I

106TH CONGRESS

2D SESSION H. R. 5063

To amend the Internal Revenue Code of 1986 to enhance the competitiveness

of the United States leasing industry.

IN THE HOUSE OF REPRESENTATIVES

JULY 27, 2000

Mr. MCCRERY 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 enhance

the competitiveness of the United States leasing industry.

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

3 SECTION 1. TREATMENT OF EXPORT LEASES.

4 (a) PROPERTY LEASED TO FOREIGN PERSONS.—

5 Section 168(g)(1) of the Internal Revenue Code of 1986

6 is amended by redesignating subparagraphs (B), (C), (D),

7 and (E) as subparagraphs (C), (D), (E), and (F), respec8 tively, and by inserting after subparagraph (A) the fol9 lowing new subparagraph:
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1 ‘‘(B) tangible property leased to a foreign

2 person or entity,’’.

3 (b) FOREIGN PERSON OR ENTITY.—Section 168(g)

4 of such Code is amended by redesignating paragraphs (5),

5 (6), and (7) as paragraphs (6), (7), and (8), respectively,

6 and by inserting after paragraph (4) the following new

7 paragraph:

8 ‘‘(5) TANGIBLE PROPERTY LEASED TO A FOR9 EIGN PERSON OR ENTITY.—

10 ‘‘(A) TANGIBLE PROPERTY.—For purposes

11 of paragraph (1)(B), the term ‘tangible prop12 erty’ means any tangible property other than—

13 ‘‘(i) nonresidential real property as

14 defined under subsection (h)(1)(E) to the

15 extent it is not subject to a disqualified

16 lease determined under rules similar to the

17 rules of subsection (h)(1)(B),

18 ‘‘(ii) property used by a foreign per19 son or entity if more than 50 percent of

20 the gross income for the taxable year de21 rived by the foreign person or entity from

22 the use of such property is—

23 ‘‘(I) subject to tax under this

24 chapter, or
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1 ‘‘(II) included under section 951

2 in the gross income of a United States

3 shareholder for the taxable year with

4 or within which ends the taxable year

5 of the controlled foreign corporation

6 in which such income was derived,

7 and

8 ‘‘(iii) property described in subsection

9 (h)(3).

10 For purposes of clause (ii), any exclusion or ex11 emption shall not apply for purposes of deter12 mining the amount of the gross income so de13 rived, but shall apply for purposes of deter14 mining the portion of such gross income subject

15 to tax under this chapter.

16 ‘‘(B) FOREIGN PERSON OR ENTITY.—For

17 purposes of this paragraph and paragraph

18 (1)(B)—

19 ‘‘(i) IN GENERAL.—The term ‘foreign

20 person or entity’ means—

21 ‘‘(I) any foreign government, any

22 international organization, or any

23 agency or instrumentality of any of

24 the foregoing, and
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1 ‘‘(II) any person who is not a

2 United States person.

3 Such term does not include any foreign

4 partnership or other foreign pass-thru enti5 ty.

6 ‘‘(ii) OTHER PASS-THRU ENTITIES;

7 TIERED ENTITIES.—In the case of prop8 erty leased to or owned by a partnership or

9 other pass-thru entity and in the case of

10 tiered partnerships and other entities, rules

11 similar to the rules of paragraphs (5) and

12 (6) of subsection (h) shall apply.’’

13 (c) TAX-EXEMPT ENTITY.—Section 168(h)(2)(A) of

14 such Code is amended by adding ‘‘and’’ at the end of

15 clause (i), by striking ‘‘, and’’ at the end of clause (ii)

16 and inserting a period, and by striking clause (iii).

17 (d) CONFORMING AMENDMENTS.—

18 (1) Section 168(h)(2) of such Code is amended

19 by striking subparagraphs (B) and (C).

20 (2) Section 168(h)(5) of such Code is amended

21 by striking subparagraph (C).

22 (e) EFFECTIVE DATE.—The amendments made by

23 this section shall apply to leases entered into after the date

24 of the enactment of this Act.

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