I 

118TH CONGRESS 

1ST SESSION H. R. 5751 

To amend the Internal Revenue Code of 1986 to restore the limitation 

on downward attribution of stock ownership in applying constructive 

ownership rules. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 27, 2023 

Mr. FERGUSON (for himself, Ms. MOORE of Wisconsin, Mr. ESTES, Mr. 

SCHNEIDER, Mrs. STEEL, and Mr. PANETTA) 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 restore 

the limitation on downward attribution of stock ownership in applying constructive ownership rules. 

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

3 SECTION 1. RESTORATION OF LIMITATION ON DOWNWARD 

4 ATTRIBUTION OF STOCK OWNERSHIP IN AP5 PLYING CONSTRUCTIVE OWNERSHIP RULES. 

6 (a) IN GENERAL.—Section 958(b) of the Internal 

7 Revenue Code of 1986 is amended— 

8 (1) by inserting after paragraph (3) the fol9 lowing: 


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1 ‘‘(4) Subparagraphs (A), (B), and (C) of sec2 tion 318(a)(3) shall not be applied so as to consider 

3 a United States person as owning stock which is 

4 owned by a person who is not a United States per5 son.’’, and 

6 (2) by striking ‘‘Paragraph (1)’’ in the last sen7 tence and inserting ‘‘Paragraphs (1) and (4)’’. 

8 (b) FOREIGN CONTROLLED UNITED STATES SHARE9 HOLDERS.—Subpart F of part III of subchapter N of 

10 chapter 1 of such Code is amended by inserting after sec11 tion 951A the following new section: 

12 ‘‘SEC. 951B. AMOUNTS INCLUDED IN GROSS INCOME OF 

13 FOREIGN CONTROLLED UNITED STATES 

14 SHAREHOLDERS. 

15 ‘‘(a) IN GENERAL.—In the case of any foreign con16 trolled United States shareholder of a foreign controlled 

17 foreign corporation— 

18 ‘‘(1) this subpart (other than sections 951A, 

19 951(b), and 957) shall be applied with respect to 

20 such shareholder (separately from, and in addition 

21 to, the application of this subpart without regard to 

22 this section)— 

23 ‘‘(A) by substituting ‘foreign controlled 

24 United States shareholder’ for ‘United States 

25 shareholder’ each place it appears therein, and 


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1 ‘‘(B) by substituting ‘foreign controlled 

2 foreign corporation’ for ‘controlled foreign cor3 poration’ each place it appears therein, and 

4 ‘‘(2) section 951A shall be applied with respect 

5 to such shareholder— 

6 ‘‘(A) by treating each reference to ‘United 

7 States shareholder’ in such section as including 

8 a reference to such shareholder, and 

9 ‘‘(B) by treating each reference to ‘con10 trolled foreign corporation’ in such section as 

11 including a reference to such foreign controlled 

12 foreign corporation. 

13 ‘‘(b) FOREIGN CONTROLLED UNITED STATES

14 SHAREHOLDER.—For purposes of this section, the term 

15 ‘foreign controlled United States shareholder’ means, with 

16 respect to any foreign corporation, any United States per17 son which would be a United States shareholder with re18 spect to such foreign corporation if— 

19 ‘‘(1) section 951(b) were applied by substituting 

20 ‘more than 50 percent’ for ‘10 percent or more’, and 

21 ‘‘(2) section 958(b) were applied without regard 

22 to paragraph (4) thereof. 

23 ‘‘(c) FOREIGN CONTROLLED FOREIGN CORPORA24 TION.—For purposes of this section, the term ‘foreign con25 trolled foreign corporation’ means a foreign corporation, 


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1 other than a controlled foreign corporation, which would 

2 be a controlled foreign corporation if section 957(a) were 

3 applied— 

4 ‘‘(1) by substituting ‘foreign controlled United 

5 States shareholders’ for ‘United States share6 holders’, and 

7 ‘‘(2) by substituting ‘section 958(b) (other than 

8 paragraph (4) thereof)’ for ‘section 958(b)’. 

9 ‘‘(d) REGULATIONS.—The Secretary shall prescribe 

10 such regulations or other guidance as may be necessary 

11 or appropriate to carry out the purposes of this section, 

12 including regulations or other guidance— 

13 ‘‘(1) to treat a foreign controlled United States 

14 shareholder or a foreign controlled foreign corpora15 tion as a United States shareholder or as a con16 trolled foreign corporation, respectively, for purposes 

17 of provisions of this title other than this subpart, 

18 and 

19 ‘‘(2) to prevent the avoidance of the purposes of 

20 this section.’’. 

21 (c) CLERICAL AMENDMENT.—The table of sections 

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

23 is amended by inserting after the item relating to section 

24 951A the following new item: 

‘‘Sec. 951B. Amounts included in gross income of foreign controlled United 

States shareholders.’’. 


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

2 this section shall apply to— 

3 (1) the last taxable year of foreign corporations 

4 beginning before January 1, 2023, and each subse5 quent taxable year of such foreign corporations, and 

6 (2) taxable years of United States persons in 

7 which or with which such taxable years of foreign 

8 corporations end. 

9 (e) NO INFERENCE.—The amendments made by this 

10 section shall not be construed to create any inference with 

11 respect to the proper application of any provision of the 

12 Internal Revenue Code of 1986 with respect to taxable 

13 years beginning before the taxable years to which such 

14 amendments apply. 

Æ 


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