I 
114TH CONGRESS 
1ST SESSION H. R. 3934 
To amend the Internal Revenue Code of 1986 to limit the interest deduction 
for excessive interest of members of financial reporting groups. 
IN THE HOUSE OF REPRESENTATIVES 
NOVEMBER 5, 2015 
Mr. POCAN (for himself, Ms. NORTON, Mr. GARAMENDI, Ms. LEE, Mr. ELLI-
SON, and Mr. NADLER) 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 limit the 
interest deduction for excessive interest of members of 
financial reporting groups. 
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 ‘‘Corporate Fair Share 
Tax Act’’. 
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SEC. 2. LIMITATION ON INTEREST DEDUCTION FOR EXCES-
SIVE INTEREST OF MEMBERS OF FINANCIAL 
REPORTING GROUPS. 
(a) IN GENERAL.—Section 163 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
(n) as subsection (o) and by inserting after subsection (m) 
the following: 
‘‘(n) LIMITATION ON EXCESSIVE INTEREST OF MEM-
BERS OF FINANCIAL REPORTING GROUPS.— 
‘‘(1) LIMITATION.— 
‘‘(A) IN GENERAL.—If this subsection ap-
plies to any corporation for any taxable year, no 
deduction shall be allowed under this chapter 
for the taxable year for interest expense to the 
extent that such expense exceeds the sum of— 
‘‘(i) the amount of interest on indebt-
edness of the corporation includible in the 
corporation’s gross income for the taxable 
year, plus 
‘‘(ii) the corporation’s proportionate 
share of the financial reporting group’s net 
interest expense for the taxable year com-
puted under United States income tax 
principles. 
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‘‘(B) PROPORTIONATE SHARE OF NET IN-
TEREST EXPENSE.—For purposes of subpara-
graph (A)(ii)— 
‘‘(i) IN
GENERAL.—A corporation’s 
proportionate share of the financial report-
ing group’s net interest expense means the 
amount equal to the percentage of the 
group’s net interest expense which bears 
the same percentage as the corporation’s 
earnings bears to the group’s earnings. 
‘‘(ii) EARNINGS.—For purposes of 
clause (i), earnings shall be the sum of net 
earnings plus net interest expense, taxes, 
depreciation, and amortization. 
‘‘(iii) DETERMINATIONS RELATING TO 
EARNINGS.—For purposes of clause (ii), 
earnings, net interest expense, taxes, de-
preciation, and amortization with respect 
to a financial reporting group shall be as 
reflected on the financial reporting group’s 
financial statements for the taxable year 
ending in the taxable year of the corpora-
tion. 
‘‘(C) ALTERNATIVE DETERMINATION.—In 
lieu of the limitation in subparagraph (A), if— 
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‘‘(i) a corporation fails to substantiate 
the corporation’s proportionate share of 
the financial reporting group’s net interest 
expense for a taxable year, or 
‘‘(ii) a corporation so elects, 
no deduction shall be allowed under this chap-
ter for the taxable year for interest expense to 
the extent that such expense exceeds 10 percent 
of the corporation’s adjusted taxable income (as 
defined under subsection (j)(6)(A)). 
‘‘(2) CORPORATIONS
TO
WHICH
SUBSECTION 
APPLIES.— 
‘‘(A) IN GENERAL.—This subsection shall 
apply to any corporation for any taxable year if 
the corporation is a member of a financial re-
porting group. 
‘‘(B) CERTAIN
CORPORATIONS
NOT
IN-
CLUDED.—This subsection shall not apply to 
any corporation which— 
‘‘(i) is a corporation predominantly 
engaged in the active conduct of a bank-
ing, financing, or similar business, or 
‘‘(ii) has less than $5,000,000 of net 
interest expense for the taxable year. 
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‘‘(C) FINANCIAL REPORTING GROUP.—For 
purposes of subparagraph (A), the term ‘finan-
cial reporting group’ means a group that pre-
pares consolidated financial statements in ac-
cordance with United States generally accepted 
accounting principles, international financial re-
porting standards, or other method authorized 
by the Secretary of the Treasury under regula-
tions. Such term shall not include any corpora-
tion described in subparagraph (B)(i). 
‘‘(D) SUBGROUPS.—For purposes of this 
subsection, all members of an expanded affili-
ated group (as defined in section 7874(c)(1)) 
shall be treated as 1 corporation. 
‘‘(3) NET INTEREST EXPENSE.—The term ‘net 
interest expense’ has the meaning given such term 
by subsection (j)(6)(B). 
‘‘(4) CARRYFORWARD.— 
‘‘(A) 
DISALLOWED
INTEREST.—Any 
amount disallowed under subparagraph (A) or 
(C) for any taxable year shall be treated as an 
interest expense in the next taxable year, and 
such amount shall not be taken into account for 
purposes of applying subsection (j)(2)(A)(ii) for 
such taxable year. 
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‘‘(B) EXCESS LIMITATION.—The excess (if 
any) of the sum determined under paragraph 
(1)(A) (i) and (ii) for a taxable year over the 
amount of interest expense deducted under this 
subsection for the taxable year shall be added 
to the limitation determined under paragraph 
(1) for the next taxable year (determined with-
out regard to this subparagraph). No excess 
limitation may be carried to more than 3 tax-
able years. 
‘‘(5) ELECTION.—The election under paragraph 
(1)(C)(ii) shall be made at such time and in such 
manner as the Secretary may prescribe by regula-
tions. 
‘‘(6) REGULATIONS.—The Secretary shall pre-
scribe such regulations and other guidance as may 
be necessary to carry out the purposes of this sub-
section, including regulations to— 
‘‘(A) coordinate the application of this sub-
section with other interest deductibility rules, 
‘‘(B) define financial services entities, 
‘‘(C) permit financial reporting groups to 
compute the group’s non-United States net in-
terest expense without making certain adjust-
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ments required under United States income tax 
principles, 
‘‘(D) provide for the treatment of pass- 
through entities, and 
‘‘(E) allow the use of financial statements 
prepared under other countries’ generally ac-
cepted accounting principles in appropriate cir-
cumstances where a financial reporting group 
does not prepare financial statements under 
United States generally accepted accounting 
principles or international financial reporting 
standards.’’. 
(b) 
COORDINATION
WITH
163(j).—Section 
163(j)(2)(A) of the Internal Revenue Code of 1986 is 
amended by adding at the end the following flush sen-
tence: ‘‘This subsection shall not apply to any corporation 
which is a member of a financial reporting group to which 
subsection (n) applies.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2015. 
Æ 
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