,i  #aae? ,,congress  #a/ ,session  ,h4 
,r4 #cfjc  ,,9 ,,! ,,h\se ,,(           
,,repres5tatives  ,july #bh1 #bjag ,mr4 
,lev9 7= himself & ,mr4 ,?ompson (      
,cali=nia7 introduc$ ! foll[+ bill2 :i* 
0 ref]r$ to ! ,committee on ,ways &     
,means  ,a ,,bill  ,to am5d ! ,int]nal  
,rev5ue ,code ( #aihf to prev5t e>n+s   
/ripp+ ( corporations :i* are relat$ to 
inv]t$ corporations4  #a4 ,%ort title   
,?is ,act may be cit$ z ! ,/op          
,corporate ,e>n+s ,/ripp+ ,act ( #bjag4 
#b4 ,prev5tion ( e>n+s /ripp+ (         
corporations :i* are relat$ to inv]t$   
corporations  7a7 ,9 g5]al ,section     
#ghgd ( ! ,int]nal ,rev5ue ,code ( #aihf
 is am5d$ by r$esignat+ subsection 7g7 z
 subsection 7h7 & by ins]t+ aft]        
subsection 7f7 ! foll[+ new subsection3 
7g7 ,special rules applicable to e>n+s  
/ripp+ & relat$ p>ty transactions  7#a7 
,9 g5]al ,9 ! case ( any corporation :i*
 is a relat$ corporation = any taxable  
ye>1 section #afc7;j7 %all be appli$ ) !
 foll[+ modifications3 7,a7 #e-ye>      

limitation on c>ry=w>d ( disall[$ am\nts
 ,= purposes ( det]m9+ any am\nt c>ri$  
to1 or f1 su* taxable ye> "u subp>agraph
 7,b7 ( section #afc7;j77#a71 su*       
subp>agraph %all be appli$ by sub/itut+ 
9 ! #a/ succe$+ taxable & 9 ! #bnd ?r\gh
 #e? succe$+ taxable ye>s to ! ext5t    
disall[$ "u subp>agraph 7,a7 9 ! prec$+ 
taxable ye> 7det]m9$ on a fir/-91       
fir/-out basis & by treat+ ! am\nt c>ri$
 =w>d "u ?is subp>agraph z all[$ "u     
subp>agraph 7,a7 be=e am\nts o!rwise    
tak5 into acc\nt "u subp>agraph 7,a77 = 
9 ! succe$+ taxable ye>4  7,b7 ,rules = 
det]m9+ :e!r int]e/ limitation rules    
apply ,9 apply+ section #afc7;j77#b7 to 
det]m9e :e!r section #afc7;j7 applies to
 su* relat$ corporation = su* taxable   
ye>-- 7i7 subp>agraph 7,a77ii7 %all be  
disreg>d$1 &  7ii7 subp>agraph          
7,b77i77,,ii7 %all be appli$ by         
sub/itut+ #be p]c5t ( ! adju/$ taxable  
income ( ! corporation = ! sum ( #ej    
p]c5t ( ! adju/$ taxable income ( !     
corporation plus any excess limitation  

c>ry=w>d "u clause 7ii7 = purposes (    
det]m9+ ! corporation's excess int]e/   
exp5se = su* taxable ye>4  7#b7 ,relat$ 
corporation ,= purposes ( ?is           
subsection--  7,a7 ,9 g5]al ,! t]m      
relat$ corporation means any corporation
 = any taxable ye> if1 at any "t dur+   
su* taxable ye>1 su* corporation is a   
memb] ( an exp&$ affiliat$ gr\p :i*     
includes 7at any "t dur+ su* taxable    
ye>7 an entity :i*-- 7i7 is a surrogate 
=eign corporation1 det]m9$ by apply+    
subsection 7a77#b77;,b7--  7,i7 by      
sub/itut+ on or aft] ,may #h1 #bjad =   
aft] ,m>* #d1 #bjjc 9 clause 7i7 !re(1  
7,,ii7 by sub/itut+ m ?an #ej p]c5t = at
 lea/ #fj p]c5t 9 clause 7ii7 !re(1 &   
7,,iii7 by disreg>d+ ! matt] foll[+     
clause 7iii7 !re(1 &  7ii7 is n treat$ z
 a dome/ic corporation by reason (      
subsection 7b74  7,b7 ,special rule =   
inclusion ( noncorporate entities ,=    
purposes ( subp>agraph 7,a71 a p>tn]%ip 
or o!r entity 7o!r ?an a corporation7   
%all be treat$ z a memb] ( an exp&$     

affiliat$ gr\p if su* entity controls 7z
 det]m9$ "u section #ied7;d77#c771 or is
 controll$ by 7z s det]m9$71 memb]s (   
su* gr\p 7includ+ any entity treat$ z a 
memb] ( su* gr\p by reason ( ?is        
s5t5ce74  7#c7 ,rules relat$ to         
application ( #e-ye> c>ry=w>d ( disall[$
 am\nts ,= purposes ( apply+ p>agraph   
7#a77;,a7--  7,a7 ,transition rule ,=   
purposes ( apply+ p>agraph 7#a77;,a71 ! 
t]m #a/ succe$+ taxable ye> means ! lat]
 (-- 7i7 ! #a/ succe$+ taxable ye> aft] 
! taxable ye> 9 :i* ! disqualifi$ int]e/
 is paid or accru$ 7det]m9$ )\t reg>d to
 subsection 7j77#a77;,b771 or  7ii7 !   
#a/ taxable ye> beg9n+ aft] ! date ( !  
enactm5t ( ?is subsection4  7,b7 ,am\nts
 c>ri$ to taxable ye> = :i* corporation 
is a relat$ corporation ,p>agraph       
7#a77;,a7 %all apply to am\nts c>ri$ to 
a taxable ye> to :i* su* p>agraph       
applies )\t reg>d to :e!r su* p>agraph  
appli$ to ! taxable ye> 9 :i* su* am\nt 
0 orig9ally paid or accru$ 7or to any   
o!r taxable ye>74  7,c7 ,am\nts c>ri$ f 

taxable ye> = :i* corporation is a      
relat$ corporation ,p>agraph 7#a77;,a7  
%all apply to am\nts c>ri$ f a taxable  
ye> to :i* su* p>agraph applies 7:e!r or
 n su* am\nt 0 orig9ally paid or accru$ 
9 su* taxable ye>7 )\t reg>d to :e!r su*
 p>agraph applies to ! taxable ye> to   
:i* c>ri$ 7or to any o!r taxable ye>74  
4  7b7 ,effective date  7#a7 ,9 g5]al   
,except z provid$ 9 p>agraph 7#b71 !    
am5dm5ts made by ?is section %all apply 
to taxable ye>s beg9n+ aft] ! date ( !  
enactm5t ( ?is ,act4  7#b7 ,limitation  
on c>ry=w>d ( disall[$ am\nts ,=        
purposes ( det]m9+ any am\nt c>ri$ to a 
taxable ye> beg9n+ aft] ! date ( !      
enactm5t ( ?is ,act1 ! am5dm5ts made by 
?is ,act %all apply to am\nts paid or   
incurr$ be=e1 on1 or aft] ! date ( !    
enactm5t ( ?is ,act4