I 

111TH CONGRESS 

2D SESSION H. R. 5893 

To amend the Internal Revenue Code of 1986 to create jobs through increased 

investment in infrastructure, to eliminate loopholes which encourage companies to move operations offshore, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 28, 2010 

Mr. LEVIN (for himself, Mr. RANGEL, Mr. STARK, Mr. MCDERMOTT, Mr. 

LEWIS of Georgia, Mr. BECERRA, Mr. PASCRELL, Mr. CROWLEY, Ms. 

BERKLEY, Mr. MEEK of Florida, Mr. DAVIS of Illinois, Mr. ETHERIDGE, 

Mr. HIGGINS, Mr. GARAMENDI, Mrs. DAHLKEMPER, Mr. KAGEN, Mr. 

PERRIELLO, Ms. KILROY, Mr. MCMAHON, Mr. KISSELL, and Mr. CARNEY) introduced the following bill; which was referred to the Committee 

on Ways and Means, and in addition to the Committee on the Budget, 

for a period to be subsequently determined by the Speaker, in each case 

for consideration of such provisions as fall within the jurisdiction of the 

committee concerned 

A BILL 

To amend the Internal Revenue Code of 1986 to create 

jobs through increased investment in infrastructure, to 

eliminate loopholes which encourage companies to move 

operations offshore, and for other purposes. 

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


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1 SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; 

2 TABLE OF CONTENTS. 

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

4 ‘‘Investing in American Jobs and Closing Tax Loopholes 

5 Act of 2010’’. 

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

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

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

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

13 this Act is as follows: 

Sec. 1. Short title; amendment of 1986 Code; table of contents. 

TITLE I—INFRASTRUCTURE INCENTIVES 

Sec. 101. Extension of Build America Bonds. 

Sec. 102. Exempt-facility bonds for sewage and water supply facilities. 

Sec. 103. Extension of exemption from alternative minimum tax treatment for 

certain tax-exempt bonds. 

Sec. 104. Extension and additional allocations of recovery zone bond authority. 

Sec. 105. Allowance of new markets tax credit against alternative minimum 

tax. 

Sec. 106. Extension of tax-exempt eligibility for loans guaranteed by Federal 

home loan banks. 

Sec. 107. Extension of temporary small issuer rules for allocation of tax-exempt 

interest expense by financial institutions. 

TITLE II—EMERGENCY FUND FOR JOB CREATION AND 

ASSISTANCE 

Sec. 201. Extension of the Emergency Fund for Job Creation and Assistance. 

TITLE III—FOREIGN PROVISIONS 

Sec. 301. Rules to prevent splitting foreign tax credits from the income to 

which they relate. 

Sec. 302. Denial of foreign tax credit with respect to foreign income not subject 

to United States taxation by reason of covered asset acquisitions. 


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Sec. 303. Separate application of foreign tax credit limitation, etc., to items 

resourced under treaties. 

Sec. 304. Limitation on the amount of foreign taxes deemed paid with respect 

to section 956 inclusions. 

Sec. 305. Special rule with respect to certain redemptions by foreign subsidiaries. 

Sec. 306. Modification of affiliation rules for purposes of rules allocating interest expense. 

Sec. 307. Termination of special rules for interest and dividends received from 

persons meeting the 80-percent foreign business requirements. 

Sec. 308. Source rules for income on guarantees. 

Sec. 309. Limitation on extension of statute of limitations for failure to notify 

Secretary of certain foreign transfers. 

TITLE IV—BUDGETARY PROVISIONS 

Sec. 401. Paygo compliance. 

Sec. 402. Time for payment of corporate estimated taxes. 

1 TITLE I—INFRASTRUCTURE 

2 INCENTIVES 

3 SEC. 101. EXTENSION OF BUILD AMERICA BONDS. 

4 (a) IN GENERAL.—Subparagraph (B) of section 

5 54AA(d)(1) is amended by striking ‘‘January 1, 2011’’ 

6 and inserting ‘‘January 1, 2013’’. 

7 (b) EXTENSION OF PAYMENTS TO ISSUERS.— 

8 (1) IN GENERAL.—Section 6431 is amended— 

9 (A) by striking ‘‘January 1, 2011’’ in sub10 section (a) and inserting ‘‘January 1, 2013’’; 

11 and 

12 (B) by striking ‘‘January 1, 2011’’ in sub13 section (f)(1)(B) and inserting ‘‘a particular 

14 date’’. 

15 (2) CONFORMING AMENDMENTS.—Subsection 

16 (g) of section 54AA is amended— 


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1 (A) by striking ‘‘January 1, 2011’’ and in2 serting ‘‘January 1, 2013’’; and 

3 (B) by striking ‘‘QUALIFIED BONDS

4 ISSUED BEFORE 2011’’ in the heading and in5 serting ‘‘CERTAIN QUALIFIED BONDS’’. 

6 (c) REDUCTION IN PERCENTAGE OF PAYMENTS TO

7 ISSUERS.—Subsection (b) of section 6431 is amended— 

8 (1) by striking ‘‘The Secretary’’ and inserting 

9 the following: 

10 ‘‘(1) IN GENERAL.—The Secretary’’; 

11 (2) by striking ‘‘35 percent’’ and inserting ‘‘the 

12 applicable percentage’’; and 

13 (3) by adding at the end the following new 

14 paragraph: 

15 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 

16 of this subsection, the term ‘applicable percentage’ 

17 means the percentage determined in accordance with 

18 the following table: 

‘‘In the case of a qualified bond issued during calendar year: The applicable percentage 

is: 

2009 or 2010 ............................................................ 35 percent 

2011 .......................................................................... 32 percent 

2012 .......................................................................... 30 percent.’’. 

19 (d) CURRENT REFUNDINGS PERMITTED.—Sub20 section (g) of section 54AA is amended by adding at the 

21 end the following new paragraph: 


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1 ‘‘(3) TREATMENT OF CURRENT REFUNDING

2 BONDS.— 

3 ‘‘(A) IN GENERAL.—For purposes of this 

4 subsection, the term ‘qualified bond’ includes 

5 any bond (or series of bonds) issued to refund 

6 a qualified bond if— 

7 ‘‘(i) the average maturity date of the 

8 issue of which the refunding bond is a part 

9 is not later than the average maturity date 

10 of the bonds to be refunded by such issue, 

11 ‘‘(ii) the amount of the refunding 

12 bond does not exceed the outstanding 

13 amount of the refunded bond, and 

14 ‘‘(iii) the refunded bond is redeemed 

15 not later than 90 days after the date of the 

16 issuance of the refunding bond. 

17 ‘‘(B) APPLICABLE PERCENTAGE.—In the 

18 case of a refunding bond referred to in subpara19 graph (A), the applicable percentage with re20 spect to such bond under section 6431(b) shall 

21 be the lowest percentage specified in paragraph 

22 (2) of such section. 

23 ‘‘(C) DETERMINATION OF AVERAGE MATU24 RITY.—For purposes of subparagraph (A)(i), 


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1 average maturity shall be determined in accord2 ance with section 147(b)(2)(A).’’. 

3 (e) CLARIFICATION RELATED TO LEVEES AND

4 FLOOD CONTROL PROJECTS.—Subparagraph (A) of sec5 tion 54AA(g)(2) is amended by inserting ‘‘(including cap6 ital expenditures for levees and other flood control 

7 projects)’’ after ‘‘capital expenditures’’. 

8 SEC. 102. EXEMPT-FACILITY BONDS FOR SEWAGE AND 

9 WATER SUPPLY FACILITIES. 

10 (a) BONDS FOR WATER AND SEWAGE FACILITIES

11 EXEMPT FROM VOLUME CAP ON PRIVATE ACTIVITY

12 BONDS.— 

13 (1) IN GENERAL.—Paragraph (3) of section 

14 146(g) is amended by inserting ‘‘(4), (5),’’ after 

15 ‘‘(2),’’. 

16 (2) CONFORMING AMENDMENT.—Paragraphs 

17 (2) and (3)(B) of section 146(k) are both amended 

18 by striking ‘‘(4), (5), (6),’’ and inserting ‘‘(6)’’. 

19 (b) TAX-EXEMPT ISSUANCE BY INDIAN TRIBAL GOV20 ERNMENTS.— 

21 (1) IN GENERAL.—Subsection (c) of section 

22 7871 is amended by adding at the end the following 

23 new paragraph: 

24 ‘‘(4) EXCEPTION FOR BONDS FOR WATER AND

25 SEWAGE FACILITIES.—Paragraph (2) shall not apply 


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1 to an exempt facility bond 95 percent or more of the 

2 net proceeds (as defined in section 150(a)(3)) of 

3 which are to be used to provide facilities described 

4 in paragraph (4) or (5) of section 142(a).’’. 

5 (2) CONFORMING AMENDMENT.—Paragraph (2) 

6 of section 7871(c) is amended by striking ‘‘para7 graph (3)’’ and inserting ‘‘paragraphs (3) and (4)’’. 

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

9 this section shall apply to obligations issued after the date 

10 of the enactment of this Act. 

11 SEC. 103. EXTENSION OF EXEMPTION FROM ALTERNATIVE 

12 MINIMUM TAX TREATMENT FOR CERTAIN 

13 TAX-EXEMPT BONDS. 

14 (a) IN GENERAL.—Clause (vi) of section 57(a)(5)(C) 

15 is amended— 

16 (1) by striking ‘‘January 1, 2011’’ in subclause 

17 (I) and inserting ‘‘January 1, 2012’’; and 

18 (2) by striking ‘‘AND 2010’’ in the heading and 

19 inserting ‘‘, 2010, AND 2011’’. 

20 (b) ADJUSTED CURRENT EARNINGS.—Clause (iv) of 

21 section 56(g)(4)(B) is amended— 

22 (1) by striking ‘‘January 1, 2011’’ in subclause 

23 (I) and inserting ‘‘January 1, 2012’’; and 

24 (2) by striking ‘‘AND 2010’’ in the heading and 

25 inserting ‘‘, 2010, AND 2011’’. 


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

2 this section shall apply to obligations issued after Decem3 ber 31, 2010. 

4 SEC. 104. EXTENSION AND ADDITIONAL ALLOCATIONS OF 

5 RECOVERY ZONE BOND AUTHORITY. 

6 (a) EXTENSION OF RECOVERY ZONE BOND AUTHOR7 ITY.—Section 1400U–2(b)(1) and section 1400U– 

8 3(b)(1)(B) are each amended by striking ‘‘January 1, 

9 2011’’ and inserting ‘‘January 1, 2012’’. 

10 (b) ADDITIONAL ALLOCATIONS OF RECOVERY ZONE

11 BOND AUTHORITY BASED ON UNEMPLOYMENT.—Section 

12 1400U–1 is amended by adding at the end the following 

13 new subsection: 

14 ‘‘(c) ALLOCATION OF 2010 RECOVERY ZONE BOND

15 LIMITATIONS BASED ON UNEMPLOYMENT.— 

16 ‘‘(1) IN GENERAL.—The Secretary shall allo17 cate the 2010 national recovery zone economic devel18 opment bond limitation and the 2010 national recov19 ery zone facility bond limitation among the States in 

20 the proportion that each such State’s 2009 unem21 ployment number bears to the aggregate of the 2009 

22 unemployment numbers for all of the States. 

23 ‘‘(2) MINIMUM ALLOCATION.—The Secretary 

24 shall adjust the allocations under paragraph (1) for 

25 each State to the extent necessary to ensure that no 


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1 State (prior to any reduction under paragraph (3)) 

2 receives less than 0.9 percent of the 2010 national 

3 recovery zone economic development bond limitation 

4 and 0.9 percent of the 2010 national recovery zone 

5 facility bond limitation. 

6 ‘‘(3) ALLOCATIONS BY STATES.— 

7 ‘‘(A) IN GENERAL.—Each State with re8 spect to which an allocation is made under 

9 paragraph (1) shall reallocate such allocation 

10 among the counties and large municipalities (as 

11 defined in subsection (a)(3)(B)) in such State 

12 in the proportion that each such county’s or 

13 municipality’s 2009 unemployment number 

14 bears to the aggregate of the 2009 unemploy15 ment numbers for all the counties and large 

16 municipalities (as so defined) in such State. 

17 ‘‘(B) 2010 ALLOCATION REDUCED BY

18 AMOUNT OF PREVIOUS ALLOCATION.—Each 

19 State shall reduce (but not below zero)— 

20 ‘‘(i) the amount of the 2010 national 

21 recovery zone economic development bond 

22 limitation allocated to each county or large 

23 municipality (as so defined) in such State 

24 by the amount of the national recovery 

25 zone economic development bond limitation 


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1 allocated to such county or large munici2 pality under subsection (a)(3)(A) (deter3 mined without regard to any waiver there4 of), and 

5 ‘‘(ii) the amount of the 2010 national 

6 recovery zone facility bond limitation allo7 cated to each county or large municipality 

8 (as so defined) in such State by the 

9 amount of the national recovery zone facil10 ity bond limitation allocated to such county 

11 or large municipality under subsection 

12 (a)(3)(A) (determined without regard to 

13 any waiver thereof). 

14 ‘‘(C) WAIVER OF SUBALLOCATIONS.—A 

15 county or municipality may waive any portion 

16 of an allocation made under this paragraph. A 

17 county or municipality shall be treated as hav18 ing waived any portion of an allocation made 

19 under this paragraph which has not been allo20 cated to a bond issued before May 1, 2011. Any 

21 allocation waived (or treated as waived) under 

22 this subparagraph may be used or reallocated 

23 by the State. 

24 ‘‘(D) SPECIAL RULE FOR A MUNICIPALITY

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1 pality any portion of which is in a county, such 

2 portion shall be treated as part of such munici3 pality and not part of such county. 

4 ‘‘(4) 2009 UNEMPLOYMENT NUMBER.—For 

5 purposes of this subsection, the term ‘2009 unem6 ployment number’ means, with respect to any State, 

7 county or municipality, the number of individuals in 

8 such State, county, or municipality who were deter9 mined to be unemployed by the Bureau of Labor 

10 Statistics for December 2009. 

11 ‘‘(5) 2010 NATIONAL LIMITATIONS.— 

12 ‘‘(A) RECOVERY ZONE ECONOMIC DEVEL13 OPMENT BONDS.—The 2010 national recovery 

14 zone economic development bond limitation is 

15 $10,000,000,000. Any allocation of such limita16 tion under this subsection shall be treated for 

17 purposes of section 1400U–2 in the same man18 ner as an allocation of national recovery zone 

19 economic development bond limitation. 

20 ‘‘(B) RECOVERY ZONE FACILITY BONDS.— 

21 The 2010 national recovery zone facility bond 

22 limitation is $15,000,000,000. Any allocation of 

23 such limitation under this subsection shall be 

24 treated for purposes of section 1400U–3 in the 


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1 same manner as an allocation of national recov2 ery zone facility bond limitation.’’. 

3 (c) AUTHORITY OF STATE TO WAIVE CERTAIN 2009 

4 ALLOCATIONS.—Subparagraph (A) of section 1400U– 

5 1(a)(3) is amended by adding at the end the following: 

6 ‘‘A county or municipality shall be treated as having 

7 waived any portion of an allocation made under this sub8 paragraph which has not been allocated to a bond issued 

9 before May 1, 2011. Any allocation waived (or treated as 

10 waived) under this subparagraph may be used or reallo11 cated by the State.’’. 

12 SEC. 105. ALLOWANCE OF NEW MARKETS TAX CREDIT 

13 AGAINST ALTERNATIVE MINIMUM TAX. 

14 (a) IN GENERAL.—Subparagraph (B) of section 

15 38(c)(4) is amended by redesignating clauses (v) through 

16 (ix) as clauses (vi) through (x), respectively, and by insert17 ing after clause (iv) the following new clause: 

18 ‘‘(v) the credit determined under sec19 tion 45D, but only with respect to credits 

20 determined with respect to qualified equity 

21 investments (as defined in section 45D(b)) 

22 initially made before January 1, 2012,’’. 

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

24 this section shall apply to credits determined with respect 

25 to qualified equity investments (as defined in section 


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1 45D(b) of the Internal Revenue Code of 1986) initially 

2 made after March 15, 2010. 

3 SEC. 106. EXTENSION OF TAX-EXEMPT ELIGIBILITY FOR 

4 LOANS GUARANTEED BY FEDERAL HOME 

5 LOAN BANKS. 

6 Clause (iv) of section 149(b)(3)(A) is amended by 

7 striking ‘‘December 31, 2010’’ and inserting ‘‘December 

8 31, 2011’’. 

9 SEC. 107. EXTENSION OF TEMPORARY SMALL ISSUER 

10 RULES FOR ALLOCATION OF TAX-EXEMPT IN11 TEREST EXPENSE BY FINANCIAL INSTITU12 TIONS. 

13 (a) IN GENERAL.—Clauses (i), (ii), and (iii) of sec14 tion 265(b)(3)(G) are each amended by striking ‘‘or 

15 2010’’ and inserting ‘‘, 2010, or 2011’’. 

16 (b) CONFORMING AMENDMENT.—Subparagraph (G) 

17 of section 265(b)(3) is amended by striking ‘‘AND 2010’’ 

18 in the heading and inserting ‘‘, 2010, AND 2011’’. 

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

20 this section shall apply to obligations issued after Decem21 ber 31, 2010. 


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1 TITLE II—EMERGENCY FUND 

2 FOR JOB CREATION AND AS3 SISTANCE 

4 SEC. 201. EXTENSION OF THE EMERGENCY FUND FOR JOB 

5 CREATION AND ASSISTANCE. 

6 (a) IN GENERAL.—Section 403(c) of the Social Secu7 rity Act (42 U.S.C. 603(c)) is amended— 

8 (1) in paragraph (1), by striking ‘‘Emergency 

9 Contingency Fund for State Temporary Assistance 

10 for Needy Families Programs’’ and inserting ‘‘Emer11 gency Fund for Job Creation and Assistance’’; 

12 (2) in paragraph (2)(A), by inserting ‘‘, and for 

13 fiscal year 2011, such sums as may be necessary to 

14 carry out this subsection’’ before ‘‘for payment’’; 

15 (3) by striking paragraph (2)(B) and inserting 

16 the following: 

17 ‘‘(B) AVAILABILITY AND USE OF FUNDS.— 

18 ‘‘(i) FISCAL YEARS 2009 AND 2010.— 

19 The amounts appropriated to the Emer20 gency Fund under subparagraph (A) for 

21 fiscal year 2009 shall remain available 

22 through fiscal year 2010 and shall be used 

23 to make grants to States in each of fiscal 

24 years 2009 and 2010 in accordance with 

25 paragraph (3), except that the amounts 


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1 shall remain available through fiscal year 

2 2011 to make grants and payments to 

3 States in accordance with paragraph 

4 (3)(C) to cover expenditures to subsidize 

5 employment positions held by individuals 

6 placed in the positions before fiscal year 

7 2011. 

8 ‘‘(ii) FISCAL YEAR 2011.—Subject to 

9 clause (iii), the amounts appropriated to 

10 the Emergency Fund under subparagraph 

11 (A) for fiscal year 2011 shall remain avail12 able through fiscal year 2012 and shall be 

13 used to make grants to States based on ex14 penditures in fiscal year 2011 for benefits 

15 and services provided in fiscal year 2011 in 

16 accordance with the requirements of para17 graph (3). 

18 ‘‘(iii) RESERVATION OF FUNDS.—Of 

19 the amounts appropriated to the Emer20 gency Fund under subparagraph (A) for 

21 fiscal year 2011, $500,000 shall be placed 

22 in reserve for use in fiscal year 2012, and 

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1 curred by States after September 30, 

2 2011.’’; 

3 (4) in paragraph (2)(C), by striking ‘‘2010’’ 

4 and inserting ‘‘2012’’; 

5 (5) in paragraph (3)— 

6 (A) in clause (i) of each of subparagraphs 

7 (A), (B), and (C), by striking ‘‘year 2009 or 

8 2010’’ and inserting ‘‘years 2009 through 

9 2011’’; and 

10 (B) in subparagraph (C), by adding at the 

11 end the following: 

12 ‘‘(iv) LIMITATION ON EXPENDITURES

13 FOR SUBSIDIZED EMPLOYMENT.—An ex14 penditure for subsidized employment shall 

15 be taken into account under clause (ii) 

16 only if the expenditure is used to subsidize 

17 employment for— 

18 ‘‘(I) a member of a needy family 

19 (without regard to whether the family 

20 is receiving assistance under the State 

21 program funded under this part); or 

22 ‘‘(II) an individual who has ex23 hausted (or, within 60 days, will ex24 haust) all rights to receive unemploy25 ment compensation under Federal and 


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1 State law, and who is a member of a 

2 needy family.’’; 

3 (6) by striking paragraph (5) and inserting the 

4 following: 

5 ‘‘(5) LIMITATIONS ON PAYMENTS.— 

6 ‘‘(A) FISCAL YEARS 2009 AND 2010.—The 

7 total amount payable to a single State under 

8 subsection (b) and this subsection for fiscal 

9 years 2009 and 2010 combined shall not exceed 

10 50 percent of the annual State family assist11 ance grant. 

12 ‘‘(B) FISCAL YEAR 2011.—The total 

13 amount payable to a single State under sub14 section (b) and this subsection for fiscal year 

15 2011 shall not exceed 30 percent of the annual 

16 State family assistance grant.’’; and 

17 (7) in paragraph (6), by inserting ‘‘or for ex18 penditures described in paragraph (3)(C)(iv)’’ before 

19 the period. 

20 (b) CONFORMING AMENDMENTS.—Section 2101 of 

21 division B of the American Recovery and Reinvestment 

22 Act of 2009 (Public Law 111–5) is amended— 

23 (1) in subsection (a)(2)— 

24 (A) by striking ‘‘2010’’ and inserting 

25 ‘‘2011’’; and 


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1 (B) by striking all that follows ‘‘repealed’’ 

2 and inserting a period; and 

3 (2) in subsection (d)(1), by striking ‘‘2010’’ 

4 and inserting ‘‘2011’’. 

5 (c) PROGRAM GUIDANCE.—The Secretary of Health 

6 and Human Services shall issue program guidance, with7 out regard to the requirements of section 553 of title 5, 

8 United States Code, which ensures that the funds provided 

9 under the amendments made by this section to a jurisdic10 tion for subsidized employment do not support any sub11 sidized employment position the annual salary of which 

12 is greater than, at State option— 

13 (1) 200 percent of the poverty line (within the 

14 meaning of section 673(2) of the Omnibus Budget 

15 Reconciliation Act of 1981, including any revision 

16 required by such section 673(2)) for a family of 4; 

17 or 

18 (2) the median wage in the jurisdiction. 

19 TITLE III—FOREIGN PROVISIONS 

20 SEC. 301. RULES TO PREVENT SPLITTING FOREIGN TAX 

21 CREDITS FROM THE INCOME TO WHICH THEY 

22 RELATE. 

23 (a) IN GENERAL.—Subpart A of part III of sub24 chapter N of chapter 1 is amended by adding at the end 

25 the following new section: 


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1 ‘‘SEC. 909. SUSPENSION OF TAXES AND CREDITS UNTIL RE2 LATED INCOME TAKEN INTO ACCOUNT. 

3 ‘‘(a) IN GENERAL.—If there is a foreign tax credit 

4 splitting event with respect to a foreign income tax paid 

5 or accrued by the taxpayer, such tax shall not be taken 

6 into account for purposes of this title before the taxable 

7 year in which the related income is taken into account 

8 under this chapter by the taxpayer. 

9 ‘‘(b) SPECIAL RULES WITH RESPECT TO SECTION

10 902 CORPORATIONS.—If there is a foreign tax credit split11 ting event with respect to a foreign income tax paid or 

12 accrued by a section 902 corporation, such tax shall not 

13 be taken into account— 

14 ‘‘(1) for purposes of section 902 or 960, or 

15 ‘‘(2) for purposes of determining earnings and 

16 profits under section 964(a), 

17 before the taxable year in which the related income is 

18 taken into account under this chapter by such section 902 

19 corporation or a domestic corporation which meets the 

20 ownership requirements of subsection (a) or (b) of section 

21 902 with respect to such section 902 corporation. 

22 ‘‘(c) SPECIAL RULES.—For purposes of this sec23 tion— 

24 ‘‘(1) APPLICATION TO PARTNERSHIPS, ETC.—In 

25 the case of a partnership, subsections (a) and (b) 

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1 erwise provided by the Secretary, a rule similar to 

2 the rule of the preceding sentence shall apply in the 

3 case of any S corporation or trust. 

4 ‘‘(2) TREATMENT OF FOREIGN TAXES AFTER

5 SUSPENSION.—In the case of any foreign income tax 

6 not taken into account by reason of subsection (a) 

7 or (b), except as otherwise provided by the Sec8 retary, such tax shall be so taken into account in the 

9 taxable year referred to in such subsection (other 

10 than for purposes of section 986(a)) as a foreign in11 come tax paid or accrued in such taxable year. 

12 ‘‘(d) DEFINITIONS.—For purposes of this section— 

13 ‘‘(1) FOREIGN TAX CREDIT SPLITTING

14 EVENT.—There is a foreign tax credit splitting event 

15 with respect to a foreign income tax if the related 

16 income is (or will be) taken into account under this 

17 chapter by a covered person. 

18 ‘‘(2) FOREIGN INCOME TAX.—The term ‘foreign 

19 income tax’ means any income, war profits, or excess 

20 profits tax paid or accrued to any foreign country or 

21 to any possession of the United States. 

22 ‘‘(3) RELATED INCOME.—The term ‘related in23 come’ means, with respect to any portion of any for24 eign income tax, the income (or, as appropriate, 


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1 earnings and profits) to which such portion of for2 eign income tax relates. 

3 ‘‘(4) COVERED PERSON.—The term ‘covered 

4 person’ means, with respect to any person who pays 

5 or accrues a foreign income tax (hereafter in this 

6 paragraph referred to as the ‘payor’)— 

7 ‘‘(A) any entity in which the payor holds, 

8 directly or indirectly, at least a 10 percent own9 ership interest (determined by vote or value), 

10 ‘‘(B) any person which holds, directly or 

11 indirectly, at least a 10 percent ownership in12 terest (determined by vote or value) in the 

13 payor, 

14 ‘‘(C) any person which bears a relationship 

15 to the payor described in section 267(b) or 

16 707(b), and 

17 ‘‘(D) any other person specified by the 

18 Secretary for purposes of this paragraph. 

19 ‘‘(5) SECTION 902 CORPORATION.—The term 

20 ‘section 902 corporation’ means any foreign corpora21 tion with respect to which one or more domestic cor22 porations meets the ownership requirements of sub23 section (a) or (b) of section 902. 

24 ‘‘(e) REGULATIONS.—The Secretary may issue such 

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1 priate to carry out the purposes of this section, including 

2 regulations or other guidance which provides— 

3 ‘‘(1) appropriate exceptions from the provisions 

4 of this section, and 

5 ‘‘(2) for the proper application of this section 

6 with respect to hybrid instruments.’’. 

7 (b) CLERICAL AMENDMENT.—The table of sections 

8 for subpart A of part III of subchapter N of chapter 1 

9 is amended by adding at the end the following new item: 

‘‘Sec. 909. Suspension of taxes and credits until related income taken into account.’’. 

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

11 this section shall apply to— 

12 (1) foreign income taxes (as defined in section 

13 909(d) of the Internal Revenue Code of 1986, as 

14 added by this section) paid or accrued after Decem15 ber 31, 2010; and 

16 (2) foreign income taxes (as so defined) paid or 

17 accrued by a section 902 corporation (as so defined) 

18 on or before such date (and not deemed paid under 

19 section 902(a) or 960 of such Code on or before 

20 such date), but only for purposes of applying sec21 tions 902 and 960 with respect to periods after such 

22 date. 


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1 Section 909(b)(2) of the Internal Revenue Code of 1986, 

2 as added by this section, shall not apply to foreign income 

3 taxes described in paragraph (2). 

4 SEC. 302. DENIAL OF FOREIGN TAX CREDIT WITH RESPECT 

5 TO FOREIGN INCOME NOT SUBJECT TO 

6 UNITED STATES TAXATION BY REASON OF 

7 COVERED ASSET ACQUISITIONS. 

8 (a) IN GENERAL.—Section 901 is amended by redes9 ignating subsection (m) as subsection (n) and by inserting 

10 after subsection (l) the following new subsection: 

11 ‘‘(m) DENIAL OF FOREIGN TAX CREDIT WITH RE12 SPECT TO FOREIGN INCOME NOT SUBJECT TO UNITED

13 STATES TAXATION BY REASON OF COVERED ASSET AC14 QUISITIONS.— 

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

16 asset acquisition, the disqualified portion of any for17 eign income tax determined with respect to the in18 come or gain attributable to the relevant foreign as19 sets— 

20 ‘‘(A) shall not be taken into account in de21 termining the credit allowed under subsection 

22 (a), and 

23 ‘‘(B) in the case of a foreign income tax 

24 paid by a section 902 corporation (as defined in 


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1 section 909(d)(5)), shall not be taken into ac2 count for purposes of section 902 or 960. 

3 ‘‘(2) COVERED ASSET ACQUISITION.—For pur4 poses of this section, the term ‘covered asset acquisi5 tion’ means— 

6 ‘‘(A) a qualified stock purchase (as defined 

7 in section 338(d)(3)) to which section 338(a) 

8 applies, 

9 ‘‘(B) any transaction which— 

10 ‘‘(i) is treated as an acquisition of as11 sets for purposes of this chapter, and 

12 ‘‘(ii) is treated as the acquisition of 

13 stock of a corporation (or is disregarded) 

14 for purposes of the foreign income taxes of 

15 the relevant jurisdiction, 

16 ‘‘(C) any acquisition of an interest in a 

17 partnership which has an election in effect 

18 under section 754, and 

19 ‘‘(D) to the extent provided by the Sec20 retary, any other similar transaction. 

21 ‘‘(3) DISQUALIFIED PORTION.—For purposes of 

22 this section— 

23 ‘‘(A) IN GENERAL.—The term ‘disqualified 

24 portion’ means, with respect to any covered 


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1 asset acquisition, for any taxable year, the ratio 

2 (expressed as a percentage) of— 

3 ‘‘(i) the aggregate basis differences 

4 (but not below zero) allocable to such tax5 able year under subparagraph (B) with re6 spect to all relevant foreign assets, divided 

7 by 

8 ‘‘(ii) the income on which the foreign 

9 income tax referred to in paragraph (1) is 

10 determined (or, if the taxpayer fails to sub11 stantiate such income to the satisfaction of 

12 the Secretary, such income shall be deter13 mined by dividing the amount of such for14 eign income tax by the highest marginal 

15 tax rate applicable to such income in the 

16 relevant jurisdiction). 

17 ‘‘(B) ALLOCATION OF BASIS DIF18 FERENCE.—For purposes of subparagraph 

19 (A)(i)— 

20 ‘‘(i) IN GENERAL.—The basis dif21 ference with respect to any relevant foreign 

22 asset shall be allocated to taxable years 

23 using the applicable cost recovery method 

24 under this chapter. 


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1 ‘‘(ii) SPECIAL RULE FOR DISPOSITION

2 OF ASSETS.—Except as otherwise provided 

3 by the Secretary, in the case of the disposi4 tion of any relevant foreign asset— 

5 ‘‘(I) the basis difference allocated 

6 to the taxable year which includes the 

7 date of such disposition shall be the 

8 excess of the basis difference with re9 spect to such asset over the aggregate 

10 basis difference with respect to such 

11 asset which has been allocated under 

12 clause (i) to all prior taxable years, 

13 and 

14 ‘‘(II) no basis difference with re15 spect to such asset shall be allocated 

16 under clause (i) to any taxable year 

17 thereafter. 

18 ‘‘(C) BASIS DIFFERENCE.— 

19 ‘‘(i) IN GENERAL.—The term ‘basis 

20 difference’ means, with respect to any rel21 evant foreign asset, the excess of— 

22 ‘‘(I) the adjusted basis of such 

23 asset immediately after the covered 

24 asset acquisition, over 


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1 ‘‘(II) the adjusted basis of such 

2 asset immediately before the covered 

3 asset acquisition. 

4 ‘‘(ii) BUILT-IN LOSS ASSETS.—In the 

5 case of a relevant foreign asset with re6 spect to which the amount described in 

7 clause (i)(II) exceeds the amount described 

8 in clause (i)(I), such excess shall be taken 

9 into account under this subsection as a 

10 basis difference of a negative amount. 

11 ‘‘(iii) SPECIAL RULE FOR SECTION 338

12 ELECTIONS.—In the case of a covered 

13 asset acquisition described in paragraph 

14 (2)(A), the covered asset acquisition shall 

15 be treated for purposes of this subpara16 graph as occurring at the close of the ac17 quisition date (as defined in section 

18 338(h)(2)). 

19 ‘‘(4) RELEVANT FOREIGN ASSETS.—For pur20 poses of this section, the term ‘relevant foreign 

21 asset’ means, with respect to any covered asset ac22 quisition, any asset (including any goodwill, going 

23 concern value, or other intangible) with respect to 

24 such acquisition if income, deduction, gain, or loss 

25 attributable to such asset is taken into account in 


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1 determining the foreign income tax referred to in 

2 paragraph (1). 

3 ‘‘(5) FOREIGN INCOME TAX.—For purposes of 

4 this section, the term ‘foreign income tax’ means 

5 any income, war profits, or excess profits tax paid 

6 or accrued to any foreign country or to any posses7 sion of the United States. 

8 ‘‘(6) TAXES ALLOWED AS A DEDUCTION, ETC.— 

9 Sections 275 and 78 shall not apply to any tax 

10 which is not allowable as a credit under subsection 

11 (a) by reason of this subsection. 

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

13 such regulations or other guidance as is necessary or 

14 appropriate to carry out the purposes of this sub15 section, including to exempt from the application of 

16 this subsection certain covered asset acquisitions, 

17 and relevant foreign assets with respect to which the 

18 basis difference is de minimis.’’. 

19 (b) EFFECTIVE DATE.— 

20 (1) IN GENERAL.—Except as provided in para21 graph (2), the amendments made by this section 

22 shall apply to covered asset acquisitions (as defined 

23 in section 901(m)(2) of the Internal Revenue Code 

24 of 1986, as added by this section) after December 

25 31, 2010. 


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1 (2) TRANSITION RULE.—The amendments 

2 made by this section shall not apply to any covered 

3 asset acquisition (as so defined) with respect to 

4 which the transferor and the transferee are not re5 lated if such acquisition is— 

6 (A) made pursuant to a written agreement 

7 which was binding on May 20, 2010, and at all 

8 times thereafter, 

9 (B) described in a ruling request submitted 

10 to the Internal Revenue Service on or before 

11 such date; or 

12 (C) described on or before such date in a 

13 public announcement or in a filing with the Se14 curities and Exchange Commission. 

15 (3) RELATED PERSONS.—For purposes of this 

16 subsection, a person shall be treated as related to 

17 another person if the relationship between such per18 sons is described in section 267 or 707(b) of the In19 ternal Revenue Code of 1986. 

20 SEC. 303. SEPARATE APPLICATION OF FOREIGN TAX CRED21 IT LIMITATION, ETC., TO ITEMS RESOURCED 

22 UNDER TREATIES. 

23 (a) IN GENERAL.—Subsection (d) of section 904 is 

24 amended by redesignating paragraph (6) as paragraph (7) 


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1 and by inserting after paragraph (5) the following new 

2 paragraph: 

3 ‘‘(6) SEPARATE APPLICATION TO ITEMS

4 RESOURCED UNDER TREATIES.— 

5 ‘‘(A) IN GENERAL.—If— 

6 ‘‘(i) without regard to any treaty obli7 gation of the United States, any item of 

8 income would be treated as derived from 

9 sources within the United States, 

10 ‘‘(ii) under a treaty obligation of the 

11 United States, such item would be treated 

12 as arising from sources outside the United 

13 States, and 

14 ‘‘(iii) the taxpayer chooses the bene15 fits of such treaty obligation, 

16 subsections (a), (b), and (c) of this section and 

17 sections 902, 907, and 960 shall be applied sep18 arately with respect to each such item. 

19 ‘‘(B) COORDINATION WITH OTHER PROVI20 SIONS.—This paragraph shall not apply to any 

21 item of income to which subsection (h)(10) or 

22 section 865(h) applies. 

23 ‘‘(C) REGULATIONS.—The Secretary may 

24 issue such regulations or other guidance as is 

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1 poses of this paragraph, including regulations 

2 or other guidance which provides that related 

3 items of income may be aggregated for pur4 poses of this paragraph.’’. 

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

6 this section shall apply to taxable years beginning after 

7 the date of the enactment of this Act. 

8 SEC. 304. LIMITATION ON THE AMOUNT OF FOREIGN TAXES 

9 DEEMED PAID WITH RESPECT TO SECTION 

10 956 INCLUSIONS. 

11 (a) IN GENERAL.—Section 960 is amended by adding 

12 at the end the following new subsection: 

13 ‘‘(c) LIMITATION WITH RESPECT TO SECTION 956 

14 INCLUSIONS.— 

15 ‘‘(1) IN GENERAL.—If there is included under 

16 section 951(a)(1)(B) in the gross income of a do17 mestic corporation any amount attributable to the 

18 earnings and profits of a foreign corporation which 

19 is a member of a qualified group (as defined in sec20 tion 902(b)) with respect to the domestic corpora21 tion, the amount of any foreign income taxes deemed 

22 to have been paid during the taxable year by such 

23 domestic corporation under section 902 by reason of 

24 subsection (a) with respect to such inclusion in gross 

25 income shall not exceed the amount of the foreign 


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1 income taxes which would have been deemed to have 

2 been paid during the taxable year by such domestic 

3 corporation if cash in an amount equal to the 

4 amount of such inclusion in gross income were dis5 tributed as a series of distributions (determined 

6 without regard to any foreign taxes which would be 

7 imposed on an actual distribution) through the chain 

8 of ownership which begins with such foreign cor9 poration and ends with such domestic corporation. 

10 ‘‘(2) AUTHORITY TO PREVENT ABUSE.—The 

11 Secretary shall issue such regulations or other guid12 ance as is necessary or appropriate to carry out the 

13 purposes of this subsection, including regulations or 

14 other guidance which prevent the inappropriate use 

15 of the foreign corporation’s foreign income taxes not 

16 deemed paid by reason of paragraph (1).’’. 

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

18 this section shall apply to acquisitions of United States 

19 property (as defined in section 956(c) of the Internal Rev20 enue Code of 1986) after December 31, 2010. 

21 SEC. 305. SPECIAL RULE WITH RESPECT TO CERTAIN RE22 DEMPTIONS BY FOREIGN SUBSIDIARIES. 

23 (a) IN GENERAL.—Paragraph (5) of section 304(b) 

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1 paragraph (C) and by inserting after subparagraph (A) 

2 the following new subparagraph: 

3 ‘‘(B) SPECIAL RULE IN CASE OF FOREIGN

4 ACQUIRING CORPORATION.—In the case of any 

5 acquisition to which subsection (a) applies in 

6 which the acquiring corporation is a foreign 

7 corporation, no earnings and profits shall be 

8 taken into account under paragraph (2)(A) 

9 (and subparagraph (A) shall not apply) if more 

10 than 50 percent of the dividends arising from 

11 such acquisition (determined without regard to 

12 this subparagraph) would neither— 

13 ‘‘(i) be subject to tax under this chap14 ter for the taxable year in which the divi15 dends arise, nor 

16 ‘‘(ii) be includible in the earnings and 

17 profits of a controlled foreign corporation 

18 (as defined in section 957 and without re19 gard to section 953(c)).’’. 

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

21 this section shall apply to acquisitions after December 31, 

22 2010. 


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1 SEC. 306. MODIFICATION OF AFFILIATION RULES FOR PUR2 POSES OF RULES ALLOCATING INTEREST EX3 PENSE. 

4 (a) IN GENERAL.—Subparagraph (A) of section 

5 864(e)(5) is amended by adding at the end the following: 

6 ‘‘Notwithstanding the preceding sentence, a foreign cor7 poration shall be treated as a member of the affiliated 

8 group if— 

9 ‘‘(i) more than 50 percent of the gross 

10 income of such foreign corporation for the 

11 taxable year is effectively connected with 

12 the conduct of a trade or business within 

13 the United States, and 

14 ‘‘(ii) at least 80 percent of either the 

15 vote or value of all outstanding stock of 

16 such foreign corporation is owned directly 

17 or indirectly by members of the affiliated 

18 group (determined with regard to this sen19 tence).’’. 

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

21 this section shall apply to taxable years beginning after 

22 the date of the enactment of this Act. 


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1 SEC. 307. TERMINATION OF SPECIAL RULES FOR INTEREST 

2 AND DIVIDENDS RECEIVED FROM PERSONS 

3 MEETING THE 80-PERCENT FOREIGN BUSI4 NESS REQUIREMENTS. 

5 (a) IN GENERAL.—Paragraph (1) of section 861(a) 

6 is amended by striking subparagraph (A) and by redesig7 nating subparagraphs (B) and (C) as subparagraphs (A) 

8 and (B), respectively. 

9 (b) GRANDFATHER RULE WITH RESPECT TO WITH10 HOLDING ON INTEREST AND DIVIDENDS RECEIVED FROM

11 PERSONS MEETING THE 80-PERCENT FOREIGN BUSI12 NESS REQUIREMENTS.— 

13 (1) IN GENERAL.—Subparagraph (B) of section 

14 871(i)(2) is amended to read as follows: 

15 ‘‘(B) The active foreign business percent16 age of— 

17 ‘‘(i) any dividend paid by an existing 

18 80/20 company, and 

19 ‘‘(ii) any interest paid by an existing 

20 80/20 company.’’. 

21 (2) DEFINITIONS AND SPECIAL RULES.—Sec22 tion 871 is amended by redesignating subsections (l) 

23 and (m) as subsections (m) and (n), respectively, 

24 and by inserting after subsection (k) the following 

25 new subsection: 


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1 ‘‘(l) RULES RELATING TO EXISTING 80/20 COMPA2 NIES.—For purposes of this subsection and subsection 

3 (i)(2)(B)— 

4 ‘‘(1) EXISTING 80/20 COMPANY.— 

5 ‘‘(A) IN GENERAL.—The term ‘existing 80/ 

6 20 company’ means any corporation if— 

7 ‘‘(i) such corporation met the 80-per8 cent foreign business requirements of sec9 tion 861(c)(1) (as in effect before the date 

10 of the enactment of this subsection) for 

11 such corporation’s last taxable year begin12 ning before January 1, 2011, 

13 ‘‘(ii) such corporation meets the 80- 

14 percent foreign business requirements of 

15 subparagraph (B) with respect to each tax16 able year after the taxable year referred to 

17 in clause (i), and 

18 ‘‘(iii) there has not been an addition 

19 of a substantial line of business with re20 spect to such corporation after the date of 

21 the enactment of this subsection. 

22 ‘‘(B) FOREIGN BUSINESS REQUIRE23 MENTS.— 

24 ‘‘(i) IN GENERAL.—Except as pro25 vided in clause (iv), a corporation meets 


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1 the 80-percent foreign business require2 ments of this subparagraph if it is shown 

3 to the satisfaction of the Secretary that at 

4 least 80 percent of the gross income from 

5 all sources of such corporation for the test6 ing period is active foreign business in7 come. 

8 ‘‘(ii) ACTIVE FOREIGN BUSINESS IN9 COME.—For purposes of clause (i), the 

10 term ‘active foreign business income’ 

11 means gross income which— 

12 ‘‘(I) is derived from sources out13 side the United States (as determined 

14 under this subchapter), and 

15 ‘‘(II) is attributable to the active 

16 conduct of a trade or business in a 

17 foreign country or possession of the 

18 United States. 

19 ‘‘(iii) TESTING PERIOD.—For pur20 poses of this subsection, the term ‘testing 

21 period’ means the 3-year period ending 

22 with the close of the taxable year of the 

23 corporation preceding the payment (or 

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1 come for such 3-year period (or part there2 of), the testing period shall be the taxable 

3 year in which the payment is made. 

4 ‘‘(iv) TRANSITION RULE.—In the case 

5 of a taxable year for which the testing pe6 riod includes 1 or more taxable years be7 ginning before January 1, 2011— 

8 ‘‘(I) a corporation meets the 80- 

9 percent foreign business requirements 

10 of this subparagraph if and only if the 

11 weighted average of— 

12 ‘‘(aa) the percentage of the 

13 corporation’s gross income from 

14 all sources that is active foreign 

15 business income (as defined in 

16 subparagraph (B) of section 

17 861(c)(1) (as in effect before the 

18 date of the enactment of this 

19 subsection)) for the portion of 

20 the testing period that includes 

21 taxable years beginning before 

22 January 1, 2011, and 

23 ‘‘(bb) the percentage of the 

24 corporation’s gross income from 

25 all sources that is active foreign 


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1 business income (as defined in 

2 clause (ii) of this subparagraph) 

3 for the portion of the testing pe4 riod, if any, that includes taxable 

5 years beginning on or after Janu6 ary 1, 2011, 

7 is at least 80 percent, and 

8 ‘‘(II) the active foreign business 

9 percentage for such taxable year shall 

10 equal the weighted average percentage 

11 determined under subclause (I). 

12 ‘‘(2) ACTIVE FOREIGN BUSINESS PERCENT13 AGE.—Except as provided in paragraph (1)(B)(iv), 

14 the term ‘active foreign business percentage’ means, 

15 with respect to any existing 80/20 company, the per16 centage which— 

17 ‘‘(A) the active foreign business income of 

18 such company for the testing period, is of 

19 ‘‘(B) the gross income of such company for 

20 the testing period from all sources. 

21 ‘‘(3) AGGREGATION RULES.—For purposes of 

22 applying paragraph (1) (other than subparagraphs 

23 (A)(i) and (B)(iv) thereof) and paragraph (2)— 

24 ‘‘(A) IN GENERAL.—The corporation re25 ferred to in paragraph (1)(A) and all of such 


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1 corporation’s subsidiaries shall be treated as 

2 one corporation. 

3 ‘‘(B) SUBSIDIARIES.—For purposes of sub4 paragraph (A), the term ‘subsidiary’ means any 

5 corporation in which the corporation referred to 

6 in subparagraph (A) owns (directly or indi7 rectly) stock meeting the requirements of sec8 tion 1504(a)(2) (determined by substituting ‘50 

9 percent’ for ‘80 percent’ each place it appears 

10 and without regard to section 1504(b)(3)). 

11 ‘‘(4) REGULATIONS.—The Secretary may issue 

12 such regulations or other guidance as is necessary or 

13 appropriate to carry out the purposes of this section, 

14 including regulations or other guidance which pro15 vide for the proper application of the aggregation 

16 rules described in paragraph (3).’’. 

17 (c) CONFORMING AMENDMENTS.— 

18 (1) Section 861 is amended by striking sub19 section (c) and by redesignating subsections (d), (e), 

20 and (f) as subsections (c), (d), and (e), respectively. 

21 (2) Paragraph (9) of section 904(h) is amended 

22 to read as follows: 

23 ‘‘(9) TREATMENT OF CERTAIN DOMESTIC COR24 PORATIONS.—In the case of any dividend treated as 

25 not from sources within the United States under 


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1 section 861(a)(2)(A), the corporation paying such 

2 dividend shall be treated for purposes of this sub3 section as a United States-owned foreign corpora4 tion.’’. 

5 (3) Subsection (c) of section 2104 is amended 

6 in the last sentence by striking ‘‘or to a debt obliga7 tion of a domestic corporation’’ and all that follows 

8 and inserting a period. 

9 (d) EFFECTIVE DATE.— 

10 (1) IN GENERAL.—Except as provided in para11 graph (2), the amendments made by this section 

12 shall apply to taxable years beginning after Decem13 ber 31, 2010. 

14 (2) GRANDFATHER RULE FOR OUTSTANDING

15 DEBT OBLIGATIONS.— 

16 (A) IN GENERAL.—The amendments made 

17 by this section shall not apply to payments of 

18 interest on obligations issued before the date of 

19 the enactment of this Act. 

20 (B) EXCEPTION FOR RELATED PARTY

21 DEBT.—Subparagraph (A) shall not apply to 

22 any interest which is payable to a related per23 son (determined under rules similar to the rules 

24 of section 954(d)(3)). 


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1 (C) SIGNIFICANT MODIFICATIONS TREAT2 ED AS NEW ISSUES.—For purposes of subpara3 graph (A), a significant modification of the 

4 terms of any obligation (including any extension 

5 of the term of such obligation) shall be treated 

6 as a new issue. 

7 SEC. 308. SOURCE RULES FOR INCOME ON GUARANTEES. 

8 (a) AMOUNTS SOURCED WITHIN THE UNITED

9 STATES.—Subsection (a) of section 861 is amended by 

10 adding at the end the following new paragraph: 

11 ‘‘(9) GUARANTEES.—Amounts received, directly 

12 or indirectly, from— 

13 ‘‘(A) a noncorporate resident or domestic 

14 corporation for the provision of a guarantee of 

15 any indebtedness of such resident or corpora16 tion, or 

17 ‘‘(B) any foreign person for the provision 

18 of a guarantee of any indebtedness of such per19 son, if such amount is connected with income 

20 which is effectively connected (or treated as ef21 fectively connected) with the conduct of a trade 

22 or business in the United States.’’. 

23 (b) AMOUNTS SOURCED WITHOUT THE UNITED

24 STATES.—Subsection (a) of section 862 is amended by 

25 striking ‘‘and’’ at the end of paragraph (7), by striking 


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1 the period at the end of paragraph (8) and inserting ‘‘; 

2 and’’, and by adding at the end the following new para3 graph: 

4 ‘‘(9) amounts received, directly or indirectly, 

5 from a foreign person for the provision of a guar6 antee of indebtedness of such person other than 

7 amounts which are derived from sources within the 

8 United States as provided in section 861(a)(9).’’. 

9 (c) CONFORMING AMENDMENT.—Clause (ii) of sec10 tion 864(c)(4)(B) is amended by striking ‘‘dividends or in11 terest’’ and inserting ‘‘dividends, interest, or amounts re12 ceived for the provision of guarantees of indebtedness’’. 

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

14 this section shall apply to guarantees issued after the date 

15 of the enactment of this Act. 

16 SEC. 309. LIMITATION ON EXTENSION OF STATUTE OF LIMI17 TATIONS FOR FAILURE TO NOTIFY SEC18 RETARY OF CERTAIN FOREIGN TRANSFERS. 

19 (a) IN GENERAL.—Paragraph (8) of section 6501(c) 

20 is amended— 

21 (1) by striking ‘‘In the case of any information’’ 

22 and inserting the following: 

23 ‘‘(A) IN GENERAL.—In the case of any in24 formation’’; and 

25 (2) by adding at the end the following: 


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1 ‘‘(B) APPLICATION TO FAILURES DUE TO

2 REASONABLE CAUSE.—If the failure to furnish 

3 the information referred to in subparagraph (A) 

4 is due to reasonable cause and not willful ne5 glect, subparagraph (A) shall apply only to the 

6 item or items related to such failure.’’. 

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

8 this section shall take effect as if included in section 513 

9 of the Hiring Incentives to Restore Employment Act. 

10 TITLE IV—BUDGETARY 

11 PROVISIONS 

12 SEC. 401. PAYGO COMPLIANCE. 

13 The budgetary effects of this Act, for the purpose of 

14 complying with the Statutory Pay-As-You-Go-Act of 2010, 

15 shall be determined by reference to the latest statement 

16 titled ‘‘Budgetary Effects of PAYGO Legislation’’ for this 

17 Act, submitted for printing in the Congressional Record 

18 by the Chairman of the House Budget Committee, pro19 vided that such statement has been submitted prior to the 

20 vote on passage. 

21 SEC. 402. TIME FOR PAYMENT OF CORPORATE ESTIMATED 

22 TAXES. 

23 The percentage under paragraph (2) of section 561 

24 of the Hiring Incentives to Restore Employment Act in 


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1 effect on the date of the enactment of this Act is increased 

2 by 3 percentage points. 

Æ 


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