I 
115TH CONGRESS 
1ST SESSION H. R. 1932 
To end offshore corporate tax avoidance, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 5, 2017 
Mr. DOGGETT (for himself, Mr. BLUMENAUER, Ms. BONAMICI, Mr. CAPUANO, 
Mr. CARTWRIGHT, Ms. JUDY CHU of California, Mr. CICILLINE, Mr. 
COHEN, Mr. CONYERS, Mr. CUMMINGS, Mr. DEFAZIO, Ms. DELAURO, 
Mr. DEUTCH, Mr. ELLISON, Mr. FOSTER, Mr. GRIJALVA, Mr. 
GUTIE´RREZ, Mr. HASTINGS, Ms. EDDIE BERNICE JOHNSON of Texas, 
Mr. JOHNSON of Georgia, Ms. KAPTUR, Ms. KELLY of Illinois, Mr. LAN-
GEVIN, Mr. LARSON of Connecticut, Ms. LEE, Mr. LEWIS of Georgia, Mr. 
TED LIEU of California, Mr. LOEBSACK, Mr. LYNCH, Ms. MCCOLLUM, 
Ms. MOORE, Mrs. NAPOLITANO, Ms. NORTON, Mr. PALLONE, Mr. 
POCAN, Mr. RASKIN, Ms. ROYBAL-ALLARD, Mr. RUIZ, Mr. RYAN of Ohio, 
Mr. SARBANES, Ms. SCHAKOWSKY, Ms. SLAUGHTER, Mr. TAKANO, Mr. 
TONKO, Ms. TSONGAS, Ms. VELA´ZQUEZ, Mrs. WATSON COLEMAN, Mr. 
WELCH, Mr. HIGGINS of New York, Mr. YARMUTH, Mr. NADLER, Ms. 
PINGREE, Mr. HUFFMAN, Mr. SCOTT of Virginia, Mr. PASCRELL, Mr. 
MCGOVERN, and Mr. LIPINSKI) introduced the following bill; which was 
referred to the Committee on Ways and Means, and in addition to the 
Committee on Financial Services, for a period to be subsequently deter-
mined by the Speaker, in each case for consideration of such provisions 
as fall within the jurisdiction of the committee concerned 
A BILL 
To end offshore corporate tax avoidance, and for other 
purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE, ETC. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Stop Tax Haven Abuse Act’’. 
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment 
to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title, etc. 
TITLE I—ENDING CORPORATE OFFSHORE TAX AVOIDANCE 
Sec. 101. Allocation of expenses and taxes on basis of repatriation of foreign 
income. 
Sec. 102. Excess income from transfers of intangibles to low-taxed affiliates 
treated as subpart F income. 
Sec. 103. Limitations on income shifting through intangible property transfers. 
Sec. 104. Repeal of check-the-box rules for certain foreign entities and CFC 
look-thru rules. 
Sec. 105. Restrictions on deduction for interest expense of members of financial 
reporting groups with excess domestic indebtedness. 
Sec. 106. Treatment of foreign corporations managed and controlled in the 
United States as domestic corporations. 
Sec. 107. Swap payments made from the United States to persons offshore. 
Sec. 108. Modifications to rules relating to inverted corporations. 
Sec. 109. Country-by-country reporting. 
TITLE II—ADDITIONAL MEASURES TO COMBAT TAX EVASION 
Sec. 201. Authorizing special measures against foreign jurisdictions, financial 
institutions, and others that significantly impede United States 
tax enforcement. 
Sec. 202. Strengthening the Foreign Account Tax Compliance Act (FATCA). 
Sec. 203. Reporting United States beneficial owners of foreign owned financial 
accounts. 
Sec. 204. Penalty for failing to disclose offshore holdings. 
Sec. 205. Deadline for anti-money laundering rule for investment advisers. 
Sec. 206. Anti-money laundering requirements for formation agents. 
Sec. 207. Strengthening John Doe summons proceedings. 
Sec. 208. Improving enforcement of foreign financial account reporting. 
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TITLE I—ENDING CORPORATE 
OFFSHORE TAX AVOIDANCE 
SEC. 101. ALLOCATION OF EXPENSES AND TAXES ON BASIS 
OF REPATRIATION OF FOREIGN INCOME. 
(a) IN GENERAL.—Part III of subchapter N of chap-
ter 1 is amended by inserting after subpart G the following 
new subpart: 
‘‘Subpart H—Special Rules for Allocation of Foreign- 
Related Deductions and Foreign Tax Credits 
‘‘Sec. 975. Deductions allocated to deferred foreign income may not offset 
United States source income. 
‘‘Sec. 976. Amount of foreign taxes computed on overall basis. 
‘‘Sec. 977. Application of subpart. 
‘‘SEC. 975. DEDUCTIONS ALLOCATED TO DEFERRED FOR-
EIGN INCOME MAY NOT OFFSET UNITED 
STATES SOURCE INCOME. 
‘‘(a) CURRENT YEAR DEDUCTIONS.—For purposes 
of this chapter, foreign-related deductions for any taxable 
year— 
‘‘(1) shall be taken into account for such tax-
able year only to the extent that such deductions are 
allocable to currently-taxed foreign income, and 
‘‘(2) to the extent not so allowed, shall be taken 
into account in subsequent taxable years as provided 
in subsection (b). 
Foreign-related deductions shall be allocated to currently- 
taxed foreign income in the same proportion which cur-
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rently-taxed foreign income bears to the sum of currently- 
taxed foreign income and deferred foreign income. 
‘‘(b) DEDUCTIONS RELATED TO REPATRIATED DE-
FERRED FOREIGN INCOME.— 
‘‘(1) IN GENERAL.—If there is repatriated for-
eign income for a taxable year, the portion of the 
previously deferred deductions allocated to the repa-
triated foreign income shall be taken into account 
for the taxable year as a deduction allocated to in-
come from sources outside the United States. Any 
such amount shall not be included in foreign-related 
deductions for purposes of applying subsection (a) to 
such taxable year. 
‘‘(2) PORTION OF PREVIOUSLY DEFERRED DE-
DUCTIONS.—For purposes of paragraph (1), the por-
tion of the previously deferred deductions allocated 
to repatriated foreign income is— 
‘‘(A) the amount which bears the same 
proportion to such deductions, as 
‘‘(B) the repatriated income bears to the 
previously deferred foreign income. 
‘‘(c) DEFINITIONS AND SPECIAL RULE.—For pur-
poses of this section— 
‘‘(1) FOREIGN-RELATED
DEDUCTIONS.—The 
term ‘foreign-related deductions’ means the total 
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amount of deductions and expenses which would be 
allocated or apportioned to gross income from 
sources without the United States for the taxable 
year if both the currently-taxed foreign income and 
deferred foreign income were taken into account. 
‘‘(2) CURRENTLY-TAXED
FOREIGN
INCOME.— 
The term ‘currently-taxed foreign income’ means the 
amount of gross income from sources without the 
United States for the taxable year (determined with-
out regard to repatriated foreign income for such 
year). 
‘‘(3) DEFERRED FOREIGN INCOME.—The term 
‘deferred foreign income’ means the excess of— 
‘‘(A) the amount that would be includible 
in gross income under subpart F of this part 
for the taxable year if— 
‘‘(i) all controlled foreign corporations 
were treated as one controlled foreign cor-
poration, and 
‘‘(ii) all earnings and profits of all 
controlled foreign corporations were sub-
part F income (as defined in section 952), 
over 
‘‘(B) the sum of— 
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‘‘(i) all dividends received during the 
taxable year from controlled foreign cor-
porations, plus 
‘‘(ii) amounts includible in gross in-
come under section 951(a). 
‘‘(4) PREVIOUSLY
DEFERRED
FOREIGN
IN-
COME.—The term ‘previously deferred foreign in-
come’ means the aggregate amount of deferred for-
eign income for all prior taxable years to which this 
part applies, determined as of the beginning of the 
taxable year, reduced by the repatriated foreign in-
come for all such prior taxable years. 
‘‘(5) REPATRIATED
FOREIGN
INCOME.—The 
term ‘repatriated foreign income’ means the amount 
included in gross income on account of distributions 
out of previously deferred foreign income. 
‘‘(6) PREVIOUSLY
DEFERRED
DEDUCTIONS.— 
The term ‘previously deferred deductions’ means the 
aggregate amount of foreign-related deductions not 
taken into account under subsection (a) for all prior 
taxable years (determined as of the beginning of the 
taxable year), reduced by any amounts taken into 
account under subsection (b) for such prior taxable 
years. 
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‘‘(7) 
TREATMENT
OF
CERTAIN
FOREIGN 
TAXES.— 
‘‘(A) PAID BY CONTROLLED FOREIGN COR-
PORATION.—Section 78 shall not apply for pur-
poses of determining currently-taxed foreign in-
come and deferred foreign income. 
‘‘(B) PAID BY TAXPAYER.—For purposes 
of determining currently-taxed foreign income, 
gross income from sources without the United 
States shall be reduced by the aggregate 
amount of taxes described in the applicable 
paragraph of section 901(b) which are paid by 
the taxpayer (without regard to sections 902 
and 960) during the taxable year. 
‘‘(8) COORDINATION
WITH
SECTION
976.—In 
determining currently-taxed foreign income and de-
ferred foreign income, the amount of deemed foreign 
tax credits shall be determined with regard to sec-
tion 976. 
‘‘SEC. 976. AMOUNT OF FOREIGN TAXES COMPUTED ON 
OVERALL BASIS. 
‘‘(a) CURRENT YEAR ALLOWANCE.—For purposes of 
this chapter, the amount taken into account as foreign in-
come taxes for any taxable year shall be an amount which 
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bears the same ratio to the total foreign income taxes for 
that taxable year as— 
‘‘(1) the currently-taxed foreign income for such 
taxable year, bears to 
‘‘(2) the sum of the currently-taxed foreign in-
come and deferred foreign income for such year. 
The portion of the total foreign income taxes for any tax-
able year not taken into account under the preceding sen-
tence for a taxable year shall only be taken into account 
as provided in subsection (b) (and shall not be taken into 
account for purposes of applying sections 902 and 960). 
‘‘(b) ALLOWANCE RELATED TO REPATRIATED DE-
FERRED FOREIGN INCOME.— 
‘‘(1) IN GENERAL.—If there is repatriated for-
eign income for any taxable year, the portion of the 
previously deferred foreign income taxes paid or ac-
crued during such taxable year shall be taken into 
account for the taxable year as foreign taxes paid or 
accrued. Any such taxes so taken into account shall 
not be included in foreign income taxes for purposes 
of applying subsection (a) to such taxable year. 
‘‘(2) PORTION OF PREVIOUSLY DEFERRED FOR-
EIGN INCOME TAXES.—For purposes of paragraph 
(1), the portion of the previously deferred foreign in-
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‘‘(A) all controlled foreign corporations 
were treated as one controlled foreign corpora-
tion, and 
‘‘(B) all earnings and profits of all con-
trolled foreign corporations were subpart F in-
come (as defined in section 952). 
‘‘(3) FOREIGN INCOME TAXES.—The term ‘for-
eign income taxes’ means any income, war profits, or 
excess profits taxes paid by the taxpayer to any for-
eign country or possession of the United States. 
‘‘(4) CURRENTLY-TAXED FOREIGN INCOME AND 
DEFERRED
FOREIGN
INCOME.—The terms ‘cur-
rently-taxed foreign income’ and ‘deferred foreign in-
come’ have the meanings given such terms by sec-
tion 975(c). 
‘‘SEC. 977. APPLICATION OF SUBPART. 
‘‘This subpart— 
‘‘(1) shall be applied before subpart A, and 
‘‘(2) shall be applied separately with respect to 
the categories of income specified in section 
904(d)(1).’’. 
(b) CLERICAL AMENDMENT.—The table of subparts 
for part III of subpart N of chapter 1 is amended by in-
serting after the item relating to subpart G the following 
new item: 
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‘‘SUBPART H. SPECIAL RULES FOR ALLOCATION OF FOREIGN-RELATED 
DEDUCTIONS AND FOREIGN TAX CREDITS’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 102. EXCESS INCOME FROM TRANSFERS OF INTANGI-
BLES TO LOW-TAXED AFFILIATES TREATED 
AS SUBPART F INCOME. 
(a) IN GENERAL.—Subsection (a) of section 954 is 
amended by inserting after paragraph (3) the following 
new paragraph: 
‘‘(4) the foreign base company excess intangible 
income for the taxable year (determined under sub-
section (f) and reduced as provided in subsection 
(b)(5)), and’’. 
(b) FOREIGN BASE COMPANY EXCESS INTANGIBLE 
INCOME.—Section 954 is amended by inserting after sub-
section (e) the following new subsection: 
‘‘(f) FOREIGN BASE COMPANY EXCESS INTANGIBLE 
INCOME.—For purposes of subsection (a)(4) and this sub-
section: 
‘‘(1) FOREIGN BASE COMPANY EXCESS INTAN-
GIBLE INCOME DEFINED.— 
‘‘(A) IN
GENERAL.—The term ‘foreign 
base company excess intangible income’ means, 
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with respect to any covered intangible, the ex-
cess of— 
‘‘(i) the sum of— 
‘‘(I) gross income from the sale, 
lease, license, or other disposition of 
property in which such covered intan-
gible is used directly or indirectly, and 
‘‘(II) gross income from the pro-
vision of services related to such cov-
ered intangible or in connection with 
property in which such covered intan-
gible is used directly or indirectly, 
over 
‘‘(ii) 150 percent of the costs properly 
allocated and apportioned to the gross in-
come taken into account under clause (i) 
other than expenses for interest and taxes 
and any expenses which are not directly al-
locable to such gross income. 
‘‘(B) SAME COUNTRY INCOME NOT TAKEN 
INTO ACCOUNT.—If— 
‘‘(i) the sale, lease, license, or other 
disposition of the property referred to in 
subparagraph (A)(i)(I) is for use, con-
sumption, or disposition in the country 
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under the laws of which the controlled for-
eign corporation is created or organized, or 
‘‘(ii) the services referred to in sub-
paragraph (A)(i)(II) are performed in such 
country, 
the gross income from such sale, lease, license, 
or other disposition, or provision of services, 
shall not be taken into account under subpara-
graph (A)(i). 
‘‘(2) EXCEPTION BASED ON EFFECTIVE FOR-
EIGN INCOME TAX RATE.— 
‘‘(A) IN GENERAL.—Foreign base company 
excess intangible income shall not include the 
applicable percentage of any item of income re-
ceived by a controlled foreign corporation if the 
taxpayer establishes to the satisfaction of the 
Secretary that such income was subject to an 
effective rate of income tax imposed by a for-
eign country in excess of 5 percent. 
‘‘(B) 
APPLICABLE
PERCENTAGE.—For 
purposes of subparagraph (A), the term ‘appli-
cable percentage’ means the ratio (expressed as 
a percentage), not greater than 100 percent, 
of— 
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‘‘(i) the number of percentage points 
by which the effective rate of income tax 
referred to in subparagraph (A) exceeds 5 
percentage points, over 
‘‘(ii) 10 percentage points. 
‘‘(C) TREATMENT OF LOSSES IN DETER-
MINING EFFECTIVE RATE OF FOREIGN INCOME 
TAX.—For purposes of determining the effective 
rate of income tax imposed by any foreign 
country— 
‘‘(i) such effective rate shall be deter-
mined without regard to any losses carried 
to the relevant taxable year, and 
‘‘(ii) to the extent the income with re-
spect to such intangible reduces losses in 
the relevant taxable year, such effective 
rate shall be treated as being the effective 
rate which would have been imposed on 
such income without regard to such losses. 
‘‘(3) COVERED
INTANGIBLE.—The term ‘cov-
ered intangible’ means, with respect to any con-
trolled foreign corporation, any intangible property 
(as defined in section 936(h)(3)(B))— 
‘‘(A) which is sold, leased, licensed, or oth-
erwise transferred (directly or indirectly) to 
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such controlled foreign corporation from a re-
lated person, or 
‘‘(B) with respect to which such controlled 
foreign corporation and one or more related 
persons has (directly or indirectly) entered into 
any shared risk or development agreement (in-
cluding any cost sharing agreement). 
‘‘(4) RELATED
PERSON.—The term ‘related 
person’ has the meaning given such term in sub-
section (d)(3).’’. 
(c) SEPARATE BASKET FOR FOREIGN TAX CRED-
IT.—Subsection (d) of section 904 is amended by redesig-
nating paragraph (7) as paragraph (8) and by inserting 
after paragraph (6) the following new paragraph: 
‘‘(7) SEPARATE
APPLICATION
TO
FOREIGN 
BASE COMPANY EXCESS INTANGIBLE INCOME.— 
‘‘(A) IN GENERAL.—Subsections (a), (b), 
and (c) of this section and sections 902, 907, 
and 960 shall be applied separately with respect 
to each item of income which is taken into ac-
count under section 954(a)(4) as foreign base 
company excess intangible income. 
‘‘(B) REGULATIONS.—The Secretary may 
issue such regulations or other guidance as is 
necessary or appropriate to carry out the pur-
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poses of this subsection, including regulations 
or other guidance which provides that related 
items of income may be aggregated for pur-
poses of this paragraph.’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Paragraph (4) of section 954(b) is amended 
by inserting ‘‘foreign base company excess intangible 
income described in subsection (a)(4) or’’ before 
‘‘foreign base company oil-related income’’ in the 
last sentence thereof. 
(2) Subsection (b) of section 954 is amended by 
adding at the end the following new paragraph: 
‘‘(7) FOREIGN BASE COMPANY EXCESS INTAN-
GIBLE INCOME NOT TREATED AS ANOTHER KIND OF 
BASE COMPANY INCOME.—Income of a corporation 
which is foreign base company excess intangible in-
come shall not be considered foreign base company 
income of such corporation under paragraph (2), 
(3), or (5) of subsection (a).’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
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SEC. 103. LIMITATIONS ON INCOME SHIFTING THROUGH IN-
TANGIBLE PROPERTY TRANSFERS. 
(a) CLARIFICATION OF DEFINITION OF INTANGIBLE 
ASSET.—Clause (vi) of section 936(h)(3)(B) is amended 
by inserting ‘‘(including any section 197 intangible de-
scribed in subparagraph (A), (B), or (C)(i) of subsection 
(d)(1) of such section)’’ after ‘‘item’’. 
(b) CLARIFICATION
OF
ALLOWABLE
VALUATION 
METHODS.— 
(1) FOREIGN
CORPORATIONS.—Paragraph (2) 
of section 367(d) is amended by adding at the end 
the following new subparagraph: 
‘‘(D) REGULATORY AUTHORITY.—For pur-
poses of the last sentence of subparagraph (A), 
the Secretary may require— 
‘‘(i) the valuation of transfers of in-
tangible property on an aggregate basis, or 
‘‘(ii) the valuation of such a transfer 
on the basis of the realistic alternatives to 
such a transfer, 
in any case in which the Secretary determines 
that such basis is the most reliable means of 
valuation of such transfers.’’. 
(2) ALLOCATION AMONG TAXPAYERS.—Section 
482 is amended by adding at the end the following: 
‘‘For purposes of the preceding sentence, the Sec-
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retary may require the valuation of transfers of in-
tangible property on an aggregate basis or the valu-
ation of such a transfer on the basis of the realistic 
alternatives to such a transfer, in any case in which 
the Secretary determines that such basis is the most 
reliable means of valuation of such transfers.’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to transfers in taxable years 
beginning after the date of the enactment of this 
Act. 
(2) NO INFERENCE.—Nothing in the amend-
ment made by subsection (a) shall be construed to 
create any inference with respect to the application 
of section 936(h)(3) of the Internal Revenue Code of 
1986, or the authority of the Secretary of the Treas-
ury to provide regulations for such application, on or 
before the date of the enactment of such amend-
ment. 
SEC. 104. REPEAL OF CHECK-THE-BOX RULES FOR CERTAIN 
FOREIGN ENTITIES AND CFC LOOK-THRU 
RULES. 
(a) CHECK-THE-BOX RULES.—Paragraph (3) of sec-
tion 7701(a) is amended— 
(1) by striking ‘‘and’’, and 
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(2) by inserting after ‘‘insurance companies’’ 
the following: ‘‘, and any foreign business entity 
that— 
‘‘(A) has a single owner that does not have 
limited liability, or 
‘‘(B) has one or more members all of 
which have limited liability’’. 
(b) LOOK-THRU RULE.—Subparagraph (C) of sec-
tion 954(c)(6) is amended to read as follows: 
‘‘(C) TERMINATION.—Subparagraph (A) 
shall not apply to dividends, interest, rents, and 
royalties received or accrued after the date of 
the enactment of the Stop Tax Haven Abuse 
Act.’’. 
(c) EFFECTIVE DATE.— 
(1) The amendments made by subsection (a) 
shall take effect on the date of the enactment of this 
Act. 
(2) The amendment made by subsection (b) 
shall apply to payments received after the date of 
the enactment of this Act. 
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SEC. 105. RESTRICTIONS ON DEDUCTION FOR INTEREST 
EXPENSE OF MEMBERS OF FINANCIAL RE-
PORTING GROUPS WITH EXCESS DOMESTIC 
INDEBTEDNESS. 
(a) IN GENERAL.—Section 163 is amended by redes-
ignating subsection (n) as subsection (o) and by inserting 
after subsection (m) the following new subsection: 
‘‘(n) RESTRICTION ON DEDUCTION FOR INTEREST 
EXPENSE
OF
MEMBERS
OF
FINANCIAL
REPORTING 
GROUPS WITH EXCESS DOMESTIC INDEBTEDNESS.— 
‘‘(1) IN GENERAL.—In the case of any corpora-
tion which is a member of an applicable financial re-
porting group the common parent of which is a for-
eign corporation, the deduction allowed under this 
chapter for interest paid or accrued by the corpora-
tion during the taxable year shall not exceed the ap-
plicable limitation for the taxable year. 
‘‘(2) CARRYFORWARD.—Any amount disallowed 
under paragraph (1) for any taxable year shall be 
treated as interest paid or accrued in the succeeding 
taxable year. 
‘‘(3) APPLICABLE LIMITATION.—For purposes 
of this subsection— 
‘‘(A) IN GENERAL.—The applicable limita-
tion with respect to a taxpayer for any taxable 
year is the sum of— 
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‘‘(i) the greater of— 
‘‘(I) 
the 
taxpayer’s 
allocable 
share of the applicable financial re-
porting group’s net interest expense 
for the taxable year, or 
‘‘(II) 10 percent of the taxpayer’s 
adjusted taxable income for the tax-
able year, plus 
‘‘(ii) the excess limitation carryfor-
wards to the taxable year from any pre-
ceding taxable year. 
‘‘(B) LIMITATION
NOT
LESS
THAN
IN-
CLUDIBLE
INTEREST.—The applicable limita-
tion under subparagraph (A) for any taxable 
year shall not be less than the amount of inter-
est includible in the gross income of the tax-
payer for the taxable year. 
‘‘(C) 
EXCESS
LIMITATION 
CARRYFORWARD.—If the applicable limitation 
of a taxpayer for any taxable year (determined 
without regard to carryforwards under subpara-
graph (A)(ii)) exceeds the interest paid or ac-
crued by the taxpayer during the taxable year, 
such excess shall be an excess limitation 
carryforward to the 1st succeeding taxable year 
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and the 2nd and 3rd succeeding taxable years 
to the extent not previously taken into account 
under this paragraph. 
‘‘(4) ALLOCABLE SHARE OF NET INTEREST EX-
PENSE.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—A taxpayer’s allocable 
share of an applicable financial reporting 
group’s net interest expense for any taxable 
year shall be the amount (not less than zero) 
which bears the same ratio to such net interest 
expense as— 
‘‘(i) the net earnings of the taxpayer, 
bears to 
‘‘(ii) the aggregate net earnings of all 
members of the applicable financial report-
ing group. 
‘‘(B) NET
EARNINGS.—The term ‘net 
earnings’ means, with respect to any taxpayer, 
the earnings of the taxpayer— 
‘‘(i) computed without regard to any 
reduction allowable for— 
‘‘(I) net interest expense, 
‘‘(II) taxes, or 
‘‘(III) depreciation, amortization, 
or depletion, and 
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‘‘(ii) computed with such other adjust-
ments as the Secretary may by regulations 
prescribe. 
‘‘(C) BURDEN ON TAXPAYER.—If a tax-
payer elects not to compute its allocable share, 
or fails to establish to the satisfaction of the 
Secretary the amount of its allocable share, for 
any taxable year, the allocable share shall be 
zero. 
‘‘(5) NET INTEREST EXPENSE AND NET EARN-
INGS DETERMINATIONS.—For purposes of this sub-
section— 
‘‘(A) NET INTEREST EXPENSE.—Any de-
termination of net interest expense for any tax-
able year shall be made— 
‘‘(i) on the basis of the applicable fi-
nancial statement of the applicable finan-
cial reporting group for the last financial 
reporting year ending with or within the 
taxable year, and 
‘‘(ii) under United States tax prin-
ciples. 
‘‘(B) NET EARNINGS.—Any determination 
of net earnings for any taxable year shall be 
made on the basis of the applicable financial 
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statement of the applicable financial reporting 
group for the last financial reporting year end-
ing with or within the taxable year. 
‘‘(C) 
APPLICABLE
FINANCIAL
STATE-
MENT.—The term ‘applicable financial state-
ment’ means a statement for financial reporting 
purposes which is made on the basis of— 
‘‘(i) generally accepted accounting 
principles, 
‘‘(ii) international financial reporting 
standards, or 
‘‘(iii) any other method specified by 
the Secretary in regulations. 
A statement under clause (ii) or (iii) may be 
used as an applicable financial statement by a 
group only if there is no statement of the group 
under any preceding clause. 
‘‘(6) 
APPLICABLE
FINANCIAL
REPORTING 
GROUP.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘applicable 
financial reporting group’ means, with respect 
to any corporation, a group of which such cor-
poration is a member and which files an appli-
cable financial statement. 
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‘‘(B) EXCEPTION FOR GROUPS WITH MINI-
MAL
DOMESTIC
NET
INTEREST
EXPENSE.— 
Such term shall not include a group if the ag-
gregate net interest expense for which a deduc-
tion is allowable to all members of the group 
under this chapter (determined without regard 
to this subsection or any other limitation on de-
ductibility of interest under this chapter) is less 
than $5,000,000. 
‘‘(C) EXCEPTION FOR CERTAIN FINANCIAL 
ENTITIES.—A corporation which is described in 
section 864(f)(4)(B), or is treated as described 
in section 864(f)(4)(B) by reason of paragraph 
(4)(C) or (5)(A) of section 864(f) (without re-
gard to whether an election is made under such 
paragraph (5)(A)), shall not be treated as a 
member of an applicable financial reporting 
group of which it is otherwise a member and 
this subsection shall not apply to such corpora-
tion. 
‘‘(7) OTHER
DEFINITIONS
AND
RULES.—For 
purposes of this subsection— 
‘‘(A) ADJUSTED TAXABLE INCOME.—The 
term ‘adjusted taxable income’ has the meaning 
given such term by subsection (j)(6)(A). 
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‘‘(B) NET INTEREST EXPENSE.—The term 
‘net interest expense’ has the meaning given 
such term by subsection (j)(6)(B). 
‘‘(C) 
TREATMENT
OF
AFFILIATED 
GROUP.—All members of the same affiliated 
group (within the meaning of section 1504(a)) 
shall be treated as 1 taxpayer. 
‘‘(8) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary to carry 
out the purposes of this section, including regula-
tions providing— 
‘‘(A) for the coordination of the application 
of this subsection and other provisions of this 
chapter relating to the deductibility of interest, 
‘‘(B) for the waiver of certain adjustments 
required under United States tax principles in 
appropriate cases for purposes of applying this 
subsection, 
‘‘(C) for the determination of which finan-
cial institutions are eligible for the exception 
from membership in an applicable financial re-
porting group under paragraph (6)(C) and the 
application of this subsection to the other mem-
bers of the group which are not so excepted, 
and 
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‘‘(D) for the application of this subsection 
in the case of pass thru entities and for the 
treatment of pass thru entities as corporations 
in cases where necessary to prevent the avoid-
ance of the purposes of this subsection.’’. 
(b) COORDINATION WITH LIMITATION ON RELATED 
PARTY INDEBTEDNESS.—Paragraph (2) of section 163(j) 
of the Internal Revenue Code of 1986 is amended by add-
ing at the end the following new subparagraph: 
‘‘(D) COORDINATION WITH LIMITATION ON 
EXCESS DOMESTIC INDEBTEDNESS.—This sub-
section shall not apply to any corporation for 
any taxable year to which subsection (n) applies 
to such corporation.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2016. 
SEC. 106. TREATMENT OF FOREIGN CORPORATIONS MAN-
AGED AND CONTROLLED IN THE UNITED 
STATES AS DOMESTIC CORPORATIONS. 
(a) IN GENERAL.—Section 7701 is amended by re-
designating subsection (p) as subsection (q) and by insert-
ing after subsection (o) the following new subsection: 
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‘‘(p) CERTAIN CORPORATIONS MANAGED AND CON-
TROLLED IN THE UNITED STATES TREATED AS DOMES-
TIC FOR INCOME TAX.— 
‘‘(1) IN GENERAL.—Notwithstanding subsection 
(a)(4), in the case of a corporation described in 
paragraph (2) if— 
‘‘(A) the corporation would not otherwise 
be treated as a domestic corporation for pur-
poses of this title, but 
‘‘(B) the management and control of the 
corporation occurs, directly or indirectly, pri-
marily within the United States, 
then, solely for purposes of chapter 1 (and any other 
provision of this title relating to chapter 1), the cor-
poration shall be treated as a domestic corporation. 
‘‘(2) CORPORATION DESCRIBED.— 
‘‘(A) IN GENERAL.—A corporation is de-
scribed in this paragraph if— 
‘‘(i) the stock of such corporation is 
regularly traded on an established securi-
ties market, or 
‘‘(ii) the aggregate gross assets of 
such corporation (or any predecessor there-
of), including assets under management 
for investors, whether held directly or indi-
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rectly, at any time during the taxable year 
or 
any 
preceding 
taxable 
year 
is 
$50,000,000 or more. 
‘‘(B) GENERAL
EXCEPTION.—A corpora-
tion shall not be treated as described in this 
paragraph if— 
‘‘(i) such corporation was treated as a 
corporation described in this paragraph in 
a preceding taxable year, 
‘‘(ii) such corporation— 
‘‘(I) is not regularly traded on an 
established securities market, and 
‘‘(II) has, and is reasonably ex-
pected to continue to have, aggregate 
gross assets (including assets under 
management for investors, whether 
held directly or indirectly) of less than 
$50,000,000, and 
‘‘(iii) the Secretary grants a waiver to 
such corporation under this subparagraph. 
‘‘(3) MANAGEMENT AND CONTROL.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
prescribe regulations for purposes of deter-
mining cases in which the management and 
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control of a corporation is to be treated as oc-
curring primarily within the United States. 
‘‘(B) EXECUTIVE OFFICERS AND SENIOR 
MANAGEMENT.—Such regulations shall provide 
that— 
‘‘(i) the management and control of a 
corporation shall be treated as occurring 
primarily within the United States if sub-
stantially all of the executive officers and 
senior management of the corporation who 
exercise day-to-day responsibility for mak-
ing decisions involving strategic, financial, 
and operational policies of the corporation 
are located primarily within the United 
States, and 
‘‘(ii) individuals who are not executive 
officers and senior management of the cor-
poration (including individuals who are of-
ficers or employees of other corporations in 
the same chain of corporations as the cor-
poration) shall be treated as executive offi-
cers and senior management if such indi-
viduals exercise the day-to-day responsibil-
ities of the corporation described in clause 
(i). 
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‘‘(C) CORPORATIONS PRIMARILY HOLDING 
INVESTMENT
ASSETS.—Such regulations shall 
also provide that the management and control 
of a corporation shall be treated as occurring 
primarily within the United States if— 
‘‘(i) the assets of such corporation (di-
rectly or indirectly) consist primarily of as-
sets being managed on behalf of investors, 
and 
‘‘(ii) decisions about how to invest the 
assets are made in the United States.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning on or 
after the date which is 2 years after the date of the enact-
ment of this Act, whether or not regulations are issued 
under section 7701(p)(3) of the Internal Revenue Code 
of 1986, as added by this section. 
SEC. 107. SWAP PAYMENTS MADE FROM THE UNITED 
STATES TO PERSONS OFFSHORE. 
(a) TAX ON SWAP PAYMENTS RECEIVED BY FOR-
EIGN PERSONS.—Section 871(a)(1) is amended— 
(1) by inserting ‘‘swap payments (as identified 
in section 1256(b)(2)(B)),’’ after ‘‘annuities,’’ in 
subparagraph (A), and 
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mstockstill on DSK30JT082PROD with BILLS
(2) by adding at the end the following new sen-
tence: ‘‘In the case of swap payments, the source of 
a swap payment is determined by reference to the lo-
cation of the payor.’’. 
(b) TAX ON SWAP PAYMENTS RECEIVED BY FOR-
EIGN CORPORATIONS.—Section 881(a) is amended— 
(1) by inserting ‘‘swap payments (as identified 
in section 1256(b)(2)(B)),’’ after ‘‘annuities,’’ in 
paragraph (1), and 
(2) by adding at the end the following new sen-
tence: ‘‘In the case of swap payments, the source of 
a swap payment is determined by reference to the lo-
cation of the payor.’’. 
SEC. 108. MODIFICATIONS TO RULES RELATING TO IN-
VERTED CORPORATIONS. 
(a) IN GENERAL.—Subsection (b) of section 7874 of 
the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(b) INVERTED CORPORATIONS TREATED AS DO-
MESTIC CORPORATIONS.— 
‘‘(1) IN
GENERAL.—Notwithstanding section 
7701(a)(4), a foreign corporation shall be treated for 
purposes of this title as a domestic corporation if— 
‘‘(A) such corporation would be a surro-
gate foreign corporation if subsection (a)(2) 
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were applied by substituting ‘80 percent’ for 
‘60 percent’, or 
‘‘(B) such corporation is an inverted do-
mestic corporation. 
‘‘(2) INVERTED DOMESTIC CORPORATION.—For 
purposes of this subsection, a foreign corporation 
shall be treated as an inverted domestic corporation 
if, pursuant to a plan (or a series of related trans-
actions)— 
‘‘(A) the entity completes after May 8, 
2014, the direct or indirect acquisition of— 
‘‘(i) substantially all of the properties 
held directly or indirectly by a domestic 
corporation, or 
‘‘(ii) substantially all of the assets of, 
or substantially all of the properties consti-
tuting a trade or business of, a domestic 
partnership, and 
‘‘(B) after the acquisition, either— 
‘‘(i) more than 50 percent of the stock 
(by vote or value) of the entity is held— 
‘‘(I) in the case of an acquisition 
with respect to a domestic corpora-
tion, by former shareholders of the 
domestic corporation by reason of 
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