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avoidance of the purposes of this section, including regula-
tions and other guidance— 
‘‘(1) to prevent the abuse of the exceptions pro-
vided by subsection (e), 
‘‘(2) to address special classes of stock and pre-
ferred stock, and 
‘‘(3) for the application of the rules under sub-
section (d).’’. 
(b) TAX NOT DEDUCTIBLE.—Paragraph (6) of sec-
tion 275(a) is amended by inserting ‘‘37,’’ before ‘‘41’’. 
(c) CLERICAL AMENDMENT.—The table of chapters 
for subtitle D is amended by inserting after the item relat-
ing to chapter 36 the following new item: 
‘‘CHAPTER 37—REPURCHASE OF CORPORATE STOCK’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to repurchases (within the meaning 
of section 4501(c) of the Internal Revenue Code of 1986, 
as added by this section) of stock after December 31, 
2021. 
Subpart B—Limitations on Deduction for Interest 
Expense 
SEC. 138111. LIMITATIONS ON DEDUCTION FOR INTEREST 
EXPENSE. 
(a) INTEREST EXPENSE OF CERTAIN MEMBERS OF 
INTERNATIONAL FINANCIAL REPORTING GROUPS.—Sec-
tion 163 is amended by redesignating subsection (n) as 
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subsection (p) and by inserting after subsection (m) the 
following new subsection: 
‘‘(n) LIMITATION ON DEDUCTION OF INTEREST BY 
CERTAIN MEMBERS OF INTERNATIONAL FINANCIAL RE-
PORTING GROUPS.— 
‘‘(1) IN GENERAL.—In the case of any specified 
domestic corporation which is a member of any 
international financial reporting group, the deduc-
tion under this chapter for interest paid or accrued 
during the taxable year in excess of the amount of 
interest includible in the gross income of such cor-
poration shall not exceed the allowable percentage of 
110 percent of such excess. 
‘‘(2) SPECIFIED DOMESTIC CORPORATION.—For 
purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘specified 
domestic corporation’ means any domestic cor-
poration other than— 
‘‘(i) any corporation if the excess of— 
‘‘(I) the average amount of inter-
est paid or accrued by such corpora-
tion during the 3-taxable-year period 
ending with the taxable year to which 
paragraph (1) applies, over 
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‘‘(II) the average amount of in-
terest includible in the gross income 
of such corporation for such 3-tax-
able-year period, 
does not exceed $12,000,000, 
‘‘(ii) any corporation to which para-
graph (1) of section 163(j) does not apply 
by reason of paragraph (3) of such section 
(determined without regard to paragraph 
(4)(B) of such section), and 
‘‘(iii) any S corporation, real estate 
investment trust, or regulated investment 
company. 
‘‘(B) AGGREGATION RULE.—For purposes 
of clauses (i) and (ii) of subparagraph (A), all 
domestic corporations which are members of the 
same international financial reporting group 
shall be treated as a single corporation. 
‘‘(C) FOREIGN
CORPORATIONS
ENGAGED 
IN TRADE OR BUSINESS WITHIN THE UNITED 
STATES.—If a foreign corporation is engaged in 
a trade or business within the United States, 
such foreign corporation shall be treated as a 
domestic corporation with respect to the items 
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that are effectively connected with such trade or 
business. 
‘‘(3) INTERNATIONAL
FINANCIAL
REPORTING 
GROUP.—For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘inter-
national financial reporting group’ means, with 
respect to any reporting year, two or more enti-
ties if— 
‘‘(i) either— 
‘‘(I) at least one entity is a for-
eign corporation engaged in a trade or 
business within the United States, or 
‘‘(II) at least one entity is a do-
mestic corporation and another entity 
is a foreign corporation, and 
‘‘(ii) such entities are included in the 
same applicable financial statement with 
respect to such year. 
‘‘(B) ELECTION
TO
INCLUDE
ELIGIBLE 
CORPORATIONS IN GROUP.— 
‘‘(i) IN GENERAL.—To the extent pro-
vided by the Secretary in regulations or 
other guidance, an international financial 
reporting group may elect (at such time 
and in such manner as the Secretary may 
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provide) to treat all eligible corporations 
with respect to such group as members of 
such group for purposes of this subsection. 
As a condition of such election, all such eli-
gible corporations must maintain (and pro-
vide access to) such books and records as 
the Secretary determines are satisfactory 
to allow for the application of this sub-
section with respect to such eligible cor-
porations. Such election may be revoked 
only with the consent of the Secretary. 
‘‘(ii) ELIGIBLE
CORPORATION.—The 
term ‘eligible corporation’ means, with re-
spect to any international financial report-
ing group, any corporation if at least 20 
percent of the stock of such corporation 
(determined by vote and value) is held (di-
rectly or indirectly) by members of such 
international financial reporting group (de-
termined without regard to this subpara-
graph). 
‘‘(4) ALLOWABLE PERCENTAGE.—For purposes 
of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘allowable 
percentage’ means, with respect to any specified 
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domestic corporation for any taxable year, the 
ratio (expressed as a percentage and not great-
er than 100 percent) of— 
‘‘(i) such corporation’s allocable share 
of the international financial reporting 
group’s reported net interest expense for 
the reporting year of such group which 
ends in or with such taxable year of such 
corporation, over 
‘‘(ii) such corporation’s reported net 
interest expense for such reporting year of 
such group. 
‘‘(B) 
REPORTED
NET
INTEREST
EX-
PENSE.—The term ‘reported net interest ex-
pense’ means— 
‘‘(i) with respect to any international 
financial reporting group for any reporting 
year, the excess of— 
‘‘(I) the aggregate amount of in-
terest 
expense 
reported 
in 
such 
group’s applicable financial state-
ments for such taxable year, over 
‘‘(II) the aggregate amount of in-
terest income reported in such group’s 
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applicable financial statements for 
such taxable year, and 
‘‘(ii) with respect to any specified do-
mestic corporation for any reporting year, 
the excess of— 
‘‘(I) the amount of interest ex-
pense of such corporation reported in 
the books and records of the inter-
national financial reporting group 
which are used in preparing such 
group’s applicable financial state-
ments for such taxable year, over 
‘‘(II) the amount of interest in-
come of such corporation reported in 
such books and records. 
‘‘(C) ALLOCABLE
SHARE
OF
REPORTED 
NET INTEREST EXPENSE.—With respect to any 
specified domestic corporation which is a mem-
ber of any international financial reporting 
group, such corporation’s allocable share of 
such group’s reported net interest expense for 
any reporting year is the portion of such ex-
pense which bears the same ratio to such ex-
pense as— 
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‘‘(i) the EBITDA of such corporation 
for such reporting year, bears to 
‘‘(ii) the EBITDA of such group for 
such reporting year. 
‘‘(D) EBITDA.— 
‘‘(i) 
IN
GENERAL.—The 
term 
‘EBITDA’ means, with respect to any re-
porting year, earnings before interest in-
come and interest expense, taxes, deprecia-
tion, depletion, and amortization— 
‘‘(I) as determined in the inter-
national financial reporting group’s 
applicable financial statements for 
such year, or 
‘‘(II) as determined in the books 
and records of the international finan-
cial reporting group which are used in 
preparing such statements if not de-
termined in such statements. 
‘‘(ii) DETERMINATION OF EBITDA OF 
A
SPECIFIED
DOMESTIC
CORPORATION.— 
The EBITDA of any specified domestic 
corporation shall be determined on a 
stand-alone basis and without regard to 
any distribution received by such corpora-
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tion from any other member of the inter-
national financial reporting group. 
‘‘(E) SPECIAL RULES FOR NON-POSITIVE 
EBITDA.— 
‘‘(i) NON-POSITIVE GROUP EBITDA.— 
In the case of any international financial 
reporting group the EBITDA of which is 
zero or less, paragraph (1) shall not apply 
to any specified domestic corporation 
which is a member of such group. 
‘‘(ii) 
NON-POSITIVE
ENTITY 
EBITDA.—In the case of any specified do-
mestic corporation the EBITDA of which 
is zero or less, the allowable percentage 
shall be 0 percent. 
‘‘(5) APPLICABLE
FINANCIAL
STATEMENT.— 
For purposes of this subsection, the term ‘applicable 
financial statement’ has the meaning given such 
term in section 451(b)(3). 
‘‘(6) REPORTING YEAR.—For purposes of this 
subsection, the term ‘reporting year’ means any year 
for which an applicable financial statement is pre-
pared or required to be prepared. 
‘‘(7) REGULATIONS.—The Secretary may issue 
such regulations or other guidance as are necessary 
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or appropriate to carry out the purposes of this sub-
section, including regulations or other guidance 
which— 
‘‘(A) allows or requires the adjustment of 
amounts reported on applicable financial state-
ments, 
‘‘(B) allows or requires any corporation to 
be included or excluded as a member of any 
international financial reporting group for pur-
poses of any determination or calculation under 
this subsection, 
‘‘(C) treats interest income of a controlled 
foreign corporation which is subpart F income, 
and any interest expense of such corporation 
which is related to subpart F income, as income 
and interest expense, respectively, of a specified 
domestic corporation for purposes of this sub-
section, 
‘‘(D) prevents the omission, inclusion, or 
duplication of any item or amount of interest 
income or interest expense, and 
‘‘(E) provides rules for the application of 
this subsection with respect to— 
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‘‘(i) a domestic corporation that is a 
partner (directly or indirectly) in a part-
nership, 
‘‘(ii) a domestic corporation that owns 
(directly or indirectly) an interest in an en-
tity that is fiscally transparent in one or 
more jurisdictions, and 
‘‘(iii) a foreign corporation to which 
this subsection applies by reason of para-
graph (2)(C).’’. 
(b) MODIFICATION OF APPLICATION OF LIMITATION 
ON BUSINESS INTEREST TO PARTNERSHIPS AND S COR-
PORATIONS.— 
(1) IN GENERAL.—Section 163(j)(4) is amend-
ed to read as follows: 
‘‘(4) APPLICATION
TO
PARTNERSHIPS
AND
S 
CORPORATIONS.— 
‘‘(A) IN
GENERAL.—In the case of any 
partnership or S corporation, this subsection 
shall be applied at the partner or shareholder 
level, respectively. 
‘‘(B) APPLICATION
OF
EXEMPTION
FOR 
CERTAIN SMALL BUSINESSES.—In the case of 
any partnership or S corporation which does 
not meet the gross receipts test of section 
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448(c) for any taxable year, paragraph (3) shall 
not apply with respect to any distributive, or 
pro rata, share of business interest and other 
items under this subsection of such partnership 
or S corporation. 
‘‘(C) REGULATIONS.— The Secretary shall 
prescribe such regulations or other guidance as 
may be necessary or appropriate to carry out 
the purposes of this section, including regula-
tions or other guidance— 
‘‘(i) for requiring or restricting the al-
location of business interest and other 
items under this subsection, 
‘‘(ii) to provide for such reporting re-
quirements as the Secretary determines 
appropriate, and 
‘‘(iii) for the application of this sub-
section in the case of tiered structures or 
trades or businesses described in para-
graph (7).’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
163(j)(3) is amended by inserting ‘‘except to the ex-
tent provided in paragraph (4)(B)’’ after ‘‘to such 
taxpayer for such taxable year’’. 
(c) CARRYFORWARD OF DISALLOWED INTEREST.— 
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(1) IN GENERAL.—Section 163 is amended by 
inserting after subsection (n), as added by sub-
section (a), the following new subsection: 
‘‘(o) CARRYFORWARD OF CERTAIN DISALLOWED IN-
TEREST.—The amount of any interest not allowed as a 
deduction for any taxable year by reason of subsection (j) 
or (n)(1) (whichever imposes the lower limitation with re-
spect to such taxable year) shall be treated as interest 
(and as business interest for purposes of subsection (j) 
to the extent such amount is properly attributable to a 
trade or business as defined in subsection (j)(7)) paid or 
accrued in the succeeding taxable year.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 163(j)(2) is amended to read 
as follows: 
‘‘(2) CARRYFORWARD CROSS-REFERENCE.—For 
carryforward treatment, see subsection (o).’’. 
(B) Section 381(c)(20) is amended to read 
as follows: 
‘‘(20) CARRYFORWARD OF DISALLOWED INTER-
EST.—The carryover of disallowed interest described 
in section 163(o) to taxable years ending after the 
date of distribution or transfer.’’. 
(C) Section 382(d)(3) is amended to read 
as follows: 
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‘‘(3) APPLICATION TO CARRYFORWARD OF DIS-
ALLOWED
INTEREST.—The term ‘pre-change loss’ 
shall include any carryover of disallowed interest de-
scribed in section 163(o) under rules similar to the 
rules of paragraph (1).’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2022. 
(e) TRANSITION RULE.—In the case of a partner’s 
first succeeding taxable year described in subclause (II) 
of section 163(j)(4)(B)(ii) of the Internal Revenue Code 
of 1986 (as in effect before the amendment made by sub-
section (b)) which begins after December 31, 2022, the 
amount of excess business interest which would (but for 
such amendment) be carried to such taxable year under 
such subclause shall be treated as interest (and as busi-
ness interest for purposes of section 163(j) of such Code, 
as amended by this section) paid or accrued in such tax-
able year. A rule similar to the rule in the preceding sen-
tence shall apply in the case of an S corporation and its 
shareholders. For carryover of any such interest dis-
allowed for such taxable year, see section 163(o) of such 
Code, as amended by this section. 
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Subpart C—Outbound International Provisions 
SEC. 138121. MODIFICATIONS TO DEDUCTION FOR FOR-
EIGN-DERIVED 
INTANGIBLE 
INCOME 
AND 
GLOBAL INTANGIBLE LOW-TAXED INCOME. 
(a) IN GENERAL.—Section 250(a) is amended to 
read as follows: 
‘‘(a) IN GENERAL.—In the case of a domestic cor-
poration for any taxable year, there shall be allowed as 
a deduction an amount equal to the sum of— 
‘‘(1) 24.8 percent of the foreign-derived intan-
gible income of such domestic corporation for such 
taxable year, plus 
‘‘(2) 28.5 percent of— 
‘‘(A) the global intangible low-taxed income 
(if any) which is included in the gross income 
of such domestic corporation under section 
951A for such taxable year, and 
‘‘(B) the amount treated as a dividend re-
ceived by such corporation under section 78 
which is attributable to the amount described in 
subparagraph (A).’’. 
(b) DEDUCTION TAKEN INTO ACCOUNT IN DETER-
MINING NET OPERATING LOSS DEDUCTION.—Section 
172(d) is amended by striking paragraph (9). 
(c) CERTAIN OTHER MODIFICATIONS.— 
(1) Section 250(b)(3) is amended— 
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(A) in subparagraph (A)(i)— 
(i) by striking ‘‘and’’ at the end of 
subclause (V), 
(ii) by striking ‘‘over’’ at the end of 
subclause (VI), and 
(iii) by adding at the end the fol-
lowing new subclauses: 
‘‘(VII) any income described in 
clause 
(i) 
or 
(ii) 
of 
section 
904(d)(2)(B), determined without re-
gard to clause (iii)(II) thereof, 
‘‘(VIII) except as otherwise pro-
vided by the Secretary, any income 
and gain from the sale or other dis-
position (including the deemed sale or 
other deemed disposition) of property 
giving rise to rents or royalties de-
rived in the active conduct of a trade 
or business, and 
‘‘(IX) 
any 
disqualified 
extraterritorial income, over’’, and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(C) DISQUALIFIED
EXTRATERRITORIAL 
INCOME.— 
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‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A)(i)(IX), the term ‘dis-
qualified extraterritorial income’ means 
any amount included in the gross income 
of the corporation with respect to any 
transaction for any taxable year if any 
amount could (determined after application 
of clause (ii) but without regard to any 
election under section 942(a)(3) as in ef-
fect before its repeal) be excluded from the 
gross income of the corporation with re-
spect to such transaction for such taxable 
year by reason of section 114 pursuant to 
the application of subsection (d) or (f) of 
section 101 of the American Jobs Creation 
Act of 2004. 
‘‘(ii) 
ELECTION
OUT
OF 
EXTRATERRITORIAL INCOME BENEFITS.— 
‘‘(I) IN
GENERAL.—Except as 
provided in subclause (II), the cor-
poration referred to in clause (i) may 
make an irrevocable election (at such 
time and in such form and manner as 
the Secretary may provide) to have 
subsections (d) and (f) of section 101 
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of the American Jobs Creation Act of 
2004 not apply with respect to such 
corporation for the taxable year for 
which such election is made and all 
succeeding taxable years (applicable 
with respect to all transactions, in-
cluding transactions occurring before 
such taxable year). 
‘‘(II) 
EXPANDED
AFFILIATED 
GROUPS.—In the case of any corpora-
tion which is a member of an ex-
panded affiliated group, the election 
described in subclause (I) may be 
made only by the common parent of 
such group (or, in the case of a com-
mon parent which is not required to 
file a return of tax under this chapter, 
the delegate of such common parent) 
and shall apply with respect to all 
members of such group. For purposes 
of the preceding sentence, the term 
‘expanded affiliated group’ means an 
affiliated group as defined in section 
1504(a), determined without regard to 
section 
1504(b)(3) 
and 
by 
sub-
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stituting ‘more than 50 percent’ for 
‘at least 80 percent’ each place it ap-
pears.’’. 
(C) Section 250(b)(5)(E) is amended by 
inserting 
‘‘(other 
than 
paragraph 
(3)(A)(i)(VIII))’’ after ‘‘For purposes of this 
subsection’’. 
(2) Section 613A(d)(1) is amended by striking 
‘‘and’’ at the end of subparagraph (D), by striking 
the period at the end of subparagraph (E) and in-
serting ‘‘, and’’, and by inserting after subparagraph 
(E) the following new subparagraph: 
‘‘(F) any deduction allowable under section 
250.’’. 
(d) 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 Decem-
ber 31, 2022. 
(2) CERTAIN
MODIFICATIONS.—The amend-
ments made by subsection (c) shall apply to taxable 
years beginning after the date of the enactment of 
this Act. 
(e) NO INFERENCE REGARDING CERTAIN MODIFICA-
TIONS.—The amendments made by subsection (c) shall 
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not be construed to create any inference with respect to 
the proper application of any provision of the Internal 
Revenue Code of 1986 with respect to any taxable year 
beginning before the taxable years to which such amend-
ments apply. 
(f) TRANSITION RULE FOR ACCELERATED PERCENT-
AGE REDUCTION.— 
(1) IN GENERAL.—In the case of any taxable 
year which includes December 31, 2022 (other than 
a taxable year with respect to which such date is the 
last day of such taxable year)— 
(A) the percentage in effect under section 
250(a)(1)(A) of the Internal Revenue Code of 
1986 shall be treated as being equal to the sum 
of— 
(i) the pre-effective date percentage of 
37.5 percent, plus 
(ii) the post-effective date percentage 
of 24.8 percent, and 
(B) the percentage in effect under section 
250(a)(1)(B) of such Code shall be treated as 
being equal to the sum of— 
(i) the pre-effective date percentage of 
50 percent, plus 
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(ii) the post-effective date percentage 
of 28.5 percent. 
(2) PRE- AND
POST-EFFECTIVE
DATE
PER-
CENTAGES.—For purposes of this subsection, with 
respect to any taxable year— 
(A) the term ‘‘pre-effective date percent-
age’’ means the ratio that the number of days 
in such taxable year which are before January 
1, 2023, bears to the number of days in such 
taxable year, and 
(B) the term ‘‘post-effective date percent-
age’’ means the ratio that the number of days 
in such taxable year which are after December 
31, 2022, bears to the number of days in such 
taxable year. 
SEC. 138122. REPEAL OF ELECTION FOR 1-MONTH DEFER-
RAL IN DETERMINATION OF TAXABLE YEAR 
OF SPECIFIED FOREIGN CORPORATIONS. 
(a) IN GENERAL.—Section 898(c) is amended by 
striking paragraph (2) and redesignating paragraph (3) 
as paragraph (2). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years of specified foreign 
corporations beginning after November 30, 2022. 
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(c) TRANSITION RULE.—In the case of a corporation 
that is a specified foreign corporation as of November 30, 
2022, such corporation’s first taxable year beginning after 
such date shall end at the same time as the first required 
year (within the meaning of section 898(c)(1) of the Inter-
nal Revenue Code of 1986) ending after such date. If any 
specified foreign corporation is required by this section (or 
the amendments made by this section) to change its tax-
able year for its first taxable year beginning after Novem-
ber 30, 2022— 
(1) such change shall be treated as initiated by 
such corporation, 
(2) such change shall be treated as having been 
made with the consent of the Secretary, and 
(3) the Secretary (including the Secretary’s del-
egate in the case of any reference to the Secretary 
in this paragraph) shall issue regulations or other 
guidance for allocating foreign taxes that accrue in 
such first taxable year between such taxable year 
and the prior taxable year, including such adjust-
ments as the Secretary determines are necessary or 
appropriate to carry out the purposes of this section. 
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SEC. 138123. MODIFICATIONS OF FOREIGN TAX CREDIT 
RULES APPLICABLE TO CERTAIN TAXPAYERS 
RECEIVING SPECIFIC ECONOMIC BENEFITS. 
(a) IN GENERAL.—Section 901 is amended by redes-
ignating subsection (n) as subsection (o) and by inserting 
after subsection (m) the following new subsection: 
‘‘(n) SPECIAL RULES RELATING TO DUAL CAPACITY 
TAXPAYERS.— 
‘‘(1) GENERAL
RULE.—Notwithstanding any 
other provision of this chapter, any amount paid or 
accrued by a dual capacity taxpayer to a foreign 
country or possession of the United States for any 
period shall not be considered a tax— 
‘‘(A) if, for such period, the foreign coun-
try or possession does not impose a generally 
applicable income tax, or 
‘‘(B) to the extent such amount exceeds 
the amount which would be paid or accrued by 
such dual capacity taxpayer under the generally 
applicable income tax imposed by such country 
or possession if such taxpayer were not a dual 
capacity taxpayer. 
Nothing in this paragraph shall be construed to 
imply the proper treatment of any such amount 
not in excess of the amount determined under 
subparagraph (B). 
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‘‘(2) DUAL
CAPACITY
TAXPAYER.—For pur-
poses of this subsection, the term ‘dual capacity tax-
payer’ means, with respect to any foreign country or 
possession of the United States, a person who— 
‘‘(A) is subject to a levy of such country or 
possession, and 
‘‘(B) receives (or will receive) directly or 
indirectly a specific economic benefit from such 
country or possession (or any political subdivi-
sion, agency, or instrumentality thereof). 
‘‘(3) GENERALLY APPLICABLE INCOME TAX.— 
For purposes of this subsection, the term ‘generally 
applicable income tax’ means an income tax (or a se-
ries of income taxes) which is generally imposed 
under the laws of a foreign country or possession of 
the United States on residents of such foreign coun-
try or possession that are not dual capacity tax-
payers.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or accrued after 
December 31, 2021. 
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SEC. 138124. MODIFICATIONS TO FOREIGN TAX CREDIT 
LIMITATIONS. 
(a) COUNTRY-BY-COUNTRY APPLICATION OF LIMITA-
TION ON FOREIGN TAX CREDIT BASED ON TAXABLE 
UNITS.— 
(1) IN GENERAL.—Section 904 is amended by 
inserting after subsection (d) the following new sub-
section: 
‘‘(e) COUNTRY-BY-COUNTRY APPLICATION BASED ON 
TAXABLE UNITS.— 
‘‘(1) IN
GENERAL.—Subsection (d) (and the 
provisions of this title referred to in paragraph (1) 
of such subsection) shall be applied separately with 
respect to each country by taking into account the 
aggregate income properly attributable or otherwise 
allocable to a taxable unit of the taxpayer which is 
a tax resident of (or, in the case of a branch, is lo-
cated in) such country. 
‘‘(2) TAXABLE UNITS.— 
‘‘(A) IN GENERAL.—Except as otherwise 
provided by the Secretary, each item shall be 
attributable or otherwise allocable to exactly 
one taxable unit of the taxpayer. 
‘‘(B) 
DETERMINATION
OF
TAXABLE 
UNITS.—Except as otherwise provided by the 
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Secretary, the taxable units of a taxpayer are 
as follows: 
‘‘(i) GENERAL TAXABLE UNIT.—The 
person that is the taxpayer and that is not 
otherwise described in a separate clause of 
this subparagraph. 
‘‘(ii) CERTAIN
FOREIGN
CORPORA-
TIONS.—Each foreign corporation with re-
spect to which the taxpayer is a United 
States shareholder. 
‘‘(iii) INTERESTS
IN
PASS-THROUGH 
ENTITIES.—Each interest held (directly or 
indirectly) by the taxpayer or any con-
trolled foreign corporation referred to in 
clause (ii) in a pass-through entity if such 
pass-through entity is a tax resident of a 
country other than the country with re-
spect to which such taxpayer or controlled 
foreign corporation (as the case may be) is 
a tax resident. 
‘‘(iv) BRANCHES.—Each branch (or 
portion thereof) the activities of which are 
directly or indirectly carried on by the tax-
payer or any controlled foreign corporation 
referred to in clause (ii) and which give 
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rise to a taxable presence in a country 
other than the country with respect to 
which such taxpayer or controlled foreign 
corporation (as the case may be) is a tax 
resident. 
‘‘(3) DEFINITIONS AND SPECIAL RULES.—For 
purposes of this subsection— 
‘‘(A) TAX RESIDENT.—Except as otherwise 
provided by the Secretary, the term ‘tax resi-
dent’ means a person or entity subject to tax 
under the tax law of a country as a resident. If 
an entity is organized under the law of a coun-
try, or resident in a country, that does not im-
pose an income tax with respect to such enti-
ties, such entity shall, except as provided by the 
Secretary, be treated as subject to tax under 
the tax law of such country for the purposes of 
the preceding sentence. 
‘‘(B) PASS-THROUGH ENTITY.—Except as 
otherwise provided by the Secretary, the term 
‘pass-through entity’ includes any partnership 
or other entity to the extent that income, gain, 
deduction, or loss of the entity is taken into ac-
count in determining the income or loss of a 
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person that owns (directly or indirectly) an in-
terest in such entity. 
‘‘(C) BRANCH.—Except as otherwise pro-
vided by the Secretary, the term ‘branch’ means 
a taxable presence of a tax resident in a coun-
try other than its country of residence as deter-
mined under such other country’s tax law. The 
Secretary shall provide regulations or other 
guidance applying such term to activities in a 
country that do not give rise to a taxable pres-
ence. 
‘‘(D) TREATMENT OF FISCALLY AUTONO-
MOUS
JURISDICTIONS.—Any fiscally autono-
mous jurisdiction shall be treated as a separate 
country. Any possession of the United States 
shall also be treated as a separate country. 
‘‘(E) 
POSSESSION
OF
THE
UNITED 
STATES.—The term ‘possession of the United 
States’ means each of American Samoa, the 
Commonwealth of the Northern Mariana Is-
lands, the Commonwealth of Puerto Rico, 
Guam, and the Virgin Islands. 
‘‘(4) REGULATIONS.—The Secretary shall issue 
such regulations or other guidance as may be nec-
essary or appropriate to carry out, or prevent avoid-
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ance of, the purposes of this subsection, including 
regulations or other guidance— 
‘‘(A) providing for the application of this 
subsection to an entity or arrangement that is 
considered a tax resident of more than one 
country or of no country, 
‘‘(B) providing for the application of this 
subsection to hybrid entities or hybrid trans-
actions (as such terms are used for purposes of 
section 267A), pass-through entities, passive 
foreign investment companies, trusts, and other 
entities or arrangements not otherwise de-
scribed in this subsection, and 
‘‘(C) providing for the assignment of any 
item (including foreign taxes and deductions) to 
taxable units, including in the case of amounts 
not otherwise taken into account in determining 
taxable income under this chapter.’’. 
(2) APPLICATION
OF
SEPARATE
LIMITATION 
LOSSES
WITH
RESPECT
TO
GLOBAL
INTANGIBLE 
LOW-TAXED INCOME.— 
(A) IN GENERAL.—Section 904(f)(5)(B) is 
amended to read as follows: 
‘‘(B) ALLOCATION OF LOSSES.—Except as 
otherwise provided in this subparagraph, the 
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separate limitation losses for any taxable year 
(to the extent such losses do not exceed the sep-
arate limitation incomes for such year) shall be 
allocated among (and operate to reduce) such 
incomes on a proportionate basis. In the case of 
a separate limitation loss for any taxable year 
in any category other than subparagraph 
(d)(1)(A), the amount of such separate limita-
tion loss shall be allocated among (and operate 
to reduce) separate limitation income in any 
category other than income described in sub-
paragraph (d)(1)(A) on a proportionate basis 
(without regard to income described in subpara-
graph (d)(1)(A)). The remaining separate limi-
tation losses may reduce separate limitation in-
come described in subparagraph (d)(1)(A) only 
to the extent that the aggregate amount of such 
losses exceeds the aggregate amount of separate 
limitation incomes (other than income described 
in subparagraph (d)(1)(A)) for such taxable 
year.’’. 
(B) 
INCOME
CATEGORY.—Section 
904(f)(5)(E)(i) is amended to read as follows: 
‘‘(i) INCOME
CATEGORY.—The term 
‘income category’ means each category of 
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income with respect to which this section is 
required to be applied separately by reason 
of any provision of this title.’’. 
(C) SEPARATE LIMITATION LOSS.—Section 
904(f)(5)(E)(iii) is amended to read as follows: 
‘‘(iii) SEPARATE LIMITATION LOSS.— 
The term ‘separate limitation loss’ means, 
with respect to any income category, the 
amount by which the gross income from 
sources outside the United States is ex-
ceeded by the sum of the deductions prop-
erly allocated and apportioned thereto.’’. 
(b) REPEAL OF SEPARATE APPLICATION TO FOR-
EIGN BRANCH INCOME.— 
(1) IN GENERAL.—Section 904(d)(1) is amend-
ed by striking subparagraph (B) and redesignating 
subparagraphs (C) and (D) as subparagraph (B) 
and (C). 
(2) COORDINATION WITH DEDUCTION FOR FOR-
EIGN-DERIVED
INTANGIBLE
INCOME.—Section 
250(b)(3)(A) is amended— 
(A) by striking subclause (VI) of clause (i) 
and inserting the following new subclause: 
‘‘(VI) the income which is attrib-
utable to 1 or more branches (within 
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the meaning of section 904(e)(3)(C)) 
or pass-through entities (within the 
meaning of section 904(e)(3)(B)) in 1 
or more foreign countries, over’’, and 
(B) by adding at the end the following 
flush sentence: 
‘‘For purposes of clause (i)(VI), the amount of 
income attributable to a branch or pass-through 
entity shall be determined under rules estab-
lished by the Secretary.’’. 
(3) AMENDMENTS.— 
(A) Section 904(d)(2)(A)(ii) is amended by 
striking ‘‘, foreign branch income,’’. 
(B) Section 904(d)(2)(H) is amended to 
read as follows: 
‘‘(H) TREATMENT OF INCOME TAX BASE 
DIFFERENCES.—The Secretary shall issue regu-
lations or other guidance assigning to the prop-
er category of income any tax imposed under 
the law of a foreign country or possession of the 
United States on an amount which does not 
constitute income under United States tax prin-
ciples.’’. 
(C) Section 904(d)(2) is amended by strik-
ing subparagraph (J). 
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‘‘(c) CARRYBACK AND CARRYOVER OF EXCESS TAX 
PAID.— 
‘‘(1) IN GENERAL.—Any amount by which all 
taxes’’, and 
(ii) by adding at the end the following 
new paragraph: 
‘‘(2) 
TEMPORARY
LIMITATION
ON 
CARRYFORWARD OF TAXES ON GLOBAL INTANGIBLE 
LOW-TAXED INCOME.— 
‘‘(A) IN GENERAL.—In the case of taxes 
paid or accrued with respect to amounts de-
scribed in subsection (d)(1)(A), paragraph (1) 
shall be applied by substituting ‘5 succeeding 
taxable years’ for ‘10 succeeding taxable years’. 
‘‘(B) TERMINATION.—Subparagraph (A) 
shall not apply to any tax paid or accrued in a 
taxable year beginning after December 31, 
2030.’’. 
(d) TREATMENT
OF CERTAIN TAX-EXEMPT DIVI-
DENDS.— 
(1) CERTAIN TAX-EXEMPT DIVIDENDS TAKEN 
INTO ACCOUNT IN APPLYING LIMITATIONS ON FOR-
EIGN TAX CREDITS.—Section 904(b) is amended by 
striking paragraph (4). 
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(2) CERTAIN
TAX-EXEMPT
DIVIDENDS
NOT 
TAKEN
INTO
ACCOUNT
IN
ALLOCATING
INTEREST 
EXPENSE.—Section 864(e)(3) is amended by strik-
ing ‘‘or 245(a)’’ and inserting ‘‘, 245(a), or 245A’’. 
(e) RULES FOR ALLOCATION OF CERTAIN DEDUC-
TIONS TO FOREIGN SOURCE GLOBAL INTANGIBLE LOW- 
TAXED INCOME FOR PURPOSES OF FOREIGN TAX CREDIT 
LIMITATION.—Section 904(b), as amended by the pre-
ceding provisions of this Act, is amended by adding at the 
end the following new paragraph: 
‘‘(4) DEDUCTIONS TREATED AS ALLOCABLE TO 
FOREIGN SOURCE GLOBAL INTANGIBLE LOW-TAXED 
INCOME.—In the case of a domestic corporation and 
solely for purposes of the application of subsection 
(a) with respect to amounts described in subsection 
(d)(1)(A), the taxpayer’s taxable income from 
sources without the United States shall be deter-
mined— 
‘‘(A) by allocating and apportioning any 
deduction allowed under section 250(a)(2) (and 
any deduction allowed under section 164(a)(3) 
for taxes imposed on amounts described in sec-
tion 250(a)(2)) to such income, and 
‘‘(B) by allocating and apportioning any 
other deduction to such income only if the Sec-
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retary determines that such deduction is di-
rectly allocable to such income. 
Any deduction which would (but for subparagraph 
(B)) have been allocated or apportioned to such in-
come shall only be allocated or apportioned to in-
come which is from sources within the United 
States.’’. 
(f) TREATMENT
OF
CERTAIN
ASSET
DISPOSI-
TIONS.—Section 904(b), as amended by the preceding pro-
visions of this Act, is amended by adding at the end the 
following new paragraph: 
‘‘(5) TREATMENT OF CERTAIN ASSET DISPOSI-
TIONS.— 
‘‘(A) IN GENERAL.—Except as otherwise 
provided by the Secretary, in the case of any 
covered asset disposition, the principles of sec-
tion 338(h)(16) shall apply in determining the 
source and character of any item for purposes 
of this part. 
‘‘(B) COVERED ASSET DISPOSITION.—For 
purposes of this paragraph, the term ‘covered 
asset 
disposition’ 
means 
any 
transaction 
which— 
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‘‘(i) is treated as a disposition of as-
sets under subchapter N of this chapter, 
and 
‘‘(ii) is treated as a disposition of 
stock of a corporation (or is disregarded) 
for purposes of the tax laws of a relevant 
foreign country or possession of the United 
States. 
‘‘(C) REGULATIONS.—The Secretary shall 
issue such regulations or other guidance as is 
necessary or appropriate to carry out, or to pre-
vent the avoidance of, the purposes of this 
paragraph.’’. 
(g) REDETERMINATION OF FOREIGN TAXES AND RE-
LATED CLAIMS.— 
(1) IN GENERAL.—Section 905(c) is amended— 
(A) in paragraph (1), by striking ‘‘or’’ at 
the end of subparagraph (B) and by inserting 
after subparagraph (C) the following new sub-
paragraphs: 
‘‘(D) the taxpayer makes a timely change 
in its choice to claim a credit or deduction for 
taxes paid or accrued, or 
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‘‘(E) there is any other change in the 
amount, or treatment, of taxes, which affects 
the taxpayer’s tax liability under this chapter,’’, 
(B) in paragraph (2)(B), by striking ‘‘Any 
such taxes’’ and inserting ‘‘Except as otherwise 
provided by the Secretary, any such taxes’’, and 
(C) by striking ‘‘ACCRUED’’ in the heading 
thereof. 
(2) MODIFICATION
TO
TIME
FOR
CLAIMING 
CREDIT OR DEDUCTION.—Section 901(a) is amended 
by striking the second sentence and inserting the fol-
lowing: ‘‘ Such choice for any taxable year may be 
made or changed at any time before the expiration 
of the applicable period prescribed by section 6511 
for making a claim for credit or refund of an over-
payment of the tax imposed by this chapter for such 
taxable year that is attributable to such amounts.’’. 
(3) MODIFICATION TO SPECIAL PERIOD OF LIM-
ITATION.—Section 6511(d)(3) is amended— 
(A) in subparagraph (A)— 
(i) by inserting ‘‘a change in the li-
ability for’’ before ‘‘any taxes paid or ac-
crued’’, 
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(ii) by striking ‘‘actually paid’’ and in-
serting ‘‘paid (or deemed paid under sec-
tion 960)’’, and 
(iii) by inserting ‘‘CHANGE IN THE LI-
ABILITY FOR’’ before ‘‘FOREIGN TAXES’’ in 
the heading thereof, and 
(B) in subparagraph (B), by striking ‘‘the 
allowance of a credit for the taxes’’ and insert-
ing ‘‘the allowance of an additional credit by 
reason of the change in liability for the taxes’’. 
(h) EFFECTIVE DATES.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2022. 
(2) MODIFICATION
OF
FOREIGN
TAX
CREDIT 
CARRYBACK
AND
CARRYFORWARD.—The amend-
ments made by subsection (c) shall apply to taxes 
paid or accrued in taxable years beginning after De-
cember 31, 2022. 
(3) TREATMENT OF CERTAIN ASSET DISPOSI-
TIONS.— 
(A) IN GENERAL.—The amendment made 
by subsection (f) shall apply to transactions 
after the date of the enactment of this Act. 
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(B) BINDING CONTRACT EXCEPTION.—The 
amendment made by subsection (f) shall not 
apply to any transaction which is made pursu-
ant to a written binding contract which was in 
effect on September 13, 2021, and is not modi-
fied in any material respect thereafter. 
(4) REDETERMINATION
OF
FOREIGN
TAXES 
AND RELATED CLAIMS.— 
(A) IN
GENERAL.—Except as otherwise 
provided in this paragraph, the amendments 
made by subsection (g) shall apply to taxes paid 
or accrued in taxable years beginning after De-
cember 31, 2021. 
(B) CERTAIN CHANGES.—The amendments 
made by subparagraphs (A) and (C) of sub-
section (g)(1) shall apply to changes that occur 
on or after the date which is 60 days after the 
date of the enactment of this Act. 
(C) MODIFICATION TO SPECIAL PERIOD OF 
LIMITATION.—The amendments made by sub-
section (g)(3) shall apply to taxes paid, accrued, 
or deemed paid in taxable years beginning after 
December 31, 2021. 
(i) REGULATIONS.—The Secretary shall issue regula-
tions or other guidance providing for the application of 
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subsections (d), (e), (f), and (g) of section 904 of the In-
ternal Revenue Code of 1986 (as amended by this section) 
with respect to amounts carried over under subsections 
(c), (f), or (g) from a taxable year with respect to which 
subsection (e) of such section does not apply to a taxable 
year with respect to which such subsection (e) does apply 
and from a taxable year with respect to which subsection 
(d)(1)(B) of such section (determined without regard to 
the amendments made by this section) applies to a taxable 
year with respect to which such section does not apply. 
SEC. 138125. FOREIGN OIL AND GAS EXTRACTION INCOME 
AND FOREIGN OIL RELATED INCOME TO IN-
CLUDE OIL SHALE AND TAR SANDS. 
(a) IN GENERAL.—Paragraphs (1)(A) and (2)(A) of 
section 907(c) are each amended by inserting ‘‘(or oil 
shale or tar sands)’’ after ‘‘oil or gas wells’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 138126. MODIFICATIONS TO INCLUSION OF GLOBAL IN-
TANGIBLE LOW-TAXED INCOME. 
(a) COUNTRY-BY-COUNTRY APPLICATION
OF SEC-
TION BASED ON CFC TAXABLE UNITS.—Section 951A is 
amended by adding at the end the following new sub-
section: 
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‘‘(g) COUNTRY-BY-COUNTRY APPLICATION OF SEC-
TION BASED ON CFC TAXABLE UNITS.— 
‘‘(1) IN GENERAL.—If any CFC taxable unit of 
a United States shareholder is a tax resident of (or, 
in the case of a branch, is located in) a country 
which is different from the country with respect to 
which any other CFC taxable unit of such United 
States shareholder is a tax resident (or, in the case 
of a branch, is located in)— 
‘‘(A) such shareholder’s global intangible 
low-taxed income for purposes of subsection (a) 
shall be the sum of the amounts of global intan-
gible low-taxed income determined separately 
with respect to each such country, and 
‘‘(B) for purposes of determining such sep-
arate amounts of global intangible low-taxed in-
come— 
‘‘(i) except as otherwise provided by 
the Secretary, any reference in subsection 
(b), (c), or (d) to a controlled foreign cor-
poration of such shareholder shall be treat-
ed as reference to a CFC taxable unit of 
such shareholder, and 
‘‘(ii) net CFC tested income, net 
deemed tangible income return, qualified 
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business asset investment, interest expense 
described in subsection (b)(2)(B), and such 
other items and amounts as the Secretary 
may provide, shall be determined sepa-
rately with respect to each such country by 
determining such amounts with respect to 
the CFC taxable units of such shareholder 
which are a tax resident of such country. 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) CFC 
TAXABLE
UNIT.—The term 
‘CFC taxable unit’ means any taxable unit de-
scribed in clause (ii), (iii), or (iv) of section 
904(e)(2)(B), determined— 
‘‘(i) by substituting ‘Each controlled 
foreign corporation’ for ‘Each foreign cor-
poration’ in clause (ii) of such section, and 
‘‘(ii) without regard to the references 
to the taxpayer in clauses (iii) and (iv) of 
such section. 
‘‘(B) APPLICATION
OF
OTHER
DEFINI-
TIONS.—Terms used in this subsection which 
are also used in section 904(e) shall have the 
same meaning as when used in section 904(e). 
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‘‘(3) SPECIAL
RULES.—For purposes of this 
subsection— 
‘‘(A) APPLICATION OF CERTAIN RULES.— 
Except as otherwise provided by the Secretary, 
rules similar to the rules of section 904(e) shall 
apply. 
‘‘(B) ALLOCATION OF GLOBAL INTANGIBLE 
LOW-TAXED INCOME TO CONTROLLED FOREIGN 
CORPORATIONS.—Except as otherwise provided 
by the Secretary, subsection (f)(2) shall be ap-
plied separately with respect to each CFC tax-
able unit.’’. 
(b) REGULATORY AUTHORITY.— 
(1) IN GENERAL.—Section 951A, as amended 
by subsection (a), is amended by adding at the end 
the following new subsection: 
‘‘(h) REGULATIONS.—The Secretary shall issue such 
regulations or other guidance as may be necessary or ap-
propriate to carry out, or prevent the avoidance of, the 
purposes of this section, including regulations or guidance 
which provide for— 
‘‘(1) the treatment of property if such property 
is transferred, or held, temporarily, 
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‘‘(2) the treatment of property if the avoidance 
of the purposes of this section is a factor in the 
transfer or holding of such property, 
‘‘(3) appropriate adjustments to the basis of 
stock and other ownership interests, and to earnings 
and profits, to reflect tested losses (whether or not 
taken into account in determining global intangible 
low-taxed income), 
‘‘(4) rules similar to the rules provided under 
the regulations or guidance issued under section 
904(e)(4), 
‘‘(5) other appropriate basis adjustments, 
‘‘(6) appropriate adjustments to be made, and 
appropriate tax attributes and records to be main-
tained, separately with respect to CFC taxable units, 
and 
‘‘(7) appropriate adjustments in determining 
tested income or tested loss if property is trans-
ferred between related parties or amounts are paid 
or accrued between related parties.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
951A(d) is amended— 
(A) by striking paragraph (4), and 
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(B) by redesignating the second paragraph 
(3) (relating to partnership property) as para-
graph (4). 
(c) CARRYOVER OF NET CFC TESTED LOSS.— 
(1) IN GENERAL.—Section 951A(c) is amended 
by adding at the end the following new paragraph: 
‘‘(3) CARRYOVER OF NET CFC TESTED LOSS.— 
‘‘(A) IN
GENERAL.—If the amount de-
scribed in paragraph (1)(B) with respect to any 
United States shareholder for any taxable year 
of such United States shareholder (determined 
after the application of this paragraph with re-
spect to amounts arising in preceding taxable 
years) exceeds the amount described in para-
graph (1)(A) with respect to such shareholder 
of such taxable year, the amount otherwise de-
scribed in paragraph (1)(B) with respect to 
such shareholder for the succeeding taxable 
year shall be increased by the amount of such 
excess. 
‘‘(B) PROPER
ADJUSTMENT
IN
ALLOCA-
TIONS OF GLOBAL INTANGIBLE LOW-TAXED IN-
COME
TO
CONTROLLED
FOREIGN
CORPORA-
TIONS.—Proper adjustments shall be made in 
the application of subsection (f)(2)(B) to take 
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into account any decrease in global intangible 
low-taxed income by reason of the application of 
subparagraph (A).’’. 
(2) COORDINATION
WITH
COUNTRY-BY-COUN-
TRY
APPLICATION.—Section 951A(g)(1)(B)(ii), as 
added by subsection (a), is amended by inserting 
‘‘any 
increase 
determined 
under 
subsection 
(c)(3)(A),’’ after ‘‘interest expense described in sub-
section (b)(2)(B),’’. 
(3) APPLICATION OF RULES WITH RESPECT TO 
OWNERSHIP CHANGES.—Section 382(d) is amended 
by adding at the end the following new paragraph: 
‘‘(4) APPLICATION TO CARRYOVER OF NET CFC 
TESTED LOSS.—The term ‘pre-change loss’ shall in-
clude any excess carried over under section 
951A(c)(3) under rules similar to the rules of para-
graph (1).’’. 
(d) REDUCTION IN NET DEEMED TANGIBLE INCOME 
RETURN FOR PURPOSES OF DETERMINING GLOBAL IN-
TANGIBLE LOW-TAXED INCOME.— 
(1) IN
GENERAL.—Section 951A(b)(2)(A) is 
amended by striking ‘‘10 percent’’ and inserting ‘‘5 
percent’’. 
(2) APPLICATION TO ASSETS LOCATED IN POS-
SESSIONS
OF
THE
UNITED
STATES.—Section 
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951A(b) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(3) APPLICATION TO ASSETS LOCATED IN POS-
SESSIONS OF THE UNITED STATES.—In the case of 
any specified tangible property located in a posses-
sion of the United States, paragraph (2)(A) and 
subsection (d) shall be applied by substituting ‘10 
percent’ for ‘5 percent’ in paragraph (2)(A).’’. 
(e) INCLUSION OF FOREIGN OIL AND GAS EXTRAC-
TION INCOME IN DETERMINING TESTED INCOME AND 
LOSS.—Section 951A(c)(2)(A)(i) is amended by inserting 
‘‘and’’ at the end of subclause (III), by striking ‘‘and’’ 
at the end of subclause (IV) and inserting ‘‘over’’, and 
by striking subclause (V). 
(f) COORDINATION WITH OTHER PROVISIONS.—Sec-
tion 951A(f)(1) is amended by adding at the end the fol-
lowing new subparagraph: 
‘‘(C) 
TREATMENT
OF
CERTAIN
REF-
ERENCES.—Except as otherwise provided by the 
Secretary, references to section 951 or section 
951(a) in sections 959, 961, 962, and such 
other provisions as the Secretary may identify 
shall include references to section 951A or sec-
tion 951A(a), respectively.’’. 
(g) EFFECTIVE DATE.— 
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(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years of foreign 
corporations beginning after December 31, 2022, 
and to taxable years of United States shareholders 
in which or with which such taxable years of foreign 
corporations end. 
(2) REGULATORY AUTHORITY AND COORDINA-
TION WITH OTHER PROVISIONS.—The amendments 
made by subsections (b) and (f) shall apply to tax-
able years of foreign corporations beginning 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 foreign corporations 
end. 
(h) NO INFERENCE REGARDING CERTAIN MODIFICA-
TIONS.—The amendments made by subsections (b) and (f) 
shall not be construed to create any inference with respect 
to the proper application of any provision of the Internal 
Revenue Code of 1986 with respect to any taxable year 
beginning before the taxable years to which such amend-
ments apply. 
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SEC. 138127. MODIFICATIONS TO DETERMINATION OF 
DEEMED PAID CREDIT FOR TAXES PROPERLY 
ATTRIBUTABLE TO TESTED INCOME. 
(a) INCREASE IN DEEMED PAID CREDIT.—Section 
960(d)(1) is amended by striking ‘‘80 percent’’ and insert-
ing ‘‘95 percent (100 percent in the case of tested foreign 
income taxes paid or accrued to a possession of the United 
States)’’. 
(b) INCLUSION OF TAXES PROPERLY ATTRIBUTABLE 
TO TESTED LOSS.— 
(1) IN GENERAL.—Section 960(d)(3) is amend-
ed to read as follows: 
‘‘(3) TESTED
FOREIGN
INCOME
TAXES.—For 
purposes of paragraph (1), the term ‘tested foreign 
income taxes’ means, with respect to any domestic 
corporation which is a United States shareholder of 
a controlled foreign corporation— 
‘‘(A) the foreign income taxes paid or ac-
crued by such foreign corporation which are 
properly attributable to the tested income or 
tested loss of such foreign corporation taken 
into account by such domestic corporation 
under section 951A, and 
‘‘(B) solely to the extent provided in regu-
lations prescribed by the Secretary, the foreign 
income taxes (as so defined) paid or accrued by 
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a foreign corporation (other than a controlled 
foreign corporation) which owns, directly or in-
directly, 80 percent or more (by vote or value) 
of the stock in such domestic corporation but 
only if— 
‘‘(i) such foreign income taxes are 
properly attributable to amounts of such 
controlled foreign corporation taken into 
account in determining tested income or 
tested loss under section 951A(c)(2), and 
‘‘(ii) no credit is allowed, in whole or 
in part, for such foreign taxes in any for-
eign jurisdiction.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
960(d)(2)(B) is amended by striking ‘‘the aggregate 
amount described in section 951A(c)(1)(A)’’ and in-
serting ‘‘the net CFC tested income (as defined in 
section 951A(c)(1))’’. 
(c) APPLICATION OF FOREIGN TAX CREDIT LIMITA-
TION TO AMOUNTS INCLUDED UNDER SECTION 78.— 
(1) Section 904(d)(2) is amended by redesig-
nating subparagraph (K) as subparagraph (L) and 
by inserting after subparagraph (J) the following 
new subparagraph: 
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‘‘(K) AMOUNTS INCLUDIBLE UNDER SEC-
TION 78.—Any amount includible in gross in-
come under section 78 shall be treated as in-
come in the same separate category as the re-
lated foreign taxes deemed paid.’’. 
(2) Section 904(d)(3)(G) is amended by strik-
ing the second sentence and inserting the following: 
‘‘Any amount included in gross income under section 
78 shall not be treated as a dividend.’’. 
(d) DISALLOWANCE OF FOREIGN TAX CREDIT WITH 
RESPECT
TO DISTRIBUTIONS
OF PREVIOUSLY TAXED 
GLOBAL
INTANGIBLE
LOW-TAXED
INCOME.—Section 
960(d) is amended by adding at the end the following new 
paragraph: 
‘‘(4) DISALLOWANCE OF FOREIGN TAX CREDIT 
WITH RESPECT TO DISTRIBUTIONS OF PREVIOUSLY 
TAXED GLOBAL INTANGIBLE LOW-TAXED INCOME.— 
No credit shall be allowed under section 901 for 20 
percent of any foreign income taxes paid or accrued 
(or deemed paid under section 960(b)(1)) with re-
spect to any amount excluded from gross income 
under section 959(a) by reason of an inclusion in 
gross income under section 951A(a).’’. 
(e) MODIFICATION OF DISALLOWANCE OF FOREIGN 
TAX CREDIT RESPECT
TO DISTRIBUTIONS
OF PRE-
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VIOUSLY TAXED GLOBAL INTANGIBLE LOW-TAXED IN-
COME.—Section 960(d)(4), as added by subsection (d), is 
amended by striking ‘‘20 percent’’ and inserting ‘‘5 per-
cent’’. 
(f) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years of foreign 
corporations beginning after December 31, 2022, 
and to taxable years of United States shareholders 
in which or with which such taxable years of foreign 
corporations end. 
(2) SUBSECTIONS
(c)
AND
(d).—The amend-
ments made by subsections (c) and (d) shall apply 
to taxable years of foreign corporations beginning 
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 foreign corpora-
tions end. 
(g) NO INFERENCE REGARDING CERTAIN MODIFICA-
TIONS.—The amendments made by subsections (c) and 
(d) shall not be construed to create any inference with re-
spect to the proper application of any provision of the In-
ternal Revenue Code of 1986 with respect to any taxable 
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year beginning before the taxable years to which such 
amendments apply. 
SEC. 138128. DEDUCTION FOR FOREIGN SOURCE PORTION 
OF DIVIDENDS LIMITED TO CONTROLLED 
FOREIGN CORPORATIONS, ETC. 
(a) IN GENERAL.—Section 245A is amended— 
(1) in subsections (a), (c)(1), and (c)(2), by 
striking ‘‘specified 10-percent owned foreign cor-
poration’’ each place it appears and inserting ‘‘con-
trolled foreign corporation’’, and 
(2) by striking subsection (b). 
(b) MODIFICATIONS RELATED TO DETERMINATION 
OF STATUS
AS
A CONTROLLED FOREIGN CORPORA-
TION.— 
(1) Subpart F of part III of subchapter N of 
chapter 1 is amended by inserting after section 
951A the following new section: 
‘‘SEC. 951B. AMOUNTS INCLUDED IN GROSS INCOME OF 
FOREIGN 
CONTROLLED 
UNITED 
STATES 
SHAREHOLDERS. 
‘‘(a) IN GENERAL.—In the case of any foreign con-
trolled United States shareholder of a foreign controlled 
foreign corporation— 
‘‘(1) this subpart (other than sections 951A, 
951(b), and 957) shall be applied with respect to 
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such shareholder (separately from, and in addition 
to, the application of this subpart without regard to 
this section)— 
‘‘(A) by substituting ‘foreign controlled 
United States shareholder’ for ‘United States 
shareholder’ each place it appears therein, and 
‘‘(B) by substituting ‘foreign controlled 
foreign corporation’ for ‘controlled foreign cor-
poration’ each place it appears therein, and 
‘‘(2) section 951A shall be applied with respect 
to such shareholder — 
‘‘(A) by treating each reference to ‘United 
States shareholder’ in such sections as includ-
ing a reference to such shareholder, and 
‘‘(B) by treating each reference to ‘con-
trolled foreign corporation’ in such sections as 
including a reference to such foreign controlled 
foreign corporation. 
‘‘(b) 
FOREIGN
CONTROLLED
UNITED
STATES 
SHAREHOLDER.—For purposes of this section, the term 
‘foreign controlled United States shareholder’ means, with 
respect to any foreign corporation, any United States per-
son which would be a United States shareholder with re-
spect to such foreign corporation if— 
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‘‘(1) section 951(b) were applied by substituting 
‘more than 50 percent’ for ‘10 percent or more’, and 
‘‘(2) section 958(b) were applied without regard 
to paragraph (4) thereof. 
‘‘(c) FOREIGN CONTROLLED FOREIGN CORPORA-
TION.—For purposes of this section, the term ‘foreign con-
trolled foreign corporation’ means a foreign corporation, 
other than a controlled foreign corporation, which would 
be a controlled foreign corporation if section 957(a)(1) 
were applied— 
‘‘(1) by substituting ‘foreign controlled United 
States shareholders’ for ‘United States share-
holders’, and 
‘‘(2) by substituting ‘section 958(b) (other than 
paragraph (4) thereof)’ for ‘section 958(b)’. 
‘‘(d) REGULATIONS.—The Secretary shall prescribe 
such regulations or other guidance as may be necessary 
or appropriate to carry out the purposes of this section, 
including regulations or other guidance— 
‘‘(1) to treat a foreign controlled United States 
shareholder or a foreign controlled foreign corpora-
tion as a United States shareholder or as a con-
trolled foreign corporation, respectively, for purposes 
of provisions of this title other than this subpart, 
and 
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‘‘(2) to prevent the avoidance of the purposes of 
this section.’’. 
(2) Section 957(a) is amended to read as fol-
lows: 
‘‘(a) CONTROLLED FOREIGN CORPORATION.—For 
purposes of this title— 
‘‘(1) IN GENERAL.—The term ‘controlled for-
eign corporation’ means any foreign corporation if 
more than 50 percent of— 
‘‘(A) the total combined voting power of all 
classes of stock of such corporation entitled to 
vote, or 
‘‘(B) the total value of the stock of such 
corporation, 
is owned (within the meaning of section 958(a)), or 
is considered as owned by applying the rules of own-
ership of section 958(b), by United States share-
holders on any day during the taxable year of such 
foreign corporation. 
‘‘(2) ELECTION
TO
TREAT
A
FOREIGN
COR-
PORATION AS A CONTROLLED FOREIGN CORPORA-
TION FOR CERTAIN PURPOSES.— 
‘‘(A) IN GENERAL.—In the case of a for-
eign corporation with respect to which an elec-
tion is in effect under this paragraph, such for-
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eign corporation shall be treated as a controlled 
foreign corporation for purposes of this title. 
‘‘(B) EXCEPTIONS.—Notwithstanding any 
other provision of this paragraph, a foreign cor-
poration shall not be treated as a controlled for-
eign corporation by reason of this paragraph 
for purposes of any provision of this title if the 
Secretary determines that treatment of such 
foreign corporation as a controlled foreign cor-
poration for purposes of such provision would 
be inconsistent with the purposes of this sub-
chapter. 
‘‘(C) ELECTION.— 
‘‘(i) BY
WHOM.—An election under 
subparagraph (A) shall be effective only if 
made by the foreign corporation and by all 
United States shareholders of such foreign 
corporation (determined as of the time of 
such election by such foreign corporation). 
‘‘(ii) WITH RESPECT TO WHOM.—Any 
election under this paragraph, once effec-
tive, shall apply to such foreign corporation 
and to all United States shareholders of 
such foreign corporation (including any 
person who becomes a United States 
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shareholder of such foreign corporation 
after such election takes effect). 
‘‘(iii) TIME, MANNER, ETC.—The elec-
tion under this paragraph shall be made at 
such time and in such manner as the Sec-
retary may provide and, once effective, 
may be revoked only with the consent of 
the Secretary. 
‘‘(D) REGULATIONS.—The Secretary shall 
issue such regulations or other guidance as may 
be necessary or appropriate to carry out the 
purposes of this paragraph, including regula-
tions or other guidance for the application of 
this paragraph to an acquisition described in 
section 381(a) with respect to any corporation 
to which an election under this paragraph ap-
plies.’’. 
(3) Section 958(b) is amended— 
(A) by inserting after paragraph (3) the 
following: 
‘‘(4) Subparagraphs (A), (B), and (C) of sec-
tion 318(a)(3) shall not be applied so as to consider 
a United States person as owning stock which is 
owned by a person who is not a United States per-
son.’’, and 
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(B) by striking ‘‘Paragraph (1)’’ in the 
last sentence and inserting ‘‘Paragraphs (1) 
and (4)’’. 
(4) Section 959(b) is amended— 
(A) by striking ‘‘the earnings and profits 
of a controlled foreign corporation’’ and insert-
ing ‘‘the earnings and profits of a foreign cor-
poration’’, 
(B) by striking ‘‘another controlled foreign 
corporation’’ and inserting ‘‘a controlled foreign 
corporation’’, 
(C) by striking ‘‘such other controlled for-
eign corporation’’ and inserting ‘‘such con-
trolled foreign corporation’’, and 
(D) by striking ‘‘of such United States 
shareholder in the controlled foreign corpora-
tion’’ and inserting ‘‘of such United States 
shareholder in the foreign corporation’’. 
(5) The table of sections for subpart F of part 
III of subchapter N of chapter 1 is amended by in-
serting after the item relating to section 951A the 
following new item: 
‘‘Sec. 951B. Amounts included in gross income of foreign controlled United 
States shareholders.’’. 
(c) CERTAIN OTHER MODIFICATIONS.— 
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(1) Section 245A(e)(4) is amended by striking 
‘‘an amount received’’ and all that follows through 
‘‘for which the controlled foreign corporation re-
ceived a deduction’’ and inserting ‘‘any dividend re-
ceived from a controlled foreign corporation for 
which such controlled foreign corporation received a 
deduction’’. 
(2) Section 245A(g) is amended to read as fol-
lows: 
‘‘(g) REGULATIONS.—The Secretary shall prescribe 
such regulations or other guidance as may be necessary 
or appropriate to carry out the purposes of this section, 
including regulations or other guidance for— 
‘‘(1) the treatment of United States share-
holders owning stock of a controlled foreign corpora-
tion through a partnership, and 
‘‘(2) the denial of all or a portion of the deduc-
tion under this section with respect to dividends re-
ceived from foreign corporations in situations in 
which— 
‘‘(A) any portion of the dividend is out of 
earnings and profits arising from transactions 
with related parties which— 
‘‘(i) do not occur in the ordinary 
course of a trade or business, and 
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‘‘(ii) occur on or after January 1, 
2018, and during a taxable year to which 
section 951A did not apply, or 
‘‘(B) a transfer or issuance of stock on or 
after January 1, 2018, results in a reduction in 
a United States shareholder’s pro rata share of 
a controlled foreign corporation’s subpart F in-
come or tested income (as defined in section 
951A).’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Section 91 is amended— 
(A) in subsection (a), by striking ‘‘specified 
10-percent owned foreign corporation (as de-
fined in section 245A)’’ and inserting ‘‘con-
trolled foreign corporation’’, and 
(B) in subsection (e), by striking ‘‘specified 
10-percent owned foreign corporation’’ and in-
serting ‘‘controlled foreign corporation’’. 
(2)(A) The heading of section 245A is amended 
by striking ‘‘SPECIFIED
10-PERCENT
OWNED 
FOREIGN CORPORATIONS’’ and inserting ‘‘CON-
TROLLED FOREIGN CORPORATIONS’’. 
(B) The item relating to section 245A in the 
table of sections for part VIII of subchapter B of 
chapter 1 is amended by striking ‘‘specified 10-per-
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cent owned foreign corporations’’ and inserting 
‘‘controlled foreign corporations’’. 
(3) Section 246(c)(5) is amended— 
(A) in subparagraph (B), by striking 
‘‘specified 10-percent owned foreign corpora-
tion’’ each place it appears and inserting ‘‘con-
trolled foreign corporation’’, and 
(B) by striking ‘‘SPECIFIED
10-PERCENT 
OWNED FOREIGN CORPORATION’’ in the heading 
and inserting ‘‘CONTROLLED
FOREIGN
COR-
PORATION’’. 
(4) Section 904 is amended— 
(A) in subsection (b)(4), by striking ‘‘spec-
ified 10-percent owned foreign corporation’’ 
both places it appears and inserting ‘‘controlled 
foreign corporation’’, and 
(B) in subsection (d)(2)(E)— 
(i) in clause (i)(I), by striking ‘‘(as 
defined in section 245A(b))’’, and 
(ii) by redesignating clause (ii) as 
clause (iii) and by inserting after clause (i) 
the following new clause: 
‘‘(ii) SPECIFIED 10-PERCENT OWNED 
FOREIGN CORPORATION.—For purposes of 
this subparagraph— 
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‘‘(I) IN
GENERAL.—The term 
‘specified 10-percent owned foreign 
corporation’ means any foreign cor-
poration with respect to which any do-
mestic corporation is a United States 
shareholder with respect to such cor-
poration. 
‘‘(II) EXCLUSION
OF
PASSIVE 
FOREIGN INVESTMENT COMPANIES.— 
Such term shall not include any cor-
poration which is a passive foreign in-
vestment company (as defined in sec-
tion 1297) with respect to the share-
holder and which is not a controlled 
foreign corporation.’’. 
(5) Section 909(b) is amended by striking ‘‘(as 
defined in section 245A(b) without regard to para-
graph (2) thereof)’’ and inserting ‘‘(as defined in 
section 904(d)(2)(E)(ii) without regard to subclause 
(II) thereof)’’. 
(6) Section 961(d) is amended— 
(A) by striking ‘‘specified 10-percent 
owned foreign corporation (as defined in section 
245A)’’ and inserting ‘‘controlled foreign cor-
poration’’, and 
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(B) by striking ‘‘SPECIFIED 10-PERCENT 
OWNED FOREIGN CORPORATION’’ in the head-
ing and inserting ‘‘CONTROLLED
FOREIGN 
CORPORATION’’. 
(e) EFFECTIVE DATES.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to distributions made after 
the date of the enactment of this Act. 
(2) MODIFICATIONS RELATED TO DETERMINA-
TION OF STATUS AS A CONTROLLED FOREIGN COR-
PORATION.—The amendments made by subsection 
(b) shall apply to taxable years of foreign corpora-
tions beginning after the date of the enactment of 
this Act, and taxable years of United States persons 
in which or with which such taxable years of foreign 
corporations end. 
(f) NO INFERENCE REGARDING CERTAIN MODIFICA-
TIONS.—The amendments made by subsections (b)(1), 
(b)(3), (b)(5), and (c) shall not be construed to create any 
inference with respect to the proper application of any pro-
vision of the Internal Revenue Code of 1986 with respect 
to distributions made, or taxable years beginning, respec-
tively, before the distributions or taxable years, respec-
tively, to which such amendments apply. 
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section 958(a)) as of the close of the 
last relevant day of such foreign cor-
poration’s taxable year, and 
‘‘(II) while such foreign corpora-
tion was a controlled foreign corpora-
tion and before such shareholder 
owned (within the meaning of section 
958(a)) such stock. 
‘‘(4) NONTAXED CURRENT DIVIDEND SHARE.— 
‘‘(A) IN
GENERAL.—In the case of any 
United States shareholder with respect to a for-
eign corporation, the nontaxed current dividend 
share determined under this paragraph is the 
nontaxed current dividend percentage of the 
subpart F income of such foreign corporation 
for the taxable year. 
‘‘(B) NONTAXED CURRENT DIVIDEND PER-
CENTAGE.—For purposes of this paragraph, the 
term ‘nontaxed current dividend percentage’ 
means, in the case of any United States share-
holder with respect to a foreign corporation for 
any taxable year of such foreign corporation, 
the ratio (expressed as a percentage) of— 
‘‘(i) the amount of nontaxed current 
dividends with respect to such taxable year 
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received with respect to the stock of such 
foreign corporation which such shareholder 
owns (within the meaning of section 
958(a)) at the time of the dividend on a 
day in which such corporation is a con-
trolled foreign corporation, divided by 
‘‘(ii) such foreign corporation’s earn-
ings and profits for such taxable year 
(computed as of the close of such taxable 
year without diminution by reason of any 
distributions made during such taxable 
year). 
‘‘(C) NONTAXED CURRENT DIVIDENDS.— 
For purposes of this paragraph, the term 
‘nontaxed current dividends’ means the portion 
of any amount received with respect to stock to 
the extent such amount (without regard to 
amounts included in the gross income of a 
United States shareholder for the taxable year 
by reason of this subpart)— 
‘‘(i) would result in a dividend out of 
the corporation’s earnings and profits for 
the taxable year (including a dividend 
under section 1248 attributable to earn-
ings and profits for the taxable year), and 
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preciation) is required to be included in inven-
tory costs of the taxpayer under section 
263A(a)(1)(A). 
‘‘(B) CERTAIN
COSTS
OF
FOREIGN
RE-
LATED PARTIES.—Such term shall also include 
so much of any amount which is paid or in-
curred by the taxpayer to a foreign person 
which is a related party of the taxpayer, is de-
scribed in paragraph (2)(A) of section 263A(a), 
and is required to be included in inventory costs 
of the taxpayer under paragraph (1)(A) of such 
section, as exceeds the sum of— 
‘‘(i) the direct costs of such property 
in the hands of such foreign person, plus 
‘‘(ii) so much of the costs described in 
section 263A(a)(2)(B) with respect to such 
property in the hands of such foreign per-
son as the taxpayer demonstrates to the 
satisfaction of the Secretary are attrib-
utable to amounts— 
‘‘(I) paid or incurred by such for-
eign person to a United States person 
or a person which is not a related 
party of the taxpayer, or 
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