,,ii  #aafth ,,congress  #ast ,session  
,s4 #behi  ,,in ,,the ,,senate ,,of     
,,the ,,united ,,states  ,september #bf1
 #bjai,mr4 ,isakson 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 restore the  
limitation on downward attribution of   
stock ownership in applying the         
constructive ownership rules to         
controlled foreign corporations1 and for
 other purposes4  #a4 ,restoration of   
limitation on downward attribution of   
stock ownership in applying constructive
 ownership rules  7a7 ,in general       
,section #ieh7;b7 of the ,internal      
,revenue ,code of #aihf is amended--    
7#a7 by inserting after paragraph 7#c7  
the following3  7#d7 ,subparagraphs     
7,a71 7,b71 and 7,c7 of section         
#cah7;a77#c7 shall not be applied so as 
to consider a ,united ,states person as 
owning stock which is owned by a person 
who is not a ,united ,states person4  1 

and  7#b7 by striking ,paragraph 7#a7 in
 the last sentence and inserting        
,paragraphs 7#a7 and 7#d74  7b7 ,foreign
 controlled ,united ,states shareholders
 ,subpart ,f of part ,,iii of subchapter
 ,n of chapter #a of such ,code is      
amended by inserting after section      
#iea;,a the following new section3      
#iea;,b4 ,amounts included in gross     
income of foreign controlled ,united    
,states shareholders  7a7 ,in general   
,in the case of any foreign controlled  
,united ,states shareholder of a foreign
 controlled foreign corporation--  7#a7 
this subpart 7other than sections       
#iea;,a1 #iea7;b71 #ieg1 and #ife7 shall
 be applied with respect to such        
shareholder 7separately from1 and in    
addition to1 the application of this    
subpart without regard to this          
section7--  7,a7 by substituting foreign
 controlled ,united ,states shareholder 
for ,united ,states shareholder each    
place it appears therein1 and  7,b7 by  
substituting foreign controlled foreign 

corporation for controlled foreign      
corporation each place it appears       
therein1 and  7#b7 sections #iea;,a and 
#ife shall be applied with respect to   
such shareholder -- 7,a7 by treating    
each reference to ,united ,states       
shareholder in such sections as         
including a reference to such           
shareholder1 and  7,b7 by treating each 
reference to controlled foreign         
corporation in such sections as         
including a reference to such foreign   
controlled foreign corporation4  7b7    
,foreign controlled ,united ,states     
shareholder ,for purposes of this       
section1 the term foreign controlled    
,united ,states shareholder means1 with 
respect to any foreign corporation1 any 
,united ,states person which would be a 
,united ,states shareholder with respect
 to such foreign corporation if--  7#a7 
section #iea7;b7 were applied by        
substituting more than #ej percent for  
#aj percent or more1 and  7#b7 section  
#ieh7;b7 were applied without regard to 

paragraph 7#d7 thereof4  7c7 ,foreign   
controlled foreign corporation ,for     
purposes of this section1 the term      
foreign controlled foreign corporation  
means a foreign corporation1 other than 
a controlled foreign corporation1 which 
would be a controlled foreign           
corporation if section #ieg7;a7 were    
applied--  7#a7 by substituting foreign 
controlled ,united ,states shareholders 
for ,united ,states shareholders1 and   
7#b7 by substituting section #ieh7;b7   
7other than paragraph 7#d7 thereof7 for 
section #ieh7;b74  7d7 ,regulations ,the
 ,secretary shall prescribe such        
regulations or other guidance as may be 
necessary or appropriate to carry out   
the purposes of this section1 including 
regulations or other guidance--  7#a7 to
 treat a foreign controlled ,united     
,states shareholder or a foreign        
controlled foreign corporation as a     
,united ,states shareholder or as a     
controlled foreign corporation1         
respectively1 for purposes of provisions

 of this title other than this subpart1 
and  7#b7 to prevent the avoidance of   
the purposes of this section4  4  7c7   
,clerical amendment ,the table of       
sections for subpart ,f of part ,,iii of
 subchapter ,n of chapter #a of such    
,code is amended by inserting after the 
item relating to section #iea;,a the    
following new item3  ,sec4 #iea;,b4     
,amounts included in gross income of    
foreign controlled ,united ,states      
shareholders4  4  7d7 ,effective date   
,the amendments made by this section    
shall apply to-- 7#a7 the last taxable  
year of foreign corporations beginning  
before ,january #a1 #bjah1 and each     
subsequent taxable year of such foreign 
corporations1 and  7#b7 taxable years of
 ,united ,states persons in which or    
with which such taxable years of foreign
 corporations end4