H.R. 4383 — Introduced in House

I 115th CONGRESS 1st Session H. R. 4383 IN THE HOUSE OF REPRESENTATIVES November 14, 2017Mr. Biggs introduced the following bill; which was referred to the Committee on Ways and Means A BILL To reform the Internal Revenue Code of 1986. 1. Clarification (a) Amendment of 1986 Code Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. (b) Table of contents The table of contents for this title is as follows: Section 1. Clarification. Title I—Immediate cost recovery Sec. 101. Repeal of certain limitations on the expensing of section 179 property. Sec. 102. Election of shorter recovery period for purpose of determining depreciation deduction. Title II—Reduced rate on business income Sec. 201. Reduced corporate rate. Sec. 202. Reduced rate on other business income. Title III—Exemption system for taxation of foreign income Sec. 301. Deduction for dividends received by domestic corporations from certain foreign corporations. Sec. 302. Treatment of deferred foreign income upon transition to participation exemption system of taxation. Sec. 303. Look-thru rule for related controlled foreign corporations made permanent. Sec. 304. Repeal of section 902 indirect foreign tax credits; determination of section 960 credit on current year basis. Title IV—Reduced rates for individuals Sec. 401. Reduced rates for individuals. Title V—Tax-exempt reorganizations Sec. 501. No taxable event for change of corporate form. Title VI—Repeal of net investment income tax Sec. 601. Repeal of net investment income tax. Title VII—Repeal of estate tax Sec. 701. Repeal of estate tax and retention of basis step-up. I Immediate cost recovery 101. Repeal of certain limitations on the expensing of section 179 property (a) In general Section 179 is amended by striking subsections (b) and (e) and by redesignating subsections (c), (d), and (f) as subsections (b), (c), and (d), respectively. (b) Conforming amendments (1) Subsection (c) of section 179, as redesignated by subsection (a), is amended by striking paragraphs (6) and (8), and by redesignating paragraphs (7), (9), and (10) as paragraphs (6), (7), and (8), respectively. (2) Paragraph (6) of section 179(c), as redesignated by paragraph (1) and subsection (a), is amended by striking paragraphs (2) and (6) and inserting paragraph (2). (3) Section 42(d)(2)(B)(i) is amended by striking section 179(d)(2) and inserting section 179(c)(2). (4) Subclause (I) of section 42(d)(2)(D)(iii) is amended— (A) by striking section 179(d) and inserting section 179(c); and (B) by striking section 179(d)(7) and inserting section 179(c)(6). (c) Effective date The amendments made by this section shall apply to property placed in service during taxable years beginning after December 31, 2016. 102. Election of shorter recovery period for purpose of determining depreciation deduction (a) In general Section 168 is amended by adding at the end the following new subsection: (o) Election of shorter recovery period (1) In general Notwithstanding subsections (c), (e), (g), and (j), for purposes of subsection (a), the applicable recovery period for any property placed in service during a taxable year ending on or after the date of the enactment of this subsection shall not exceed such period as the taxpayer may elect with respect to such property. (2) Election An election made under this subsection shall be made at such time and in such form and manner as the Secretary may require. An election under this subsection, once made, shall apply to the taxable year for which made and all subsequent taxable years unless revoked with the consent of the Secretary. (3) Transition rule In the case of any property placed in service during a taxable year ending before January 1, 2017, paragraph (1) shall apply with respect to the adjusted basis of such property in the same manner as if such property (with such adjusted basis) were placed in service on the first day of the taxable year which includes January 1, 2017. The application of this paragraph shall not be treated as a change in method of accounting for purposes of section 481. . (b) Effective date The amendment made by this section shall apply to property placed in service before, on, or after January 1, 2017. II Reduced rate on business income 201. Reduced corporate rate (a) In general Section 11(b) is amended to read as follows: (b) Amount of tax The amount of the tax imposed by subsection (a) shall be 15 percent of taxable income. . (b) Conforming amendments Paragraphs (1), (2), and (6) of section 1445(e) are each amended by striking 35 percent and inserting 15 percent. (c) Effective date (1) In general Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years beginning after December 31, 2016. (2) Certain conforming amendments The amendments made by subsection (b) shall apply to transfers, dispositions, and distributions, after such date. 202. Reduced rate on other business income (a) In general Section 1 is amended by adding at the end the following new subsection: (j) Maximum rate on business income (1) In general The rate of tax imposed under this section on business income shall not exceed 15 percent. (2) Business income The term business income means the excess (if any) of— (A) any distributional or pro rata share of items of income or gain from a partnership or S corporation and any income or gain properly allocable to a sole proprietorship, over (B) any distributional or pro rata share of items of deduction or loss from a partnership or S corporation and any deduction or loss properly allocable to a sole proprietorship. . (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2016. III Exemption system for taxation of foreign income 301. Deduction for dividends received by domestic corporations from certain foreign corporations (a) In general Part VIII of subchapter B of chapter 1 is amended by inserting after section 245 the following new section: 245A. Dividends received by domestic corporations from certain foreign corporations (a) In general In the case of any dividend received from a specified 10-percent owned foreign corporation by a domestic corporation which is a United States shareholder with respect to such foreign corporation, there shall be allowed as a deduction an amount equal to 95 percent of the foreign-source portion of such dividend. (b) Specified 10-Percent owned foreign corporation For purposes of this section, the term specified 10-percent owned foreign corporation means any foreign corporation if any domestic corporation owns directly, or indirectly through a chain of ownership described under section 958(a), 10 percent or more of the voting stock of such foreign corporation. (c) Foreign-Source portion For purposes of this section— (1) In general The foreign-source portion of any dividend is an amount which bears the same ratio to such dividends as— (A) the post-1986 undistributed foreign earnings, bears to (B) the total post-1986 undistributed earnings. (2) Post-1986 undistributed earnings The term post-1986 undistributed earnings means the amount of the earnings and profits of the specified 10-percent owned foreign corporation (computed in accordance with sections 964(a) and 986) accumulated in taxable years beginning after December 31, 1986— (A) as of the close of the taxable year of the specified 10-percent owned foreign corporation in which the dividend is distributed, and (B) without diminution by reason of dividends distributed during such taxable year. (3) Post-1986 undistributed foreign earnings The term post-1986 undistributed foreign earnings means the portion of the post-1986 undistributed earnings which is attributable to neither— (A) income described in subparagraph (A) of section 245(a)(5), nor (B) dividends described in subparagraph (B) of such section (determined without regard to section 245(a)(12)). (4) Treatment of distributions from earnings before 1987 (A) In general In the case of any dividend paid out of earnings and profits of the specified 10-percent owned foreign corporation (computed in accordance with sections 964(a) and 986) accumulated in taxable years beginning before January 1, 1987— (i) paragraphs (1), (2), and (3) shall be applied without regard to the phrase post-1986 each place it appears, and (ii) paragraph (2) shall be applied without regard to the phrase in taxable years beginning after December 31, 1986. (B) Dividends paid first out of post-1986 earnings Dividends shall be treated as paid out of post-1986 undistributed earnings to the extent thereof. (d) Disallowance of foreign tax credit, etc (1) In general No credit shall be allowed under section 901 for any taxes paid or accrued (or treated as paid or accrued) with respect to any dividend for which a deduction is allowed under this section. (2) Denial of deduction No deduction shall be allowed under this chapter for any tax for which credit is not allowable under section 901 by reason of paragraph (1) (determined by treating the taxpayer as having elected the benefits of subpart A of part III of subchapter N). (e) Regulations The Secretary may prescribe such regulations or other guidance as may be necessary or appropriate to carry out the provisions of this section. . (b) Application of holding period requirement Subsection (c) of section 246 is amended— (1) by striking or 245 in paragraph (1) and inserting 245, or 245A; and (2) by adding at the end the following new paragraph: (5) Special rules for foreign source portion of dividends received from specified 10-percent owned foreign corporations (A) 6-month holding period requirement For purposes of section 245A— (i) paragraph (1)(A) shall be applied— (I) by substituting 180 days for 45 days each place it appears, and (II) by substituting 361-day period for 91-day period, and (ii) paragraph (2) shall not apply. (B) Status must be maintained during holding period For purposes of section 245A, the holding period requirement of this subsection shall be treated as met only if— (i) the specified 10-percent owned corporation referred to in section 245A(a) is a specified 10-percent owned corporation at all times during such period, and (ii) the taxpayer is a United States shareholder with respect to such specified 10-percent owned corporation at all times during such period. . (c) Application of rules generally applicable to deductions for dividends received (1) Treatment of dividends from certain corporations Paragraph (1) of section 246(a) is amended by striking and 245 and inserting 245, and 245A. (2) Assets generating tax-exempt portion of dividend not taken into account in allocating and apportioning deductible expenses Paragraph (3) of section 864(e) is amended by striking or 245(a) and inserting , 245(a), or 245A. (3) Coordination with section 1059 Subparagraph (B) of section 1059(b)(2) is amended by striking or 245 and inserting 245, or 245A. (d) Coordination with foreign tax credit limitation Subsection (b) of section 904, as amended by the preceding provisions of this Act, is amended by redesignating paragraph (2) as paragraph (1) and by adding at the end the following new paragraph: (2) Treatment of dividends for which deduction is allowed under section 245A For purposes of subsection (a), in the case of a domestic corporation which is a United States shareholder with respect to a specified 10-percent owned foreign corporation, such domestic corporation’s taxable income from sources without the United States shall be determined without regard to— (A) the foreign-source portion of any dividend received from such foreign corporation, and (B) any deductions properly allocable to such portion. Any term which is used in section 245A and in this paragraph shall have the same meaning for purposes of this paragraph as when used in such section. . (e) Conforming amendments (1) Paragraph (4) of section 245(a) is amended by striking section 902(c)(1) and inserting section 245A(c)(2). (2) Subsection (b) of section 951 is amended by striking subpart and inserting title. (3) Subsection (a) of section 957 is amended by striking subpart in the matter preceding paragraph (1) and inserting title. (4) The table of sections for part VIII of subchapter B of chapter 1 is amended by inserting after the item relating to section 245 the following new item: Sec. 245A. Dividends received by domestic corporations from certain foreign corporations. . (f) Effective date The amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2016, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end. 302. Treatment of deferred foreign income upon transition to participation exemption system of taxation (a) In general Section 965 is amended to read as follows: 965. Treatment of deferred foreign income upon transition to participation exemption system of taxation (a) Treatment of deferred foreign income as subpart F income In the case of the last taxable year of a deferred foreign income corporation which begins before December 31, 2016, the subpart F income of such foreign corporation (as otherwise determined for such taxable year under section 952) shall be increased by the accumulated post-1986 deferred foreign income of such corporation determined as of the close of such taxable year. (b) Reduction in amounts included in gross income of United States shareholders of specified foreign corporations with deficits in earnings and profits (1) In general In the case of a taxpayer which is a United States shareholder with respect to at least one deferred foreign income corporation and at least one E&P deficit foreign corporation, the amount which would (but for this subsection) be taken into account under section 951(a)(1) by reason of subsection (a) as such United States shareholder’s pro rata share of the subpart F income of each deferred foreign income corporation shall be reduced (but not below zero) by the amount of such United States shareholder’s aggregate foreign E&P deficit which is allocated under paragraph (2) to such deferred foreign income corporation. (2) Allocation of aggregate foreign E&P deficit The aggregate foreign E&P deficit of any United States shareholder shall be allocated among the deferred foreign income corporations of such United States shareholder in an amount which bears the same proportion to such aggregate as— (A) such United States shareholder’s pro rata share of the accumulated post-1986 deferred foreign income of each such deferred foreign income corporation, bears to (B) the aggregate of such United States shareholder’s pro rata share of the accumulated post-1986 deferred foreign income of all deferred foreign income corporations of such United States shareholder. (3) Definitions related to E&P deficits For purposes of this subsection— (A) Aggregate foreign E&P deficit The term aggregate foreign E&P deficit means, with respect to any United States shareholder, the aggregate of such shareholder’s pro rata shares of the specified E&P deficits of the E&P deficit foreign corporations of such shareholder. (B) E&P deficit foreign corporation The term E&P deficit foreign corporation means, with respect to any taxpayer, any specified foreign corporation with respect to which such taxpayer is a United States shareholder, if— (i) such specified foreign corporation has a deficit in post-1986 earnings and profits, and (ii) as of December 31, 2016— (I) such corporation was a specified foreign corporation, and (II) such taxpayer was a United States shareholder of such corporation. (C) Specified E&P deficit The term specified E&P deficit means, with respect to any E&P deficit foreign corporation, the amount of the deficit referred to in subparagraph (B). (c) Reduced rate on included income In the case of a United States shareholder of a deferred foreign income corporation, there shall be allowed as a deduction for the taxable year in which an amount is included in the gross income of such United States shareholder under section 951(a)(1) by reason of this section an amount equal to 88.6 percent of the amount so included as gross income. (d) Deferred foreign income corporation; accumulated post-1986 deferred foreign income For purposes of this section— (1) Deferred foreign income corporation The term deferred foreign income corporation means, with respect to any United States shareholder, any specified foreign corporation of such United States shareholder which has accumulated post-1986 deferred foreign income (as of the close of the taxable year referred to in subsection (a)) greater than zero. (2) Accumulated post-1986 deferred foreign income The term accumulated post-1986 deferred foreign income means the post-1986 earnings and profits except to the extent such earnings— (A) are attributable to income of the specified foreign corporation which is effectively connected with the conduct of a trade or business within the United States and subject to tax under this chapter, (B) if distributed, would— (i) in the case of a controlled foreign corporation, be excluded from the gross income of a United States shareholder under section 959, or (ii) in the case of any passive foreign investment company (as defined in section 1297) other than a controlled foreign corporation, be treated as a distribution which is not a dividend, or (C) in the case of any passive foreign investment company (as so defined), is properly attributable to an unreversed inclusion of a United States person under section 1296. To the extent provided in regulations or other guidance prescribed by the Secretary, in the case of any controlled foreign corporation which has shareholders which are not United States shareholders, accumulated post-1986 deferred foreign income shall be appropriately reduced by amounts which would be described in subparagraph (B)(i) is such shareholders were United States shareholders. Such regulations or other guidance may provide a similar rule for purposes of subparagraph (B)(ii) and (C). (3) Post-1986 earnings and profits The term post-1986 earnings and profits means the earnings and profits of the foreign corporation (computed in accordance with sections 964(a) and 986) accumulated in taxable years beginning after December 31, 1986, and determined— (A) as of the close the taxable year referred to in subsection (a), and (B) without diminution by reason of dividends distributed during such taxable year. (e) Specified foreign corporation (1) In general For purposes of this section, the term specified foreign corporation means— (A) any controlled foreign corporation, and (B) any section 902 corporation (as defined in section 909(d)(5)). (2) Application to section 902 corporations For purposes of section 951, a section 902 corporation (as so defined) shall be treated as a controlled foreign corporation solely for purposes of taking into account the subpart F income of such corporation under subsection (a) (and for purposes of applying subsection (f)). (f) Determinations of pro rata share For purposes of this section, the determination of any United States shareholder’s pro rata share of any amount with respect to any specified foreign corporation shall be determined under rules similar to the rules of section 951(a)(2) by treating such amount in the same manner as subpart F income (and by treating such specified foreign corporation as a controlled foreign corporation). (g) Disallowance of foreign tax credit, etc (1) In general No credit shall be allowed under section 901 for 88.6 percent of any taxes paid or accrued (or treated as paid or accrued) with respect to any amount for which a deduction is allowed under this section. (2) Denial of deduction No deduction shall be allowed under this chapter for any tax for which credit is not allowable under section 901 by reason of paragraph (1) (determined by treating the taxpayer as having elected the benefits of subpart A of part III of subchapter N). (3) Coordination with section 78 Section 78 shall not apply to any tax for which credit is not allowable under section 901 by reason of paragraph (1). (h) Election To pay liability in installments (1) In general In the case of a United States shareholder of a deferred foreign income corporation, such United States shareholder may elect to pay the net tax liability under this section in 8 installments of the following amounts: (A) 8 percent of the net tax liability in the case of each of the first 5 of such installments, (B) 15 percent of the net tax liability in the case of the 6th such installment, (C) 20 percent of the net tax liability in the case of the 7th such installment, and (D) 25 percent of the net tax liability in the case of the 8th such installment. (2) Date for payment of installments If an election is made under paragraph (1), the first installment shall be paid on the due date (determined without regard to any extension of time for filing the return) for the return of tax for the taxable year described in subsection (b) and each succeeding installment shall be paid on the due date (as so determined) for the return of tax for the taxable year following the taxable year with respect to which the preceding installment was made. (3) Acceleration of payment If there is an addition to tax for failure to pay timely assessed with respect to any installment required under this subsection, a liquidation or sale of substantially all the assets of the taxpayer (including in a title 11 or similar case), a cessation of business by the taxpayer, or any similar circumstance, then the unpaid portion of all remaining installments shall be due on the date of such event (or in the case of a title 11 or similar case, the day before the petition is filed). The preceding sentence shall not apply to the sale of substantially all the assets of a taxpayer to a buyer if such buyer enters into an agreement with the Secretary under which such buyer is liable for the remaining installments due under this subsection in the same manner as if such buyer were the taxpayer. (4) Proration of deficiency to installments If an election is made under paragraph (1) to pay the net tax liability under this section in installments and a deficiency has been assessed with respect to such net tax liability, the deficiency shall be prorated to the installments payable under paragraph (1). The part of the deficiency so prorated to any installment the date for payment of which has not arrived shall be collected at the same time as, and as a part of, such installment. The part of the deficiency so prorated to any installment the date for payment of which has arrived shall be paid upon notice and demand from the Secretary. This subsection shall not apply if the deficiency is due to negligence, to intentional disregard of rules and regulations, or to fraud with intent to evade tax. (5) Election Any election under paragraph (1) shall be made not later than the due date for the return of tax for the taxable year described in subsection (a) and shall be made in such manner as the Secretary may provide. (6) Net tax liability under this section For purposes of this subsection— (A) In general The net tax liability under this section with respect to any United States shareholder is the excess (if any) of— (i) such taxpayer’s net income tax for the taxable year described in subsection (a), over (ii) such taxpayer’s net income tax for such taxable year determined without regard to this section. (B) Net income tax The term net income tax means the regular tax liability reduced by the credits allowed under subparts A, B, and D of part IV of subchapter A. (i) Special rules for S corporation shareholders (1) In general In the case of any S corporation which is a United States shareholder of a deferred foreign income corporation, each shareholder of such S corporation may elect to defer payment of such shareholder’s net tax liability under this section with respect to such S corporation until the shareholder’s taxable year which includes the triggering event with respect to such liability. (2) Triggering event (A) In general In the case of any shareholder’s net tax liability under this section with respect to any S corporation, the triggering event with respect to such liability is whichever of the following occurs first: (i) Such corporation ceases to be an S corporation (determined as of the first day of the first taxable year that such corporation is not an S corporation). (ii) A liquidation or sale of substantially all the assets of such S corporation (including in a title 11 or similar case), a cessation of business by such S corporation, such S corporation ceases to exist, or any similar circumstance. (iii) A transfer of any share of stock in such S corporation by the taxpayer (including by reason of death, or otherwise). (B) Partial transfers of stock In the case of a transfer of less than all of the taxpayer’s shares of stock in the S corporation, such transfer shall only be a triggering event with respect to so much of the taxpayer’s net tax liability under this section with respect to such S corporation as is properly allocable to such stock. (C) Transfer of liability A transfer described in clause (iii) shall not be treated as a triggering event if the transferee enters into an agreement with the Secretary under which such transferee is liable for net tax liability with respect to such stock in the same manner as if such transferee were the taxpayer. (3) Net tax liability A shareholder’s net tax liability under this section with respect to any S corporation is the net tax liability under this section which would be determined under subsection (h)(6) if the only subpart F income taken into account by such shareholder by reason of this section were allocations from such S corporation. (4) Election to pay deferred liability in installments In the case of a taxpayer which elects to defer payment under paragraph (1), subsection (h) shall be applied— (A) separately with respect to the liability to which such election applies, (B) an election under subsection (h) with respect to such liability shall be treated as timely made if made not later than the due date for the return of tax for the taxable year in which the triggering event with respect to such liability occurs, (C) the first installment under subsection (h) with respect to such liability shall be paid not later than such due date (but determined without regard to any extension of time for filing the return), and (D) if the triggering event with respect to any net tax liability is described in paragraph (2)(A)(ii), an election under subsection (h) with respect to such liability may be made only with the consent of the Secretary. (5) Joint and several liability of S corporation If any shareholder of an S corporation elects to defer payment under paragraph (1), such S corporation shall be jointly and severally liable for such payment and any penalty, addition to tax, or additional amount attributable thereto. (6) Extension of limitation on collection Notwithstanding any other provision of law, any limitation on the time period for the collection of a liability deferred under this subsection shall not be treated as beginning before the date of the triggering event with respect to such liability. (7) Election Any election under paragraph (1) shall be made not later than the due date for the return of tax for the taxable year described in subsection (a) and shall be made in such manner as the Secretary may provide. (j) Inclusion of deferred foreign income under this section not To trigger recapture of overall foreign loss For purposes of section 904(f)(1), in the case of a United States shareholder of a deferred foreign income corporation, such United States shareholder’s taxable income from sources without the United States shall be determined without regard to this section. (k) Regulations The Secretary may prescribe such regulations or other guidance as may be necessary or appropriate to carry out the provisions of this section. . (b) Clerical amendment The table of section for subpart F of part III of subchapter N of chapter 1 is amended by striking the item relating to section 965 and inserting the following: Sec. 965. Treatment of deferred foreign income upon transition to participation exemption system of taxation. . 303. Look-thru rule for related controlled foreign corporations made permanent (a) In general Paragraph (6) of section 954(c) is amended by striking subparagraph (C). (b) Effective date The amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2016, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end. 304. Repeal of section 902 indirect foreign tax credits; determination of section 960 credit on current year basis (a) Repeal of section 902 indirect foreign tax credits Subpart A of part III of subchapter N of chapter 1 is amended by striking section 902. (b) Determination of section 960 credit on current year basis Section 960 is amended— (1) by striking subsection (c), by redesignating subsection (b) as subsection (c), by striking all that precedes subsection (c) (as so redesignated) and inserting the following: 960. Deemed paid credit for subpart F inclusions (a) In general For purposes of this subpart, if there is included in the gross income of a domestic corporation any item of income under section 951(a)(1) with respect to any controlled foreign corporation with respect to which such domestic corporation is a United States shareholder, such domestic corporation shall be deemed to have paid so much of such foreign corporation’s foreign income taxes as are properly attributable to the item of income so included. (b) Special rules for distributions from previously taxed earnings and profits For purposes of this subpart— (1) In general If any portion of a distribution from a controlled foreign corporation to a domestic corporation which is a United States shareholder with respect to such controlled foreign corporation is excluded from gross income under section 959(a), such domestic corporation shall be deemed to have paid so much of such foreign corporation’s foreign income taxes as— (A) are properly attributable to such portion, and (B) have not been deemed to have to been paid by such domestic corporation under this section for any prior taxable year. (2) Tiered controlled foreign corporations If section 959(b) applies to any portion of a distribution from a controlled foreign corporation to another controlled foreign corporation, such controlled foreign corporation shall be deemed to have paid so much of such other controlled foreign corporation’s foreign income taxes as— (A) are properly attributable to such portion, and (B) have not been deemed to have been paid by a domestic corporation under this section for any prior taxable year. ; (2) and by adding after subsection (c) (as so redesignated) the following new subsections: (d) Foreign income taxes The term foreign income taxes means any income, war profits, or excess profits taxes paid or accrued to any foreign country or possession of the United States. (e) Regulations The Secretary shall provide such regulations as may be necessary or appropriate to carry out the provisions of this section. . (c) Conforming amendments (1) Section 78 is amended to read as follows: 78. Gross up for deemed paid foreign tax credit If a domestic corporation chooses to have the benefits of subpart A of part III of subchapter N (relating to foreign tax credit) for any taxable year, an amount equal to the taxes deemed to be paid by such corporation under section 960 (relating to deemed paid credit for subpart F inclusions) for such taxable year shall be treated for purposes of this title (other than section 960) as an item of income required to be included in the gross income of such domestic corporation under section 951(a). . (2) Section 245(a)(10) is amended by striking 902,. (3) Sections 535(b)(1) and 545(b)(1) are each amended by striking section 902(a) or 960(a)(1) and inserting section 960. (4) Paragraph (1) of section 814(f) is amended— (A) by striking subparagraph (B); and (B) by striking all that precedes No income and inserting the following: (1) Treatment of foreign taxes . (5) Subparagraph (B) of section 864(h)(1) is amended by striking 902,. (6) Subsection (a) of section 901 is amended by striking sections 902 and 960 and inserting section 960. (7) Paragraph (2) of section 901(e) is amended by striking but is not limited to— and all that follows through that portion and inserting but is not limited to that portion. (8) Subsection (f) of section 901 is amended by striking sections 902 and 960 and inserting section 960. (9) Subparagraph (A) of section 901(j)(1) is amended by striking 902 or. (10) Subparagraph (B) of section 901(j)(1) is amended by striking sections 902 and 960 and inserting section 960. (11) Paragraph (2) of section 901(k) is amended by striking 902,. (12) Paragraph (6) of section 901(k) is amended by striking 902 or. (13) Subparagraph (A) of section 904(h)(10) is amended by striking sections 902, 907, and 960 and inserting sections 907 and 960. (14) Section 904 is amended by striking subsection (k). (15) Paragraph (1) of section 905(c) is amended by striking the last sentence. (16) Subclause (I) of section 905(c)(2)(B)(i) is amended by striking section 902 or. (17) Subsection (a) of section 906 is amended by striking (or deemed, under section 902, paid or accrued during the taxable year). (18) Subsection (b) of section 906 is amended by striking paragraphs (4) and (5). (19) Subparagraph (B) of section 907(b)(2) is amended by striking 902 or. (20) Paragraph (3) of section 907(c) is amended— (A) by striking subparagraph (A) and redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively; and (B) by striking section 960(a) in subparagraph (A) (as so redesignated) and inserting section 960. (21) Paragraph (5) of section 907(c) is amended by striking 902 or. (22) Clause (i) of section 907(f)(2)(B) is amended by striking 902 or. (23) Subsection (a) of section 908 is amended by striking 902 or. (24) Subsection (b) of section 909 is amended— (A) by striking section 902 corporation in the matter preceding paragraph (1) and inserting specified 10-percent owned foreign corporation; (B) by striking 902 or in paragraph (1); (C) by striking by such section 902 corporation and all that follows in the matter following paragraph (2) and inserting by such specified 10-percent owned foreign corporation or a domestic corporation which is a United States shareholder with respect to such specified 10-percent owned foreign corporation.; and (D) by striking section 902 corporations in the heading thereof and inserting specified 10-Percent owned foreign corporations. (25) Subsection (d) of section 909 is amended by striking paragraph (5). (26) Paragraph (1) of section 958(a) is amended by striking 960(a)(1) and inserting 960. (27) Subsection (d) of section 959 is amended by striking Except as provided in section 960(a)(3), any and inserting Any. (28) Subsection (e) of section 959 is amended by striking and section 960(b). (29) Subparagraph (A) of section 1291(g)(2) is amended by striking any distribution— and all that follows through but only if and inserting any distribution, any withholding tax imposed with respect to such distribution, but only if. (30) Section 1293 is amended by striking subsection (f). (31) Subparagraph (B) of section 6038(c)(1) is amended by striking sections 902 (relating to foreign tax credit for corporate stockholder in foreign corporation) and 960 (relating to special rules for foreign tax credit) and inserting section 960. (32) Paragraph (4) of section 6038(c) is amended by striking subparagraph (C). (33) The table of sections for subpart A of part III of subchapter N of chapter 1 is amended by striking the item relating to section 902. (34) The table of sections for subpart F of part III of subchapter N of chapter 1 is amended by striking the item relating to section 960 and inserting the following: Sec. 960. Deemed paid credit for subpart F inclusions. . (d) Effective date The amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2016, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end. IV Reduced rates for individuals 401. Reduced rates for individuals (a) Joint returns and surviving spouses Section 1(a) is amended by striking in accordance with the following table and all that follows and inserting as follows: 12 percent of so much of taxable income as does not exceed $75,300, plus 25 percent of so much of taxable income as exceeds $75,300 but does not exceed $466,950, plus 29 percent of so much of taxable income as exceeds $466,950.. (b) Heads of households Section 1(b) is amended by striking in accordance with the following table and all that follows and inserting as follows: 12 percent of so much of taxable income as does not exceed $50,400, plus 25 percent of so much of taxable income as exceeds $50,400 but does not exceed $441,000, plus 29 percent of so much of taxable income as exceeds $441,000.. (c) Single Section 1(c) is amended by striking in accordance with the following table and all that follows and inserting as follows: 12 percent of so much of taxable income as does not exceed $37,650, plus 25 percent of so much of taxable income as exceeds $37,650 but does not exceed $415,050, plus 29 percent of so much of taxable income as exceeds $415,050.. (d) Married filing separately Section 1(d) is amended by striking in accordance with the following table and all that follows and inserting as follows: 12 percent of so much of taxable income as does not exceed $37,650, plus 25 percent of so much of taxable income as exceeds $37,650 but does not exceed $233,475, plus 29 percent of so much of taxable income as exceeds $233,475.. (e) Estates and trusts Section 1(e) is amended by striking in accordance with the following table and all that follows and inserting as follows: 12 percent of so much of taxable income as does not exceeds $5,000, plus 25 percent of so much of taxable income as exceeds $5,000 but does not exceed $10,000, plus 29 percent of so much of taxable income as exceeds $15,000. (f) Inflation adjustment Section 1(f) is amended by striking by striking paragraphs (7) and (8) and inserting the following new paragraph: (7) Application to taxable years after 2017 In prescribing tables under paragraph (1) which apply to any taxable year beginning in a calendar year after 2017, paragraph (3) shall be applied by substituting 2016 for 1992 in subparagraph (B) thereof. . (g) Repeal of modifications to superceded rates Section 1 is amended by striking subsection (i) and by redesignating subsection (j) (as added by section 202) as subsection (i). (h) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2016. V Tax-exempt reorganizations 501. No taxable event for change of corporate form Notwithstanding any provision of the Internal Revenue Code of 1986, a change in the organizational structure of a corporation, however organized, into another organizational structure is not a taxable event for the purposes of such Code if there is no change among the owners, their ownership interests, or the assets of the organization (other than a de minimus change in such assets). The preceding sentence shall apply to changes in organizational structure occurring after December 31, 2016. VI Repeal of net investment income tax 601. Repeal of net investment income tax (a) In general Subtitle A of the Internal Revenue Code of 1986 is amended by striking chapter 2A. (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2016. VII Repeal of estate tax 701. Repeal of estate tax and retention of basis step-up Effective for estates of decedents dying after December 31, 2016, chapter 11 of the Internal Revenue Code of 1986 is repealed.