I 
116TH CONGRESS 
1ST SESSION H. R. 4509 
To amend the Internal Revenue Code of 1986 to restore the limitation 
on downward attribution of stock ownership in applying the constructive 
ownership rules to controlled foreign corporations, and for other pur-
poses. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 26, 2019 
Mr. LEWIS (for himself, Ms. MOORE, Mr. SCHNEIDER, Mr. ESTES, Mr. HOLD-
ING, and Mr. FERGUSON) introduced the following bill; which was re-
ferred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to restore 
the limitation on downward attribution of stock owner-
ship in applying the constructive ownership rules to con-
trolled foreign corporations, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. RESTORATION OF LIMITATION ON DOWNWARD 
ATTRIBUTION OF STOCK OWNERSHIP IN AP-
PLYING CONSTRUCTIVE OWNERSHIP RULES. 
(a) IN GENERAL.—Section 958(b) of the Internal 
Revenue Code of 1986 is amended— 
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(1) by inserting after paragraph (3) the fol-
lowing: 
‘‘(4) Subparagraphs (A), (B), and (C) of sec-
tion 318(a)(3) shall not be applied so as to consider 
a United States person as owning stock which is 
owned by a person who is not a United States per-
son.’’; and 
(2) by striking ‘‘Paragraph (1)’’ in the last sen-
tence and inserting ‘‘Paragraphs (1) and (4)’’. 
(b) FOREIGN CONTROLLED UNITED STATES SHARE-
HOLDERS.—Subpart F of part III of subchapter N of 
chapter 1 of such Code is amended by inserting after sec-
tion 951A the following new section: 
‘‘SEC. 951B. AMOUNTS INCLUDED IN GROSS INCOME OF 
FOREIGN 
CONTROLLED 
UNITED 
STATES 
SHAREHOLDERS. 
‘‘(a) IN GENERAL.—In the case of any foreign con-
trolled United States shareholder of a foreign controlled 
foreign corporation— 
‘‘(1) this subpart (other than sections 951A, 
951(b), 957, and 965) shall be applied with respect 
to such shareholder (separately from, and in addi-
tion to, the application of this subpart without re-
gard to this section)— 
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‘‘(A) by substituting ‘foreign controlled 
United States shareholder’ for ‘United States 
shareholder’ each place it appears therein, and 
‘‘(B) by substituting ‘foreign controlled 
foreign corporation’ for ‘controlled foreign cor-
poration’ each place it appears therein, and 
‘‘(2) sections 951A and 965 shall be applied 
with respect to such shareholder— 
‘‘(A) by treating each reference to ‘United 
States shareholder’ in such sections as includ-
ing a reference to such shareholder, and 
‘‘(B) by treating each reference to ‘con-
trolled foreign corporation’ in such sections as 
including a reference to such foreign controlled 
foreign corporation. 
‘‘(b) 
FOREIGN
CONTROLLED
UNITED
STATES 
SHAREHOLDER.—For purposes of this section, the term 
‘foreign controlled United States shareholder’ means, with 
respect to any foreign corporation, any United States per-
son which would be a United States shareholder with re-
spect to such foreign corporation if— 
‘‘(1) section 951(b) were applied by substituting 
‘more than 50 percent’ for ‘10 percent or more’, and 
‘‘(2) section 958(b) were applied without regard 
to paragraph (4) thereof. 
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of such Code is amended by inserting after the item relat-
ing to section 951A the following new item: 
‘‘Sec. 951B. Amounts included in gross income of foreign controlled United 
States shareholders.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to— 
(1) the last taxable year of foreign corporations 
beginning before January 1, 2018, and each subse-
quent taxable year of such foreign corporations; and 
(2) taxable years of United States persons in 
which or with which such taxable years of foreign 
corporations end. 
Æ 
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