business income (as defined in 
clause (ii) of this subparagraph) 
for the portion of the testing pe-
riod, if any, that includes taxable 
years beginning on or after Janu-
ary 1, 2011, 
is at least 80 percent, and 
‘‘(II) the active foreign business 
percentage for such taxable year shall 
equal the weighted average percentage 
determined under subclause (I). 
‘‘(2) ACTIVE
FOREIGN
BUSINESS
PERCENT-
AGE.—Except as provided in paragraph (1)(B)(iv), 
the term ‘active foreign business percentage’ means, 
with respect to any existing 80/20 company, the per-
centage which— 
‘‘(A) the active foreign business income of 
such company for the testing period, is of 
‘‘(B) the gross income of such company for 
the testing period from all sources. 
‘‘(3) AGGREGATION RULES.—For purposes of 
applying paragraph (1) (other than subparagraphs 
(A)(i) and (B)(iv) thereof) and paragraph (2)— 
‘‘(A) IN
GENERAL.—The corporation re-
ferred to in paragraph (1)(A) and all of such 
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corporation’s subsidiaries shall be treated as 
one corporation. 
‘‘(B) SUBSIDIARIES.—For purposes of sub-
paragraph (A), the term ‘subsidiary’ means any 
corporation in which the corporation referred to 
in subparagraph (A) owns (directly or indi-
rectly) stock meeting the requirements of sec-
tion 1504(a)(2) (determined by substituting ‘50 
percent’ for ‘80 percent’ each place it appears 
and without regard to section 1504(b)(3)). 
‘‘(4) REGULATIONS.—The Secretary may issue 
such regulations or other guidance as is necessary or 
appropriate to carry out the purposes of this section, 
including regulations or other guidance which pro-
vide for the proper application of the aggregation 
rules described in paragraph (3).’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 861 is amended by striking sub-
section (c) and by redesignating subsections (d), (e), 
and (f) as subsections (c), (d), and (e), respectively. 
(2) Paragraph (9) of section 904(h) is amended 
to read as follows: 
‘‘(9) TREATMENT OF CERTAIN DOMESTIC COR-
PORATIONS.—In the case of any dividend treated as 
not from sources within the United States under 
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section 861(a)(2)(A), the corporation paying such 
dividend shall be treated for purposes of this sub-
section as a United States-owned foreign corpora-
tion.’’. 
(3) Subsection (c) of section 2104 is amended 
in the last sentence by striking ‘‘or to a debt obliga-
tion of a domestic corporation’’ and all that follows 
and inserting a period. 
(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, 2010. 
(2) GRANDFATHER
RULE
FOR
OUTSTANDING 
DEBT OBLIGATIONS.— 
(A) IN GENERAL.—The amendments made 
by this section shall not apply to payments of 
interest on obligations issued before the date of 
the enactment of this Act. 
(B) EXCEPTION
FOR
RELATED
PARTY 
DEBT.—Subparagraph (A) shall not apply to 
any interest which is payable to a related per-
son (determined under rules similar to the rules 
of section 954(d)(3)). 
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(C) SIGNIFICANT MODIFICATIONS TREAT-
ED AS NEW ISSUES.—For purposes of subpara-
graph (A), a significant modification of the 
terms of any obligation (including any extension 
of the term of such obligation) shall be treated 
as a new issue. 
SEC. 308. SOURCE RULES FOR INCOME ON GUARANTEES. 
(a) AMOUNTS
SOURCED
WITHIN
THE
UNITED 
STATES.—Subsection (a) of section 861 is amended by 
adding at the end the following new paragraph: 
‘‘(9) GUARANTEES.—Amounts received, directly 
or indirectly, from— 
‘‘(A) a noncorporate resident or domestic 
corporation for the provision of a guarantee of 
any indebtedness of such resident or corpora-
tion, or 
‘‘(B) any foreign person for the provision 
of a guarantee of any indebtedness of such per-
son, if such amount is connected with income 
which is effectively connected (or treated as ef-
fectively connected) with the conduct of a trade 
or business in the United States.’’. 
(b) AMOUNTS SOURCED WITHOUT
THE UNITED 
STATES.—Subsection (a) of section 862 is amended by 
striking ‘‘and’’ at the end of paragraph (7), by striking 
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the period at the end of paragraph (8) and inserting ‘‘; 
and’’, and by adding at the end the following new para-
graph: 
‘‘(9) amounts received, directly or indirectly, 
from a foreign person for the provision of a guar-
antee of indebtedness of such person other than 
amounts which are derived from sources within the 
United States as provided in section 861(a)(9).’’. 
(c) CONFORMING AMENDMENT.—Clause (ii) of sec-
tion 864(c)(4)(B) is amended by striking ‘‘dividends or in-
terest’’ and inserting ‘‘dividends, interest, or amounts re-
ceived for the provision of guarantees of indebtedness’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to guarantees issued after the date 
of the enactment of this Act. 
SEC. 309. LIMITATION ON EXTENSION OF STATUTE OF LIMI-
TATIONS FOR FAILURE TO NOTIFY SEC-
RETARY OF CERTAIN FOREIGN TRANSFERS. 
(a) IN GENERAL.—Paragraph (8) of section 6501(c) 
is amended— 
(1) by striking ‘‘In the case of any information’’ 
and inserting the following: 
‘‘(A) IN GENERAL.—In the case of any in-
formation’’; and 
(2) by adding at the end the following: 
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