Offshoring Prevention Act

To amend the Internal Revenue Code of 1986 to provide for the taxation of income of controlled foreign corporations attributable to imported property. 1. Short title This Act may be cited as the Offshoring Prevention Act 2. Taxation of income of controlled foreign corporations attributable to imported property (a) In general Section 954(a) , and (5) imported property income for the taxable year (determined under subsection (j) and reduced as provided in subsection (b)(5)). . (b) Imported property income defined Section 954 of such Code is amended by adding at the end the following new subsection: (j) Imported property income (1) In general For purposes of subsection (a)(5), the term imported property income (A) manufacturing, producing, growing, or extracting imported property; (B) the sale, exchange, or other disposition of imported property; or (C) the lease, rental, or licensing of imported property. Such term shall not include any foreign oil and gas extraction income (within the meaning of section 907(c)) or any foreign oil related income (within the meaning of section 907(c)). (2) Imported property For purposes of this subsection— (A) In general Except as otherwise provided in this paragraph, the term imported property (B) Imported property includes certain property imported by unrelated persons The term imported property (i) such property would be imported into the United States; or (ii) such property would be used as a component in other property which would be imported into the United States. (C) Exception for property subsequently exported The term imported property (i) before substantial use in the United States, is sold, leased, or rented by the controlled foreign corporation or a related person for direct use, consumption, or disposition outside the United States; or (ii) is used by the controlled foreign corporation or a related person as a component in other property which is so sold, leased, or rented. (D) Exception for certain agricultural commodities The term imported property (3) Definitions and special rules (A) Import For purposes of this subsection, the term import (B) United states For purposes of this subsection, the term United States (C) Unrelated person For purposes of this subsection, the term unrelated person (D) Coordination with foreign base company sales income For purposes of this section, the term foreign base company sales income . (c) Separate application of limitations on foreign tax credit for imported property income (1) In general Section 904(d)(1) of such Code is amended by striking and (B) imported property income, and . (2) Imported property income defined Section 904(d)(2) of such Code is amended by redesignating subparagraphs (I), (J), and (K) as subparagraphs (J), (K), and (L), respectively, and by inserting after subparagraph (H) the following new subparagraph: (I) Imported property income The term imported property income . (3) Conforming amendment Section 904(d)(2)(A)(ii) of such Code is amended by inserting or imported property income passive category income (d) Conforming amendments (1) Section 952(c)(1)(B)(iii) of such Code is amended— (A) by redesignating subclauses (II), (III), (IV), and (V) as subclauses (III), (IV), (V), and (VI), and (B) by inserting after subclause (I) the following new subclause: (II) imported property income, . (2) The last sentence of section 954(b)(4) of such Code is amended by striking subsection (a)(5) subsection (a)(4) (3) Section 954(b)(5) of such Code is amended by striking and the foreign base company oil related income the foreign base company oil related income, and the imported property income (e) Effective date The amendments made by this section shall apply to taxable years of foreign corporations beginning after the date of the enactment of this Act, and to taxable years of United States shareholders within which or with which such taxable years of such foreign corporations end.

Summary: Offshoring Prevention Act This bill amends the Internal Revenue Code to include imported property income in foreign base company income, for purposes of determining the income of controlled foreign corporations. The bill defines "imported property income" as, with certain exceptions, income derived in connection with: manufacturing, producing, growing, or extracting imported property; the sale, exchange, or other disposition of imported property; or the lease, rental, or licensing of imported property. The bill also provides for a separate application of limitations on the foreign tax credit for imported property income.