I 

113TH CONGRESS 

2D SESSION H. R. 5443 

To amend the Internal Revenue Code of 1986 to end tax deferrals on 

profits accumulated offshore and to terminate the deferral of active 

income of controlled foreign corporations. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 10, 2014 

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

on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to end tax 

deferrals on profits accumulated offshore and to terminate the deferral of active income of controlled foreign 

corporations. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Putting America First 

5 Corporate Tax Act’’. 


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1 SEC. 2. INCLUSION IN SUBPART F INCOME OF INVEST2 MENTS BY CONTROLLED FOREIGN CORPORA3 TIONS WITH RESPECT TO MEMBERS OF FOR4 EIGN GROUP WHICH INCLUDES UNITED 

5 STATES SHAREHOLDER. 

6 (a) IN GENERAL.—Section 956(a)(1)(A) of the Inter7 nal Revenue Code of 1986 is amended to read as follows: 

8 ‘‘(A) such shareholder’s pro rata share of 

9 the average of— 

10 ‘‘(i) the amounts of United States 

11 property, and 

12 ‘‘(ii) in the case of a controlled foreign 

13 corporation which is a member of an ex14 panded affiliated group the common parent 

15 of which is not a United States person, the 

16 amount of foreign group property, 

17 held (directly or indirectly) by the controlled 

18 foreign corporation as of the close of each quar19 ter of such taxable year, over’’. 

20 (b) FOREIGN GROUP PROPERTY.—Section 956 of 

21 such Code is amended by redesignating subsections (d) 

22 and (e) as subsections (e) and (f), respectively, and by in23 serting after subsection (c) the following new subsection: 

24 ‘‘(d) FOREIGN GROUP PROPERTY; EXPANDED AF25 FILIATED GROUP.—For purposes of this section— 

26 ‘‘(1) FOREIGN GROUP PROPERTY.— 


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1 ‘‘(A) IN GENERAL.—The term ‘foreign 

2 group property’ means any stock or obligation 

3 of any foreign person which is not a controlled 

4 foreign corporation. 

5 ‘‘(B) EXCEPTIONS.—Such term shall not 

6 include— 

7 ‘‘(i) the stock or obligation of any en8 tity if less than 25 percent of the total 

9 combined voting power of such entity, im10 mediately after the acquisition of any stock 

11 in such entity by the controlled foreign cor12 poration, is owned (directly or indirectly) 

13 by the common parent referred to in sub14 section (a)(1)(A)(ii), and 

15 ‘‘(ii) property described in subpara16 graph (C), (I), (J), or (K) of subsection 

17 (c)(2), applied by substituting ‘foreign per18 son’ for ‘United States person’ in such 

19 subparagraphs (C) and (J). 

20 ‘‘(2) EXPANDED AFFILIATED GROUP.—The 

21 term ‘expanded affiliated group’ means an affiliated 

22 group as defined in section 1504(a), determined— 

23 ‘‘(A) by substituting ‘more than 50 per24 cent’ for ‘at least 80 percent’ each place it ap25 pears, and 


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1 ‘‘(B) without regard to paragraphs (2) and 

2 (3) of section 1504(b). 

3 A partnership or any other entity (other than a cor4 poration) shall be treated as a member of an ex5 panded affiliated group if such entity controls (as 

6 determined under section 954(d)(3)), or is controlled 

7 by (as so determined), members of such group (in8 cluding any entity treated as a member of such 

9 group by reason of this sentence). 

10 ‘‘(3) APPLICATION TO NON-CORPORATE ENTI11 TIES.—In the case of any entity which is not a cor12 poration— 

13 ‘‘(A) any reference in this subsection to 

14 stock shall be treated as a reference to any eq15 uity or profits interest in such entity, and 

16 ‘‘(B) except as otherwise provided by the 

17 Secretary, paragraph (1)(B)(i) shall be applied 

18 by substituting ‘25 percent (by value) of the 

19 beneficial interests in such entity’ for ‘25 per20 cent of the total combined voting power of such 

21 entity’.’’. 

22 (c) APPLICATION OF RULES FOR PLEDGES AND

23 GUARANTEES.—Section 956(e) of such Code, as so redes24 ignated, is amended to read as follows: 


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1 ‘‘(e) PLEDGES AND GUARANTEES.—For purposes of 

2 subsection (a), a controlled foreign corporation shall, 

3 under regulations prescribed by the Secretary, be consid4 ered as holding— 

5 ‘‘(1) an obligation of a United States person if 

6 such controlled foreign corporation is a pledgor or 

7 guarantor of such obligation, and 

8 ‘‘(2) an obligation of a foreign person if such 

9 controlled foreign corporation or, to the extent pro10 vided under such regulations, any United States 

11 shareholder of such controlled foreign corporation, is 

12 a pledgor or guarantor of such obligation.’’. 

13 (d) APPLICATION OF LIMITATION ON AMOUNT OF

14 FOREIGN TAXES DEEMED PAID WITH RESPECT TO SEC15 TION 956 INCLUSIONS.—Notwithstanding section 214(b) 

16 of Public Law 111–226, section 960(c) of the Internal 

17 Revenue Code of 1986 shall apply to acquisitions of for18 eign group property (as defined in 956(d) of such Code, 

19 as amended by this section) after December 31, 2010, in 

20 addition to acquisitions of United States property (as de21 fined in section 956(c) of such Code) after such date. 

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

23 this section shall apply to taxable years of controlled for24 eign corporations ending after the date of the enactment 

25 of this Act and to taxable years of United States shareVerDate Mar 15 2010 00:19 Sep 12, 2014 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H5443.IH H5443

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1 holders in which or with which such taxable years of con2 trolled foreign corporations end. 

3 SEC. 3. TERMINATION OF DEFERRAL OF ACTIVE INCOME 

4 OF CONTROLLED FOREIGN CORPORATIONS. 

5 (a) IN GENERAL.—Section 952 of the Internal Rev6 enue Code of 1986 is amended by adding at the end the 

7 following new subsection: 

8 ‘‘(d) SPECIAL APPLICATION OF SUBPART.— 

9 ‘‘(1) IN GENERAL.—For taxable years begin10 ning after December 31, 2014, notwithstanding any 

11 other provision of this subpart, the term ‘subpart F 

12 income’ means, in the case of any controlled foreign 

13 corporation, the income of such corporation derived 

14 from any foreign country. 

15 ‘‘(2) APPLICABLE RULES.—Rules similar to the 

16 rules under the last sentence of subsection (a) and 

17 subsection (d) shall apply to this subsection.’’. 

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

19 subsection (a) shall apply to taxable years beginning after 

20 December 31, 2014. 

Æ 


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