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(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 ‘‘specified 10-percent owned foreign corpora-
tion (as defined in section 245A(b))’’, 
(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 
specified 10-percent owned foreign corporation or 
a domestic corporation which is a United States
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† HR 1 EAS 
shareholder with respect to such specified 10-per-
cent owned foreign corporation.’’, and 
(D) by striking ‘‘SECTION 902 CORPORA-
TIONS’’ in the heading thereof and inserting 
‘‘SPECIFIED 10-PERCENT OWNED FOREIGN COR-
PORATIONS’’. 
(28) Section 909(d) is amended by striking 
paragraph (5). 
(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’’. 
(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’’.
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(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 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. 14302. SEPARATE FOREIGN TAX CREDIT LIMITATION 
BASKET FOR FOREIGN BRANCH INCOME. 
(a) IN GENERAL.—Section 904(d)(1), as amended by 
section 14201, is amended by redesignating subparagraphs 
(B) and (C) as subparagraphs (C) and (D), respectively, 
and by inserting after subparagraph (A) the following new 
subparagraph: 
‘‘(B) foreign branch income,’’. 
(b) FOREIGN BRANCH INCOME.—
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(1) IN GENERAL.—Section 904(d)(2) is amended 
by inserting after subparagraph (I) the following new 
subparagraph: 
‘‘(J) FOREIGN BRANCH INCOME.— 
‘‘(i) IN GENERAL.—The term ‘foreign 
branch income’ means the business profits of 
such United States person which are attrib-
utable to 1 or more qualified business units 
(as defined in section 989(a)) in 1 or more 
foreign countries. For purposes of the pre-
ceding sentence, the amount of business 
profits attributable to a qualified business 
unit shall be determined under rules estab-
lished by the Secretary. 
‘‘(ii) EXCEPTION.—Such term shall not 
include any income which is passive cat-
egory income.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
904(d)(2)(A)(ii), as amended by section 14201, is 
amended by striking ‘‘income described in paragraph 
(1)(A) and’’ and inserting ‘‘income described in para-
graph (1)(A), foreign branch income, and’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017.
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† HR 1 EAS 
SEC. 14303. ACCELERATION OF ELECTION TO ALLOCATE IN-
TEREST, ETC., ON A WORLDWIDE BASIS. 
(a) IN GENERAL.—Section 864(f)(6) is amended by 
striking ‘‘December 31, 2020’’ and inserting ‘‘December 31, 
2017’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 14304. SOURCE OF INCOME FROM SALES OF INVEN-
TORY DETERMINED SOLELY ON BASIS OF 
PRODUCTION 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 
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.
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† HR 1 EAS 
SEC. 14305. ELECTION TO INCREASE PERCENTAGE OF DO-
MESTIC TAXABLE INCOME OFFSET BY OVER-
ALL DOMESTIC LOSS TREATED AS FOREIGN 
SOURCE. 
(a) IN GENERAL.—Section 904(g) is amended by add-
ing at the end the following new paragraph: 
‘‘(5) ELECTION TO INCREASE PERCENTAGE OF 
TAXABLE INCOME TREATED AS FOREIGN SOURCE.— 
‘‘(A) IN GENERAL.—If any pre-2018 unused 
overall domestic loss is taken into account under 
paragraph (1) for any applicable taxable year, 
the taxpayer may elect to have such paragraph 
applied to such loss by substituting a percentage 
greater than 50 percent (but not greater than 
100 percent) for 50 percent in subparagraph (B) 
thereof. 
‘‘(B) PRE-2018 UNUSED OVERALL DOMESTIC 
LOSS.—For purposes of this paragraph, the term 
‘pre-2018 unused overall domestic loss’ means 
any overall domestic loss which— 
‘‘(i) arises in a qualified taxable year 
beginning before January 1, 2018, and 
‘‘(ii) has not been used under para-
graph (1) for any taxable year beginning 
before such date.
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† HR 1 EAS 
‘‘(C) APPLICABLE
TAXABLE
YEAR.—For 
purposes of this paragraph, the term ‘applicable 
taxable year’ means any taxable year of the tax-
payer beginning after December 31, 2017, and 
before January 1, 2028.’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
PART II—INBOUND TRANSACTIONS 
SEC. 14401. BASE EROSION AND ANTI-ABUSE TAX. 
(a) IMPOSITION OF TAX.—Subchapter A of chapter 1 
is amended by adding at the end the following new part: 
‘‘PART VII—BASE EROSION AND ANTI-ABUSE TAX 
‘‘Sec. 59A. Tax on base erosion payments of taxpayers with substantial gross re-
ceipts. 
‘‘SEC. 59A. TAX ON BASE EROSION PAYMENTS OF TAX-
PAYERS 
WITH 
SUBSTANTIAL 
GROSS 
RE-
CEIPTS. 
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed on 
each applicable taxpayer for any taxable year a tax equal 
to the base erosion minimum tax amount for the taxable 
year. Such tax shall be in addition to any other tax imposed 
by this subtitle. 
‘‘(b) BASE EROSION MINIMUM TAX AMOUNT.—For 
purposes of this section—
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† HR 1 EAS 
‘‘(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), the term ‘base erosion minimum 
tax amount’ means, with respect to any applicable 
taxpayer for any taxable year, the excess (if any) of— 
‘‘(A) an amount equal to 10 percent of the 
modified taxable income of such taxpayer for the 
taxable year, over 
‘‘(B) an amount equal to the regular tax li-
ability (as defined in section 26(b)) of the tax-
payer for the taxable year, reduced (but not 
below zero) by the excess (if any) of— 
‘‘(i) the credits allowed under this 
chapter against such regular tax liability, 
over 
‘‘(ii) the credit allowed under section 
38 for the taxable year which is properly al-
locable to the research credit determined 
under section 41(a). 
‘‘(2) MODIFICATIONS FOR TAXABLE YEARS BE-
GINNING AFTER 2025.—In the case of any taxable year 
beginning after December 31, 2025, paragraph (1) 
shall be applied— 
‘‘(A) by substituting ‘12.5 percent’ for ‘10 
percent’ in subparagraph (A) thereof, and
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† HR 1 EAS 
‘‘(B) by reducing (but not below zero) the 
regular tax liability (as defined in section 26(b)) 
for purposes of subparagraph (B) thereof by the 
aggregate amount of the credits allowed under 
this chapter against such regular tax liability 
rather than the excess described in such subpara-
graph. 
‘‘(3) INCREASED RATE FOR CERTAIN BANKS AND 
SECURITIES DEALERS.— 
‘‘(A) IN GENERAL.—In the case of an appli-
cable taxpayer described in subparagraph (B) for 
any taxable year— 
‘‘(i) paragraphs (1)(A) and (2)(A) 
shall each be applied by substituting ‘11 
percent’ for ‘10 percent’, and 
‘‘(ii) paragraph (2)(A) shall be applied 
by substituting ‘13.5 percent’ for ‘12.5 per-
cent’. 
‘‘(B) TAXPAYER DESCRIBED.—An applica-
ble taxpayer is described in this subparagraph if 
such taxpayer is a member of an affiliated group 
(as defined in section 1504(a)(1)) which in-
cludes— 
‘‘(i) a bank (as defined in section 581), 
or
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† HR 1 EAS 
‘‘(ii) a registered securities dealer 
under section 15(a) of the Securities Ex-
change Act of 1934. 
‘‘(c) MODIFIED TAXABLE INCOME.—For purposes of 
this section— 
‘‘(1) IN GENERAL.—The term ‘modified taxable 
income’ means the taxable income of the taxpayer 
computed under this chapter for the taxable year, de-
termined without regard to— 
‘‘(A) any base erosion tax benefit with re-
spect to any base erosion payment, or 
‘‘(B) the base erosion percentage of any net 
operating loss deduction allowed under section 
172 for the taxable year. 
‘‘(2) BASE EROSION TAX BENEFIT.— 
‘‘(A) IN GENERAL.—The term ‘base erosion 
tax benefit’ means— 
‘‘(i) any deduction described in sub-
section (d)(1) which is allowed under this 
chapter for the taxable year with respect to 
any base erosion payment, 
‘‘(ii) in the case of a base erosion pay-
ment described in subsection (d)(2), any de-
duction allowed under this chapter for the 
taxable year for depreciation (or amortiza-
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† HR 1 EAS 
tion in lieu of depreciation) with respect to 
the property acquired with such payment, 
and 
‘‘(iii) in the case of a base erosion pay-
ment described in subsection (d)(3), any re-
duction in gross receipts with respect to 
such payment in computing gross income of 
the taxpayer for the taxable year for pur-
poses of this chapter. 
‘‘(B) TAX BENEFITS DISREGARDED IF TAX 
WITHHELD ON BASE EROSION PAYMENT.— 
‘‘(i) IN GENERAL.—Except as provided 
in clause (ii), any base erosion tax benefit 
attributable to any base erosion payment— 
‘‘(I) on which tax is imposed by 
section 871 or 881, and 
‘‘(II) with respect to which tax 
has been deducted and withheld under 
section 1441 or 1442, 
shall not be taken into account in com-
puting modified taxable income under para-
graph (1)(A) or the base erosion percentage 
under paragraph (4). 
‘‘(ii) EXCEPTION.—The amount not 
taken into account in computing modified