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[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4383 Introduced in House (IH)]

<DOC>

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.

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

SECTION 1. CLARIFICATION.

    (a) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (b) Table of Contents.--The table of contents for this title is as 
follows:

Section 1. Clarification.
                    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.

                    TITLE I--IMMEDIATE COST RECOVERY

SEC. 101. REPEAL OF CERTAIN LIMITATIONS ON THE EXPENSING OF SECTION 179 
              PROPERTY.

    (a) In General.--Section 179 is amended by striking subsections (b) 
and (e) and by redesignating subsections (c), (d), and (f) as 
subsections (b), (c), and (d), respectively.
    (b) Conforming Amendments.--
            (1) Subsection (c) of section 179, as redesignated by 
        subsection (a), is amended by striking paragraphs (6) and (8), 
        and by redesignating paragraphs (7), (9), and (10) as 
        paragraphs (6), (7), and (8), respectively.
            (2) Paragraph (6) of section 179(c), as redesignated by 
        paragraph (1) and subsection (a), is amended by striking 
        ``paragraphs (2) and (6)'' and inserting ``paragraph (2)''.
            (3) Section 42(d)(2)(B)(i) is amended by striking ``section 
        179(d)(2)'' and inserting ``section 179(c)(2)''.
            (4) Subclause (I) of section 42(d)(2)(D)(iii) is amended--
                    (A) by striking ``section 179(d)'' and inserting 
                ``section 179(c)''; and
                    (B) by striking ``section 179(d)(7)'' and inserting 
                ``section 179(c)(6)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service during taxable years beginning 
after December 31, 2016.

SEC. 102. ELECTION OF SHORTER RECOVERY PERIOD FOR PURPOSE OF 
              DETERMINING DEPRECIATION DEDUCTION.

    (a) In General.--Section 168 is amended by adding at the end the 
following new subsection:
    ``(o) Election of Shorter Recovery Period.--
            ``(1) In general.--Notwithstanding subsections (c), (e), 
        (g), and (j), for purposes of subsection (a), the applicable 
        recovery period for any property placed in service during a 
        taxable year ending on or after the date of the enactment of 
        this subsection shall not exceed such period as the taxpayer 
        may elect with respect to such property.
            ``(2) Election.--An election made under this subsection 
        shall be made at such time and in such form and manner as the 
        Secretary may require. An election under this subsection, once 
        made, shall apply to the taxable year for which made and all 
        subsequent taxable years unless revoked with the consent of the 
        Secretary.
            ``(3) Transition rule.--In the case of any property placed 
        in service during a taxable year ending before January 1, 2017, 
        paragraph (1) shall apply with respect to the adjusted basis of 
        such property in the same manner as if such property (with such 
        adjusted basis) were placed in service on the first day of the 
        taxable year which includes January 1, 2017. The application of 
        this paragraph shall not be treated as a change in method of 
        accounting for purposes of section 481.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service before, on, or after January 1, 2017.

               TITLE II--REDUCED RATE ON BUSINESS INCOME

SEC. 201. REDUCED CORPORATE RATE.

    (a) In General.--Section 11(b) is amended to read as follows:
    ``(b) Amount of Tax.--The amount of the tax imposed by subsection 
(a) shall be 15 percent of taxable income.''.
    (b) Conforming Amendments.--Paragraphs (1), (2), and (6) of section 
1445(e) are each amended by striking ``35 percent'' and inserting ``15 
percent''.
    (c) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        taxable years beginning after December 31, 2016.
            (2) Certain conforming amendments.--The amendments made by 
        subsection (b) shall apply to transfers, dispositions, and 
        distributions, after such date.

SEC. 202. REDUCED RATE ON OTHER BUSINESS INCOME.

    (a) In General.--Section 1 is amended by adding at the end the 
following new subsection:
    ``(j) Maximum Rate on Business Income.--
            ``(1) In general.--The rate of tax imposed under this 
        section on business income shall not exceed 15 percent.
            ``(2) Business income.--The term `business income' means 
        the excess (if any) of--
                    ``(A) any distributional or pro rata share of items 
                of income or gain from a partnership or S corporation 
                and any income or gain properly allocable to a sole 
                proprietorship, over
                    ``(B) any distributional or pro rata share of items 
                of deduction or loss from a partnership or S 
                corporation and any deduction or loss properly 
                allocable to a sole proprietorship.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2016.

       TITLE III--EXEMPTION SYSTEM FOR TAXATION OF FOREIGN INCOME

SEC. 301. DEDUCTION FOR DIVIDENDS RECEIVED BY DOMESTIC CORPORATIONS 
              FROM CERTAIN FOREIGN CORPORATIONS.

    (a) In General.--Part VIII of subchapter B of chapter 1 is amended 
by inserting after section 245 the following new section:

``SEC. 245A. DIVIDENDS RECEIVED BY DOMESTIC CORPORATIONS FROM CERTAIN 
              FOREIGN CORPORATIONS.

    ``(a) In General.--In the case of any dividend received from a 
specified 10-percent owned foreign corporation by a domestic 
corporation which is a United States shareholder with respect to such 
foreign corporation, there shall be allowed as a deduction an amount 
equal to 95 percent of the foreign-source portion of such dividend.
    ``(b) Specified 10-Percent Owned Foreign Corporation.--For purposes 
of this section, the term `specified 10-percent owned foreign 
corporation' means any foreign corporation if any domestic corporation 
owns directly, or indirectly through a chain of ownership described 
under section 958(a), 10 percent or more of the voting stock of such 
foreign corporation.
    ``(c) Foreign-Source Portion.--For purposes of this section--
            ``(1) In general.--The foreign-source portion of any 
        dividend is an amount which bears the same ratio to such 
        dividends as--
                    ``(A) the post-1986 undistributed foreign earnings, 
                bears to
                    ``(B) the total post-1986 undistributed earnings.
            ``(2) Post-1986 undistributed earnings.--The term `post-
        1986 undistributed earnings' means the amount of the earnings 
        and profits of the specified 10-percent owned foreign 
        corporation (computed in accordance with sections 964(a) and 
        986) accumulated in taxable years beginning after December 31, 
        1986--
                    ``(A) as of the close of the taxable year of the 
                specified 10-percent owned foreign corporation in which 
                the dividend is distributed, and
                    ``(B) without diminution by reason of dividends 
                distributed during such taxable year.
            ``(3) Post-1986 undistributed foreign earnings.--The term 
        `post-1986 undistributed foreign earnings' means the portion of 
        the post-1986 undistributed earnings which is attributable to 
        neither--
                    ``(A) income described in subparagraph (A) of 
                section 245(a)(5), nor
                    ``(B) dividends described in subparagraph (B) of 
                such section (determined without regard to section 
                245(a)(12)).
            ``(4) Treatment of distributions from earnings before 
        1987.--
                    ``(A) In general.--In the case of any dividend paid 
                out of earnings and profits of the specified 10-percent 
                owned foreign corporation (computed in accordance with 
                sections 964(a) and 986) accumulated in taxable years 
                beginning before January 1, 1987--
                            ``(i) paragraphs (1), (2), and (3) shall be 
                        applied without regard to the phrase `post-
                        1986' each place it appears, and
                            ``(ii) paragraph (2) shall be applied 
                        without regard to the phrase `in taxable years 
                        beginning after December 31, 1986'.
                    ``(B) Dividends paid first out of post-1986 
                earnings.--Dividends shall be treated as paid out of 
                post-1986 undistributed earnings to the extent thereof.
    ``(d) Disallowance of Foreign Tax Credit, etc.--
            ``(1) In general.--No credit shall be allowed under section 
        901 for any taxes paid or accrued (or treated as paid or 
        accrued) with respect to any dividend for which a deduction is 
        allowed under this section.
            ``(2) Denial of deduction.--No deduction shall be allowed 
        under this chapter for any tax for which credit is not 
        allowable under section 901 by reason of paragraph (1) 
        (determined by treating the taxpayer as having elected the 
        benefits of subpart A of part III of subchapter N).
    ``(e) Regulations.--The Secretary may prescribe such regulations or 
other guidance as may be necessary or appropriate to carry out the 
provisions of this section.''.
    (b) Application of Holding Period Requirement.--Subsection (c) of 
section 246 is amended--
            (1) by striking ``or 245'' in paragraph (1) and inserting 
        ``245, or 245A''; and
            (2) by adding at the end the following new paragraph:
            ``(5) Special rules for foreign source portion of dividends 
        received from specified 10-percent owned foreign 
        corporations.--
                    ``(A) 6-month holding period requirement.--For 
                purposes of section 245A--
                            ``(i) paragraph (1)(A) shall be applied--
                                    ``(I) by substituting `180 days' 
                                for `45 days' each place it appears, 
                                and
                                    ``(II) by substituting `361-day 
                                period' for `91-day period', and
                            ``(ii) paragraph (2) shall not apply.
                    ``(B) Status must be maintained during holding 
                period.--For purposes of section 245A, the holding 
                period requirement of this subsection shall be treated 
                as met only if--
                            ``(i) the specified 10-percent owned 
                        corporation referred to in section 245A(a) is a 
                        specified 10-percent owned corporation at all 
                        times during such period, and
                            ``(ii) the taxpayer is a United States 
                        shareholder with respect to such specified 10-
                        percent owned corporation at all times during 
                        such period.''.
    (c) Application of Rules Generally Applicable to Deductions for 
Dividends Received.--
            (1) Treatment of dividends from certain corporations.--
        Paragraph (1) of section 246(a) is amended by striking ``and 
        245'' and inserting ``245, and 245A''.
            (2) Assets generating tax-exempt portion of dividend not 
        taken into account in allocating and apportioning deductible 
        expenses.--Paragraph (3) of section 864(e) is amended by 
        striking ``or 245(a)'' and inserting ``, 245(a), or 245A''.
            (3) Coordination with section 1059.--Subparagraph (B) of 
        section 1059(b)(2) is amended by striking ``or 245'' and 
        inserting ``245, or 245A''.
    (d) Coordination With Foreign Tax Credit Limitation.--Subsection 
(b) of section 904, as amended by the preceding provisions of this Act, 
is amended by redesignating paragraph (2) as paragraph (1) and by 
adding at the end the following new paragraph:
            ``(2) Treatment of dividends for which deduction is allowed 
        under section 245a.--For purposes of subsection (a), in the 
        case of a domestic corporation which is a United States 
        shareholder with respect to a specified 10-percent owned 
        foreign corporation, such domestic corporation's taxable income 
        from sources without the United States shall be determined 
        without regard to--
                    ``(A) the foreign-source portion of any dividend 
                received from such foreign corporation, and
                    ``(B) any deductions properly allocable to such 
                portion.
        Any term which is used in section 245A and in this paragraph 
        shall have the same meaning for purposes of this paragraph as 
        when used in such section.''.
    (e) Conforming Amendments.--
            (1) Paragraph (4) of section 245(a) is amended by striking 
        ``section 902(c)(1)'' and inserting ``section 245A(c)(2)''.
            (2) Subsection (b) of section 951 is amended by striking 
        ``subpart'' and inserting ``title''.
            (3) Subsection (a) of section 957 is amended by striking 
        ``subpart'' in the matter preceding paragraph (1) and inserting 
        ``title''.
            (4) The table of sections for part VIII of subchapter B of 
        chapter 1 is amended by inserting after the item relating to 
        section 245 the following new item:

``Sec. 245A. Dividends received by domestic corporations from certain 
                            foreign corporations.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years of foreign corporations beginning after December 
31, 2016, and to taxable years of United States shareholders in which 
or with which such taxable years of foreign corporations end.

SEC. 302. TREATMENT OF DEFERRED FOREIGN INCOME UPON TRANSITION TO 
              PARTICIPATION EXEMPTION SYSTEM OF TAXATION.

    (a) In General.--Section 965 is amended to read as follows:

``SEC. 965. TREATMENT OF DEFERRED FOREIGN INCOME UPON TRANSITION TO 
              PARTICIPATION EXEMPTION SYSTEM OF TAXATION.

    ``(a) Treatment of Deferred Foreign Income as Subpart F Income.--In 
the case of the last taxable year of a deferred foreign income 
corporation which begins before December 31, 2016, the subpart F income 
of such foreign corporation (as otherwise determined for such taxable 
year under section 952) shall be increased by the accumulated post-1986 
deferred foreign income of such corporation determined as of the close 
of such taxable year.
    ``(b) Reduction in Amounts Included in Gross Income of United 
States Shareholders of Specified Foreign Corporations With Deficits in 
Earnings and Profits.--
            ``(1) In general.--In the case of a taxpayer which is a 
        United States shareholder with respect to at least one deferred 
        foreign income corporation and at least one E&P deficit foreign 
        corporation, the amount which would (but for this subsection) 
        be taken into account under section 951(a)(1) by reason of 
        subsection (a) as such United States shareholder's pro rata 
        share of the subpart F income of each deferred foreign income 
        corporation shall be reduced (but not below zero) by the amount 
        of such United States shareholder's aggregate foreign E&P 
        deficit which is allocated under paragraph (2) to such deferred 
        foreign income corporation.
            ``(2) Allocation of aggregate foreign e&p deficit.--The 
        aggregate foreign E&P deficit of any United States shareholder 
        shall be allocated among the deferred foreign income 
        corporations of such United States shareholder in an amount 
        which bears the same proportion to such aggregate as--
                    ``(A) such United States shareholder's pro rata 
                share of the accumulated post-1986 deferred foreign 
                income of each such deferred foreign income 
                corporation, bears to
                    ``(B) the aggregate of such United States 
                shareholder's pro rata share of the accumulated post-
                1986 deferred foreign income of all deferred foreign 
                income corporations of such United States shareholder.
            ``(3) Definitions related to e&p deficits.--For purposes of 
        this subsection--
                    ``(A) Aggregate foreign e&p deficit.--The term 
                `aggregate foreign E&P deficit' means, with respect to 
                any United States shareholder, the aggregate of such 
                shareholder's pro rata shares of the specified E&P 
                deficits of the E&P deficit foreign corporations of 
                such shareholder.
                    ``(B) E&P deficit foreign corporation.--The term 
                `E&P deficit foreign corporation' means, with respect 
                to any taxpayer, any specified foreign corporation with 
                respect to which such taxpayer is a United States 
                shareholder, if--
                            ``(i) such specified foreign corporation 
                        has a deficit in post-1986 earnings and 
                        profits, and
                            ``(ii) as of December 31, 2016--
                                    ``(I) such corporation was a 
                                specified foreign corporation, and
                                    ``(II) such taxpayer was a United 
                                States shareholder of such corporation.
                    ``(C) Specified e&p deficit.--The term `specified 
                E&P deficit' means, with respect to any E&P deficit 
                foreign corporation, the amount of the deficit referred 
                to in subparagraph (B).
    ``(c) Reduced Rate on Included Income.--In the case of a United 
States shareholder of a deferred foreign income corporation, there 
shall be allowed as a deduction for the taxable year in which an amount 
is included in the gross income of such United States shareholder under 
section 951(a)(1) by reason of this section an amount equal to 88.6 
percent of the amount so included as gross income.
    ``(d) Deferred Foreign Income Corporation; Accumulated Post-1986 
Deferred Foreign Income.--For purposes of this section--
            ``(1) Deferred foreign income corporation.--The term 
        `deferred foreign income corporation' means, with respect to 
        any United States shareholder, any specified foreign 
        corporation of such United States shareholder which has 
        accumulated post-1986 deferred foreign income (as of the close 
        of the taxable year referred to in subsection (a)) greater than 
        zero.
            ``(2) Accumulated post-1986 deferred foreign income.--The 
        term `accumulated post-1986 deferred foreign income' means the 
        post-1986 earnings and profits except to the extent such 
        earnings--
                    ``(A) are attributable to income of the specified 
                foreign corporation which is effectively connected with 
                the conduct of a trade or business within the United 
                States and subject to tax under this chapter,
                    ``(B) if distributed, would--
                            ``(i) in the case of a controlled foreign 
                        corporation, be excluded from the gross income 
                        of a United States shareholder under section 
                        959, or
                            ``(ii) in the case of any passive foreign 
                        investment company (as defined in section 1297) 
                        other than a controlled foreign corporation, be 
                        treated as a distribution which is not a 
                        dividend, or
                    ``(C) in the case of any passive foreign investment 
                company (as so defined), is properly attributable to an 
                unreversed inclusion of a United States person under 
                section 1296.
        To the extent provided in regulations or other guidance 
        prescribed by the Secretary, in the case of any controlled 
        foreign corporation which has shareholders which are not United 
        States shareholders, accumulated post-1986 deferred foreign 
        income shall be appropriately reduced by amounts which would be 
        described in subparagraph (B)(i) is such shareholders were 
        United States shareholders. Such regulations or other guidance 
        may provide a similar rule for purposes of subparagraph (B)(ii) 
        and (C).
            ``(3) Post-1986 earnings and profits.--The term `post-1986 
        earnings and profits' means the earnings and profits of the 
        foreign corporation (computed in accordance with sections 
        964(a) and 986) accumulated in taxable years beginning after 
        December 31, 1986, and determined--
                    ``(A) as of the close the taxable year referred to 
                in subsection (a), and
                    ``(B) without diminution by reason of dividends 
                distributed during such taxable year.
    ``(e) Specified Foreign Corporation.--
            ``(1) In general.--For purposes of this section, the term 
        `specified foreign corporation' means--
                    ``(A) any controlled foreign corporation, and
                    ``(B) any section 902 corporation (as defined in 
                section 909(d)(5)).
            ``(2) Application to section 902 corporations.--For 
        purposes of section 951, a section 902 corporation (as so 
        defined) shall be treated as a controlled foreign corporation 
        solely for purposes of taking into account the subpart F income 
        of such corporation under subsection (a) (and for purposes of 
        applying subsection (f)).
    ``(f) Determinations of Pro Rata Share.--For purposes of this 
section, the determination of any United States shareholder's pro rata 
share of any amount with respect to any specified foreign corporation 
shall be determined under rules similar to the rules of section 
951(a)(2) by treating such amount in the same manner as subpart F 
income (and by treating such specified foreign corporation as a 
controlled foreign corporation).
    ``(g) Disallowance of Foreign Tax Credit, etc.--
            ``(1) In general.--No credit shall be allowed under section 
        901 for 88.6 percent of any taxes paid or accrued (or treated 
        as paid or accrued) with respect to any amount for which a 
        deduction is allowed under this section.
            ``(2) Denial of deduction.--No deduction shall be allowed 
        under this chapter for any tax for which credit is not 
        allowable under section 901 by reason of paragraph (1) 
        (determined by treating the taxpayer as having elected the 
        benefits of subpart A of part III of subchapter N).
            ``(3) Coordination with section 78.--Section 78 shall not 
        apply to any tax for which credit is not allowable under 
        section 901 by reason of paragraph (1).
    ``(h) Election To Pay Liability in Installments.--
            ``(1) In general.--In the case of a United States 
        shareholder of a deferred foreign income corporation, such 
        United States shareholder may elect to pay the net tax 
        liability under this section in 8 installments of the following 
        amounts:
                    ``(A) 8 percent of the net tax liability in the 
                case of each of the first 5 of such installments,
                    ``(B) 15 percent of the net tax liability in the 
                case of the 6th such installment,
                    ``(C) 20 percent of the net tax liability in the 
                case of the 7th such installment, and
                    ``(D) 25 percent of the net tax liability in the 
                case of the 8th such installment.
            ``(2) Date for payment of installments.--If an election is 
        made under paragraph (1), the first installment shall be paid 
        on the due date (determined without regard to any extension of 
        time for filing the return) for the return of tax for the 
        taxable year described in subsection (b) and each succeeding 
        installment shall be paid on the due date (as so determined) 
        for the return of tax for the taxable year following the 
        taxable year with respect to which the preceding installment 
        was made.
            ``(3) Acceleration of payment.--If there is an addition to 
        tax for failure to pay timely assessed with respect to any 
        installment required under this subsection, a liquidation or 
        sale of substantially all the assets of the taxpayer (including 
        in a title 11 or similar case), a cessation of business by the 
        taxpayer, or any similar circumstance, then the unpaid portion 
        of all remaining installments shall be due on the date of such 
        event (or in the case of a title 11 or similar case, the day 
        before the petition is filed). The preceding sentence shall not 
        apply to the sale of substantially all the assets of a taxpayer 
        to a buyer if such buyer enters into an agreement with the 
        Secretary under which such buyer is liable for the remaining 
        installments due under this subsection in the same manner as if 
        such buyer were the taxpayer.
            ``(4) Proration of deficiency to installments.--If an 
        election is made under paragraph (1) to pay the net tax 
        liability under this section in installments and a deficiency 
        has been assessed with respect to such net tax liability, the 
        deficiency shall be prorated to the installments payable under 
        paragraph (1). The part of the deficiency so prorated to any 
        installment the date for payment of which has not arrived shall 
        be collected at the same time as, and as a part of, such 
        installment. The part of the deficiency so prorated to any 
        installment the date for payment of which has arrived shall be 
        paid upon notice and demand from the Secretary. This subsection 
        shall not apply if the deficiency is due to negligence, to 
        intentional disregard of rules and regulations, or to fraud 
        with intent to evade tax.
            ``(5) Election.--Any election under paragraph (1) shall be 
        made not later than the due date for the return of tax for the 
        taxable year described in subsection (a) and shall be made in 
        such manner as the Secretary may provide.
            ``(6) Net tax liability under this section.--For purposes 
        of this subsection--
                    ``(A) In general.--The net tax liability under this 
                section with respect to any United States shareholder 
                is the excess (if any) of--
                            ``(i) such taxpayer's net income tax for 
                        the taxable year described in subsection (a), 
                        over
                            ``(ii) such taxpayer's net income tax for 
                        such taxable year determined without regard to 
                        this section.
                    ``(B) Net income tax.--The term `net income tax' 
                means the regular tax liability reduced by the credits 
                allowed under subparts A, B, and D of part IV of 
                subchapter A.
    ``(i) Special Rules for S Corporation Shareholders.--
            ``(1) In general.--In the case of any S corporation which 
        is a United States shareholder of a deferred foreign income 
        corporation, each shareholder of such S corporation may elect 
        to defer payment of such shareholder's net tax liability under 
        this section with respect to such S corporation until the 
        shareholder's taxable year which includes the triggering event 
        with respect to such liability.
            ``(2) Triggering event.--
                    ``(A) In general.--In the case of any shareholder's 
                net tax liability under this section with respect to 
                any S corporation, the triggering event with respect to 
                such liability is whichever of the following occurs 
                first:
                            ``(i) Such corporation ceases to be an S 
                        corporation (determined as of the first day of 
                        the first taxable year that such corporation is 
                        not an S corporation).
                            ``(ii) A liquidation or sale of 
                        substantially all the assets of such S 
                        corporation (including in a title 11 or similar 
                        case), a cessation of business by such S 
                        corporation, such S corporation ceases to 
                        exist, or any similar circumstance.
                            ``(iii) A transfer of any share of stock in 
                        such S corporation by the taxpayer (including 
                        by reason of death, or otherwise).
                    ``(B) Partial transfers of stock.--In the case of a 
                transfer of less than all of the taxpayer's shares of 
                stock in the S corporation, such transfer shall only be 
                a triggering event with respect to so much of the 
                taxpayer's net tax liability under this section with 
                respect to such S corporation as is properly allocable 
                to such stock.
                    ``(C) Transfer of liability.--A transfer described 
                in clause (iii) shall not be treated as a triggering 
                event if the transferee enters into an agreement with 
                the Secretary under which such transferee is liable for 
                net tax liability with respect to such stock in the 
                same manner as if such transferee were the taxpayer.
            ``(3) Net tax liability.--A shareholder's net tax liability 
        under this section with respect to any S corporation is the net 
        tax liability under this section which would be determined 
        under subsection (h)(6) if the only subpart F income taken into 
        account by such shareholder by reason of this section were 
        allocations from such S corporation.
            ``(4) Election to pay deferred liability in installments.--
        In the case of a taxpayer which elects to defer payment under 
        paragraph (1), subsection (h) shall be applied--
                    ``(A) separately with respect to the liability to 
                which such election applies,
                    ``(B) an election under subsection (h) with respect 
                to such liability shall be treated as timely made if 
                made not later than the due date for the return of tax 
                for the taxable year in which the triggering event with 
                respect to such liability occurs,
                    ``(C) the first installment under subsection (h) 
                with respect to such liability shall be paid not later 
                than such due date (but determined without regard to 
                any extension of time for filing the return), and
                    ``(D) if the triggering event with respect to any 
                net tax liability is described in paragraph (2)(A)(ii), 
                an election under subsection (h) with respect to such 
                liability may be made only with the consent of the 
                Secretary.
            ``(5) Joint and several liability of s corporation.--If any 
        shareholder of an S corporation elects to defer payment under 
        paragraph (1), such S corporation shall be jointly and 
        severally liable for such payment and any penalty, addition to 
        tax, or additional amount attributable thereto.
            ``(6) Extension of limitation on collection.--
        Notwithstanding any other provision of law, any limitation on 
        the time period for the collection of a liability deferred 
        under this subsection shall not be treated as beginning before 
        the date of the triggering event with respect to such 
        liability.
            ``(7) Election.--Any election under paragraph (1) shall be 
        made not later than the due date for the return of tax for the 
        taxable year described in subsection (a) and shall be made in 
        such manner as the Secretary may provide.
    ``(j) Inclusion of Deferred Foreign Income Under This Section Not 
To Trigger Recapture of Overall Foreign Loss.--For purposes of section 
904(f)(1), in the case of a United States shareholder of a deferred 
foreign income corporation, such United States shareholder's taxable 
income from sources without the United States shall be determined 
without regard to this section.
    ``(k) Regulations.--The Secretary may prescribe such regulations or 
other guidance as may be necessary or appropriate to carry out the 
provisions of this section.''.
    (b) Clerical Amendment.--The table of section for subpart F of part 
III of subchapter N of chapter 1 is amended by striking the item 
relating to section 965 and inserting the following:

``Sec. 965. 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.

    (a) In General.--Paragraph (6) of section 954(c) is amended by 
striking subparagraph (C).
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years of foreign corporations beginning after December 
31, 2016, and to taxable years of United States shareholders in which 
or with which such taxable years of foreign corporations end.

SEC. 304. REPEAL OF SECTION 902 INDIRECT FOREIGN TAX CREDITS; 
              DETERMINATION OF SECTION 960 CREDIT ON CURRENT YEAR 
              BASIS.

    (a) Repeal of Section 902 Indirect Foreign Tax Credits.--Subpart A 
of part III of subchapter N of chapter 1 is amended by striking section 
902.
    (b) Determination of Section 960 Credit on Current Year Basis.--
Section 960 is amended--
            (1) by striking subsection (c), by redesignating subsection 
        (b) as subsection (c), by striking all that precedes subsection 
        (c) (as so redesignated) and inserting the following:

``SEC. 960. DEEMED PAID CREDIT FOR SUBPART F INCLUSIONS.

    ``(a) In General.--For purposes of this subpart, if there is 
included in the gross income of a domestic corporation any item of 
income under section 951(a)(1) with respect to any controlled foreign 
corporation with respect to which such domestic corporation is a United 
States shareholder, such domestic corporation shall be deemed to have 
paid so much of such foreign corporation's foreign income taxes as are 
properly attributable to the item of income so included.
    ``(b) Special Rules for Distributions From Previously Taxed 
Earnings and Profits.--For purposes of this subpart--
            ``(1) In general.--If any portion of a distribution from a 
        controlled foreign corporation to a domestic corporation which 
        is a United States shareholder with respect to such controlled 
        foreign corporation is excluded from gross income under section 
        959(a), such domestic corporation shall be deemed to have paid 
        so much of such foreign corporation's foreign income taxes as--
                    ``(A) are properly attributable to such portion, 
                and
                    ``(B) have not been deemed to have to been paid by 
                such domestic corporation under this section for any 
                prior taxable year.
            ``(2) Tiered controlled foreign corporations.--If section 
        959(b) applies to any portion of a distribution from a 
        controlled foreign corporation to another controlled foreign 
        corporation, such controlled foreign corporation shall be 
        deemed to have paid so much of such other controlled foreign 
        corporation's foreign income taxes as--
                    ``(A) are properly attributable to such portion, 
                and
                    ``(B) have not been deemed to have been paid by a 
                domestic corporation under this section for any prior 
                taxable year.'';
            (2) and by adding after subsection (c) (as so redesignated) 
        the following new subsections:
    ``(d) Foreign Income Taxes.--The term `foreign income taxes' means 
any income, war profits, or excess profits taxes paid or accrued to any 
foreign country or possession of the United States.
    ``(e) Regulations.--The Secretary shall provide such regulations as 
may be necessary or appropriate to carry out the provisions of this 
section.''.
    (c) Conforming Amendments.--
            (1) Section 78 is amended to read as follows:

``SEC. 78. GROSS UP FOR DEEMED PAID FOREIGN TAX CREDIT.

    ``If a domestic corporation chooses to have the benefits of subpart 
A of part III of subchapter N (relating to foreign tax credit) for any 
taxable year, an amount equal to the taxes deemed to be paid by such 
corporation under section 960 (relating to deemed paid credit for 
subpart F inclusions) for such taxable year shall be treated for 
purposes of this title (other than section 960) as an item of income 
required to be included in the gross income of such domestic 
corporation under section 951(a).''.
            (2) Section 245(a)(10) is amended by striking ``902,''.
            (3) Sections 535(b)(1) and 545(b)(1) are each amended by 
        striking ``section 902(a) or 960(a)(1)'' and inserting 
        ``section 960''.
            (4) Paragraph (1) of section 814(f) is amended--
                    (A) by striking subparagraph (B); and
                    (B) by striking all that precedes ``No income'' and 
                inserting the following:
            ``(1) Treatment of foreign taxes.--''.
            (5) Subparagraph (B) of section 864(h)(1) is amended by 
        striking ``902,''.
            (6) Subsection (a) of section 901 is amended by striking 
        ``sections 902 and 960'' and inserting ``section 960''.
            (7) Paragraph (2) of section 901(e) is amended by striking 
        ``but is not limited to--'' and all that follows through ``that 
        portion'' and inserting ``but is not limited to that portion''.
            (8) Subsection (f) of section 901 is amended by striking 
        ``sections 902 and 960'' and inserting ``section 960''.
            (9) Subparagraph (A) of section 901(j)(1) is amended by 
        striking ``902 or''.
            (10) Subparagraph (B) of section 901(j)(1) is amended by 
        striking ``sections 902 and 960'' and inserting ``section 
        960''.
            (11) Paragraph (2) of section 901(k) is amended by striking 
        ``902,''.
            (12) Paragraph (6) of section 901(k) is amended by striking 
        ``902 or''.
            (13) Subparagraph (A) of section 904(h)(10) is amended by 
        striking ``sections 902, 907, and 960'' and inserting 
        ``sections 907 and 960''.
            (14) Section 904 is amended by striking subsection (k).
            (15) Paragraph (1) of section 905(c) is amended by striking 
        the last sentence.
            (16) Subclause (I) of section 905(c)(2)(B)(i) is amended by 
        striking ``section 902 or''.
            (17) Subsection (a) of section 906 is amended by striking 
        ``(or deemed, under section 902, paid or accrued during the 
        taxable year)''.
            (18) Subsection (b) of section 906 is amended by striking 
        paragraphs (4) and (5).
            (19) Subparagraph (B) of section 907(b)(2) is amended by 
        striking ``902 or''.
            (20) Paragraph (3) of section 907(c) is amended--
                    (A) by striking subparagraph (A) and redesignating 
                subparagraphs (B) and (C) as subparagraphs (A) and (B), 
                respectively; and
                    (B) by striking ``section 960(a)'' in subparagraph 
                (A) (as so redesignated) and inserting ``section 960''.
            (21) Paragraph (5) of section 907(c) is amended by striking 
        ``902 or''.
            (22) Clause (i) of section 907(f)(2)(B) is amended by 
        striking ``902 or''.
            (23) Subsection (a) of section 908 is amended by striking 
        ``902 or''.
            (24) Subsection (b) of section 909 is amended--
                    (A) by striking ``section 902 corporation'' in the 
                matter preceding paragraph (1) and inserting 
                ``specified 10-percent owned foreign corporation'';
                    (B) by striking ``902 or'' in paragraph (1);
                    (C) by striking ``by such section 902 corporation'' 
                and all that follows in the matter following paragraph 
                (2) and inserting ``by such specified 10-percent owned 
                foreign corporation or a domestic corporation which is 
                a United States shareholder with respect to such 
                specified 10-percent owned foreign corporation.''; and
                    (D) by striking ``Section 902 Corporations'' in the 
                heading thereof and inserting ``Specified 10-Percent 
                Owned Foreign Corporations''.
            (25) Subsection (d) of section 909 is amended by striking 
        paragraph (5).
            (26) Paragraph (1) of section 958(a) is amended by striking 
        ``960(a)(1)'' and inserting ``960''.
            (27) Subsection (d) of section 959 is amended by striking 
        ``Except as provided in section 960(a)(3), any'' and inserting 
        ``Any''.
            (28) Subsection (e) of section 959 is amended by striking 
        ``and section 960(b)''.
            (29) Subparagraph (A) of section 1291(g)(2) is amended by 
        striking ``any distribution--'' and all that follows through 
        ``but only if'' and inserting ``any distribution, any 
        withholding tax imposed with respect to such distribution, but 
        only if''.
            (30) Section 1293 is amended by striking subsection (f).
            (31) Subparagraph (B) of section 6038(c)(1) is amended by 
        striking ``sections 902 (relating to foreign tax credit for 
        corporate stockholder in foreign corporation) and 960 (relating 
        to special rules for foreign tax credit)'' and inserting 
        ``section 960''.
            (32) Paragraph (4) of section 6038(c) is amended by 
        striking subparagraph (C).
            (33) The table of sections for subpart A of part III of 
        subchapter N of chapter 1 is amended by striking the item 
        relating to section 902.
            (34) The table of sections for subpart F of part III of 
        subchapter N of chapter 1 is amended by striking the item 
        relating to section 960 and inserting the following:

``Sec. 960. Deemed paid credit for subpart F inclusions.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years of foreign corporations beginning after December 
31, 2016, and to taxable years of United States shareholders in which 
or with which such taxable years of foreign corporations end.

                TITLE IV--REDUCED RATES FOR INDIVIDUALS

SEC. 401. REDUCED RATES FOR INDIVIDUALS.

    (a) Joint Returns and Surviving Spouses.--Section 1(a) is amended 
by striking ``in accordance with the following table'' and all that 
follows and inserting ``as follows: 12 percent of so much of taxable 
income as does not exceed $75,300, plus 25 percent of so much of 
taxable income as exceeds $75,300 but does not exceed $466,950, plus 29 
percent of so much of taxable income as exceeds $466,950.''.
    (b) Heads of Households.--Section 1(b) is amended by striking ``in 
accordance with the following table'' and all that follows and 
inserting ``as follows: 12 percent of so much of taxable income as does 
not exceed $50,400, plus 25 percent of so much of taxable income as 
exceeds $50,400 but does not exceed $441,000, plus 29 percent of so 
much of taxable income as exceeds $441,000.''.
    (c) Single.--Section 1(c) is amended by striking ``in accordance 
with the following table'' and all that follows and inserting ``as 
follows: 12 percent of so much of taxable income as does not exceed 
$37,650, plus 25 percent of so much of taxable income as exceeds 
$37,650 but does not exceed $415,050, plus 29 percent of so much of 
taxable income as exceeds $415,050.''.
    (d) Married Filing Separately.--Section 1(d) is amended by striking 
``in accordance with the following table'' and all that follows and 
inserting ``as follows: 12 percent of so much of taxable income as does 
not exceed $37,650, plus 25 percent of so much of taxable income as 
exceeds $37,650 but does not exceed $233,475, plus 29 percent of so 
much of taxable income as exceeds $233,475.''.
    (e) Estates and Trusts.--Section 1(e) is amended by striking ``in 
accordance with the following table'' and all that follows and 
inserting ``as follows: 12 percent of so much of taxable income as does 
not exceeds $5,000, plus 25 percent of so much of taxable income as 
exceeds $5,000 but does not exceed $10,000, plus 29 percent of so much 
of taxable income as exceeds $15,000.''
    (f) Inflation Adjustment.--Section 1(f) is amended by striking by 
striking paragraphs (7) and (8) and inserting the following new 
paragraph:
            ``(7) Application to taxable years after 2017.--In 
        prescribing tables under paragraph (1) which apply to any 
        taxable year beginning in a calendar year after 2017, paragraph 
        (3) shall be applied by substituting `2016' for `1992' in 
        subparagraph (B) thereof.''.
    (g) Repeal of Modifications to Superceded Rates.--Section 1 is 
amended by striking subsection (i) and by redesignating subsection (j) 
(as added by section 202) as subsection (i).
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2016.

                  TITLE V--TAX-EXEMPT REORGANIZATIONS

SEC. 501. NO TAXABLE EVENT FOR CHANGE OF CORPORATE FORM.

    Notwithstanding any provision of the Internal Revenue Code of 1986, 
a change in the organizational structure of a corporation, however 
organized, into another organizational structure is not a taxable event 
for the purposes of such Code if there is no change among the owners, 
their ownership interests, or the assets of the organization (other 
than a de minimus change in such assets). The preceding sentence shall 
apply to changes in organizational structure occurring after December 
31, 2016.

             TITLE VI--REPEAL OF NET INVESTMENT INCOME TAX

SEC. 601. REPEAL OF NET INVESTMENT INCOME TAX.

    (a) In General.--Subtitle A of the Internal Revenue Code of 1986 is 
amended by striking chapter 2A.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2016.

                    TITLE VII--REPEAL OF ESTATE TAX

SEC. 701. REPEAL OF ESTATE TAX AND RETENTION OF BASIS STEP-UP.

    Effective for estates of decedents dying after December 31, 2016, 
chapter 11 of the Internal Revenue Code of 1986 is repealed.
                                 <all>
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