I 
114TH CONGRESS 
2D SESSION 
H. R. 5125 
To amend the Internal Revenue Code of 1986 to discourage corporate inver-
sions and to impose tax on unrepatriated earnings and unrecognized 
gains in connection with corporate expatriations. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 29, 2016 
Mr. DOGGETT (for himself, Mr. BLUMENAUER, Mr. CAPUANO, Mr. CART-
WRIGHT, Mr. CICILLINE, Mr. COHEN, Mr. CONYERS, Mr. CUMMINGS, Mr. 
DANNY K. DAVIS of Illinois, Mr. DEFAZIO, Ms. DELAURO, Mr. ELLISON, 
Mr. FARR, Mr. GARAMENDI, Mr. GENE GREEN of Texas, Mr. GRIJALVA, 
Mr. GUTIE´RREZ, Mr. HASTINGS, Mr. JOHNSON of Georgia, Mr. KILDEE, 
Ms. LEE, Mr. LEVIN, Mr. LEWIS, Mr. LIPINSKI, Mr. LOEBSACK, Mr. 
LYNCH, Mr. MCDERMOTT, Mr. MCGOVERN, Ms. MOORE, Mr. NADLER, 
Mr. PASCRELL, Mr. PAYNE, Mr. POCAN, Mr. RANGEL, Ms. ROYBAL- 
ALLARD, Mr. RUSH, Ms. SCHAKOWSKY, Mr. SCOTT of Virginia, Mr. 
SHERMAN, Ms. SLAUGHTER, Mr. THOMPSON of California, Mr. TONKO, 
Mr. VAN HOLLEN, Mr. WELCH, Mr. YARMUTH, Ms. EDDIE BERNICE 
JOHNSON of Texas, Ms. BASS, and Mr. PERLMUTTER) introduced the fol-
lowing bill; which was referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to discourage 
corporate inversions and to impose tax on unrepatriated 
earnings and unrecognized gains in connection with cor-
porate expatriations. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Corporate EXpatriates 
and Inverters Tax Fairness Act’’ or as the ‘‘Corporate 
EXIT Fairness Act’’. 
SEC. 2. RULES TO DISCOURAGE CORPORATE INVERSIONS 
AND IMPOSE TAX ON UNREPATRIATED EARN-
INGS AND UNRECOGNIZED GAINS IN CON-
NECTION WITH CORPORATE EXPATRIATIONS. 
(a) RULES RELATING TO CORPORATE INVERSIONS 
AND CORPORATE EXPATRIATIONS COMPLETED AFTER 
APRIL 29, 2016.—Subchapter C of chapter 80 of the In-
ternal Revenue Code of 1986 is amended by adding at the 
end the following new section: 
‘‘SEC. 7874A. RULES RELATING TO CORPORATE INVER-
SIONS AND CORPORATE EXPATRIATIONS. 
‘‘(a) UNREPATRIATED EARNINGS
AND UNRECOG-
NIZED GAINS IN CONNECTION WITH CORPORATE EXPA-
TRIATION.— 
‘‘(1) IN GENERAL.—In the case of a corporate 
expatriation— 
‘‘(A) the subpart F income of any applica-
ble controlled foreign corporation for its last 
taxable year ending before the acquisition date 
shall be increased by the accumulated deferred 
foreign income of such corporation, and 
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‘‘(B) any gain position stock of any appli-
cable controlled foreign corporation which is 
held by an expatriated entity on the acquisition 
date shall be treated as sold on such date for 
its fair market value. 
‘‘(2) RULES
RELATED
TO
RECOGNITION
OF 
GAIN.— 
‘‘(A) APPLICATION TO DISPOSITIONS DUR-
ING 5 YEARS BEFORE ACQUISITION DATE.—In 
the case of any disposition of gain position 
stock of any applicable controlled foreign cor-
poration by an expatriated entity at any time 
during the 5-year period ending on the acquisi-
tion date with respect to a corporate expatria-
tion, such disposition shall be treated as a sale 
of such stock for its fair market value and the 
period of limitation on assessment and collec-
tion of any tax with respect to such disposition 
under section 6501 or 6502 shall commence not 
earlier than the acquisition date. 
‘‘(B) GAIN
POSITION
STOCK.—For pur-
poses of this subsection, the term ‘gain position 
stock’ means any stock if gain would arise from 
the sale of such stock. 
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‘‘(C) GAIN TAKEN INTO ACCOUNT; PROPER 
ADJUSTMENT.—Notwithstanding any other pro-
vision of this title, in the case of any sale under 
paragraph (1)(B) or (2)(A), any gain arising 
from such sale shall be taken into account for 
the taxable year of the sale. In the case of any 
sale under paragraph (1)(B), proper adjustment 
shall be made in the amount of any gain or loss 
subsequently realized for gain taken into ac-
count under the preceding sentence. 
‘‘(b) FOREIGN PARENT TREATED AS DOMESTIC COR-
PORATION.—Notwithstanding section 7701(a)(4)— 
‘‘(1) APPLICATION
TO
CORPORATE
INVER-
SIONS.—In the case of a corporate inversion, the for-
eign corporation making the acquisition described in 
subsection (c)(1) shall be treated for purposes of 
this title as a domestic corporation. 
‘‘(2) ELECTIVE
APPLICATION
TO
CORPORATE 
EXPATRIATIONS.—If the common parent of the ex-
panded affiliated group which includes the foreign 
corporation making the acquisition in a corporate 
expatriation elects the application of this paragraph 
and enters into an agreement with the Secretary 
providing the Secretary such assurances as the Sec-
retary may require that the application of paragraph 
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(1) will be administrable and enforceable with re-
spect to such corporation— 
‘‘(A) such foreign corporation shall be 
treated for purposes of this title as a domestic 
corporation, and 
‘‘(B) subsection (a) shall not apply with re-
spect to such corporate expatriation. 
‘‘(c) CORPORATE INVERSION; CORPORATE EXPA-
TRIATION.—For purposes of this section— 
‘‘(1) CORPORATE INVERSION.—The term ‘cor-
porate inversion’ means the direct or indirect acqui-
sition (pursuant to a plan or a series of related 
transactions) of substantially all of the assets of a 
domestic corporation or domestic partnership, sub-
stantially all of the trade or business assets of a do-
mestic corporation or domestic partnership, or sub-
stantially all of the United States trade or business 
assets of a foreign partnership, by a foreign corpora-
tion if— 
‘‘(A) such acquisition is completed after 
April 29, 2016, 
‘‘(B) after the acquisition the expanded af-
filiated group which includes the foreign cor-
poration does not have substantial business ac-
tivities in the foreign country in which, or 
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under the law of which, the foreign corporation 
is created or organized, when compared to the 
total business activities of such expanded affili-
ated group, and 
‘‘(C) after the acquisition, either— 
‘‘(i) more than 50 percent of the stock 
(by vote or value) of the foreign corpora-
tion is held— 
‘‘(I) in the case of an acquisition 
with respect to a domestic corpora-
tion, by former shareholders of the 
domestic corporation by reason of 
holding stock in the domestic corpora-
tion, or 
‘‘(II) in the case of an acquisition 
with respect to a partnership, by 
former partners of the partnership by 
reason of holding a capital or profits 
interest in the partnership, or 
‘‘(ii) the management and control of 
the expanded affiliated group which in-
cludes the foreign corporation occurs, di-
rectly or indirectly, primarily within the 
United States, and such expanded affili-
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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 April 29, 2016, except that the Sec-
retary 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 
April 29, 2016, but applied by treating all ref-
erences in such regulations to ‘foreign country’ 
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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