,,ii #aafth ,,congress #b;d ,session ,s4 #cebf ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,march #ah1 #bjbj,mr4 ,reed introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to restrict the authority of the ,secretary of the ,treasury to purchase or guarantee assets in response to the coronavirus disease 7,,covid-#ai7 outbreak4 #a4 ,short title ,this ,act may be cited as the ,protecting ,taxpayer's ,return on ,investment ,act of #bjbj4 #b4 ,authority for warrants and debt instruments 7a7 ,definitions ,in this section3 7#a7 ,asset ,the term asset means any financial instrument that the ,secretary1 after consultation with the ,chairman of the ,board of ,governors of the ,federal ,reserve ,system1 determines the purchase of which or the guarantee of which is necessary to promote economic stability4 7#b7 ,company ,the term company means any entity that is not subject to the prohibitions in subsection 7e74 7#c7 ,secretary ,the term ,secretary means the ,secretary of the ,treasury4 7b7 ,warrant or senior debt instrument ,the ,secretary may not purchase1 or make any commitment to purchase1 or guarantee1 or make any commitment to guarantee1 any asset in response to the coronavirus disease 7,,covid-#ai7 outbreak1 unless the ,secretary receives from the company from which such assets are to be purchased or are to be guaranteed-- 7#a7 in the case of a company1 the securities of which are traded on a national securities exchange1 a warrant giving the right to the ,secretary to receive nonvoting common stock or preferred stock in such company1 or voting stock with respect to which1 the ,secretary agrees not to exercise voting power1 as the ,secretary determines appropriate2 or 7#b7 in the case of any company other than one described in paragraph 7#a71 a warrant for common or preferred stock1 or a senior debt instrument from such company1 as described in subsection 7c77#c74 7c7 ,terms and conditions ,the terms and conditions of any warrant or senior debt instrument required under subsection 7b7 shall meet the following requirements3 7#a7 ,purposes ,such terms and conditions shall1 at a minimum1 be designed-- 7,a7 to provide for reasonable participation by the ,secretary1 for the benefit of taxpayers1 in equity appreciation in the case of a warrant or other equity security1 or a reasonable interest rate premium1 in the case of a debt instrument2 and 7,b7 to provide additional protection for the taxpayer against losses from sale of assets by the ,secretary and any associated administrative expenses4 7#b7 ,authority to sell1 exercise1 or surrender 7,a7 ,in general ,for the primary benefit of taxpayers1 the ,secretary may sell1 exercise1 or surrender a warrant or any senior debt instrument received under this section1 based on the conditions established under paragraph 7#a74 7,b7 ,proceeds ,of any proceeds received through the sale1 exercise1 or surrender of any warrant or any senior debt instrument-- 7i7 #fe percent shall be transferred or credited to the ,housing ,trust ,fund established under section #acch of the ,federal ,housing ,enterprises ,financial ,safety and ,soundness ,act of #aiib 7#ab ,u4,s4,c4 #defh72 and 7ii7 #ce percent shall be transferred or credited to the ,capital ,magnet ,fund under section #acci of the ,federal ,housing ,enterprises ,financial ,safety and ,soundness ,act of #aiib 7#ab ,u4,s4,c4 #defi74 7#c7 ,conversion ,the warrant shall provide that if1 after the warrant is received by the ,secretary under this section1 the company that issued the warrant is no longer listed or traded on a national securities exchange or securities association1 as described in subsection 7b77#a71 such warrants shall convert to senior debt1 or contain appropriate protections for the ,secretary to ensure that the ,treasury is appropriately compensated for the value of the warrant1 in an amount determined by the ,secretary for the primary benefit of taxpayers4 7#d7 ,protections ,any warrant representing securities to be received by the ,secretary under this section shall contain anti-dilution provisions of the type employed in capital market transactions1 as determined by the ,secretary for the primary benefit of taxpayers4 ,such provisions shall protect the value of the securities from market transactions such as stock splits1 stock distributions1 dividends1 and other distributions1 mergers1 and other forms of reorganization or recapitalization4 7#e7 ,exercise price ,the exercise price for any warrant issued pursuant to this section shall be set by the ,secretary1 for the primary benefit of taxpayers4 7#f7 ,sufficiency ,the company shall guarantee to the ,secretary that it has authorized shares of nonvoting stock available to fulfill its obligations under this section4 ,should the company not have sufficient authorized shares1 including preferred shares that may carry dividend rights equal to a multiple number of common shares1 the ,secretary may1 to the extent necessary for the primary benefit of taxpayers1 accept a senior debt note in an amount1 and on such terms as will compensate the ,secretary with equivalent value1 in the event that a sufficient shareholder vote to authorize the necessary additional shares cannot be obtained4 7d7 ,exceptions ,the ,secretary may establish an exception to the requirements of this section and appropriate alternative requirements for any participating company that is legally prohibited from issuing securities and debt instruments1 so as not to allow circumvention of the requirements of this section4 7e7 ,prohibitions of foreign companies 7#a7 ,in general ,the ,secretary may not purchase1 or make any commitment to purchase1 or guarantee1 or make any commitment to guarantee1 any asset in response to the coronavirus disease 7,,covid-#ai7 outbreak from-- 7,a7 any foreign incorporated entity that the ,secretary has determined is an inverted domestic corporation or any subsidiary of such entity2 or 7,b7 any joint venture if more than #aj percent of the joint venture 7by vote or value7 is held by a foreign incorporated entity that the ,secretary has determined is an inverted domestic corporation or any subsidiary of such entity4 7#b7 ,inverted domestic corporation 7,a7 ,in general ,for purposes of this subsection1 a foreign incorporated entity shall be treated as an inverted domestic corporation if1 pursuant to a plan 7or a series of related transactions7-- 7i7 the entity completes on or after ,may #h1 #bjad1 the direct or indirect acquisition of-- 7,i7 substantially all of the properties held directly or indirectly by a domestic corporation2 or 7,,ii7 substantially all of the assets of1 or substantially all of the properties constituting a trade or business of1 a domestic partnership2 and 7ii7 after the acquisition1 either-- 7,i7 more than #ej percent of the stock 7by vote or value7 of the entity is held-- 7aa7 in the case of an acquisition with respect to a domestic corporation1 by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation2 or 7bb7 in the case of an acquisition with respect to a domestic partnership1 by former partners of the domestic partnership by reason of holding a capital or profits interest in the domestic partnership2 or 7,,ii7 the management and control of the expanded affiliated group which includes the entity occurs1 directly or indirectly1 primarily within the ,united ,states1 as determined pursuant to regulations prescribed by the ,secretary1 and such expanded affiliated group has significant domestic business activities4 7,b7 ,exception for corporations with substantial business activities in foreign country of organization 7i7 ,in general ,a foreign incorporated entity described in subparagraph 7,a7 shall not be treated as an inverted domestic corporation if after the acquisition the expanded affiliated group which includes the entity has substantial business activities in the foreign country in which or under the law of which the entity is created or organized when compared to the total business activities of such expanded affiliated group4 7ii7 ,substantial business activities ,the ,secretary shall establish regulations for determining whether an affiliated group has substantial business activities for purposes of clause 7i71 except that such regulations may not treat any group as having substantial business activities if such group would not be considered to have substantial business activities under the regulations prescribed under section #ghgd of the ,internal ,revenue ,code of #aihf1 as in effect on ,january #ah1 #bjag4 7,c7 ,significant domestic business activities 7i7 ,in general ,for purposes of subparagraph 7,a77ii77,,ii71 an expanded affiliated group has significant domestic business activities if at least #be percent of-- 7,i7 the employees of the group are based in the ,united ,states2 7,,ii7 the employee compensation incurred by the group is incurred with respect to employees based in the ,united ,states2 7,,iii7 the assets of the group are located in the ,united ,states2 or 7,,iv7 the income of the group is derived in the ,united ,states4 7ii7 ,determination ,determinations pursuant to clause 7i7 shall be made in the same manner as such determinations are made for purposes of determining substantial business activities under regulations referred to in subparagraph 7,b7 as in effect on ,january #ah1 #bjag1 but applied by treating all references in such regulations to foreign country and relevant foreign country as references to the ,united ,states4 ,the ,secretary may issue regulations decreasing the threshold percent in any of the tests under such regulations for determining if business activities constitute significant domestic business activities for purposes of this subparagraph4 7#c7 ,waiver 7,a7 ,in general ,the ,secretary may waive paragraph 7#a7 if the ,secretary determines that the waiver is-- 7i7 required in the interest of national security2 or 7ii7 necessary for the efficient or effective administration of ,federal or federally funded-- 7,i7 programs that provide health benefits to individuals2 or 7,,ii7 public health programs4 7,b7 ,report to ,congress ,the ,secretary shall1 not later than #ad days after issuing such waiver1 submit a written notification of the waiver to the relevant authorizing committees of ,congress and the ,committees on ,appropriations of the ,senate and the ,house of ,representatives4 7#d7 ,definitions and special rules 7,a7 ,definitions ,in this subsection1 the terms expanded affiliated group1 foreign incorporated entity1 domestic1 and foreign have the meaning given those terms in section #hce7;c7 of the ,homeland ,security ,act of #bjjb 7#f ,u4,s4,c4 #cie7;c774 7,b7 ,special rules ,in applying paragraph 7#b7 of this subsection for purposes of paragraph 7#a7 of this subsection1 the rules described under #hce7;c77#a7 of the ,homeland ,security ,act of #bjjb 7#f ,u4,s4,c4 #cie7;c77#a77 shall apply4 7#e7 ,regulations regarding management and control 7,a7 ,in general ,the ,secretary shall1 for purposes of this subsection1 prescribe regulations for purposes of determining cases in which the management and control of an expanded affiliated group is to be treated as occurring1 directly or indirectly1 primarily within the ,united ,states4 ,the regulations prescribed under the preceding sentence shall apply to periods after ,may #h1 #bjad4 7,b7 ,executive officers and senior management ,the regulations prescribed under subparagraph 7,a7 shall provide that the management and control of an expanded affiliated group shall be treated as occurring1 directly or indirectly1 primarily within the ,united ,states if substantially all of the executive officers and senior management of the expanded affiliated group who exercise day-to-day responsibility for making decisions involving strategic1 financial1 and operational policies of the expanded affiliated group are based or primarily located within the ,united ,states4 ,individuals who in fact exercise such day-to-day responsibilities shall be treated as executive officers and senior management regardless of their title4 #c4 ,special rules for tax treatment of executive compensation for employers participating in certain coronavirus relief programs 7a7 ,in general ,section #afb7m7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new paragraph3 7#g7 ,special rule for application to employers participating in certain coronavirus relief programs 7,a7 ,in general ,in the case of an applicable employer1 no deduction shall be allowed under this chapter-- 7i7 in the case of applicable remuneration for any applicable taxable year which is attributable to services performed by a covered individual during such applicable taxable year1 to the extent that the amount of such remuneration exceeds #ejj1jjj1 or 7ii7 in the case of deferred deduction remuneration for any taxable year for services performed during any applicable taxable year by a covered individual1 to the extent that the amount of such remuneration exceeds #ejj1jjj reduced 7but not below zero7 by the sum of-- 7,i7 the applicable remuneration for such applicable taxable year1 plus 7,,ii7 the portion of the deferred deduction remuneration for such services which was taken into account under this clause in a preceding taxable year4 7,b7 ,applicable employer ,for purposes of this paragraph-- 7i7 ,in general ,the term applicable employer means any employer from whom one or more assets are purchased or guaranteed in accordance with section #b of the ,protecting ,taxpayer's ,return on ,investment ,act of #bjbj4 7ii7 ,aggregation rules ,two or more persons who are treated as a single employer under subsection 7b7 or 7c7 of section #dad shall be treated as a single employer1 except that in applying section #aefc7;a7 for purposes of either such subsection1 paragraphs 7#b7 and 7#c7 thereof shall be disregarded4 7,c7 ,applicable taxable year ,for purposes of this paragraph1 the term applicable taxable year means1 with respect to any employer-- 7i7 the first taxable year of the employer in which the ,secretary has purchased or guaranteed an asset of the employer in accordance with section #b of the ,protecting ,taxpayer's ,return on ,investment ,act of #bjbj1 and 7ii7 any subsequent taxable year ending before the date on which the ,secretary sells the assets associated with the employer or no longer guarantees the assets associated with the employer1 as the case may be4 7,d7 ,covered individual ,for purposes of this paragraph1 the term covered individual means any individual who has performed services 7directly or indirectly7 for the applicable employer 7or any predecessor74 7,e7 ,applicable remuneration ,for purposes of this paragraph1 the term applicable remuneration means the applicable employee remuneration of the covered individual1 as determined under paragraph 7#d7 without regard to subparagraph 7,b7 thereof4 ,such term shall not include any deferred deduction remuneration with respect to services performed in a prior applicable taxable year4 7,f7 ,deferred deduction remuneration ,for purposes of this paragraph1 the term deferred deduction remuneration means remuneration which would be applicable remuneration for services performed in an applicable taxable year but for the fact that the deduction under this chapter 7determined without regard to this paragraph7 for such remuneration is allowable in a subsequent taxable year4 7,g7 ,coordination ,rules similar to the rules of subparagraphs 7,d71 7,e71 and 7,f7 of paragraph 7#d7 shall apply for purposes of this paragraph4 7,h7 ,regulatory authority ,the ,secretary may prescribe such guidance1 rules1 or regulations as are necessary to carry out the purposes of this paragraph1 including the extent to which this paragraph applies in the case of any acquisition1 merger1 or reorganization of an applicable employer4 4 7b7 ,effective date ,the amendment made by this section shall apply to taxable years beginning after ,december #ca1 #bjai4