Putting America First Corporate Tax Act

To amend the Internal Revenue Code of 1986 to end tax deferrals on profits accumulated offshore and to terminate the deferral of active income of controlled foreign corporations. 1. Short title This Act may be cited as the Putting America First Corporate Tax Act 2. Inclusion in subpart F income of investments by controlled foreign corporations with respect to members of foreign group which includes United States shareholder (a) In general Section 956(a)(1)(A) (A) such shareholder’s pro rata share of the average of— (i) the amounts of United States property, and (ii) in the case of a controlled foreign corporation which is a member of an expanded affiliated group the common parent of which is not a United States person, the amount of foreign group property, held (directly or indirectly) by the controlled foreign corporation as of the close of each quarter of such taxable year, over . (b) Foreign group property Section 956 of such Code is amended by redesignating subsections (d) and (e) as subsections (e) and (f), respectively, and by inserting after subsection (c) the following new subsection: (d) Foreign group property; expanded affiliated group For purposes of this section— (1) Foreign group property (A) In general The term foreign group property (B) Exceptions Such term shall not include— (i) the stock or obligation of any entity if less than 25 percent of the total combined voting power of such entity, immediately after the acquisition of any stock in such entity by the controlled foreign corporation, is owned (directly or indirectly) by the common parent referred to in subsection (a)(1)(A)(ii), and (ii) property described in subparagraph (C), (I), (J), or (K) of subsection (c)(2), applied by substituting foreign person United States person (2) Expanded affiliated group The term expanded affiliated group (A) by substituting more than 50 percent at least 80 percent (B) without regard to paragraphs (2) and (3) of section 1504(b). A partnership or any other entity (other than a corporation) shall be treated as a member of an expanded affiliated group if such entity controls (as determined under section 954(d)(3)), or is controlled by (as so determined), members of such group (including any entity treated as a member of such group by reason of this sentence). (3) Application to non-corporate entities In the case of any entity which is not a corporation— (A) any reference in this subsection to stock shall be treated as a reference to any equity or profits interest in such entity, and (B) except as otherwise provided by the Secretary, paragraph (1)(B)(i) shall be applied by substituting 25 percent (by value) of the beneficial interests in such entity 25 percent of the total combined voting power of such entity . (c) Application of rules for pledges and guarantees Section 956(e) of such Code, as so redesignated, is amended to read as follows: (e) Pledges and guarantees For purposes of subsection (a), a controlled foreign corporation shall, under regulations prescribed by the Secretary, be considered as holding— (1) an obligation of a United States person if such controlled foreign corporation is a pledgor or guarantor of such obligation, and (2) an obligation of a foreign person if such controlled foreign corporation or, to the extent provided under such regulations, any United States shareholder of such controlled foreign corporation, is a pledgor or guarantor of such obligation. . (d) Application of limitation on amount of foreign taxes deemed paid with respect to section 956 inclusions Notwithstanding section 214(b) of Public Law 111–226 (e) Effective date The amendments made by this section shall apply to taxable years of controlled foreign corporations ending after the date of the enactment of this Act and to taxable years of United States shareholders in which or with which such taxable years of controlled foreign corporations end. 3. Termination of deferral of active income of controlled foreign corporations (a) In general Section 952 (d) Special application of subpart (1) In general For taxable years beginning after December 31, 2014, notwithstanding any other provision of this subpart, the term subpart F income (2) Applicable rules Rules similar to the rules under the last sentence of subsection (a) and subsection (d) shall apply to this subsection. . (b) Effective date The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 2014.

Summary: Putting America First Corporate Tax Act - Amends the Internal Revenue Code to include in subpart F income (income of a controlled foreign corporation earned outside the United States that is not tax deferred): (1) a shareholder's pro rata share of the average of certain U.S. and foreign property held by a controlled foreign corporation as of the close of each quarter of a taxable year, and (2) the income of a controlled foreign corporation derived from any foreign country.