II 

113TH CONGRESS 

1ST SESSION S. 250 

To amend the Internal Revenue Code of 1986 to modify the treatment 

of foreign corporations, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 7, 2013 

Mr. SANDERS introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to modify 

the treatment of foreign corporations, 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, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Corporate Tax Dodg5 ing Prevention Act’’. 

6 SEC. 2. DEFERRAL OF ACTIVE INCOME OF CONTROLLED 

7 FOREIGN CORPORATIONS. 

8 Section 952 of the Internal Revenue Code of 1986 

9 is amended by adding at the end the following new sub10 section: 


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

2 ‘‘(1) IN GENERAL.—For taxable years begin3 ning after December 31, 2013, notwithstanding any 

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

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

6 corporation, the income of such corporation derived 

7 from any foreign country. 

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

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

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

11 SEC. 3. MODIFICATIONS OF FOREIGN TAX CREDIT RULES 

12 APPLICABLE TO LARGE INTEGRATED OIL 

13 COMPANIES WHICH ARE DUAL CAPACITY 

14 TAXPAYERS. 

15 (a) IN GENERAL.—Section 901 of the Internal Rev16 enue Code of 1986 is amended by redesignating subsection 

17 (n) as subsection (o) and by inserting after subsection (m) 

18 the following new subsection: 

19 ‘‘(n) SPECIAL RULES RELATING TO LARGE INTE20 GRATED OIL COMPANIES WHICH ARE DUAL CAPACITY

21 TAXPAYERS.— 

22 ‘‘(1) GENERAL RULE.—Notwithstanding any 

23 other provision of this chapter, any amount paid or 

24 accrued by a dual capacity taxpayer which is a large 

25 integrated oil company to a foreign country or posVerDate Mar 15 2010 22:29 Feb 19, 2013 Jkt 029200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S250.IS S250

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1 session of the United States for any period shall not 

2 be considered a tax— 

3 ‘‘(A) if, for such period, the foreign coun4 try or possession does not impose a generally 

5 applicable income tax, or 

6 ‘‘(B) to the extent such amount exceeds 

7 the amount (determined in accordance with reg8 ulations) which— 

9 ‘‘(i) is paid by such dual capacity tax10 payer pursuant to the generally applicable 

11 income tax imposed by the country or pos12 session, or 

13 ‘‘(ii) would be paid if the generally ap14 plicable income tax imposed by the country 

15 or possession were applicable to such dual 

16 capacity taxpayer. 

17 Nothing in this paragraph shall be construed to 

18 imply the proper treatment of any such amount 

19 not in excess of the amount determined under 

20 subparagraph (B). 

21 ‘‘(2) DUAL CAPACITY TAXPAYER.—For pur22 poses of this subsection, the term ‘dual capacity tax23 payer’ means, with respect to any foreign country or 

24 possession of the United States, a person who— 


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1 ‘‘(A) is subject to a levy of such country or 

2 possession, and 

3 ‘‘(B) receives (or will receive) directly or 

4 indirectly a specific economic benefit (as deter5 mined in accordance with regulations) from 

6 such country or possession. 

7 ‘‘(3) GENERALLY APPLICABLE INCOME TAX.— 

8 For purposes of this subsection— 

9 ‘‘(A) IN GENERAL.—The term ‘generally 

10 applicable income tax’ means an income tax (or 

11 a series of income taxes) which is generally im12 posed under the laws of a foreign country or 

13 possession on income derived from the conduct 

14 of a trade or business within such country or 

15 possession. 

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

17 include a tax unless it has substantial applica18 tion, by its terms and in practice, to— 

19 ‘‘(i) persons who are not dual capacity 

20 taxpayers, and 

21 ‘‘(ii) persons who are citizens or resi22 dents of the foreign country or possession. 

23 ‘‘(4) LARGE INTEGRATED OIL COMPANY.—For 

24 purposes of this subsection, the term ‘large inte25 grated oil company’ means, with respect to any taxVerDate Mar 15 2010 22:29 Feb 19, 2013 Jkt 029200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S250.IS S250

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1 able year, an integrated oil company (as defined in 

2 section 291(b)(4)) which— 

3 ‘‘(A) had gross receipts in excess of 

4 $1,000,000,000 for such taxable year, and 

5 ‘‘(B) has an average daily worldwide pro6 duction of crude oil of at least 500,000 barrels 

7 for such taxable year.’’. 

8 (b) EFFECTIVE DATE.— 

9 (1) IN GENERAL.—The amendments made by 

10 this section shall apply to taxes paid or accrued in 

11 taxable years beginning after the date of the enact12 ment of this Act. 

13 (2) CONTRARY TREATY OBLIGATIONS

14 UPHELD.—The amendments made by this section 

15 shall not apply to the extent contrary to any treaty 

16 obligation of the United States. 

17 SEC. 4. REINSTITUTION OF PER COUNTRY FOREIGN TAX 

18 CREDIT. 

19 (a) IN GENERAL.—Subsection (a) of section 904 of 

20 the Internal Revenue Code of 1986 is amended to read 

21 as follows: 

22 ‘‘(a) LIMITATION.—The amount of the credit in re23 spect of the tax paid or accrued to any foreign country 

24 or possession of the United States shall not exceed the 

25 same proportion of the tax against which such credit is 


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1 taken which the taxpayer’s taxable income from sources 

2 within such country or possession (but not in excess of 

3 the taxpayer’s entire taxable income) bears to such tax4 payer’s entire taxable income for the same taxable year.’’. 

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

6 this section shall apply to taxable years beginning after 

7 December 31, 2013. 

8 SEC. 5. TREATMENT OF FOREIGN CORPORATIONS MAN9 AGED AND CONTROLLED IN THE UNITED 

10 STATES AS DOMESTIC CORPORATIONS. 

11 (a) IN GENERAL.—Section 7701 of the Internal Rev12 enue Code of 1986 is amended by redesignating subsection 

13 (p) as subsection (q) and by inserting after subsection (o) 

14 the following new subsection: 

15 ‘‘(p) CERTAIN CORPORATIONS MANAGED AND CON16 TROLLED IN THE UNITED STATES TREATED AS DOMES17 TIC FOR INCOME TAX.— 

18 ‘‘(1) IN GENERAL.—Notwithstanding subsection 

19 (a)(4), in the case of a corporation described in 

20 paragraph (2) if— 

21 ‘‘(A) the corporation would not otherwise 

22 be treated as a domestic corporation for pur23 poses of this title, but 


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1 ‘‘(B) the management and control of the 

2 corporation occurs, directly or indirectly, pri3 marily within the United States, 

4 then, solely for purposes of chapter 1 (and any other 

5 provision of this title relating to chapter 1), the cor6 poration shall be treated as a domestic corporation. 

7 ‘‘(2) CORPORATION DESCRIBED.— 

8 ‘‘(A) IN GENERAL.—A corporation is de9 scribed in this paragraph if— 

10 ‘‘(i) the stock of such corporation is 

11 regularly traded on an established securi12 ties market, or 

13 ‘‘(ii) the aggregate gross assets of 

14 such corporation (or any predecessor there15 of), including assets under management 

16 for investors, whether held directly or indi17 rectly, at any time during the taxable year 

18 or any preceding taxable year is 

19 $50,000,000 or more. 

20 ‘‘(B) GENERAL EXCEPTION.—A corpora21 tion shall not be treated as described in this 

22 paragraph if— 

23 ‘‘(i) such corporation was treated as a 

24 corporation described in this paragraph in 

25 a preceding taxable year, 


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1 ‘‘(ii) such corporation— 

2 ‘‘(I) is not regularly traded on an 

3 established securities market, and 

4 ‘‘(II) has, and is reasonably ex5 pected to continue to have, aggregate 

6 gross assets (including assets under 

7 management for investors, whether 

8 held directly or indirectly) of less than 

9 $50,000,000, and 

10 ‘‘(iii) the Secretary grants a waiver to 

11 such corporation under this subparagraph. 

12 ‘‘(C) EXCEPTION FROM GROSS ASSETS

13 TEST.—Subparagraph (A)(ii) shall not apply to 

14 a corporation which is a controlled foreign cor15 poration (as defined in section 957) and which 

16 is a member of an affiliated group (as defined 

17 section 1504, but determined without regard to 

18 section 1504(b)(3)) the common parent of 

19 which— 

20 ‘‘(i) is a domestic corporation (deter21 mined without regard to this subsection), 

22 and 

23 ‘‘(ii) has substantial assets (other 

24 than cash and cash equivalents and other 

25 than stock of foreign subsidiaries) held for 


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1 use in the active conduct of a trade or 

2 business in the United States. 

3 ‘‘(3) MANAGEMENT AND CONTROL.— 

4 ‘‘(A) IN GENERAL.—The Secretary shall 

5 prescribe regulations for purposes of deter6 mining cases in which the management and 

7 control of a corporation is to be treated as oc8 curring primarily within the United States. 

9 ‘‘(B) EXECUTIVE OFFICERS AND SENIOR

10 MANAGEMENT.—Such regulations shall provide 

11 that— 

12 ‘‘(i) the management and control of a 

13 corporation shall be treated as occurring 

14 primarily within the United States if sub15 stantially all of the executive officers and 

16 senior management of the corporation who 

17 exercise day-to-day responsibility for mak18 ing decisions involving strategic, financial, 

19 and operational policies of the corporation 

20 are located primarily within the United 

21 States, and 

22 ‘‘(ii) individuals who are not executive 

23 officers and senior management of the cor24 poration (including individuals who are of25 ficers or employees of other corporations in 


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1 the same chain of corporations as the cor2 poration) shall be treated as executive offi3 cers and senior management if such indi4 viduals exercise the day-to-day responsibil5 ities of the corporation described in clause 

6 (i). 

7 ‘‘(C) CORPORATIONS PRIMARILY HOLDING

8 INVESTMENT ASSETS.—Such regulations shall 

9 also provide that the management and control 

10 of a corporation shall be treated as occurring 

11 primarily within the United States if— 

12 ‘‘(i) the assets of such corporation (di13 rectly or indirectly) consist primarily of as 

14 sets being managed on behalf of investors, 

15 and 

16 ‘‘(ii) decisions about how to invest the 

17 assets are made in the United States.’’. 

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

19 this section shall apply to taxable years beginning on or 

20 after the date which is 2 years after the date of the enact21 ment of this Act. 

Æ 


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