group as defined in section 1504(a), determined 
without regard to section 1504(b)(3) and by sub-
stituting ‘more than 50 percent’ for ‘at least 80 per-
cent’ each place it appears in section 1504(a). A 
partnership or any other entity (other than a cor-
poration) shall be treated as a member of an ex-
panded affiliated group if such entity is controlled 
(within the meaning of section 954(d)(3)) by mem-
bers of such group (including any entity treated as 
a member of such group by reason of this para-
graph). 
‘‘(5) EXPENSES
MUST
BE
PURSUANT
TO 
INSOURCING PLAN.—Amounts shall be taken into ac-
count under paragraph (1) only to the extent that 
such amounts are paid or incurred pursuant to a 
written plan to carry out the relocation described in 
paragraph (1). 
‘‘(6) OPERATING EXPENSES NOT TAKEN INTO 
ACCOUNT.—Any amount paid or incurred in connec-
tion with the ongoing operation of a business unit 
shall not be treated as an amount paid or incurred 
in connection with the establishment or elimination 
of such business unit. 
‘‘(c) INCREASED DOMESTIC EMPLOYMENT REQUIRE-
MENT.—No credit shall be allowed under this section un-
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less the number of full-time equivalent employees of the 
taxpayer for the taxable year for which the credit is 
claimed exceeds the number of full-time equivalent em-
ployees of the taxpayer for the last taxable year ending 
before the first taxable year in which such eligible 
insourcing expenses were paid or incurred. For purposes 
of this subsection, full-time equivalent employees has the 
meaning given such term under section 45R(d) (and the 
applicable rules of section 45R(e)), determined by only 
taking into account wages (as otherwise defined in section 
45R(e)) paid with respect to services performed within the 
United States. All employers treated as a single employer 
under subsection (b), (c), (m), or (o) of section 414 shall 
be treated as a single employer for purposes of this sub-
section. 
‘‘(d) CREDIT ALLOWED UPON COMPLETION
OF 
INSOURCING PLAN.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), eligible insourcing expenses shall be taken 
into account under subsection (a) in the taxable year 
during which the plan described in subsection (b)(5) 
has been completed and all eligible insourcing ex-
penses pursuant to such plan have been paid or in-
curred. 
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‘‘(2) ELECTION TO APPLY EMPLOYMENT TEST 
AND CLAIM CREDIT IN FIRST FULL TAXABLE YEAR 
AFTER
COMPLETION
OF
PLAN.—If the taxpayer 
elects the application of this paragraph, eligible 
insourcing expenses shall be taken into account 
under subsection (a) in the first taxable year after 
the taxable year described in paragraph (1). 
‘‘(e) POSSESSIONS TREATED
AS PART
OF
THE 
UNITED STATES.—For purposes of this section, the term 
‘United States’ shall be treated as including each posses-
sion of the United States (including the Commonwealth 
of Puerto Rico and the Commonwealth of the Northern 
Mariana Islands). 
‘‘(f) REGULATIONS.—The Secretary shall prescribe 
such regulations or other guidance as may be necessary 
or appropriate to carry out the purposes of this section.’’. 
(b) CREDIT TO BE PART OF GENERAL BUSINESS 
CREDIT.—Section 38(b) of such Code is amended by strik-
ing ‘‘plus’’ at the end of paragraph (35), by striking the 
period at the end of paragraph (36) and inserting ‘‘, plus’’, 
and by adding at the end the following new paragraph: 
‘‘(37) the insourcing expenses credit determined 
under section 45S(a).’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
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smartinez on DSK3GLQ082PROD with BILLS
of such Code is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 45S. Credit for insourcing expenses.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
the date of the enactment of this Act. 
(e) APPLICATION
TO
UNITED
STATES
POSSES-
SIONS.— 
(1) PAYMENTS TO POSSESSIONS.— 
(A) MIRROR
CODE
POSSESSIONS.—The 
Secretary of the Treasury shall make periodic 
payments to each possession of the United 
States with a mirror code tax system in an 
amount equal to the loss to that possession by 
reason of section 45S of the Internal Revenue 
Code of 1986. Such amount shall be determined 
by the Secretary of the Treasury based on in-
formation provided by the government of the re-
spective possession. 
(B) OTHER POSSESSIONS.—The Secretary 
of the Treasury shall make annual payments to 
each possession of the United States which does 
not have a mirror code tax system in an 
amount estimated by the Secretary of the 
Treasury as being equal to the aggregate bene-
fits that would have been provided to residents 
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of such possession by reason of section 45S of 
such Code if a mirror code tax system had been 
in effect in such possession. The preceding sen-
tence shall not apply with respect to any posses-
sion of the United States unless such possession 
has a plan, which has been approved by the 
Secretary of the Treasury, under which such 
possession will promptly distribute such pay-
ment to the residents of such possession. 
(2) COORDINATION
WITH
CREDIT
ALLOWED 
AGAINST UNITED STATES INCOME TAXES.—No cred-
it shall be allowed against United States income 
taxes under section 45S of such Code to any per-
son— 
(A) to whom a credit is allowed against 
taxes imposed by the possession by reason of 
such section, or 
(B) who is eligible for a payment under a 
plan described in paragraph (1)(B). 
(3) DEFINITIONS AND SPECIAL RULES.— 
(A) 
POSSESSIONS
OF
THE
UNITED 
STATES.—For purposes of this section, the 
term ‘‘possession of the United States’’ includes 
the Commonwealth of Puerto Rico and the 
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