I 
111TH CONGRESS 
2D SESSION 
H. R. 5893 
To amend the Internal Revenue Code of 1986 to create jobs through increased 
investment in infrastructure, to eliminate loopholes which encourage com-
panies to move operations offshore, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 28, 2010 
Mr. LEVIN (for himself, Mr. RANGEL, Mr. STARK, Mr. MCDERMOTT, Mr. 
LEWIS of Georgia, Mr. BECERRA, Mr. PASCRELL, Mr. CROWLEY, Ms. 
BERKLEY, Mr. MEEK of Florida, Mr. DAVIS of Illinois, Mr. ETHERIDGE, 
Mr. HIGGINS, Mr. GARAMENDI, Mrs. DAHLKEMPER, Mr. KAGEN, Mr. 
PERRIELLO, Ms. KILROY, Mr. MCMAHON, Mr. KISSELL, and Mr. CAR-
NEY) introduced the following bill; which was referred to the Committee 
on Ways and Means, and in addition to the Committee on the Budget, 
for a period to be subsequently determined by the Speaker, in each case 
for consideration of such provisions as fall within the jurisdiction of the 
committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to create 
jobs through increased investment in infrastructure, to 
eliminate loopholes which encourage companies to move 
operations offshore, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; 
TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Investing in American Jobs and Closing Tax Loopholes 
Act of 2010’’. 
(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 for 
this Act is as follows: 
Sec. 1. Short title; amendment of 1986 Code; table of contents. 
TITLE I—INFRASTRUCTURE INCENTIVES 
Sec. 101. Extension of Build America Bonds. 
Sec. 102. Exempt-facility bonds for sewage and water supply facilities. 
Sec. 103. Extension of exemption from alternative minimum tax treatment for 
certain tax-exempt bonds. 
Sec. 104. Extension and additional allocations of recovery zone bond authority. 
Sec. 105. Allowance of new markets tax credit against alternative minimum 
tax. 
Sec. 106. Extension of tax-exempt eligibility for loans guaranteed by Federal 
home loan banks. 
Sec. 107. Extension of temporary small issuer rules for allocation of tax-exempt 
interest expense by financial institutions. 
TITLE II—EMERGENCY FUND FOR JOB CREATION AND 
ASSISTANCE 
Sec. 201. Extension of the Emergency Fund for Job Creation and Assistance. 
TITLE III—FOREIGN PROVISIONS 
Sec. 301. Rules to prevent splitting foreign tax credits from the income to 
which they relate. 
Sec. 302. Denial of foreign tax credit with respect to foreign income not subject 
to United States taxation by reason of covered asset acquisi-
tions. 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6211
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
Sec. 303. Separate application of foreign tax credit limitation, etc., to items 
resourced under treaties. 
Sec. 304. Limitation on the amount of foreign taxes deemed paid with respect 
to section 956 inclusions. 
Sec. 305. Special rule with respect to certain redemptions by foreign subsidi-
aries. 
Sec. 306. Modification of affiliation rules for purposes of rules allocating inter-
est expense. 
Sec. 307. Termination of special rules for interest and dividends received from 
persons meeting the 80-percent foreign business requirements. 
Sec. 308. Source rules for income on guarantees. 
Sec. 309. Limitation on extension of statute of limitations for failure to notify 
Secretary of certain foreign transfers. 
TITLE IV—BUDGETARY PROVISIONS 
Sec. 401. Paygo compliance. 
Sec. 402. Time for payment of corporate estimated taxes. 
TITLE I—INFRASTRUCTURE 
INCENTIVES 
SEC. 101. EXTENSION OF BUILD AMERICA BONDS. 
(a) IN GENERAL.—Subparagraph (B) of section 
54AA(d)(1) is amended by striking ‘‘January 1, 2011’’ 
and inserting ‘‘January 1, 2013’’. 
(b) EXTENSION OF PAYMENTS TO ISSUERS.— 
(1) IN GENERAL.—Section 6431 is amended— 
(A) by striking ‘‘January 1, 2011’’ in sub-
section (a) and inserting ‘‘January 1, 2013’’; 
and 
(B) by striking ‘‘January 1, 2011’’ in sub-
section (f)(1)(B) and inserting ‘‘a particular 
date’’. 
(2) CONFORMING
AMENDMENTS.—Subsection 
(g) of section 54AA is amended— 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
(A) by striking ‘‘January 1, 2011’’ and in-
serting ‘‘January 1, 2013’’; and 
(B) 
by 
striking 
‘‘QUALIFIED
BONDS 
ISSUED BEFORE 2011’’ in the heading and in-
serting ‘‘CERTAIN QUALIFIED BONDS’’. 
(c) REDUCTION IN PERCENTAGE OF PAYMENTS TO 
ISSUERS.—Subsection (b) of section 6431 is amended— 
(1) by striking ‘‘The Secretary’’ and inserting 
the following: 
‘‘(1) IN GENERAL.—The Secretary’’; 
(2) by striking ‘‘35 percent’’ and inserting ‘‘the 
applicable percentage’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(2) APPLICABLE PERCENTAGE.—For purposes 
of this subsection, the term ‘applicable percentage’ 
means the percentage determined in accordance with 
the following table: 
‘‘In the case of a qualified bond issued during cal-
endar year: 
The applicable percentage 
is: 
2009 or 2010 ............................................................
35 percent 
2011 ..........................................................................
32 percent 
2012 ..........................................................................
30 percent.’’. 
(d) CURRENT
REFUNDINGS
PERMITTED.—Sub-
section (g) of section 54AA is amended by adding at the 
end the following new paragraph: 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
‘‘(3) TREATMENT
OF
CURRENT
REFUNDING 
BONDS.— 
‘‘(A) IN GENERAL.—For purposes of this 
subsection, the term ‘qualified bond’ includes 
any bond (or series of bonds) issued to refund 
a qualified bond if— 
‘‘(i) the average maturity date of the 
issue of which the refunding bond is a part 
is not later than the average maturity date 
of the bonds to be refunded by such issue, 
‘‘(ii) the amount of the refunding 
bond does not exceed the outstanding 
amount of the refunded bond, and 
‘‘(iii) the refunded bond is redeemed 
not later than 90 days after the date of the 
issuance of the refunding bond. 
‘‘(B) APPLICABLE
PERCENTAGE.—In the 
case of a refunding bond referred to in subpara-
graph (A), the applicable percentage with re-
spect to such bond under section 6431(b) shall 
be the lowest percentage specified in paragraph 
(2) of such section. 
‘‘(C) DETERMINATION OF AVERAGE MATU-
RITY.—For purposes of subparagraph (A)(i), 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
to an exempt facility bond 95 percent or more of the 
net proceeds (as defined in section 150(a)(3)) of 
which are to be used to provide facilities described 
in paragraph (4) or (5) of section 142(a).’’. 
(2) CONFORMING AMENDMENT.—Paragraph (2) 
of section 7871(c) is amended by striking ‘‘para-
graph (3)’’ and inserting ‘‘paragraphs (3) and (4)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after the date 
of the enactment of this Act. 
SEC. 103. EXTENSION OF EXEMPTION FROM ALTERNATIVE 
MINIMUM TAX TREATMENT FOR CERTAIN 
TAX-EXEMPT BONDS. 
(a) IN GENERAL.—Clause (vi) of section 57(a)(5)(C) 
is amended— 
(1) by striking ‘‘January 1, 2011’’ in subclause 
(I) and inserting ‘‘January 1, 2012’’; and 
(2) by striking ‘‘AND 2010’’ in the heading and 
inserting ‘‘, 2010, AND 2011’’. 
(b) ADJUSTED CURRENT EARNINGS.—Clause (iv) of 
section 56(g)(4)(B) is amended— 
(1) by striking ‘‘January 1, 2011’’ in subclause 
(I) and inserting ‘‘January 1, 2012’’; and 
(2) by striking ‘‘AND 2010’’ in the heading and 
inserting ‘‘, 2010, AND 2011’’. 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after Decem-
ber 31, 2010. 
SEC. 104. EXTENSION AND ADDITIONAL ALLOCATIONS OF 
RECOVERY ZONE BOND AUTHORITY. 
(a) EXTENSION OF RECOVERY ZONE BOND AUTHOR-
ITY.—Section 
1400U–2(b)(1) 
and 
section 
1400U– 
3(b)(1)(B) are each amended by striking ‘‘January 1, 
2011’’ and inserting ‘‘January 1, 2012’’. 
(b) ADDITIONAL ALLOCATIONS OF RECOVERY ZONE 
BOND AUTHORITY BASED ON UNEMPLOYMENT.—Section 
1400U–1 is amended by adding at the end the following 
new subsection: 
‘‘(c) ALLOCATION OF 2010 RECOVERY ZONE BOND 
LIMITATIONS BASED ON UNEMPLOYMENT.— 
‘‘(1) IN GENERAL.—The Secretary shall allo-
cate the 2010 national recovery zone economic devel-
opment bond limitation and the 2010 national recov-
ery zone facility bond limitation among the States in 
the proportion that each such State’s 2009 unem-
ployment number bears to the aggregate of the 2009 
unemployment numbers for all of the States. 
‘‘(2) MINIMUM
ALLOCATION.—The Secretary 
shall adjust the allocations under paragraph (1) for 
each State to the extent necessary to ensure that no 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
State (prior to any reduction under paragraph (3)) 
receives less than 0.9 percent of the 2010 national 
recovery zone economic development bond limitation 
and 0.9 percent of the 2010 national recovery zone 
facility bond limitation. 
‘‘(3) ALLOCATIONS BY STATES.— 
‘‘(A) IN GENERAL.—Each State with re-
spect to which an allocation is made under 
paragraph (1) shall reallocate such allocation 
among the counties and large municipalities (as 
defined in subsection (a)(3)(B)) in such State 
in the proportion that each such county’s or 
municipality’s 2009 unemployment number 
bears to the aggregate of the 2009 unemploy-
ment numbers for all the counties and large 
municipalities (as so defined) in such State. 
‘‘(B) 2010 
ALLOCATION
REDUCED
BY 
AMOUNT
OF
PREVIOUS
ALLOCATION.—Each 
State shall reduce (but not below zero)— 
‘‘(i) the amount of the 2010 national 
recovery zone economic development bond 
limitation allocated to each county or large 
municipality (as so defined) in such State 
by the amount of the national recovery 
zone economic development bond limitation 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
allocated to such county or large munici-
pality under subsection (a)(3)(A) (deter-
mined without regard to any waiver there-
of), and 
‘‘(ii) the amount of the 2010 national 
recovery zone facility bond limitation allo-
cated to each county or large municipality 
(as so defined) in such State by the 
amount of the national recovery zone facil-
ity bond limitation allocated to such county 
or large municipality under subsection 
(a)(3)(A) (determined without regard to 
any waiver thereof). 
‘‘(C) WAIVER
OF
SUBALLOCATIONS.—A 
county or municipality may waive any portion 
of an allocation made under this paragraph. A 
county or municipality shall be treated as hav-
ing waived any portion of an allocation made 
under this paragraph which has not been allo-
cated to a bond issued before May 1, 2011. Any 
allocation waived (or treated as waived) under 
this subparagraph may be used or reallocated 
by the State. 
‘‘(D) SPECIAL RULE FOR A MUNICIPALITY 
IN A COUNTY.—In the case of any large munici-
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
pality any portion of which is in a county, such 
portion shall be treated as part of such munici-
pality and not part of such county. 
‘‘(4) 2009 
UNEMPLOYMENT
NUMBER.—For 
purposes of this subsection, the term ‘2009 unem-
ployment number’ means, with respect to any State, 
county or municipality, the number of individuals in 
such State, county, or municipality who were deter-
mined to be unemployed by the Bureau of Labor 
Statistics for December 2009. 
‘‘(5) 2010 NATIONAL LIMITATIONS.— 
‘‘(A) RECOVERY ZONE ECONOMIC DEVEL-
OPMENT BONDS.—The 2010 national recovery 
zone economic development bond limitation is 
$10,000,000,000. Any allocation of such limita-
tion under this subsection shall be treated for 
purposes of section 1400U–2 in the same man-
ner as an allocation of national recovery zone 
economic development bond limitation. 
‘‘(B) RECOVERY ZONE FACILITY BONDS.— 
The 2010 national recovery zone facility bond 
limitation is $15,000,000,000. Any allocation of 
such limitation under this subsection shall be 
treated for purposes of section 1400U–3 in the 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
same manner as an allocation of national recov-
ery zone facility bond limitation.’’. 
(c) AUTHORITY OF STATE TO WAIVE CERTAIN 2009 
ALLOCATIONS.—Subparagraph (A) of section 1400U– 
1(a)(3) is amended by adding at the end the following: 
‘‘A county or municipality shall be treated as having 
waived any portion of an allocation made under this sub-
paragraph which has not been allocated to a bond issued 
before May 1, 2011. Any allocation waived (or treated as 
waived) under this subparagraph may be used or reallo-
cated by the State.’’. 
SEC. 105. ALLOWANCE OF NEW MARKETS TAX CREDIT 
AGAINST ALTERNATIVE MINIMUM TAX. 
(a) IN GENERAL.—Subparagraph (B) of section 
38(c)(4) is amended by redesignating clauses (v) through 
(ix) as clauses (vi) through (x), respectively, and by insert-
ing after clause (iv) the following new clause: 
‘‘(v) the credit determined under sec-
tion 45D, but only with respect to credits 
determined with respect to qualified equity 
investments (as defined in section 45D(b)) 
initially made before January 1, 2012,’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to credits determined with respect 
to qualified equity investments (as defined in section 
VerDate Mar 15 2010 
03:35 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
45D(b) of the Internal Revenue Code of 1986) initially 
made after March 15, 2010. 
SEC. 106. EXTENSION OF TAX-EXEMPT ELIGIBILITY FOR 
LOANS GUARANTEED BY FEDERAL HOME 
LOAN BANKS. 
Clause (iv) of section 149(b)(3)(A) is amended by 
striking ‘‘December 31, 2010’’ and inserting ‘‘December 
31, 2011’’. 
SEC. 107. EXTENSION OF TEMPORARY SMALL ISSUER 
RULES FOR ALLOCATION OF TAX-EXEMPT IN-
TEREST EXPENSE BY FINANCIAL INSTITU-
TIONS. 
(a) IN GENERAL.—Clauses (i), (ii), and (iii) of sec-
tion 265(b)(3)(G) are each amended by striking ‘‘or 
2010’’ and inserting ‘‘, 2010, or 2011’’. 
(b) CONFORMING AMENDMENT.—Subparagraph (G) 
of section 265(b)(3) is amended by striking ‘‘AND 2010’’ 
in the heading and inserting ‘‘, 2010, AND 2011’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after Decem-
ber 31, 2010. 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
TITLE 
II—EMERGENCY 
FUND 
FOR JOB CREATION AND AS-
SISTANCE 
SEC. 201. EXTENSION OF THE EMERGENCY FUND FOR JOB 
CREATION AND ASSISTANCE. 
(a) IN GENERAL.—Section 403(c) of the Social Secu-
rity Act (42 U.S.C. 603(c)) is amended— 
(1) in paragraph (1), by striking ‘‘Emergency 
Contingency Fund for State Temporary Assistance 
for Needy Families Programs’’ and inserting ‘‘Emer-
gency Fund for Job Creation and Assistance’’; 
(2) in paragraph (2)(A), by inserting ‘‘, and for 
fiscal year 2011, such sums as may be necessary to 
carry out this subsection’’ before ‘‘for payment’’; 
(3) by striking paragraph (2)(B) and inserting 
the following: 
‘‘(B) AVAILABILITY AND USE OF FUNDS.— 
‘‘(i) FISCAL YEARS 2009 AND 2010.— 
The amounts appropriated to the Emer-
gency Fund under subparagraph (A) for 
fiscal year 2009 shall remain available 
through fiscal year 2010 and shall be used 
to make grants to States in each of fiscal 
years 2009 and 2010 in accordance with 
paragraph (3), except that the amounts 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
shall remain available through fiscal year 
2011 to make grants and payments to 
States in accordance with paragraph 
(3)(C) to cover expenditures to subsidize 
employment positions held by individuals 
placed in the positions before fiscal year 
2011. 
‘‘(ii) FISCAL YEAR 2011.—Subject to 
clause (iii), the amounts appropriated to 
the Emergency Fund under subparagraph 
(A) for fiscal year 2011 shall remain avail-
able through fiscal year 2012 and shall be 
used to make grants to States based on ex-
penditures in fiscal year 2011 for benefits 
and services provided in fiscal year 2011 in 
accordance with the requirements of para-
graph (3). 
‘‘(iii) RESERVATION
OF
FUNDS.—Of 
the amounts appropriated to the Emer-
gency Fund under subparagraph (A) for 
fiscal year 2011, $500,000 shall be placed 
in reserve for use in fiscal year 2012, and 
shall be used to award grants for any ex-
penditures described in this subsection in-
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00015
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
curred by States after September 30, 
2011.’’; 
(4) in paragraph (2)(C), by striking ‘‘2010’’ 
and inserting ‘‘2012’’; 
(5) in paragraph (3)— 
(A) in clause (i) of each of subparagraphs 
(A), (B), and (C), by striking ‘‘year 2009 or 
2010’’ and inserting ‘‘years 2009 through 
2011’’; and 
(B) in subparagraph (C), by adding at the 
end the following: 
‘‘(iv) LIMITATION ON EXPENDITURES 
FOR
SUBSIDIZED
EMPLOYMENT.—An ex-
penditure for subsidized employment shall 
be taken into account under clause (ii) 
only if the expenditure is used to subsidize 
employment for— 
‘‘(I) a member of a needy family 
(without regard to whether the family 
is receiving assistance under the State 
program funded under this part); or 
‘‘(II) an individual who has ex-
hausted (or, within 60 days, will ex-
haust) all rights to receive unemploy-
ment compensation under Federal and 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
State law, and who is a member of a 
needy family.’’; 
(6) by striking paragraph (5) and inserting the 
following: 
‘‘(5) LIMITATIONS ON PAYMENTS.— 
‘‘(A) FISCAL YEARS 2009 AND 2010.—The 
total amount payable to a single State under 
subsection (b) and this subsection for fiscal 
years 2009 and 2010 combined shall not exceed 
50 percent of the annual State family assist-
ance grant. 
‘‘(B) 
FISCAL
YEAR
2011.—The 
total 
amount payable to a single State under sub-
section (b) and this subsection for fiscal year 
2011 shall not exceed 30 percent of the annual 
State family assistance grant.’’; and 
(7) in paragraph (6), by inserting ‘‘or for ex-
penditures described in paragraph (3)(C)(iv)’’ before 
the period. 
(b) CONFORMING AMENDMENTS.—Section 2101 of 
division B of the American Recovery and Reinvestment 
Act of 2009 (Public Law 111–5) is amended— 
(1) in subsection (a)(2)— 
(A) by striking ‘‘2010’’ and inserting 
‘‘2011’’; and 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00017
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
(B) by striking all that follows ‘‘repealed’’ 
and inserting a period; and 
(2) in subsection (d)(1), by striking ‘‘2010’’ 
and inserting ‘‘2011’’. 
(c) PROGRAM GUIDANCE.—The Secretary of Health 
and Human Services shall issue program guidance, with-
out regard to the requirements of section 553 of title 5, 
United States Code, which ensures that the funds provided 
under the amendments made by this section to a jurisdic-
tion for subsidized employment do not support any sub-
sidized employment position the annual salary of which 
is greater than, at State option— 
(1) 200 percent of the poverty line (within the 
meaning of section 673(2) of the Omnibus Budget 
Reconciliation Act of 1981, including any revision 
required by such section 673(2)) for a family of 4; 
or 
(2) the median wage in the jurisdiction. 
TITLE III—FOREIGN PROVISIONS 
SEC. 301. RULES TO PREVENT SPLITTING FOREIGN TAX 
CREDITS FROM THE INCOME TO WHICH THEY 
RELATE. 
(a) IN GENERAL.—Subpart A of part III of sub-
chapter N of chapter 1 is amended by adding at the end 
the following new section: 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
‘‘SEC. 909. SUSPENSION OF TAXES AND CREDITS UNTIL RE-
LATED INCOME TAKEN INTO ACCOUNT. 
‘‘(a) IN GENERAL.—If there is a foreign tax credit 
splitting event with respect to a foreign income tax paid 
or accrued by the taxpayer, such tax shall not be taken 
into account for purposes of this title before the taxable 
year in which the related income is taken into account 
under this chapter by the taxpayer. 
‘‘(b) SPECIAL RULES WITH RESPECT TO SECTION 
902 CORPORATIONS.—If there is a foreign tax credit split-
ting event with respect to a foreign income tax paid or 
accrued by a section 902 corporation, such tax shall not 
be taken into account— 
‘‘(1) for purposes of section 902 or 960, or 
‘‘(2) for purposes of determining earnings and 
profits under section 964(a), 
before the taxable year in which the related income is 
taken into account under this chapter by such section 902 
corporation or a domestic corporation which meets the 
ownership requirements of subsection (a) or (b) of section 
902 with respect to such section 902 corporation. 
‘‘(c) SPECIAL RULES.—For purposes of this sec-
tion— 
‘‘(1) APPLICATION TO PARTNERSHIPS, ETC.—In 
the case of a partnership, subsections (a) and (b) 
shall be applied at the partner level. Except as oth-
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00019
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
erwise provided by the Secretary, a rule similar to 
the rule of the preceding sentence shall apply in the 
case of any S corporation or trust. 
‘‘(2) TREATMENT OF FOREIGN TAXES AFTER 
SUSPENSION.—In the case of any foreign income tax 
not taken into account by reason of subsection (a) 
or (b), except as otherwise provided by the Sec-
retary, such tax shall be so taken into account in the 
taxable year referred to in such subsection (other 
than for purposes of section 986(a)) as a foreign in-
come tax paid or accrued in such taxable year. 
‘‘(d) DEFINITIONS.—For purposes of this section— 
‘‘(1) 
FOREIGN
TAX
CREDIT
SPLITTING 
EVENT.—There is a foreign tax credit splitting event 
with respect to a foreign income tax if the related 
income is (or will be) taken into account under this 
chapter by a covered person. 
‘‘(2) FOREIGN INCOME TAX.—The term ‘foreign 
income tax’ means any income, war profits, or excess 
profits tax paid or accrued to any foreign country or 
to any possession of the United States. 
‘‘(3) RELATED INCOME.—The term ‘related in-
come’ means, with respect to any portion of any for-
eign income tax, the income (or, as appropriate, 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00020
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
earnings and profits) to which such portion of for-
eign income tax relates. 
‘‘(4) COVERED
PERSON.—The term ‘covered 
person’ means, with respect to any person who pays 
or accrues a foreign income tax (hereafter in this 
paragraph referred to as the ‘payor’)— 
‘‘(A) any entity in which the payor holds, 
directly or indirectly, at least a 10 percent own-
ership interest (determined by vote or value), 
‘‘(B) any person which holds, directly or 
indirectly, at least a 10 percent ownership in-
terest (determined by vote or value) in the 
payor, 
‘‘(C) any person which bears a relationship 
to the payor described in section 267(b) or 
707(b), and 
‘‘(D) any other person specified by the 
Secretary for purposes of this paragraph. 
‘‘(5) SECTION
902
CORPORATION.—The term 
‘section 902 corporation’ means any foreign corpora-
tion with respect to which one or more domestic cor-
porations meets the ownership requirements of sub-
section (a) or (b) of section 902. 
‘‘(e) REGULATIONS.—The Secretary may issue such 
regulations or other guidance as is necessary or appro-
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00021
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
priate to carry out the purposes of this section, including 
regulations or other guidance which provides— 
‘‘(1) appropriate exceptions from the provisions 
of this section, and 
‘‘(2) for the proper application of this section 
with respect to hybrid instruments.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subpart A of part III of subchapter N of chapter 1 
is amended by adding at the end the following new item: 
‘‘Sec. 909. Suspension of taxes and credits until related income taken into ac-
count.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to— 
(1) foreign income taxes (as defined in section 
909(d) of the Internal Revenue Code of 1986, as 
added by this section) paid or accrued after Decem-
ber 31, 2010; and 
(2) foreign income taxes (as so defined) paid or 
accrued by a section 902 corporation (as so defined) 
on or before such date (and not deemed paid under 
section 902(a) or 960 of such Code on or before 
such date), but only for purposes of applying sec-
tions 902 and 960 with respect to periods after such 
date. 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00022
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
Section 909(b)(2) of the Internal Revenue Code of 1986, 
as added by this section, shall not apply to foreign income 
taxes described in paragraph (2). 
SEC. 302. DENIAL OF FOREIGN TAX CREDIT WITH RESPECT 
TO 
FOREIGN 
INCOME 
NOT 
SUBJECT 
TO 
UNITED STATES TAXATION BY REASON OF 
COVERED ASSET ACQUISITIONS. 
(a) IN GENERAL.—Section 901 is amended by redes-
ignating subsection (m) as subsection (n) and by inserting 
after subsection (l) the following new subsection: 
‘‘(m) DENIAL OF FOREIGN TAX CREDIT WITH RE-
SPECT TO FOREIGN INCOME NOT SUBJECT TO UNITED 
STATES TAXATION BY REASON OF COVERED ASSET AC-
QUISITIONS.— 
‘‘(1) IN GENERAL.—In the case of a covered 
asset acquisition, the disqualified portion of any for-
eign income tax determined with respect to the in-
come or gain attributable to the relevant foreign as-
sets— 
‘‘(A) shall not be taken into account in de-
termining the credit allowed under subsection 
(a), and 
‘‘(B) in the case of a foreign income tax 
paid by a section 902 corporation (as defined in 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00023
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
section 909(d)(5)), shall not be taken into ac-
count for purposes of section 902 or 960. 
‘‘(2) COVERED ASSET ACQUISITION.—For pur-
poses of this section, the term ‘covered asset acquisi-
tion’ means— 
‘‘(A) a qualified stock purchase (as defined 
in section 338(d)(3)) to which section 338(a) 
applies, 
‘‘(B) any transaction which— 
‘‘(i) is treated as an acquisition of as-
sets for purposes of this chapter, and 
‘‘(ii) is treated as the acquisition of 
stock of a corporation (or is disregarded) 
for purposes of the foreign income taxes of 
the relevant jurisdiction, 
‘‘(C) any acquisition of an interest in a 
partnership which has an election in effect 
under section 754, and 
‘‘(D) to the extent provided by the Sec-
retary, any other similar transaction. 
‘‘(3) DISQUALIFIED PORTION.—For purposes of 
this section— 
‘‘(A) IN GENERAL.—The term ‘disqualified 
portion’ means, with respect to any covered 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00024
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
asset acquisition, for any taxable year, the ratio 
(expressed as a percentage) of— 
‘‘(i) the aggregate basis differences 
(but not below zero) allocable to such tax-
able year under subparagraph (B) with re-
spect to all relevant foreign assets, divided 
by 
‘‘(ii) the income on which the foreign 
income tax referred to in paragraph (1) is 
determined (or, if the taxpayer fails to sub-
stantiate such income to the satisfaction of 
the Secretary, such income shall be deter-
mined by dividing the amount of such for-
eign income tax by the highest marginal 
tax rate applicable to such income in the 
relevant jurisdiction). 
‘‘(B) 
ALLOCATION
OF
BASIS
DIF-
FERENCE.—For 
purposes 
of 
subparagraph 
(A)(i)— 
‘‘(i) IN
GENERAL.—The basis dif-
ference with respect to any relevant foreign 
asset shall be allocated to taxable years 
using the applicable cost recovery method 
under this chapter. 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00025
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
‘‘(ii) SPECIAL RULE FOR DISPOSITION 
OF ASSETS.—Except as otherwise provided 
by the Secretary, in the case of the disposi-
tion of any relevant foreign asset— 
‘‘(I) the basis difference allocated 
to the taxable year which includes the 
date of such disposition shall be the 
excess of the basis difference with re-
spect to such asset over the aggregate 
basis difference with respect to such 
asset which has been allocated under 
clause (i) to all prior taxable years, 
and 
‘‘(II) no basis difference with re-
spect to such asset shall be allocated 
under clause (i) to any taxable year 
thereafter. 
‘‘(C) BASIS DIFFERENCE.— 
‘‘(i) IN
GENERAL.—The term ‘basis 
difference’ means, with respect to any rel-
evant foreign asset, the excess of— 
‘‘(I) the adjusted basis of such 
asset immediately after the covered 
asset acquisition, over 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00026
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
‘‘(II) the adjusted basis of such 
asset immediately before the covered 
asset acquisition. 
‘‘(ii) BUILT-IN LOSS ASSETS.—In the 
case of a relevant foreign asset with re-
spect to which the amount described in 
clause (i)(II) exceeds the amount described 
in clause (i)(I), such excess shall be taken 
into account under this subsection as a 
basis difference of a negative amount. 
‘‘(iii) SPECIAL RULE FOR SECTION 338 
ELECTIONS.—In the case of a covered 
asset acquisition described in paragraph 
(2)(A), the covered asset acquisition shall 
be treated for purposes of this subpara-
graph as occurring at the close of the ac-
quisition date (as defined in section 
338(h)(2)). 
‘‘(4) RELEVANT
FOREIGN
ASSETS.—For pur-
poses of this section, the term ‘relevant foreign 
asset’ means, with respect to any covered asset ac-
quisition, any asset (including any goodwill, going 
concern value, or other intangible) with respect to 
such acquisition if income, deduction, gain, or loss 
attributable to such asset is taken into account in 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00027
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
determining the foreign income tax referred to in 
paragraph (1). 
‘‘(5) FOREIGN INCOME TAX.—For purposes of 
this section, the term ‘foreign income tax’ means 
any income, war profits, or excess profits tax paid 
or accrued to any foreign country or to any posses-
sion of the United States. 
‘‘(6) TAXES ALLOWED AS A DEDUCTION, ETC.— 
Sections 275 and 78 shall not apply to any tax 
which is not allowable as a credit under subsection 
(a) by reason of this subsection. 
‘‘(7) REGULATIONS.—The Secretary may issue 
such regulations or other guidance as is necessary or 
appropriate to carry out the purposes of this sub-
section, including to exempt from the application of 
this subsection certain covered asset acquisitions, 
and relevant foreign assets with respect to which the 
basis difference is de minimis.’’. 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to covered asset acquisitions (as defined 
in section 901(m)(2) of the Internal Revenue Code 
of 1986, as added by this section) after December 
31, 2010. 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00028
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
(2) 
TRANSITION
RULE.—The 
amendments 
made by this section shall not apply to any covered 
asset acquisition (as so defined) with respect to 
which the transferor and the transferee are not re-
lated if such acquisition is— 
(A) made pursuant to a written agreement 
which was binding on May 20, 2010, and at all 
times thereafter, 
(B) described in a ruling request submitted 
to the Internal Revenue Service on or before 
such date; or 
(C) described on or before such date in a 
public announcement or in a filing with the Se-
curities and Exchange Commission. 
(3) RELATED PERSONS.—For purposes of this 
subsection, a person shall be treated as related to 
another person if the relationship between such per-
sons is described in section 267 or 707(b) of the In-
ternal Revenue Code of 1986. 
SEC. 303. SEPARATE APPLICATION OF FOREIGN TAX CRED-
IT LIMITATION, ETC., TO ITEMS RESOURCED 
UNDER TREATIES. 
(a) IN GENERAL.—Subsection (d) of section 904 is 
amended by redesignating paragraph (6) as paragraph (7) 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00029
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
and by inserting after paragraph (5) the following new 
paragraph: 
‘‘(6) 
SEPARATE
APPLICATION
TO
ITEMS 
RESOURCED UNDER TREATIES.— 
‘‘(A) IN GENERAL.—If— 
‘‘(i) without regard to any treaty obli-
gation of the United States, any item of 
income would be treated as derived from 
sources within the United States, 
‘‘(ii) under a treaty obligation of the 
United States, such item would be treated 
as arising from sources outside the United 
States, and 
‘‘(iii) the taxpayer chooses the bene-
fits of such treaty obligation, 
subsections (a), (b), and (c) of this section and 
sections 902, 907, and 960 shall be applied sep-
arately with respect to each such item. 
‘‘(B) COORDINATION WITH OTHER PROVI-
SIONS.—This paragraph shall not apply to any 
item of income to which subsection (h)(10) or 
section 865(h) applies. 
‘‘(C) REGULATIONS.—The Secretary may 
issue such regulations or other guidance as is 
necessary or appropriate to carry out the pur-
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00030
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
poses of this paragraph, including regulations 
or other guidance which provides that related 
items of income may be aggregated for pur-
poses of this paragraph.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 304. LIMITATION ON THE AMOUNT OF FOREIGN TAXES 
DEEMED PAID WITH RESPECT TO SECTION 
956 INCLUSIONS. 
(a) IN GENERAL.—Section 960 is amended by adding 
at the end the following new subsection: 
‘‘(c) LIMITATION WITH RESPECT TO SECTION 956 
INCLUSIONS.— 
‘‘(1) IN GENERAL.—If there is included under 
section 951(a)(1)(B) in the gross income of a do-
mestic corporation any amount attributable to the 
earnings and profits of a foreign corporation which 
is a member of a qualified group (as defined in sec-
tion 902(b)) with respect to the domestic corpora-
tion, the amount of any foreign income taxes deemed 
to have been paid during the taxable year by such 
domestic corporation under section 902 by reason of 
subsection (a) with respect to such inclusion in gross 
income shall not exceed the amount of the foreign 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00031
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
income taxes which would have been deemed to have 
been paid during the taxable year by such domestic 
corporation if cash in an amount equal to the 
amount of such inclusion in gross income were dis-
tributed as a series of distributions (determined 
without regard to any foreign taxes which would be 
imposed on an actual distribution) through the chain 
of ownership which begins with such foreign cor-
poration and ends with such domestic corporation. 
‘‘(2) AUTHORITY
TO
PREVENT
ABUSE.—The 
Secretary shall issue such regulations or other guid-
ance as is necessary or appropriate to carry out the 
purposes of this subsection, including regulations or 
other guidance which prevent the inappropriate use 
of the foreign corporation’s foreign income taxes not 
deemed paid by reason of paragraph (1).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to acquisitions of United States 
property (as defined in section 956(c) of the Internal Rev-
enue Code of 1986) after December 31, 2010. 
SEC. 305. SPECIAL RULE WITH RESPECT TO CERTAIN RE-
DEMPTIONS BY FOREIGN SUBSIDIARIES. 
(a) IN GENERAL.—Paragraph (5) of section 304(b) 
is amended by redesignating subparagraph (B) as sub-
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00032
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
paragraph (C) and by inserting after subparagraph (A) 
the following new subparagraph: 
‘‘(B) SPECIAL RULE IN CASE OF FOREIGN 
ACQUIRING CORPORATION.—In the case of any 
acquisition to which subsection (a) applies in 
which the acquiring corporation is a foreign 
corporation, no earnings and profits shall be 
taken into account under paragraph (2)(A) 
(and subparagraph (A) shall not apply) if more 
than 50 percent of the dividends arising from 
such acquisition (determined without regard to 
this subparagraph) would neither— 
‘‘(i) be subject to tax under this chap-
ter for the taxable year in which the divi-
dends arise, nor 
‘‘(ii) be includible in the earnings and 
profits of a controlled foreign corporation 
(as defined in section 957 and without re-
gard to section 953(c)).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to acquisitions after December 31, 
2010. 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00033
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
SEC. 306. MODIFICATION OF AFFILIATION RULES FOR PUR-
POSES OF RULES ALLOCATING INTEREST EX-
PENSE. 
(a) IN GENERAL.—Subparagraph (A) of section 
864(e)(5) is amended by adding at the end the following: 
‘‘Notwithstanding the preceding sentence, a foreign cor-
poration shall be treated as a member of the affiliated 
group if— 
‘‘(i) more than 50 percent of the gross 
income of such foreign corporation for the 
taxable year is effectively connected with 
the conduct of a trade or business within 
the United States, and 
‘‘(ii) at least 80 percent of either the 
vote or value of all outstanding stock of 
such foreign corporation is owned directly 
or indirectly by members of the affiliated 
group (determined with regard to this sen-
tence).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00034
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
SEC. 307. TERMINATION OF SPECIAL RULES FOR INTEREST 
AND DIVIDENDS RECEIVED FROM PERSONS 
MEETING THE 80-PERCENT FOREIGN BUSI-
NESS REQUIREMENTS. 
(a) IN GENERAL.—Paragraph (1) of section 861(a) 
is amended by striking subparagraph (A) and by redesig-
nating subparagraphs (B) and (C) as subparagraphs (A) 
and (B), respectively. 
(b) GRANDFATHER RULE WITH RESPECT TO WITH-
HOLDING ON INTEREST AND DIVIDENDS RECEIVED FROM 
PERSONS MEETING THE 80-PERCENT FOREIGN BUSI-
NESS REQUIREMENTS.— 
(1) IN GENERAL.—Subparagraph (B) of section 
871(i)(2) is amended to read as follows: 
‘‘(B) The active foreign business percent-
age of— 
‘‘(i) any dividend paid by an existing 
80/20 company, and 
‘‘(ii) any interest paid by an existing 
80/20 company.’’. 
(2) DEFINITIONS AND SPECIAL RULES.—Sec-
tion 871 is amended by redesignating subsections (l) 
and (m) as subsections (m) and (n), respectively, 
and by inserting after subsection (k) the following 
new subsection: 
VerDate Mar 15 2010 
03:35 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00035
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
‘‘(l) RULES RELATING TO EXISTING 80/20 COMPA-
NIES.—For purposes of this subsection and subsection 
(i)(2)(B)— 
‘‘(1) EXISTING 80/20 COMPANY.— 
‘‘(A) IN GENERAL.—The term ‘existing 80/ 
20 company’ means any corporation if— 
‘‘(i) such corporation met the 80-per-
cent foreign business requirements of sec-
tion 861(c)(1) (as in effect before the date 
of the enactment of this subsection) for 
such corporation’s last taxable year begin-
ning before January 1, 2011, 
‘‘(ii) such corporation meets the 80- 
percent foreign business requirements of 
subparagraph (B) with respect to each tax-
able year after the taxable year referred to 
in clause (i), and 
‘‘(iii) there has not been an addition 
of a substantial line of business with re-
spect to such corporation after the date of 
the enactment of this subsection. 
‘‘(B) 
FOREIGN
BUSINESS
REQUIRE-
MENTS.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (iv), a corporation meets 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00036
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
the 80-percent foreign business require-
ments of this subparagraph if it is shown 
to the satisfaction of the Secretary that at 
least 80 percent of the gross income from 
all sources of such corporation for the test-
ing period is active foreign business in-
come. 
‘‘(ii) ACTIVE FOREIGN BUSINESS IN-
COME.—For purposes of clause (i), the 
term ‘active foreign business income’ 
means gross income which— 
‘‘(I) is derived from sources out-
side the United States (as determined 
under this subchapter), and 
‘‘(II) is attributable to the active 
conduct of a trade or business in a 
foreign country or possession of the 
United States. 
‘‘(iii) TESTING
PERIOD.—For pur-
poses of this subsection, the term ‘testing 
period’ means the 3-year period ending 
with the close of the taxable year of the 
corporation preceding the payment (or 
such part of such period as may be appli-
cable). If the corporation has no gross in-
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00037
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS
come for such 3-year period (or part there-
of), the testing period shall be the taxable 
year in which the payment is made. 
‘‘(iv) TRANSITION RULE.—In the case 
of a taxable year for which the testing pe-
riod includes 1 or more taxable years be-
ginning before January 1, 2011— 
‘‘(I) a corporation meets the 80- 
percent foreign business requirements 
of this subparagraph if and only if the 
weighted average of— 
‘‘(aa) the percentage of the 
corporation’s gross income from 
all sources that is active foreign 
business income (as defined in 
subparagraph 
(B) 
of 
section 
861(c)(1) (as in effect before the 
date of the enactment of this 
subsection)) for the portion of 
the testing period that includes 
taxable years beginning before 
January 1, 2011, and 
‘‘(bb) the percentage of the 
corporation’s gross income from 
all sources that is active foreign 
VerDate Mar 15 2010 
02:45 Jul 29, 2010
Jkt 089200
PO 00000
Frm 00038
Fmt 6652
Sfmt 6201
E:\BILLS\H5893.IH
H5893
jbell on DSKDVH8Z91PROD with BILLS