265 
apply to amounts paid or incurred after December 
31, 2017. 
(2) TRANSITION RULE.—In the case of qualified 
rehabilitation expenditures (within the meaning of 
section 47 of the Internal Revenue Code of 1986 as in 
effect before its repeal) with respect to any building— 
(A) owned or leased (as permitted by sec-
tion 47 of the Internal Revenue Code of 1986 as 
in effect before its repeal) by the taxpayer at all 
times after December 31, 2017, and 
(B) with respect to which the 24-month pe-
riod selected by the taxpayer under section 
47(c)(1)(C) of such Code begins not later than 
the end of the 180-day period beginning on the 
date of the enactment of this Act, 
the amendments made by this section shall apply to 
such expenditures paid or incurred after the end of 
the taxable year in which the 24-month period re-
ferred to in subparagraph (B) ends. 
SEC. 3404. REPEAL OF WORK OPPORTUNITY TAX CREDIT. 
(a) IN GENERAL.—Subpart F of part IV of subchapter 
A of chapter 1 is amended by striking section 51 (and by 
striking the item relating to such section in the table of sec-
tions for such subpart). 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00265
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
266 
(b) CLERICAL AMENDMENT.—The heading of such sub-
part F (and the item relating to such subpart in the table 
of subparts for part IV of subchapter A of chapter 1) are 
each amended by striking ‘‘Rules for Computing Work Op-
portunity Credit’’ and inserting ‘‘Special Rules’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to amounts paid or incurred to individ-
uals who begin work for the employer after December 31, 
2017. 
SEC. 3405. REPEAL OF DEDUCTION FOR CERTAIN UNUSED 
BUSINESS CREDITS. 
(a) IN GENERAL.—Part VI of subchapter B of chapter 
1 is amended by striking section 196 (and by striking the 
item relating to such section in the table of sections for such 
part). 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 3406. TERMINATION OF NEW MARKETS TAX CREDIT. 
(a) IN GENERAL.—Section 45D(f) is amended— 
(1) by striking ‘‘2019’’ in paragraph (1)(G) and 
inserting ‘‘2017’’, and 
(2) by striking ‘‘2024’’ in paragraph (3) and in-
serting ‘‘2022’’. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00266
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
267 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to calendar years beginning after De-
cember 31, 2017. 
SEC. 3407. REPEAL OF CREDIT FOR EXPENDITURES TO PRO-
VIDE ACCESS TO DISABLED INDIVIDUALS. 
(a) IN GENERAL.—Subpart D of part IV of subchapter 
A of chapter 1 is amended by striking section 44 (and by 
striking the item relating to such section in the table of sec-
tions for such subpart). 
(b) CONFORMING
AMENDMENT.—Section 38(b) is 
amended by striking paragraph (7). 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 3408. MODIFICATION OF CREDIT FOR PORTION OF EM-
PLOYER SOCIAL SECURITY TAXES PAID WITH 
RESPECT TO EMPLOYEE TIPS. 
(a) CREDIT DETERMINED WITH RESPECT TO MIN-
IMUM WAGE
AS
IN EFFECT.—Section 45B(b)(1)(B) is 
amended by striking ‘‘as in effect on January 1, 2007, 
and’’. 
(b) INFORMATION RETURN REQUIREMENT.—Section 
45B is amended by redesignating subsections (c) and (d) 
as subsections (d) and (e), respectively, and by inserting 
after subsection (b) the following new subsection: 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00267
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
268 
‘‘(c) INFORMATION RETURN REQUIREMENT.— 
‘‘(1) IN GENERAL.—No credit shall be determined 
under subsection (a) with respect to any food or bev-
erage establishment of any taxpayer for any taxable 
year unless such taxpayer has, with respect to the cal-
endar year which ends in or with such taxable year— 
‘‘(A) made a report to the Secretary show-
ing 
the 
information 
described 
in 
section 
6053(c)(1) with respect to such food or beverage 
establishment, and 
‘‘(B) furnished written statements to each 
employee of such food or beverage establishment 
showing the information described in section 
6053(c)(2). 
‘‘(2) ALLOCATION OF 10 PERCENT OF GROSS RE-
CEIPTS.—For purposes of determining the informa-
tion referred to in subparagraphs (A) and (B), section 
6053(c)(3)(A)(i) shall be applied by substituting ‘10 
percent’ for ‘8 percent’. For purposes of section 
6053(c)(5), any reference to section 6053(c)(3)(B) 
contained therein shall be treated as including a ref-
erence to this paragraph. 
‘‘(3) FOOD OR BEVERAGE ESTABLISHMENT.—For 
purposes of this subsection, the term ‘food or beverage 
establishment’ means any trade or business (or por-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00268
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
269 
tion thereof) which would be a large food or beverage 
establishment (as defined in section 6053(c)(4)) if 
such section were applied without regard to subpara-
graph (C) thereof.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
Subtitle F—Energy Credits 
SEC. 3501. MODIFICATIONS TO CREDIT FOR ELECTRICITY 
PRODUCED FROM CERTAIN RENEWABLE RE-
SOURCES. 
(a) TERMINATION OF INFLATION ADJUSTMENT.—Sec-
tion 45(b)(2) is amended— 
(1) by striking ‘‘The 1.5 cent amount’’ and in-
serting the following: 
‘‘(A) IN GENERAL.—The 1.5 cent amount’’, 
and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(B) 
TERMINATION.—Subparagraph 
(A) 
shall not apply with respect to any electricity or 
refined coal produced at a facility the construc-
tion of which begins after the date of the enact-
ment of this subparagraph.’’. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00269
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
270 
(b) SPECIAL RULE FOR DETERMINATION OF BEGIN-
NING OF CONSTRUCTION.—Section 45(e) is amended by 
adding at the end the following new paragraph: 
‘‘(12) SPECIAL RULE FOR DETERMINING BEGIN-
NING OF CONSTRUCTION.—For purposes of subsection 
(d), the construction of any facility, modification, im-
provement, addition, or other property shall not be 
treated as beginning before any date unless there is a 
continuous program of construction which begins be-
fore such date and ends on the date that such prop-
erty is placed in service.’’. 
(c) EFFECTIVE DATES.— 
(1) TERMINATION OF INFLATION ADJUSTMENT.— 
The amendments made by subsection (a) shall apply 
to taxable years ending after the date of the enact-
ment of this Act. 
(2) SPECIAL RULE FOR DETERMINATION OF BE-
GINNING OF CONSTRUCTION.—The amendment made 
by subsection (b) shall apply to taxable years begin-
ning before, on, or after the date of the enactment of 
this Act. 
SEC. 3502. MODIFICATION OF THE ENERGY INVESTMENT 
TAX CREDIT. 
(a) EXTENSION OF SOLAR ENERGY PROPERTY.—Sec-
tion 48(a)(3)(A)(ii) is amended by striking ‘‘periods ending 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00270
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
273 
struction of which begins before January 1, 
2022, and which is not placed in service before 
January 1, 2024, the energy percentage deter-
mined under paragraph (2) shall be equal to 10 
percent.’’. 
(h) PHASEOUT
FOR FIBER-OPTIC SOLAR ENERGY 
PROPERTY.—Subparagraphs (A) and (B) of section 
48(a)(6) are each amended by inserting ‘‘or (3)(A)(ii)’’ 
after ‘‘paragraph (3)(A)(i)’’. 
(i) TERMINATION OF SOLAR ENERGY PROPERTY.— 
Section 48(a)(3)(A)(i) is amended by inserting ‘‘, the con-
struction of which begins before January 1, 2028, and’’ 
after ‘‘equipment’’. 
(j) TERMINATION OF GEOTHERMAL ENERGY PROP-
ERTY.—Section 48(a)(3)(A)(iii) is amended by inserting ‘‘, 
the construction of which begins before January 1, 2028, 
and’’ after ‘‘equipment’’. 
(k) SPECIAL RULE FOR DETERMINATION OF BEGIN-
NING OF CONSTRUCTION.—Section 48(c) is amended by 
adding at the end the following new paragraph: 
‘‘(5) SPECIAL RULE FOR DETERMINING BEGIN-
NING OF CONSTRUCTION.—The construction of any fa-
cility, modification, improvement, addition, or other 
property shall not be treated as beginning before any 
date unless there is a continuous program of construc-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00273
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
274 
tion which begins before such date and ends on the 
date that such property is placed in service.’’. 
(l) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as otherwise provided 
in this subsection, the amendments made by this sec-
tion shall apply to periods after December 31, 2016, 
under rules similar to the rules of section 48(m) of the 
Internal Revenue Code of 1986 (as in effect on the 
day before the date of the enactment of the Revenue 
Reconciliation Act of 1990). 
(2) EXTENSION OF COMBINED HEAT AND POWER 
SYSTEM PROPERTY.—The amendment made by sub-
section (d) shall apply to property placed in service 
after December 31, 2016. 
(3) 
PHASEOUTS
AND
TERMINATIONS.—The 
amendments made by subsections (g), (h), (i), and (j) 
shall take effect on the date of the enactment of this 
Act. 
(4) SPECIAL RULE FOR DETERMINATION OF BE-
GINNING OF CONSTRUCTION.—The amendment made 
by subsection (k) shall apply to taxable years begin-
ning before, on, or after the date of the enactment of 
this Act. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00274
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
275 
SEC. 3503. EXTENSION AND PHASEOUT OF RESIDENTIAL 
ENERGY EFFICIENT PROPERTY. 
(a) EXTENSION.—Section 25D(h) is amended by strik-
ing ‘‘December 31, 2016 (December 31, 2021, in the case 
of any qualified solar electric property expenditures and 
qualified solar water heating property expenditures)’’ and 
inserting ‘‘December 31, 2021’’. 
(b) PHASEOUT.— 
(1) IN GENERAL.—Paragraphs (3), (4), and (5) 
of section 25D(a) are amended by striking ‘‘30 per-
cent’’ each place it appears and inserting ‘‘the appli-
cable percentage’’. 
(2) CONFORMING AMENDMENT.—Section 25D(g) 
of such Code is amended by striking ‘‘paragraphs (1) 
and (2) of’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to property placed in service after De-
cember 31, 2016. 
SEC. 3504. REPEAL OF ENHANCED OIL RECOVERY CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of subchapter 
A of chapter 1 is amended by striking section 43 (and by 
striking the item relating to such section in the table of sec-
tions for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(b) is amended by striking para-
graph (6). 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00275
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
276 
(2) Section 6501(m) is amended by striking 
‘‘43,’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 3505. REPEAL OF CREDIT FOR PRODUCING OIL AND 
GAS FROM MARGINAL WELLS. 
(a) IN GENERAL.—Subpart D of part IV of subchapter 
A of chapter 1 is amended by striking section 45I (and by 
striking the item relating to such section in the table of sec-
tions for such subpart). 
(b) CONFORMING
AMENDMENT.—Section 38(b) is 
amended by striking paragraph (19). 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 3506. MODIFICATIONS OF CREDIT FOR PRODUCTION 
FROM ADVANCED NUCLEAR POWER FACILI-
TIES. 
(a) 
TREATMENT
OF
UNUTILIZED
LIMITATION 
AMOUNTS.—Section 45J(b) is amended— 
(1) in paragraph (4), by inserting ‘‘or any 
amendment to’’ after ‘‘enactment of’’; and 
(2) by adding at the end the following new para-
graph: 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00276
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
277 
‘‘(5) ALLOCATION OF UNUTILIZED LIMITATION.— 
‘‘(A) IN
GENERAL.—Any unutilized na-
tional megawatt capacity limitation shall be al-
located by the Secretary under paragraph (3) as 
rapidly as is practicable after December 31, 
2020— 
‘‘(i) first to facilities placed in service 
on or before such date to the extent that 
such facilities did not receive an allocation 
equal to their full nameplate capacity; and 
‘‘(ii) then to facilities placed in service 
after such date in the order in which such 
facilities are placed in service. 
‘‘(B) UNUTILIZED NATIONAL MEGAWATT CA-
PACITY LIMITATION.—The term ‘unutilized na-
tional megawatt capacity limitation’ means the 
excess (if any) of— 
‘‘(i) 6,000 megawatts, over 
‘‘(ii) the aggregate amount of national 
megawatt capacity limitation allocated by 
the Secretary before January 1, 2021, re-
duced by any amount of such limitation 
which was allocated to a facility which was 
not placed in service before such date. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00277
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
278 
‘‘(C) COORDINATION
WITH
OTHER
PROVI-
SIONS.—In the case of any unutilized national 
megawatt capacity limitation allocated by the 
Secretary pursuant to this paragraph— 
‘‘(i) such allocation shall be treated for 
purposes of this section in the same manner 
as an allocation of national megawatt ca-
pacity limitation; and 
‘‘(ii) subsection (d)(1)(B) shall not 
apply to any facility which receives such al-
location.’’. 
(b) TRANSFER OF CREDIT BY CERTAIN PUBLIC ENTI-
TIES.— 
(1) IN GENERAL.—Section 45J is amended— 
(A) by redesignating subsection (e) as sub-
section (f); and 
(B) by inserting after subsection (d) the fol-
lowing new subsection: 
‘‘(e) TRANSFER OF CREDIT BY CERTAIN PUBLIC ENTI-
TIES.— 
‘‘(1) IN GENERAL.—If, with respect to a credit 
under subsection (a) for any taxable year— 
‘‘(A) the taxpayer would be a qualified pub-
lic entity; and 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00278
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
279 
‘‘(B) such entity elects the application of 
this paragraph for such taxable year with respect 
to all (or any portion specified in such election) 
of such credit, 
the eligible project partner specified in such election 
(and not the qualified public entity) shall be treated 
as the taxpayer for purposes of this title with respect 
to such credit (or such portion thereof). 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) QUALIFIED PUBLIC ENTITY.—The term 
‘qualified public entity’ means— 
‘‘(i) a Federal, State, or local govern-
ment entity, or any political subdivision, 
agency, or instrumentality thereof; 
‘‘(ii) a mutual or cooperative electric 
company described in section 501(c)(12) or 
section 1381(a)(2); or 
‘‘(iii) a not-for-profit electric utility 
which has or had received a loan or loan 
guarantee under the Rural Electrification 
Act of 1936. 
‘‘(B) ELIGIBLE
PROJECT
PARTNER.—The 
term ‘eligible project partner’ means— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00279
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
280 
‘‘(i) any person responsible for, or par-
ticipating in, the design or construction of 
the advanced nuclear power facility to 
which the credit under subsection (a) re-
lates; 
‘‘(ii) any person who participates in 
the provision of the nuclear steam supply 
system to the advanced nuclear power facil-
ity to which the credit under subsection (a) 
relates; 
‘‘(iii) any person who participates in 
the provision of nuclear fuel to the advanced 
nuclear power facility to which the credit 
under subsection (a) relates; or 
‘‘(iv) any person who has an owner-
ship interest in such facility. 
‘‘(3) SPECIAL RULES.— 
‘‘(A) APPLICATION TO PARTNERSHIPS.—In 
the case of a credit under subsection (a) which 
is determined at the partnership level— 
‘‘(i) for purposes of paragraph (1)(A), 
a qualified public entity shall be treated as 
the taxpayer with respect to such entity’s 
distributive share of such credit; and 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00280
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
281 
‘‘(ii) the term ‘eligible project partner’ 
shall include any partner of the partner-
ship. 
‘‘(B) TAXABLE
YEAR
IN
WHICH
CREDIT 
TAKEN INTO ACCOUNT.—In the case of any credit 
(or portion thereof) with respect to which an 
election is made under paragraph (1), such cred-
it shall be taken into account in the first taxable 
year of the eligible project partner ending with, 
or after, the qualified public entity’s taxable year 
with respect to which the credit was determined. 
‘‘(C) TREATMENT OF TRANSFER UNDER PRI-
VATE
USE
RULES.—For purposes of section 
141(b)(1), any benefit derived by an eligible 
project partner in connection with an election 
under this subsection shall not be taken into ac-
count as a private business use.’’. 
(2) SPECIAL RULE FOR PROCEEDS OF TRANS-
FERS FOR MUTUAL OR COOPERATIVE ELECTRIC COM-
PANIES.—Section 501(c)(12) of such Code is amended 
by adding at the end the following new subparagraph: 
‘‘(I) In the case of a mutual or cooperative 
electric company described in this paragraph or 
an organization described in section 1381(a)(2), 
income received or accrued in connection with 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00281
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
282 
an election under section 45J(e)(1) shall be treat-
ed as an amount collected from members for the 
sole purpose of meeting losses and expenses.’’. 
(c) EFFECTIVE DATES.— 
(1) TREATMENT
OF
UNUTILIZED
LIMITATION 
AMOUNTS.—The amendment made by subsection (a) 
shall take effect on the date of the enactment of this 
Act. 
(2) TRANSFER OF CREDIT BY CERTAIN PUBLIC 
ENTITIES.—The amendments made by subsection (b) 
shall apply to taxable years beginning after the date 
of the enactment of this Act. 
Subtitle G—Bond Reforms 
SEC. 3601. TERMINATION OF PRIVATE ACTIVITY BONDS. 
(a) IN GENERAL.—Paragraph (1) of section 103(b) is 
amended— 
(1) by striking ‘‘which is not a qualified bond 
(within the meaning of section 141)’’, and 
(2) by striking ‘‘WHICH IS NOT A QUALIFIED 
BOND’’ in the heading thereof. 
(b) CONFORMING AMENDMENTS.— 
(1) Subpart A of part IV of subchapter B of 
chapter 1 is amended by striking sections 142, 143, 
144, 145, 146, and 147 (and by striking each of the 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00282
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
283 
items relating to such sections in the table of sections 
for such subpart). 
(2) Section 25 is amended by adding at the end 
the following new subsection: 
‘‘(j) COORDINATION WITH REPEAL OF PRIVATE ACTIV-
ITY BONDS.—Any reference to section 143, 144, or 146 shall 
be treated as a reference to such section as in effect before 
its repeal by the Tax Cuts and Jobs Act.’’. 
(3) Section 26(b)(2) is amended by striking sub-
paragraph (D). 
(4) Section 141(b) is amended by striking para-
graphs (5) and (9). 
(5) Section 141(d) is amended by striking para-
graph (5). 
(6) Section 141 is amended by striking sub-
section (e). 
(7) Section 148(f)(4) is amended— 
(A) by striking ‘‘(determined in accordance 
with section 147(b)(2)(A))’’ in the flush matter 
following subparagraph (A)(ii) and inserting 
‘‘(determined by taking into account the respec-
tive issue prices of the bonds issued as part of the 
issue)’’, and 
(B) by striking the last sentence of subpara-
graph (D)(v). 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00283
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
284 
(8) Clause (iv) of section 148(f)(4)(C) is amend-
ed to read as follows: 
‘‘(iv) CONSTRUCTION ISSUE.—For pur-
poses of this subparagraph— 
‘‘(I) IN GENERAL.—The term ‘con-
struction issue’ means any issue if at 
least 75 percent of the available con-
struction proceeds of such issue are to 
be used for construction expenditures. 
‘‘(II) CONSTRUCTION.—The term 
‘construction’ includes reconstruction 
and rehabilitation.’’. 
(9) Section 149(b)(3) is amended by striking 
subparagraph (C). 
(10) Section 149(e)(2) is amended— 
(A) by striking subparagraphs (C), (D), 
and (F) and by redesignating subparagraphs (E) 
and (G) as subparagraphs (C) and (D), respec-
tively, and 
(B) by striking the second sentence. 
(11) Section 149(f)(6) is amended— 
(A) by striking subparagraph (B), and 
(B) by striking ‘‘For purposes of this sub-
section’’ and all that follows through ‘‘The term’’ 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00284
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
285 
and inserting the following: ‘‘For purposes of 
this subsection, the term’’. 
(12) Section 150(e)(3) is amended to read as fol-
lows: 
‘‘(3) PUBLIC APPROVAL REQUIREMENT.—A bond 
shall not be treated as part of an issue which meets 
the requirements of paragraph (1) unless such bond 
satisfies the requirements of section 147(f)(2) (as in 
effect before its repeal by the Tax Cuts and Jobs 
Act).’’. 
(13) Section 269A(b)(3) is amended by striking 
‘‘144(a)(3)’’ and inserting ‘‘414(n)(6)(A)’’. 
(14) Section 414(m)(5) is amended by striking 
‘‘section 
144(a)(3)’’ 
and 
inserting 
‘‘subsection 
(n)(6)(A)’’. 
(15) Section 414(n)(6)(A) is amended to read as 
follows: 
‘‘(A) RELATED PERSONS.—A person is a re-
lated person to another person if— 
‘‘(i) the relationship between such per-
sons would result in a disallowance of losses 
under section 267 or 707(b), or 
‘‘(ii) such persons are members of the 
same controlled group of corporations (as 
defined in section 1563(a), except that ‘more 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00285
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
286 
than 50 percent’ shall be substituted for ‘at 
least 80 percent’ each place it appears 
therein).’’. 
(16) Section 6045(e)(4)(B) is amended by insert-
ing ‘‘(as in effect before its repeal by the Tax Cuts 
and Jobs Act)’’ after ‘‘section 143(m)(3)’’. 
(17) Section 6654(f)(1) is amended by inserting 
‘‘(as in effect before its repeal by the Tax Cuts and 
Jobs Act)’’ after ‘‘section 143(m)’’. 
(18) Section 7871(c) is amended— 
(A) by striking paragraphs (2) and (3), and 
(B) by striking ‘‘TAX-EXEMPT BONDS.—’’ 
and all that follows through ‘‘Subsection (a) of 
section 103’’ and inserting the following: ‘‘TAX- 
EXEMPT BONDS.—Subsection (a) of section 103’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to bonds issued after December 31, 2017. 
SEC. 3602. REPEAL OF ADVANCE REFUNDING BONDS. 
(a) IN GENERAL.—Paragraph (1) of section 149(d) is 
amended by striking ‘‘as part of an issue described in para-
graph (2), (3), or (4).’’ and inserting ‘‘to advance refund 
another bond.’’. 
(b) CONFORMING AMENDMENTS.— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00286
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
287 
(1) Section 149(d) is amended by striking para-
graphs (2), (3), (4), and (6) and by redesignating 
paragraphs (5) and (7) as paragraphs (2) and (3). 
(2) Section 148(f)(4)(C) is amended by striking 
clause (xiv) and by redesignating clauses (xv) to 
(xvii) as clauses (xiv) to (xvi). 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to advance refunding bonds issued after 
December 31, 2017. 
SEC. 3603. REPEAL OF TAX CREDIT BONDS. 
(a) IN GENERAL.—Part IV of subchapter A of chapter 
1 is amended by striking subparts H, I, and J (and by 
striking the items relating to such subparts in the table of 
subparts for such part). 
(b) PAYMENTS TO ISSUERS.—Subchapter B of chapter 
65 is amended by striking section 6431 (and by striking 
the item relating to such section in the table of sections for 
such subchapter). 
(c) CONFORMING AMENDMENTS.— 
(1) Part IV of subchapter U of chapter 1 is 
amended by striking section 1397E (and by striking 
the item relating to such section in the table of sec-
tions for such part). 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00287
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
288 
(2) Section 54(l)(3)(B) is amended by inserting 
‘‘(as in effect before its repeal by the Tax Cuts and 
Jobs Act)’’ after ‘‘section 1397E(I)’’. 
(3) Section 6211(b)(4)(A) is amended by striking 
‘‘, and 6431’’ and inserting ‘‘and’’ before ‘‘36B’’. 
(4) Section 6401(b)(1) is amended by striking 
‘‘G, H, I, and J’’ and inserting ‘‘and G’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall apply to bonds issued after December 31, 2017. 
SEC. 3604. NO TAX EXEMPT BONDS FOR PROFESSIONAL 
STADIUMS. 
(a) IN GENERAL.—Section 103(b), as amended by this 
Act, is further amended by adding at the end the following 
new paragraph: 
‘‘(4) PROFESSIONAL STADIUM BOND.—Any pro-
fessional stadium bond.’’. 
(b) PROFESSIONAL STADIUM BOND DEFINED.—Sub-
section (c) of section 103 is amended by adding at the end 
the following new paragraph: 
‘‘(3) PROFESSIONAL STADIUM BOND.—The term 
‘professional stadium bond’ means any bond issued as 
part of an issue any proceeds of which are used to fi-
nance or refinance capital expenditures allocable to a 
facility (or appurtenant real property) which, during 
at least 5 days during any calendar year, is used as 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00288
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
289 
a stadium or arena for professional sports exhibitions, 
games, or training.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to bonds issued after November 2, 2017. 
Subtitle H—Insurance 
SEC. 3701. NET OPERATING LOSSES OF LIFE INSURANCE 
COMPANIES. 
(a) IN GENERAL.—Section 805(b) is amended by strik-
ing paragraph (4) and by redesignating paragraph (5) as 
paragraph (4). 
(b) CONFORMING AMENDMENTS.— 
(1) Part I of subchapter L of chapter 1 is 
amended by striking section 810 (and by striking the 
item relating to such section in the table of sections 
for such part). 
(2) Part III of subchapter L of chapter 1 is 
amended by striking section 844 (and by striking the 
item relating to such section in the table of sections 
for such part). 
(3) Section 381 is amended by striking sub-
section (d). 
(4) Section 805(a)(4)(B)(ii) is amended to read 
as follows: 
‘‘(ii) the deduction allowed under sec-
tion 172,’’. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00289
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
290 
(5) Section 805(a) is amended by striking para-
graph (5). 
(6) Section 953(b)(1)(B) is amended to read as 
follows: 
‘‘(B) So much of section 805(a)(8) as relates 
to the deduction allowed under section 172.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to losses arising in taxable years begin-
ning after December 31, 2017. 
SEC. 3702. REPEAL OF SMALL LIFE INSURANCE COMPANY 
DEDUCTION. 
(a) IN GENERAL.—Part I of subchapter L of chapter 
1 is amended by striking section 806 (and by striking the 
item relating to such section in the table of sections for such 
part). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 453B(e) is amended— 
(A) by striking ‘‘(as defined in section 
806(b)(3))’’ in paragraph (2)(B), and 
(B) by adding at the end the following new 
paragraph: 
‘‘(3) NONINSURANCE BUSINESS.— 
‘‘(A) IN
GENERAL.—For purposes of this 
subsection, the term ‘noninsurance business’ 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00290
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
291 
means any activity which is not an insurance 
business. 
‘‘(B) CERTAIN ACTIVITIES TREATED AS IN-
SURANCE
BUSINESSES.—For purposes of sub-
paragraph (A), any activity which is not an in-
surance business shall be treated as an insurance 
business if— 
‘‘(i) it is of a type traditionally car-
ried on by life insurance companies for in-
vestment purposes, but only if the carrying 
on of such activity (other than in the case 
of real estate) does not constitute the active 
conduct of a trade or business, or 
‘‘(ii) it involves the performance of ad-
ministrative services in connection with 
plans providing life insurance, pension, or 
accident and health benefits.’’. 
(2) Section 465(c)(7)(D)(v)(II) is amended by 
striking ‘‘section 806(b)(3)’’ and inserting ‘‘section 
453B(e)(3)’’. 
(3) Section 801(a)(2) is amended by striking 
subparagraph (C). 
(4) Section 804 is amended by striking 
‘‘means—’’ and all that follows and inserting ‘‘means 
the general deductions provided in section 805.’’. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00291
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
292 
(5) Section 805(a)(4)(B), as amended by section 
3701, is amended by striking clause (i) and by redes-
ignating clauses (ii), (iii), and (iv) as clauses (i), 
(ii), and (iii), respectively. 
(6) Section 805(b)(2)(A) is amended by striking 
clause (iii) and by redesignating clauses (iv) and (v) 
as clauses (iii) and (iv), respectively. 
(7) Section 842(c) is amended by striking para-
graph (1) and by redesignating paragraphs (2) and 
(3) as paragraphs (1) and (2), respectively. 
(8) Section 953(b)(1), as amended by section 
3701, is amended by striking subparagraph (A) and 
by redesignating subparagraphs (B) and (C) as sub-
paragraphs (A) and (B), respectively. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 3703. SURTAX ON LIFE INSURANCE COMPANY TAXABLE 
INCOME. 
(a) IN GENERAL.—Section 801(a)(1) is amended— 
(1) by striking ‘‘consist of a tax’’ and insert 
‘‘consist of the sum of— 
‘‘(A) a tax’’, and 
(2) by striking the period at the end and insert-
ing ‘‘, and’’, and 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00292
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
293 
(3) by adding at the end the following new sub-
paragraph: 
‘‘(B) a tax equal to 8 percent of the life in-
surance company taxable income.’’. 
SEC. 3704. ADJUSTMENT FOR CHANGE IN COMPUTING RE-
SERVES. 
(a) IN GENERAL.—Paragraph (1) of section 807(f) is 
amended to read as follows: 
‘‘(1) TREATMENT AS CHANGE IN METHOD OF AC-
COUNTING.—If the basis for determining any item re-
ferred to in subsection (c) as of the close of any tax-
able year differs from the basis for such determination 
as of the close of the preceding taxable year, then so 
much of the difference between— 
‘‘(A) the amount of the item at the close of 
the taxable year, computed on the new basis, and 
‘‘(B) the amount of the item at the close of 
the taxable year, computed on the old basis, 
as is attributable to contracts issued before the taxable 
year shall be taken into account under section 481 as 
adjustments attributable to a change in method of ac-
counting initiated by the taxpayer and made with the 
consent of the Secretary.’’. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00293
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
294 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 3705. REPEAL OF SPECIAL RULE FOR DISTRIBUTIONS 
TO SHAREHOLDERS FROM PRE-1984 POLICY-
HOLDERS SURPLUS ACCOUNT. 
(a) IN GENERAL.—Subpart D of part I of subchapter 
L is amended by striking section 815 (and by striking the 
item relating to such section in the table of sections for such 
subpart). 
(b) 
CONFORMING
AMENDMENT.—Section 
801 
is 
amended by striking subsection (c). 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
(d) PHASED INCLUSION OF REMAINING BALANCE OF 
POLICYHOLDERS SURPLUS ACCOUNTS.—In the case of any 
stock life insurance company which has a balance (deter-
mined as of the close of such company’s last taxable year 
beginning before January 1, 2018) in an existing policy-
holders surplus account (as defined in section 815 of the 
Internal Revenue Code of 1986, as in effect before its re-
peal), the tax imposed by section 801 of such Code for the 
first 8 taxable years beginning after December 31, 2017, 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00294
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
295 
shall be the amount which would be imposed by such section 
for such year on the sum of— 
(1) life insurance company taxable income for 
such year (within the meaning of such section 801 but 
not less than zero), plus 
(2) 1⁄8 of such balance. 
SEC. 3706. MODIFICATION OF PRORATION RULES FOR 
PROPERTY AND CASUALTY INSURANCE COM-
PANIES. 
(a) IN GENERAL.—Section 832(b)(5)(B) is amended 
by striking ‘‘15 percent’’ and inserting ‘‘26.25 percent’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 3707. MODIFICATION OF DISCOUNTING RULES FOR 
PROPERTY AND CASUALTY INSURANCE COM-
PANIES. 
(a) MODIFICATION OF RATE OF INTEREST USED TO 
DISCOUNT UNPAID LOSSES.—Paragraph (2) of section 
846(c) is amended to read as follows: 
‘‘(2) DETERMINATION
OF
ANNUAL
RATE.—The 
annual rate determined by the Secretary under this 
paragraph for any calendar year shall be a rate de-
termined on the basis of the corporate bond yield 
curve (as defined in section 430(h)(2)(D)(i)).’’. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00295
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
296 
(b) MODIFICATION OF COMPUTATIONAL RULES FOR 
LOSS PAYMENT PATTERNS.—Section 846(d)(3) is amended 
by striking subparagraphs (B) through (G) and inserting 
the following new subparagraphs: 
‘‘(B) TREATMENT
OF
CERTAIN
LOSSES.— 
Losses which would have been treated as paid in 
the last year of the period applicable under sub-
paragraph (A)(i) or (A)(ii) shall be treated as 
paid in the following manner: 
‘‘(i) 
3-YEAR
LOSS
PAYMENT
PAT-
TERN.— 
‘‘(I) IN
GENERAL.—The period 
taken into account under subpara-
graph (A)(i) shall be extended to the 
extent required under subclause (II). 
‘‘(II) COMPUTATION
OF
EXTEN-
SION.—The amount of losses which 
would have been treated as paid in the 
3d year after the accident year shall be 
treated as paid in such 3d year and 
each subsequent year in an amount 
equal to the average of the losses treat-
ed as paid in the 1st and 2d years 
after the accident year (or, if lesser, the 
portion of the unpaid losses not there-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00296
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
297 
tofore taken into account). To the ex-
tent such unpaid losses have not been 
treated as paid before the 18th year 
after the accident year, they shall be 
treated as paid in such 18th year. 
‘‘(ii) 10-YEAR
LOSS
PAYMENT
PAT-
TERN.— 
‘‘(I) IN
GENERAL.—The period 
taken into account under subpara-
graph (A)(ii) shall be extended to the 
extent required under subclause (II). 
‘‘(II) COMPUTATION
OF
EXTEN-
SION.—The amount of losses which 
would have been treated as paid in the 
10th year after the accident year shall 
be treated as paid in such 10th year 
and each subsequent year in an 
amount equal to the amount of the av-
erage of the losses treated as paid in 
the 7th, 8th, and 9th years after the ac-
cident year (or, if lesser, the portion of 
the unpaid losses not theretofore taken 
into account). To the extent such un-
paid losses have not been treated as 
paid before the 25th year after the ac-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00297
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
298 
cident year, they shall be treated as 
paid in such 25th year.’’. 
(c) REPEAL
OF
HISTORICAL
PAYMENT
PATTERN 
ELECTION.—Section 846 is amended by striking subsection 
(e) and by redesignating subsections (f) and (g) as sub-
sections (e) and (f), respectively. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
(e) TRANSITIONAL RULE.—For the first taxable year 
beginning after December 31, 2017— 
(1) the unpaid losses and the expenses unpaid 
(as defined in paragraphs (5)(B) and (6) of section 
832(b) of the Internal Revenue Code of 1986) at the 
end of the preceding taxable year, and 
(2) the unpaid losses as defined in sections 
807(c)(2) and 805(a)(1) of such Code at the end of the 
preceding taxable year, 
shall be determined as if the amendments made by this sec-
tion had applied to such unpaid losses and expenses unpaid 
in the preceding taxable year and by using the interest rate 
and loss payment patterns applicable to accident years end-
ing with calendar year 2018, and any adjustment shall be 
taken into account ratably in such first taxable year and 
the 7 succeeding taxable years. For subsequent taxable 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00298
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
299 
years, such amendments shall be applied with respect to 
such unpaid losses and expenses unpaid by using the inter-
est rate and loss payment patterns applicable to accident 
years ending with calendar year 2018. 
SEC. 3708. REPEAL OF SPECIAL ESTIMATED TAX PAYMENTS. 
(a) IN GENERAL.—Part III of subchapter L of chapter 
1 is amended by striking section 847 (and by striking the 
item relating to such section in the table of sections for such 
part). 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
Subtitle I—Compensation 
SEC. 3801. MODIFICATION OF LIMITATION ON EXCESSIVE 
EMPLOYEE REMUNERATION. 
(a) REPEAL OF PERFORMANCE-BASED COMPENSATION 
AND COMMISSION EXCEPTIONS FOR LIMITATION ON EXCES-
SIVE EMPLOYEE REMUNERATION.— 
(1) IN GENERAL.—Section 162(m)(4) is amended 
by striking subparagraphs (B) and (C) and by redes-
ignating subparagraphs (D), (E), (F), and (G) as 
subparagraphs (B), (C), (D), and (E), respectively. 
(2) CONFORMING AMENDMENTS.— 
(A) Paragraphs (5)(E) and (6)(D) of sec-
tion 162(m) are each amended by striking ‘‘sub-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00299
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
300 
paragraphs (B), (C), and (D)’’ and inserting 
‘‘subparagraph (B)’’. 
(B) Paragraphs (5)(G) and (6)(G) of sec-
tion 162(m) are each amended by striking ‘‘(F) 
and (G)’’ and inserting ‘‘(D) and (E)’’. 
(b) EXPANSION OF APPLICABLE EMPLOYER.—Section 
162(m)(2) is amended to read as follows: 
‘‘(2) PUBLICLY HELD CORPORATION.—For pur-
poses of this subsection, the term ‘publicly held cor-
poration’ means any corporation which is an issuer 
(as defined in section 3 of the Securities Exchange 
Act of 1934 (15 U.S.C. 78c))— 
‘‘(A) the securities of which are required to 
be registered under section 12 of such Act (15 
U.S.C. 78l), or 
‘‘(B) that is required to file reports under 
section 15(d) of such Act (15 U.S.C. 78o(d)).’’. 
(c) MODIFICATION OF DEFINITION OF COVERED EM-
PLOYEES.—Section 162(m)(3) is amended— 
(1) in subparagraph (A), by striking ‘‘as of the 
close of the taxable year, such employee is the chief ex-
ecutive officer of the taxpayer or is’’ and inserting 
‘‘such employee is the principal executive officer or 
principal financial officer of the taxpayer at any 
time during the taxable year, or was’’, 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00300
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
301 
(2) in subparagraph (B)— 
(A) by striking ‘‘4’’ and inserting ‘‘3’’, and 
(B) by striking ‘‘(other than the chief execu-
tive officer)’’ and inserting ‘‘(other than the 
principal executive officer or principal financial 
officer)’’, and 
(3) by striking ‘‘or’’ at the end of subparagraph 
(A), by striking the period at the end of subparagraph 
(B) and inserting ‘‘, or’’, and by adding at the end 
the following: 
‘‘(C) was a covered employee of the taxpayer 
(or any predecessor) for any preceding taxable 
year beginning after December 31, 2016. 
Such term shall include any employee who would be 
described in subparagraph (B) if the reporting de-
scribed in such subparagraph were required as so de-
scribed.’’. 
(d) SPECIAL RULE
FOR REMUNERATION PAID
TO 
BENEFICIARIES, ETC.—Section 162(m)(4), as amended by 
subsection (a), is amended by adding at the end the fol-
lowing new subparagraph: 
‘‘(F) SPECIAL
RULE
FOR
REMUNERATION 
PAID
TO
BENEFICIARIES, ETC.—Remuneration 
shall not fail to be applicable employee remu-
neration merely because it is includible in the 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00301
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
302 
income of, or paid to, a person other than the 
covered employee, including after the death of the 
covered employee.’’. 
(e) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 3802. EXCISE TAX ON EXCESS TAX-EXEMPT ORGANIZA-
TION EXECUTIVE COMPENSATION. 
(a) IN GENERAL.—Subchapter D of chapter 42 is 
amended by adding at the end the following new section: 
‘‘SEC. 4960. TAX ON EXCESS TAX-EXEMPT ORGANIZATION 
EXECUTIVE COMPENSATION. 
‘‘(a) TAX IMPOSED.—There is hereby imposed a tax 
equal to 20 percent of the sum of— 
‘‘(1) so much of the remuneration paid (other 
than any excess parachute payment) by an applicable 
tax-exempt organization for the taxable year with re-
spect to employment of any covered employee in ex-
cess of $1,000,000, plus 
‘‘(2) any excess parachute payment paid by such 
an organization to any covered employee. 
‘‘(b) LIABILITY FOR TAX.—The employer shall be liable 
for the tax imposed under subsection (a). 
‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00302
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
303 
‘‘(1) APPLICABLE TAX-EXEMPT ORGANIZATION.— 
The term ‘applicable tax-exempt organization’ means 
any organization that for the taxable year— 
‘‘(A) is exempt from taxation under section 
501(a), 
‘‘(B) is a farmers’ cooperative organization 
described in section 521(b)(1), 
‘‘(C) has income excluded from taxation 
under section 115(1), or 
‘‘(D) is a political organization described in 
section 527(e)(1). 
‘‘(2) COVERED EMPLOYEE.—For purposes of this 
section, the term ‘covered employee’ means any em-
ployee (including any former employee) of an appli-
cable tax-exempt organization if the employee— 
‘‘(A) is one of the 5 highest compensated 
employees of the organization for the taxable 
year, or 
‘‘(B) was a covered employee of the organi-
zation (or any predecessor) for any preceding 
taxable year beginning after December 31, 2016. 
‘‘(3) REMUNERATION.—For purposes of this sec-
tion, the term ‘remuneration’ means wages (as de-
fined in section 3401(a)), except that such term shall 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00303
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
304 
not include any designated Roth contribution (as de-
fined in section 402A(c)). 
‘‘(4) REMUNERATION FROM RELATED ORGANIZA-
TIONS.— 
‘‘(A) IN GENERAL.—Remuneration of a cov-
ered employee paid by an applicable tax-exempt 
organization shall include any remuneration 
paid with respect to employment of such em-
ployee by any related person or governmental en-
tity. 
‘‘(B) RELATED ORGANIZATIONS.—A person 
or governmental entity shall be treated as related 
to an applicable tax-exempt organization if such 
person or governmental entity— 
‘‘(i) controls, or is controlled by, the 
organization, 
‘‘(ii) is controlled by one or more per-
sons that control the organization, 
‘‘(iii) is a supported organization (as 
defined in section 509(f)(2)) during the tax-
able year with respect to the organization, 
‘‘(iv) is a supporting organization de-
scribed in section 509(a)(3) during the tax-
able year with respect to the organization, 
or 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00304
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
305 
‘‘(v) in the case of an organization that 
is a voluntary employees’ beneficiary asso-
ciation described in section 501(a)(9), estab-
lishes, maintains, or makes contributions to 
such voluntary employees’ beneficiary asso-
ciation. 
‘‘(C) LIABILITY FOR TAX.—In any case in 
which remuneration from more than one em-
ployer is taken into account under this para-
graph in determining the tax imposed by sub-
section (a), each such employer shall be liable for 
such tax in an amount which bears the same 
ratio to the total tax determined under sub-
section (a) with respect to such remuneration 
as— 
‘‘(i) the amount of remuneration paid 
by such employer with respect to such em-
ployee, bears to 
‘‘(ii) the amount of remuneration paid 
by all such employers to such employee. 
‘‘(5) EXCESS PARACHUTE PAYMENT.—For pur-
poses determining the tax imposed by subsection 
(a)(2)— 
‘‘(A) IN GENERAL.—The term ‘excess para-
chute payment’ means an amount equal to the 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00305
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
306 
excess of any parachute payment over the por-
tion of the base amount allocated to such pay-
ment. 
‘‘(B) PARACHUTE
PAYMENT.—The term 
‘parachute payment’ means any payment in the 
nature of compensation to (or for the benefit of) 
a covered employee if— 
‘‘(i) such payment is contingent on 
such employee’s separation from employ-
ment with the employer, and 
‘‘(ii) the aggregate present value of the 
payments in the nature of compensation to 
(or for the benefit of) such individual which 
are contingent on such separation equals or 
exceeds an amount equal to 3 times the base 
amount. 
Such term does not include any payment de-
scribed in section 280G(b)(6) (relating to exemp-
tion for payments under qualified plans) or any 
payment made under or to an annuity contract 
described in section 403(b) or a plan described 
in section 457(b). 
‘‘(C) BASE AMOUNT.—Rules similar to the 
rules of 280G(b)(3) shall apply for purposes of 
determining the base amount. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00306
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
307 
‘‘(D) 
PROPERTY
TRANSFERS; 
PRESENT 
VALUE.—Rules similar to the rules of para-
graphs (3) and (4) of section 280G(d) shall 
apply. 
‘‘(6) COORDINATION WITH DEDUCTION LIMITA-
TION.—Remuneration the deduction for which is not 
allowed by reason of section 162(m) shall not be taken 
into account for purposes of this section. 
‘‘(d) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary to prevent avoidance 
of the purposes of this section through the performance of 
services other than as an employee.’’. 
(b) CLERICAL AMENDMENT.—The table of sections for 
subchapter D of chapter 42 is amended by adding at the 
end the following new item: 
‘‘Sec. 4960. Tax on excess exempt organization executive compensation.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 3803. TREATMENT OF QUALIFIED EQUITY GRANTS. 
(a) IN GENERAL.— 
(1) ELECTION TO DEFER INCOME.—Section 83 is 
amended by adding at the end the following new sub-
section: 
‘‘(i) QUALIFIED EQUITY GRANTS.— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00307
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
308 
‘‘(1) IN GENERAL.—For purposes of this subtitle, 
if qualified stock is transferred to a qualified em-
ployee who makes an election with respect to such 
stock under this subsection— 
‘‘(A) except as provided in subparagraph 
(B), no amount shall be included in income 
under subsection (a) for the first taxable year in 
which the rights of the employee in such stock 
are transferable or are not subject to a substan-
tial risk of forfeiture, whichever is applicable, 
and 
‘‘(B) an amount equal to the amount which 
would be included in income of the employee 
under subsection (a) (determined without regard 
to this subsection) shall be included in income 
for the taxable year of the employee which in-
cludes the earliest of— 
‘‘(i) the first date such qualified stock 
becomes transferable (including transferable 
to the employer), 
‘‘(ii) the date the employee first be-
comes an excluded employee, 
‘‘(iii) the first date on which any stock 
of the corporation which issued the qualified 
stock becomes readily tradable on an estab-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00308
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
309 
lished securities market (as determined by 
the Secretary, but not including any market 
unless such market is recognized as an es-
tablished securities market by the Secretary 
for purposes of a provision of this title other 
than this subsection), 
‘‘(iv) the date that is 5 years after the 
first date the rights of the employee in such 
stock are transferable or are not subject to 
a substantial risk of forfeiture, whichever 
occurs earlier, or 
‘‘(v) the date on which the employee re-
vokes (at such time and in such manner as 
the Secretary may provide) the election 
under this subsection with respect to such 
stock. 
‘‘(2) QUALIFIED STOCK.— 
‘‘(A) IN
GENERAL.—For purposes of this 
subsection, the term ‘qualified stock’ means, with 
respect to any qualified employee, any stock in 
a corporation which is the employer of such em-
ployee, if— 
‘‘(i) such stock is received— 
‘‘(I) in connection with the exer-
cise of an option, or 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00309
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
310 
‘‘(II) in settlement of a restricted 
stock unit, and 
‘‘(ii) such option or restricted stock 
unit was provided by the corporation— 
‘‘(I) in connection with the per-
formance of services as an employee, 
and 
‘‘(II) during a calendar year in 
which such corporation was an eligible 
corporation. 
‘‘(B) LIMITATION.—The term ‘qualified 
stock’ shall not include any stock if the employee 
may sell such stock to, or otherwise receive cash 
in lieu of stock from, the corporation at the time 
that the rights of the employee in such stock first 
become transferable or not subject to a substan-
tial risk of forfeiture. 
‘‘(C) ELIGIBLE
CORPORATION.—For pur-
poses of subparagraph (A)(ii)(II)— 
‘‘(i) IN GENERAL.—The term ‘eligible 
corporation’ means, with respect to any cal-
endar year, any corporation if— 
‘‘(I) no stock of such corporation 
(or any predecessor of such corpora-
tion) is readily tradable on an estab-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00310
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
311 
lished securities market (as determined 
under paragraph (1)(B)(iii)) during 
any preceding calendar year, and 
‘‘(II) such corporation has a writ-
ten plan under which, in such calendar 
year, not less than 80 percent of all 
employees who provide services to such 
corporation in the United States (or 
any possession of the United States) 
are granted stock options, or restricted 
stock units, with the same rights and 
privileges to receive qualified stock. 
‘‘(ii) SAME RIGHTS AND PRIVILEGES.— 
For purposes of clause (i)(II)— 
‘‘(I) except as provided in sub-
clauses (II) and (III), the determina-
tion of rights and privileges with re-
spect to stock shall be determined in a 
similar manner as provided under sec-
tion 423(b)(5), 
‘‘(II) employees shall not fail to be 
treated as having the same rights and 
privileges to receive qualified stock 
solely because the number of shares 
available to all employees is not equal 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00311
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
312 
in amount, so long as the number of 
shares available to each employee is 
more than a de minimis amount, and 
‘‘(III) rights and privileges with 
respect to the exercise of an option 
shall not be treated as the same as 
rights and privileges with respect to 
the settlement of a restricted stock unit. 
‘‘(iii) EMPLOYEE.—For purposes of 
clause (i)(II), the term ‘employee’ shall not 
include any employee described in section 
4980E(d)(4) or any excluded employee. 
‘‘(iv) SPECIAL
RULE
FOR
CALENDAR 
YEARS BEFORE 2018.—In the case of any 
calendar year beginning before January 1, 
2018, clause (i)(II) shall be applied without 
regard to whether the rights and privileges 
with respect to the qualified stock are the 
same. 
‘‘(3) QUALIFIED
EMPLOYEE; 
EXCLUDED
EM-
PLOYEE.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘qualified em-
ployee’ means any individual who— 
‘‘(i) is not an excluded employee, and 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00312
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
313 
‘‘(ii) agrees in the election made under 
this subsection to meet such requirements as 
determined by the Secretary to be necessary 
to ensure that the withholding requirements 
of the corporation under chapter 24 with re-
spect to the qualified stock are met. 
‘‘(B) EXCLUDED EMPLOYEE.—The term ‘ex-
cluded employee’ means, with respect to any cor-
poration, any individual— 
‘‘(i) who was a 1-percent owner (with-
in the meaning of section 416(i)(1)(B)(ii)) 
at any time during the 10 preceding cal-
endar years, 
‘‘(ii) who is or has been at any prior 
time— 
‘‘(I) the chief executive officer of 
such corporation or an individual act-
ing in such a capacity, or 
‘‘(II) the chief financial officer of 
such corporation or an individual act-
ing in such a capacity, 
‘‘(iii) who bears a relationship de-
scribed in section 318(a)(1) to any indi-
vidual described in subclause (I) or (II) of 
clause (ii), or 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00313
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
314 
‘‘(iv) who has been for any of the 10 
preceding taxable years one of the 4 highest 
compensated officers of such corporation de-
termined with respect to each such taxable 
year on the basis of the shareholder disclo-
sure rules for compensation under the Secu-
rities Exchange Act of 1934 (as if such rules 
applied to such corporation). 
‘‘(4) ELECTION.— 
‘‘(A) TIME
FOR
MAKING
ELECTION.—An 
election with respect to qualified stock shall be 
made under this subsection no later than 30 
days after the first time the rights of the em-
ployee in such stock are transferable or are not 
subject to a substantial risk of forfeiture, which-
ever occurs earlier, and shall be made in a man-
ner similar to the manner in which an election 
is made under subsection (b). 
‘‘(B) LIMITATIONS.—No election may be 
made under this section with respect to any 
qualified stock if— 
‘‘(i) the qualified employee has made 
an election under subsection (b) with respect 
to such qualified stock, 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00314
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
315 
‘‘(ii) any stock of the corporation 
which issued the qualified stock is readily 
tradable on an established securities market 
(as 
determined 
under 
paragraph 
(1)(B)(iii)) at any time before the election 
is made, or 
‘‘(iii) such corporation purchased any 
of its outstanding stock in the calendar year 
preceding the calendar year which includes 
the first time the rights of the employee in 
such stock are transferable or are not subject 
to a substantial risk of forfeiture, unless— 
‘‘(I) not less than 25 percent of 
the total dollar amount of the stock so 
purchased is deferral stock, and 
‘‘(II) the determination of which 
individuals from whom deferral stock 
is purchased is made on a reasonable 
basis. 
‘‘(C) DEFINITIONS AND SPECIAL RULES RE-
LATED
TO
LIMITATION
ON
STOCK
REDEMP-
TIONS.— 
‘‘(i) DEFERRAL STOCK.—For purposes 
of this paragraph, the term ‘deferral stock’ 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00315
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
316 
means stock with respect to which an elec-
tion is in effect under this subsection. 
‘‘(ii) DEFERRAL STOCK WITH RESPECT 
TO ANY INDIVIDUAL NOT TAKEN INTO AC-
COUNT
IF
INDIVIDUAL
HOLDS
DEFERRAL 
STOCK WITH LONGER DEFERRAL PERIOD.— 
Stock purchased by a corporation from any 
individual shall not be treated as deferral 
stock for purposes of clause (iii) if such in-
dividual (immediately after such purchase) 
holds any deferral stock with respect to 
which an election has been in effect under 
this subsection for a longer period than the 
election with respect to the stock so pur-
chased. 
‘‘(iii) PURCHASE OF ALL OUTSTANDING 
DEFERRAL
STOCK.—The requirements of 
subclauses (I) and (II) of subparagraph 
(B)(iii) shall be treated as met if the stock 
so purchased includes all of the corpora-
tion’s outstanding deferral stock. 
‘‘(iv) REPORTING.—Any corporation 
which has outstanding deferral stock as of 
the beginning of any calendar year and 
which purchases any of its outstanding 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00316
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
317 
stock during such calendar year shall in-
clude on its return of tax for the taxable 
year in which, or with which, such calendar 
year ends the total dollar amount of its out-
standing stock so purchased during such 
calendar year and such other information 
as the Secretary may require for purposes of 
administering this paragraph. 
‘‘(5) CONTROLLED
GROUPS.—For purposes of 
this subsection, all corporations which are members of 
the same controlled group of corporations (as defined 
in section 1563(a)) shall be treated as one corpora-
tion. 
‘‘(6) NOTICE
REQUIREMENT.—Any corporation 
that transfers qualified stock to a qualified employee 
shall, at the time that (or a reasonable period before) 
an amount attributable to such stock would (but for 
this subsection) first be includible in the gross income 
of such employee— 
‘‘(A) certify to such employee that such 
stock is qualified stock, and 
‘‘(B) notify such employee— 
‘‘(i) that the employee may elect to 
defer income on such stock under this sub-
section, and 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00317
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
318 
‘‘(ii) that, if the employee makes such 
an election— 
‘‘(I) the amount of income recog-
nized at the end of the deferral period 
will be based on the value of the stock 
at the time at which the rights of the 
employee in such stock first become 
transferable or not subject to substan-
tial risk of forfeiture, notwithstanding 
whether the value of the stock has de-
clined during the deferral period, 
‘‘(II) the amount of such income 
recognized at the end of the deferral pe-
riod will be subject to withholding 
under section 3401(i) at the rate deter-
mined under section 3402(t), and 
‘‘(III) the responsibilities of the 
employee (as determined by the Sec-
retary under paragraph (3)(A)(ii)) 
with respect to such withholding. 
‘‘(7) RESTRICTED
STOCK
UNITS.—This section 
(other than this subsection), including any election 
under subsection (b), shall not apply to restricted 
stock units.’’. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00318
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
319 
(2) DEDUCTION BY EMPLOYER.—Subsection (h) 
of section 83 is amended by striking ‘‘or (d)(2)’’ and 
inserting ‘‘(d)(2), or (i)’’. 
(b) WITHHOLDING.— 
(1) TIME
OF
WITHHOLDING.—Section 3401 is 
amended by adding at the end the following new sub-
section: 
‘‘(i) QUALIFIED STOCK FOR WHICH AN ELECTION IS 
IN EFFECT UNDER SECTION 83(i).—For purposes of sub-
section (a), qualified stock (as defined in section 83(i)) with 
respect to which an election is made under section 83(i) 
shall be treated as wages— 
‘‘(1) received on the earliest date described in 
section 83(i)(1)(B), and 
‘‘(2) in an amount equal to the amount included 
in income under section 83 for the taxable year which 
includes such date.’’. 
(2) AMOUNT OF WITHHOLDING.—Section 3402 is 
amended by adding at the end the following new sub-
section: 
‘‘(t) RATE OF WITHHOLDING FOR CERTAIN STOCK.— 
In the case of any qualified stock (as defined in section 
83(i)) with respect to which an election is made under sec-
tion 83(i)— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00319
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
320 
‘‘(1) the rate of tax under subsection (a) shall 
not be less than the maximum rate of tax in effect 
under section 1, and 
‘‘(2) such stock shall be treated for purposes of 
section 3501(b) in the same manner as a non-cash 
fringe benefit.’’. 
(c) COORDINATION WITH OTHER DEFERRED COM-
PENSATION RULES.— 
(1) ELECTION TO APPLY DEFERRAL TO STATU-
TORY OPTIONS.— 
(A) INCENTIVE
STOCK
OPTIONS.—Section 
422(b) is amended by adding at the end the fol-
lowing: ‘‘Such term shall not include any option 
if an election is made under section 83(i) with 
respect to the stock received in connection with 
the exercise of such option.’’. 
(B) EMPLOYEE STOCK PURCHASE PLANS.— 
Section 423(a) is amended by adding at the end 
the following flush sentence: 
‘‘The preceding sentence shall not apply to any share of 
stock with respect to which an election is made under sec-
tion 83(i).’’. 
(2) EXCLUSION
FROM
DEFINITION
OF
NON-
QUALIFIED
DEFERRED
COMPENSATION
PLAN.—Sub-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00320
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
321 
section (d) of section 409A is amended by adding at 
the end the following new paragraph: 
‘‘(7) TREATMENT OF QUALIFIED STOCK.—An ar-
rangement under which an employee may receive 
qualified stock (as defined in section 83(i)(2)) shall 
not be treated as a nonqualified deferred compensa-
tion plan solely because of an employee’s election, or 
ability to make an election, to defer recognition of in-
come under section 83(i).’’. 
(d) INFORMATION REPORTING.—Section 6051(a) is 
amended by striking ‘‘and’’ at the end of paragraph (13), 
by striking the period at the end of paragraph (14) and 
inserting a comma, and by inserting after paragraph (14) 
the following new paragraphs: 
‘‘(15) the amount excludable from gross income 
under subparagraph (A) of section 83(i)(1), 
‘‘(16) the amount includible in gross income 
under subparagraph (B) of section 83(i)(1) with re-
spect to an event described in such subparagraph 
which occurs in such calendar year, and 
‘‘(17) the aggregate amount of income which is 
being deferred pursuant to elections under section 
83(i), determined as of the close of the calendar 
year.’’. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00321
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
322 
(e) PENALTY FOR FAILURE OF EMPLOYER TO PRO-
VIDE NOTICE OF TAX CONSEQUENCES.—Section 6652 is 
amended by adding at the end the following new subsection: 
‘‘(o) FAILURE TO PROVIDE NOTICE UNDER SECTION 
83(i).—In the case of each failure to provide a notice as 
required by section 83(i)(6), at the time prescribed therefor, 
unless it is shown that such failure is due to reasonable 
cause and not to willful neglect, there shall be paid, on no-
tice and demand of the Secretary and in the same manner 
as tax, by the person failing to provide such notice, an 
amount equal to $100 for each such failure, but the total 
amount imposed on such person for all such failures during 
any calendar year shall not exceed $50,000.’’. 
(f) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall 
apply to stock attributable to options exercised, or re-
stricted stock units settled, after December 31, 2017. 
(2) REQUIREMENT
TO
PROVIDE
NOTICE.—The 
amendments made by subsection (e) shall apply to 
failures after December 31, 2017. 
(g) TRANSITION RULE.—Until such time as the Sec-
retary (or the Secretary’s delegate) issue regulations or 
other guidance for purposes of implementing the require-
ments of paragraph (2)(C)(i)(II) of section 83(i) of the In-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00322
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
323 
ternal Revenue Code of 1986 (as added by this section), or 
the requirements of paragraph (6) of such section, a cor-
poration shall be treated as being in compliance with such 
requirements (respectively) if such corporation complies 
with a reasonable good faith interpretation of such require-
ments. 
TITLE IV—TAXATION OF FOR-
EIGN INCOME AND FOREIGN 
PERSONS 
Subtitle A—Establishment of Par-
ticipation Exemption System for 
Taxation of Foreign Income 
SEC. 4001. DEDUCTION FOR FOREIGN-SOURCE PORTION OF 
DIVIDENDS RECEIVED BY DOMESTIC COR-
PORATIONS FROM SPECIFIED 10-PERCENT 
OWNED FOREIGN CORPORATIONS. 
(a) IN GENERAL.—Part VIII of subchapter B of chap-
ter 1 is amended by inserting after section 245 the following 
new section: 
‘‘SEC. 245A. DEDUCTION FOR FOREIGN-SOURCE PORTION 
OF DIVIDENDS RECEIVED BY DOMESTIC COR-
PORATIONS FROM SPECIFIED 10-PERCENT 
OWNED FOREIGN CORPORATIONS. 
‘‘(a) IN GENERAL.—In the case of any dividend re-
ceived from a specified 10-percent owned foreign corpora-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00323
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
324 
tion by a domestic corporation which is a United States 
shareholder with respect to such foreign corporation, there 
shall be allowed as a deduction an amount equal to the for-
eign-source portion of such dividend. 
‘‘(b) SPECIFIED 10-PERCENT OWNED FOREIGN COR-
PORATION.—For purposes of this section, the term ‘specified 
10-percent owned foreign corporation’ means any foreign 
corporation with respect to which any domestic corporation 
is a United States shareholder. Such term shall not include 
any passive foreign investment company (within the mean-
ing of subpart D of part VI of subchapter P) that is not 
a controlled foreign corporation. 
‘‘(c) FOREIGN-SOURCE PORTION.—For purposes of this 
section— 
‘‘(1) IN GENERAL.—The foreign-source portion of 
any dividend is an amount which bears the same 
ratio to such dividend as— 
‘‘(A) the post-1986 undistributed foreign 
earnings of the specified 10-percent owned for-
eign corporation, bears to 
‘‘(B) the total post-1986 undistributed earn-
ings of such foreign corporation. 
‘‘(2) POST-1986 UNDISTRIBUTED EARNINGS.—The 
term ‘post-1986 undistributed earnings’ means the 
amount of the earnings and profits of the specified 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00324
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
325 
10-percent owned foreign corporation (computed in 
accordance with sections 964(a) and 986) accumu-
lated in taxable years beginning after December 31, 
1986— 
‘‘(A) as of the close of the taxable year of the 
specified 10-percent owned foreign corporation in 
which the dividend is distributed, and 
‘‘(B) without diminution by reason of divi-
dends distributed during such taxable year. 
‘‘(3) POST-1986 UNDISTRIBUTED FOREIGN EARN-
INGS.—The term ‘post-1986 undistributed foreign 
earnings’ means the portion of the post-1986 undis-
tributed earnings which is attributable to neither— 
‘‘(A) income described in subparagraph (A) 
of section 245(a)(5), nor 
‘‘(B) dividends described in subparagraph 
(B) of such section (determined without regard to 
section 245(a)(12)). 
‘‘(4) TREATMENT
OF
DISTRIBUTIONS
FROM 
EARNINGS BEFORE 1987.— 
‘‘(A) IN GENERAL.—In the case of any divi-
dend paid out of earnings and profits of the 
specified 10-percent owned foreign corporation 
(computed in accordance with sections 964(a) 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00325
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
326 
and 986) accumulated in taxable years begin-
ning before January 1, 1987— 
‘‘(i) paragraphs (1), (2), and (3) shall 
be applied without regard to the phrase 
‘post-1986’ each place it appears, and 
‘‘(ii) paragraph (2) shall be applied by 
substituting ‘after the date specified in sec-
tion 316(a)(1)’ for ‘in taxable years begin-
ning after December 31, 1986’. 
‘‘(B) DIVIDENDS PAID FIRST OUT OF POST- 
1986 EARNINGS.—Dividends shall be treated as 
paid out of post-1986 undistributed earnings to 
the extent thereof. 
‘‘(5) TREATMENT OF CERTAIN DIVIDENDS IN EX-
CESS OF UNDISTRIBUTED EARNINGS.—In the case of 
any dividend from the specified 10-percent owned for-
eign corporation which is in excess of undistributed 
earnings (as determined under paragraph (2) after 
taking into account the modifications described in 
clauses (i) and (ii) of paragraph (4)(A)), the foreign- 
source portion of such dividend is an amount which 
bears the same ratio to such dividend as— 
‘‘(A) the portion of the earnings and profits 
described in subparagraph (B) which is attrib-
utable to neither income described in paragraph 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00326
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
327 
(3)(A) nor dividends described in paragraph 
(3)(B), bears to 
‘‘(B) the earnings and profits of such cor-
poration for the taxable year in which such dis-
tribution is made (computed as of the close of the 
taxable year without diminution by reason of 
any distributions made during the taxable year). 
‘‘(d) DISALLOWANCE OF FOREIGN TAX CREDIT, ETC.— 
‘‘(1) IN GENERAL.—No credit shall be allowed 
under section 901 for any taxes paid or accrued (or 
treated as paid or accrued) with respect to any divi-
dend for which a deduction is allowed under this sec-
tion. 
‘‘(2) DENIAL
OF
DEDUCTION.—No deduction 
shall be allowed under this chapter for any tax for 
which credit is not allowable under section 901 by 
reason of paragraph (1) (determined by treating the 
taxpayer as having elected the benefits of subpart A 
of part III of subchapter N). 
‘‘(e) REGULATIONS.—The Secretary may prescribe 
such regulations or other guidance as may be necessary or 
appropriate to carry out the provisions of this section.’’. 
(b) APPLICATION
OF HOLDING PERIOD REQUIRE-
MENT.—Section 246(c) is amended— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00327
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
328 
(1) by striking ‘‘or 245’’ in paragraph (1) and 
inserting ‘‘245, or 245A’’, and 
(2) by adding at the end the following new para-
graph: 
‘‘(5) SPECIAL RULES FOR FOREIGN SOURCE POR-
TION OF DIVIDENDS RECEIVED FROM SPECIFIED 10- 
PERCENT OWNED FOREIGN CORPORATIONS.— 
‘‘(A) 6-MONTH HOLDING PERIOD REQUIRE-
MENT.—For purposes of section 245A— 
‘‘(i) paragraph (1)(A) shall be ap-
plied— 
‘‘(I) by substituting ‘180 days’ for 
‘45 days’each place it appears, and 
‘‘(II) by substituting ‘361-day pe-
riod’ for ‘91-day period’, and 
‘‘(ii) paragraph (2) shall not apply. 
‘‘(B) STATUS MUST BE MAINTAINED DURING 
HOLDING
PERIOD.—For purposes of applying 
paragraph (1) with respect to section 245A, the 
taxpayer shall be treated as holding the stock re-
ferred to in paragraph (1) for any period only 
if— 
‘‘(i) the specified 10-percent owned for-
eign corporation referred to in section 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00328
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
329 
245A(a) is a specified 10-percent owned for-
eign corporation for such period, and 
‘‘(ii) the taxpayer is a United States 
shareholder with respect to such specified 
10-percent owned foreign corporation for 
such period.’’. 
(c) APPLICATION OF RULES GENERALLY APPLICABLE 
TO DEDUCTIONS FOR DIVIDENDS RECEIVED.— 
(1) TREATMENT OF DIVIDENDS FROM CERTAIN 
CORPORATIONS.—Section 246(a)(1) is amended by 
striking ‘‘and 245’’ and inserting ‘‘245, and 245A’’. 
(2) COORDINATION WITH SECTION 1059.—Section 
1059(b)(2)(B) is amended by striking ‘‘or 245’’ and 
inserting ‘‘245, or 245A’’. 
(d) COORDINATION WITH FOREIGN TAX CREDIT LIMI-
TATION.—Section 904(b) is amended by adding at the end 
the following new paragraph: 
‘‘(5) TREATMENT OF DIVIDENDS FOR WHICH DE-
DUCTION
IS
ALLOWED
UNDER
SECTION
245A.—For 
purposes of subsection (a), in the case of a United 
States shareholder with respect to a specified 10-per-
cent owned foreign corporation, such shareholder’s 
taxable income from sources without the United 
States (and entire taxable income) shall be deter-
mined without regard to— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00329
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
330 
‘‘(A) the foreign-source portion of any divi-
dend received from such foreign corporation, and 
‘‘(B) any deductions properly allocable or 
apportioned to— 
‘‘(i) income (other than subpart F in-
come (as defined in section 952) and foreign 
high return amounts (as defined in section 
951A(b)) with respect to stock of such speci-
fied 10-percent owned foreign corporation, 
or 
‘‘(ii) such stock (to the extent income 
with respect to such stock is other than sub-
part F income (as so defined) or foreign 
high return amounts (as so defined)). 
Any term which is used in section 245A and in this 
paragraph shall have the same meaning for purposes 
of this paragraph as when used in such section.’’. 
(e) CONFORMING AMENDMENTS.— 
(1) Section 245(a)(4) is amended by striking 
‘‘section 902(c)(1)’’ and inserting ‘‘section 245A(c)(2) 
applied by substituting ‘qualified 10-percent owned 
foreign corporation’ for ‘specified 10-percent owned 
foreign corporation’ each place it appears’’. 
(2) Section 951(b) is amended by striking ‘‘sub-
part’’ and inserting ‘‘title’’. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00330
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
331 
(3) Section 957(a) is amended by striking ‘‘sub-
part’’ in the matter preceding paragraph (1) and in-
serting ‘‘title’’. 
(4) The table of sections for part VIII of sub-
chapter B of chapter 1 is amended by inserting after 
section 245 the following new item: 
‘‘Sec. 245A. Deduction for foreign-source portion of dividends received by domes-
tic corporations from specified 10-percent owned foreign corpora-
tions.’’. 
(f) EFFECTIVE DATE.—The amendments made by this 
section shall apply to distributions made after (and, in the 
case of the amendments made by subsection (d), deductions 
with respect to taxable years ending after) December 31, 
2017. 
SEC. 4002. APPLICATION OF PARTICIPATION EXEMPTION TO 
INVESTMENTS IN UNITED STATES PROPERTY. 
(a) IN GENERAL.—Section 956(a) is amended in the 
matter preceding paragraph (1) by inserting ‘‘(other than 
a corporation)’’ after ‘‘United States shareholder’’. 
(b) REGULATORY AUTHORITY TO PREVENT ABUSE.— 
Section 956(e) is amended by striking ‘‘including regula-
tions to prevent’’ and inserting ‘‘including regulations— 
‘‘(1) to address United States shareholders that 
are partnerships with corporate partners, and 
‘‘(2) to prevent’’. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00331
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
332 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years of foreign corporations 
beginning after December 31, 2017. 
SEC. 4003. LIMITATION ON LOSSES WITH RESPECT TO SPEC-
IFIED 10-PERCENT OWNED FOREIGN COR-
PORATIONS. 
(a) BASIS IN SPECIFIED 10-PERCENT OWNED FOR-
EIGN CORPORATION REDUCED BY NONTAXED PORTION OF 
DIVIDEND FOR PURPOSES OF DETERMINING LOSS.— 
(1) IN GENERAL.—Section 961 is amended by 
adding at the end the following new subsection: 
‘‘(d) BASIS IN SPECIFIED 10-PERCENT OWNED FOR-
EIGN CORPORATION REDUCED BY NONTAXED PORTION OF 
DIVIDEND FOR PURPOSES OF DETERMINING LOSS.—If a 
domestic corporation received a dividend from a specified 
10-percent owned foreign corporation (as defined in section 
245A) in any taxable year, solely for purposes of deter-
mining loss on any disposition of stock of such foreign cor-
poration in such taxable year or any subsequent taxable 
year, the basis of such domestic corporation in such stock 
shall be reduced (but not below zero) by the amount of any 
deduction allowable to such domestic corporation under sec-
tion 245A with respect to such stock except to the extent 
such basis was reduced under section 1059 by reason of a 
dividend for which such a deduction was allowable.’’. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00332
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
333 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to distributions made 
after December 31, 2017. 
(b) TREATMENT OF FOREIGN BRANCH LOSSES TRANS-
FERRED TO SPECIFIED 10-PERCENT OWNED FOREIGN COR-
PORATIONS.— 
(1) IN GENERAL.—Part II of subchapter B of 
chapter 1 is amended by adding at the end the fol-
lowing new section: 
‘‘SEC. 91. CERTAIN FOREIGN BRANCH LOSSES TRANS-
FERRED TO SPECIFIED 10-PERCENT OWNED 
FOREIGN CORPORATIONS. 
‘‘(a) IN GENERAL.—If a domestic corporation trans-
fers substantially all of the assets of a foreign branch (with-
in the meaning of section 367(a)(3)(C)) to a specified 10- 
percent owned foreign corporation (as defined in section 
245A) with respect to which it is a United States share-
holder after such transfer, such domestic corporation shall 
include in gross income for the taxable year which includes 
such transfer an amount equal to the transferred loss 
amount with respect to such transfer. 
‘‘(b) TRANSFERRED LOSS AMOUNT.—For purposes of 
this section, the term ‘transferred loss amount’ means, with 
respect to any transfer of substantially all of the assets of 
a foreign branch, the excess (if any) of— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00333
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
334 
‘‘(1) the sum of losses— 
‘‘(A) which were incurred by the foreign 
branch after December 31, 2017, and before the 
transfer, and 
‘‘(B) with respect to which a deduction was 
allowed to the taxpayer, over 
‘‘(2) the sum of— 
‘‘(A) any taxable income of such branch for 
a taxable year after the taxable year in which 
the loss was incurred and through the close of the 
taxable year of the transfer, and 
‘‘(B) any amount which is recognized under 
section 904(f)(3) on account of the transfer. 
‘‘(c) REDUCTION FOR RECOGNIZED GAINS.— 
‘‘(1) IN GENERAL.—In the case of a transfer not 
described in section 367(a)(3)(C), the transferred loss 
amount shall be reduced (but not below zero) by the 
amount of gain recognized by the taxpayer on account 
of the transfer (other than amounts taken into ac-
count under subsection (c)(2)(B)). 
‘‘(2) COORDINATION WITH RECOGNITION UNDER 
SECTION 367.—In the case of a transfer described in 
section 367(a)(3)(C), the transferred loss amount shall 
not exceed the excess (if any) of— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00334
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
335 
‘‘(A) the excess of the amount described in 
section 367(a)(3)(C)(i) over the amount described 
in section 367(a)(3)(C)(ii) with respect to such 
transfer, over 
‘‘(B) the amount of gain recognized under 
section 367(a)(3)(C) with respect to such trans-
fer. 
‘‘(d) SOURCE OF INCOME.—Amounts included in gross 
income under this section shall be treated as derived from 
sources within the United States. 
‘‘(e) BASIS ADJUSTMENTS.—Consistent with such reg-
ulations or other guidance as the Secretary may prescribe, 
proper adjustments shall be made in the adjusted basis of 
the taxpayer’s stock in the specified 10-percent owned for-
eign corporation to which the transfer is made, and in the 
transferee’s adjusted basis in the property transferred, to 
reflect amounts included in gross income under this sec-
tion.’’. 
(2) AMOUNTS RECOGNIZED UNDER SECTION 367 
ON TRANSFER OF FOREIGN BRANCH WITH PREVIOUSLY 
DEDUCTED
LOSSES
TREATED
AS
UNITED
STATES 
SOURCE.—Section 367(a)(3)(C) is amended by strik-
ing ‘‘outside’’ in the last sentence and inserting 
‘‘within’’. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00335
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
336 
(3) CLERICAL AMENDMENT.—The table of sec-
tions for part II of subchapter B of chapter 1 is 
amended by adding at the end the following new item: 
‘‘Sec. 91. Certain foreign branch losses transferred to specified 10-percent owned 
foreign corporations.’’. 
(4) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to transfers after De-
cember 31, 2017. 
SEC. 4004. TREATMENT OF DEFERRED FOREIGN INCOME 
UPON TRANSITION TO PARTICIPATION EX-
EMPTION SYSTEM OF TAXATION. 
(a) IN GENERAL.—Section 965 is amended to read as 
follows: 
‘‘SEC. 965. TREATMENT OF DEFERRED FOREIGN INCOME 
UPON TRANSITION TO PARTICIPATION EX-
EMPTION SYSTEM OF TAXATION. 
‘‘(a) TREATMENT OF DEFERRED FOREIGN INCOME AS 
SUBPART F INCOME.—In the case of the last taxable year 
of a deferred foreign income corporation which begins before 
January 1, 2018, the subpart F income of such foreign cor-
poration (as otherwise determined for such taxable year 
under section 952) shall be increased by the greater of— 
‘‘(1) the accumulated post-1986 deferred foreign 
income of such corporation determined as of Novem-
ber 2, 2017, or 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00336
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
337 
‘‘(2) the accumulated post-1986 deferred foreign 
income of such corporation determined as of December 
31, 2017. 
‘‘(b) REDUCTION IN AMOUNTS INCLUDED IN GROSS IN-
COME OF UNITED STATES SHAREHOLDERS OF SPECIFIED 
FOREIGN CORPORATIONS WITH DEFICITS
IN EARNINGS 
AND PROFITS.— 
‘‘(1) IN GENERAL.—In the case of a taxpayer 
which is a United States shareholder with respect to 
at least one deferred foreign income corporation and 
at least one E&P deficit foreign corporation, the 
amount which would (but for this subsection) be taken 
into account under section 951(a)(1) by reason of sub-
section (a) as such United States shareholder’s pro 
rata share of the subpart F income of each deferred 
foreign income corporation shall be reduced (but not 
below zero) by the amount of such United States 
shareholder’s aggregate foreign E&P deficit which is 
allocated under paragraph (2) to such deferred foreign 
income corporation. 
‘‘(2) ALLOCATION OF AGGREGATE FOREIGN E&P 
DEFICIT.—The aggregate foreign E&P deficit of any 
United States shareholder shall be allocated among 
the deferred foreign income corporations of such 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00337
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
338 
United States shareholder in an amount which bears 
the same proportion to such aggregate as— 
‘‘(A) such United States shareholder’s pro 
rata share of the accumulated post-1986 deferred 
foreign income of each such deferred foreign in-
come corporation, bears to 
‘‘(B) the aggregate of such United States 
shareholder’s pro rata share of the accumulated 
post-1986 deferred foreign income of all deferred 
foreign income corporations of such United 
States shareholder. 
‘‘(3) DEFINITIONS RELATED TO E&P DEFICITS.— 
For purposes of this subsection— 
‘‘(A) AGGREGATE FOREIGN E&P DEFICIT.— 
The term ‘aggregate foreign E&P deficit’ means, 
with respect to any United States shareholder, 
the aggregate of such shareholder’s pro rata 
shares of the specified E&P deficits of the E&P 
deficit foreign corporations of such shareholder. 
‘‘(B) E&P DEFICIT
FOREIGN
CORPORA-
TION.—The term ‘E&P deficit foreign corpora-
tion’ means, with respect to any taxpayer, any 
specified foreign corporation with respect to 
which such taxpayer is a United States share-
holder, if— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00338
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
339 
‘‘(i) such specified foreign corporation 
has a deficit in post-1986 earnings and 
profits, and 
‘‘(ii) as of November 2, 2017— 
‘‘(I) such corporation was a speci-
fied foreign corporation, and 
‘‘(II) such taxpayer was a United 
States shareholder of such corporation. 
‘‘(C) SPECIFIED E&P DEFICIT.—The term 
‘specified E&P deficit’ means, with respect to 
any E&P deficit foreign corporation, the amount 
of the deficit referred to in subparagraph (B). 
‘‘(4) NETTING AMONG UNITED STATES SHARE-
HOLDERS IN SAME AFFILIATED GROUP.— 
‘‘(A) IN GENERAL.—In the case of any af-
filiated group which includes at least one E&P 
net surplus shareholder and one E&P net deficit 
shareholder, the amount which would (but for 
this paragraph) be taken into account under sec-
tion 951(a)(1) by reason of subsection (a) by 
each such E&P net surplus shareholder shall be 
reduced (but not below zero) by such share-
holder’s applicable share of the affiliated group’s 
aggregate unused E&P deficit. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00339
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
340 
‘‘(B) E&P NET SURPLUS SHAREHOLDER.— 
For purposes of this paragraph, the term ‘E&P 
net surplus shareholder’ means any United 
States shareholder which would (determined 
without regard to this paragraph) take into ac-
count an amount greater than zero under section 
951(a)(1) by reason of subsection (a). 
‘‘(C) E&P NET DEFICIT SHAREHOLDER.— 
For purposes of this paragraph, the term ‘E&P 
net deficit shareholder’ means any United States 
shareholder if— 
‘‘(i) the aggregate foreign E&P deficit 
with respect to such shareholder (as defined 
in paragraph (3)(A)), exceeds 
‘‘(ii) the amount which would (but for 
this subsection) be taken into account by 
such shareholder under section 951(a)(1) by 
reason of subsection (a). 
‘‘(D) AGGREGATE UNUSED E&P DEFICIT.— 
For purposes of this paragraph— 
‘‘(i) IN
GENERAL.—The term ‘aggre-
gate unused E&P deficit’ means, with re-
spect to any affiliated group, the lesser of— 
‘‘(I) the sum of the excesses de-
scribed in subparagraph (C), deter-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00340
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
341 
mined with respect to each E&P net 
deficit shareholder in such group, or 
‘‘(II) 
the 
amount 
determined 
under subparagraph (E)(ii). 
‘‘(ii) REDUCTION
WITH
RESPECT
TO 
E&P NET DEFICIT SHAREHOLDERS WHICH 
ARE NOT WHOLLY OWNED BY THE AFFILI-
ATED GROUP.—If the group ownership per-
centage of any E&P net deficit shareholder 
is less than 100 percent, the amount of the 
excess described in subparagraph (C) which 
is taken into account under clause (i)(I) 
with respect to such E&P net deficit share-
holder shall be such group ownership per-
centage of such amount. 
‘‘(E) APPLICABLE SHARE.—For purposes of 
this paragraph, the term ‘applicable share’ 
means, with respect to any E&P net surplus 
shareholder in any affiliated group, the amount 
which bears the same proportion to such group’s 
aggregate unused E&P deficit as— 
‘‘(i) the product of— 
‘‘(I) such shareholder’s group own-
ership percentage, multiplied by 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00341
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
342 
‘‘(II) the amount which would 
(but for this paragraph) be taken into 
account under section 951(a)(1) by 
reason of subsection (a) by such share-
holder, bears to 
‘‘(ii) the aggregate amount determined 
under clause (i) with respect to all E&P net 
surplus shareholders in such group. 
‘‘(F) GROUP
OWNERSHIP
PERCENTAGE.— 
For purposes of this paragraph, the term ‘group 
ownership percentage’ means, with respect to 
any United States shareholder in any affiliated 
group, the percentage of the value of the stock of 
such United States shareholder which is held by 
other includible corporations in such affiliated 
group. Notwithstanding the preceding sentence, 
the group ownership percentage of the common 
parent of the affiliated group is 100 percent. 
Any term used in this subparagraph which is 
also used in section 1504 shall have the same 
meaning as when used in such section. 
‘‘(c) APPLICATION OF PARTICIPATION EXEMPTION TO 
INCLUDED INCOME.— 
‘‘(1) IN
GENERAL.—In the case of a United 
States shareholder of a deferred foreign income cor-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00342
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
343 
poration, there shall be allowed as a deduction for the 
taxable year in which an amount is included in the 
gross income of such United States shareholder under 
section 951(a)(1) by reason of this section an amount 
equal to the sum of— 
‘‘(A) the United States shareholder’s 7 per-
cent rate equivalent percentage of the excess (if 
any) of— 
‘‘(i) the amount so included as gross 
income, over 
‘‘(ii) the amount of such United States 
shareholder’s aggregate foreign cash posi-
tion, plus 
‘‘(B) the United States shareholder’s 14 per-
cent rate equivalent percentage of so much of the 
amount described in subparagraph (A)(ii) as 
does not exceed the amount described in subpara-
graph (A)(i). 
‘‘(2) 7 AND 14 PERCENT RATE EQUIVALENT PER-
CENTAGES.—For purposes of this subsection— 
‘‘(A) 7 PERCENT RATE EQUIVALENT PER-
CENTAGE.—The term ‘7 percent rate equivalent 
percentage’ means, with respect to any United 
States shareholder for any taxable year, the per-
centage which would result in the amount to 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00343
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
344 
which such percentage applies being subject to a 
7 percent rate of tax determined by only taking 
into account a deduction equal to such percent-
age of such amount and the highest rate of tax 
specified in section 11 for such taxable year. In 
the case of any taxable year of a United States 
shareholder to which section 15 applies, the high-
est rate of tax under section 11 before the effec-
tive date of the change in rates and the highest 
rate of tax under section 11 after the effective 
date of such change shall each be taken into ac-
count under the preceding sentence in the same 
proportions as the portion of such taxable year 
which is before and after such effective date, re-
spectively. 
‘‘(B) 14 PERCENT RATE EQUIVALENT PER-
CENTAGE.—The term ‘14 percent rate equivalent 
percentage’ means, with respect to any United 
States shareholder for any taxable year, the per-
centage determined under subparagraph (A) ap-
plied by substituting ‘14 percent rate of tax’ for 
‘7 percent rate of tax’. 
‘‘(3) AGGREGATE FOREIGN CASH POSITION.—For 
purposes of this subsection— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00344
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
345 
‘‘(A) IN
GENERAL.—The term ‘aggregate 
foreign cash position’ means, with respect to any 
United States shareholder, one-third of the sum 
of— 
‘‘(i) the aggregate of such United 
States shareholder’s pro rata share of the 
cash position of each specified foreign cor-
poration of such United States shareholder 
determined as of November 2, 2017, 
‘‘(ii) the aggregate described in clause 
(i) determined as of the close of the last tax-
able year of each such specified foreign cor-
poration which ends before November 2, 
2017, and 
‘‘(iii) the aggregate described in clause 
(i) determined as of the close of the taxable 
year of each such specified foreign corpora-
tion which precedes the taxable year re-
ferred to in clause (ii). 
In the case of any foreign corporation which did 
not exist as of the determination date described 
in clause (ii) or (iii), this subparagraph shall be 
applied separately to such foreign corporation by 
not taking into account such clause and by sub-
stituting ‘one-half (100 percent in the case that 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00345
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
346 
both clauses (ii) and (iii) are disregarded)’ for 
‘one-third’. 
‘‘(B) CASH POSITION.—For purposes of this 
paragraph, the cash position of any specified for-
eign corporation is the sum of— 
‘‘(i) cash held by such foreign corpora-
tion, 
‘‘(ii) the net accounts receivable of such 
foreign corporation, plus 
‘‘(iii) the fair market value of the fol-
lowing assets held by such corporation: 
‘‘(I) 
Actively 
traded 
personal 
property for which there is an estab-
lished financial market. 
‘‘(II) Commercial paper, certifi-
cates of deposit, the securities of the 
Federal government and of any State 
or foreign government. 
‘‘(III) Any foreign currency. 
‘‘(IV) Any obligation with a term 
of less than one year. 
‘‘(V) Any asset which the Sec-
retary identifies as being economically 
equivalent to any asset described in 
this subparagraph. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00346
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
347 
‘‘(C) NET
ACCOUNTS
RECEIVABLE.—For 
purposes of this paragraph, the term ‘net ac-
counts receivable’ means, with respect to any 
specified foreign corporation, the excess (if any) 
of— 
‘‘(i) such corporation’s accounts receiv-
able, over 
‘‘(ii) such corporation’s accounts pay-
able (determined consistent with the rules of 
section 461). 
‘‘(D) PREVENTION OF DOUBLE COUNTING.— 
‘‘(i) IN GENERAL.—The applicable per-
centage of each specified cash position of a 
specified foreign corporation shall not be 
taken into account by— 
‘‘(I) the United States shareholder 
referred to in clause (ii) with respect to 
such position, or 
‘‘(II) any United States share-
holder which is an includible corpora-
tion in the same affiliated group as 
such United States shareholder referred 
to in clause (ii). 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00347
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
348 
‘‘(ii) SPECIFIED CASH POSITION.—For 
purposes of this subparagraph, the term 
‘specified cash position’ means— 
‘‘(I) amounts described in sub-
paragraph (B)(ii) to the extent such 
amounts are receivable from another 
specified foreign corporation with re-
spect to any United States shareholder, 
‘‘(II) amounts described in sub-
paragraph (B)(iii)(I) to the extent 
such amounts consist of an equity in-
terest in another specified foreign cor-
poration with respect to any United 
States shareholder, and 
‘‘(III) amounts described in sub-
paragraph (B)(iii)(IV) to the extent 
that another specified foreign corpora-
tion with respect to any United States 
shareholder is obligated to repay such 
amount. 
‘‘(iii) APPLICABLE PERCENTAGE.—For 
purposes of this subparagraph, the term 
‘applicable percentage’ means— 
‘‘(I) with respect to each specified 
cash position described in subclause (I) 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00348
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
349 
or (III) of clause (ii), the pro rata 
share of the United States shareholder 
referred to in clause (ii) with respect to 
the specified foreign corporation re-
ferred to in such clause, and 
‘‘(II) with respect to each specified 
cash 
position 
described 
in 
clause 
(ii)(II), the ratio (expressed as a per-
centage and not in excess of 100 per-
cent) of the United States shareholder’s 
pro rata share of the cash position of 
the specified foreign corporation re-
ferred to in such clause divided by the 
amount of such specified cash position. 
For purposes of this subparagraph, a sepa-
rate applicable percentage shall be deter-
mined under each of subclauses (I) and (II) 
with respect to each specified foreign cor-
poration referred to in clause (ii) with re-
spect to which a specified cash position is 
determined for the specified foreign corpora-
tion referred to in clause (i). 
‘‘(iv) REDUCTION
WITH
RESPECT
TO 
AFFILIATED GROUP MEMBERS NOT WHOLLY 
OWNED BY THE AFFILIATED GROUP.—For 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00349
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
350 
purposes of clause (i)(II), in the case of an 
includible corporation the group ownership 
percentage of which is less than 100 percent 
(as determined under subsection (b)(4)(F)), 
the amount not take into account by reason 
of such clause shall be the group ownership 
percentage of such amount (determined 
without regard to this clause). 
‘‘(E) CERTAIN BLOCKED ASSETS NOT TAKEN 
INTO ACCOUNT.—A cash position of a specified 
foreign corporation shall not be taken into ac-
count under subparagraph (A) if such position 
could not (as of the date that it would otherwise 
have been taken into account under clause (i), 
(ii), or (iii) of subparagraph (A)) have been dis-
tributed by such specified foreign corporation to 
United States shareholders of such specified for-
eign corporation because of currency or other re-
strictions or limitations imposed under the laws 
of any foreign country (within the meaning of 
section 964(b)). 
‘‘(F) CASH
POSITIONS
OF
CERTAIN
NON- 
CORPORATE ENTITIES TAKEN INTO ACCOUNT.— 
An entity (other than a domestic corporation) 
shall be treated as a specified foreign corporation 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00350
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
351 
of a United States shareholder for purposes of de-
termining such United States shareholder’s ag-
gregate foreign cash position if any interest in 
such entity is held by a specified foreign corpora-
tion of such United States shareholder (deter-
mined after application of this subparagraph) 
and such entity would be a specified foreign cor-
poration of such United States shareholder if 
such entity were a foreign corporation. 
‘‘(G) 
TIME
OF
CERTAIN
DETERMINA-
TIONS.—For purposes of this paragraph, the de-
termination of whether a person is a United 
States shareholder, whether a person is a speci-
fied foreign corporation, and the pro rata share 
of a United States shareholder with respect to a 
specified foreign corporation, shall be determined 
as of the end of the taxable year described in sub-
section (a). 
‘‘(H) ANTI-ABUSE.—If the Secretary deter-
mines that the principal purpose of any trans-
action was to reduce the aggregate foreign cash 
position taken into account under this sub-
section, such transaction shall be disregarded for 
purposes of this subsection. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00351
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
352 
‘‘(d) DEFERRED FOREIGN INCOME CORPORATION; AC-
CUMULATED POST-1986 DEFERRED FOREIGN INCOME.— 
For purposes of this section— 
‘‘(1) DEFERRED
FOREIGN
INCOME
CORPORA-
TION.—The term ‘deferred foreign income corporation’ 
means, with respect to any United States shareholder, 
any specified foreign corporation of such United 
States shareholder which has accumulated post-1986 
deferred foreign income (as of the date referred to in 
paragraph (1) or (2) of subsection (a), whichever is 
applicable with respect to such foreign corporation) 
greater than zero. 
‘‘(2) ACCUMULATED POST-1986 DEFERRED FOR-
EIGN INCOME.—The term ‘accumulated post-1986 de-
ferred foreign income’ means the post-1986 earnings 
and profits except to the extent such earnings— 
‘‘(A) are attributable to income of the speci-
fied foreign corporation which is effectively con-
nected with the conduct of a trade or business 
within the United States and subject to tax 
under this chapter, or 
‘‘(B) if distributed, would be excluded from 
the gross income of a United States shareholder 
under section 959. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00352
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
353 
To the extent provided in regulations or other guid-
ance prescribed by the Secretary, in the case of any 
controlled foreign corporation which has shareholders 
which are not United States shareholders, accumu-
lated post-1986 deferred foreign income shall be ap-
propriately reduced by amounts which would be de-
scribed in subparagraph (B) if such shareholders were 
United States shareholders. 
‘‘(3) POST-1986
EARNINGS
AND
PROFITS.—The 
term ‘post-1986 earnings and profits’ means the earn-
ings and profits of the foreign corporation (computed 
in accordance with sections 964(a) and 986) accumu-
lated in taxable years beginning after December 31, 
1986, and determined— 
‘‘(A) as of the date referred to in paragraph 
(1) or (2) of subsection (a), whichever is applica-
ble with respect to such foreign corporation, 
‘‘(B) without diminution by reason of divi-
dends distributed during the taxable year ending 
with or including such date, and 
‘‘(C) increased by the amount of any quali-
fied deficit (within the meaning of section 
952(c)(1)(B)(ii)) arising before January 1, 2018, 
which is treated as a qualified deficit (within the 
meaning of such section as amended by the Tax 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00353
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
354 
Cuts and Jobs Act) for purposes of such foreign 
corporation’s first taxable year beginning after 
December 31, 2017. 
‘‘(e) SPECIFIED FOREIGN CORPORATION.— 
‘‘(1) IN GENERAL.—For purposes of this section, 
the term ‘specified foreign corporation’ means— 
‘‘(A) any controlled foreign corporation, 
and 
‘‘(B) any foreign corporation with respect 
to which one or more domestic corporations is a 
United States shareholder (determined without 
regard to section 958(b)(4)). 
‘‘(2) APPLICATION
TO
CERTAIN
FOREIGN
COR-
PORATIONS.—For purposes of sections 951 and 961, a 
foreign corporation described in paragraph (1)(B) 
shall be treated as a controlled foreign corporation 
solely for purposes of taking into account the subpart 
F income of such corporation under subsection (a) 
(and for purposes of applying subsection (f)). 
‘‘(3) EXCEPTION FOR PASSIVE FOREIGN INVEST-
MENT COMPANIES.—The term ‘specified foreign cor-
poration’ shall not include any passive foreign invest-
ment company (within the meaning of subpart D of 
part VI of subchapter P) that is not a controlled for-
eign corporation. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00354
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
355 
‘‘(f) DETERMINATIONS OF PRO RATA SHARE.—For 
purposes of this section, the determination of any United 
States shareholder’s pro rata share of any amount with re-
spect to any specified foreign corporation shall be deter-
mined under rules similar to the rules of section 951(a)(2) 
by treating such amount in the same manner as subpart 
F income (and by treating such specified foreign corpora-
tion as a controlled foreign corporation). 
‘‘(g) DISALLOWANCE OF FOREIGN TAX CREDIT, ETC.— 
‘‘(1) IN GENERAL.—No credit shall be allowed 
under section 901 for the applicable percentage of any 
taxes paid or accrued (or treated as paid or accrued) 
with respect to any amount for which a deduction is 
allowed under this section. 
‘‘(2) APPLICABLE
PERCENTAGE.—For purposes 
of this subsection, the term ‘applicable percentage’ 
means the amount (expressed as a percentage) equal 
to the sum of— 
‘‘(A) 80 percent of the ratio of— 
‘‘(i) the excess to which subsection 
(c)(1)(A) applies, divided by 
‘‘(ii) the sum of such excess plus the 
amount to which subsection (c)(1)(B) ap-
plies, plus 
‘‘(B) 60 percent of the ratio of— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00355
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
356 
‘‘(i) the amount to which subsection 
(c)(1)(B) applies, divided by 
‘‘(ii) the sum described in subpara-
graph (A)(ii). 
‘‘(3) DENIAL
OF
DEDUCTION.—No deduction 
shall be allowed under this chapter for any tax for 
which credit is not allowable under section 901 by 
reason of paragraph (1) (determined by treating the 
taxpayer as having elected the benefits of subpart A 
of part III of subchapter N). 
‘‘(4) COORDINATION WITH SECTION 78.—With re-
spect to the taxes treated as paid or accrued by a do-
mestic corporation with respect to amounts which are 
includible in gross income of such domestic corpora-
tion by reason of this section, section 78 shall apply 
only to so much of such taxes as bears the same pro-
portion to the amount of such taxes as— 
‘‘(A) the excess of— 
‘‘(i) the amounts which are includible 
in gross income of such domestic corpora-
tion by reason of this section, over 
‘‘(ii) the deduction allowable under 
subsection (c) with respect to such amounts, 
bears to 
‘‘(B) such amounts. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00356
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
357 
‘‘(5) EXTENSION OF FOREIGN TAX CREDIT CAR-
RYOVER PERIOD.—With respect to any taxes paid or 
accrued (or treated as paid or accrued) with respect 
to any amount for which a deduction is allowed 
under this section, section 904(c) shall be applied by 
substituting ‘first 20 succeeding taxable years’ for 
‘first 10 succeeding taxable years’. 
‘‘(h) ELECTION
TO
PAY
LIABILITY
IN
INSTALL-
MENTS.— 
‘‘(1) IN
GENERAL.—In the case of a United 
States shareholder of a deferred foreign income cor-
poration, such United States shareholder may elect to 
pay the net tax liability under this section in 8 equal 
installments. 
‘‘(2) DATE FOR PAYMENT OF INSTALLMENTS.—If 
an election is made under paragraph (1), the first in-
stallment shall be paid on the due date (determined 
without regard to any extension of time for filing the 
return) for the return of tax for the taxable year de-
scribed in subsection (a) and each succeeding install-
ment shall be paid on the due date (as so determined) 
for the return of tax for the taxable year following the 
taxable year with respect to which the preceding in-
stallment was made. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00357
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
358 
‘‘(3) ACCELERATION OF PAYMENT.—If there is 
an addition to tax for failure to timely pay any in-
stallment required under this subsection, a liquida-
tion or sale of substantially all the assets of the tax-
payer (including in a title 11 or similar case), a ces-
sation of business by the taxpayer, or any similar cir-
cumstance, then the unpaid portion of all remaining 
installments shall be due on the date of such event (or 
in the case of a title 11 or similar case, the day before 
the petition is filed). The preceding sentence shall not 
apply to the sale of substantially all the assets of a 
taxpayer to a buyer if such buyer enters into an 
agreement with the Secretary under which such buyer 
is liable for the remaining installments due under 
this subsection in the same manner as if such buyer 
were the taxpayer. 
‘‘(4) PRORATION
OF
DEFICIENCY
TO
INSTALL-
MENTS.—If an election is made under paragraph (1) 
to pay the net tax liability under this section in in-
stallments and a deficiency has been assessed with re-
spect to such net tax liability, the deficiency shall be 
prorated to the installments payable under paragraph 
(1). The part of the deficiency so prorated to any in-
stallment the date for payment of which has not ar-
rived shall be collected at the same time as, and as 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00358
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
359 
a part of, such installment. The part of the deficiency 
so prorated to any installment the date for payment 
of which has arrived shall be paid upon notice and 
demand from the Secretary. This subsection shall not 
apply if the deficiency is due to negligence, to inten-
tional disregard of rules and regulations, or to fraud 
with intent to evade tax. 
‘‘(5) ELECTION.—Any election under paragraph 
(1) shall be made not later than the due date for the 
return of tax for the taxable year described in sub-
section (a) and shall be made in such manner as the 
Secretary may provide. 
‘‘(6) NET
TAX
LIABILITY
UNDER
THIS
SEC-
TION.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The net tax liability 
under this section with respect to any United 
States shareholder is the excess (if any) of— 
‘‘(i) such taxpayer’s net income tax for 
the taxable year in which an amount is in-
cluded in the gross income of such United 
States shareholder under section 951(a)(1) 
by reason of this section, over 
‘‘(ii) such taxpayer’s net income tax 
for such taxable year determined— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00359
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
360 
‘‘(I) without regard to this sec-
tion, and 
‘‘(II) without regard to any in-
come, deduction, or credit, properly at-
tributable to a dividend received by 
such United States shareholder from 
any deferred foreign income corpora-
tion. 
‘‘(B) NET INCOME TAX.—The term ‘net in-
come tax’ means the regular tax liability reduced 
by the credits allowed under subparts A, B, and 
D of part IV of subchapter A. 
‘‘(i) SPECIAL RULES FOR S CORPORATION SHARE-
HOLDERS.— 
‘‘(1) IN GENERAL.—In the case of any S cor-
poration which is a United States shareholder of a 
deferred foreign income corporation, each shareholder 
of such S corporation may elect to defer payment of 
such shareholder’s net tax liability under this section 
with respect to such S corporation until the share-
holder’s taxable year which includes the triggering 
event with respect to such liability. Any net tax li-
ability payment of which is deferred under the pre-
ceding sentence shall be assessed on the return as an 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00360
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
361 
addition to tax in the shareholder’s taxable year 
which includes such triggering event. 
‘‘(2) TRIGGERING EVENT.— 
‘‘(A) IN
GENERAL.—In the case of any 
shareholder’s net tax liability under this section 
with respect to any S corporation, the triggering 
event with respect to such liability is whichever 
of the following occurs first: 
‘‘(i) Such corporation ceases to be an S 
corporation (determined as of the first day 
of the first taxable year that such corpora-
tion is not an S corporation). 
‘‘(ii) A liquidation or sale of substan-
tially all the assets of such S corporation 
(including in a title 11 or similar case), a 
cessation of business by such S corporation, 
such S corporation ceases to exist, or any 
similar circumstance. 
‘‘(iii) A transfer of any share of stock 
in such S corporation by the taxpayer (in-
cluding by reason of death, or otherwise). 
‘‘(B) PARTIAL TRANSFERS OF STOCK.—In 
the case of a transfer of less than all of the tax-
payer’s shares of stock in the S corporation, such 
transfer shall only be a triggering event with re-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00361
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
362 
spect to so much of the taxpayer’s net tax liabil-
ity under this section with respect to such S cor-
poration as is properly allocable to such stock. 
‘‘(C) TRANSFER OF LIABILITY.—A transfer 
described in clause (iii) shall not be treated as 
a triggering event if the transferee enters into an 
agreement with the Secretary under which such 
transferee is liable for net tax liability with re-
spect to such stock in the same manner as if such 
transferee were the taxpayer. 
‘‘(3) NET TAX LIABILITY.—A shareholder’s net 
tax liability under this section with respect to any S 
corporation is the net tax liability under this section 
which would be determined under subsection (h)(6) if 
the only subpart F income taken into account by such 
shareholder by reason of this section were allocations 
from such S corporation. 
‘‘(4) ELECTION TO PAY DEFERRED LIABILITY IN 
INSTALLMENTS.—In the case of a taxpayer which 
elects to defer payment under paragraph (1)— 
‘‘(A) subsection (h) shall be applied sepa-
rately with respect to the liability to which such 
election applies, 
‘‘(B) an election under subsection (h) with 
respect to such liability shall be treated as timely 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00362
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
363 
made if made not later than the due date for the 
return of tax for the taxable year in which the 
triggering event with respect to such liability oc-
curs, 
‘‘(C) the first installment under subsection 
(h) with respect to such liability shall be paid 
not later than such due date (but determined 
without regard to any extension of time for filing 
the return), and 
‘‘(D) if the triggering event with respect to 
any net tax liability is described in paragraph 
(2)(A)(ii), an election under subsection (h) with 
respect to such liability may be made only with 
the consent of the Secretary. 
‘‘(5) JOINT AND SEVERAL LIABILITY OF S COR-
PORATION.—If any shareholder of an S corporation 
elects to defer payment under paragraph (1), such S 
corporation shall be jointly and severally liable for 
such payment and any penalty, addition to tax, or 
additional amount attributable thereto. 
‘‘(6) EXTENSION
OF
LIMITATION
ON
COLLEC-
TION.—Notwithstanding any other provision of law, 
any limitation on the time period for the collection of 
a liability deferred under this subsection shall not be 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00363
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
364 
treated as beginning before the date of the triggering 
event with respect to such liability. 
‘‘(7) ANNUAL REPORTING OF NET TAX LIABIL-
ITY.— 
‘‘(A) IN GENERAL.—Any shareholder of an 
S corporation which makes an election under 
paragraph (1) shall report the amount of such 
shareholder’s deferred net tax liability on such 
shareholder’s return of tax for the taxable year 
for which such election is made and on the re-
turn of tax for each taxable year thereafter until 
such amount has been fully assessed on such re-
turns. 
‘‘(B) DEFERRED NET TAX LIABILITY.—For 
purposes of this paragraph, the term ‘deferred 
net tax liability’ means, with respect to any tax-
able year, the amount of net tax liability pay-
ment of which has been deferred under para-
graph (1) and which has not been assessed on a 
return of tax for any prior taxable year. 
‘‘(C) FAILURE TO REPORT.—In the case of 
any failure to report any amount required to be 
reported under subparagraph (A) with respect to 
any taxable year before the due date for the re-
turn of tax for such taxable year, there shall be 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00364
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
365 
assessed on such return as an addition to tax 5 
percent of such amount. 
‘‘(8) ELECTION.—Any election under paragraph 
(1)— 
‘‘(A) shall be made by the shareholder of the 
S corporation not later than the due date for 
such shareholder’s return of tax for the taxable 
year which includes the close of the taxable year 
of such S corporation in which the amount de-
scribed in subsection (a) is taken into account, 
and 
‘‘(B) shall be made in such manner as the 
Secretary may provide. 
‘‘(j) REPORTING BY S CORPORATION.—Each S cor-
poration which is a United States shareholder of a deferred 
foreign income corporation shall report in its return of tax 
under section 6037(a) the amount includible in its gross 
income for such taxable year by reason of this section and 
the amount of the deduction allowable by subsection (c). 
Any copy provided to a shareholder under section 6037(b) 
shall include a statement of such shareholder’s pro rata 
share of such amounts. 
‘‘(k) INCLUSION
OF DEFERRED FOREIGN INCOME 
UNDER THIS SECTION NOT TO TRIGGER RECAPTURE OF 
OVERALL FOREIGN LOSS, ETC.—For purposes of sections 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00365
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
366 
904(f)(1) and 907(c)(4), in the case of a United States 
shareholder of a deferred foreign income corporation, such 
United States shareholder’s taxable income from sources 
without the United States and combined foreign oil and gas 
income shall be determined without regard to this section. 
‘‘(l) REGULATIONS.—The Secretary may prescribe 
such regulations or other guidance as may be necessary or 
appropriate to carry out the provisions of this section.’’. 
(b) CLERICAL AMENDMENT.—The table of sections for 
subpart F of part III of subchapter N of chapter 1 is 
amended by striking the item relating to section 965 and 
inserting the following: 
‘‘Sec. 965. Treatment of deferred foreign income upon transition to participation 
exemption system of taxation.’’. 
Subtitle B—Modifications Related 
to Foreign Tax Credit System 
SEC. 4101. REPEAL OF SECTION 902 INDIRECT FOREIGN TAX 
CREDITS; DETERMINATION OF SECTION 960 
CREDIT ON CURRENT YEAR BASIS. 
(a) REPEAL OF SECTION 902 INDIRECT FOREIGN TAX 
CREDITS.—Subpart A of part III of subchapter N of chap-
ter 1 is amended by striking section 902. 
(b) DETERMINATION OF SECTION 960 CREDIT ON CUR-
RENT YEAR BASIS.—Section 960 is amended— 
(1) by striking subsection (c), by redesignating 
subsection (b) as subsection (c), by striking all that 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00366
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
367 
precedes subsection (c) (as so redesignated) and in-
serting the following: 
‘‘SEC. 960. DEEMED PAID CREDIT FOR SUBPART F INCLU-
SIONS. 
‘‘(a) IN GENERAL.—For purposes of this subpart, if 
there is included in the gross income of a domestic corpora-
tion any item of income under section 951(a)(1) with re-
spect to any controlled foreign corporation with respect to 
which such domestic corporation is a United States share-
holder, such domestic corporation shall be deemed to have 
paid so much of such foreign corporation’s foreign income 
taxes as are properly attributable to such item of income. 
‘‘(b) SPECIAL RULES FOR DISTRIBUTIONS FROM PRE-
VIOUSLY TAXED EARNINGS AND PROFITS.—For purposes of 
this subpart— 
‘‘(1) IN GENERAL.—If any portion of a distribu-
tion from a controlled foreign corporation to a domes-
tic corporation which is a United States shareholder 
with respect to such controlled foreign corporation is 
excluded from gross income under section 959(a), such 
domestic corporation shall be deemed to have paid so 
much of such foreign corporation’s foreign income 
taxes as— 
‘‘(A) are properly attributable to such por-
tion, and 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00367
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
368 
‘‘(B) have not been deemed to have to been 
paid by such domestic corporation under this 
section for the taxable year or any prior taxable 
year. 
‘‘(2) TIERED CONTROLLED FOREIGN CORPORA-
TIONS.—If section 959(b) applies to any portion of a 
distribution from a controlled foreign corporation to 
another controlled foreign corporation, such controlled 
foreign corporation shall be deemed to have paid so 
much of such other controlled foreign corporation’s 
foreign income taxes as— 
‘‘(A) are properly attributable to such por-
tion, and 
‘‘(B) have not been deemed to have been 
paid by a domestic corporation under this sec-
tion for the taxable year or any prior taxable 
year.’’, 
(2) and by adding after subsection (c) (as so re-
designated) the following new subsections: 
‘‘(d) FOREIGN INCOME TAXES.—The term ‘foreign in-
come taxes’ means any income, war profits, or excess profits 
taxes paid or accrued to any foreign country or possession 
of the United States. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00368
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
369 
‘‘(e) REGULATIONS.—The Secretary may prescribe 
such regulations or other guidance as may be necessary or 
appropriate to carry out the provisions of this section.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 78 is amended to read as follows: 
‘‘SEC. 78. GROSS UP FOR DEEMED PAID FOREIGN TAX CRED-
IT. 
‘‘If a domestic corporation chooses to have the benefits 
of subpart A of part III of subchapter N (relating to foreign 
tax credit) for any taxable year, an amount equal to the 
taxes deemed to be paid by such corporation under sub-
sections (a) and (b) of section 960 for such taxable year 
shall be treated for purposes of this title (other than sections 
959, 960, and 961) as an item of income required to be 
included in the gross income of such domestic corporation 
under section 951(a) for such taxable year.’’. 
(2) Section 245(a)(10)(C) is amended by striking 
‘‘sections 902, 907, and 960’’ and inserting ‘‘sections 
907 and 960’’. 
(3) Sections 535(b)(1) and 545(b)(1) are each 
amended by striking ‘‘section 902(a) or 960(a)(1)’’ 
and inserting ‘‘section 960’’. 
(4) Section 814(f)(1) is amended— 
(A) by striking subparagraph (B), and 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00369
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
370 
(B) by striking all that precedes ‘‘No in-
come’’ and inserting the following: 
‘‘(1) TREATMENT OF FOREIGN TAXES.—’’. 
(5) Section 865(h)(1)(B) is amended by striking 
‘‘sections 902, 907, and 960’’ and inserting ‘‘sections 
907 and 960’’. 
(6) Section 901(a) is amended by striking ‘‘sec-
tions 902 and 960’’ and inserting ‘‘section 960’’. 
(7) Section 901(e)(2) is amended by striking 
‘‘but is not limited to—’’ and all that follows through 
‘‘that portion’’ and inserting ‘‘but is not limited to, 
that portion’’. 
(8) Section 901(f) is amended by striking ‘‘sec-
tions 902 and 960’’ and inserting ‘‘section 960’’. 
(9) Section 901(j)(1)(A) is amended by striking 
‘‘902 or’’. 
(10) Section 901(j)(1)(B) is amended by striking 
‘‘sections 902 and 960’’ and inserting ‘‘section 960’’. 
(11) Section 901(k)(2) is amended by striking 
‘‘section 853, 902, or 960’’ and inserting ‘‘section 853 
or 960’’. 
(12) Section 901(k)(6) is amended by striking 
‘‘902 or’’. 
(13) Section 901(m)(1) is amended by striking 
‘‘relevant foreign assets—’’ and all that follows and 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00370
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
371 
inserting ‘‘relevant foreign assets shall not be taken 
into account in determining the credit allowed under 
subsection (a).’’. 
(14) Section 904(d)(1) is amended by striking 
‘‘sections 902, 907, and 960’’ and inserting ‘‘sections 
907 and 960’’. 
(15) Section 904(d)(6)(A) is amended by striking 
‘‘sections 902, 907, and 960’’ and inserting ‘‘sections 
907 and 960’’. 
(16) Section 904(h)(10)(A) is amended by strik-
ing ‘‘sections 902, 907, and 960’’ and inserting ‘‘sec-
tions 907 and 960’’. 
(17) Section 904 is amended by striking sub-
section (k). 
(18) Section 905(c)(1) is amended by striking 
the last sentence. 
(19) Section 905(c)(2)(B)(i) is amended to read 
as follows: 
‘‘(i) shall be taken into account for the 
taxable year to which such taxes relate, 
and’’. 
(20) Section 906(a) is amended by striking ‘‘(or 
deemed, under section 902, paid or accrued during 
the taxable year)’’. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00371
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
372 
(21) Section 906(b) is amended by striking para-
graphs (4) and (5). 
(22) Section 907(b)(2)(B) is amended by striking 
‘‘902 or’’. 
(23) Section 907(c)(3) is amended— 
(A) by striking subparagraph (A) and re-
designating subparagraphs (B) and (C) as sub-
paragraphs (A) and (B), respectively, and 
(B) by striking ‘‘section 960(a)’’ in sub-
paragraph (A) (as so redesignated) and inserting 
‘‘section 960’’. 
(24) Section 907(c)(5) is amended by striking 
‘‘902 or’’. 
(25) Section 907(f)(2)(B)(i) is amended by strik-
ing ‘‘902 or’’. 
(26) Section 908(a) is amended by striking ‘‘902 
or’’. 
(27) Section 909(b) is amended— 
(A) by striking ‘‘section 902 corporation’’ in 
the matter preceding paragraph (1) and insert-
ing ‘‘10/50 corporation’’, 
(B) by striking ‘‘902 or’’ in paragraph (1), 
(C) by striking ‘‘by such section 902 cor-
poration’’ and all that follows in the matter fol-
lowing paragraph (2) and inserting ‘‘by such 10/ 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00372
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
373 
50 corporation or a domestic corporation which 
is a United States shareholder with respect to 
such 10/50 corporation.’’, and 
(D) by striking ‘‘SECTION 902 CORPORA-
TIONS’’ in the heading thereof and inserting ‘‘10/ 
50 CORPORATIONS’’. 
(28) Section 909(d)(5) is amended to read as fol-
lows: 
‘‘(5) 10/50 CORPORATION.—The term ‘10/50 cor-
poration’ means any foreign corporation with respect 
to which one or more domestic corporations is a 
United States shareholder.’’. 
(29) Section 958(a)(1) is amended by striking 
‘‘960(a)(1)’’ and inserting ‘‘960’’. 
(30) Section 959(d) is amended by striking ‘‘Ex-
cept as provided in section 960(a)(3), any’’ and in-
serting ‘‘Any’’. 
(31) Section 959(e) is amended by striking ‘‘sec-
tion 960(b)’’ and inserting ‘‘section 960(c)’’. 
(32) Section 1291(g)(2)(A) is amended by strik-
ing ‘‘any distribution—’’ and all that follows through 
‘‘but only if’’ and inserting ‘‘any distribution, any 
withholding tax imposed with respect to such dis-
tribution, but only if’’. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00373
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
374 
(33) Section 6038(c)(1)(B) is amended by strik-
ing ‘‘sections 902 (relating to foreign tax credit for 
corporate stockholder in foreign corporation) and 960 
(relating to special rules for foreign tax credit)’’ and 
inserting ‘‘section 960’’. 
(34) Section 6038(c)(4) is amended by striking 
subparagraph (C). 
(35) The table of sections for subpart A of part 
III of subchapter N of chapter 1 is amended by strik-
ing the item relating to section 902. 
(36) The table of sections for subpart F of part 
III of subchapter N of chapter 1 is amended by strik-
ing the item relating to section 960 and inserting the 
following: 
‘‘Sec. 960. Deemed paid credit for subpart F inclusions.’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 4102. SOURCE OF INCOME FROM SALES OF INVENTORY 
DETERMINED SOLELY ON BASIS OF PRODUC-
TION ACTIVITIES. 
(a) IN GENERAL.—Section 863(b) is amended by add-
ing at the end the following: ‘‘Gains, profits, and income 
from the sale or exchange of inventory property described 
in paragraph (2) shall be allocated and apportioned be-
tween sources within and without the United States solely 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00374
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
375 
on the basis of the production activities with respect to the 
property.’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
Subtitle C—Modification of Subpart 
F Provisions 
SEC. 4201. REPEAL OF INCLUSION BASED ON WITHDRAWAL 
OF PREVIOUSLY EXCLUDED SUBPART F IN-
COME FROM QUALIFIED INVESTMENT. 
(a) IN GENERAL.—Subpart F of part III of subchapter 
N of chapter 1 is amended by striking section 955. 
(b) CONFORMING AMENDMENTS.— 
(1)(A) Section 951(a)(1)(A) is amended to read 
as follows: 
‘‘(A) his pro rata share (determined under 
paragraph (2)) of the corporation’s subpart F 
income for such year, and’’. 
(B) Section 851(b)(3) is amended by striking 
‘‘section 951(a)(1)(A)(i)’’ in the flush language at the 
end and inserting ‘‘section 951(a)(1)(A)’’. 
(C) Section 952(c)(1)(B)(i) is amended by strik-
ing ‘‘section 951(a)(1)(A)(i)’’ and inserting ‘‘section 
951(a)(1)(A)’’. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00375
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
376 
(D) Section 953(c)(1)(C) is amended by striking 
‘‘section 951(a)(1)(A)(i)’’ and inserting ‘‘section 
951(a)(1)(A)’’. 
(2) Section 951(a) is amended by striking para-
graph (3). 
(3) Section 953(d)(4)(B)(iv)(II) is amended by 
striking ‘‘or amounts referred to in clause (ii) or (iii) 
of section 951(a)(1)(A)’’. 
(4) Section 964(b) is amended by striking ‘‘, 
955,’’. 
(5) Section 970 is amended by striking sub-
section (b). 
(6) The table of sections for subpart F of part III 
of subchapter N of chapter 1 is amended by striking 
the item relating to section 955. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years of foreign corporations 
beginning after December 31, 2017, and to taxable years 
of United States shareholders in which or with which such 
taxable years of foreign corporations end. 
SEC. 4202. REPEAL OF TREATMENT OF FOREIGN BASE COM-
PANY OIL RELATED INCOME AS SUBPART F 
INCOME. 
(a) IN GENERAL.—Section 954(a) is amended by strik-
ing paragraph (5), by striking the comma at the end of 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00376
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
377 
paragraph (3) and inserting a period, and by inserting 
‘‘and’’ at the end of paragraph (2). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 952(c)(1)(B)(iii) is amended by 
striking subclause (I) and by redesignating subclauses 
(II) through (V) as subclauses (I) through (IV), re-
spectively. 
(2) Section 954(b)(4) is amended by striking the 
last sentence. 
(3) Section 954(b)(5) is amended by striking 
‘‘the foreign base company services income, and the 
foreign base company oil related income’’ and insert-
ing ‘‘and the foreign base company services income’’. 
(4) Section 954(b) is amended by striking para-
graph (6). 
(5) Section 954 is amended by striking sub-
section (g). 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years of foreign corporations 
beginning after December 31, 2017, and to taxable years 
of United States shareholders in which or with which such 
taxable years of foreign corporations end. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00377
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
378 
SEC. 4203. INFLATION ADJUSTMENT OF DE MINIMIS EXCEP-
TION FOR FOREIGN BASE COMPANY INCOME. 
(a) IN GENERAL.—Section 954(b)(3) is amended by 
adding at the end the following new subparagraph: 
‘‘(D) INFLATION ADJUSTMENT.—In the case 
of any taxable year beginning after 2017, the 
dollar amount in subparagraph (A)(ii) shall be 
increased by an amount equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(c)(2)(A) for the 
calendar year in which the taxable year be-
gins. 
Any increase determined under the preceding 
sentence shall be rounded to the nearest multiple 
of $50,000.’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years of foreign corporations 
beginning after December 31, 2017, and to taxable years 
of United States shareholders in which or with which such 
taxable years of foreign corporations end. 
SEC. 4204. LOOK-THRU RULE FOR RELATED CONTROLLED 
FOREIGN CORPORATIONS MADE PERMANENT. 
(a) IN GENERAL.—Paragraph (6) of section 954(c) is 
amended by striking subparagraph (C). 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00378
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
379 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years of foreign corporations 
beginning after December 31, 2019, and to taxable years 
of United States shareholders in which or with which such 
taxable years of foreign corporations end. 
SEC. 4205. MODIFICATION OF STOCK ATTRIBUTION RULES 
FOR 
DETERMINING 
STATUS 
AS 
A 
CON-
TROLLED FOREIGN CORPORATION. 
(a) IN GENERAL.—Section 958(b) is amended— 
(1) by striking paragraph (4), and 
(2) by striking ‘‘Paragraphs (1) and (4)’’ in the 
last sentence and inserting ‘‘Paragraph (1)’’. 
(b) APPLICATION OF CERTAIN REPORTING REQUIRE-
MENTS.—Section 6038(e)(2) is amended by striking ‘‘except 
that—’’ and all that follows through ‘‘in applying subpara-
graph (C)’’ and inserting ‘‘except that in applying subpara-
graph (C)’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years of foreign corporations 
beginning after December 31, 2017, and to taxable years 
of United States shareholders in which or with which such 
taxable years of foreign corporations end. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00379
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
380 
SEC. 4206. ELIMINATION OF REQUIREMENT THAT COR-
PORATION MUST BE CONTROLLED FOR 30 
DAYS 
BEFORE 
SUBPART 
F 
INCLUSIONS 
APPLY. 
(a) IN GENERAL.—Section 951(a)(1) is amended by 
striking ‘‘for an uninterrupted period of 30 days or more’’ 
and inserting ‘‘at any time’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to taxable years of foreign corporations 
beginning after December 31, 2017, and to taxable years 
of United States shareholders with or within which such 
taxable years of foreign corporations end. 
Subtitle D—Prevention of Base 
Erosion 
SEC. 4301. CURRENT YEAR INCLUSION BY UNITED STATES 
SHAREHOLDERS WITH FOREIGN HIGH RE-
TURNS. 
(a) IN GENERAL.—Subpart F of part III of subchapter 
N of chapter 1 is amended by inserting after section 951 
the following new section: 
‘‘SEC. 951A. FOREIGN HIGH RETURN AMOUNT INCLUDED IN 
GROSS INCOME OF UNITED STATES SHARE-
HOLDERS. 
‘‘(a) IN GENERAL.—Each person who is a United 
States shareholder of any controlled foreign corporation for 
any taxable year of such United States shareholder shall 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00380
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
381 
include in gross income for such taxable year 50 percent 
of such shareholder’s foreign high return amount for such 
taxable year. 
‘‘(b) FOREIGN HIGH RETURN AMOUNT.—For purposes 
of this section— 
‘‘(1) IN GENERAL.—The term ‘foreign high re-
turn amount’ means, with respect to any United 
States shareholder for any taxable year of such 
United States shareholder, the excess (if any) of— 
‘‘(A) such shareholder’s net CFC tested in-
come for such taxable year, over 
‘‘(B) the excess (if any) of— 
‘‘(i) the applicable percentage of the 
aggregate of such shareholder’s pro rata 
share of the qualified business asset invest-
ment of each controlled foreign corporation 
with respect to which such shareholder is a 
United States shareholder for such taxable 
year (determined for each taxable year of 
each such controlled foreign corporation 
which ends in or with such taxable year of 
such United States shareholder), over 
‘‘(ii) the amount of interest expense 
taken 
into 
account 
under 
subsection 
(c)(2)(A)(ii) in determining the share-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00381
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
382 
holder’s net CFC tested income for the tax-
able year. 
‘‘(2) APPLICABLE PERCENTAGE.—The term ‘ap-
plicable percentage’ means, with respect to any tax-
able year, the Federal short-term rate (determined 
under section 1274(d) for the month in which or with 
which such taxable year ends) plus 7 percentage 
points. 
‘‘(c) NET CFC TESTED INCOME.—For purposes of this 
section— 
‘‘(1) IN GENERAL.—The term ‘net CFC tested in-
come’ means, with respect to any United States share-
holder for any taxable year of such United States 
shareholder, the excess (if any) of— 
‘‘(A) the aggregate of such shareholder’s pro 
rata share of the tested income of each controlled 
foreign corporation with respect to which such 
shareholder is a United States shareholder for 
such taxable year of such United States share-
holder (determined for each taxable year of such 
controlled foreign corporation which ends in or 
with such taxable year of such United States 
shareholder), over 
‘‘(B) the aggregate of such shareholder’s pro 
rata share of the tested loss of each controlled for-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00382
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
383 
eign corporation with respect to which such 
shareholder is a United States shareholder for 
such taxable year of such United States share-
holder (determined for each taxable year of such 
controlled foreign corporation which ends in or 
with such taxable year of such United States 
shareholder). 
‘‘(2) TESTED INCOME; TESTED LOSS.—For pur-
poses of this section— 
‘‘(A) TESTED INCOME.—The term ‘tested in-
come’ means, with respect to any controlled for-
eign corporation for any taxable year of such 
controlled foreign corporation, the excess (if any) 
of— 
‘‘(i) the gross income of such corpora-
tion determined without regard to— 
‘‘(I) any item of income which is 
effectively connected with the conduct 
by such corporation of a trade or busi-
ness within the United States if subject 
to tax under this chapter, 
‘‘(II) any gross income taken into 
account in determining the subpart F 
income of such corporation, 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00383
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
385 
defined in section 954) or insurance 
income (as defined in section 953) of 
such corporation by reason of section 
954(b)(4), 
‘‘(VII) any dividend received from 
a related person (as defined in section 
954(d)(3)), and 
‘‘(VIII) any commodities gross in-
come of such corporation, over 
‘‘(ii) the deductions (including taxes) 
properly allocable to such gross income 
under rules similar to the rules of section 
954(b)(5) (or which would be so properly 
allocable if such corporation had such gross 
income). 
‘‘(B) TESTED LOSS.—The term ‘tested loss’ 
means, with respect to any controlled foreign 
corporation for any taxable year of such con-
trolled foreign corporation, the excess (if any) of 
the amount described in subparagraph (A)(ii) 
over the amount described in subparagraph 
(A)(i). 
‘‘(d) QUALIFIED BUSINESS ASSET INVESTMENT.—For 
purposes of this section— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00385
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
386 
‘‘(1) IN GENERAL.—The term ‘qualified business 
asset investment’ means, with respect to any con-
trolled foreign corporation for any taxable year of 
such controlled foreign corporation, the aggregate of 
the corporation’s adjusted bases (determined as of the 
close of such taxable year and after any adjustments 
with respect to such taxable year) in specified tan-
gible property— 
‘‘(A) used in a trade or business of the cor-
poration, and 
‘‘(B) of a type with respect to which a de-
duction is allowable under section 168. 
‘‘(2) SPECIFIED TANGIBLE PROPERTY.—The term 
‘specified tangible property’ means any tangible prop-
erty to the extent such property is used in the produc-
tion of tested income or tested loss. 
‘‘(3) PARTNERSHIP PROPERTY.—For purposes of 
this subsection, if a controlled foreign corporation 
holds an interest in a partnership at the close of such 
taxable year of the controlled foreign corporation, 
such controlled foreign corporation shall take into ac-
count under paragraph (1) the controlled foreign cor-
poration’s distributive share of the aggregate of the 
partnership’s adjusted bases (determined as of such 
date in the hands of the partnership) in tangible 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00386
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
387 
property held by such partnership to the extent such 
property— 
‘‘(A) is used in the trade or business of the 
partnership, 
‘‘(B) is of a type with respect to which a de-
duction is allowable under section 168, and 
‘‘(C) is used in the production of tested in-
come or tested loss (determined with respect to 
such controlled foreign corporation’s distributive 
share of income or loss with respect to such prop-
erty). 
For purposes of this paragraph, the controlled foreign 
corporation’s distributive share of the adjusted basis 
of any property shall be the controlled foreign cor-
poration’s distributive share of income and loss with 
respect to such property. 
‘‘(4) DETERMINATION OF ADJUSTED BASIS.—For 
purposes of this subsection, the adjusted basis in any 
property shall be determined without regard to any 
provision of this title (or any other provision of law) 
which is enacted after the date of the enactment of 
this section. 
‘‘(5) REGULATIONS.—The Secretary shall issue 
such regulations or other guidance as the Secretary 
determines appropriate to prevent the avoidance of 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00387
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
388 
the purposes of this subsection, including regulations 
or other guidance which provide for the treatment of 
property if— 
‘‘(A) such property is transferred, or held, 
temporarily, or 
‘‘(B) the avoidance of the purposes of this 
paragraph is a factor in the transfer or holding 
of such property. 
‘‘(e) COMMODITIES GROSS INCOME.—For purposes of 
this section— 
‘‘(1) COMMODITIES GROSS INCOME.—The term 
‘commodities gross income’ means, with respect to 
any corporation— 
‘‘(A) gross income of such corporation from 
the disposition of commodities which are pro-
duced or extracted by such corporation (or a 
partnership in which such corporation is a part-
ner), and 
‘‘(B) gross income of such corporation from 
the disposition of property which gives rise to in-
come described in subparagraph (A). 
‘‘(2) COMMODITY.—The term ‘commodity’ means 
any commodity described in section 475(e)(2)(A) or 
section 475(e)(2)(D) (determined without regard to 
clause (i) thereof and by substituting ‘a commodity 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00388
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
389 
described in subparagraph (A)’ for ‘such a com-
modity’ in clause (ii) thereof). 
‘‘(f) TAXABLE YEARS
FOR WHICH PERSONS ARE 
TREATED AS UNITED STATES SHAREHOLDERS OF CON-
TROLLED FOREIGN CORPORATIONS.—For purposes of this 
section— 
‘‘(1) IN GENERAL.—A United States shareholder 
of a controlled foreign corporation shall be treated as 
a United States shareholder of such controlled foreign 
corporation for any taxable year of such United 
States shareholder if— 
‘‘(A) a taxable year of such controlled for-
eign corporation ends in or with such taxable 
year of such person, and 
‘‘(B) such person owns (within the meaning 
of section 958(a)) stock in such controlled foreign 
corporation on the last day, in such taxable year 
of such foreign corporation, on which the foreign 
corporation is a controlled foreign corporation. 
‘‘(2) TREATMENT
AS
A
CONTROLLED
FOREIGN 
CORPORATION.—Except for purposes of paragraph 
(1)(B) and the application of section 951(a)(2) to this 
section pursuant to subsection (g), a foreign corpora-
tion shall be treated as a controlled foreign corpora-
tion for any taxable year of such foreign corporation 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00389
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
390 
if such foreign corporation is a controlled foreign cor-
poration at any time during such taxable year. 
‘‘(g) DETERMINATION
OF PRO RATA SHARE.—For 
purposes of this section, pro rata shares shall be determined 
under the rules of section 951(a)(2) in the same manner 
as such section applies to subpart F income. 
‘‘(h) COORDINATION WITH SUBPART F.— 
‘‘(1) TREATMENT AS SUBPART F INCOME FOR 
CERTAIN PURPOSES.—Except as otherwise provided 
by the Secretary any foreign high return amount in-
cluded in gross income under subsection (a) shall be 
treated in the same manner as an amount included 
under section 951(a)(1)(A) for purposes of applying 
sections 168(h)(2)(B), 535(b)(10), 851(b), 904(h)(1), 
959, 961, 962, 993(a)(1)(E), 996(f)(1), 1248(b)(1), 
1248(d)(1), 
6501(e)(1)(C), 
6654(d)(2)(D), 
and 
6655(e)(4). 
‘‘(2) ENTIRE FOREIGN HIGH RETURN AMOUNT 
TAKEN INTO ACCOUNT FOR PURPOSES OF CERTAIN 
SECTIONS.—For purposes of applying paragraph (1) 
with respect to sections 168(h)(2)(B), 851(b), 959, 
961, 962, 1248(b)(1), and 1248(d)(1), the foreign high 
return amount included in gross income under sub-
section (a) shall be determined by substituting ‘100 
percent’ for ‘50 percent’ in such subsection. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00390
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
391 
‘‘(3) ALLOCATION
OF
FOREIGN
HIGH
RETURN 
AMOUNT TO CONTROLLED FOREIGN CORPORATIONS.— 
For purposes of the sections referred to in paragraph 
(1), with respect to any controlled foreign corporation 
any pro rata amount from which is taken into ac-
count in determining the foreign high return amount 
included in gross income of a United States share-
holder under subsection (a), the portion of such for-
eign high return amount which is treated as being 
with respect to such controlled foreign corporation 
is— 
‘‘(A) in the case of a controlled foreign cor-
poration with tested loss, zero, and 
‘‘(B) in the case of a controlled foreign cor-
poration with tested income, the portion of such 
foreign high return amount which bears the same 
ratio to such foreign high return amount as— 
‘‘(i) such United States shareholder’s 
pro rata amount of the tested income of 
such controlled foreign corporation, bears to 
‘‘(ii) the aggregate amount determined 
under subsection (c)(1)(A) with respect to 
such United States shareholder. 
‘‘(4) COORDINATION WITH SUBPART F TO DENY 
DOUBLE BENEFIT OF LOSSES.—In the case of any 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00391
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
392 
United States shareholder of any controlled foreign 
corporation, the amount included in gross income 
under section 951(a)(1)(A) shall be determined by in-
creasing the earnings and profits of such controlled 
foreign corporation (solely for purposes of deter-
mining such amount) by an amount that bears the 
same ratio (not greater than 1) to such shareholder’s 
pro rata share of the tested loss of such controlled for-
eign corporation as— 
‘‘(A) the aggregate amount determined 
under subsection (c)(1)(A) with respect to such 
shareholder, bears to 
‘‘(B) the aggregate amount determined 
under subsection (c)(1)(B) with respect to such 
shareholder.’’. 
(b) FOREIGN TAX CREDIT.— 
(1) APPLICATION OF DEEMED PAID FOREIGN TAX 
CREDIT.—Section 960, as amended by the preceding 
provisions of this Act, is amended by redesignating 
subsections (d) and (e) as subsections (e) and (f), re-
spectively, and by inserting after subsection (c) the 
following new subsection: 
‘‘(d) DEEMED PAID CREDIT FOR TAXES PROPERLY 
ATTRIBUTABLE TO TESTED INCOME.— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00392
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
393 
‘‘(1) IN GENERAL.—For purposes of this subpart, 
if any amount is includible in the gross income of a 
domestic corporation under section 951A, such domes-
tic corporation shall be deemed to have paid foreign 
income taxes equal to 80 percent of— 
‘‘(A) such domestic corporation’s foreign 
high return percentage, multiplied by 
‘‘(B) the aggregate tested foreign income 
taxes paid or accrued by controlled foreign cor-
porations with respect to which such domestic 
corporation is a United States shareholder. 
‘‘(2) FOREIGN HIGH RETURN PERCENTAGE.—For 
purposes of paragraph (1), the term ‘foreign high re-
turn percentage’ means, with respect to any domestic 
corporation, the ratio (expressed as a percentage) of— 
‘‘(A) such corporation’s foreign high return 
amount (as defined in section 951A(b)), divided 
by 
‘‘(B) the aggregate amount determined 
under section 951A(c)(1)(A) with respect to such 
corporation. 
‘‘(3) TESTED
FOREIGN
INCOME
TAXES.—For 
purposes of paragraph (1), the term ‘tested foreign in-
come taxes’ means, with respect to any domestic cor-
poration which is a United States shareholder of a 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00393
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
394 
controlled foreign corporation, the foreign income 
taxes paid or accrued by such foreign corporation 
which are properly attributable to gross income de-
scribed in section 951A(c)(2)(A)(i).’’. 
(2) APPLICATION OF FOREIGN TAX CREDIT LIMI-
TATION.— 
(A) SEPARATE BASKET FOR FOREIGN HIGH 
RETURN AMOUNT.—Section 904(d)(1) is amend-
ed by redesignating subparagraphs (A) and (B) 
as subparagraphs (B) and (C), respectively, and 
by inserting before subparagraph (B) (as so re-
designated) the following new subparagraph: 
‘‘(A) any amount includible in gross income 
under section 951A,’’. 
(B) NO CARRYOVER OF EXCESS TAXES.— 
Section 904(c) is amended by adding at the end 
the following: ‘‘This subsection shall not apply to 
taxes paid or accrued with respect to amounts 
described in subsection (d)(1)(A).’’ 
(3) GROSS UP FOR DEEMED PAID FOREIGN TAX 
CREDIT.—Section 78, as amended by the preceding 
provisions of this Act, is amended— 
(A) by striking ‘‘any taxable year, an 
amount’’ and inserting ‘‘any taxable year— 
‘‘(1) an amount’’, and 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00394
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
395 
(B) by striking the period at the end and 
inserting ‘‘, and 
‘‘(2) an amount equal to the taxes deemed to be 
paid by such corporation under section 960(d) for 
such taxable year (determined by substituting ‘100 
percent’ for ‘80 percent’ in such section) shall be 
treated for purposes of this title (other than sections 
959, 960, and 961) as an increase in the foreign high 
return amount of such domestic corporation under 
section 951A for such taxable year.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 170(b)(2)(D) is amended by striking 
‘‘computed without regard to’’ and all that follows 
and inserting ‘‘computed— 
‘‘(i) without regard to— 
‘‘(I) this section, 
‘‘(II) part VIII (except section 
248), 
‘‘(III) any net operating loss 
carryback to the taxable year under 
section 172, 
‘‘(IV) any capital loss carryback 
to the taxable year under section 
1212(a)(1), and 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00395
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
396 
‘‘(ii) by substituting ‘100 percent’ for 
‘50 percent’ in section 951A(a).’’. 
(2) Section 246(b)(1) is amended by— 
(A) striking ‘‘and without regard to’’ and 
inserting ‘‘without regard to’’, and 
(B) by striking the period at the end and 
inserting ‘‘, and by substituting ‘100 percent’ for 
‘50 percent’ in section 951A(a).’’. 
(3) Section 469(i)(3)(F) is amended by striking 
‘‘determined without regard to’’ and all that follows 
and inserting ‘‘determined— 
‘‘(i) without regard to— 
‘‘(I) any amount includible in 
gross income under section 86, 
‘‘(II) the amounts allowable as a 
deduction under section 219, and 
‘‘(III) any passive activity loss or 
any loss allowable by reason of sub-
section (c)(7), and 
‘‘(ii) by substituting ‘100 percent’ for 
‘50 percent’ in section 951A(a).’’. 
(4) Section 856(c)(2) is amended by striking 
‘‘and’’ at the end of subparagraph (H), by adding 
‘‘and’’ at the end of subparagraph (I), and by insert-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00396
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
397 
ing after subparagraph (I) the following new sub-
paragraph: 
‘‘(J) amounts includible in gross income 
under section 951A(a);’’. 
(5) Section 856(c)(3)(D) is amended by striking 
‘‘dividends or other distributions on, and gain’’ and 
inserting ‘‘dividends, other distributions on, amounts 
includible in gross income under section 951A(a) with 
respect to, and gain’’. 
(6) The table of sections for subpart F of part III 
of subchapter N of chapter 1 is amended by inserting 
after the item relating to section 951 the following 
new item: 
‘‘Sec. 951A. Foreign high return amount included in gross income of United 
States shareholders.’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years of foreign corporations 
beginning after December 31, 2017, and to taxable years 
of United States shareholders in which or with which such 
taxable years of foreign corporations end. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00397
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
398 
SEC. 4302. LIMITATION ON DEDUCTION OF INTEREST BY 
DOMESTIC CORPORATIONS WHICH ARE MEM-
BERS OF AN INTERNATIONAL FINANCIAL RE-
PORTING GROUP. 
(a) IN GENERAL.—Section 163 is amended by redesig-
nating subsection (n) as subsection (p) and by inserting 
after subsection (m) the following new subsection: 
‘‘(n) LIMITATION ON DEDUCTION OF INTEREST BY DO-
MESTIC CORPORATIONS IN INTERNATIONAL FINANCIAL RE-
PORTING GROUPS.— 
‘‘(1) IN GENERAL.—In the case of any domestic 
corporation which is a member of any international 
financial reporting group, the deduction under this 
chapter for interest paid or accrued during the tax-
able year shall not exceed the sum of— 
‘‘(A) the allowable percentage of 110 percent 
of the excess (if any) of — 
‘‘(i) the amount of such interest so 
paid or accrued, over 
‘‘(ii) the amount described in subpara-
graph (B), plus 
‘‘(B) the amount of interest includible in 
gross income of such corporation for such taxable 
year. 
‘‘(2) 
INTERNATIONAL
FINANCIAL
REPORTING 
GROUP.— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00398
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
399 
‘‘(A) For purposes of this subsection, the 
term ‘international financial reporting group’ 
means, with respect to any reporting year, any 
group of entities which— 
‘‘(i) includes— 
‘‘(I) at least one foreign corpora-
tion engaged in a trade or business 
within the United States, or 
‘‘(II) at least one domestic cor-
poration and one foreign corporation, 
‘‘(ii) prepares consolidated financial 
statements with respect to such year, and 
‘‘(iii) reports in such statements aver-
age annual gross receipts (determined in the 
aggregate with respect to all entities which 
are part of such group) for the 3-reporting- 
year period ending with such reporting year 
in excess of $100,000,000. 
‘‘(B) RULES RELATING TO DETERMINATION 
OF AVERAGE GROSS RECEIPTS.—For purposes of 
subparagraph (A)(iii), rules similar to the rules 
of section 448(c)(3) shall apply. 
‘‘(3) ALLOWABLE PERCENTAGE.—For purposes of 
this subsection— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00399
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
400 
‘‘(A) IN
GENERAL.—The term ‘allowable 
percentage’ means, with respect to any domestic 
corporation for any taxable year, the ratio (ex-
pressed as a percentage and not greater than 100 
percent) of— 
‘‘(i) such corporation’s allocable share 
of the international financial reporting 
group’s reported net interest expense for the 
reporting year of such group which ends in 
or with such taxable year of such corpora-
tion, over 
‘‘(ii) such corporation’s reported net 
interest expense for such reporting year of 
such group. 
‘‘(B) REPORTED NET INTEREST EXPENSE.— 
The term ‘reported net interest expense’ means— 
‘‘(i) with respect to any international 
financial reporting group for any reporting 
year, the excess of— 
‘‘(I) the aggregate amount of in-
terest expense reported in such group’s 
consolidated financial statements for 
such taxable year, over 
‘‘(II) the aggregate amount of in-
terest income reported in such group’s 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00400
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
401 
consolidated financial statements for 
such taxable year, and 
‘‘(ii) with respect to any domestic cor-
poration for any reporting year, the excess 
of— 
‘‘(I) the amount of interest ex-
pense of such corporation reported in 
the books and records of the inter-
national financial reporting group 
which are used in preparing such 
group’s consolidated financial state-
ments for such taxable year, over 
‘‘(II) the amount of interest in-
come of such corporation reported in 
such books and records. 
‘‘(C) ALLOCABLE SHARE OF REPORTED NET 
INTEREST EXPENSE.—With respect to any do-
mestic corporation which is a member of any 
international financial reporting group, such 
corporation’s allocable share of such group’s re-
ported net interest expense for any reporting 
year is the portion of such expense which bears 
the same ratio to such expense as— 
‘‘(i) the EBITDA of such corporation 
for such reporting year, bears to 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00401
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
402 
‘‘(ii) the EBITDA of such group for 
such reporting year. 
‘‘(D) EBITDA.— 
‘‘(i) 
IN
GENERAL.—The 
term 
‘EBITDA’ means, with respect to any re-
porting year, earnings before interest, taxes, 
depreciation, and amortization— 
‘‘(I) as determined in the inter-
national financial reporting group’s 
consolidated financial statements for 
such year, or 
‘‘(II) for purposes of subpara-
graph (A)(i), as determined in the 
books and records of the international 
financial reporting group which are 
used in preparing such statements if 
not determined in such statements. 
‘‘(ii) TREATMENT
OF
DISREGARDED 
ENTITIES.—The EBITDA of any domestic 
corporation shall not fail to include the 
EBITDA of any entity which is disregarded 
for purposes of this chapter. 
‘‘(iii) TREATMENT
OF
INTRA-GROUP 
DISTRIBUTIONS.—The EBITDA of any do-
mestic corporation shall be determined 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00402
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
403 
without regard to any distribution received 
by such corporation from any other member 
of the international financial reporting 
group. 
‘‘(E) SPECIAL
RULES
FOR
NON-POSITIVE 
EBITDA.— 
‘‘(i) NON-POSITIVE
GROUP
EBITDA.— 
In the case of any international financial 
reporting group the EBITDA of which is 
zero or less, paragraph (1) shall not apply 
to any member of such group the EBITDA 
of which is above zero. 
‘‘(ii) NON-POSITIVE ENTITY EBITDA.— 
In the case of any group member the 
EBITDA of which is zero or less, paragraph 
(1) shall be applied without regard to sub-
paragraph (A) thereof. 
‘‘(4) CONSOLIDATED
FINANCIAL
STATEMENT.— 
For purposes of this subsection, the term ‘consolidated 
financial statement’ means any consolidated financial 
statement described in paragraph (2)(A)(ii) if such 
statement is— 
‘‘(A) a financial statement which is cer-
tified as being prepared in accordance with gen-
erally accepted accounting principles, inter-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00403
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
404 
national financial reporting standards, or any 
other comparable method of accounting identified 
by the Secretary, and which is— 
‘‘(i) a 10-K (or successor form), or an-
nual statement to shareholders, required to 
be filed with the United States Securities 
and Exchange Commission, 
‘‘(ii) an audited financial statement 
which is used for— 
‘‘(I) credit purposes, 
‘‘(II) reporting to shareholders, 
partners, or other proprietors, or to 
beneficiaries, or 
‘‘(III) 
any 
other 
substantial 
nontax purpose, 
but only if there is no statement described 
in clause (i), or 
‘‘(iii) filed with any other Federal or 
State agency for nontax purposes, but only 
if there is no statement described in clause 
(i) or (ii), or 
‘‘(B) a financial statement which— 
‘‘(i) is used for a purpose described in 
subclause (I), (II), or (III) of subparagraph 
(A)(ii), or 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00404
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
405 
‘‘(ii) filed with any regulatory or gov-
ernmental body (whether domestic or for-
eign) specified by the Secretary, 
but only if there is no statement described in 
subparagraph (A). 
‘‘(5) REPORTING
YEAR.—For purposes of this 
subsection, the term ‘reporting year’ means, with re-
spect to any international financial reporting group, 
the year with respect to which the consolidated finan-
cial statements are prepared. 
‘‘(6) APPLICATION TO CERTAIN ENTITIES.— 
‘‘(A) PARTNERSHIPS.—Except as otherwise 
provided by the Secretary in paragraph (7), this 
subsection shall apply to any partnership which 
is a member of any international financial re-
porting group under rules similar to the rules of 
section 163(j)(3). 
‘‘(B) FOREIGN CORPORATIONS ENGAGED IN 
TRADE
OR
BUSINESS
WITHIN
THE
UNITED 
STATES.—Except as otherwise provided by the 
Secretary in paragraph (8), any deduction for 
interest paid or accrued by a foreign corporation 
engaged in a trade or business within the United 
States shall be limited in a manner consistent 
with the principles of this subsection. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00405
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
406 
‘‘(C) CONSOLIDATED
GROUPS.—For pur-
poses of this subsection, the members of any 
group that file (or are required to file) a consoli-
dated return with respect to the tax imposed by 
chapter 1 for a taxable year shall be treated as 
a single corporation. 
‘‘(7) REGULATIONS.—The Secretary may issue 
such regulations or other guidance as are necessary or 
appropriate to carry out the purposes of this sub-
section.’’. 
(b) CARRYFORWARD OF DISALLOWED INTEREST.— 
(1) IN GENERAL.—Section 163(o) is amended to 
read as follows: 
‘‘(o) CARRYFORWARD OF CERTAIN DISALLOWED IN-
TEREST.—The amount of any interest not allowed as a de-
duction for any taxable year by reason of subsection (j)(1) 
or (n)(1) (whichever imposes the lower limitation with re-
spect to such taxable year) shall be treated as interest (and 
as business interest for purposes of subsection (j)(1)) paid 
or accrued in the succeeding taxable year. Interest paid or 
accrued in any taxable year (determined without regard to 
the preceding sentence) shall not be carried past the 5th tax-
able year following such taxable year, determined by treat-
ing interest as allowed as a deduction on a first-in, first- 
out basis.’’. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00406
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
407 
(2) TREATMENT
OF
CARRYFORWARD
OF
DIS-
ALLOWED INTEREST IN CERTAIN CORPORATE ACQUISI-
TIONS.—For rules related to the carryforward of dis-
allowed interest in certain corporate acquisitions, see 
the amendments made by section 3301(c). 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 4303. EXCISE TAX ON CERTAIN PAYMENTS FROM DO-
MESTIC CORPORATIONS TO RELATED FOR-
EIGN CORPORATIONS; ELECTION TO TREAT 
SUCH 
PAYMENTS 
AS 
EFFECTIVELY 
CON-
NECTED INCOME. 
(a) EXCISE TAX ON CERTAIN AMOUNTS FROM DOMES-
TIC CORPORATIONS TO FOREIGN AFFILIATES.— 
(1) IN GENERAL.—Chapter 36 is amended by 
adding at the end the following new subchapter: 
‘‘Subchapter E—Tax on Certain Amounts to 
Foreign Affiliates 
‘‘Sec. 4491. Imposition of tax on certain amounts from domestic corporations to 
foreign affiliates. 
‘‘SEC. 4491. IMPOSITION OF TAX ON CERTAIN AMOUNTS 
FROM DOMESTIC CORPORATIONS TO FOR-
EIGN AFFILIATES. 
‘‘(a) IN GENERAL.—There is hereby imposed on each 
specified amount paid or incurred by a domestic corpora-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00407
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
408 
tion to a foreign corporation which is a member of the same 
international financial reporting group as such domestic 
corporation a tax equal to the highest rate of tax in effect 
under section 11 multiplied by such amount. 
‘‘(b) BY WHOM PAID.—The tax imposed by subsection 
(a) shall be paid by the domestic corporation described in 
such subsection. 
‘‘(c) EXCEPTION FOR EFFECTIVELY CONNECTED IN-
COME.—Subsection (a) shall not apply to so much of any 
specified amount as is effectively connected with the conduct 
of a trade or business within the United States if such 
amount is subject to tax under chapter 1. In the case of 
any amount which is treated as effectively connected with 
the conduct of a trade or business within the United States 
by reason of section 882(g), the preceding sentence shall 
apply to such amount only if the domestic corporation pro-
vides to the Secretary (at such time and in such form and 
manner as the Secretary may provide) a copy of the election 
made under section 882(g) by the foreign corporation re-
ferred to in subsection (a). 
‘‘(d) DEFINITIONS AND SPECIAL RULES.—Terms used 
in this section that are also used in section 882(g) shall 
have the same meaning as when used in such section and 
rules similar to the rules of paragraphs (5) and (6) of such 
section shall apply for purposes of this section.’’. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00408
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
409 
(2) DENIAL OF DEDUCTION FOR TAX IMPOSED.— 
Section 275(a) is amended by inserting after para-
graph (6) the following new paragraph: 
‘‘(7) Taxes imposed by section 4491.’’. 
(3) CLERICAL AMENDMENT.—The table of sub-
chapters for chapter 36 is amended by adding at the 
end the following new item: 
‘‘SUBCHAPTER E. TAX ON CERTAIN AMOUNTS TO FOREIGN AFFILIATES.’’. 
(b) ELECTION TO TREAT CERTAIN PAYMENTS FROM 
DOMESTIC CORPORATIONS
TO RELATED FOREIGN COR-
PORATIONS AS EFFECTIVELY CONNECTED INCOME.—Sec-
tion 882 is amended by adding at the end the following 
new subsection: 
‘‘(g) ELECTION TO TREAT CERTAIN PAYMENTS FROM 
DOMESTIC CORPORATIONS
TO RELATED FOREIGN COR-
PORATIONS AS EFFECTIVELY CONNECTED INCOME.— 
‘‘(1) IN GENERAL.—In the case of any specified 
amount paid or incurred by a domestic corporation 
to a foreign corporation which is a member of the 
same international financial reporting group as such 
domestic corporation and which has elected to be sub-
ject to the provisions of this subsection— 
‘‘(A) such amount shall be taken into ac-
count (other than for purposes of sections 245, 
245A, and 881) in the taxable year of such for-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00409
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
410 
eign corporation during which such amount is 
paid or incurred as if— 
‘‘(i) such foreign corporation were en-
gaged in a trade or business within the 
United States, 
‘‘(ii) such foreign corporation had a 
permanent establishment in the United 
States during the taxable year, and 
‘‘(iii) such payment were effectively 
connected with the conduct of a trade or 
business within the United States and were 
attributable to such permanent establish-
ment, 
‘‘(B) for purposes of subsection (c)(1)(A), no 
deduction shall be allowed with respect to such 
amount and such subsection shall be applied 
without regard to such amount, and 
‘‘(C) the foreign corporation shall be al-
lowed a deduction (for the taxable year referred 
to in subparagraph (A)) equal to the deemed ex-
penses with respect to such amount. 
‘‘(2) SPECIFIED AMOUNT.—For purposes of this 
subsection— 
‘‘(A) IN
GENERAL.—The term ‘specified 
amount’ means any amount which is, with re-
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00410
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
411 
spect to the payor, allowable as a deduction or 
includible in costs of goods sold, inventory, or the 
basis of a depreciable or amortizable asset. 
‘‘(B) EXCEPTIONS.—The term ‘specified 
amount’ shall not include— 
‘‘(i) interest, 
‘‘(ii) any amount paid or incurred for 
the acquisition of any security described in 
section 475(c)(2) (determined without re-
gard to the last sentence thereof) or any 
commodity described in section 475(e)(2), 
‘‘(iii) except as provided in subpara-
graph (C), any amount with respect to 
which tax is imposed under section 881(a), 
and 
‘‘(iv) in the case of a payor which has 
elected to use a services cost method for pur-
poses of section 482, any amount paid or 
incurred for services if such amount is the 
total services cost with no markup. 
‘‘(C) AMOUNTS
NOT
TREATED
AS
EFFEC-
TIVELY CONNECTED TO EXTENT OF GROSS-BASIS 
TAX.—Subparagraph (B)(iii) shall only apply to 
so much of any specified amount as bears the 
proportion to such amount as— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00411
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
412 
‘‘(i) the rate of tax imposed under sec-
tion 881(a) with respect to such amount, 
bears to 
‘‘(ii) 30 percent. 
‘‘(3) DEEMED EXPENSES.— 
‘‘(A) IN
GENERAL.—The deemed expenses 
with respect to any specified amount received by 
a foreign corporation during any reporting year 
is the amount of expenses such that the net in-
come ratio of such foreign corporation with re-
spect to such amount (taking into account only 
such specified amount and such deemed expenses) 
is equal to the net income ratio of the inter-
national financial reporting group determined 
for such reporting year with respect to the prod-
uct line to which the specified amount relates. 
‘‘(B) NET INCOME RATIO.—For purposes of 
this paragraph, the term ‘net income ratio’ 
means the ratio of— 
‘‘(i) net income determined without re-
gard to interest income, interest expense, 
and income taxes, divided by 
‘‘(ii) revenues. 
‘‘(C) 
METHOD
OF
DETERMINATION.— 
Amounts described in subparagraph (B) shall be 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00412
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
413 
determined with respect to the international fi-
nancial reporting group on the basis of the con-
solidated financial statements referred to in 
paragraph (4)(A)(i) and the books and records of 
the members of the international financial re-
porting group which are used in preparing such 
statements, taking into account only revenues 
and expenses of the members of such group (other 
than the members of such group which are (or 
are treated as) a domestic corporation for pur-
poses of this subsection) derived from, or in-
curred with respect to— 
‘‘(i) persons who are not members of 
such group, and 
‘‘(ii) members of such group which are 
(or are treated as) a domestic corporation 
for purposes of this subsection. 
‘‘(4) 
INTERNATIONAL
FINANCIAL
REPORTING 
GROUP.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘international 
financial reporting group’ means any group of 
entities, with respect to any specified amount, if 
such amount is paid or incurred during a re-
porting year of such group with respect to 
which— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00413
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
414 
‘‘(i) such group prepares consolidated 
financial statements (within the meaning of 
section 163(n)(4)) with respect to such year, 
and 
‘‘(ii) the average annual aggregate 
payment amount of such group for the 3-re-
porting-year period ending with such re-
porting year exceeds $100,000,000. 
‘‘(B) 
ANNUAL
AGGREGATE
PAYMENT 
AMOUNT.—The term ‘annual aggregate payment 
amount’ means, with respect to any reporting 
year of the group referred to in subparagraph 
(A)(i), the aggregate specified amounts to which 
paragraph (1) applies (or would apply if such 
group were an international financial reporting 
group). 
‘‘(C) APPLICATION
OF
CERTAIN
RULES.— 
Rules similar to the rules of subparagraphs (A), 
(B), and (D) of section 448(c)(3) shall apply for 
purposes of this paragraph. 
‘‘(5) TREATMENT OF PARTNERSHIPS.—Any spec-
ified amount paid, incurred, or received by a partner-
ship which is a member of any international finan-
cial reporting group (and any amount treated as 
paid, incurred, or received by a partnership under 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00414
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
415 
this paragraph) shall be treated for purposes of this 
subsection as amounts paid, incurred, or received, re-
spectively, by each partner of such partnership in an 
amount equal to such partner’s distributive share of 
the items of income, gain, deduction, or loss to which 
such amounts relate. 
‘‘(6) TREATMENT OF AMOUNTS IN CONNECTION 
WITH
UNITED
STATES
TRADE
OR
BUSINESS.—Any 
specified amount paid, incurred, or received by a for-
eign corporation in connection with the conduct of a 
trade or business within the United States (other than 
a trade or business it is deemed to conduct pursuant 
to this subsection) shall be treated for purposes of this 
subsection as an amount paid, incurred, or received, 
respectively, by a domestic corporation. For purposes 
of the preceding sentence, a foreign corporation shall 
be deemed to pay, incur, and receive amounts with 
respect to a trade or business it conducts within the 
United States (other than a trade or business it is 
deemed to conduct pursuant to this subsection) to the 
extent such foreign corporation would be treated as 
paying, incurring, or receiving such amounts from 
such trade or business if such trade or business were 
a domestic corporation. 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00415
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
416 
‘‘(7) JOINT AND SEVERAL LIABILITY OF MEM-
BERS OF INTERNAL FINANCIAL REPORTING GROUP.— 
In the case of any underpayment with respect to any 
taxable year of a foreign corporation which is a mem-
ber of an international financial accounting group, 
each domestic corporation which is a member of such 
group at any time during such taxable year shall be 
jointly and severally liable for— 
‘‘(A) so much of such underpayment as does 
not exceed the excess (if any) of such under-
payment over the amount of such underpayment 
determined without regard to this subsection, 
and 
‘‘(B) any penalty, addition to tax, or addi-
tional amount attributable to the amount de-
scribed in subparagraph (A). 
‘‘(8) FOREIGN TAX CREDIT ALLOWED.—The cred-
it allowed under section 906(a) with respect to 
amounts taken into account in income under para-
graph (1)(A) shall be limited to 80 percent of the 
amount of taxes paid or accrued and determined 
without regard to section 906(b)(1). 
‘‘(9) ELECTION.—Any election under paragraph 
(1)— 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00416
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS
417 
‘‘(A) shall be made at such time and in 
such form and manner as the Secretary may 
provide, and 
‘‘(B) shall apply for the taxable year for 
which made and all subsequent taxable years un-
less revoked with the consent of the Secretary. 
‘‘(10) REGULATIONS.—The Secretary may issue 
such regulations or other guidance as are necessary or 
appropriate to carry out the purposes of this sub-
section, including regulations or other guidance— 
‘‘(A) to provide for the proper determina-
tion of product lines, and 
‘‘(B) to prevent the avoidance of the pur-
poses of this subsection through the use of con-
duit transactions or by other means.’’. 
(c) REPORTING REQUIREMENTS.— 
(1) REPORTING
BY
FOREIGN
CORPORATION.— 
Section 6038C(b) is amended to read as follows: 
‘‘(b) REQUIRED INFORMATION.— 
‘‘(1) IN GENERAL.—The information described in 
this subsection is— 
‘‘(A) the information described in section 
6038A(b), and 
‘‘(B) such other information as the Sec-
retary may prescribe by regulations relating to 
VerDate Sep 11 2014 
00:35 Nov 14, 2017
Jkt 079200
PO 00000
Frm 00417
Fmt 6652
Sfmt 6203
E:\BILLS\H1.RH
H1
lotter on DSKBCFDHB2PROD with BILLS