9n+ be=e ! applicable date 7z def9$ 9 section #cjj ( ! ,infra/ructure #b4j ,act71 to any taxable ye> beg9n+ on or aft] su* date-- 7,i7 if su* taxes 7 treat$ z attributable to income describ$ 9 p>agraph 7#a77;,a7 7z 9 effect = taxable ye>s beg9n+ ! day be=e su* applicable date71 su* taxes %all be treat$ z attributable to income describ$ 9 p>agraph 7#a77;,b71 & 7,,ii7 if su* taxes 7 treat$ z attributable to income describ$ 9 p>agraph 7#a77;,b7 7z 9 effect = taxable ye>s beg9n+ ! day be=e su* applicable date71 su* taxes %all be treat$ z attributable to income describ$ 9 p>agraph 7#a77;,c71 & 7ii7 ! ,secret>y may by regulations provide = ! allocation ( any c>ryback ( taxes ) respect to income f a taxable ye> beg9n+ on or aft] su* applicable date1 to a taxable ye> beg9n+ be=e su* date = purposes ( allocat+ su* income among ! sep>ate categories 9 effect = ! taxable ye> to :i* c>ri$4 7#c7 ,controll$ =eign corporation2 ,unit$ ,/ates %>ehold] ,= purposes ( ?is subsection-- 7,a7 ,controll$ =eign corporation ,! t]m controll$ =eign corporation has ! mean+ giv5 su* t]m by section #ieg 7tak+ into acc\nt section #ief7;a774 7,b7 ,unit$ ,/ates %>ehold] ,! t]m ,unit$ ,/ates %>ehold] has ! mean+ giv5 su* t]m by section #iea7;b7 7tak+ into acc\nt section #ief7;a774 7#d7 ,sep>ate application to items res\rc$ "u treaties 7,a7 ,9 g5]al ,if-- 7i7 )\t reg>d to any treaty obligation ( ! ,unit$ ,/ates1 any item ( income w\ld be treat$ z d]iv$ f s\rces )9 ! ,unit$ ,/ates1 7ii7 "u a treaty obligation ( ! ,unit$ ,/ates1 su* item w\ld be treat$ z aris+ f s\rces outside ! ,unit$ ,/ates1 & 7iii7 ! taxpay] *ooses ! b5efits ( su* treaty obligation1 subsections 7a71 7b71 & 7c7 ( ?is section & sections #ijg & #ifj %all be appli$ sep>ately ) respect to ea* su* item4 7,b7 ,coord9ation ) o!r provisions ,?is p>agraph %all n apply to any item ( income to :i* subsection 7h77#aj7 or section #hfe7;h7 applies4 7,c7 ,regulations ,! ,secret>y may issue su* regulations z may be necess>y or appropriate to c>ry out ! purposes ( ?is p>agraph1 includ+ regulations :i* provide t relat$ items ( income may be aggregat$ = purposes ( ?is p>agraph4 7#e7 ,regulations ,! ,secret>y %all prescribe su* regulations z may be necess>y or appropriate = ! purposes ( ?is subsection1 includ+ prev5t+ ! manipulation ( ! "* ( income ! effect ( :i* is to avoid ! purposes ( ?is subsection4 4 7b7 ,application ( p] c\ntry limitation ,section #ijd is am5d$ by ins]t+ aft] subsection 7d7 ! foll[+ new subsection3 7e7 ,limitations appli$ on a p] c\ntry basis ,! provisions ( subsections 7a71 7b71 7c71 & 7d7 & sections #ijg & #ifj %all be appli$ sep>ately ) respect to ea* =eign c\ntry or possession ) respect to :i* taxes describ$ 9 section #ija7;b7 are paid or accru$4 4 7c7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ on or aft] ! applicable date4 #cab4 ,d5ial ( cr$it & d$uction = =eign taxes ) respect to exclud$ subp>t ,f income 7a7 ,9 g5]al ,section #ija is am5d$ by r$esignat+ subsection 7n7 z subsection 7o7 & by ins]t+ aft] subsection 7m7 ! foll[+3 7n7 ,d5ial ( =eign tax cr$it & d$uction ) respect to exclud$ subp>t ,f income 7#a7 ,9 g5]al ,not)/&+ section #ifj7;b71 no cr$it %all be all[$ "u subsection 7a7 = any income1 w> pr(its1 or excess pr(its taxes paid or accru$ 7or deem$ paid or accru$ "u section #ifj7 ) respect to ! excludable portion ( subp>t ,f income or any di/ribution receiv$ by a ,unit$ ,/ates %>ehold] 7z def9$ 9 section #iea7;b77 :i* is prop]ly attributable to su* excludable portion4 ,no d$uction %all be all[$ to a taxpay] "u ?is *apt] = any tax = :i* a cr$it is n all[able by reason ( ! prec$+ s5t5ce4 7#b7 ,excludable portion ,! t]m excludable portion has ! mean+ giv5 su* t]m by section #iei7;g77#c77;,b74 7#c7 ,coord9ation ) section #gh ,section #gh %all n apply to any tax :i* is n all[able z a cr$it "u ?is section by reason ( ?is subsection4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ on or aft] ! applicable date1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s ) or )9 :i* su* taxable ye>s ( =eign corporations end4 ,,iii ,exp5se disall[ance #cba4 ,disall[ance ( d$uction = exp5ses allocable to exempt income ( a controll$ =eign corporation 7a7 ,9 g5]al ,"p ,,ix ( sub*apt] ,b ( *apt] #a is am5d$ by add+ at ! end ! foll[+3 #bfe;,a4 ,exp5ses allocable to exempt income ( a controll$ =eign corporation 7a7 ,9 g5]al ,9 ! case ( a ,unit$ ,/ates %>ehold] ( a controll$ =eign corporation = any taxable ye>1 no d$uction %all be all[$ "u ?is *apt] =-- 7#a7 ! disall[$ portion ( any allocable ,,cfc int]e/1 or 7#b7 exp5ses directly allocable to ! excludable portion ( subp>t ,f income 7z def9$ 9 section #iei7;g77#c77;,b774 7b7 ,disall[$ portion ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m disall[$ portion means1 ) respect to any allocable ,,cfc int]e/ 9 connection ) a controll$ =eign corporation1 ! exclusion p]c5tage ( ! am\nt :i* be>s ! same ratio to ! am\nt ( su* int]e/ z-- 7,a7 ! corporation's modifi$ active income 7z def9$ 9 section #ieb7 = ! applicable taxable ye>1 be>s to 7,b7 ! corporation's curr5t e>n+s & pr(its4 7#b7 ,curr5t e>n+s & pr(its ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m curr5t e>n+s & pr(its means ! e>n+s & pr(its ( ! controll$ =eign corporation = ! applicable taxable ye>1 )\t dim9ution by reason ( di/ributions made dur+ ! taxable ye>4 7,b7 ,special rule = det]m9+ e>n+s & pr(its ,e>n+s & pr(its ( any controll$ =eign corporation %all be det]m9$ )\t reg>d to p>agraphs 7#d71 7#e71 & 7#f7 ( section #cab7n74 ,"u regulations1 ! prec$+ s5t5ce %all n apply to ! ext5t x w\ld increase e>n+s & pr(its by an am\nt :i* 0 previ\sly di/ribut$ by ! controll$ =eign corporation4 7#c7 ,exclusion p]c5tage ,! t]m exclusion p]c5tage means1 ) respect to any controll$ =eign corporation = any taxable ye>1 ! numb] ( p]c5tage po9ts by :i* #ajj p]c5t exce$s ! inclusion p]c5tage det]m9$ "u section #ieb7;d7 ) respect to su* controll$ =eign corporation = su* taxable ye>4 7c7 ,def9itions & special rules ,= purposes ( ?is section-- 7#a7 ,allocable ,,cfc int]e/ ,! t]m allocable ,,cfc int]e/ means any int]e/ exp5se paid or accru$ dur+ ! taxable ye> by a ,unit$ ,/ates %>ehold] ( a controll$ =eign corporation :i* "u section #hfa1 & subsection 7e7 or 7f7 ( section #hfd 7:i*ev] is applicable71 is apportion$ to income ( ! controll$ =eign corporation4 7#b7 ,applicable taxable ye> ,! t]m applicable taxable ye> means1 ) respect to any controll$ =eign corporation1 ! taxable ye> ( su* corporation :i* ends ) or )9 ! taxable ye> ( ! ,unit$ ,/ates %>ehold] describ$ 9 subsection 7a74 7#c7 ,unit$ ,/ates %>ehold]2 controll$ =eign corporation ,! t]m ,unit$ ,/ates %>ehold] has ! mean+ giv5 su* t]m by section #iea7;b7 & ! t]m controll$ =eign corporation %all h ! mean+ giv5 su* t]m by section #ieg7;a74 7#d7 ,special rule = memb]s ( an affiliat$ gr\p ,if a ,unit$ ,/ates %>ehold] to :i* subsection 7a7 applies is a dome/ic corporation :i* is a memb] ( a gr\p all memb]s ( :i* are treat$ z a s+le corporation "u subsection 7e7 or 7f7 ( section #hfd1 :i*ev] is applicable1 all dome/ic corporations :i* are memb]s ( su* gr\p %all be treat$ z a s+le corporation = purposes ( ?is section4 7#e7 ,special rules 7,a7 ,coord9ation ) o!r provisions ,except z provid$ 9 regulations1 ?is section %all be appli$ be=e any o!r provision ( ?is *apt] limit+ ! d$uctibility ( any allocable ,,cfc int]e/4 7,b7 ,sep>ate application to income 9 sep>ate baskets ,?is section %all be appli$ sep>ately ) respect to ! categories ( income "u section #ijd7;d77#a74 7d7 ,regulations ,! ,secret>y %all prescribe su* regulations z may be necess>y to c>ry out ! purposes ( ?is section1 includ+ regulations provid+-- 7#a7 = ! %>+ ( in=mation betwe5 %>ehold]s if necess>y to c>ry out ! provisions ( ?is section1 7#b7 = directly associat+ int]e/ or o!r exp5ses disall[$ "u ?is section ) income ( a controll$ =eign corporation & = coord9at+ ?is section ) o!r provisions ( ?is *apt] limit+ ! d$uctibility ( int]e/ or o!r exp5ses1 & 7#c7 = ! prop] application ( ?is section ) respect to ! taxpay]'s %>e ( net op]at+ losses ( a controll$ =eign corporation4 4 7b7 ,con=m+ am5dm5t ,! table ( sections = "p ,,ix ( sub*apt] ,b ( *apt] #a is am5d$ by ins]t+ aft] ! item relat+ to section #bfe ! foll[+3 ,sec4 #bfe;,a4 ,exp5se allocable to exempt income ( a controll$ =eign corporation4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ on or aft] ! applicable date1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s ) or )9 :i* su* taxable ye>s ( =eign corporations end4 ,,iv ,o!r provisions relat+ to subp>t ,f ,a ,previ\sly def]r$ =eign income #cca4 ,treatm5t ( previ\sly def]r$ =eign income 7a7 ,9 g5]al ,subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new section3 #iff4 ,inclusion ( previ\sly def]r$ =eign income 7a7 ,inclusion z subp>t ,f income 7#a7 ,9 g5]al ,subject to ! provisions ( p>agraph 7#b71 ! subp>t ,f income 7det]m9$ "u section #ieb )\t reg>d to ?is section7 ( a controll$ =eign corporation = its la/ taxable ye> beg9n+ be=e ! applicable date 7z def9$ 9 section #cjj ( ! ,infra/ructure #b4j ,act71 %all be increas$ by ! accumulat$ def]r$ =eign income ( ! corporation4 7#b7 ,inclusion only to apply to dome/ic corporations ,9 ! case ( any increase 9 subp>t ,f income ( a controll$ =eign corporation by reason ( p>agraph 7#a7-- 7,a7 not)/&+ section #iea7;a77#a71 ! inclusion 9 gross income "u su* section ( a ,unit$ ,/ates %>ehold]'s pro rata portion 7z det]m9$ "u section #iea7;a77#b77 ( su* increas$ subp>t ,f income %all only apply if ! ,unit$ ,/ates %>ehold] is a dome/ic corporation1 & 7,b7 !re %all be all[$ z a d$uction = ! taxable ye> ( su* ,unit$ ,/ates %>ehold] 9 :i* su* increas$ subp>t ,f income is includ$ 9 su* %>ehold]'s gross income "u section #iea7;a77#a7 an am\nt equal to ! applicable p]c5tage ( ! am\nt ( ! income s includ$4 7b7 ,accumulat$ def]r$ =eign income ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m accumulat$ def]r$ =eign income means ! excess (-- 7,a7 ! undi/ribut$ e>n+s ( ! controll$ =eign corporation1 ov] 7,b7 ! undi/ribut$ ,u4,s4 e>n+s ( su* controll$ =eign corporation4 7#b7 ,undi/ribut$ e>n+s 7,a7 ,9 g5]al ,! t]m undi/ribut$ e>n+s means ! e>n+s & pr(its ( ! controll$ =eign corporation describ$ 9 section #iei7;c77#c71 det]m9$-- 7i7 z ( ! close ( ! taxable ye> describ$ 9 subsection 7a77#a71 7ii7 )\t dim9ution by reason ( di/ributions made dur+ su* taxable ye>1 & 7iii7 )\t reg>d to ?is section4 7,b7 ,special rule = curr5t ye> di/ributions ,= purposes ( ?is *apt]1 any det]m9ation ) respect to ! treatm5t ( di/ributions describ$ 9 subp>agraph 7,a77ii7 %all be made aft] ! application ( ?is section to ! e>n+s & pr(its describ$ 9 subp>agraph 7,a74 7#c7 ,undi/ribut$ ,u4,s4 e>n+s ,! t]m undi/ribut$ ,u4,s4 e>n+s has ! mean+ giv5 ! t]m po/-#aihf undi/ribut$ ,u4,s4 e>n+s 9 section #bde7;a77#e7 7z 9 effect = taxable ye>s beg9n+ ! day be=e ! applicable date 7z def9$ 9 section #cjj ( ! ,infra/ructure #b4j ,act771 det]m9$-- 7,a7 )\t reg>d to po/-#aihf ea* place x appe>s 9 ! matt] be=e subp>agraph 7,a71 & 7,b7 )\t reg>d to ! la/ s5t5ce !re(4 7c7 ,disall[ance ( =eign tax cr$it1 etc 7#a7 ,9 g5]al ,no cr$it %all be all[$ "u section #ija to a ,unit$ ,/ates %>ehold] ( a controll$ =eign corporation = any taxes paid or accru$ 7or treat$ z paid or accru$7 ) respect to ! d$uctible portion (-- 7,a7 ! increas$ subp>t ,f income ( ! corporation includ$ 9 ! gross income ( ! %>ehold] "u subsection 7a77#b77;,a71 or 7,b7 any di/ribution receiv$ by ! %>ehold] :i* is prop]ly attributable to su* increas$ subp>t ,f income4 7#b7 ,d5ial ( d$uction ,no d$uction %all be all[$ "u ?is *apt] to a ,unit$ ,/ates %>ehold] ( a controll$ =eign corporation = any tax = :i* a cr$it is n all[able "u section #ija by reason ( p>agraph 7#a74 7#c7 ,d$uctible portion ,= purposes ( ?is subsection1 ! t]m d$uctible portion means1 ) respect to ! increas$ subp>t ,f income ( ! corporation includ$ 9 ! gross income ( ! %>ehold] "u subsection 7a77#b77;,a71 ! applicable p]c5tage ( su* income ) respect to :i* a d$uction is all[able "u subsection 7a77#b77;,b74 7#d7 ,coord9ation ) section #gh ,section #gh %all n apply to ! portion ( any tax = :i* cr$it is n all[able "u section #ija by reason ( p>agraph 7#a74 7d7 ,applicable p]c5tage ,= purposes ( ?is section1 ! t]m applicable p]c5tage means ! p]c5tage :i* is equal to ! ratio (-- 7#a7 ! excess (-- 7,a7 ! highe/ rate ( tax 9 effect "u section #aa7;b7 = ! taxable ye> ( ! ,unit$ ,/ates %>ehold] describ$ 9 subsection 7a77#b77;,b71 ov] 7,b7 #bj p]c5t1 to 7#b7 ! highe/ rate ( tax 9 effect "u section #aa7;b7 = ! taxable ye> ( ! ,unit$ ,/ates %>ehold] describ$ 9 subsection 7a77#b77;,b74 ,! p]c5tage det]m9$ "u ! prec$+ s5t5ce %all be r\nd$ to ! ne>e/ :ole p]c5tage po9t4 7e7 ,election ,to pay liability 9 in/allm5ts 7#a7 ,9 g5]al ,9 ! case ( a ,unit$ ,/ates %>ehold] ) respect to "o or m controll$ =eign corporations to :i* subsection 7a7 applies1 su* ,unit$ ,/ates %>ehold] may elect to pay ! net tax liability "u ?is section 9 #b or m 7b n exce$+ #h7 equal in/allm5ts4 7#b7 ,date = paym5t ( in/allm5ts ,if an election is made "u p>agraph 7#a71 ! due date = ! fir/ in/allm5t %all be ! due date 7det]m9$ )\t reg>d to any ext5sion ( "t = fil+ ! return7 = ! return ( tax = ! taxable ye> describ$ 9 subsection 7a77#b77;,b7 & ! due date = ea* succe$+ in/allm5t %all be ! due date 7z s det]m9$7 = ! return ( tax = ! taxable ye> foll[+ ! taxable ye> ) respect to :i* ! prec$+ in/allm5t 0 made4 7#c7 ,accel]ation ( paym5t ,if !re is-- 7,a7 an assessm5t ( an addition to tax = failure to pay timely ) respect to any in/allm5t requir$ "u ?is subsection1 7,b7 a liquidation or sale ( sub/antially all ! assets ( ! taxpay] 7includ+ 9 a title #aa or simil> case71 7,c7 a cessation ( bus9ess by ! taxpay]1 or 7,d7 any simil> circum/ance1 !n ! unpaid portion ( all rema9+ in/allm5ts %all be due on ! date ( su* ev5t 7or 9 ! case ( a title #aa or simil> case1 ! day be=e ! petition is fil$74 7#d7 ,proration ( defici5cy to in/allm5ts ,if an election is made "u p>agraph 7#a7 to pay ! net tax liability "u ?is section 9 in/allm5ts & a defici5cy has be5 assess$1 ! defici5cy %all be prorat$ to ! in/allm5ts payable "u p>agraph 7#a74 ,! "p ( ! defici5cy s prorat$ to any in/allm5t ! date = paym5t ( :i* has n arriv$ %all be collect$ at ! same "t z1 & z a "p (1 su* in/allm5t4 ,! "p ( ! defici5cy s prorat$ to any in/allm5t ! date = paym5t ( :i* has arriv$ %all be paid ^u notice & dem& f ! ,secret>y4 ,?is p>agraph %all n apply if ! defici5cy is due to neglig5ce1 to int5tional disreg>d ( rules & regulations1 or to fraud ) int5t to evade tax4 7#e7 ,rules relat+ to int]e/ 7,a7 ,9 g5]al ,9 ! case ( any net tax liability prorat$ to an in/allm5t "u ?is subsection1 ! la/ date prescrib$ = paym5t ( ! tax = purposes ( section #ffja7;a7 %all be ! la/ date = paym5t ( ! in/allm5t r ?an ! la/ date = paym5t ( tax = ! taxable ye> 9 :i* ! net tax liability arose4 7,b7 ,special rules = defici5cies 7i7 ,int]e/ payable = entire p]iod ,subp>agraph 7,a7 %all n apply to any defici5cy prorat$ to an in/allm5t "u p>agraph 7#d74 7ii7 ,paym5t ( int]e/ attributable to prior p]iods ,9 ! case ( a defici5cy to :i* p>agraph 7#d7 applies1 int]e/ ) respect to su* defici5cy :i* is assign$ "u p>agraph 7#d7 to any in/allm5t ! date = paym5t ( :i* has arriv$ on or be=e ! date ( ! assessm5t ( ! defici5cy1 %all be paid ^u notice & dem& f ! ,secret>y4 7#f7 ,p]iod ( assessm5t ,not)/&+ section #feja1 ! p]iod = assess+ ! net tax liability "u ?is section = :i* an election is made "u p>agraph 7#a7 %all n expire be=e ! due date = ! la/ in/allm5t4 7#g7 ,election ,any election "u p>agraph 7#a7 %all be made n lat] ?an ! due date = ! return ( tax = ! taxable ye> ( ! ,unit$ ,/ates %>ehold] describ$ 9 subsection 7a77#b77;,b7 & %all be made 9 su* mann] z ! ,secret>y may provide4 7#h7 ,net tax liability "u ?is section ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! net tax liability "u ?is section ) respect to any ,unit$ ,/ates %>ehold] is ! excess 7if any7 (-- 7i7 su* taxpay]'s net income tax = ! taxable ye>1 ov] 7ii7 su* taxpay]'s net income tax = su* taxable ye> det]m9$ )\t reg>d to ?is section4 7,b7 ,net income tax ,! t]m net income tax means ! net income tax 7z def9$ 9 section #ch7;c77#a77 r$uc$ by ! cr$it all[$ "u section #ch4 7,c7 ,regulations ,! ,secret>y %all prescribe su* regulations z may be necess>y = ! det]m9ation "u ?is subsection ( ! net tax liability "u ?is section 9 ! case ( any pass-?ru entity4 7f7 ,regulations ,! ,secret>y %all promulgate su* regulations z necess>y to c>ry out ! purposes ( ?is section1 includ+ regulations = ! application ( ?is section to pass-?r\gh entities all or "p ( :i* are own$ by #a or m dome/ic corporations4 4 7b7 ,ord]+ rule = purposes ( treatm5t ( previ\sly tax$ income 7#a7 ,9 g5]al ,section #iei is am5d$ by add+ at ! end ! foll[+ new subsection3 7g7 ,special ord]+ rule ,not)/&+ subsection 7c71 = purposes ( subsections 7a7 & 7b71 section #caf7;a7 %all be appli$ by apply+ p>agraph 7#b7 !re( & !n p>agraph 7#a7 !re(-- 7#a7 fir/ to ! d$uctible portion 7z def9$ 9 section #iff7;c77#c77 ( ! increase 9 subp>t ,f income describ$ 9 section #iff7;a77#a7 includ$ 9 ! gross income ( ,unit$ ,/ates %>ehold]s "u section #iea7;a77#a7 7aft] application ( section #iff7;a77#b77;,a771 & 7#b7 !n to am\nts describ$ 9 p>agraph 7#a71 7#b71 or 7#c7 ( subsection 7c74 4 7#b7 ,con=m+ am5dm5t ,section #iei7;c7 is am5d$ by ins]t+ except z provid$ 9 subsection 7g71 aft] subsections 7a7 & 7b714 7c7 ,con=m+ am5dm5ts 7#a7 ,clause 7vi7 ( section #ef7;g77#d77;,c7 is am5d$-- 7,a7 by ins]t+ or section #iff7;a7 aft] section #ife1 & 7,b7 by ins]t+ & inclusions aft] c]ta9 di/ributions 9 ! head+ !re(4 7#b7 ,p>agraph 7#c7 ( section #bde7;a7 is am5d$-- 7,a7 by /rik+ po/-#aihf 9 subp>agraph 7,a71 & 7,b7 by /rik+ total po/-#aihf 9 subp>agraph 7,b74 7#c7 ,p>agraph 7#d7 ( section #bde7;a7 is am5d$ to read z foll[s3 7#d7 ,undi/ribut$ e>n+s ,! t]m undi/ribut$ e>n+s means ! am\nt ( ! e>n+s & pr(its ( ! controll$ =eign corporation 7comput$ 9 accordance ) sections #ifd7;a7 & #ihf7-- 7,a7 z ( ! close ( ! taxable ye> ( ! controll$ =eign corporation 9 :i* ! divid5d is di/ribut$1 & 7,b7 )\t dim9ution by reason ( divid5ds di/ribut$ dur+ su* taxable ye>4 4 7#d7 ,p>agraph 7#e7 ( section #bde7;a7 is am5d$-- 7,a7 by /rik+ po/-#aihf bo? places x appe>s 9 ! matt] prec$+ subp>agraph 7,a71 & 7,b7 by /rik+ ,po/-#aihf undi/ribut$ 9 ! head+ !re( & ins]t+ ,undi/ribut$4 7#e7 ,p>agraph 7#f7 ( section #bde7;a7 is am5d$-- 7,a7 by /rik+ beg9n+ aft] ,decemb] #ca1 #aihf & ins]t+ :i* is aft] ! fir/ taxable ye> ( su* corporation1 & 7,b7 by /rik+ po/-#aihf bo? places x appe>s4 7#f7 ,p>agraph 7#b7 ( section #ffja7;b7 is am5d$-- 7,a7 by /rik+ section #faef7;a7 9 ! matt] prec$+ subp>agraph 7,a7 & ins]t+ section #ife7;d77#a7 or #faef7;a71 & 7,b7 by /rik+ section #faef7;b7 9 subp>agraph 7,a7 & ins]t+ section #ife7;d77#b7 or #faef7;b71 z ! case may be4 7#g7 ,! table ( sections = subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #ife & ins]t+ ! foll[+3 ,sec4 #iff4 ,inclusion ( previ\sly def]r$ =eign income4 4 7d7 ,effective date 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 ! am5dm5ts made by ?is section %all apply to ! la/ taxable ye> ( =eign corporations beg9n+ be=e ! applicable date1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s ) or )9 :i* su* taxable ye>s ( =eign corporations end4 7#b7 ,con=m+ am5dm5ts relat$ to section #bde ,! am5dm5ts made by p>agraphs 7#b71 7#c71 7#d71 & 7#e7 ( subsection 7c7 %all apply to taxable ye>s ( =eign corporations beg9n+ on or aft] ! applicable date1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s ) or )9 :i* su* taxable ye>s ( =eign corporations end4 ,b ,o!r provisions #ccf4 ,elim9ation ( #cj-;day requirem5t 7a7 ,9 g5]al ,section #iea7;a77#a7 is am5d$ by /rik+ = an un9t]rupt$ p]iod ( #cj days or m & ins]t+ at any "t4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ on or aft] ! applicable date1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s ) or )9 :i* su* taxable ye>s ( =eign corporations end4 #ccg4 ,modification ( def9ition ( ,unit$ ,/ates %>ehold] 7a7 ,9 g5]al ,section #iea7;b7 is am5d$ by ins]t+ 1 or #aj p]c5t or m ( ! total value ( %>es ( all classes ( /ock ( su* =eign corporation aft] su* =eign corporation4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ on or aft] ! applicable date1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s ) or )9 :i* su* taxable ye>s ( =eign corporations end4 ,b ,re=m ( =eign tax cr$it provisions #cda4 ,repeal ( section #ijb indirect =eign tax cr$its2 =eign tax cr$it relat$ to subp>t ,f income 7a7 ,repeal ( section #ijb indirect =eign tax cr$its ,subp>t ,a ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ section #ijb4 7b7 ,=eign tax cr$it relat$ to subp>t ,f income 7#a7 ,9 g5]al ,section #ifj is am5d$ by r$esignat+ subsections 7b7 & 7c7 z subsections 7c7 & 7d71 respectively1 & by /rik+ subsection 7a7 & ins]t+ ! foll[+3 7a7 ,det]m9ation ( cr$it on curr5t ye> basis ,= purposes ( ?is subp>t1 if !re is includ$ 9 ! gross income ( a dome/ic corporation any am\nt "u section #iea7;a7 ) respect to any controll$ =eign corporation ) respect to :i* su* dome/ic corporation is a ,unit$ ,/ates %>ehold]1 su* dome/ic corporation %all be deem$ to h paid s mu* ( su* =eign corporation's =eign income taxes z are prop]ly attributable to ! am\nt s includ$4 7b7 ,treatm5t ( =eign taxes n previ\sly deem$ paid ,= purposes ( ?is subp>t-- 7#a7 ,9 g5]al ,if any portion ( a di/ribution f a controll$ =eign corporation receiv$ by a dome/ic corporation is exclud$ f gross income "u section #iei7;a71 su* dome/ic corporation %all be deem$ to h paid s mu* ( su* =eign corporation's =eign income taxes z are prop]ly attributable to ! am\nt s exclud$ to ! ext5t su* taxes 7 n deem$ paid by ! dome/ic corporation "u ?is section = any prior taxable ye>4 7#b7 ,taxes ( l[]-ti] ,c,f,cs ,if a controll$ =eign corporation receives a di/ribution any portion ( :i* is describ$ 9 section #iei7;b7 f ano!r controll$ =eign corporation1 su* =eign corporation %all be deem$ to h paid s mu* ( su* o!r =eign corporation's =eign income taxes z are prop]ly attributable to ! am\nt s describ$ to ! ext5t su* taxes 7 n deem$ paid by a dome/ic corporation "u ?is section = any prior taxable ye>4 4 7#b7 ,application ) respect to =eign tax cr$it limitation ,section #ifj7;c71 z r$esignat$ by p>agraph 7#a71 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#f7 ,application ) respect to =eign tax cr$it limitation ,?is subsection %all be appli$ sep>ately ) respect to ea* category ( income describ$ 9 section #ijd7;d77#a74 4 7#c7 ,con=m+ am5dm5ts 7,a7 ,section #ifj is am5d$ by /rik+ subsection 7d71 z r$esignat$ by p>agraph 7#a71 & ins]t+ ! foll[+3 7d7 ,=eign income taxes ,= purposes ( ?is section1 ! t]m =eign income taxes means any income1 w> pr(its1 or excess pr(its taxes paid or accru$ by a =eign corporation to any =eign c\ntry or possession ( ! ,unit$ ,/ates4 7e7 ,regulations ,! ,secret>y %all provide su* regulations z may be necess>y or appropriate to c>ry out ! provisions ( ?is section1 includ+ rules = ! application ( ?is section to dome/ic p>tn]%ips ) p>tn]s t are dome/ic corporations4 4 7,b7 ,section #ifj is am5d$ by /rik+ ! head+ & ins]t+ ,deem$ paid cr$it = subp>t ,f inclusions4 7c7 ,modification to section #gh gross ,up ,section #gh is am5d$ to read z foll[s3 #gh4 ,am\nts receiv$ f c]ta9 =eign corporations by dome/ic corporations *oos+ =eign tax cr$it ,if a dome/ic corporation :i* is a ,unit$ ,/ates %>ehold] *ooses to h ! b5efits ( subp>t ,a ( "p ,,iii ( sub*apt] ,n 7relat+ to =eign tax cr$its7 = any taxable ye>1 an am\nt equal to ! taxes deem$ to be paid by su* corporation "u section #ifj = su* taxable ye>-- 7#a7 %all be treat$ z an am\nt includ$ 9 ! gross income "u section #iea7;a71 & 7#b7 = purposes ( section #ijd1 %all be deem$ to be attributable to ! same category ( income describ$ 9 section #ijd7;d77#a7 z ! income :i* gave rise to ! taxes deem$ paid by su* corporation4 4 7d7 ,con=m+ am5dm5ts 7#a7 ,subclause 7,,iii7 ( section #ef7;g77#d77;,c77iii7 is am5d$ by ins]t+ z 9 effect be=e its repeal aft] section #ijb4 7#b7 ,sections #ece7;b77#a7 & #ede7;b77#a7 are ea* am5d$ by /rik+ section #ijb7;a7 or #ifj7;a77#a7 & ins]t+ section #ifj4 7#c7 ,subp>agraph 7,b7 ( section #had7;f77#a7 is repeal$4 7#d7 ,subsection 7a7 ( section #ija is am5d$ by /rik+ sections #ijb & #ifj & ins]t+ section #ifj4 7#e7 ,p>agraph 7#b7 ( section #ija7;e7 is am5d$ by /rik+ b is n limit$ to-- & all t foll[s ?r\gh t portion & ins]t+ b is n limit$ to t portion4 7#f7 ,subsection 7f7 ( section #ija is am5d$ by /rik+ sections #ijb & #ifj & ins]t+ section #ifj4 7#g7 ,subp>agraph 7,a7 ( section #ija7;j77#a7 is am5d$ by /rik+ #ijb or4 7#h7 ,subp>agraph 7,a7 ( section #ijd7;h77#aj7 is am5d$ by /rik+ sections #ijb1 #ijg1 & #ifj & ins]t+ sections #ijg & #ifj4 7#i7 ,subsection 7k7 ( section #ijd is am5d$ to read z foll[s3 7k7 ,cross ref]5ce ,= modification ( limitation "u subsection 7a7 = purposes ( det]m9+ ! am\nt ( cr$it :i* c be tak5 aga9/ ! alt]native m9imum tax1 see section #ei7;a74 4 7#aj7 ,p>agraph 7#a7 ( section #ije7;c7 is am5d$ by /rik+ ! la/ s5t5ce4 7#aa7 ,subclause 7,i7 ( section #ije7;c77#b77;,b7 is am5d$ by /rik+ #ijb or4 7#ab7 ,subsection 7a7 ( section #ijf is am5d$ by /rik+ 7or deem$1 "u section #ijb1 paid or accru$ dur+ ! taxable ye>74 7#ac7 ,subsection 7b7 ( section #ijf is am5d$ by /rik+ p>agraphs 7#d7 & 7#e74 7#ad7 ,subp>agraph 7,b7 ( section #ijg7;b77#b7 is am5d$ by /rik+ #ijb or4 7#ae7 ,p>agraph 7#c7 ( section #ijg7;c7 is am5d$-- 7,a7 by /rik+ subp>agraph 7,a7 & r$esignat+ subp>agraphs 7,b7 & 7,c7 z subp>agraphs 7,a7 & 7,b71 respectively1 & 7,b7 by /rik+ section #ifj7;a7 9 subp>agraph 7,a7 7z s r$esignat$7 & ins]t+ section #ifj4 7#af7 ,p>agraph 7#e7 ( section #ijg7;c7 is am5d$ by /rik+ #ijb or4 7#ag7 ,clause 7i7 ( section #ijg7;f77#b77;,b7 is am5d$ by /rik+ #ijb or4 7#ah7 ,subsection 7a7 ( section #ijh is am5d$ by /rik+ #ijb or4 7#ai7 ,p>agraph 7#a7 ( section #ieh7;a7 is am5d$ by /rik+ #ifj7;a77#a7 & ins]t+ #ifj4 7#bj7 ,subp>agraph 7,b7 ( section #fjch7;c77#a7 is am5d$ by /rik+ sections #ijb 7relat+ to =eign tax cr$it = corporate /ockhold] 9 =eign corporation7 & #ifj 7relat+ to special rules = =eign tax cr$it7 & ins]t+ section #ifj4 7#ba7 ,p>agraph 7#d7 ( section #fjch7;c7 is am5d$ by /rik+ subp>agraph 7,c74 7#bb7 ,! table ( sections = subp>t ,a ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #ijb4 7#bc7 ,! table ( sections = "p ,,ii ( sub*apt] ,b ( *apt] #a is am5d$ by /rik+ ,divid5ds 9 ! item relat+ to section #gh & ins]t+ ,am\nts4 7#bd7 ,! table ( sections = subp>t ,f ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #ifj & ins]t+ ! foll[+3 ,sec4 #ifj4 ,deem$ paid cr$it = subp>t ,f inclusions4 4 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations beg9n+ on or aft] ! applicable date1 & to taxable ye>s ( ,unit$ ,/ates %>ehold]s ) or )9 :i* su* taxable ye>s ( =eign corporations end4 #cdb4 ,repeal ( rule susp5d+ =eign taxes & cr$its until relat$ income is tak5 into acc\nt 7a7 ,9 g5]al ,subp>t ,a ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ section #iji4 7b7 ,con=m+ am5dm5ts 7#a7 ,section #ija7m77#a77;,b7 is am5d$ by /rik+ a section #ijb corporation 7z def9$ 9 section #iji7;d77#e77 & ins]t+ a controll$ =eign corporation 7z def9$ 9 section #ieg7;a774 7#b7 ,! table ( sections ( subp>t ,a ( "p ,,iii ( sub*apt] ,n ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #iji4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to =eign taxes paid or accru$ 9 taxable ye>s beg9n+ on or aft] ! applicable date4