I 

117TH CONGRESS 

1ST SESSION H. R. 2031 

To amend the Internal Revenue Code of 1986 to encourage the transfer 

of intangible property from controlled foreign corporations to United 

States shareholders. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 18, 2021 

Mr. LAHOOD (for himself and Mr. FERGUSON) 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 encourage 

the transfer of intangible property from controlled foreign corporations to United States shareholders. 

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

3 SECTION 1. SPECIAL RULES FOR TRANSFERS OF INTAN4 GIBLE PROPERTY FROM CONTROLLED FOR5 EIGN CORPORATIONS TO UNITED STATES 

6 SHAREHOLDERS. 

7 (a) IN GENERAL.—Subpart F of part III of sub8 chapter N of chapter 1 of the Internal Revenue Code of 


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1 1986 is amended by adding at the end the following new 

2 section: 

3 ‘‘SEC. 966. TRANSFERS OF INTANGIBLE PROPERTY TO 

4 UNITED STATES SHAREHOLDERS. 

5 ‘‘(a) IN GENERAL.—If a controlled foreign corpora6 tion holds intangible property on the date of the enact7 ment of this section and thereafter distributes such prop8 erty to a domestic corporation which is a United States 

9 shareholder with respect to such controlled foreign cor10 poration— 

11 ‘‘(1) for purposes of part I of subchapter C and 

12 any other provision of this title specified by the Sec13 retary, the fair market value of such property on the 

14 date of such distribution shall be treated as not ex15 ceeding the adjusted basis of such property imme16 diately before such distribution, and 

17 ‘‘(2) if any portion of such distribution is not 

18 a dividend— 

19 ‘‘(A) no gain shall be recognized by such 

20 United States shareholder with respect to such 

21 distribution, and 

22 ‘‘(B) the adjusted basis of such property in 

23 the hands of such United States shareholder 

24 immediately after such distribution shall be the 

25 adjusted basis of such property in the hands of 


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1 such controlled foreign corporation immediately 

2 before such distribution reduced by the amount 

3 (if any) of gain not recognized by reason of 

4 subparagraph (A) (determined after the appli5 cation of paragraph (1)). 

6 ‘‘(b) INTANGIBLE PROPERTY.—For purposes of this 

7 section, the term ‘intangible property’ means any— 

8 ‘‘(1) patent, copyright, license, invention, for9 mula, process, design, pattern, know-how, or format, 

10 ‘‘(2) method, program, system, procedure, cam11 paign, survey, study, forecast, estimate, or technical 

12 data, 

13 ‘‘(3) computer software (as defined in section 

14 197(e)(3)(B)), or 

15 ‘‘(4) any similar item, which has substantial 

16 value independent of the services of any individual.’’. 

17 (b) CONFORMING AMENDMENTS.— 

18 (1) Section 197(f)(2)(B)(i) of such Code is 

19 amended by inserting ‘‘966(a),’’ after ‘‘731,’’. 

20 (2) The table of sections for subpart F of part 

21 III of subchapter N of chapter 1 of such Code is 

22 amended by adding at the end the following new 

23 item: 

‘‘Sec. 966. Transfers of intangible property to United States shareholders.’’. 

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

25 this section shall apply to distributions made in taxable 


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1 years of foreign corporations beginning after December 

2 31, 2021, and to taxable years of United States share3 holders in which or with which such taxable years of for4 eign corporations end. 

Æ 


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