I 
115TH CONGRESS 
1ST SESSION H. R. 3603 
To amend the Internal Revenue Code of 1986 to prevent earnings stripping 
of corporations which are related to inverted corporations. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 28, 2017 
Mr. LEVIN (for himself and Mr. THOMPSON of California) introduced the 
following bill; which was referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to prevent 
earnings stripping of corporations which are related to 
inverted corporations. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Stop Corporate Earn-
ings Stripping Act of 2017’’. 
SEC. 2. PREVENTION OF EARNINGS STRIPPING OF COR-
PORATIONS WHICH ARE RELATED TO IN-
VERTED CORPORATIONS. 
(a) IN GENERAL.—Section 7874 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
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(g) as subsection (h) and by inserting after subsection (f) 
the following new subsection: 
‘‘(g) SPECIAL RULES APPLICABLE
TO EARNINGS 
STRIPPING AND RELATED PARTY TRANSACTIONS.— 
‘‘(1) IN GENERAL.—In the case of any corpora-
tion which is a related corporation for any taxable 
year, section 163(j) shall be applied with the fol-
lowing modifications: 
‘‘(A) 
5-YEAR
LIMITATION
ON 
CARRYFORWARD OF DISALLOWED AMOUNTS.— 
For purposes of determining any amount car-
ried to, or from, such taxable year under sub-
paragraph (B) of section 163(j)(1), such sub-
paragraph shall be applied by substituting ‘in 
the 1st succeeding taxable and in the 2nd 
through 5th succeeding taxable years to the ex-
tent disallowed under subparagraph (A) in the 
preceding taxable year (determined on a first- 
in, first-out basis and by treating the amount 
carried forward under this subparagraph as al-
lowed under subparagraph (A) before amounts 
otherwise taken into account under subpara-
graph (A))’ for ‘in the succeeding taxable year’. 
‘‘(B) RULES FOR DETERMINING WHETHER 
INTEREST LIMITATION RULES APPLY.—In ap-
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plying section 163(j)(2) to determine whether 
section 163(j) applies to such related corpora-
tion for such taxable year— 
‘‘(i) subparagraph (A)(ii) shall be dis-
regarded, and 
‘‘(ii) subparagraph (B)(i)(II) shall be 
applied by substituting ‘25 percent of the 
adjusted taxable income of the corporation’ 
for ‘the sum of 50 percent of the adjusted 
taxable income of the corporation plus any 
excess limitation carryforward under clause 
(ii)’ for purposes of determining the cor-
poration’s excess interest expense for such 
taxable year. 
‘‘(2) RELATED CORPORATION.—For purposes of 
this subsection— 
‘‘(A) IN GENERAL.—The term ‘related cor-
poration’ means any corporation for any taxable 
year if, at any time during such taxable year, 
such corporation is a member of an expanded 
affiliated group which includes (at any time 
during such taxable year) an entity which— 
‘‘(i) is a surrogate foreign corporation, 
determined 
by 
applying 
subsection 
(a)(2)(B)— 
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‘‘(I) by substituting ‘on or after 
May 8, 2014’ for ‘after March 4, 
2003’ in clause (i) thereof, 
‘‘(II) by substituting ‘more than 
50 percent’ for ‘at least 60 percent’ in 
clause (ii) thereof, and 
‘‘(III) by disregarding the matter 
following clause (iii) thereof, and 
‘‘(ii) is not treated as a domestic cor-
poration by reason of subsection (b). 
‘‘(B) SPECIAL RULE FOR INCLUSION OF 
NONCORPORATE
ENTITIES.—For purposes of 
subparagraph (A), a partnership or 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 deter-
mined), members of such group (including any 
entity treated as a member of such group by 
reason of this sentence). 
‘‘(3) RULES RELATED TO APPLICATION OF 5- 
YEAR CARRYFORWARD OF DISALLOWED AMOUNTS.— 
For purposes of applying paragraph (1)(A)— 
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‘‘(A) TRANSITION RULE.—For purposes of 
applying paragraph (1)(A), the term ‘1st suc-
ceeding taxable year’ means the later of— 
‘‘(i) the 1st succeeding taxable year 
after the taxable year in which the dis-
qualified interest is paid or accrued (deter-
mined 
without 
regard 
to 
subsection 
(j)(1)(B)), or 
‘‘(ii) the 1st taxable year beginning 
after the date of the enactment of this sub-
section. 
‘‘(B) AMOUNTS
CARRIED
TO
TAXABLE 
YEAR FOR WHICH CORPORATION IS A RELATED 
CORPORATION.—Paragraph (1)(A) shall apply 
to amounts carried to a taxable year to which 
such paragraph applies without regard to 
whether such paragraph applied to the taxable 
year in which such amount was originally paid 
or accrued (or to any other taxable year). 
‘‘(C) AMOUNTS CARRIED FROM TAXABLE 
YEAR FOR WHICH CORPORATION IS A RELATED 
CORPORATION.—Paragraph (1)(A) shall apply 
to amounts carried from a taxable year to 
which such paragraph applies (whether or not 
such amount was originally paid or accrued in 
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such taxable year) without regard to whether 
such paragraph applies to the taxable year to 
which carried (or to any other taxable year).’’. 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years beginning after the date 
of the enactment of this Act. 
(2) LIMITATION
ON
CARRYFORWARD
OF
DIS-
ALLOWED AMOUNTS.—For purposes of determining 
any amount carried to a taxable year beginning after 
the date of the enactment of this Act, the amend-
ments made by this Act shall apply to amounts paid 
or incurred before, on, or after the date of the enact-
ment of this Act. 
Æ 
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