I 

118TH CONGRESS 

1ST SESSION H. R. 884 

To amend the Internal Revenue Code of 1986 to provide for current year 

inclusion of net CFC tested income, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 9, 2023 

Mr. DOGGETT (for himself, Ms. ADAMS, Ms. BARRAGA ́N, Mrs. BEATTY, Mr. 

BLUMENAUER, Ms. BONAMICI, Mr. BOWMAN, Mr. BOYLE of Pennsylvania, Ms. BROWN, Ms. BUDZINSKI, Ms. BUSH, Mr. CARSON, Mr. CARTER of Louisiana, Mr. CARTWRIGHT, Mr. CASAR, Mr. CASE, Ms. CHU, 

Mr. CICILLINE, Ms. CLARKE of New York, Mr. CLEAVER, Mr. COHEN, 

Mr. COURTNEY, Mr. CROW, Mr. DAVIS of Illinois, Ms. DEAN of Pennsylvania, Ms. DEGETTE, Ms. DELAURO, Mr. DELUZIO, Mr. DESAULNIER, 

Mrs. DINGELL, Ms. ESCOBAR, Mr. ESPAILLAT, Mr. EVANS, Ms. LEGER

FERNANDEZ, Mr. FOSTER, Ms. LOIS FRANKEL of Florida, Mr. FROST, 

Mr. GALLEGO, Mr. GARAMENDI, Mr. GARCI ́A of Illinois, Mr. ROBERT

GARCIA of California, Ms. GARCIA of Texas, Mr. GOLDEN of Maine, Mr. 

GOMEZ, Mr. GREEN of Texas, Mr. GRIJALVA, Mrs. HAYES, Mr. HIGGINS

of New York, Ms. HOYLE of Oregon, Mr. HUFFMAN, Mr. IVEY, Ms. 

JACKSON LEE, Ms. JAYAPAL, Mr. JOHNSON of Georgia, Ms. KAPTUR, 

Ms. KELLY of Illinois, Mr. KHANNA, Mr. KIM of New Jersey, Mr. LARSON of Connecticut, Ms. LEE of California, Mr. LIEU, Mr. LYNCH, Ms. 

MCCOLLUM, Mr. MCGOVERN, Mr. MEEKS, Ms. MENG, Mr. MFUME, Mr. 

MOULTON, Mr. MRVAN, Mr. NADLER, Mrs. NAPOLITANO, Mr. NEGUSE, 

Mr. NICKEL, Mr. NORCROSS, Ms. NORTON, Ms. OCASIO-CORTEZ, Ms. 

OMAR, Mr. PALLONE, Ms. PINGREE, Mr. POCAN, Ms. PORTER, Mr. 

VARGAS, Ms. VELA ́ZQUEZ, Ms. WATERS, Mrs. WATSON COLEMAN, Ms. 

WILD, Ms. WILLIAMS of Georgia, and Ms. WILSON of Florida) 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 provide 


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for current year inclusion of net CFC tested income, 

and for other purposes. 

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, ETC. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘No Tax Breaks for Outsourcing Act’’. 

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment 

9 to, or repeal of, a section or other provision, the reference 

10 shall be considered to be made to a section or other provi11 sion of the Internal Revenue Code of 1986. 

12 (c) TABLE OF CONTENTS.—The table of contents of 

13 this Act is as follows: 

Sec. 1. Short title, etc. 

Sec. 2. Current year inclusion of net CFC tested income. 

Sec. 3. Country-by-country application of limitation on foreign tax credit based 

on taxable units. 

Sec. 4. Limitation on deduction of interest by domestic corporations which are 

members of an international financial reporting group. 

Sec. 5. Modifications to rules relating to inverted corporations. 

Sec. 6. Treatment of foreign corporations managed and controlled in the United 

States as domestic corporations. 

14 SEC. 2. CURRENT YEAR INCLUSION OF NET CFC TESTED IN15 COME. 

16 (a) REPEAL OF TAX-FREE DEEMED RETURN ON IN17 VESTMENTS.— 


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1 (1) IN GENERAL.—Section 951A(a) is amended 

2 by striking ‘‘global intangible low-taxed income’’ and 

3 inserting ‘‘net CFC tested income’’. 

4 (2) CONFORMING AMENDMENTS.— 

5 (A) Section 951A is amended by striking 

6 subsections (b) and (d). 

7 (B) Section 951A(e)(1) is amended by 

8 striking ‘‘subsections (b), (c)(1)(A), and’’ and 

9 inserting ‘‘subsections (c)(1)(A) and’’. 

10 (C) Section 951A(f) is amended by strik11 ing ‘‘global intangible low-taxed income’’ each 

12 place it appears and inserting ‘‘net CFC tested 

13 income’’. 

14 (D) Section 960(d)(2)(A) is amended by 

15 striking ‘‘global intangible low-taxed income (as 

16 defined in section 951A(b))’’ and inserting ‘‘net 

17 CFC tested income (as defined in section 

18 951A(c))’’. 

19 (b) COUNTRY-BY-COUNTRY APPLICATION OF SEC20 TION BASED ON CFC TAXABLE UNITS.—Section 951A is 

21 amended by adding at the end the following new sub22 section: 

23 ‘‘(g) COUNTRY-BY-COUNTRY APPLICATION OF SEC24 TION BASED ON CFC TAXABLE UNITS.— 


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1 ‘‘(1) IN GENERAL.—If any CFC taxable unit of 

2 a United States shareholder is a tax resident of (or, 

3 in the case of a branch, is located in) a country 

4 which is different from the country with respect to 

5 which any other CFC taxable unit of such United 

6 States shareholder is a tax resident (or, in the case 

7 of a branch, is located in)— 

8 ‘‘(A) such shareholder’s net CFC tested in9 come for purposes of subsection (a) shall be the 

10 sum of the amounts of net CFC tested income 

11 determined separately with respect to each such 

12 country, and 

13 ‘‘(B) for purposes of determining such sep14 arate amounts of net CFC tested income— 

15 ‘‘(i) except as otherwise provided by 

16 the Secretary, any reference in subsection 

17 (c) to a controlled foreign corporation of 

18 such shareholder shall be treated as ref19 erence to a CFC taxable unit of such 

20 shareholder, and 

21 ‘‘(ii) net CFC tested income and such 

22 other items and amounts as the Secretary 

23 may provide, shall be determined sepa24 rately with respect to each such country by 

25 determining such amounts with respect to 


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1 the CFC taxable units of such shareholder 

2 which are a tax resident of such country. 

3 ‘‘(2) DEFINITIONS.—For purposes of this sub4 section— 

5 ‘‘(A) CFC TAXABLE UNIT.—The term 

6 ‘CFC taxable unit’ means any taxable unit de7 scribed in clause (ii), (iii), or (iv) of section 

8 904(e)(2)(B), determined— 

9 ‘‘(i) by substituting ‘controlled foreign 

10 corporation’ for ‘foreign corporation’ each 

11 place it appears in such clauses, and 

12 ‘‘(ii) without regard to the references 

13 to the taxpayer in clauses (iii) and (iv) of 

14 such section. 

15 ‘‘(B) APPLICATION OF OTHER DEFINI16 TIONS.—Terms used in this subsection which 

17 are also used in section 904(e) shall have the 

18 same meaning as when used in section 904(e). 

19 ‘‘(3) SPECIAL RULES.—For purposes of this 

20 subsection— 

21 ‘‘(A) APPLICATION OF CERTAIN RULES.— 

22 Except as otherwise provided by the Secretary, 

23 rules similar to the rules of section 904(e) shall 

24 apply. 


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1 ‘‘(B) ALLOCATION OF NET CFC TESTED

2 INCOME TO CONTROLLED FOREIGN CORPORA3 TIONS.—Except as otherwise provided by the 

4 Secretary, subsection (f)(2) shall be applied 

5 separately with respect to each CFC taxable 

6 unit.’’. 

7 (c) REGULATORY AUTHORITY.—Section 951A, as 

8 amended by subsection (b), is amended by adding at the 

9 end the following new subsection: 

10 ‘‘(h) REGULATIONS.—The Secretary shall issue such 

11 regulations or other guidance as may be necessary or ap12 propriate to carry out, or prevent the avoidance of, the 

13 purposes of this section, including regulations or guidance 

14 which provide for— 

15 ‘‘(1) the treatment of property if such property 

16 is transferred, or held, temporarily, 

17 ‘‘(2) the treatment of property if the avoidance 

18 of the purposes of this section is a factor in the 

19 transfer or holding of such property, 

20 ‘‘(3) appropriate adjustments to the basis of 

21 stock and other ownership interests, and to earnings 

22 and profits, to reflect tested losses (whether or not 

23 taken into account in determining net CFC tested 

24 income), 


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1 ‘‘(4) rules similar to the rules provided under 

2 the regulations or guidance issued under section 

3 904(e)(4), 

4 ‘‘(5) other appropriate basis adjustments, 

5 ‘‘(6) appropriate adjustments to be made, and 

6 appropriate tax attributes and records to be main7 tained, separately with respect to CFC taxable units, 

8 and 

9 ‘‘(7) appropriate adjustments in determining 

10 tested income or tested loss if property is trans11 ferred between related parties or amounts are paid 

12 or accrued between related parties.’’. 

13 (d) COORDINATION WITH OTHER PROVISIONS.—Sec14 tion 951A(f)(1) is amended by adding at the end the fol15 lowing new subparagraph: 

16 ‘‘(C) TREATMENT OF CERTAIN REF17 ERENCES.—Except as otherwise provided by the 

18 Secretary, references to section 951 or section 

19 951(a) in sections 959, 961, 962, and such 

20 other provisions as the Secretary may identify 

21 shall include references to section 951A or sec22 tion 951A(a), respectively.’’. 

23 (e) REPEAL OF REDUCED RATE OF TAX ON NET

24 CFC TESTED INCOME AND FOREIGN-DERIVED INTAN25 GIBLE INCOME.— 


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1 (1) IN GENERAL.—Part VIII of subchapter B 

2 of chapter 1 is amended by striking section 250 (and 

3 by striking the item relating to such section in the 

4 table of sections of such part). 

5 (2) CONFORMING AMENDMENTS.— 

6 (A) Section 59A(c)(4)(B)(i) is amended by 

7 striking ‘‘section 172, 245A, or 250’’ and in8 serting ‘‘section 172 or 245A’’. 

9 (B) Section 172(d) is amended by striking 

10 paragraph (9). 

11 (C) Section 246(b)(1) is amended— 

12 (i) by striking ‘‘subsection (a) and (b) 

13 of section 245, and section 250’’ and in14 serting ‘‘and subsection (a) and (b) of sec15 tion 245’’; and 

16 (ii) by striking ‘‘subsection (a) and 

17 (b) of section 245, and 250’’ and inserting 

18 ‘‘and subsection (a) and (b) of section 

19 245’’. 

20 (D) Section 469(i)(3)(E)(iii) is amended 

21 by striking ‘‘, 221, and 250’’ and inserting 

22 ‘‘and 221’’. 

23 (f) REPEAL OF CERTAIN EXCLUSIONS FROM THE

24 DETERMINATION OF TESTED INCOME.—Section 

25 951A(c)(2)(A)(i) is amended— 


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1 (1) by striking subclauses (III) and (V), 

2 (2) by redesignating subclause (IV) as sub3 clause (III), 

4 (3) by adding ‘‘and’’ at the end of subclause 

5 (II), and 

6 (4) by striking ‘‘and’’ at the end of subclause 

7 (III) (as so redesignated) and inserting ‘‘over’’. 

8 (g) INCREASE IN DEEMED PAID CREDIT FOR TAXES

9 PROPERLY ATTRIBUTABLE TO TESTED INCOME.— 

10 (1) IN GENERAL.—Section 960(d) is amended 

11 by striking ‘‘80 percent of’’. 

12 (2) CONFORMING AMENDMENT.—Section 78 is 

13 amended by striking ‘‘(determined without regard to 

14 the phrase ‘‘80 percent of’’ in subsection (d)(1) 

15 thereof)’’. 

16 (h) REPEAL OF HIGH TAX EXCLUSION FOR FOREIGN

17 BASE COMPANY INCOME AND INSURANCE INCOME.— 

18 (1) IN GENERAL.—Section 954(b) is amended 

19 by striking paragraph (4). 

20 (2) CONFORMING AMENDMENT.—Section 

21 904(d)(3)(E) is amended by striking the last sen22 tence. 

23 (i) ELIMINATION OF CARRYBACK OF FOREIGN TAX

24 CREDIT.— 

25 (1) IN GENERAL.—Section 904(c) is amended— 


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1 (A) by striking ‘‘in the first preceding tax2 able year and in any of the first 10 succeeding 

3 taxable years, in that order’’ and inserting ‘‘in 

4 any of the first 10 succeeding taxable years, in 

5 order’’, 

6 (B) by striking ‘‘preceding or’’ each place 

7 it appears, and 

8 (C) by striking ‘‘CARRYBACK AND’’ in the 

9 heading thereof. 

10 (2) APPLICATION TO LIMITATION ON FOREIGN

11 OIL AND GAS TAXES.—Section 907(f) is amended— 

12 (A) in paragraph (1), by striking ‘‘in the 

13 first preceding taxable year and’’, 

14 (B) in paragraph (2), by striking ‘‘pre15 ceding or’’ in the matter preceding subpara16 graph (A), 

17 (C) in paragraph (3)(B)— 

18 (i) by striking ‘‘in a preceding or suc19 ceeding’’ and inserting ‘‘in a succeeding’’, 

20 and 

21 (ii) by striking ‘‘in such preceding or 

22 succeeding’’ both places it appears and in23 serting ‘‘in such succeeding’’, and 

24 (D) in the heading, by striking 

25 ‘‘CARRYBACK AND’’. 


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1 (j) TREATMENT OF FOREIGN BASE COMPANY OIL

2 RELATED INCOME AS SUBPART F INCOME.— 

3 (1) IN GENERAL.—Section 954(a) is amended 

4 by striking ‘‘and’’ at the end of paragraph (2), by 

5 striking the period at the end of paragraph (3) and 

6 inserting ‘‘, and’’, and by adding at the end the fol7 lowing new paragraph: 

8 ‘‘(4) the foreign base company oil related in9 come for the taxable year (determined under sub10 section (f) and reduced as provided in subsection 

11 (b)(5)).’’. 

12 (2) FOREIGN BASE COMPANY OIL RELATED IN13 COME.—Section 954 is amended by inserting after 

14 subsection (e) the following new subsection: 

15 ‘‘(f) FOREIGN BASE COMPANY OIL RELATED IN16 COME.—For purposes of this section, the term ‘foreign 

17 base company oil related income’ means foreign oil related 

18 income (within the meaning of paragraphs (2) and (3) of 

19 section 907(c)) other than income derived from a source 

20 within a foreign country in connection with— 

21 ‘‘(1) oil or gas which was extracted from an oil 

22 or gas well located in such foreign country, or 

23 ‘‘(2) oil, gas, or a primary product of oil or gas 

24 which is sold by the foreign corporation or a related 

25 person for use or consumption within such country 


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1 or is loaded in such country on a vessel or aircraft 

2 as fuel for such vessel or aircraft. 

3 Such term shall not include any foreign personal holding 

4 company income (as defined in subsection (c)).’’. 

5 (3) CONFORMING AMENDMENTS.— 

6 (A) Section 952(c)(1)(B)(iii) is amended 

7 by redesignating subclauses (III) and (IV) as 

8 subclauses (IV) and (V), respectively, and by 

9 inserting after subclause (II) the following new 

10 subclause: 

11 ‘‘(III) foreign base company oil 

12 related income.’’. 

13 (B) Section 954(b) is amended— 

14 (i) by striking ‘‘and the foreign base 

15 company services income’’ in paragraph 

16 (5) and inserting ‘‘the foreign base com17 pany services income, and the foreign base 

18 company oil related income’’, and 

19 (ii) by adding at the end the following 

20 new paragraph: 

21 ‘‘(6) FOREIGN BASE COMPANY OIL RELATED IN22 COME NOT TREATED AS ANOTHER KIND OF FOREIGN

23 BASE COMPANY INCOME.—Income of a corporation 

24 which is foreign base company oil related income 

25 shall not be considered foreign base company income 


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1 of such corporation under paragraph (2) or (3) of 

2 subsection (a).’’. 

3 (k) EFFECTIVE DATES.— 

4 (1) IN GENERAL.—Except as otherwise pro5 vided in this subsection, the amendments made by 

6 this section shall apply to taxable years of foreign 

7 corporations beginning after December 31, 2022, 

8 and to taxable years of United States shareholders 

9 in which or with which such taxable years of foreign 

10 corporations end. 

11 (2) REGULATORY AUTHORITY AND COORDINA12 TION WITH OTHER PROVISIONS.—The amendments 

13 made by subsections (c) and (d) shall apply to tax14 able years of foreign corporations beginning after 

15 the date of the enactment of this Act, and to taxable 

16 years of United States shareholders in which or with 

17 which such taxable years of foreign corporations 

18 end. 

19 (3) REPEAL OF REDUCED RATE OF TAX; IN20 CREASE IN DEEMED PAID CREDIT.—The amend21 ments made by subsections (e) and (g) shall apply 

22 to taxable years beginning after December 31, 2022. 

23 (4) ELIMINATION OF CARRYBACK OF FOREIGN

24 TAX CREDIT.—The amendment made by subsection 


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1 (i) shall apply to credits arising in taxable years be2 ginning after December 31, 2022. 

3 (l) NO INFERENCE REGARDING CERTAIN MODIFICA4 TIONS.—The amendments made by subsections (c) and 

5 (d) shall not be construed to create any inference with re6 spect to the proper application of any provision of the In7 ternal Revenue Code of 1986 with respect to any taxable 

8 year beginning before the taxable years to which such 

9 amendments apply. 

10 SEC. 3. COUNTRY-BY-COUNTRY APPLICATION OF LIMITA11 TION ON FOREIGN TAX CREDIT BASED ON 

12 TAXABLE UNITS. 

13 (a) IN GENERAL.—Section 904 is amended by insert14 ing after subsection (d) the following new subsection: 

15 ‘‘(e) COUNTRY-BY-COUNTRY APPLICATION BASED ON

16 TAXABLE UNITS.— 

17 ‘‘(1) IN GENERAL.—Subsection (d) (and the 

18 provisions of this title referred to in paragraph (1) 

19 of such subsection) shall be applied separately with 

20 respect to each country by taking into account the 

21 aggregate income properly attributable or otherwise 

22 allocable to a taxable unit of the taxpayer which is 

23 a tax resident of (or, in the case of a branch, is lo24 cated in) such country. 

25 ‘‘(2) TAXABLE UNITS.— 


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1 ‘‘(A) IN GENERAL.—Except as otherwise 

2 provided by the Secretary, each item shall be 

3 attributable or otherwise allocable to exactly 

4 one taxable unit of the taxpayer. 

5 ‘‘(B) DETERMINATION OF TAXABLE

6 UNITS.—Except as otherwise provided by the 

7 Secretary, the taxable units of a taxpayer are 

8 as follows: 

9 ‘‘(i) GENERAL TAXABLE UNIT.—The 

10 person that is the taxpayer and that is not 

11 otherwise described in a separate clause of 

12 this subparagraph. 

13 ‘‘(ii) CERTAIN FOREIGN CORPORA14 TIONS.—Each foreign corporation with re15 spect to which the taxpayer is a United 

16 States shareholder. 

17 ‘‘(iii) INTERESTS IN PASS-THROUGH

18 ENTITIES.—Each interest held (directly or 

19 indirectly) by the taxpayer or any foreign 

20 corporation referred to in clause (ii) in a 

21 pass-through entity if such pass-through 

22 entity is a tax resident of a country other 

23 than the country with respect to which 

24 such taxpayer or foreign corporation (as 

25 the case may be) is a tax resident. 


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1 ‘‘(iv) BRANCHES.—Each branch (or 

2 portion thereof) the activities of which are 

3 directly or indirectly carried on by the tax4 payer or any foreign corporation referred 

5 to in clause (ii) and which give rise to a 

6 taxable presence in a country other than 

7 the country with respect to which such tax8 payer or foreign corporation (as the case 

9 may be) is a tax resident. 

10 ‘‘(3) DEFINITIONS AND SPECIAL RULES.—For 

11 purposes of this subsection— 

12 ‘‘(A) TAX RESIDENT.—Except as otherwise 

13 provided by the Secretary, the term ‘tax resi14 dent’ means a person or entity subject to tax 

15 under the tax law of a country as a resident. If 

16 an entity is organized under the law of a coun17 try, or resident in a country, that does not im18 pose an income tax with respect to such enti19 ties, such entity shall, except as provided by the 

20 Secretary, be treated as subject to tax under 

21 the tax law of such country for the purposes of 

22 the preceding sentence. 

23 ‘‘(B) PASS-THROUGH ENTITY.—Except as 

24 otherwise provided by the Secretary, the term 

25 ‘pass-through entity’ includes any partnership 


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1 or other entity to the extent that income, gain, 

2 deduction, or loss of the entity is taken into ac3 count in determining the income or loss of a 

4 person that owns (directly or indirectly) an in5 terest in such entity. 

6 ‘‘(C) BRANCH.—Except as otherwise pro7 vided by the Secretary, the term ‘branch’ means 

8 a taxable presence of a tax resident in a coun9 try other than its country of residence as deter10 mined under such other country’s tax law. The 

11 Secretary shall provide regulations or other 

12 guidance applying such term to activities in a 

13 country that do not give rise to a taxable pres14 ence. 

15 ‘‘(D) TREATMENT OF FISCALLY AUTONO16 MOUS JURISDICTIONS.—Any fiscally autono17 mous jurisdiction shall be treated as a separate 

18 country. Any possession of the United States 

19 shall also be treated as a separate country. 

20 ‘‘(E) POSSESSION OF THE UNITED

21 STATES.—The term ‘possession of the United 

22 States’ means each of American Samoa, the 

23 Commonwealth of the Northern Mariana Is24 lands, the Commonwealth of Puerto Rico, 

25 Guam, and the Virgin Islands. 


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1 ‘‘(4) REGULATIONS.—The Secretary shall issue 

2 such regulations or other guidance as may be nec3 essary or appropriate to carry out, or prevent avoid4 ance of, the purposes of this subsection, including 

5 regulations or other guidance— 

6 ‘‘(A) providing for the application of this 

7 subsection to an entity or arrangement that is 

8 considered a tax resident of more than one 

9 country or of no country, 

10 ‘‘(B) providing for the application of this 

11 subsection to hybrid entities or hybrid trans12 actions (as such terms are used for purposes of 

13 section 267A), pass-through entities, passive 

14 foreign investment companies, trusts, and other 

15 entities or arrangements not otherwise de16 scribed in this subsection, and 

17 ‘‘(C) providing for the assignment of any 

18 item (including foreign taxes and deductions) to 

19 taxable units, including in the case of amounts 

20 not otherwise taken into account in determining 

21 taxable income under this chapter.’’. 

22 (b) TREATMENT OF INADEQUATE SUBSTAN23 TIATION.—Section 904(d)(4)(C)(ii) is amended by strik24 ing ‘‘paragraph (1)(A)’’ and inserting ‘‘paragraph 

25 (1)(C)’’. 


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1 (c) APPLICATION OF FOREIGN TAX CREDIT LIMITA2 TION WITH RESPECT TO FOREIGN BRANCHES.—Section 

3 904(d)(2)(J)(i) is amended— 

4 (1) by striking ‘‘qualified business units (as de5 fined in section 989(a)) in 1 or more foreign coun6 tries’’ and inserting ‘‘foreign branches described in 

7 section 904(e)(2)(B)(iv)’’, and 

8 (2) by striking ‘‘a qualified business unit’’ and 

9 inserting ‘‘a foreign branch’’. 

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

11 this section shall apply to taxable years beginning after 

12 December 31, 2022. 

13 SEC. 4. LIMITATION ON DEDUCTION OF INTEREST BY DO14 MESTIC CORPORATIONS WHICH ARE MEM15 BERS OF AN INTERNATIONAL FINANCIAL RE16 PORTING GROUP. 

17 (a) IN GENERAL.—Section 163 is amended by redes18 ignating subsection (n) as subsection (p) and by inserting 

19 after subsection (m) the following new subsection: 

20 ‘‘(n) LIMITATION ON DEDUCTION OF INTEREST BY

21 DOMESTIC CORPORATIONS IN INTERNATIONAL FINAN22 CIAL REPORTING GROUPS.— 

23 ‘‘(1) IN GENERAL.—In the case of any domestic 

24 corporation which is a member of any international 

25 financial reporting group, the deduction under this 


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1 chapter for interest paid or accrued during the tax2 able year shall not exceed the sum of— 

3 ‘‘(A) the allowable percentage of 110 per4 cent of the excess (if any) of— 

5 ‘‘(i) the amount of such interest so 

6 paid or accrued, over 

7 ‘‘(ii) the amount described in subpara8 graph (B), plus 

9 ‘‘(B) the amount of interest includible in 

10 gross income of such corporation for such tax11 able year. 

12 ‘‘(2) INTERNATIONAL FINANCIAL REPORTING

13 GROUP.— 

14 ‘‘(A) For purposes of this subsection, the 

15 term ‘international financial reporting group’ 

16 means, with respect to any reporting year, any 

17 group of entities which— 

18 ‘‘(i) includes— 

19 ‘‘(I) at least one foreign corpora20 tion engaged in a trade or business 

21 within the United States, or 

22 ‘‘(II) at least one domestic cor23 poration and one foreign corporation, 

24 ‘‘(ii) prepares consolidated financial 

25 statements with respect to such year, and 


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1 ‘‘(iii) reports in such statements aver2 age annual gross receipts (determined in 

3 the aggregate with respect to all entities 

4 which are part of such group) for the 3-re5 porting-year period ending with such re6 porting year in excess of $100,000,000. 

7 ‘‘(B) RULES RELATING TO DETERMINA8 TION OF AVERAGE GROSS RECEIPTS.—For pur9 poses of subparagraph (A)(iii), rules similar to 

10 the rules of section 448(c)(3) shall apply. 

11 ‘‘(3) ALLOWABLE PERCENTAGE.—For purposes 

12 of this subsection— 

13 ‘‘(A) IN GENERAL.—The term ‘allowable 

14 percentage’ means, with respect to any domestic 

15 corporation for any taxable year, the ratio (ex16 pressed as a percentage and not greater than 

17 100 percent) of— 

18 ‘‘(i) such corporation’s allocable share 

19 of the international financial reporting 

20 group’s reported net interest expense for 

21 the reporting year of such group which 

22 ends in or with such taxable year of such 

23 corporation, over 


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1 ‘‘(ii) such corporation’s reported net 

2 interest expense for such reporting year of 

3 such group. 

4 ‘‘(B) REPORTED NET INTEREST EX5 PENSE.—The term ‘reported net interest ex6 pense’ means— 

7 ‘‘(i) with respect to any international 

8 financial reporting group for any reporting 

9 year, the excess of— 

10 ‘‘(I) the aggregate amount of in11 terest expense reported in such 

12 group’s consolidated financial state13 ments for such taxable year, over 

14 ‘‘(II) the aggregate amount of in15 terest income reported in such group’s 

16 consolidated financial statements for 

17 such taxable year, and 

18 ‘‘(ii) with respect to any domestic cor19 poration for any reporting year, the excess 

20 of— 

21 ‘‘(I) the amount of interest ex22 pense of such corporation reported in 

23 the books and records of the inter24 national financial reporting group 

25 which are used in preparing such 


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1 group’s consolidated financial state2 ments for such taxable year, over 

3 ‘‘(II) the amount of interest in4 come of such corporation reported in 

5 such books and records. 

6 ‘‘(C) ALLOCABLE SHARE OF REPORTED

7 NET INTEREST EXPENSE.—With respect to any 

8 domestic corporation which is a member of any 

9 international financial reporting group, such 

10 corporation’s allocable share of such group’s re11 ported net interest expense for any reporting 

12 year is the portion of such expense which bears 

13 the same ratio to such expense as— 

14 ‘‘(i) the EBITDA of such corporation 

15 for such reporting year, bears to 

16 ‘‘(ii) the EBITDA of such group for 

17 such reporting year. 

18 ‘‘(D) EBITDA.— 

19 ‘‘(i) IN GENERAL.—The term 

20 ‘EBITDA’ means, with respect to any re21 porting year, earnings before interest, 

22 taxes, depreciation, and amortization— 

23 ‘‘(I) as determined in the inter24 national financial reporting group’s 


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1 consolidated financial statements for 

2 such year, or 

3 ‘‘(II) for purposes of subpara4 graph (A)(i), as determined in the 

5 books and records of the international 

6 financial reporting group which are 

7 used in preparing such statements if 

8 not determined in such statements. 

9 ‘‘(ii) TREATMENT OF DISREGARDED

10 ENTITIES.—The EBITDA of any domestic 

11 corporation shall not fail to include the 

12 EBITDA of any entity which is dis13 regarded for purposes of this chapter. 

14 ‘‘(iii) TREATMENT OF INTRA-GROUP

15 DISTRIBUTIONS.—The EBITDA of any do16 mestic corporation shall be determined 

17 without regard to any distribution received 

18 by such corporation from any other mem19 ber of the international financial reporting 

20 group. 

21 ‘‘(E) SPECIAL RULES FOR NON-POSITIVE

22 EBITDA.— 

23 ‘‘(i) NON-POSITIVE GROUP EBITDA.— 

24 In the case of any international financial 

25 reporting group the EBITDA of which is 


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1 zero or less, paragraph (1) shall not apply 

2 to any member of such group the EBITDA 

3 of which is above zero. 

4 ‘‘(ii) NON-POSITIVE ENTITY

5 EBITDA.—In the case of any group mem6 ber the EBITDA of which is zero or less, 

7 paragraph (1) shall be applied without re8 gard to subparagraph (A) thereof. 

9 ‘‘(4) CONSOLIDATED FINANCIAL STATEMENT.— 

10 For purposes of this subsection, the term ‘consoli11 dated financial statement’ means any consolidated 

12 financial statement described in paragraph (2)(A)(ii) 

13 if such statement is— 

14 ‘‘(A) a financial statement which is cer15 tified as being prepared in accordance with gen16 erally accepted accounting principles, inter17 national financial reporting standards, or any 

18 other comparable method of accounting identi19 fied by the Secretary, and which is— 

20 ‘‘(i) a 10–K (or successor form), or 

21 annual statement to shareholders, required 

22 to be filed with the United States Securi23 ties and Exchange Commission, 

24 ‘‘(ii) an audited financial statement 

25 which is used for— 


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1 ‘‘(I) credit purposes, 

2 ‘‘(II) reporting to shareholders, 

3 partners, or other proprietors, or to 

4 beneficiaries, or 

5 ‘‘(III) any other substantial 

6 nontax purpose, 

7 but only if there is no statement described 

8 in clause (i), or 

9 ‘‘(iii) filed with any other Federal or 

10 State agency for nontax purposes, but only 

11 if there is no statement described in clause 

12 (i) or (ii), or 

13 ‘‘(B) a financial statement which— 

14 ‘‘(i) is used for a purpose described in 

15 subclause (I), (II), or (III) of subpara16 graph (A)(ii), or 

17 ‘‘(ii) filed with any regulatory or gov18 ernmental body (whether domestic or for19 eign) specified by the Secretary, 

20 but only if there is no statement described in 

21 subparagraph (A). 

22 ‘‘(5) REPORTING YEAR.—For purposes of this 

23 subsection, the term ‘reporting year’ means, with re24 spect to any international financial reporting group, 


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1 the year with respect to which the consolidated fi2 nancial statements are prepared. 

3 ‘‘(6) APPLICATION TO CERTAIN ENTITIES.— 

4 ‘‘(A) PARTNERSHIPS.—Except as other5 wise provided by the Secretary in paragraph 

6 (7), this subsection and subsection (o) shall 

7 apply to any partnership which is a member of 

8 any international financial reporting group 

9 under rules similar to the rules of section 

10 163(j)(4). 

11 ‘‘(B) FOREIGN CORPORATIONS ENGAGED

12 IN TRADE OR BUSINESS WITHIN THE UNITED

13 STATES.—Except as otherwise provided by the 

14 Secretary in paragraph (7), any deduction for 

15 interest paid or accrued by a foreign corpora16 tion engaged in a trade or business within the 

17 United States shall be limited in a manner con18 sistent with the principles of this subsection. 

19 ‘‘(C) CONSOLIDATED GROUPS.—For pur20 poses of this subsection, the members of any 

21 group that file (or are required to file) a con22 solidated return with respect to the tax imposed 

23 by chapter 1 for a taxable year shall be treated 

24 as a single corporation. 


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1 ‘‘(7) REGULATIONS.—The Secretary may issue 

2 such regulations or other guidance as are necessary 

3 or appropriate to carry out the purposes of this sub4 section.’’. 

5 (b) CARRYFORWARD OF DISALLOWED INTEREST.— 

6 (1) IN GENERAL.—Section 163 is amended by 

7 inserting after subsection (n), as added by sub8 section (a), the following new subsection: 

9 ‘‘(o) CARRYFORWARD OF CERTAIN DISALLOWED IN10 TEREST.—The amount of any interest not allowed as a 

11 deduction for any taxable year by reason of subsection 

12 (j)(1) or (n)(1) (whichever imposes the lower limitation 

13 with respect to such taxable year) shall be treated as inter14 est (and as business interest for purposes of subsection 

15 (j)(1)) paid or accrued (and as interest expense reported 

16 as described in clause (i)(I) or (ii)(I) of subsection 

17 (n)(3)(B), as the case may be) in the succeeding taxable 

18 year. Interest paid or accrued in any taxable year (deter19 mined without regard to the preceding sentence) shall not 

20 be carried past the fifth taxable year following such tax21 able year, determined by treating interest as allowed as 

22 a deduction on a first-in, first-out basis.’’. 

23 (2) CONFORMING AMENDMENTS.— 

24 (A) Section 163(j)(2) is amended to read 

25 as follows: 


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1 ‘‘(2) CARRYFORWARD CROSS-REFERENCE.—For 

2 carryforward treatment, see subsection (o).’’. 

3 (B) Section 163(j)(4)(B)(i)(I) is amended 

4 by striking ‘‘paragraph (2)’’ and inserting ‘‘sub5 section (o)’’. 

6 (C) Section 381(c)(20) is amended to read 

7 as follows: 

8 ‘‘(20) CARRYFORWARD OF DISALLOWED INTER9 EST.—The carryover of disallowed interest described 

10 in section 163(o) to taxable years ending after the 

11 date of distribution or transfer.’’. 

12 (D) Section 382(d)(3) is amended to read 

13 as follows: 

14 ‘‘(3) APPLICATION TO CARRYFORWARD OF DIS15 ALLOWED INTEREST.—The term ‘pre-change loss’ 

16 shall include any carryover of disallowed interest de17 scribed in section 163(o) under rules similar to the 

18 rules of paragraph (1).’’. 

19 (c) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to taxable years beginning after 

21 December 31, 2022. 

22 SEC. 5. MODIFICATIONS TO RULES RELATING TO IN23 VERTED CORPORATIONS. 

24 (a) IN GENERAL.—Subsection (b) of section 7874 is 

25 amended to read as follows: 


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1 ‘‘(b) INVERTED CORPORATIONS TREATED AS DO2 MESTIC CORPORATIONS.— 

3 ‘‘(1) IN GENERAL.—Notwithstanding section 

4 7701(a)(4), a foreign corporation shall be treated for 

5 purposes of this title as a domestic corporation if— 

6 ‘‘(A) such corporation would be a surro7 gate foreign corporation if subsection (a)(2) 

8 were applied by substituting ‘80 percent’ for 

9 ‘60 percent’, or 

10 ‘‘(B) such corporation is an inverted do11 mestic corporation. 

12 ‘‘(2) INVERTED DOMESTIC CORPORATION.—For 

13 purposes of this subsection, a foreign corporation 

14 shall be treated as an inverted domestic corporation 

15 if, pursuant to a plan (or a series of related trans16 actions)— 

17 ‘‘(A) the entity completes after December 

18 22, 2017, the direct or indirect acquisition of— 

19 ‘‘(i) substantially all of the properties 

20 held directly or indirectly by a domestic 

21 corporation, or 

22 ‘‘(ii) substantially all of the assets of, 

23 or substantially all of the properties consti24 tuting a trade or business of, a domestic 

25 partnership, and 


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1 ‘‘(B) after the acquisition, either— 

2 ‘‘(i) more than 50 percent of the stock 

3 (by vote or value) of the entity is held— 

4 ‘‘(I) in the case of an acquisition 

5 with respect to a domestic corpora6 tion, by former shareholders of the 

7 domestic corporation by reason of 

8 holding stock in the domestic corpora9 tion, or 

10 ‘‘(II) in the case of an acquisition 

11 with respect to a domestic partner12 ship, by former partners of the do13 mestic partnership by reason of hold14 ing a capital or profits interest in the 

15 domestic partnership, or 

16 ‘‘(ii) the management and control of 

17 the expanded affiliated group which in18 cludes the entity occurs, directly or indi19 rectly, primarily within the United States, 

20 and such expanded affiliated group has 

21 significant domestic business activities. 

22 ‘‘(3) EXCEPTION FOR CORPORATIONS WITH

23 SUBSTANTIAL BUSINESS ACTIVITIES IN FOREIGN

24 COUNTRY OF ORGANIZATION.—A foreign corporation 

25 described in paragraph (2) shall not be treated as an 


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1 inverted domestic corporation if after the acquisition 

2 the expanded affiliated group which includes the en3 tity has substantial business activities in the foreign 

4 country in which or under the law of which the enti5 ty is created or organized when compared to the 

6 total business activities of such expanded affiliated 

7 group. For purposes of subsection (a)(2)(B)(iii) and 

8 the preceding sentence, the term ‘substantial busi9 ness activities’ shall have the meaning given such 

10 term under regulations in effect on December 22, 

11 2017, except that the Secretary may issue regula12 tions increasing the threshold percent in any of the 

13 tests under such regulations for determining if busi14 ness activities constitute substantial business activi15 ties for purposes of this paragraph. 

16 ‘‘(4) MANAGEMENT AND CONTROL.—For pur17 poses of paragraph (2)(B)(ii)— 

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

19 prescribe regulations for purposes of deter20 mining cases in which the management and 

21 control of an expanded affiliated group is to be 

22 treated as occurring, directly or indirectly, pri23 marily within the United States. The regula24 tions prescribed under the preceding sentence 

25 shall apply to periods after December 22, 2017. 


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1 ‘‘(B) EXECUTIVE OFFICERS AND SENIOR

2 MANAGEMENT.—Such regulations shall provide 

3 that the management and control of an ex4 panded affiliated group shall be treated as oc5 curring, directly or indirectly, primarily within 

6 the United States if substantially all of the ex7 ecutive officers and senior management of the 

8 expanded affiliated group who exercise day-to9 day responsibility for making decisions involving 

10 strategic, financial, and operational policies of 

11 the expanded affiliated group are based or pri12 marily located within the United States. Indi13 viduals who in fact exercise such day-to-day re14 sponsibilities shall be treated as executive offi15 cers and senior management regardless of their 

16 title. 

17 ‘‘(5) SIGNIFICANT DOMESTIC BUSINESS ACTIVI18 TIES.—For purposes of paragraph (2)(B)(ii), an ex19 panded affiliated group has significant domestic 

20 business activities if at least 25 percent of— 

21 ‘‘(A) the employees of the group are based 

22 in the United States, 

23 ‘‘(B) the employee compensation incurred 

24 by the group is incurred with respect to employ25 ees based in the United States, 


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1 ‘‘(C) the assets of the group are located in 

2 the United States, or 

3 ‘‘(D) the income of the group is derived in 

4 the United States, 

5 determined in the same manner as such determina6 tions are made for purposes of determining substan7 tial business activities under regulations referred to 

8 in paragraph (3) as in effect on December 22, 2017, 

9 but applied by treating all references in such regula10 tions to ‘foreign country’ and ‘relevant foreign coun11 try’ as references to ‘the United States’. The Sec12 retary may issue regulations decreasing the thresh13 old percent in any of the tests under such regula14 tions for determining if business activities constitute 

15 significant domestic business activities for purposes 

16 of this paragraph.’’. 

17 (b) CONFORMING AMENDMENTS.— 

18 (1) Clause (i) of section 7874(a)(2)(B) is 

19 amended by striking ‘‘after March 4, 2003,’’ and in20 serting ‘‘after March 4, 2003, and before December 

21 23, 2017,’’. 

22 (2) Subsection (c) of section 7874 is amend23 ed— 

24 (A) in paragraph (2)— 


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1 (i) by striking ‘‘subsection 

2 (a)(2)(B)(ii)’’ and inserting ‘‘subsections 

3 (a)(2)(B)(ii) and (b)(2)(B)(i)’’; and 

4 (ii) by inserting ‘‘or (b)(2)(A)’’ after 

5 ‘‘(a)(2)(B)(i)’’ in subparagraph (B); 

6 (B) in paragraph (3), by inserting ‘‘or 

7 (b)(2)(B)(i), as the case may be,’’ after 

8 ‘‘(a)(2)(B)(ii)’’; 

9 (C) in paragraph (5), by striking ‘‘sub10 section (a)(2)(B)(ii)’’ and inserting ‘‘sub11 sections (a)(2)(B)(ii) and (b)(2)(B)(i)’’; and 

12 (D) in paragraph (6), by inserting ‘‘or in13 verted domestic corporation, as the case may 

14 be,’’ after ‘‘surrogate foreign corporation’’. 

15 (c) EFFECTIVE DATE.—The amendments made by 

16 this section shall apply to taxable years ending after De17 cember 22, 2017. 

18 (d) EXTENSION OF LIMITATION ON ASSESSMENT.— 

19 If the period of limitation on assessment of tax resulting 

20 from the amendments made by subsection (a) expires be21 fore the end of the 3-year period beginning on the date 

22 of the enactment of this Act, such assessment (to the ex23 tent attributable to such amendments) may, nevertheless, 

24 be made before the close of such 3-year period. 


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1 SEC. 6. TREATMENT OF FOREIGN CORPORATIONS MAN2 AGED AND CONTROLLED IN THE UNITED 

3 STATES AS DOMESTIC CORPORATIONS. 

4 (a) IN GENERAL.—Section 7701 is amended by re5 designating subsection (p) as subsection (q) and by insert6 ing after subsection (o) the following new subsection: 

7 ‘‘(p) CERTAIN CORPORATIONS MANAGED AND CON8 TROLLED IN THE UNITED STATES TREATED AS DOMES9 TIC FOR INCOME TAX.— 

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

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

12 paragraph (2) if— 

13 ‘‘(A) the corporation would not otherwise 

14 be treated as a domestic corporation for pur15 poses of this title, but 

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

17 corporation occurs, directly or indirectly, pri18 marily within the United States, 

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

20 provision of this title relating to chapter 1), the cor21 poration shall be treated as a domestic corporation. 

22 ‘‘(2) CORPORATION DESCRIBED.— 

23 ‘‘(A) IN GENERAL.—A corporation is de24 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 ‘‘(3) MANAGEMENT AND CONTROL.— 

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

5 prescribe regulations for purposes of deter6 mining cases in which the management and 

7 control of a corporation is to be treated as oc8 curring primarily within the United States. 

9 ‘‘(B) EXECUTIVE OFFICERS AND SENIOR

10 MANAGEMENT.—Such regulations shall provide 

11 that— 

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

13 corporation shall be treated as occurring 

14 primarily within the United States if sub15 stantially all of the executive officers and 

16 senior management of the corporation who 

17 exercise day-to-day responsibility for mak18 ing decisions involving strategic, financial, 

19 and operational policies of the corporation 

20 are located primarily within the United 

21 States, and 

22 ‘‘(ii) individuals who are not executive 

23 officers and senior management of the cor24 poration (including individuals who are of25 ficers or employees of other corporations in 


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1 the same chain of corporations as the cor2 poration) shall be treated as executive offi3 cers and senior management if such indi4 viduals exercise the day-to-day responsibil5 ities of the corporation described in clause 

6 (i). 

7 ‘‘(C) CORPORATIONS PRIMARILY HOLDING

8 INVESTMENT ASSETS.—Such regulations shall 

9 also provide that the management and control 

10 of a corporation shall be treated as occurring 

11 primarily within the United States if— 

12 ‘‘(i) the assets of such corporation (di13 rectly or indirectly) consist primarily of as14 sets being managed on behalf of investors, 

15 and 

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

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

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

19 this section shall apply to taxable years beginning on or 

20 after the date which is 2 years after the date of the enact21 ment of this Act, whether or not regulations are issued 

22 under section 7701(p)(3) of the Internal Revenue Code 

23 of 1986, as added by this section. 

Æ 


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