I 
114TH CONGRESS 
2D SESSION 
H. R. 5545 
To amend the Internal Revenue Code of 1986 to modify the application 
of certain rules with respect to certain foreign countries. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 21, 2016 
Mr. BOUSTANY (for himself, Mr. ROSKAM, Mr. TIBERI, Mr. BUCHANAN, Mr. 
SAM JOHNSON of Texas, Mr. REICHERT, Mr. YOUNG of Indiana, Mr. 
NUNES, and Mrs. BLACK) introduced the following bill; which was re-
ferred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to modify 
the application of certain rules with respect to certain 
foreign countries. 
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 ‘‘Preventing Investment 
in Terrorist Regimes Act’’. 
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SEC. 2. MODIFICATION OF APPLICATION OF CERTAIN 
RULES WITH RESPECT TO CERTAIN FOREIGN 
COUNTRIES. 
(a) LIMITATION ON WAIVER AUTHORITY.—Section 
901(j)(5)(A) of the Internal Revenue Code of 1986 is 
amended by inserting ‘‘(other than a country described in 
paragraph (2)(A)(iv))’’ after ‘‘a country’’. 
(b) DENIAL OF FOREIGN TAX CREDIT WITH RE-
SPECT TO INCOME DERIVED FROM CERTAIN FOREIGN 
COUNTRIES WITHOUT REGARD TO WHICH COUNTRY TAX 
IS PAID.—Subparagraph (A) of section 901(j)(1) of such 
Code is amended by striking ‘‘to any country’’ and all that 
follows and inserting ‘‘to— 
‘‘(i) any foreign country to which this 
subsection applies if such taxes are with 
respect to income attributable to a period 
during which this subsection applies to 
such foreign country, and 
‘‘(ii) any foreign country (without re-
gard to whether this subsection applies to 
such foreign country) if such taxes are 
with respect to income derived from any 
foreign country to which this subsection 
applies during a period for which this sub-
section so applies (determined under rules 
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similar to the rules of section 952(d)), 
and’’. 
(c) DENIAL OF DEDUCTION FOR TAXES FOR WHICH 
FOREIGN
TAX
CREDIT
IS
DENIED, 
ETC.—Section 
901(j)(3) of such Code is amended to read as follows: 
‘‘(3) DENIAL OF DEDUCTION FOR TAXES FOR 
WHICH FOREIGN TAX CREDIT IS DENIED, ETC.— 
‘‘(A) IN GENERAL.—No deduction shall be 
allowed under this chapter for any tax for 
which credit is not allowable under this section 
by reason of paragraph (1)(A). 
‘‘(B) DENIAL
OF
DEDUCTION
PARITY.— 
Solely for purposes of section 78, the taxes 
deemed to be paid under section 902(a) and 
960(a)(1) shall be determined without regard to 
this subsection.’’. 
(d) APPLICATION OF DENIAL OF DEDUCTION FOR 
TAXES
PAID
BY
CONTROLLED
FOREIGN
CORPORA-
TIONS.— 
(1) DETERMINATION OF SUBPART F INCOME.— 
Section 952(a) of such Code is amended by striking 
‘‘(including taxes)’’ in the last sentence and insert-
ing ‘‘(including taxes other than taxes for which 
credit is not allowed under section 901 by reason of 
section 901(j)(1)(A))’’. 
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(2) DETERMINATION OF EARNINGS AND PROF-
ITS.—Section 964(a) of such Code is amended by in-
serting ‘‘, or any taxes for which credit is not al-
lowed under section 901 by reason of section 
901(j)(1)(A),’’ after ‘‘other payment (within the 
meaning of section 162(c))’’. 
(e) CLARIFICATION REGARDING COUNTRY FROM 
WHICH INCOME IS DERIVED.—Section 952(d) of such 
Code is amended by striking ‘‘The Secretary’’ and insert-
ing the following: 
‘‘(1) IN GENERAL.—For purposes of subsection 
(a)(5), income shall be treated as derived from a for-
eign country if such income is derived in connection 
with— 
‘‘(A) property which is sold— 
‘‘(i) for use, consumption, or disposi-
tion in such foreign country, or 
‘‘(ii) to any foreign person which is 
created, organized, or controlled in such 
foreign country or to a citizen or resident 
of such foreign country, or 
‘‘(B) services provided with respect to per-
sons or property located in such foreign country 
or with respect to persons described in subpara-
graph (A)(ii). 
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‘‘(2) SPECIAL
RULES.—For purposes of this 
subsection— 
‘‘(A) ULTIMATE
DISPOSITION.—Property 
shall not fail to be treated as described in para-
graph (1)(A) if the controlled foreign corpora-
tion or any related person knew, or had reason 
to know, that such property would be ultimately 
sold— 
‘‘(i) for use, consumption, or disposi-
tion in such foreign country, or 
‘‘(ii) to any person described in para-
graph (1)(A)(ii). 
‘‘(B) SALES
TO
RELATED
PARTIES.—If 
property is sold to a related person, such sale 
shall not fail to be treated as described in para-
graph (1)(A) unless— 
‘‘(i) such property is ultimately sold— 
‘‘(I) for use, consumption or dis-
position outside such foreign country, 
or 
‘‘(II) to a person not described in 
paragraph (1)(A)(ii), or 
‘‘(ii) such property is resold to an un-
related person not described in paragraph 
(1)(A)(ii) and neither the controlled for-
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eign corporation nor any related person 
knew or had reason to know that such 
property would be ultimately sold in a sale 
described in paragraph (1)(A). 
‘‘(C) APPLICATION
TO
SERVICES.—Rules 
similar to the rules of subparagraphs (A) and 
(B) shall apply with respect to services de-
scribed in paragraph (1)(B). 
‘‘(D) RELATED
PERSON.—The term ‘re-
lated person’ has the meaning given such term 
by section 954(d)(3). 
‘‘(3) REGULATIONS.—The Secretary’’. 
(f) DOUBLING OF RATES OF TAX WITH RESPECT TO 
CERTAIN FOREIGN COUNTRIES.— 
(1) DOUBLING OF RATES OF TAX ON CITIZENS 
AND
CORPORATIONS
OF
CERTAIN
FOREIGN
COUN-
TRIES.—Section 891 of such Code is amended— 
(A) by striking ‘‘Whenever the President’’ 
and inserting the following: 
‘‘(a) DOUBLING OF RATES OF TAX ON CITIZENS AND 
CORPORATIONS OF CERTAIN FOREIGN COUNTRIES.— 
‘‘(1) PRESIDENTIAL
PROCLAMATION.—When-
ever the President’’, and 
(B) by adding at the end the following new 
paragraph: 
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‘‘(2) STATUTORY APPLICATION.—In the case of 
any foreign country to which section 901(j) applies 
for any period, paragraph (1) shall apply with re-
spect to such country in the same manner as if the 
President had made a proclamation described in the 
first sentence of paragraph (1) with respect to such 
country at the beginning of such period and a proc-
lamation described in the last sentence of paragraph 
(1) with respect to such country at the end of such 
period.’’. 
(2) DOUBLING OF RATES OF TAX ON INCOME 
DERIVED
FROM
CERTAIN
FOREIGN
COUNTRIES.— 
Section 891 of such Code, as amended by paragraph 
(1), is amended by adding at the end the following 
new subsection: 
‘‘(b) DOUBLING OF RATES OF TAX ON INCOME DE-
RIVED FROM CERTAIN FOREIGN COUNTRIES.— 
‘‘(1) IN GENERAL.—In the case of any foreign 
country to which section 901(j) applies for any pe-
riod, the rates of tax imposed by sections 1, 11, 801, 
831, 852, 871, and 881 with respect to any taxpayer 
shall be doubled in the case of income derived from 
such foreign country during such period (determined 
under rules similar to the rules of section 952(d)). 
In any case in which the manner in which income 
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is stacked would change the rate of tax which is 
treated as applying to income described in the pre-
ceding sentence, such income shall be stacked in the 
manner which results in the highest rate of tax ap-
plying to the income so described. 
‘‘(2) COORDINATION WITH DOUBLING OF RATES 
OF TAX ON CITIZENS AND CORPORATIONS OF CER-
TAIN
FOREIGN
COUNTRIES.—Paragraph (1) shall 
not apply to any taxpayer for any period for which 
subsection (a) applies to such taxpayer.’’. 
(3) CONFORMING AMENDMENTS.— 
(A) The heading of section 891 of such 
Code is amended by striking ‘‘ON CITIZENS 
AND
CORPORATIONS
OF’’ and inserting 
‘‘WITH RESPECT TO’’. 
(B) The item relating to section 891 in the 
table of sections for subpart D of part II of 
subchapter N of chapter 1 of such Code is 
amended to read as follows: 
‘‘Sec. 891. Doubling of rates of tax with respect to certain foreign countries.’’. 
(g) PROHIBITION ON AGREEMENTS TO DELEGATE 
CERTAIN
REPORTING
TO
CERTAIN
FOREIGN
COUN-
TRIES.—Section 1474(f) of such Code is amended— 
(1) by striking ‘‘The Secretary’’ and inserting 
the following: 
‘‘(1) IN GENERAL.—The Secretary’’, and 
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(2) by adding at the end the following new 
paragraph: 
‘‘(2) PROHIBITION
ON
INTERGOVERNMENTAL 
AGREEMENTS
WITH
CERTAIN
FOREIGN
COUN-
TRIES.—The Secretary may not enter into any inter-
governmental agreement to carry out section 
1471(b) with any country to which section 901(j) 
applies.’’. 
(h) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
subsections (a), (b), and (c) shall apply to taxes paid 
or incurred in taxable years ending after the date of 
the introduction of this Act. 
(2) AMENDMENTS RELATED TO CONTROLLED 
FOREIGN
CORPORATIONS.—The amendments made 
by— 
(A) subsections (a), (b), and (c) to the ex-
tent 
such 
amendments 
relate 
to 
section 
952(a)(5) of the Internal Revenue Code of 1986 
or to taxes deemed to have been paid under sec-
tion 902 or 960 of such Code, and 
(B) subsections (d) and (e), 
shall apply to taxable years of foreign corporations 
ending after the date of the introduction of this Act 
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and to taxable years of United States shareholders 
with or within which such taxable years of foreign 
corporations end. 
(3) AMENDMENTS RELATED TO DOUBLING OF 
TAX ON CITIZENS AND CORPORATIONS OF CERTAIN 
FOREIGN
COUNTRIES.—The amendments made by 
subsection (g) shall apply to taxable years ending 
after the date of the introduction of this Act (with-
out regard to whether the period described in sub-
section (a)(2) or (b)(1) of section 891 of the Inter-
nal Revenue Code of 1986, as added by subsection 
(f), begins before such date). 
(4) AMENDMENTS
RELATED
TO
PROHIBITION 
ON AGREEMENTS TO DELEGATE CERTAIN REPORT-
ING TO CERTAIN FOREIGN COUNTRIES.—The amend-
ments made by subsection (g) shall take effect on 
the date of the enactment of this Act. 
Æ 
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