I 
109TH CONGRESS 
1ST SESSION H. R. 3959 
To amend the Internal Revenue Code of 1986 to prevent corporate 
expatriation to avoid United States income taxes. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 29, 2005 
Mr. NEAL of Massachusetts (for himself, Mr. MCDERMOTT, Mr. LEWIS of 
Georgia, Ms. DELAURO, Mr. THOMPSON of California, Mr. DOGGETT, 
Mr. LEVIN, Mr. EMANUEL, Mr. STARK, Mr. VISCLOSKY, and Mr. 
PASCRELL) introduced the following bill; which was referred to the Com-
mittee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to prevent 
corporate expatriation to avoid United States income taxes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Corporate Patriot En-
forcement Act of 2005’’.
SEC. 2. PREVENTION OF CORPORATE EXPATRIATION TO 
AVOID UNITED STATES INCOME TAX. 
(a) IN GENERAL.—Paragraph (4) of section 7701(a) 
of the Internal Revenue Code of 1986 (defining domestic) 
is amended to read as follows: 
‘‘(4) DOMESTIC.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘domestic’ when ap-
plied to a corporation or partnership means cre-
ated or organized in the United States or under 
the law of the United States or of any State 
unless, in the case of a partnership, the Sec-
retary provides otherwise by regulations. 
‘‘(B) CERTAIN
CORPORATIONS
TREATED 
AS DOMESTIC.— 
‘‘(i) IN GENERAL.—The acquiring cor-
poration in a corporate expatriation trans-
action shall be treated as a domestic cor-
poration. 
‘‘(ii) 
CORPORATE
EXPATRIATION 
TRANSACTION.—For purposes of this sub-
paragraph, the term ‘corporate expatria-
tion transaction’ means any transaction 
if— 
‘‘(I) a nominally foreign corpora-
tion (referred to in this subparagraph
as the ‘acquiring corporation’) ac-
quires, as a result of such transaction, 
directly or indirectly substantially all 
of the properties held directly or indi-
rectly by a domestic corporation, and 
‘‘(II) immediately after the trans-
action, more than 80 percent of the 
stock (by vote or value) of the acquir-
ing corporation is held by former 
shareholders of the domestic corpora-
tion by reason of holding stock in the 
domestic corporation. 
‘‘(iii) LOWER STOCK OWNERSHIP RE-
QUIREMENT
IN
CERTAIN
CASES.—Sub-
clause (II) of clause (ii) shall be applied by 
substituting ‘50 percent’ for ‘80 percent’ 
with respect to any nominally foreign cor-
poration if— 
‘‘(I) such corporation does not 
have substantial business activities 
(when compared to the total business 
activities of the expanded affiliated 
group) in the foreign country in which 
or under the law of which the corpora-
tion is created or organized, and
‘‘(II) the stock of the corporation 
is publicly traded and the principal 
market for the public trading of such 
stock is in the United States. 
‘‘(iv) PARTNERSHIP TRANSACTIONS.— 
The term ‘corporate expatriation trans-
action’ includes any transaction if— 
‘‘(I) a nominally foreign corpora-
tion (referred to in this subparagraph 
as the ‘acquiring corporation’) ac-
quires, as a result of such transaction, 
directly or indirectly properties consti-
tuting a trade or business of a domes-
tic partnership, 
‘‘(II) immediately after the trans-
action, more than 80 percent of the 
stock (by vote or value) of the acquir-
ing corporation is held by former 
partners of the domestic partnership 
or related foreign partnerships (deter-
mined without regard to stock of the 
acquiring corporation which is sold in 
a public offering related to the trans-
action), and
‘‘(III) the acquiring corporation 
meets the requirements of subclauses 
(I) and (II) of clause (iii). 
‘‘(v) SPECIAL RULES.—For purposes 
of this subparagraph— 
‘‘(I) a series of related trans-
actions shall be treated as 1 trans-
action, and 
‘‘(II) stock held by members of 
the expanded affiliated group which 
includes the acquiring corporation 
shall not be taken into account in de-
termining ownership. 
‘‘(vi) OTHER DEFINITIONS.—For pur-
poses of this subparagraph— 
‘‘(I) NOMINALLY FOREIGN COR-
PORATION.—The term ‘nominally for-
eign corporation’ means any corpora-
tion which would (but for this sub-
paragraph) be treated as a foreign 
corporation. 
‘‘(II) 
EXPANDED
AFFILIATED 
GROUP.—The term ‘expanded affili-
ated group’ means an affiliated group