I 
112TH CONGRESS 
1ST SESSION H. R. 3020 
To amend the Internal Revenue Code of 1986 to allow certain Puerto Rico 
corporations to elect to be treated as domestic corporations. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 22, 2011 
Mr. PIERLUISI (for himself, Mr. YOUNG of Alaska, and Mr. SERRANO) intro-
duced the following bill; which was referred to the Committee on Ways 
and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to allow cer-
tain Puerto Rico corporations to elect to be treated as 
domestic 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 ‘‘Puerto Rico Invest-
ment Promotion Act of 2011’’. 
VerDate Mar 15 2010 
04:04 Sep 27, 2011
Jkt 099200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H3020.IH
H3020
PWALKER on DSK5TPTVN1PROD with BILLS
SEC. 2. CERTAIN PUERTO RICO CORPORATIONS MAY 
ELECT TO BE TREATED AS DOMESTIC COR-
PORATIONS. 
(a) IN GENERAL.—Subpart D of part III of sub-
chapter N of chapter 1 of the Internal Revenue Code of 
1986 (relating to possessions of the United States) is 
amended by inserting after section 933 the following new 
section: 
‘‘SEC. 933A. ELECTION BY PUERTO RICO CORPORATIONS 
TO BE TREATED AS DOMESTIC CORPORA-
TIONS. 
‘‘(a) IN GENERAL.—A qualified Puerto Rico corpora-
tion for which an election under this section is in effect 
for any taxable year shall be treated for such year as a 
domestic corporation for purposes of this title. 
‘‘(b) QUALIFIED PUERTO RICO CORPORATION.—For 
purposes of this section, the term ‘qualified Puerto Rico 
corporation’ means any corporation if— 
‘‘(1) the corporation is incorporated under the 
laws of Puerto Rico, and 
‘‘(2) at least 50 percent of its gross income (de-
termined without regard to subsection (c)) for the 
taxable year is derived from sources within Puerto 
Rico. 
‘‘(c) EXCLUSION
OF PUERTO RICO SOURCE IN-
COME.— 
VerDate Mar 15 2010 
04:04 Sep 27, 2011
Jkt 099200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H3020.IH
H3020
PWALKER on DSK5TPTVN1PROD with BILLS
‘‘(1) IN GENERAL.—In the case of a qualified 
Puerto Rico corporation for which an election under 
this section is in effect for any taxable year, gross 
income for such year shall not include income de-
rived from sources within Puerto Rico. 
‘‘(2) DENIAL OF CERTAIN FOREIGN TAX CRED-
ITS.—No credit shall be allowed for the amount of 
taxes paid or accrued to a foreign country or posses-
sion of the United States to the extent such taxes 
are properly allocable to amounts excluded from 
gross income under paragraph (1). 
‘‘(d) RULES RELATING TO ELECTION.— 
‘‘(1) PERIOD ELECTION IN EFFECT.— 
‘‘(A) IN GENERAL.—Except as otherwise 
provided in this paragraph, an election under 
this section shall apply to the taxable year for 
which made and all subsequent taxable years. 
‘‘(B) REVOCATION.— 
‘‘(i) REVOCATION BY CORPORATION.— 
A corporation may revoke an election 
under this section for any taxable year 
only if the election has been in effect for 
at least the 3 most recent preceding tax-
able years. 
VerDate Mar 15 2010 
04:04 Sep 27, 2011
Jkt 099200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H3020.IH
H3020
PWALKER on DSK5TPTVN1PROD with BILLS
‘‘(ii) CEASING TO BE QUALIFIED.—An 
election under this section shall be revoked 
by the Secretary for any taxable year for 
which the corporation fails to meet the re-
quirements of subsection (b). 
‘‘(iii) EFFECT OF REVOCATION.—Ex-
cept as provided in subparagraph (C), a 
revocation under this subparagraph shall 
apply to the taxable year for which revoked 
and all subsequent taxable years. 
‘‘(C) ELECTION AFTER REVOCATION.—An 
election under this section may be made after 
a revocation under subparagraph (B), but the 
election may not apply to any taxable year be-
fore the 4th taxable year following the most re-
cent preceding taxable year for which the elec-
tion was in effect. 
‘‘(2) EFFECT OF MAKING AND TERMINATING 
ELECTION.— 
‘‘(A) MAKING ELECTION.—For purposes of 
section 367, any qualified Puerto Rico corpora-
tion making an election under this section shall 
be treated as transferring (as of the 1st day of 
the 1st taxable year to which such election ap-
plies) all of its assets to a domestic corporation 
VerDate Mar 15 2010 
04:04 Sep 27, 2011
Jkt 099200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H3020.IH
H3020
PWALKER on DSK5TPTVN1PROD with BILLS