International Tax Competitiveness Act of 2013

To amend the Internal Revenue Code of 1986 to reduce international tax avoidance and restore a level playing field for American businesses. 1. Short title This Act may be cited as the International Tax Competitiveness Act of 2013 2. Treatment of foreign corporations managed and controlled in the United States as domestic corporations (a) In general Section 7701 (p) Certain corporations managed and controlled in the United States treated as domestic for income tax (1) In general Notwithstanding subsection (a)(4), in the case of a corporation described in paragraph (2) if— (A) the corporation would not otherwise be treated as a domestic corporation for purposes of this title, but (B) the management and control of the corporation occurs, directly or indirectly, primarily within the United States, then, solely for purposes of chapter 1 (and any other provision of this title relating to chapter 1), the corporation shall be treated as a domestic corporation. (2) Corporation described (A) In general A corporation is described in this paragraph if— (i) the stock of such corporation is regularly traded on an established securities market, or (ii) the aggregate gross assets of such corporation (or any predecessor thereof), including assets under management for investors, whether held directly or indirectly, at any time during the taxable year or any preceding taxable year is $50,000,000 or more. (B) General exception A corporation shall not be treated as described in this paragraph if— (i) such corporation was treated as a corporation described in this paragraph in a preceding taxable year, (ii) such corporation— (I) is not regularly traded on an established securities market, and (II) has, and is reasonably expected to continue to have, aggregate gross assets (including assets under management for investors, whether held directly or indirectly) of less than $50,000,000, and (iii) the Secretary grants a waiver to such corporation under this subparagraph. (C) Exception from gross assets test Subparagraph (A)(ii) shall not apply to a corporation which is a controlled foreign corporation (as defined in section 957) and which is a member of an affiliated group (as defined section 1504, but determined without regard to section 1504(b)(3)) the common parent of which— (i) is a domestic corporation (determined without regard to this subsection), and (ii) has substantial assets (other than cash and cash equivalents and other than stock of foreign subsidiaries) held for use in the active conduct of a trade or business in the United States. (3) Management and control (A) In general The Secretary shall prescribe regulations for purposes of determining cases in which the management and control of a corporation is to be treated as occurring primarily within the United States. (B) Executive officers and senior management Such regulations shall provide that— (i) the management and control of a corporation shall be treated as occurring primarily within the United States if substantially all of the executive officers and senior management of the corporation who exercise day-to-day responsibility for making decisions involving strategic, financial, and operational policies of the corporation are located primarily within the United States, and (ii) individuals who are not executive officers and senior management of the corporation (including individuals who are officers or employees of other corporations in the same chain of corporations as the corporation) shall be treated as executive officers and senior management if such individuals exercise the day-to-day responsibilities of the corporation described in clause (i). (C) Corporations primarily holding investment assets Such regulations shall also provide that the management and control of a corporation shall be treated as occurring primarily within the United States if— (i) the assets of such corporation (directly or indirectly) consist primarily of as sets being managed on behalf of investors, and (ii) decisions about how to invest the assets are made in the United States. . (b) Effective date The amendments made by this section shall apply to taxable years beginning on or after the date which is 2 years after the date of the enactment of this Act. 3. Current taxation of royalties and other income from intangibles received from a controlled foreign corporation (a) Repeal of look-Thru rule for royalties received from controlled foreign corporations Paragraph (6) of section 954(c) (1) by striking rents, and royalties and rents (2) by striking , rent, or royalty or rent (b) Entities not permitted To be disregarded in determining royalties Subsection (c) of section 954 of such Code is amended by adding at the end the following new paragraph: (7) All royalties taken into account For purposes of determining the foreign personal holding company income which consists of royalties, this subsection shall be applied without regard to any election to disregard any entity which would be taken into account for Federal income tax purposes but for such election. . (c) Certain other income derived from United States intangibles taken into account as subpart F income Subsection (d) of section 954 of such Code is amended by adding at the end the following new paragraph: (5) Special rule for certain products produced pursuant to intangibles made available by United States persons For purposes of this subsection, personal property shall be treated as having been purchased from a related person if any intangible property (within the meaning of section 936(h)(3)(B)) made available to a controlled foreign corporation, directly or indirectly, by a related person which is a United States person contributes, directly or indirectly, to the production of such personal property by the controlled foreign corporation. The preceding sentence shall not apply to any personal property produced directly by the controlled foreign corporation, without regard to any election to disregard any entity which would be taken into account for Federal income tax purposes but for such election. . (d) Effective date The amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2013, and to taxable years of United States shareholders within which or with which such tax years of such foreign corporations end. 4. Taxation of boot received in reorganizations (a) In general Paragraph (2) of section 356(a) (1) by striking If an exchange Except as otherwise provided by the Secretary— (A) In general If an exchange ; (2) by striking then there shall be February 28, 1913 then the amount of other property or money shall be treated as a dividend to the extent of the earnings and profits of the corporation (3) by adding at the end the following new subparagraph: (B) Certain reorganizations In the case of a reorganization described in section 368(a)(1)(D) with respect to which the requirements of subparagraphs (A) and (B) of section 354(b)(1) are met (or any other reorganization specified by the Secretary), in applying subparagraph (A)— (i) the earnings and profits of each corporation which is a party to the reorganization shall be taken into account, and (ii) the amount which is a dividend (and source thereof) shall be determined under rules similar to the rules of paragraphs (2) and (5) of section 304(b). . (b) Earnings and profits Paragraph (7) of section 312(n) of such Code is amended by adding at the end the following: A similar rule shall apply to an exchange to which section 356(a)(1) applies. (c) Conforming amendment Paragraph (1) of section 356(a) of such Code is amended by striking then the gain then (except as provided in paragraph (2)) the gain (d) Effective date The amendments made by this section shall apply to exchanges after the date of the enactment of this Act.

Summary: International Tax Competitiveness Act of 2013 - Amends the Internal Revenue Code to: (1) treat foreign corporations that are managed, directly or indirectly, within the United States as domestic corporations for U.S. tax purposes; (2) subject certain royalty income and income from intangibles received from a controlled foreign corporation to U.S. taxation; and (3) revise the tax treatment of property other than stock received in connection with a corporate reorganization (i.e., boot) to provide that such property shall be treated as a taxable dividend.