I 
114TH CONGRESS 
2D SESSION 
H. R. 5261 
To amend the Internal Revenue Code of 1986 to prevent the avoidance 
of the rules related to investment of earnings in United States property 
through corporate expatriation or the use of corporate structures in 
which the common parent is a foreign corporation. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 17, 2016 
Mr. LEVIN (for himself, Mr. VAN HOLLEN, Mr. RANGEL, Mr. MCDERMOTT, 
Mr. THOMPSON of California, Mr. PASCRELL, and Mr. DANNY K. DAVIS 
of Illinois) introduced the following bill; which was referred to the Com-
mittee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to prevent 
the avoidance of the rules related to investment of earn-
ings in United States property through corporate expa-
triation or the use of corporate structures in which the 
common parent is a foreign corporation. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Protecting the U.S. 
Corporate Tax Base Act of 2016’’. 
VerDate Sep 11 2014 
21:07 May 18, 2016
Jkt 059200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H5261.IH
H5261
sradovich on DSK3TPTVN1PROD with BILLS
SEC. 2. INCLUSION IN SUBPART F INCOME OF INVEST-
MENTS BY CONTROLLED FOREIGN CORPORA-
TIONS WITH RESPECT TO MEMBERS OF FOR-
EIGN 
GROUP 
WHICH 
INCLUDES 
UNITED 
STATES SHAREHOLDER. 
(a) IN GENERAL.—Section 956(a)(1)(A) of the Inter-
nal Revenue Code of 1986 is amended to read as follows: 
‘‘(A) such shareholder’s pro rata share of 
the sum of— 
‘‘(i) the average of the amounts of 
United States property held (directly or in-
directly) by the controlled foreign corpora-
tion as of the close of each quarter of such 
taxable year, and 
‘‘(ii) in the case of a controlled foreign 
corporation which is a member of an ex-
panded affiliated group the common parent 
of which is not a domestic corporation, the 
average of the amounts of foreign group 
property held (directly or indirectly) by the 
controlled foreign corporation as of the 
close of each quarter of such taxable year, 
over’’. 
(b) FOREIGN GROUP PROPERTY.—Section 956 of 
such Code is amended by redesignating subsections (d) 
VerDate Sep 11 2014 
21:07 May 18, 2016
Jkt 059200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H5261.IH
H5261
sradovich on DSK3TPTVN1PROD with BILLS
and (e) as subsections (e) and (f), respectively, and by in-
serting after subsection (c) the following new subsection: 
‘‘(d) FOREIGN GROUP PROPERTY; EXPANDED AF-
FILIATED GROUP.—For purposes of this section— 
‘‘(1) FOREIGN GROUP PROPERTY.— 
‘‘(A) IN
GENERAL.—The term ‘foreign 
group property’ means any stock or obligation 
of any foreign person which is not a controlled 
foreign corporation. 
‘‘(B) EXCEPTIONS.—Such term shall not 
include— 
‘‘(i) the stock or obligation of any en-
tity if less than 25 percent of the total 
combined voting power of such entity, im-
mediately after the acquisition of any stock 
in such entity by the controlled foreign cor-
poration, is owned (directly or indirectly) 
by the common parent referred to in sub-
section (a)(1)(A)(ii), and 
‘‘(ii) property described in subpara-
graph (C), (I), (J), (K) or (L) of sub-
section (c)(2), applied— 
‘‘(I) by substituting ‘foreign per-
son’ for ‘United States person’ in 
such subparagraphs (C), (J), and (L), 
VerDate Sep 11 2014 
21:07 May 18, 2016
Jkt 059200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H5261.IH
H5261
sradovich on DSK3TPTVN1PROD with BILLS
‘‘(II) by substituting ‘foreign cor-
poration’ for ‘domestic corporation’ in 
subsection (c)(2)(L)(i), and 
‘‘(III) by treating a foreign per-
son as a United States shareholder 
described in subsection (c)(2)(L)(ii)(I) 
if such foreign person would be so de-
scribed if such person were a United 
States person. 
‘‘(C) LIMITATION
ON
TREATMENT
AS
A 
CONTROLLED FOREIGN CORPORATION.—A for-
eign corporation shall not be treated as a con-
trolled foreign corporation for purposes of sub-
paragraph (A) unless more than 50 percent of 
the total combined voting power of all classes of 
stock of such corporation entitled to vote, and 
more than 50 percent of the total value of the 
stock of such corporation, is owned (directly or 
indirectly) by United States persons described 
in 
subparagraph 
(A) 
or 
(C) 
of 
section 
7701(a)(30). 
‘‘(D) FOREIGN PERSON.—For purposes of 
this paragraph, the term ‘foreign person’ means 
any person who is not a United States person 
(as defined in section 7701(a)(30)). 
VerDate Sep 11 2014 
21:07 May 18, 2016
Jkt 059200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H5261.IH
H5261
sradovich on DSK3TPTVN1PROD with BILLS
‘‘(2) EXPANDED
AFFILIATED
GROUP.—The 
term ‘expanded affiliated group’ means an affiliated 
group as defined in section 1504(a), determined— 
‘‘(A) by substituting ‘more than 50 per-
cent’ for ‘at least 80 percent’ each place it ap-
pears, and 
‘‘(B) without regard to paragraphs (2) and 
(3) of section 1504(b). 
A partnership or any other entity (other than a cor-
poration) shall be treated as a member of an ex-
panded affiliated group if such entity controls (as 
determined under section 954(d)(3)), or is controlled 
by (as so determined), members of such group (in-
cluding any entity treated as a member of such 
group by reason of this sentence). 
‘‘(3) APPLICATION TO NON-CORPORATE ENTI-
TIES.—In the case of any entity which is not a cor-
poration— 
‘‘(A) any reference in this subsection to 
stock shall be treated as a reference to any eq-
uity or profits interest in such entity, and 
‘‘(B) except as otherwise provided by the 
Secretary, paragraph (1)(B)(i) shall be applied 
by substituting ‘25 percent (by value) of the 
beneficial interests in such entity’ for ‘25 per-
VerDate Sep 11 2014 
21:07 May 18, 2016
Jkt 059200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H5261.IH
H5261
sradovich on DSK3TPTVN1PROD with BILLS
cent of the total combined voting power of such 
entity’.’’. 
(c) APPLICATION
OF RULES
FOR PLEDGES
AND 
GUARANTEES.—Section 956(e) of such Code, as so redes-
ignated, is amended to read as follows: 
‘‘(e) PLEDGES AND GUARANTEES.—For purposes of 
subsection (a), a controlled foreign corporation shall, 
under regulations prescribed by the Secretary, be consid-
ered as holding— 
‘‘(1) an obligation of a United States person if 
such controlled foreign corporation is a pledgor or 
guarantor of such obligation, and 
‘‘(2) an obligation of a foreign person if such 
controlled foreign corporation or, to the extent pro-
vided under such regulations, any United States 
shareholder of such controlled foreign corporation, is 
a pledgor or guarantor of such obligation.’’. 
(d) TERMINATION OF RULE WHICH PERMITS USE 
OF RELATED-PARTY TRANSACTIONS TO AVOID TREAT-
MENT AS A CONTROLLED FOREIGN CORPORATION.—Sec-
tion 958(b)(4) of such Code is amended by inserting ‘‘if 
such stock was acquired by such person on or before May 
17, 2016’’ before the period at the end. 
(e) APPLICATION OF LIMITATION ON AMOUNT OF 
FOREIGN TAXES DEEMED PAID WITH RESPECT TO SEC-
VerDate Sep 11 2014 
21:07 May 18, 2016
Jkt 059200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H5261.IH
H5261
sradovich on DSK3TPTVN1PROD with BILLS
TION 956 INCLUSIONS.—Notwithstanding section 214(b) 
of Public Law 111–226, section 960(c) of the Internal 
Revenue Code of 1986 shall apply to acquisitions of for-
eign group property (as defined in 956(d) of such Code, 
as amended by this section) after December 31, 2010, in 
addition to acquisitions of United States property (as de-
fined in section 956(c) of such Code) after such date. 
(f) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years of controlled foreign cor-
porations ending after the date of the enactment of 
this Act and to taxable years of United States share-
holders in which or with which such taxable years of 
controlled foreign corporations end. 
(2) TERMINATION
OF
RULE
WHICH
PERMITS 
USE OF RELATED-PARTY TRANSACTIONS TO AVOID 
TREATMENT AS A CONTROLLED FOREIGN CORPORA-
TION.—The amendment made by subsection (d) 
shall apply to taxable years of controlled foreign cor-
porations ending on or after May 17, 2016, and to 
taxable years of United States shareholders in which 
or with which such taxable years of controlled for-
eign corporations end. 
Æ 
VerDate Sep 11 2014 
21:07 May 18, 2016
Jkt 059200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6301
E:\BILLS\H5261.IH
H5261
sradovich on DSK3TPTVN1PROD with BILLS