I 

115TH CONGRESS 

1ST SESSION H. R. 4383 

To reform the Internal Revenue Code of 1986. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 14, 2017 

Mr. BIGGS introduced the following bill; which was referred to the Committee 

on Ways and Means 

A BILL 

To reform the Internal Revenue Code of 1986. 

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

3 SECTION 1. CLARIFICATION. 

4 (a) AMENDMENT OF 1986 CODE.—Except as other5 wise expressly provided, whenever in this Act an amend6 ment or repeal is expressed in terms of an amendment 

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

8 shall be considered to be made to a section or other provi9 sion of the Internal Revenue Code of 1986. 

10 (b) TABLE OF CONTENTS.—The table of contents for 

11 this title is as follows: 

Section 1. Clarification. 


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TITLE I—IMMEDIATE COST RECOVERY 

Sec. 101. Repeal of certain limitations on the expensing of section 179 property. 

Sec. 102. Election of shorter recovery period for purpose of determining depreciation deduction. 

TITLE II—REDUCED RATE ON BUSINESS INCOME 

Sec. 201. Reduced corporate rate. 

Sec. 202. Reduced rate on other business income. 

TITLE III—EXEMPTION SYSTEM FOR TAXATION OF FOREIGN 

INCOME 

Sec. 301. Deduction for dividends received by domestic corporations from certain foreign corporations. 

Sec. 302. Treatment of deferred foreign income upon transition to participation 

exemption system of taxation. 

Sec. 303. Look-thru rule for related controlled foreign corporations made permanent. 

Sec. 304. Repeal of section 902 indirect foreign tax credits; determination of 

section 960 credit on current year basis. 

TITLE IV—REDUCED RATES FOR INDIVIDUALS 

Sec. 401. Reduced rates for individuals. 

TITLE V—TAX-EXEMPT REORGANIZATIONS 

Sec. 501. No taxable event for change of corporate form. 

TITLE VI—REPEAL OF NET INVESTMENT INCOME TAX 

Sec. 601. Repeal of net investment income tax. 

TITLE VII—REPEAL OF ESTATE TAX 

Sec. 701. Repeal of estate tax and retention of basis step-up. 

1 TITLE I—IMMEDIATE COST 

2 RECOVERY 

3 SEC. 101. REPEAL OF CERTAIN LIMITATIONS ON THE EX4 PENSING OF SECTION 179 PROPERTY. 

5 (a) IN GENERAL.—Section 179 is amended by strik6 ing subsections (b) and (e) and by redesignating sub7 sections (c), (d), and (f) as subsections (b), (c), and (d), 

8 respectively. 

9 (b) CONFORMING AMENDMENTS.— 


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1 (1) Subsection (c) of section 179, as redesig2 nated by subsection (a), is amended by striking 

3 paragraphs (6) and (8), and by redesignating para4 graphs (7), (9), and (10) as paragraphs (6), (7), 

5 and (8), respectively. 

6 (2) Paragraph (6) of section 179(c), as redesig7 nated by paragraph (1) and subsection (a), is 

8 amended by striking ‘‘paragraphs (2) and (6)’’ and 

9 inserting ‘‘paragraph (2)’’. 

10 (3) Section 42(d)(2)(B)(i) is amended by strik11 ing ‘‘section 179(d)(2)’’ and inserting ‘‘section 

12 179(c)(2)’’. 

13 (4) Subclause (I) of section 42(d)(2)(D)(iii) is 

14 amended— 

15 (A) by striking ‘‘section 179(d)’’ and in16 serting ‘‘section 179(c)’’; and 

17 (B) by striking ‘‘section 179(d)(7)’’ and 

18 inserting ‘‘section 179(c)(6)’’. 

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

20 this section shall apply to property placed in service during 

21 taxable years beginning after December 31, 2016. 


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1 SEC. 102. ELECTION OF SHORTER RECOVERY PERIOD FOR 

2 PURPOSE OF DETERMINING DEPRECIATION 

3 DEDUCTION. 

4 (a) IN GENERAL.—Section 168 is amended by adding 

5 at the end the following new subsection: 

6 ‘‘(o) ELECTION OF SHORTER RECOVERY PERIOD.— 

7 ‘‘(1) IN GENERAL.—Notwithstanding sub8 sections (c), (e), (g), and (j), for purposes of sub9 section (a), the applicable recovery period for any 

10 property placed in service during a taxable year end11 ing on or after the date of the enactment of this 

12 subsection shall not exceed such period as the tax13 payer may elect with respect to such property. 

14 ‘‘(2) ELECTION.—An election made under this 

15 subsection shall be made at such time and in such 

16 form and manner as the Secretary may require. An 

17 election under this subsection, once made, shall 

18 apply to the taxable year for which made and all 

19 subsequent taxable years unless revoked with the 

20 consent of the Secretary. 

21 ‘‘(3) TRANSITION RULE.—In the case of any 

22 property placed in service during a taxable year end23 ing before January 1, 2017, paragraph (1) shall 

24 apply with respect to the adjusted basis of such 

25 property in the same manner as if such property 

26 (with such adjusted basis) were placed in service on 


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1 the first day of the taxable year which includes Jan2 uary 1, 2017. The application of this paragraph 

3 shall not be treated as a change in method of ac4 counting for purposes of section 481.’’. 

5 (b) EFFECTIVE DATE.—The amendment made by 

6 this section shall apply to property placed in service be7 fore, on, or after January 1, 2017. 

8 TITLE II—REDUCED RATE ON 

9 BUSINESS INCOME 

10 SEC. 201. REDUCED CORPORATE RATE. 

11 (a) IN GENERAL.—Section 11(b) is amended to read 

12 as follows: 

13 ‘‘(b) AMOUNT OF TAX.—The amount of the tax im14 posed by subsection (a) shall be 15 percent of taxable in15 come.’’. 

16 (b) CONFORMING AMENDMENTS.—Paragraphs (1), 

17 (2), and (6) of section 1445(e) are each amended by strik18 ing ‘‘35 percent’’ and inserting ‘‘15 percent’’. 

19 (c) EFFECTIVE DATE.— 

20 (1) IN GENERAL.—Except as otherwise pro21 vided in this subsection, the amendments made by 

22 this section shall apply to taxable years beginning 

23 after December 31, 2016. 

24 (2) CERTAIN CONFORMING AMENDMENTS.—The 

25 amendments made by subsection (b) shall apply to 


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1 transfers, dispositions, and distributions, after such 

2 date. 

3 SEC. 202. REDUCED RATE ON OTHER BUSINESS INCOME. 

4 (a) IN GENERAL.—Section 1 is amended by adding 

5 at the end the following new subsection: 

6 ‘‘(j) MAXIMUM RATE ON BUSINESS INCOME.— 

7 ‘‘(1) IN GENERAL.—The rate of tax imposed 

8 under this section on business income shall not ex9 ceed 15 percent. 

10 ‘‘(2) BUSINESS INCOME.—The term ‘business 

11 income’ means the excess (if any) of— 

12 ‘‘(A) any distributional or pro rata share 

13 of items of income or gain from a partnership 

14 or S corporation and any income or gain prop15 erly allocable to a sole proprietorship, over 

16 ‘‘(B) any distributional or pro rata share 

17 of items of deduction or loss from a partnership 

18 or S corporation and any deduction or loss 

19 properly allocable to a sole proprietorship.’’. 

20 (b) EFFECTIVE DATE.—The amendment made by 

21 this section shall apply to taxable years beginning after 

22 December 31, 2016. 


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1 TITLE III—EXEMPTION SYSTEM 

2 FOR TAXATION OF FOREIGN 

3 INCOME 

4 SEC. 301. DEDUCTION FOR DIVIDENDS RECEIVED BY DO5 MESTIC CORPORATIONS FROM CERTAIN FOR6 EIGN CORPORATIONS. 

7 (a) IN GENERAL.—Part VIII of subchapter B of 

8 chapter 1 is amended by inserting after section 245 the 

9 following new section: 

10 ‘‘SEC. 245A. DIVIDENDS RECEIVED BY DOMESTIC CORPORA11 TIONS FROM CERTAIN FOREIGN CORPORA12 TIONS. 

13 ‘‘(a) IN GENERAL.—In the case of any dividend re14 ceived from a specified 10-percent owned foreign corpora15 tion by a domestic corporation which is a United States 

16 shareholder with respect to such foreign corporation, there 

17 shall be allowed as a deduction an amount equal to 95 

18 percent of the foreign-source portion of such dividend. 

19 ‘‘(b) SPECIFIED 10-PERCENT OWNED FOREIGN COR20 PORATION.—For purposes of this section, the term ‘speci21 fied 10-percent owned foreign corporation’ means any for22 eign corporation if any domestic corporation owns directly, 

23 or indirectly through a chain of ownership described under 

24 section 958(a), 10 percent or more of the voting stock of 

25 such foreign corporation. 


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1 ‘‘(c) FOREIGN-SOURCE PORTION.—For purposes of 

2 this section— 

3 ‘‘(1) IN GENERAL.—The foreign-source portion 

4 of any dividend is an amount which bears the same 

5 ratio to such dividends as— 

6 ‘‘(A) the post-1986 undistributed foreign 

7 earnings, bears to 

8 ‘‘(B) the total post-1986 undistributed 

9 earnings. 

10 ‘‘(2) POST-1986 UNDISTRIBUTED EARNINGS.— 

11 The term ‘post-1986 undistributed earnings’ means 

12 the amount of the earnings and profits of the speci13 fied 10-percent owned foreign corporation (computed 

14 in accordance with sections 964(a) and 986) accu15 mulated in taxable years beginning after December 

16 31, 1986— 

17 ‘‘(A) as of the close of the taxable year of 

18 the specified 10-percent owned foreign corpora19 tion in which the dividend is distributed, and 

20 ‘‘(B) without diminution by reason of divi21 dends distributed during such taxable year. 

22 ‘‘(3) POST-1986 UNDISTRIBUTED FOREIGN

23 EARNINGS.—The term ‘post-1986 undistributed for24 eign earnings’ means the portion of the post-1986 


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1 undistributed earnings which is attributable to nei2 ther— 

3 ‘‘(A) income described in subparagraph (A) 

4 of section 245(a)(5), nor 

5 ‘‘(B) dividends described in subparagraph 

6 (B) of such section (determined without regard 

7 to section 245(a)(12)). 

8 ‘‘(4) TREATMENT OF DISTRIBUTIONS FROM

9 EARNINGS BEFORE 1987.— 

10 ‘‘(A) IN GENERAL.—In the case of any div11 idend paid out of earnings and profits of the 

12 specified 10-percent owned foreign corporation 

13 (computed in accordance with sections 964(a) 

14 and 986) accumulated in taxable years begin15 ning before January 1, 1987— 

16 ‘‘(i) paragraphs (1), (2), and (3) shall 

17 be applied without regard to the phrase 

18 ‘post-1986’ each place it appears, and 

19 ‘‘(ii) paragraph (2) shall be applied 

20 without regard to the phrase ‘in taxable 

21 years beginning after December 31, 1986’. 

22 ‘‘(B) DIVIDENDS PAID FIRST OUT OF

23 POST-1986 EARNINGS.—Dividends shall be treat24 ed as paid out of post-1986 undistributed earn25 ings to the extent thereof. 


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1 ‘‘(d) DISALLOWANCE OF FOREIGN TAX CREDIT, 

2 ETC.— 

3 ‘‘(1) IN GENERAL.—No credit shall be allowed 

4 under section 901 for any taxes paid or accrued (or 

5 treated as paid or accrued) with respect to any divi6 dend for which a deduction is allowed under this sec7 tion. 

8 ‘‘(2) DENIAL OF DEDUCTION.—No deduction 

9 shall be allowed under this chapter for any tax for 

10 which credit is not allowable under section 901 by 

11 reason of paragraph (1) (determined by treating the 

12 taxpayer as having elected the benefits of subpart A 

13 of part III of subchapter N). 

14 ‘‘(e) REGULATIONS.—The Secretary may prescribe 

15 such regulations or other guidance as may be necessary 

16 or appropriate to carry out the provisions of this section.’’. 

17 (b) APPLICATION OF HOLDING PERIOD REQUIRE18 MENT.—Subsection (c) of section 246 is amended— 

19 (1) by striking ‘‘or 245’’ in paragraph (1) and 

20 inserting ‘‘245, or 245A’’; and 

21 (2) by adding at the end the following new 

22 paragraph: 

23 ‘‘(5) SPECIAL RULES FOR FOREIGN SOURCE

24 PORTION OF DIVIDENDS RECEIVED FROM SPECIFIED

25 10-PERCENT OWNED FOREIGN CORPORATIONS.— 


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1 ‘‘(A) 6-MONTH HOLDING PERIOD REQUIRE2 MENT.—For purposes of section 245A— 

3 ‘‘(i) paragraph (1)(A) shall be ap4 plied— 

5 ‘‘(I) by substituting ‘180 days’ 

6 for ‘45 days’ each place it appears, 

7 and 

8 ‘‘(II) by substituting ‘361-day pe9 riod’ for ‘91-day period’, and 

10 ‘‘(ii) paragraph (2) shall not apply. 

11 ‘‘(B) STATUS MUST BE MAINTAINED DUR12 ING HOLDING PERIOD.—For purposes of section 

13 245A, the holding period requirement of this 

14 subsection shall be treated as met only if— 

15 ‘‘(i) the specified 10-percent owned 

16 corporation referred to in section 245A(a) 

17 is a specified 10-percent owned corporation 

18 at all times during such period, and 

19 ‘‘(ii) the taxpayer is a United States 

20 shareholder with respect to such specified 

21 10-percent owned corporation at all times 

22 during such period.’’. 

23 (c) APPLICATION OF RULES GENERALLY APPLICA24 BLE TO DEDUCTIONS FOR DIVIDENDS RECEIVED.— 


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1 (1) TREATMENT OF DIVIDENDS FROM CERTAIN

2 CORPORATIONS.—Paragraph (1) of section 246(a) is 

3 amended by striking ‘‘and 245’’ and inserting ‘‘245, 

4 and 245A’’. 

5 (2) ASSETS GENERATING TAX-EXEMPT PORTION

6 OF DIVIDEND NOT TAKEN INTO ACCOUNT IN ALLO7 CATING AND APPORTIONING DEDUCTIBLE EX8 PENSES.—Paragraph (3) of section 864(e) is amend9 ed by striking ‘‘or 245(a)’’ and inserting ‘‘, 245(a), 

10 or 245A’’. 

11 (3) COORDINATION WITH SECTION 1059.—Sub12 paragraph (B) of section 1059(b)(2) is amended by 

13 striking ‘‘or 245’’ and inserting ‘‘245, or 245A’’. 

14 (d) COORDINATION WITH FOREIGN TAX CREDIT

15 LIMITATION.—Subsection (b) of section 904, as amended 

16 by the preceding provisions of this Act, is amended by re17 designating paragraph (2) as paragraph (1) and by adding 

18 at the end the following new paragraph: 

19 ‘‘(2) TREATMENT OF DIVIDENDS FOR WHICH

20 DEDUCTION IS ALLOWED UNDER SECTION 245A.— 

21 For purposes of subsection (a), in the case of a do22 mestic corporation which is a United States share23 holder with respect to a specified 10-percent owned 

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1 able income from sources without the United States 

2 shall be determined without regard to— 

3 ‘‘(A) the foreign-source portion of any divi4 dend received from such foreign corporation, 

5 and 

6 ‘‘(B) any deductions properly allocable to 

7 such portion. 

8 Any term which is used in section 245A and in this 

9 paragraph shall have the same meaning for purposes 

10 of this paragraph as when used in such section.’’. 

11 (e) CONFORMING AMENDMENTS.— 

12 (1) Paragraph (4) of section 245(a) is amended 

13 by striking ‘‘section 902(c)(1)’’ and inserting ‘‘sec14 tion 245A(c)(2)’’. 

15 (2) Subsection (b) of section 951 is amended by 

16 striking ‘‘subpart’’ and inserting ‘‘title’’. 

17 (3) Subsection (a) of section 957 is amended by 

18 striking ‘‘subpart’’ in the matter preceding para19 graph (1) and inserting ‘‘title’’. 

20 (4) The table of sections for part VIII of sub21 chapter B of chapter 1 is amended by inserting after 

22 the item relating to section 245 the following new 

23 item: 

‘‘Sec. 245A. Dividends received by domestic corporations from certain foreign 

corporations.’’. 


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

2 this section shall apply to taxable years of foreign corpora3 tions beginning after December 31, 2016, and to taxable 

4 years of United States shareholders in which or with which 

5 such taxable years of foreign corporations end. 

6 SEC. 302. TREATMENT OF DEFERRED FOREIGN INCOME 

7 UPON TRANSITION TO PARTICIPATION EX8 EMPTION SYSTEM OF TAXATION. 

9 (a) IN GENERAL.—Section 965 is amended to read 

10 as follows: 

11 ‘‘SEC. 965. TREATMENT OF DEFERRED FOREIGN INCOME 

12 UPON TRANSITION TO PARTICIPATION EX13 EMPTION SYSTEM OF TAXATION. 

14 ‘‘(a) TREATMENT OF DEFERRED FOREIGN INCOME

15 AS SUBPART F INCOME.—In the case of the last taxable 

16 year of a deferred foreign income corporation which begins 

17 before December 31, 2016, the subpart F income of such 

18 foreign corporation (as otherwise determined for such tax19 able year under section 952) shall be increased by the ac20 cumulated post-1986 deferred foreign income of such cor21 poration determined as of the close of such taxable year. 

22 ‘‘(b) REDUCTION IN AMOUNTS INCLUDED IN GROSS

23 INCOME OF UNITED STATES SHAREHOLDERS OF SPECI24 FIED FOREIGN CORPORATIONS WITH DEFICITS IN EARN25 INGS AND PROFITS.— 


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1 ‘‘(1) IN GENERAL.—In the case of a taxpayer 

2 which is a United States shareholder with respect to 

3 at least one deferred foreign income corporation and 

4 at least one E&P deficit foreign corporation, the 

5 amount which would (but for this subsection) be 

6 taken into account under section 951(a)(1) by rea7 son of subsection (a) as such United States share8 holder’s pro rata share of the subpart F income of 

9 each deferred foreign income corporation shall be re10 duced (but not below zero) by the amount of such 

11 United States shareholder’s aggregate foreign E&P 

12 deficit which is allocated under paragraph (2) to 

13 such deferred foreign income corporation. 

14 ‘‘(2) ALLOCATION OF AGGREGATE FOREIGN E&P

15 DEFICIT.—The aggregate foreign E&P deficit of any 

16 United States shareholder shall be allocated among 

17 the deferred foreign income corporations of such 

18 United States shareholder in an amount which bears 

19 the same proportion to such aggregate as— 

20 ‘‘(A) such United States shareholder’s pro 

21 rata share of the accumulated post-1986 de22 ferred foreign income of each such deferred for23 eign income corporation, bears to 

24 ‘‘(B) the aggregate of such United States 

25 shareholder’s pro rata share of the accumulated 


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1 post-1986 deferred foreign income of all de2 ferred foreign income corporations of such 

3 United States shareholder. 

4 ‘‘(3) DEFINITIONS RELATED TO E&P DEFI5 CITS.—For purposes of this subsection— 

6 ‘‘(A) AGGREGATE FOREIGN E&P DEF7 ICIT.—The term ‘aggregate foreign E&P deficit’ 

8 means, with respect to any United States share9 holder, the aggregate of such shareholder’s pro 

10 rata shares of the specified E&P deficits of the 

11 E&P deficit foreign corporations of such share12 holder. 

13 ‘‘(B) E&P DEFICIT FOREIGN CORPORA14 TION.—The term ‘E&P deficit foreign corpora15 tion’ means, with respect to any taxpayer, any 

16 specified foreign corporation with respect to 

17 which such taxpayer is a United States share18 holder, if— 

19 ‘‘(i) such specified foreign corporation 

20 has a deficit in post-1986 earnings and 

21 profits, and 

22 ‘‘(ii) as of December 31, 2016— 

23 ‘‘(I) such corporation was a spec24 ified foreign corporation, and 


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1 ‘‘(II) such taxpayer was a United 

2 States shareholder of such corpora3 tion. 

4 ‘‘(C) SPECIFIED E&P DEFICIT.—The term 

5 ‘specified E&P deficit’ means, with respect to 

6 any E&P deficit foreign corporation, the 

7 amount of the deficit referred to in subpara8 graph (B). 

9 ‘‘(c) REDUCED RATE ON INCLUDED INCOME.—In the 

10 case of a United States shareholder of a deferred foreign 

11 income corporation, there shall be allowed as a deduction 

12 for the taxable year in which an amount is included in 

13 the gross income of such United States shareholder under 

14 section 951(a)(1) by reason of this section an amount 

15 equal to 88.6 percent of the amount so included as gross 

16 income. 

17 ‘‘(d) DEFERRED FOREIGN INCOME CORPORATION; 

18 ACCUMULATED POST-1986 DEFERRED FOREIGN IN19 COME.—For purposes of this section— 

20 ‘‘(1) DEFERRED FOREIGN INCOME CORPORA21 TION.—The term ‘deferred foreign income corpora22 tion’ means, with respect to any United States 

23 shareholder, any specified foreign corporation of 

24 such United States shareholder which has accumu25 lated post-1986 deferred foreign income (as of the 


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1 close of the taxable year referred to in subsection 

2 (a)) greater than zero. 

3 ‘‘(2) ACCUMULATED POST-1986 DEFERRED FOR4 EIGN INCOME.—The term ‘accumulated post-1986 

5 deferred foreign income’ means the post-1986 earn6 ings and profits except to the extent such earnings— 

7 ‘‘(A) are attributable to income of the 

8 specified foreign corporation which is effectively 

9 connected with the conduct of a trade or busi10 ness within the United States and subject to 

11 tax under this chapter, 

12 ‘‘(B) if distributed, would— 

13 ‘‘(i) in the case of a controlled foreign 

14 corporation, be excluded from the gross in15 come of a United States shareholder under 

16 section 959, or 

17 ‘‘(ii) in the case of any passive foreign 

18 investment company (as defined in section 

19 1297) other than a controlled foreign cor20 poration, be treated as a distribution which 

21 is not a dividend, or 

22 ‘‘(C) in the case of any passive foreign in23 vestment company (as so defined), is properly 

24 attributable to an unreversed inclusion of a 

25 United States person under section 1296. 


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1 To the extent provided in regulations or other guid2 ance prescribed by the Secretary, in the case of any 

3 controlled foreign corporation which has share4 holders which are not United States shareholders, 

5 accumulated post-1986 deferred foreign income shall 

6 be appropriately reduced by amounts which would be 

7 described in subparagraph (B)(i) is such share8 holders were United States shareholders. Such regu9 lations or other guidance may provide a similar rule 

10 for purposes of subparagraph (B)(ii) and (C). 

11 ‘‘(3) POST-1986 EARNINGS AND PROFITS.—The 

12 term ‘post-1986 earnings and profits’ means the 

13 earnings and profits of the foreign corporation (com14 puted in accordance with sections 964(a) and 986) 

15 accumulated in taxable years beginning after Decem16 ber 31, 1986, and determined— 

17 ‘‘(A) as of the close the taxable year re18 ferred to in subsection (a), and 

19 ‘‘(B) without diminution by reason of divi20 dends distributed during such taxable year. 

21 ‘‘(e) SPECIFIED FOREIGN CORPORATION.— 

22 ‘‘(1) IN GENERAL.—For purposes of this sec23 tion, the term ‘specified foreign corporation’ 

24 means— 


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1 ‘‘(A) any controlled foreign corporation, 

2 and 

3 ‘‘(B) any section 902 corporation (as de4 fined in section 909(d)(5)). 

5 ‘‘(2) APPLICATION TO SECTION 902 CORPORA6 TIONS.—For purposes of section 951, a section 902 

7 corporation (as so defined) shall be treated as a con8 trolled foreign corporation solely for purposes of tak9 ing into account the subpart F income of such cor10 poration under subsection (a) (and for purposes of 

11 applying subsection (f)). 

12 ‘‘(f) DETERMINATIONS OF PRO RATA SHARE.—For 

13 purposes of this section, the determination of any United 

14 States shareholder’s pro rata share of any amount with 

15 respect to any specified foreign corporation shall be deter16 mined under rules similar to the rules of section 951(a)(2) 

17 by treating such amount in the same manner as subpart 

18 F income (and by treating such specified foreign corpora19 tion as a controlled foreign corporation). 

20 ‘‘(g) DISALLOWANCE OF FOREIGN TAX CREDIT, 

21 ETC.— 

22 ‘‘(1) IN GENERAL.—No credit shall be allowed 

23 under section 901 for 88.6 percent of any taxes paid 

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1 spect to any amount for which a deduction is al2 lowed under this section. 

3 ‘‘(2) DENIAL OF DEDUCTION.—No deduction 

4 shall be allowed under this chapter for any tax for 

5 which credit is not allowable under section 901 by 

6 reason of paragraph (1) (determined by treating the 

7 taxpayer as having elected the benefits of subpart A 

8 of part III of subchapter N). 

9 ‘‘(3) COORDINATION WITH SECTION 78.—Sec10 tion 78 shall not apply to any tax for which credit 

11 is not allowable under section 901 by reason of para12 graph (1). 

13 ‘‘(h) ELECTION TO PAY LIABILITY IN INSTALL14 MENTS.— 

15 ‘‘(1) IN GENERAL.—In the case of a United 

16 States shareholder of a deferred foreign income cor17 poration, such United States shareholder may elect 

18 to pay the net tax liability under this section in 8 

19 installments of the following amounts: 

20 ‘‘(A) 8 percent of the net tax liability in 

21 the case of each of the first 5 of such install22 ments, 

23 ‘‘(B) 15 percent of the net tax liability in 

24 the case of the 6th such installment, 


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1 ‘‘(C) 20 percent of the net tax liability in 

2 the case of the 7th such installment, and 

3 ‘‘(D) 25 percent of the net tax liability in 

4 the case of the 8th such installment. 

5 ‘‘(2) DATE FOR PAYMENT OF INSTALLMENTS.— 

6 If an election is made under paragraph (1), the first 

7 installment shall be paid on the due date (deter8 mined without regard to any extension of time for 

9 filing the return) for the return of tax for the tax10 able year described in subsection (b) and each suc11 ceeding installment shall be paid on the due date (as 

12 so determined) for the return of tax for the taxable 

13 year following the taxable year with respect to which 

14 the preceding installment was made. 

15 ‘‘(3) ACCELERATION OF PAYMENT.—If there is 

16 an addition to tax for failure to pay timely assessed 

17 with respect to any installment required under this 

18 subsection, a liquidation or sale of substantially all 

19 the assets of the taxpayer (including in a title 11 or 

20 similar case), a cessation of business by the tax21 payer, or any similar circumstance, then the unpaid 

22 portion of all remaining installments shall be due on 

23 the date of such event (or in the case of a title 11 

24 or similar case, the day before the petition is filed). 

25 The preceding sentence shall not apply to the sale 


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1 of substantially all the assets of a taxpayer to a 

2 buyer if such buyer enters into an agreement with 

3 the Secretary under which such buyer is liable for 

4 the remaining installments due under this subsection 

5 in the same manner as if such buyer were the tax6 payer. 

7 ‘‘(4) PRORATION OF DEFICIENCY TO INSTALL8 MENTS.—If an election is made under paragraph (1) 

9 to pay the net tax liability under this section in in10 stallments and a deficiency has been assessed with 

11 respect to such net tax liability, the deficiency shall 

12 be prorated to the installments payable under para13 graph (1). The part of the deficiency so prorated to 

14 any installment the date for payment of which has 

15 not arrived shall be collected at the same time as, 

16 and as a part of, such installment. The part of the 

17 deficiency so prorated to any installment the date 

18 for payment of which has arrived shall be paid upon 

19 notice and demand from the Secretary. This sub20 section shall not apply if the deficiency is due to 

21 negligence, to intentional disregard of rules and reg22 ulations, or to fraud with intent to evade tax. 

23 ‘‘(5) ELECTION.—Any election under paragraph 

24 (1) shall be made not later than the due date for the 

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1 section (a) and shall be made in such manner as the 

2 Secretary may provide. 

3 ‘‘(6) NET TAX LIABILITY UNDER THIS SEC4 TION.—For purposes of this subsection— 

5 ‘‘(A) IN GENERAL.—The net tax liability 

6 under this section with respect to any United 

7 States shareholder is the excess (if any) of— 

8 ‘‘(i) such taxpayer’s net income tax 

9 for the taxable year described in subsection 

10 (a), over 

11 ‘‘(ii) such taxpayer’s net income tax 

12 for such taxable year determined without 

13 regard to this section. 

14 ‘‘(B) NET INCOME TAX.—The term ‘net 

15 income tax’ means the regular tax liability re16 duced by the credits allowed under subparts A, 

17 B, and D of part IV of subchapter A. 

18 ‘‘(i) SPECIAL RULES FOR S CORPORATION SHARE19 HOLDERS.— 

20 ‘‘(1) IN GENERAL.—In the case of any S cor21 poration which is a United States shareholder of a 

22 deferred foreign income corporation, each share23 holder of such S corporation may elect to defer pay24 ment of such shareholder’s net tax liability under 

25 this section with respect to such S corporation until 


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1 the shareholder’s taxable year which includes the 

2 triggering event with respect to such liability. 

3 ‘‘(2) TRIGGERING EVENT.— 

4 ‘‘(A) IN GENERAL.—In the case of any 

5 shareholder’s net tax liability under this section 

6 with respect to any S corporation, the trig7 gering event with respect to such liability is 

8 whichever of the following occurs first: 

9 ‘‘(i) Such corporation ceases to be an 

10 S corporation (determined as of the first 

11 day of the first taxable year that such cor12 poration is not an S corporation). 

13 ‘‘(ii) A liquidation or sale of substan14 tially all the assets of such S corporation 

15 (including in a title 11 or similar case), a 

16 cessation of business by such S corpora17 tion, such S corporation ceases to exist, or 

18 any similar circumstance. 

19 ‘‘(iii) A transfer of any share of stock 

20 in such S corporation by the taxpayer (in21 cluding by reason of death, or otherwise). 

22 ‘‘(B) PARTIAL TRANSFERS OF STOCK.—In 

23 the case of a transfer of less than all of the tax24 payer’s shares of stock in the S corporation, 

25 such transfer shall only be a triggering event 


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1 with respect to so much of the taxpayer’s net 

2 tax liability under this section with respect to 

3 such S corporation as is properly allocable to 

4 such stock. 

5 ‘‘(C) TRANSFER OF LIABILITY.—A trans6 fer described in clause (iii) shall not be treated 

7 as a triggering event if the transferee enters 

8 into an agreement with the Secretary under 

9 which such transferee is liable for net tax liabil10 ity with respect to such stock in the same man11 ner as if such transferee were the taxpayer. 

12 ‘‘(3) NET TAX LIABILITY.—A shareholder’s net 

13 tax liability under this section with respect to any S 

14 corporation is the net tax liability under this section 

15 which would be determined under subsection (h)(6) 

16 if the only subpart F income taken into account by 

17 such shareholder by reason of this section were allo18 cations from such S corporation. 

19 ‘‘(4) ELECTION TO PAY DEFERRED LIABILITY

20 IN INSTALLMENTS.—In the case of a taxpayer which 

21 elects to defer payment under paragraph (1), sub22 section (h) shall be applied— 

23 ‘‘(A) separately with respect to the liability 

24 to which such election applies, 


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1 ‘‘(B) an election under subsection (h) with 

2 respect to such liability shall be treated as time3 ly made if made not later than the due date for 

4 the return of tax for the taxable year in which 

5 the triggering event with respect to such liabil6 ity occurs, 

7 ‘‘(C) the first installment under subsection 

8 (h) with respect to such liability shall be paid 

9 not later than such due date (but determined 

10 without regard to any extension of time for fil11 ing the return), and 

12 ‘‘(D) if the triggering event with respect to 

13 any net tax liability is described in paragraph 

14 (2)(A)(ii), an election under subsection (h) with 

15 respect to such liability may be made only with 

16 the consent of the Secretary. 

17 ‘‘(5) JOINT AND SEVERAL LIABILITY OF S COR18 PORATION.—If any shareholder of an S corporation 

19 elects to defer payment under paragraph (1), such 

20 S corporation shall be jointly and severally liable for 

21 such payment and any penalty, addition to tax, or 

22 additional amount attributable thereto. 

23 ‘‘(6) EXTENSION OF LIMITATION ON COLLEC24 TION.—Notwithstanding any other provision of law, 

25 any limitation on the time period for the collection 


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1 of a liability deferred under this subsection shall not 

2 be treated as beginning before the date of the trig3 gering event with respect to such liability. 

4 ‘‘(7) ELECTION.—Any election under paragraph 

5 (1) shall be made not later than the due date for the 

6 return of tax for the taxable year described in sub7 section (a) and shall be made in such manner as the 

8 Secretary may provide. 

9 ‘‘(j) INCLUSION OF DEFERRED FOREIGN INCOME

10 UNDER THIS SECTION NOT TO TRIGGER RECAPTURE OF

11 OVERALL FOREIGN LOSS.—For purposes of section 

12 904(f)(1), in the case of a United States shareholder of 

13 a deferred foreign income corporation, such United States 

14 shareholder’s taxable income from sources without the 

15 United States shall be determined without regard to this 

16 section. 

17 ‘‘(k) REGULATIONS.—The Secretary may prescribe 

18 such regulations or other guidance as may be necessary 

19 or appropriate to carry out the provisions of this section.’’. 

20 (b) CLERICAL AMENDMENT.—The table of section 

21 for subpart F of part III of subchapter N of chapter 1 

22 is amended by striking the item relating to section 965 

23 and inserting the following: 

‘‘Sec. 965. Treatment of deferred foreign income upon transition to participation exemption system of taxation.’’. 


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1 SEC. 303. LOOK-THRU RULE FOR RELATED CONTROLLED 

2 FOREIGN CORPORATIONS MADE PERMA3 NENT. 

4 (a) IN GENERAL.—Paragraph (6) of section 954(c) 

5 is amended by striking subparagraph (C). 

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

7 this section shall apply to taxable years of foreign corpora8 tions beginning after December 31, 2016, and to taxable 

9 years of United States shareholders in which or with which 

10 such taxable years of foreign corporations end. 

11 SEC. 304. REPEAL OF SECTION 902 INDIRECT FOREIGN TAX 

12 CREDITS; DETERMINATION OF SECTION 960 

13 CREDIT ON CURRENT YEAR BASIS. 

14 (a) REPEAL OF SECTION 902 INDIRECT FOREIGN

15 TAX CREDITS.—Subpart A of part III of subchapter N 

16 of chapter 1 is amended by striking section 902. 

17 (b) DETERMINATION OF SECTION 960 CREDIT ON

18 CURRENT YEAR BASIS.—Section 960 is amended— 

19 (1) by striking subsection (c), by redesignating 

20 subsection (b) as subsection (c), by striking all that 

21 precedes subsection (c) (as so redesignated) and in22 serting the following: 

23 ‘‘SEC. 960. DEEMED PAID CREDIT FOR SUBPART F INCLU24 SIONS. 

25 ‘‘(a) IN GENERAL.—For purposes of this subpart, if 

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1 poration any item of income under section 951(a)(1) with 

2 respect to any controlled foreign corporation with respect 

3 to which such domestic corporation is a United States 

4 shareholder, such domestic corporation shall be deemed to 

5 have paid so much of such foreign corporation’s foreign 

6 income taxes as are properly attributable to the item of 

7 income so included. 

8 ‘‘(b) SPECIAL RULES FOR DISTRIBUTIONS FROM

9 PREVIOUSLY TAXED EARNINGS AND PROFITS.—For pur10 poses of this subpart— 

11 ‘‘(1) IN GENERAL.—If any portion of a dis12 tribution from a controlled foreign corporation to a 

13 domestic corporation which is a United States share14 holder with respect to such controlled foreign cor15 poration is excluded from gross income under section 

16 959(a), such domestic corporation shall be deemed 

17 to have paid so much of such foreign corporation’s 

18 foreign income taxes as— 

19 ‘‘(A) are properly attributable to such por20 tion, and 

21 ‘‘(B) have not been deemed to have to been 

22 paid by such domestic corporation under this 

23 section for any prior taxable year. 

24 ‘‘(2) TIERED CONTROLLED FOREIGN CORPORA25 TIONS.—If section 959(b) applies to any portion of 


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1 a distribution from a controlled foreign corporation 

2 to another controlled foreign corporation, such con3 trolled foreign corporation shall be deemed to have 

4 paid so much of such other controlled foreign cor5 poration’s foreign income taxes as— 

6 ‘‘(A) are properly attributable to such por7 tion, and 

8 ‘‘(B) have not been deemed to have been 

9 paid by a domestic corporation under this sec10 tion for any prior taxable year.’’; 

11 (2) and by adding after subsection (c) (as so re12 designated) the following new subsections: 

13 ‘‘(d) FOREIGN INCOME TAXES.—The term ‘foreign 

14 income taxes’ means any income, war profits, or excess 

15 profits taxes paid or accrued to any foreign country or 

16 possession of the United States. 

17 ‘‘(e) REGULATIONS.—The Secretary shall provide 

18 such regulations as may be necessary or appropriate to 

19 carry out the provisions of this section.’’. 

20 (c) CONFORMING AMENDMENTS.— 

21 (1) Section 78 is amended to read as follows: 

22 ‘‘SEC. 78. GROSS UP FOR DEEMED PAID FOREIGN TAX 

23 CREDIT. 

24 ‘‘If a domestic corporation chooses to have the bene25 fits of subpart A of part III of subchapter N (relating 


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1 to foreign tax credit) for any taxable year, an amount 

2 equal to the taxes deemed to be paid by such corporation 

3 under section 960 (relating to deemed paid credit for sub4 part F inclusions) for such taxable year shall be treated 

5 for purposes of this title (other than section 960) as an 

6 item of income required to be included in the gross income 

7 of such domestic corporation under section 951(a).’’. 

8 (2) Section 245(a)(10) is amended by striking 

9 ‘‘902,’’. 

10 (3) Sections 535(b)(1) and 545(b)(1) are each 

11 amended by striking ‘‘section 902(a) or 960(a)(1)’’ 

12 and inserting ‘‘section 960’’. 

13 (4) Paragraph (1) of section 814(f) is amend14 ed— 

15 (A) by striking subparagraph (B); and 

16 (B) by striking all that precedes ‘‘No in17 come’’ and inserting the following: 

18 ‘‘(1) TREATMENT OF FOREIGN TAXES.—’’. 

19 (5) Subparagraph (B) of section 864(h)(1) is 

20 amended by striking ‘‘902,’’. 

21 (6) Subsection (a) of section 901 is amended by 

22 striking ‘‘sections 902 and 960’’ and inserting ‘‘sec23 tion 960’’. 

24 (7) Paragraph (2) of section 901(e) is amended 

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1 lows through ‘‘that portion’’ and inserting ‘‘but is 

2 not limited to that portion’’. 

3 (8) Subsection (f) of section 901 is amended by 

4 striking ‘‘sections 902 and 960’’ and inserting ‘‘sec5 tion 960’’. 

6 (9) Subparagraph (A) of section 901(j)(1) is 

7 amended by striking ‘‘902 or’’. 

8 (10) Subparagraph (B) of section 901(j)(1) is 

9 amended by striking ‘‘sections 902 and 960’’ and in10 serting ‘‘section 960’’. 

11 (11) Paragraph (2) of section 901(k) is amend12 ed by striking ‘‘902,’’. 

13 (12) Paragraph (6) of section 901(k) is amend14 ed by striking ‘‘902 or’’. 

15 (13) Subparagraph (A) of section 904(h)(10) is 

16 amended by striking ‘‘sections 902, 907, and 960’’ 

17 and inserting ‘‘sections 907 and 960’’. 

18 (14) Section 904 is amended by striking sub19 section (k). 

20 (15) Paragraph (1) of section 905(c) is amend21 ed by striking the last sentence. 

22 (16) Subclause (I) of section 905(c)(2)(B)(i) is 

23 amended by striking ‘‘section 902 or’’. 


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1 (17) Subsection (a) of section 906 is amended 

2 by striking ‘‘(or deemed, under section 902, paid or 

3 accrued during the taxable year)’’. 

4 (18) Subsection (b) of section 906 is amended 

5 by striking paragraphs (4) and (5). 

6 (19) Subparagraph (B) of section 907(b)(2) is 

7 amended by striking ‘‘902 or’’. 

8 (20) Paragraph (3) of section 907(c) is amend9 ed— 

10 (A) by striking subparagraph (A) and re11 designating subparagraphs (B) and (C) as sub12 paragraphs (A) and (B), respectively; and 

13 (B) by striking ‘‘section 960(a)’’ in sub14 paragraph (A) (as so redesignated) and insert15 ing ‘‘section 960’’. 

16 (21) Paragraph (5) of section 907(c) is amend17 ed by striking ‘‘902 or’’. 

18 (22) Clause (i) of section 907(f)(2)(B) is 

19 amended by striking ‘‘902 or’’. 

20 (23) Subsection (a) of section 908 is amended 

21 by striking ‘‘902 or’’. 

22 (24) Subsection (b) of section 909 is amend23 ed— 

24 (A) by striking ‘‘section 902 corporation’’ 

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1 serting ‘‘specified 10-percent owned foreign cor2 poration’’; 

3 (B) by striking ‘‘902 or’’ in paragraph (1); 

4 (C) by striking ‘‘by such section 902 cor5 poration’’ and all that follows in the matter fol6 lowing paragraph (2) and inserting ‘‘by such 

7 specified 10-percent owned foreign corporation 

8 or a domestic corporation which is a United 

9 States shareholder with respect to such speci10 fied 10-percent owned foreign corporation.’’; 

11 and 

12 (D) by striking ‘‘SECTION 902 CORPORA13 TIONS’’ in the heading thereof and inserting 

14 ‘‘SPECIFIED 10-PERCENT OWNED FOREIGN

15 CORPORATIONS’’. 

16 (25) Subsection (d) of section 909 is amended 

17 by striking paragraph (5). 

18 (26) Paragraph (1) of section 958(a) is amend19 ed by striking ‘‘960(a)(1)’’ and inserting ‘‘960’’. 

20 (27) Subsection (d) of section 959 is amended 

21 by striking ‘‘Except as provided in section 960(a)(3), 

22 any’’ and inserting ‘‘Any’’. 

23 (28) Subsection (e) of section 959 is amended 

24 by striking ‘‘and section 960(b)’’. 


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1 (29) Subparagraph (A) of section 1291(g)(2) is 

2 amended by striking ‘‘any distribution—’’ and all 

3 that follows through ‘‘but only if’’ and inserting 

4 ‘‘any distribution, any withholding tax imposed with 

5 respect to such distribution, but only if’’. 

6 (30) Section 1293 is amended by striking sub7 section (f). 

8 (31) Subparagraph (B) of section 6038(c)(1) is 

9 amended by striking ‘‘sections 902 (relating to for10 eign tax credit for corporate stockholder in foreign 

11 corporation) and 960 (relating to special rules for 

12 foreign tax credit)’’ and inserting ‘‘section 960’’. 

13 (32) Paragraph (4) of section 6038(c) is 

14 amended by striking subparagraph (C). 

15 (33) The table of sections for subpart A of part 

16 III of subchapter N of chapter 1 is amended by 

17 striking the item relating to section 902. 

18 (34) The table of sections for subpart F of part 

19 III of subchapter N of chapter 1 is amended by 

20 striking the item relating to section 960 and insert21 ing the following: 

‘‘Sec. 960. Deemed paid credit for subpart F inclusions.’’. 

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

23 this section shall apply to taxable years of foreign corpora24 tions beginning after December 31, 2016, and to taxable 


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1 years of United States shareholders in which or with which 

2 such taxable years of foreign corporations end. 

3 TITLE IV—REDUCED RATES FOR 

4 INDIVIDUALS 

5 SEC. 401. REDUCED RATES FOR INDIVIDUALS. 

6 (a) JOINT RETURNS AND SURVIVING SPOUSES.— 

7 Section 1(a) is amended by striking ‘‘in accordance with 

8 the following table’’ and all that follows and inserting ‘‘as 

9 follows: 12 percent of so much of taxable income as does 

10 not exceed $75,300, plus 25 percent of so much of taxable 

11 income as exceeds $75,300 but does not exceed $466,950, 

12 plus 29 percent of so much of taxable income as exceeds 

13 $466,950.’’. 

14 (b) HEADS OF HOUSEHOLDS.—Section 1(b) is 

15 amended by striking ‘‘in accordance with the following 

16 table’’ and all that follows and inserting ‘‘as follows: 12 

17 percent of so much of taxable income as does not exceed 

18 $50,400, plus 25 percent of so much of taxable income 

19 as exceeds $50,400 but does not exceed $441,000, plus 

20 29 percent of so much of taxable income as exceeds 

21 $441,000.’’. 

22 (c) SINGLE.—Section 1(c) is amended by striking ‘‘in 

23 accordance with the following table’’ and all that follows 

24 and inserting ‘‘as follows: 12 percent of so much of taxable 

25 income as does not exceed $37,650, plus 25 percent of 


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1 so much of taxable income as exceeds $37,650 but does 

2 not exceed $415,050, plus 29 percent of so much of tax3 able income as exceeds $415,050.’’. 

4 (d) MARRIED FILING SEPARATELY.—Section 1(d) is 

5 amended by striking ‘‘in accordance with the following 

6 table’’ and all that follows and inserting ‘‘as follows: 12 

7 percent of so much of taxable income as does not exceed 

8 $37,650, plus 25 percent of so much of taxable income 

9 as exceeds $37,650 but does not exceed $233,475, plus 

10 29 percent of so much of taxable income as exceeds 

11 $233,475.’’. 

12 (e) ESTATES AND TRUSTS.—Section 1(e) is amended 

13 by striking ‘‘in accordance with the following table’’ and 

14 all that follows and inserting ‘‘as follows: 12 percent of 

15 so much of taxable income as does not exceeds $5,000, 

16 plus 25 percent of so much of taxable income as exceeds 

17 $5,000 but does not exceed $10,000, plus 29 percent of 

18 so much of taxable income as exceeds $15,000.’’ 

19 (f) INFLATION ADJUSTMENT.—Section 1(f) is 

20 amended by striking by striking paragraphs (7) and (8) 

21 and inserting the following new paragraph: 

22 ‘‘(7) APPLICATION TO TAXABLE YEARS AFTER

23 2017.—In prescribing tables under paragraph (1) 

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1 plied by substituting ‘2016’ for ‘1992’ in subpara2 graph (B) thereof.’’. 

3 (g) REPEAL OF MODIFICATIONS TO SUPERCEDED

4 RATES.—Section 1 is amended by striking subsection (i) 

5 and by redesignating subsection (j) (as added by section 

6 202) as subsection (i). 

7 (h) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to taxable years beginning after 

9 December 31, 2016. 

10 TITLE V—TAX-EXEMPT 

11 REORGANIZATIONS 

12 SEC. 501. NO TAXABLE EVENT FOR CHANGE OF COR13 PORATE FORM. 

14 Notwithstanding any provision of the Internal Rev15 enue Code of 1986, a change in the organizational struc16 ture of a corporation, however organized, into another or17 ganizational structure is not a taxable event for the pur18 poses of such Code if there is no change among the own19 ers, their ownership interests, or the assets of the organi20 zation (other than a de minimus change in such assets). 

21 The preceding sentence shall apply to changes in organiza22 tional structure occurring after December 31, 2016. 


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1 TITLE VI—REPEAL OF NET 

2 INVESTMENT INCOME TAX 

3 SEC. 601. REPEAL OF NET INVESTMENT INCOME TAX. 

4 (a) IN GENERAL.—Subtitle A of the Internal Rev5 enue Code of 1986 is amended by striking chapter 2A. 

6 (b) EFFECTIVE DATE.—The amendment made by 

7 this section shall apply to taxable years beginning after 

8 December 31, 2016. 

9 TITLE VII—REPEAL OF ESTATE 

10 TAX 

11 SEC. 701. REPEAL OF ESTATE TAX AND RETENTION OF 

12 BASIS STEP-UP. 

13 Effective for estates of decedents dying after Decem14 ber 31, 2016, chapter 11 of the Internal Revenue Code 

15 of 1986 is repealed. 

Æ 


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