ated group has significant domestic busi-
ness activities. 
‘‘(2) CORPORATE
EXPATRIATION.—The term 
‘corporate expatriation’ means any acquisition which 
is not described in paragraph (1) but which would 
be so described if paragraph (1) were applied with-
out regard to subparagraphs (B) and (C) thereof. 
‘‘(3) DETERMINATIONS WITH RESPECT TO MAN-
AGEMENT
AND
CONTROL
AND
BUSINESS
ACTIVI-
TIES.— 
‘‘(A) MANAGEMENT AND CONTROL.—For 
purposes of paragraph (1)(C)(ii)— 
‘‘(i) IN
GENERAL.—The Secretary 
shall prescribe regulations for purposes of 
determining cases in which the manage-
ment and control of an expanded affiliated 
group is to be treated as occurring, directly 
or indirectly, primarily within the United 
States. 
‘‘(ii) EXECUTIVE OFFICERS AND SEN-
IOR MANAGEMENT.—Such regulations shall 
provide that the management and control 
of an expanded affiliated group shall be 
treated as occurring, directly or indirectly, 
primarily within the United States if sub-
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stantially all of the executive officers and 
senior management of the expanded affili-
ated group who exercise day-to-day respon-
sibility for making decisions involving stra-
tegic, financial, and operational policies of 
the expanded affiliated group are based or 
primarily located within the United States. 
Individuals who in fact exercise such day- 
to-day responsibilities shall be treated as 
executive officers and senior management 
regardless of their title. 
‘‘(B) 
SUBSTANTIAL
BUSINESS
ACTIVI-
TIES.—For purposes of paragraph (1)(B), the 
term ‘substantial business activities’ shall have 
the meaning given such term under regulations 
in effect on January 4, 2017, except that the 
Secretary may issue regulations increasing the 
threshold percent in any of the tests under such 
regulations for determining if business activities 
constitute substantial business activities for 
purposes of this subsection. 
‘‘(C) SIGNIFICANT
DOMESTIC
BUSINESS 
ACTIVITIES.—For 
purposes 
of 
paragraph 
(1)(C)(ii), an expanded affiliated group has sig-
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nificant domestic business activities if at least 
25 percent of— 
‘‘(i) the employees of the group are 
based in the United States, 
‘‘(ii) the employee compensation in-
curred by the group is incurred with re-
spect to employees based in the United 
States, 
‘‘(iii) the assets of the group are lo-
cated in the United States, or 
‘‘(iv) the income of the group is de-
rived in the United States, 
determined in the same manner as such deter-
minations are made for purposes of determining 
substantial business activities under regulations 
referred to in subparagraph (B) as in effect on 
January 4, 2017, but applied by treating all 
references in such regulations to ‘foreign coun-
try’ and ‘relevant foreign country’ as references 
to ‘the United States’. The Secretary may issue 
regulations decreasing the threshold percent in 
any of the tests under such regulations for de-
termining if business activities constitute sig-
nificant domestic business activities for pur-
poses of this subsection. 
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‘‘(4) CERTAIN
STOCK
DISREGARDED.—There 
shall not be taken into account in determining own-
ership under paragraph (1)(C)(i)— 
‘‘(A) stock held by members of the ex-
panded affiliated group which includes the for-
eign corporation, or 
‘‘(B) stock of such foreign corporation 
which is sold in a public offering related to the 
acquisition described in the matter preceding 
subparagraph (A) of paragraph (1). 
‘‘(5) PLAN DEEMED IN CERTAIN CASES.—If a 
foreign corporation completes an acquisition which 
would be described in paragraph (1) or (2) if such 
acquisition were pursuant to a plan and such acqui-
sition is completed— 
‘‘(A) in the case of an acquisition which 
would be so described in paragraph (1), during 
the 4-year period beginning on the date which 
is 2 years before the ownership requirements of 
paragraph (1)(C)(i) are met, or 
‘‘(B) in the case of an acquisition which 
would be so described in paragraph (2), during 
the 4-year period ending on the acquisition 
date, 
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such acquisition shall be treated as pursuant to a 
plan. 
‘‘(6) CERTAIN TRANSFERS DISREGARDED.—The 
transfer of properties or liabilities (including by con-
tribution or distribution) shall be disregarded if such 
transfers are part of a plan a principal purpose of 
which is to avoid the purposes of this section. 
‘‘(7) SPECIAL RULE FOR RELATED PARTNER-
SHIPS.—For 
purposes 
of 
applying 
paragraph 
(1)(C)(i) to the acquisition of a trade or business of 
a partnership, except as provided in regulations, all 
partnerships which are under common control (with-
in the meaning of section 482) shall be treated as 
1 partnership. 
‘‘(8) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be appropriate to de-
termine whether any transaction or series of trans-
actions is a corporate inversion or corporate expa-
triation, including regulations— 
‘‘(A) to treat warrants, options, contracts 
to acquire stock, convertible debt interests, and 
other similar interests as stock, and 
‘‘(B) to treat stock as not stock. 
‘‘(d) OTHER DEFINITIONS.—For purposes of this 
section— 
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‘‘(1) ACCUMULATED
DEFERRED
FOREIGN
IN-
COME.— 
‘‘(A) IN
GENERAL.—The term ‘accumu-
lated deferred foreign income’ means the excess 
of— 
‘‘(i) the undistributed earnings of the 
controlled foreign corporation, over 
‘‘(ii) the undistributed U.S. earnings 
of such controlled foreign corporation. 
‘‘(B) UNDISTRIBUTED
EARNINGS.—The 
term ‘undistributed earnings’ means the earn-
ings and profits of the controlled foreign cor-
poration described in section 959(c)(3), deter-
mined— 
‘‘(i) as of the close of the taxable year 
described in subparagraph (A), 
‘‘(ii) without diminution by reason of 
distributions made during such taxable 
year, and 
‘‘(iii) without regard to this para-
graph. 
For purposes of this chapter, any determination 
with respect to the treatment of distributions 
described in clause (ii) shall be made after the 
application of this paragraph to the earnings 
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