I 

113TH CONGRESS 

1ST SESSION H. R. 1555 

To amend the Internal Revenue Code of 1986 to reduce international tax 

avoidance and restore a level playing field for American businesses. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 15, 2013 

Mr. DOGGETT (for himself, Ms. BASS, Mr. BECERRA, Ms. CHU, Mr. 

CICILLINE, Mr. CONYERS, Mr. DEFAZIO, Ms. DEGETTE, Ms. DELAURO, 

Mr. DINGELL, Mr. ELLISON, Mr. JOHNSON of Georgia, Ms. LEE of California, Mr. MCDERMOTT, Mr. MCGOVERN, Mr. MORAN, Mr. RUSH, Mr. 

SHERMAN, Mr. TONKO, Ms. TSONGAS, Mr. GARAMENDI, Ms. SCHAKOWSKY, Mr. PAYNE, and Mr. COHEN) introduced the following bill; 

which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to reduce 

international tax avoidance and restore a level playing 

field for American businesses. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘International Tax 

5 Competitiveness Act of 2013’’. 


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1 SEC. 2. TREATMENT OF FOREIGN CORPORATIONS MAN2 AGED AND CONTROLLED IN THE UNITED 

3 STATES AS DOMESTIC CORPORATIONS. 

4 (a) IN GENERAL.—Section 7701 of the Internal Rev5 enue Code of 1986 (relating to definitions) is amended by 

6 redesignating subsection (p) as subsection (q) and by in7 serting after subsection (o) the following new subsection: 

8 ‘‘(p) CERTAIN CORPORATIONS MANAGED AND CON9 TROLLED IN THE UNITED STATES TREATED AS DOMES10 TIC FOR INCOME TAX.— 

11 ‘‘(1) IN GENERAL.—Notwithstanding subsection 

12 (a)(4), in the case of a corporation described in 

13 paragraph (2) if— 

14 ‘‘(A) the corporation would not otherwise 

15 be treated as a domestic corporation for pur16 poses of this title, but 

17 ‘‘(B) the management and control of the 

18 corporation occurs, directly or indirectly, pri19 marily within the United States, 

20 then, solely for purposes of chapter 1 (and any other 

21 provision of this title relating to chapter 1), the cor22 poration shall be treated as a domestic corporation. 

23 ‘‘(2) CORPORATION DESCRIBED.— 

24 ‘‘(A) IN GENERAL.—A corporation is de25 scribed in this paragraph if— 


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1 ‘‘(i) the stock of such corporation is 

2 regularly traded on an established securi3 ties market, or 

4 ‘‘(ii) the aggregate gross assets of 

5 such corporation (or any predecessor there6 of), including assets under management 

7 for investors, whether held directly or indi8 rectly, at any time during the taxable year 

9 or any preceding taxable year is 

10 $50,000,000 or more. 

11 ‘‘(B) GENERAL EXCEPTION.—A corpora12 tion shall not be treated as described in this 

13 paragraph if— 

14 ‘‘(i) such corporation was treated as a 

15 corporation described in this paragraph in 

16 a preceding taxable year, 

17 ‘‘(ii) such corporation— 

18 ‘‘(I) is not regularly traded on an 

19 established securities market, and 

20 ‘‘(II) has, and is reasonably ex21 pected to continue to have, aggregate 

22 gross assets (including assets under 

23 management for investors, whether 

24 held directly or indirectly) of less than 

25 $50,000,000, and 


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1 ‘‘(iii) the Secretary grants a waiver to 

2 such corporation under this subparagraph. 

3 ‘‘(C) EXCEPTION FROM GROSS ASSETS

4 TEST.—Subparagraph (A)(ii) shall not apply to 

5 a corporation which is a controlled foreign cor6 poration (as defined in section 957) and which 

7 is a member of an affiliated group (as defined 

8 section 1504, but determined without regard to 

9 section 1504(b)(3)) the common parent of 

10 which— 

11 ‘‘(i) is a domestic corporation (deter12 mined without regard to this subsection), 

13 and 

14 ‘‘(ii) has substantial assets (other 

15 than cash and cash equivalents and other 

16 than stock of foreign subsidiaries) held for 

17 use in the active conduct of a trade or 

18 business in the United States. 

19 ‘‘(3) MANAGEMENT AND CONTROL.— 

20 ‘‘(A) IN GENERAL.—The Secretary shall 

21 prescribe regulations for purposes of deter22 mining cases in which the management and 

23 control of a corporation is to be treated as oc24 curring primarily within the United States. 


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1 ‘‘(B) EXECUTIVE OFFICERS AND SENIOR

2 MANAGEMENT.—Such regulations shall provide 

3 that— 

4 ‘‘(i) the management and control of a 

5 corporation shall be treated as occurring 

6 primarily within the United States if sub7 stantially all of the executive officers and 

8 senior management of the corporation who 

9 exercise day-to-day responsibility for mak10 ing decisions involving strategic, financial, 

11 and operational policies of the corporation 

12 are located primarily within the United 

13 States, and 

14 ‘‘(ii) individuals who are not executive 

15 officers and senior management of the cor16 poration (including individuals who are of17 ficers or employees of other corporations in 

18 the same chain of corporations as the cor19 poration) shall be treated as executive offi20 cers and senior management if such indi21 viduals exercise the day-to-day responsibil22 ities of the corporation described in clause 

23 (i). 

24 ‘‘(C) CORPORATIONS PRIMARILY HOLDING

25 INVESTMENT ASSETS.—Such regulations shall 


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1 also provide that the management and control 

2 of a corporation shall be treated as occurring 

3 primarily within the United States if— 

4 ‘‘(i) the assets of such corporation (di5 rectly or indirectly) consist primarily of as 

6 sets being managed on behalf of investors, 

7 and 

8 ‘‘(ii) decisions about how to invest the 

9 assets are made in the United States.’’. 

10 (b) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to taxable years beginning on or 

12 after the date which is 2 years after the date of the enact13 ment of this Act. 

14 SEC. 3. CURRENT TAXATION OF ROYALTIES AND OTHER IN15 COME FROM INTANGIBLES RECEIVED FROM 

16 A CONTROLLED FOREIGN CORPORATION. 

17 (a) REPEAL OF LOOK-THRU RULE FOR ROYALTIES

18 RECEIVED FROM CONTROLLED FOREIGN CORPORA19 TIONS.—Paragraph (6) of section 954(c) of the Internal 

20 Revenue Code of 1986 is amended— 

21 (1) by striking ‘‘rents, and royalties’’ in sub22 paragraph (A) and inserting ‘‘and rents’’, and 

23 (2) by striking ‘‘, rent, or royalty’’ both places 

24 it appears in subparagraph (B) and inserting ‘‘or 

25 rent’’. 


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1 (b) ENTITIES NOT PERMITTED TO BE DIS2 REGARDED IN DETERMINING ROYALTIES.—Subsection (c) 

3 of section 954 of such Code is amended by adding at the 

4 end the following new paragraph: 

5 ‘‘(7) ALL ROYALTIES TAKEN INTO ACCOUNT.— 

6 For purposes of determining the foreign personal 

7 holding company income which consists of royalties, 

8 this subsection shall be applied without regard to 

9 any election to disregard any entity which would be 

10 taken into account for Federal income tax purposes 

11 but for such election.’’. 

12 (c) CERTAIN OTHER INCOME DERIVED FROM

13 UNITED STATES INTANGIBLES TAKEN INTO ACCOUNT AS

14 SUBPART F INCOME.—Subsection (d) of section 954 of 

15 such Code is amended by adding at the end the following 

16 new paragraph: 

17 ‘‘(5) SPECIAL RULE FOR CERTAIN PRODUCTS

18 PRODUCED PURSUANT TO INTANGIBLES MADE

19 AVAILABLE BY UNITED STATES PERSONS.—For pur20 poses of this subsection, personal property shall be 

21 treated as having been purchased from a related per22 son if any intangible property (within the meaning 

23 of section 936(h)(3)(B)) made available to a con24 trolled foreign corporation, directly or indirectly, by 

25 a related person which is a United States person 


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1 contributes, directly or indirectly, to the production 

2 of such personal property by the controlled foreign 

3 corporation. The preceding sentence shall not apply 

4 to any personal property produced directly by the 

5 controlled foreign corporation, without regard to any 

6 election to disregard any entity which would be 

7 taken into account for Federal income tax purposes 

8 but for such election.’’. 

9 (d) EFFECTIVE DATE.—The amendments made by 

10 this section shall apply to taxable years of foreign corpora11 tions beginning after December 31, 2013, and to taxable 

12 years of United States shareholders within which or with 

13 which such tax years of such foreign corporations end. 

14 SEC. 4. TAXATION OF BOOT RECEIVED IN REORGANIZA15 TIONS. 

16 (a) IN GENERAL.—Paragraph (2) of section 356(a) 

17 of the Internal Revenue Code of 1986 is amended— 

18 (1) by striking ‘‘If an exchange’’ and inserting 

19 ‘‘Except as otherwise provided by the Secretary— 

20 ‘‘(A) IN GENERAL.—If an exchange’’; 

21 (2) by striking ‘‘then there shall be’’ and all 

22 that follows through ‘‘February 28, 1913’’ and in23 serting ‘‘then the amount of other property or 

24 money shall be treated as a dividend to the extent 

25 of the earnings and profits of the corporation’’; and 


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1 (3) by adding at the end the following new sub2 paragraph: 

3 ‘‘(B) CERTAIN REORGANIZATIONS.—In the 

4 case of a reorganization described in section 

5 368(a)(1)(D) with respect to which the require6 ments of subparagraphs (A) and (B) of section 

7 354(b)(1) are met (or any other reorganization 

8 specified by the Secretary), in applying sub9 paragraph (A)— 

10 ‘‘(i) the earnings and profits of each 

11 corporation which is a party to the reorga12 nization shall be taken into account, and 

13 ‘‘(ii) the amount which is a dividend 

14 (and source thereof) shall be determined 

15 under rules similar to the rules of para16 graphs (2) and (5) of section 304(b).’’. 

17 (b) EARNINGS AND PROFITS.—Paragraph (7) of sec18 tion 312(n) of such Code is amended by adding at the 

19 end the following: ‘‘A similar rule shall apply to an ex20 change to which section 356(a)(1) applies.’’. 

21 (c) CONFORMING AMENDMENT.—Paragraph (1) of 

22 section 356(a) of such Code is amended by striking ‘‘then 

23 the gain’’ and inserting ‘‘then (except as provided in para24 graph (2)) the gain’’. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to exchanges after the date of the 

3 enactment of this Act. 

Æ 


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