I

107TH CONGRESS

1ST SESSION H. R. 1492

To amend the Internal Revenue Code of 1986 to enhance the competitiveness

of the United States leasing industry.

IN THE HOUSE OF REPRESENTATIVES

APRIL 4, 2001

Mr. MATSUI 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 enhance

the competitiveness of the United States leasing industry.

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

3 SECTION 1. TREATMENT OF EXPORT LEASES.

4 (a) PROPERTY LEASED TO FOREIGN PERSONS.—

5 Section 168(g)(1) of the Internal Revenue Code of 1986

6 is amended by redesignating subparagraphs (B), (C), (D),

7 and (E) as subparagraphs (C), (D), (E), and (F), respec8 tively, and by inserting after subparagraph (A) the fol9 lowing new subparagraph:
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1 ‘‘(B) any tangible property leased to a for2 eign person or entity,’’.

3 (b) FOREIGN PERSON OR ENTITY.—Section 168(g)

4 of such Code is amended by redesignating paragraphs (5),

5 (6), and (7) as paragraphs (6), (7), and (8), respectively,

6 and by inserting after paragraph (4) the following new

7 paragraph:

8 ‘‘(5) TANGIBLE PROPERTY LEASED TO A FOR9 EIGN PERSON OR ENTITY.—

10 ‘‘(A) TANGIBLE PROPERTY.—For purposes

11 of paragraph (1)(B), the term ‘tangible prop12 erty’ means any tangible property other than—

13 ‘‘(i) nonresidential real property as

14 defined under subsection (h)(1)(E) to the

15 extent it is not subject to a disqualified

16 lease determined under rules similar to the

17 rules of subsection (h)(1)(B),

18 ‘‘(ii) property used by a foreign per19 son or entity if more than 50 percent of

20 the gross income for the taxable year de21 rived by the foreign person or entity from

22 the use of such property is—

23 ‘‘(I) subject to tax under this

24 chapter, or
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1 ‘‘(II) included under section 951

2 in the gross income of a United States

3 shareholder for the taxable year with

4 or within which ends the taxable year

5 of the controlled foreign corporation

6 in which such income was derived,

7 and

8 ‘‘(iii) property determined under rules

9 similar to the rules of subsection (h)(3).

10 For purposes of clause (ii), any exclusion or ex11 emption shall not apply for purposes of deter12 mining the amount of the gross income so de13 rived, but shall apply for purposes of deter14 mining the portion of such gross income subject

15 to tax under this chapter.

16 ‘‘(B) FOREIGN PERSON OR ENTITY.—For

17 purposes of this paragraph and paragraph

18 (1)(B)—

19 ‘‘(i) IN GENERAL.—The term ‘foreign

20 person or entity’ means—

21 ‘‘(I) any foreign government, any

22 international organization, or any

23 agency or instrumentality of any of

24 the foregoing, and
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1 ‘‘(II) any person who is not a

2 United States person.

3 Such term does not include any foreign

4 partnership or other foreign pass-thru enti5 ty.

6 ‘‘(ii) OTHER PASS-THRU ENTITIES;

7 TIERED ENTITIES.—In the case of prop8 erty leased to or owned by a partnership or

9 other pass-thru entity and in the case of

10 tiered partnerships and other entities, rules

11 similar to the rules of paragraphs (5) and

12 (6) of subsection (h) shall apply. For pur13 poses of the preceding sentence, unless it is

14 otherwise established to the satisfaction of

15 the Secretary, it shall be presumed that

16 the partners of a foreign partnership (and

17 the beneficiaries of any other foreign pass18 thru entity) are persons who are not

19 United States persons.’’

20 (c) TAX-EXEMPT ENTITY.—Section 168(h)(2)(A) of

21 such Code is amended by adding ‘‘and’’ at the end of

22 clause (i), by striking ‘‘, and’’ at the end of clause (ii)

23 and inserting a period, and by striking clause (iii).

24 (d) CONFORMING AMENDMENTS.—
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1 (1) Section 168(g)(6)(A) of such Code is

2 amended by striking ‘‘paragraph (1)(D)’’ and insert3 ing ‘‘paragraph (1)(E)’’.

4 (2) Section 168(h)(2) of such Code is amended

5 by striking subparagraphs (B) and (C) and redesig6 nating subparagraphs (D) and (E) as subparagraphs

7 (B) and (C), respectively.

8 (3) Section 168(h)(5) of such Code is amended

9 by striking subparagraph (C).

10 (4) Section 168(h)(7) of such Code is amended

11 by inserting ‘‘subsection (g) and ’’ before ‘‘this sub12 section’’.

13 (5) Section 168(j)(4)(B)(i) of such Code is

14 amended by striking ‘‘subsection (g)(7)’’ and insert15 ing ‘‘subsection (g)(8)’’.

16 (6) Section 50(b)(4)(A)(ii) of such Code is

17 amended by striking ‘‘section 168(h)(2)(C)), but

18 only with respect to property to which section

19 168(h)(2)(A)(iii) applies (determined after the appli20 cation of section 168(h)(2)(B))’’ and inserting ‘‘sec21 tion 168(g)(5)(B)), but only with respect to property

22 to which section 168(g)(5) applies’’.
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1 (e) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to leases entered into after the date

3 of the enactment of this Act.

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