I
107TH CONGRESS
1ST SESSION
H. R. 1492
To amend the Internal Revenue Code of 1986 to enhance the competitiveness
of the United States leasing industry.
IN THE HOUSE OF REPRESENTATIVES
APRIL 4, 2001
Mr. MATSUI 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 enhance
the competitiveness of the United States leasing industry.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. TREATMENT OF EXPORT LEASES.
(a) PROPERTY LEASED TO FOREIGN PERSONS.—
Section 168(g)(1) of the Internal Revenue Code of 1986
is amended by redesignating subparagraphs (B), (C), (D),
and (E) as subparagraphs (C), (D), (E), and (F), respec-
tively, and by inserting after subparagraph (A) the fol-
lowing new subparagraph:
‘‘(B) any tangible property leased to a for-
eign person or entity,’’.
(b) FOREIGN PERSON OR ENTITY.—Section 168(g)
of such Code is amended by redesignating paragraphs (5),
(6), and (7) as paragraphs (6), (7), and (8), respectively,
and by inserting after paragraph (4) the following new
paragraph:
‘‘(5) TANGIBLE PROPERTY LEASED TO A FOR-
EIGN PERSON OR ENTITY.—
‘‘(A) TANGIBLE PROPERTY.—For purposes
of paragraph (1)(B), the term ‘tangible prop-
erty’ means any tangible property other than—
‘‘(i) nonresidential real property as
defined under subsection (h)(1)(E) to the
extent it is not subject to a disqualified
lease determined under rules similar to the
rules of subsection (h)(1)(B),
‘‘(ii) property used by a foreign per-
son or entity if more than 50 percent of
the gross income for the taxable year de-
rived by the foreign person or entity from
the use of such property is—
‘‘(I) subject to tax under this
chapter, or
‘‘(II) included under section 951
in the gross income of a United States
shareholder for the taxable year with
or within which ends the taxable year
of the controlled foreign corporation
in which such income was derived,
and
‘‘(iii) property determined under rules
similar to the rules of subsection (h)(3).
For purposes of clause (ii), any exclusion or ex-
emption shall not apply for purposes of deter-
mining the amount of the gross income so de-
rived, but shall apply for purposes of deter-
mining the portion of such gross income subject
to tax under this chapter.
‘‘(B) FOREIGN PERSON OR ENTITY.—For
purposes of this paragraph and paragraph
(1)(B)—
‘‘(i) IN GENERAL.—The term ‘foreign
person or entity’ means—
‘‘(I) any foreign government, any
international organization, or any
agency or instrumentality of any of
the foregoing, and
‘‘(II) any person who is not a
United States person.
Such term does not include any foreign
partnership or other foreign pass-thru enti-
ty.
‘‘(ii) OTHER
PASS-THRU
ENTITIES;
TIERED ENTITIES.—In the case of prop-
erty leased to or owned by a partnership or
other pass-thru entity and in the case of
tiered partnerships and other entities, rules
similar to the rules of paragraphs (5) and
(6) of subsection (h) shall apply. For pur-
poses of the preceding sentence, unless it is
otherwise established to the satisfaction of
the Secretary, it shall be presumed that
the partners of a foreign partnership (and
the beneficiaries of any other foreign pass-
thru entity) are persons who are not
United States persons.’’
(c) TAX-EXEMPT ENTITY.—Section 168(h)(2)(A) of
such Code is amended by adding ‘‘and’’ at the end of
clause (i), by striking ‘‘, and’’ at the end of clause (ii)
and inserting a period, and by striking clause (iii).
(d) CONFORMING AMENDMENTS.—
(1) Section 168(g)(6)(A) of such Code is
amended by striking ‘‘paragraph (1)(D)’’ and insert-
ing ‘‘paragraph (1)(E)’’.
(2) Section 168(h)(2) of such Code is amended
by striking subparagraphs (B) and (C) and redesig-
nating subparagraphs (D) and (E) as subparagraphs
(B) and (C), respectively.
(3) Section 168(h)(5) of such Code is amended
by striking subparagraph (C).
(4) Section 168(h)(7) of such Code is amended
by inserting ‘‘subsection (g) and ’’ before ‘‘this sub-
section’’.
(5) Section 168(j)(4)(B)(i) of such Code is
amended by striking ‘‘subsection (g)(7)’’ and insert-
ing ‘‘subsection (g)(8)’’.
(6) Section 50(b)(4)(A)(ii) of such Code is
amended by striking ‘‘section 168(h)(2)(C)), but
only with respect to property to which section
168(h)(2)(A)(iii) applies (determined after the appli-
cation of section 168(h)(2)(B))’’ and inserting ‘‘sec-
tion 168(g)(5)(B)), but only with respect to property
to which section 168(g)(5) applies’’.