II 

113TH CONGRESS 

2D SESSION S. 2895 

To amend the Internal Revenue Code to include in income the unrepatriated 

earnings of groups that include an inverted corporation. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 18, 2014 

Mr. BROWN (for himself and Mr. DURBIN) introduced the following bill; which 

was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code to include in income 

the unrepatriated earnings of groups that include an 

inverted corporation. 

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 ‘‘Pay What You Owe 

5 Before You Go Act’’. 

6 SEC. 2. RECAPTURE OF UNREPATRIATED EARNINGS OF 

7 GROUPS INCLUDING AN INVERTED COR8 PORATION. 

9 (a) IN GENERAL.—Section 7874 of the Internal Rev10 enue Code of 1986 is amended by redesignating subsection 


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1 (g) as subsection (h) and by inserting after subsection (f) 

2 the following new subsection: 

3 ‘‘(g) RECAPTURE OF TAX ON UNREPATRIATED

4 EARNINGS.— 

5 ‘‘(1) IN GENERAL.—The subpart F income of 

6 any applicable controlled foreign corporation for its 

7 last taxable year ending before the acquisition date 

8 shall be increased by the accumulated deferred for9 eign income of the corporation. 

10 ‘‘(2) APPLICABLE CONTROLLED FOREIGN COR11 PORATION.—For purposes of this subsection— 

12 ‘‘(A) IN GENERAL.—The term ‘applicable 

13 controlled foreign corporation’ means any con14 trolled foreign corporation with respect to 

15 which— 

16 ‘‘(i) a covered entity was a United 

17 States shareholder at any time during the 

18 5-year period ending on the acquisition 

19 date, or 

20 ‘‘(ii) a member of the same expanded 

21 affiliated group as a covered entity was a 

22 United States shareholder at any time dur23 ing the 5-year period ending on the acqui24 sition date. 


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1 ‘‘(B) COVERED ENTITY.—The term ‘cov2 ered entity’ means, with respect to a controlled 

3 foreign corporation, any entity which— 

4 ‘‘(i) is treated as a surrogate foreign 

5 corporation under subsection (a)(2)(B), de6 termined— 

7 ‘‘(I) by substituting ‘September 

8 18, 2014’ for ‘March 4, 2003’ each 

9 place it appears, 

10 ‘‘(II) by substituting ‘more than 

11 50 percent’ for ‘at least 60 percent’ in 

12 clause (ii) thereof, and 

13 ‘‘(III) by disregarding clause (iii) 

14 thereof, and 

15 ‘‘(ii) is not treated as a domestic cor16 poration by reason of subsection (b). 

17 ‘‘(3) ACCUMULATED DEFERRED FOREIGN IN18 COME.—For purposes of this section— 

19 ‘‘(A) IN GENERAL.—The term ‘accumu20 lated deferred foreign income’ means the excess 

21 of— 

22 ‘‘(i) the undistributed earnings of the 

23 controlled foreign corporation, over 

24 ‘‘(ii) the undistributed U.S. earnings 

25 of such controlled foreign corporation. 


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1 ‘‘(B) UNDISTRIBUTED EARNINGS.—The 

2 term ‘undistributed earnings’ means the earn3 ings and profits of the controlled foreign cor4 poration described in section 959(c)(3), deter5 mined— 

6 ‘‘(i) as of the close of the taxable year 

7 described in paragraph (1), 

8 ‘‘(ii) without diminution by reason of 

9 distributions made during such taxable 

10 year, and 

11 ‘‘(iii) without regard to this sub12 section. 

13 For purposes of this chapter, any determination 

14 with respect to the treatment of distributions 

15 described in clause (ii) shall be made after the 

16 application of this subsection to the earnings 

17 and profits described in the matter preceding 

18 clause (i). 

19 ‘‘(C) UNDISTRIBUTED U.S. EARNINGS.— 

20 The term ‘undistributed U.S. earnings’ has the 

21 meaning given the term ‘post-1986 undistrib22 uted U.S. earnings’ in section 245(a)(5), deter23 mined— 

24 ‘‘(i) as of the close of the taxable year 

25 described in paragraph (1), and 


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1 ‘‘(ii) without regard to ‘post-1986’ 

2 each place it appears in the matter before 

3 subparagraph (A). 

4 ‘‘(4) ACQUISITION DATE.—For purposes of this 

5 section, the term ‘acquisition date’ means the date 

6 the covered entity completes the acquisition de7 scribed in subsection (a)(2)(B)(i) (after the applica8 tion of paragraph (2)(B)(i) of this subsection).’’. 

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

10 this section shall apply with respect to taxable years end11 ing after September 18, 2014. 

Æ 


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