,,ii #aaeth ,,congress #ast ,session ,s4 #fch ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,march #ae1 #bjag,mr4 ,portman 7for himself1 ,ms4 ,stabenow1 and ,mr4 ,brown7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to provide appropriate rules for the application of the deduction for income attributable to domestic production activities with respect to certain contract manufacturing or production arrangements4 #a4 ,short title ,this ,act may be cited as the ,promoting ,more ,american ,manufacturing ,jobs ,act4 #b4 ,application of deduction for income attributable to domestic production activities to certain contract manufacturing or production arrangements 7a7 ,in general ,section #aii7;d7 of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by inserting the same qualified production activities income derived from before any activity in paragraph 7#aj71 7#b7 by redesignating paragraph 7#aj7 7as amended by paragraph 7#a77 as paragraph 7#aa71 and 7#c7 by inserting after paragraph 7#i7 the following new paragraph3 7#aj7 ,contract manufacturing or production arrangements 7,a7 ,in general ,except as provided in subparagraph 7,b71 in the case of a contract manufacturing or production arrangement under which any person makes a substantial contribution through the activities of its employees within the ,united ,states to the manufacture1 production1 growth1 or extraction of qualifying production property1 taking into account the factors set forth in subparagraph 7,d7-- 7i7 such person shall be treated as engaging in the manufacturing1 production1 growth1 or extraction of such qualifying production property1 and 7ii7 the domestic production gross receipts of such person shall include the gross receipts of such person received under such arrangement for such activities4 7,b7 ,treatment of certain written agreements ,in the case of a contract manufacturing or production arrangement1 if all parties to such arrangement agree in writing that only one such person shall be eligible for the deduction under this section1 such person shall be treated as performing the activities described in subclauses 7,i7 and 7,,ii7 of subsection 7c77#d77;,a77i7 under such arrangement and no other person shall be treated for purposes of this section as performing such activities4 7,c7 ,contract manufacturing or production arrangement ,for purposes of this paragraph1 the term contract manufacturing or production arrangement means any arrangement under which-- 7i7 a person contracts with one or more unrelated persons for the manufacture1 production1 growth or extraction of an item of qualifying production property or a qualified film1 and 7ii7 in the case of qualifying production property1 such item of qualifying production property is manufactured1 produced1 grown or extracted in whole or significant part within the ,united ,states pursuant to subsection 7c77#d77;,a77i77,i74 7,d7 ,factors for determining substantial contribution ,the ,secretary shall prescribe regulations setting forth activities to be taken into account in determining whether a person makes a substantial contribution through the activities of its employees within the ,united ,states to the manufacture1 production1 growth or extraction of qualifying production property for purposes of subparagraph 7,a74 ,such factors shall include-- 7i7 oversight and direction of the activities or process pursuant to which the property is manufactured1 produced1 grown or extracted2 7ii7 physical transformation of personal property1 or assembly or conversion of component parts into qualifying production property1 that does not by itself constitute manufacturing1 production1 growth or extraction pursuant to subsection 7c77#d77;,a77i77,i72 7iii7 material selection1 vendor selection1 or ownership and control of the raw materials1 work-in-process or finished goods2 7iv7 management of risk of loss1 cost reduction or efficiency initiatives associated with the manufacturing process1 demand planning1 production scheduling1 hedging raw material costs and other manufacturing costs or capacities2 7v7 control of manufacturing related logistics2 7vi7 sample testing1 establishment of quality control standards and other quality control activities2 7vii7 developing1 or directing the use or development of1 product design and design specifications1 as well as trade secrets1 technology1 and other intellectual property for the purpose of manufacturing1 producing1 growing or extracting the qualifying production property2 and 7viii7 such other activities as shall be determined by the ,secretary4 7,e7 ,safe harbor for determining substantial contribution 7i7 ,in general ,a person which has economic risk of loss with respect to greater than #ej percent of the direct material costs necessary to the manufacture1 production1 growth1 or extraction of the qualifying production in whole or in significant part within the ,united ,states shall be deemed for purposes of subparagraph 7,a7 to make a substantial contribution through the activities of its employees within the ,united ,states to the manufacture1 production1 growth1 or extraction of such qualifying production property4 7ii7 ,economic risk of loss ,for purposes of this subparagraph1 a person has economic risk of loss if such person bears the ultimate economic responsibility for the direct material cost4 ,the following factors shall not affect the determination of economic risk of loss3 7,i7 ,contractual requirements to insure the direct materials4 7,,ii7 ,contractual liability for breach of performance4 7iii7 ,direct material cost ,for purposes of this subparagraph1 the term direct material cost includes the cost of materials that become an integral part of qualifying production property and materials that are consumed in the ordinary course of production and that can be identified or associated with particular units or groups of units of property produced4 4 7b7 ,effective date 7#a7 ,in general ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 7#b7 ,election for retroactive application ,if all of the persons entering into a written agreement described in section #aii7;d77#aj77;,b7 of the ,internal ,revenue ,code of #aihf 7as amended by this ,act7 elect to have this paragraph apply to taxable years beginning on or before the date of the enactment of this ,act and can demonstrate1 by providing copies of timely filed tax returns 7including amended returns7 or otherwise1 that only one person claimed the deduction under section #aii of such ,code in such taxable years with respect to the property described in the agreement1 then the amendments made by this section shall apply to such taxable years of such persons4 7c7 ,no inference ,the amendments made by this section are intended as safe harbors and shall not be construed as adversely affecting the eligibility for a deduction under section #aii of the ,internal ,revenue ,code of #aihf of any person who contracts with another person to manufacture1 produce1 grow or extract property described in subsection 7c77#e7 or 7c77#f7 of such section4