399 
† HR 1 EAS 
‘‘(i) SALES TO RELATED PARTIES.—If 
property is sold to a related party who is 
not a United States person, such sale shall 
not be treated as for a foreign use unless— 
‘‘(I) such property is ultimately 
sold by a related party, or used by a 
related party in connection with prop-
erty which is sold or the provision of 
services, to another person who is an 
unrelated party who is not a United 
States person, and 
‘‘(II) the taxpayer establishes to 
the satisfaction of the Secretary that 
such property is for a foreign use. 
For purposes of this clause, a sale of prop-
erty shall be treated as a sale of each of the 
components thereof. 
‘‘(ii) SERVICE PROVIDED TO RELATED 
PARTIES.—If a service is provided to a re-
lated party who is not located in the United 
States, such service shall not be treated de-
scribed in subparagraph (A)(ii) unless the 
taxpayer established to the satisfaction of 
the Secretary that such service is not sub-
stantially similar to services provided by
400 
† HR 1 EAS 
such related party to persons located within 
the United States. 
‘‘(D) RELATED
PARTY.—For purposes of 
this paragraph, the term ‘related party’ means 
any member of an affiliated group as defined in 
section 1504(a), determined— 
‘‘(i) by substituting ‘more than 50 per-
cent’ for ‘at least 80 percent’ each place it 
appears, and 
‘‘(ii) without regard to paragraphs (2) 
and (3) of section 1504(b). 
Any person (other than a corporation) shall be 
treated as a member of such group if such person 
is controlled by members of such group (includ-
ing any entity treated as a member of such 
group by reason of this sentence) or controls any 
such member. For purposes of the preceding sen-
tence, control shall be determined under the rules 
of section 954(d)(3). 
‘‘(E) SOLD.—For purposes of this sub-
section, the terms ‘sold’, ‘sells’, and ‘sale’ shall 
include any lease, license, exchange, or other dis-
position.
401 
† HR 1 EAS 
‘‘(c) REGULATIONS.—The Secretary shall prescribe 
such regulations or other guidance as may be necessary or 
appropriate to carry out the provisions of this section.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 172(d), as amended by section 13011, 
is amended by adding at the end the following new 
paragraph: 
‘‘(10) DEDUCTION FOR FOREIGN-DERIVED INTAN-
GIBLE
INCOME.—The deduction under section 250 
shall not be allowed.’’. 
(2) Section 246(b)(1) is amended— 
(A) by striking ‘‘and subsection (a) and (b) 
of section 245’’ the first place it appears and in-
serting ‘‘, subsection (a) and (b) of section 245, 
and section 250’’, 
(B) by striking ‘‘and subsection (a) and (b) 
of section 245’’ the second place it appears and 
inserting ‘‘subsection (a) and (b) of section 245, 
and 250’’. 
(3) Section 469(i)(3)(F)(iii) is amended by strik-
ing ‘‘and 222’’ and inserting ‘‘222, and 250’’. 
(4) The table of sections for part VIII of sub-
chapter B of chapter 1 is amended by adding at the 
end the following new item: 
‘‘Sec. 250. Foreign-derived intangible income and global intangible low-taxed in-
come.’’.
402 
† HR 1 EAS 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 14203. SPECIAL RULES FOR TRANSFERS OF INTAN-
GIBLE PROPERTY FROM CONTROLLED FOR-
EIGN CORPORATIONS TO UNITED STATES 
SHAREHOLDERS. 
(a) IN GENERAL.—Subpart F of part III of subchapter 
N of chapter 1 is amended by adding at the end the fol-
lowing new section: 
‘‘SEC. 966. TRANSFERS OF INTANGIBLE PROPERTY TO 
UNITED STATES SHAREHOLDERS. 
‘‘(a) IN GENERAL.—In the case of any distribution of 
intangible property which is held by a controlled foreign 
corporation on the date of enactment of this section and 
which is described in subsection (b)— 
‘‘(1) for purposes of part I of subchapter C and 
any other provision of this title specified by the Sec-
retary, the fair market value of such property on the 
date of such distribution shall be treated as not ex-
ceeding the adjusted basis of such property imme-
diately before such distribution, and 
‘‘(2) if the distribution is to a United States 
shareholder and is not a dividend—
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† HR 1 EAS 
‘‘(A) the United States shareholder’s ad-
justed basis in the stock of the controlled foreign 
corporation with respect to which such distribu-
tion is made shall be increased by the amount (if 
any) of such distribution which would (but for 
this subsection) be includible in gross income, 
and 
‘‘(B) the adjusted basis of such property in 
the hands of such United States shareholder im-
mediately after such distribution shall be such 
adjusted basis immediately before such distribu-
tion reduced by the amount of the increase de-
scribed in subparagraph (A). 
‘‘(b) DISTRIBUTION.—A distribution is described in 
this section if the distribution is— 
‘‘(1) received by a domestic corporation from a 
controlled foreign corporation with respect to which 
such corporation is a United States shareholder, and 
‘‘(2) made by the controlled foreign corporation 
before the last day of the third taxable year of the con-
trolled foreign corporation beginning after December 
31, 2017. 
‘‘(c) INTANGIBLE PROPERTY.—For purposes of this 
subsection, the term ‘intangible property’ has the meaning
404 
† HR 1 EAS 
given such term by section 936(h)(3)(B) or which is com-
puter software described in section 197(e)(3)(B).’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 197(f)(2)(B)(i) is amended by insert-
ing ‘‘966(a),’’ after ‘‘731,’’. 
(2) The table of sections for subpart F of part III 
of subchapter N of chapter 1 is amended by adding 
at the end the following new item: 
‘‘Sec. 966. Transfers of intangible property to United States shareholders.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to distributions made in 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. 
CHAPTER 2—OTHER MODIFICATIONS OF 
SUBPART F PROVISIONS 
SEC. 14211. ELIMINATION OF INCLUSION OF FOREIGN BASE 
COMPANY OIL RELATED INCOME. 
(a) REPEAL.—Subsection (a) of section 954 is amend-
ed— 
(1) by inserting ‘‘and’’ at the end of paragraph 
(2), 
(2) by striking the comma at the end of para-
graph (3) and inserting a period, and 
(3) by striking paragraph (5).
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† HR 1 EAS 
(b) CONFORMING AMENDMENTS.— 
(1) Section 952(c)(1)(B)(iii) is amended by 
striking subclause (I) and redesignating subclauses 
(II) through (V) as subclauses (I) through (IV), re-
spectively. 
(2) Section 954(b) is amended— 
(A) by striking the second sentence of para-
graph (4), 
(B) by striking ‘‘the foreign base company 
services income, and the foreign base company 
oil related income’’ in paragraph (5) and insert-
ing ‘‘and the foreign base company services in-
come’’, and 
(C) by striking paragraph (6). 
(3) Section 954 is amended by striking sub-
section (g). 
(c) 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 with or within which such 
taxable years of foreign corporations end.
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† HR 1 EAS 
SEC. 14212. INFLATION ADJUSTMENT OF DE MINIMIS EX-
CEPTION FOR FOREIGN BASE COMPANY IN-
COME. 
(a) IN GENERAL.—Section 954(b)(3) is amended by 
adding at the end the following new subparagraph: 
‘‘(D) INFLATION ADJUSTMENT.—In the case 
of any taxable year beginning after 2017, the 
dollar amount in subparagraph (A)(ii) shall be 
increased by an amount equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins. 
Any increase determined under the preceding 
sentence shall be rounded to the nearest multiple 
of $50,000.’’. 
(b) 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.
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† HR 1 EAS 
SEC. 14213. REPEAL OF INCLUSION BASED ON WITHDRAWAL 
OF PREVIOUSLY EXCLUDED SUBPART F IN-
COME FROM QUALIFIED INVESTMENT. 
(a) IN GENERAL.—Subpart F of part III of subchapter 
N of chapter 1 is amended by striking section 955. 
(b) CONFORMING AMENDMENTS.— 
(1)(A) Section 951(a)(1)(A) is amended to read 
as follows: 
‘‘(A) his pro rata share (determined under 
paragraph (2)) of the corporation’s subpart F 
income for such year, and’’. 
(B) Section 851(b) is amended by striking ‘‘sec-
tion 951(a)(1)(A)(i)’’ in the flush language at the end 
and inserting ‘‘section 951(a)(1)(A)’’. 
(C) Section 952(c)(1)(B)(i) is amended by strik-
ing ‘‘section 951(a)(1)(A)(i)’’ and inserting ‘‘section 
951(a)(1)(A)’’. 
(D) Section 953(c)(1)(C) is amended by striking 
‘‘section 951(a)(1)(A)(i)’’ and inserting ‘‘section 
951(a)(1)(A)’’. 
(2) Section 951(a) is amended by striking para-
graph (3). 
(3) Section 953(d)(4)(B)(iv)(II) is amended by 
striking ‘‘or amounts referred to in clause (ii) or (iii) 
of section 951(a)(1)(A)’’.
408 
† HR 1 EAS 
(4) Section 964(b) is amended by striking ‘‘, 
955,’’. 
(5) Section 970 is amended by striking sub-
section (b). 
(6) The table of sections for subpart F of part III 
of subchapter N of chapter 1 is amended by striking 
the item relating to section 955. 
(c) 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. 14214. MODIFICATION OF STOCK ATTRIBUTION RULES 
FOR 
DETERMINING 
STATUS 
AS 
A 
CON-
TROLLED FOREIGN CORPORATION. 
(a) IN GENERAL.—Section 958(b) is amended— 
(1) by striking paragraph (4), and 
(2) by striking ‘‘Paragraphs (1) and (4)’’ in the 
last sentence and inserting ‘‘Paragraph (1)’’. 
(b) 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
409 
† HR 1 EAS 
(2) taxable years of United States shareholders 
in which or with which such taxable years of foreign 
corporations end. 
SEC. 14215. MODIFICATION OF DEFINITION OF UNITED 
STATES SHAREHOLDER. 
(a) IN GENERAL.—Section 951(b) is amended by in-
serting ‘‘, or 10 percent or more of the total value of shares 
of all classes of stock of such foreign corporation’’ after 
‘‘such foreign corporation’’. 
(b) EFFECTIVE DATE.—The amendment 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 with or within which such 
taxable years of foreign corporations end. 
SEC. 14216. ELIMINATION OF REQUIREMENT THAT COR-
PORATION MUST BE CONTROLLED FOR 30 
DAYS 
BEFORE 
SUBPART 
F 
INCLUSIONS 
APPLY. 
(a) IN GENERAL.—Section 951(a)(1) is amended by 
striking ‘‘for an uninterrupted period of 30 days or more’’ 
and inserting ‘‘at any time’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to taxable years of foreign corporations 
beginning after December 31, 2017, and to taxable years
410 
† HR 1 EAS 
of United States shareholders with or within which such 
taxable years of foreign corporations end. 
SEC. 14217. LOOK-THRU RULE FOR RELATED CONTROLLED 
FOREIGN CORPORATIONS MADE PERMANENT. 
(a) IN GENERAL.—Paragraph (6) of section 954(c) is 
amended by striking subparagraph (C). 
(b) 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. 14218. CORPORATIONS ELIGIBLE FOR DEDUCTION FOR 
DIVIDENDS 
FROM 
CONTROLLED 
FOREIGN 
CORPORATIONS EXEMPT FROM SUBPART F 
INCLUSION FOR INVESTMENT IN UNITED 
STATES PROPERTY. 
(a) IN GENERAL.—Section 956(a) is amended by in-
serting ‘‘(other than a corporation)’’ after ‘‘United States 
shareholder’’ in the matter preceding paragraph (1). 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to taxable years of controlled foreign cor-
porations ending after December 31, 2017, and to taxable 
years of United States shareholders with or within which 
such taxable years of controlled foreign corporations end.
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† HR 1 EAS 
CHAPTER 3—PREVENTION OF BASE 
EROSION 
SEC. 14221. DENIAL OF DEDUCTION FOR INTEREST EX-
PENSE OF UNITED STATES SHAREHOLDERS 
WHICH ARE MEMBERS OF WORLDWIDE AF-
FILIATED GROUPS WITH EXCESS DOMESTIC 
INDEBTEDNESS. 
(a) IN GENERAL.—Section 163 is amended by redesig-
nating subsection (n) as subsection (o) and by inserting 
after subsection (m) the following new subsection: 
‘‘(n) DISALLOWANCE OF DEDUCTION FOR INTEREST 
EXPENSE OF UNITED STATES SHAREHOLDERS WHICH ARE 
MEMBERS OF WORLDWIDE AFFILIATED GROUPS WITH EX-
CESS DOMESTIC INDEBTEDNESS.— 
‘‘(1) IN GENERAL.—In the case of any domestic 
corporation which is a member of a worldwide affili-
ated group, the deduction allowed under this chapter 
for interest paid or accrued by such domestic corpora-
tion during the taxable year shall be reduced by the 
product of— 
‘‘(A) the net interest expense of such domes-
tic corporation, multiplied by 
‘‘(B) the debt-to-equity differential percent-
age of such worldwide affiliated group.
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† HR 1 EAS 
‘‘(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) DEBT-TO-EQUITY DIFFERENTIAL PERCENT-
AGE.— 
‘‘(A) IN
GENERAL.—For purposes of this 
subsection, the term ‘debt-to-equity differential 
percentage’ means, with respect to any world-
wide affiliated group, the percentage which the 
excess domestic indebtedness of such group bears 
to the total indebtedness of the domestic corpora-
tions which are members of such group. 
‘‘(B) EXCESS DOMESTIC INDEBTEDNESS.— 
For purposes of subparagraph (A), the term ‘ex-
cess domestic indebtedness’ means, with respect 
to any worldwide affiliated group, the excess (if 
any) of— 
‘‘(i) the total indebtedness of the do-
mestic corporations which are members of 
such group, over 
‘‘(ii) 110 percent of the amount which 
the total indebtedness of such domestic cor-
porations would be if the ratio of such in-
459 
† HR 1 EAS 
‘‘(i) is made on the basis of generally 
accepted accounting principles, 
‘‘(ii) is made on the basis of inter-
national financial reporting standards, but 
only if there is no statement that meets the 
requirement of clause (i), or 
‘‘(iii) except as otherwise provided by 
the Secretary in regulations, is the annual 
statement which is required to be filed with 
the applicable insurance regulatory body, 
but only if there is no statement which 
meets the requirements of clause (i) or (ii). 
‘‘(B) APPLICABLE INSURANCE REGULATORY 
BODY.—The term ‘applicable insurance regu-
latory body’ means, with respect to any insur-
ance business, the entity established by law to li-
cense, authorize, or regulate such business and to 
which the statement described in subparagraph 
(A) is provided.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017.