,,ii  #aaf? ,,congress  #a/ ,session    
,s4 #fdg  ,,9 ,,! ,,s5ate ,,( ,,!       
,,unit$ ,,/ates  ,m>* #e1 #bjai,mr4     
,s*atz 7= himself1 ,mr4 ,van ,holl51    
,mr4 ,m]kley1 & ,mrs4 ,gillibr&7        
introduc$ ! foll[+ bill2 :i* 0 read     
twice & ref]r$ to ! ,committee on       
,f9ance  ,a ,,bill  ,to am5d ! ,int]nal 
,rev5ue ,code ( #aihf to impose a tax on
 c]ta9 trad+ transactions4  #a4 ,%ort   
title ,?is ,act may be cit$ z ! ,wall   
,/reet ,tax ,act ( #bjai4  #b4          
,transaction tax  7a7 ,9 g5]al ,*apt]   
#cf ( ! ,int]nal ,rev5ue ,code ( #aihf  
is am5d$ by ins]t+ aft] sub*apt] ,b !   
foll[+ new sub*apt]3  ,c ,tax on ,trad+ 
,transactions  ,sec4 #ddge4 ,tax on     
trad+ transactions4,sec4 #ddgf4         
,d]ivative def9$4  #ddge4 ,tax on trad+ 
transactions  7a7 ,imposition ( tax ,!re
 is h]eby impos$ a tax on ea* cov]$     
transaction ) respect to any security4  
7b7 ,rate ( tax ,! tax impos$ "u        
subsection 7a7 ) respect to any cov]$   
transaction %all be #j4a p]c5t ( !      

specifi$ base am\nt ) respect to su*    
cov]$ transaction4  7c7 ,specifi$ base  
am\nt ,= purposes ( ?is section1 ! t]m  
specifi$ base am\nt means-- 7#a7 except 
z provid$ 9 p>agraph 7#b71 ! fair m>ket 
value ( a security 7det]m9$ z ( ! "t ( !
 cov]$ transaction71 &  7#b7 9 ! case ( 
any paym5t ) respect to a d]ivative1 !  
am\nt ( su* paym5t4  7d7 ,cov]$         
transaction ,= purposes ( ?is section-- 
7#a7 ,9 g5]al ,! t]m cov]$ transaction  
means-- 7,a7 except z provid$ 9         
subp>agraph 7,b71 any pur*ase if--  7i7 
su* pur*ase occurs on1 or is subject to 
! rules (1 a qualifi$ bo>d or ex*ange   
locat$ 9 ! ,unit$ ,/ates1 or  7ii7 !    
pur*as] or sell] is a ,unit$ ,/ates     
p]son1 &  7,b7 any transaction ) respect
 to a d]ivative if--  7i7 su* d]ivative 
is trad$ on1 or is subject to ! rules (1
 a qualifi$ bo>d or ex*ange locat$ 9 !  
,unit$ ,/ates1 or  7ii7 any p>ty )      
rights "u su* d]ivative is a ,unit$     
,/ates p]son4  7#b7 ,exception = initial
 issues ,no tax %all be impos$ "u       

subsection 7a7 on any cov]$ transaction 
) respect to ! initial issuance ( any   
security describ$ 9 subp>agraph 7,a71   
7,b71 or 7,c7 ( subsection 7e77#a74  7e7
 ,def9itions & special rules ,= purposes
 ( ?is section-- 7#a7 ,security ,=      
purposes ( ?is section1 ! t]m security  
means--  7,a7 any %>e ( /ock 9 a        
corporation1  7,b7 any p>tn]%ip or      
b5eficial own]%ip int]e/ 9 a p>tn]%ip or
 tru/1  7,c7 except z provid$ 9 p>agraph
 7#b71 any note1 bond1 deb5ture1 or o!r 
evid5ce ( indebt$ness1 &  7,d7 any      
d]ivative 7z def9$ 9 section #ddgf74    
7#b7 ,exception = c]ta9 trad$ %ort-t]m  
indebt$ness ,a note1 bond1 deb5ture1 or 
o!r evid5ce ( indebt$ness :i*--  7,a7 is
 trad$ on1 or is subject to ! rules (1 a
 qualifi$ bo>d or ex*ange locat$ 9 !    
,unit$ ,/ates1 &  7,b7 has a fix$       
maturity ( n m ?an #ajj days1  %all n be
 treat$ z describ$ 9 p>agraph 7#a77;,c74
  7#c7 ,qualifi$ bo>d or ex*ange ,! t]m 
qualifi$ bo>d or ex*ange has ! mean+    
giv5 su* t]m by section #abef7;g77#g74  

7f7 ,by :om paid  7#a7 ,9 g5]al ,! tax  
impos$ by ?is section %all be paid by-- 
7,a7 9 ! case ( a transaction :i* occurs
 on1 or is subject to ! rules (1 a      
qualifi$ bo>d or ex*ange locat$ 9 !     
,unit$ ,/ates1 su* qualifi$ bo>d or     
ex*ange1 &  7,b7 9 ! case ( a pur*ase n 
describ$ 9 subp>agraph 7,a7 :i* is      
execut$ by a brok] 7z def9$ 9 section   
#fjde7;c77#a77 :i* is a ,unit$ ,/ates   
p]son1 su* brok]4  7#b7 ,special rules =
 direct1 etc41 transactions ,9 ! case ( 
any transaction to :i* p>agraph 7#a7    
does n apply1 ! tax impos$ by ?is       
section %all be paid by--  7,a7 9 ! case
 ( a transaction describ$ 9 subsection  
7d77#a77;,a7-- 7i7 ! pur*as] if !       
pur*as] is a ,unit$ ,/ates p]son1 &     
7ii7 ! sell] if ! pur*as] is n a ,unit$ 
,/ates p]son1 &  7,b7 9 ! case ( a      
transaction describ$ 9 subsection       
7d77#a77;,b7--  7i7 ! payor if ! payor  
is a ,unit$ ,/ates p]son1 &  7ii7 !     
payee if ! payor is n a ,unit$ ,/ates   
p]son4  7g7 ,treatm5t ( ex*anges &      

paym5ts ) respect to d]ivatives ,=      
purposes ( ?is section-- 7#a7 ,treatm5t 
( ex*anges  7,a7 ,9 g5]al ,an ex*ange   
%all be treat$ z ! sale ( ! prop]ty     
transf]r$ & a pur*ase ( ! prop]ty       
receiv$ by ea* p>ty to ! ex*ange4  7,b7 
,c]ta9 deem$ ex*anges ,9 ! case ( a     
di/ribution treat$ z an ex*ange = /ock  
"u section #cjb or #cca1 ! corporation  
mak+ su* di/ribution %all be treat$ z   
hav+ pur*as$ su* /ock = purposes ( ?is  
section4  7#b7 ,paym5ts ) respect to    
d]ivatives treat$ z sep>ate transactions
 ,except z o!rwise provid$ by !         
,secret>y1 any paym5t ) respect to any  
d]ivative %all be treat$ z a sep>ate    
transaction = purposes ( ?is section4   
7h7 ,application to transactions by     
controll$ =eign corporations  7#a7 ,9   
g5]al ,= purposes ( ?is section1 a      
controll$ =eign corporation %all be     
treat$ z a ,unit$ ,/ates p]son4  7#b7   
,special rules = paym5t ( tax on direct1
 etc41 transactions ,9 ! case ( any     
transaction :i* is a cov]$ transaction  

solely by reason ( p>agraph 7#a7 & :i*  
is n describ$ 9 subsection 7f77#a7--    
7,a7 ,paym5t by ,unit$ ,/ates %>ehold]s 
,any tax :i* w\ld 7b = ?is p>agraph7 be 
payable "u subsection 7f77#b7 by !      
controll$ =eign corporation %all1 9 lieu
 !re(1 be paid by ! ,unit$ ,/ates       
%>ehold]s ( su* controll$ =eign         
corporation z provid$ 9 subp>agraph     
7,b74  7,b7 ,pro rata %>es ,ea* su*     
,unit$ ,/ates %>ehold] %all pay ! same  
proportion ( su* tax z-- 7i7 ! /ock :i* 
su* ,unit$ ,/ates %>ehold] owns 7)9 !   
mean+ ( section #ieh7;a77 9 su*         
controll$ =eign corporation1 be>s to    
7ii7 ! /ock s own$ by all ,unit$ ,/ates 
%>ehold]s 9 su* controll$ =eign         
corporation4  7,c7 ,def9itions ,=       
purposes ( ?is subsection1 ! t]ms ,unit$
 ,/ates %>ehold] & controll$ =eign      
corporation h ! mean+s giv5 su* t]ms 9  
sections #iea7;b7 & #ieg7;a71           
respectively4  7i7 ,adm9i/ration ,!     
,secret>y %all c>ry out ?is section 9   
consultation ) ! ,securities & ,ex*ange 

,commission & ! ,commodity ,futures     
,trad+ ,commission4  7j7 ,guidance2     
regulations ,! ,secret>y %all-- 7#a7    
provide guidance reg>d+ su* in=mation   
report+ conc]n+ cov]$ transactions z !  
,secret>y deems appropriate1 &  7#b7    
prescribe su* regulations z are necess>y
 or appropriate to prev5t avoidance ( ! 
purposes ( ?is section1 includ+ ! use ( 
non-,unit$ ,/ates p]sons 9 su*          
transactions4  #ddgf4 ,d]ivative def9$  
7a7 ,9 g5]al ,= purposes ( ?is sub*apt]1
 except z o!rwise provid$ 9 ?is section1
 ! t]m d]ivative means any contract     
7includ+ any option1 =w>d contract1     
futures contract1 %ort position1 swap1  
or simil> contract7 ! value ( :i*1 or   
any paym5t or o!r transf] ) respect to  
:i*1 is 7directly or indirectly7 det]m9$
 by ref]5ce to "o or m ( ! foll[+3  7#a7
 ,any %>e ( /ock 9 a corporation4  7#b7 
,any p>tn]%ip or b5eficial own]%ip      
int]e/ 9 a p>tn]%ip or tru/4  7#c7 ,any 
evid5ce ( indebt$ness4  7#d7 ,except z  
provid$ 9 subsection 7b77#a71 any real  

prop]ty4  7#e7 ,any commodity :i* is    
actively trad$ 7)9 ! mean+ ( section    
#ajib7;d77#a774  7#f7 ,any curr5cy4     
7#g7 ,any rate1 price1 am\nt1 index1    
=mula1 or algori?m4  7#h7 ,any o!r item 
z ! ,secret>y may prescribe4  ,except z 
provid$ 9 regulations prescrib$ by !    
,secret>y to prev5t ! avoidance ( !     
purposes ( ?is sub*apt]1 su* t]m %all n 
include any item describ$ 9 p>agraphs   
7#a7 ?r\gh 7#h74  7b7 ,exceptions  7#a7 
,c]ta9 real prop]ty  7,a7 ,9 g5]al ,=   
purposes ( ?is sub*apt]1 ! t]m d]ivative
 %all n include any contract ) respect  
to int]e/s 9 real prop]ty 7z def9$ 9    
section #hef7;c77#e77;,c77 if su*       
contract requires physical deliv]y ( su*
 real prop]ty4  7,b7 ,options to settle 
9 ca%  7i7 ,9 g5]al ,= purposes (       
subp>agraph 7,a71 a contract :i*        
provides = an option ( ca% settlem5t    
%all n be treat$ z requir+ physical     
deliv]y ( real prop]ty unless ! option  
is--  7,i7 n ex]cisable unconditionally1
 &  7,,ii7 ex]cisable only 9 unusual &  

exceptional circum/ances4  7ii7 ,option 
( ca% settlem5t ,= purposes ( clause    
7i71 a contract provides an option ( ca%
 settlem5t if ! contract settles 9 7or  
c\ld be settl$ 97 ca% or prop]ty o!r ?an
 ! und]ly+ real prop]ty4  7#b7          
,securities l5d+1 sale-repur*ase1 &     
simil> f9anc+ transactions ,to ! ext5t  
provid$ by ! ,secret>y1 = purposes ( ?is
 sub*apt]1 ! t]m d]ivative %all n       
include ! "r to ! return ( ! same or    
sub/antially id5tical securities        
transf]r$ 9 a securities l5d+           
transaction1 sale-repur*ase transaction1
 or simil> f9anc+ transaction4  7#c7    
,options receiv$ 9 connection ) !       
p]=mance ( s]vices ,= purposes ( ?is    
sub*apt]1 ! t]m d]ivative %all n include
 any option describ$ 9 section          
#hc7;e77#c7 receiv$ 9 connection ) !    
p]=mance ( s]vices4  7#d7 ,insurance    
contracts1 annuities1 & end[m5ts ,=     
purposes ( ?is sub*apt]1 ! t]m d]ivative
 %all n include any insurance1 annuity1 
or end[m5t contract issu$ by an         

insurance company to :i* sub*apt] ,l    
applies 7or issu$ by any =eign          
corporation to :i* su* sub*apt] w\ld    
apply if su* =eign corporation 7 a      
dome/ic corporation74  7#e7 ,d]ivatives 
) respect to /ock ( memb]s ( same       
worldwide affiliat$ gr\p ,= purposes (  
?is sub*apt]1 ! t]m d]ivative %all n    
include any d]ivative 7det]m9$ )\t reg>d
 to ?is p>agraph7 ) respect to /ock     
issu$ by any memb] ( ! same worldwide   
affiliat$ gr\p 7z def9$ 9 section       
#hfd7;f77 9 :i* ! taxpay] is a memb]4   
7#f7 ,commodities us$ 9 normal c\rse (  
trade or bus9ess ,= purposes ( ?is      
sub*apt]1 ! t]m d]ivative %all n include
 any contract ) respect to any commodity
 if-- 7,a7 su* contract requires        
physical deliv]y ) ! option ( ca%       
settlem5t only 9 unusual & exceptional  
circum/ances1 &  7,b7 su* commodity is  
us$ 7& is us$ 9 quantities ) respect to 
:i* su* d]ivative relates7 9 ! normal   
c\rse ( ! taxpay]'s trade or bus9ess    
7or1 9 ! case ( an individual1 = p]sonal

 consumption74  7c7 ,contracts ) emb$d$ 
d]ivative compon5ts  7#a7 ,9 g5]al ,if a
 contract has d]ivative & nond]ivative  
compon5ts1 !n ea* d]ivative compon5t    
%all be treat$ z a d]ivative = purposes 
( ?is sub*apt]4 ,if ! d]ivative compon5t
 _c be sep>ately valu$1 !n ! entire     
contract %all be treat$ z a d]ivative = 
purposes ( ?is sub*apt]4  7#b7          
,exception = c]ta9 emb$d$ d]ivative     
compon5ts ( debt in/rum5ts ,a debt      
in/rum5t %all n be treat$ z hav+ a      
d]ivative compon5t m]ely because-- 7,a7 
su* debt in/rum5t is d5om9at$ 9 a       
nonfunctional curr5cy 7z def9$ 9 section
 #ihh7;c77#a77;,c77ii771 or  7,b7       
paym5ts ) respect to su* debt in/rum5t  
are det]m9$ by ref]5ce to ! value ( a   
nonfunctional curr5cy 7z s def9$74  7d7 
,treatm5t ( ,am]ican ,depository        
,receipts & simil> in/rum5ts ,except z  
o!rwise provid$ by ! ,secret>y1 =       
purposes ( ?is sub*apt]1 ,am]ican       
depository receipts 7& simil> in/rum5ts7
 ) respect to %>es ( /ock 9 =eign       

corporations %all be treat$ z %>es (    
/ock 9 su* =eign corporations4  4  7b7  
,in=mation report+ ) respect to         
controll$ =eign corporations ,section   
#fjch7;a77#a77;,b7 ( su* ,code is am5d$ 
by ins]t+ & transactions :i* are cov]$  
transactions = purposes ( section #ddge 
by reason ( ! application ( section     
#ddge7;h77#a7 to su* corporation be=e ! 
semicolon at ! end4  7c7 ,con=m+ am5dm5t
 ,! table ( sub*apt]s = *apt] #cf ( su* 
,code is am5d$ by ins]t+ aft] ! item    
relat+ to sub*apt] ,b ! foll[+ new item3
  ,sub*apt] ,c4 ,tax on trad+           
transactions4  4  7d7 ,effective date ,!
 am5dm5ts made by ?is section %all apply
 to transactions aft] ,decemb] #ca1     
#bjai4