,i  #aaeth ,,congress  #ast ,session    
,h4 ,r4 #cfjc  ,,in ,,the ,,house ,,of  
,,representatives  ,july #bh1 #bjag ,mr4
 ,levin 7for himself and ,mr4 ,thompson 
of ,california7 introduced the following
 bill2 which was referred to the        
,committee on ,ways and ,means  ,a      
,,bill  ,to amend the ,internal ,revenue
 ,code of #aihf to prevent earnings     
stripping of corporations which are     
related to inverted corporations4  #a4  
,short title ,this ,act may be cited as 
the ,stop ,corporate ,earnings          
,stripping ,act of #bjag4  #b4          
,prevention of earnings stripping of    
corporations which are related to       
inverted corporations  7a7 ,in general  
,section #ghgd of the ,internal ,revenue
 ,code of #aihf is amended by           
redesignating subsection 7g7 as         
subsection 7h7 and by inserting after   
subsection 7f7 the following new        
subsection3  7g7 ,special rules         
applicable to earnings stripping and    
related party transactions  7#a7 ,in    

general ,in the case of any corporation 
which is a related corporation for any  
taxable year1 section #afc7;j7 shall be 
applied with the following              
modifications3 7,a7 #e-year limitation  
on carryforward of disallowed amounts   
,for purposes of determining any amount 
carried to1 or from1 such taxable year  
under subparagraph 7,b7 of section      
#afc7;j77#a71 such subparagraph shall be
 applied by substituting in the #ast    
succeeding taxable and in the #bnd      
through #eth succeeding taxable years to
 the extent disallowed under            
subparagraph 7,a7 in the preceding      
taxable year 7determined on a first-in1 
first-out basis and by treating the     
amount carried forward under this       
subparagraph as allowed under           
subparagraph 7,a7 before amounts        
otherwise taken into account under      
subparagraph 7,a77 for in the succeeding
 taxable year4  7,b7 ,rules for         
determining whether interest limitation 
rules apply ,in applying section        

#afc7;j77#b7 to determine whether       
section #afc7;j7 applies to such related
 corporation for such taxable year-- 7i7
 subparagraph 7,a77ii7 shall be         
disregarded1 and  7ii7 subparagraph     
7,b77i77,,ii7 shall be applied by       
substituting #be percent of the adjusted
 taxable income of the corporation for  
the sum of #ej percent of the adjusted  
taxable income of the corporation plus  
any excess limitation carryforward under
 clause 7ii7 for purposes of determining
 the corporation's excess interest      
expense for such taxable year4  7#b7    
,related corporation ,for purposes of   
this subsection--  7,a7 ,in general ,the
 term related corporation means any     
corporation for any taxable year if1 at 
any time during such taxable year1 such 
corporation is a member of an expanded  
affiliated group which includes 7at any 
time during such taxable year7 an entity
 which-- 7i7 is a surrogate foreign     
corporation1 determined by applying     
subsection 7a77#b77;,b7--  7,i7 by      

substituting on or after ,may #h1 #bjad 
for after ,march #d1 #bjjc in clause 7i7
 thereof1  7,,ii7 by substituting more  
than #ej percent for at least #fj       
percent in clause 7ii7 thereof1 and     
7,,iii7 by disregarding the matter      
following clause 7iii7 thereof1 and     
7ii7 is not treated as a domestic       
corporation by reason of subsection 7b74
  7,b7 ,special rule for inclusion of   
noncorporate entities ,for purposes of  
subparagraph 7,a71 a partnership or     
other entity 7other than a corporation7 
shall be treated as a member of an      
expanded affiliated group if such entity
 controls 7as determined under section  
#ied7;d77#c771 or is controlled by 7as  
so determined71 members of such group   
7including any entity treated as a      
member of such group by reason of this  
sentence74  7#c7 ,rules related to      
application of #e-year carryforward of  
disallowed amounts ,for purposes of     
applying paragraph 7#a77;,a7--  7,a7    
,transition rule ,for purposes of       

applying paragraph 7#a77;,a71 the term  
#ast succeeding taxable year means the  
later of-- 7i7 the #ast succeeding      
taxable year after the taxable year in  
which the disqualified interest is paid 
or accrued 7determined without regard to
 subsection 7j77#a77;,b771 or  7ii7 the 
#ast taxable year beginning after the   
date of the enactment of this           
subsection4  7,b7 ,amounts carried to   
taxable year for which corporation is a 
related corporation ,paragraph 7#a77;,a7
 shall apply to amounts carried to a    
taxable year to which such paragraph    
applies without regard to whether such  
paragraph applied to the taxable year in
 which such amount was originally paid  
or accrued 7or to any other taxable     
year74  7,c7 ,amounts carried from      
taxable year for which corporation is a 
related corporation ,paragraph 7#a77;,a7
 shall apply to amounts carried from a  
taxable year to which such paragraph    
applies 7whether or not such amount was 
originally paid or accrued in such      

taxable year7 without regard to whether 
such paragraph applies to the taxable   
year to which carried 7or to any other  
taxable year74  4  7b7 ,effective date  
7#a7 ,in general ,except as provided in 
paragraph 7#b71 the amendments made by  
this section shall apply to taxable     
years beginning after the date of the   
enactment of this ,act4  7#b7           
,limitation on carryforward of          
disallowed amounts ,for purposes of     
determining any amount carried to a     
taxable year beginning after the date of
 the enactment of this ,act1 the        
amendments made by this ,act shall apply
 to amounts paid or incurred before1 on1
 or after the date of the enactment of  
this ,act4