I 
119TH CONGRESS 
1ST SESSION 
H. R. 995 
To amend the Internal Revenue Code of 1986 to provide for current year 
inclusion of net CFC tested income, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 5, 2025 
Mr. DOGGETT (for himself, Ms. ADAMS, Ms. ANSARI, Ms. BALINT, Ms. 
BARRAGA´N, Mrs. BEATTY, Mr. BISHOP, Ms. BONAMICI, Mr. BOYLE of 
Pennsylvania, Ms. BROWN, Ms. BROWNLEY, Ms. BUDZINSKI, Mr. CAR-
SON, Mr. CARTER of Louisiana, Mr. CASAR, Mr. CASE, Ms. CHU, Ms. 
CLARKE of New York, Mr. CLEAVER, Mr. COHEN, Mr. CONAWAY, Ms. 
CROCKETT, Mr. CROW, Mr. DAVIS of Illinois, Mr. DAVIS of North Caro-
lina, Ms. DEAN
of Pennsylvania, Mrs. MCCLAIN
DELANEY, Ms. 
DELAURO, Ms. DELBENE, Mr. DELUZIO, Mr. DESAULNIER, Ms. DEX-
TER, Mrs. DINGELL, Ms. ESCOBAR, Mr. ESPAILLAT, Mr. EVANS of Penn-
sylvania, Ms. LEGER FERNANDEZ, Mr. FOSTER, Mrs. FOUSHEE, Ms. 
LOIS FRANKEL of Florida, Mr. FROST, Mr. GARAMENDI, Mr. GARCI´A of 
Illinois, Mr. GARCIA of California, Ms. GARCIA of Texas, Mr. GOLDEN 
of Maine, Mr. GOLDMAN of New York, Mr. GOMEZ, Mr. GREEN of Texas, 
Mr. GRIJALVA, Mrs. HAYES, Mr. HORSFORD, Ms. HOYLE of Oregon, Mr. 
HUFFMAN, Mr. IVEY, Mr. JACKSON of Illinois, Ms. JAYAPAL, Mr. JOHN-
SON of Georgia, Ms. KAPTUR, Ms. KELLY of Illinois, Mr. KENNEDY of 
New York, Mr. KHANNA, Mr. LANDSMAN, Mr. LARSON of Connecticut, 
Ms. LEE of Pennsylvania, Mr. LIEU, Mr. LYNCH, Mr. MAGAZINER, Mrs. 
MCBATH, Ms. MCBRIDE, Ms. MCCOLLUM, Mr. MCGARVEY, Mr. MCGOV-
ERN, Mr. MEEKS, Mr. MENENDEZ, Ms. MENG, Mr. MFUME, Mr. 
MOULTON, Mr. MRVAN, Mr. NADLER, Mr. NEGUSE, Mr. NORCROSS, Ms. 
NORTON, Ms. OCASIO-CORTEZ, Ms. OMAR, Mr. PALLONE, Ms. PEREZ, 
Ms. PINGREE, Mr. POCAN, Ms. PRESSLEY, Mrs. RAMIREZ, Mr. RASKIN, 
Mr. RILEY of New York, Ms. ROSS, Mr. RYAN, Ms. SALINAS, Ms. SCAN-
LON, Ms. SCHAKOWSKY, Mr. SHERMAN, Mr. SMITH of Washington, Mr. 
SOTO, Ms. STANSBURY, Ms. STEVENS, Mrs. SYKES, Mr. TAKANO, Mr. 
THANEDAR, Mr. THOMPSON of Mississippi, Ms. TITUS, Ms. TLAIB, Ms. 
TOKUDA, Mr. TONKO, Mrs. TORRES of California, Mrs. TRAHAN, Mr. 
TURNER of Texas, Mr. VARGAS, Ms. VELA´ZQUEZ, Ms. WASSERMAN 
SCHULTZ, Ms. WATERS, Mrs. WATSON COLEMAN, Ms. WILLIAMS of 
Georgia, and Ms. WILSON of Florida) introduced the following bill; which 
was referred to the Committee on Ways and Means 
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A BILL 
To amend the Internal Revenue Code of 1986 to provide 
for current year inclusion of net CFC tested income, 
and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE, ETC. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘No Tax Breaks for Outsourcing 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. 
Sec. 2. Current year inclusion of net CFC tested income. 
Sec. 3. Country-by-country application of limitation on foreign tax credit based 
on taxable units. 
Sec. 4. Limitation on deduction of interest by domestic corporations which are 
members of an international financial reporting group. 
Sec. 5. Modifications to rules relating to inverted corporations. 
Sec. 6. Treatment of foreign corporations managed and controlled in the United 
States as domestic corporations. 
SEC. 2. CURRENT YEAR INCLUSION OF NET CFC TESTED IN-
COME. 
(a) REPEAL OF TAX-FREE DEEMED RETURN ON IN-
VESTMENTS.— 
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‘‘(B) ALLOCATION
OF
NET
CFC
TESTED 
INCOME TO CONTROLLED FOREIGN CORPORA-
TIONS.—Except as otherwise provided by the 
Secretary, subsection (f)(2) shall be applied 
separately with respect to each CFC taxable 
unit.’’. 
(c) REGULATORY AUTHORITY.—Section 951A, as 
amended by subsection (b), is amended by adding at the 
end the following new subsection: 
‘‘(h) REGULATIONS.—The Secretary shall issue such 
regulations or other guidance as may be necessary or ap-
propriate to carry out, or prevent the avoidance of, the 
purposes of this section, including regulations or guidance 
which provide for— 
‘‘(1) the treatment of property if such property 
is transferred, or held, temporarily, 
‘‘(2) the treatment of property if the avoidance 
of the purposes of this section is a factor in the 
transfer or holding of such property, 
‘‘(3) appropriate adjustments to the basis of 
stock and other ownership interests, and to earnings 
and profits, to reflect tested losses (whether or not 
taken into account in determining net CFC tested 
income), 
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‘‘(4) rules similar to the rules provided under 
the regulations or guidance issued under section 
904(e)(4), 
‘‘(5) other appropriate basis adjustments, 
‘‘(6) appropriate adjustments to be made, and 
appropriate tax attributes and records to be main-
tained, separately with respect to CFC taxable units, 
and 
‘‘(7) appropriate adjustments in determining 
tested income or tested loss if property is trans-
ferred between related parties or amounts are paid 
or accrued between related parties.’’. 
(d) COORDINATION WITH OTHER PROVISIONS.—Sec-
tion 951A(f)(1) is amended by adding at the end the fol-
lowing new subparagraph: 
‘‘(C) 
TREATMENT
OF
CERTAIN
REF-
ERENCES.—Except as otherwise provided by the 
Secretary, references to section 951 or section 
951(a) in sections 959, 961, 962, and such 
other provisions as the Secretary may identify 
shall include references to section 951A or sec-
tion 951A(a), respectively.’’. 
(e) REPEAL OF REDUCED RATE OF TAX ON NET 
CFC TESTED INCOME AND FOREIGN-DERIVED INTAN-
GIBLE INCOME.— 
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(1) IN GENERAL.—Part VIII of subchapter B 
of chapter 1 is amended by striking section 250 (and 
by striking the item relating to such section in the 
table of sections of such part). 
(2) CONFORMING AMENDMENTS.— 
(A) Section 59A(c)(4)(B)(i) is amended by 
striking ‘‘section 172, 245A, or 250’’ and in-
serting ‘‘section 172 or 245A’’. 
(B) Section 172(d) is amended by striking 
paragraph (9). 
(C) Section 246(b)(1) is amended— 
(i) by striking ‘‘subsection (a) and (b) 
of section 245, and section 250’’ and in-
serting ‘‘and subsection (a) and (b) of sec-
tion 245’’; and 
(ii) by striking ‘‘subsection (a) and 
(b) of section 245, and 250’’ and inserting 
‘‘and subsection (a) and (b) of section 
245’’. 
(D) Section 469(i)(3)(E)(iii) is amended 
by striking ‘‘, 221, and 250’’ and inserting 
‘‘and 221’’. 
(f) REPEAL OF CERTAIN EXCLUSIONS FROM THE 
DETERMINATION
OF
TESTED
INCOME.—Section 
951A(c)(2)(A)(i) is amended— 
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(1) by striking subclauses (III) and (V), 
(2) by redesignating subclause (IV) as sub-
clause (III), 
(3) by adding ‘‘and’’ at the end of subclause 
(II), and 
(4) by striking ‘‘and’’ at the end of subclause 
(III) (as so redesignated) and inserting ‘‘over’’. 
(g) INCREASE IN DEEMED PAID CREDIT FOR TAXES 
PROPERLY ATTRIBUTABLE TO TESTED INCOME.— 
(1) IN GENERAL.—Section 960(d) is amended 
by striking ‘‘80 percent of’’. 
(2) CONFORMING AMENDMENT.—Section 78 is 
amended by striking ‘‘(determined without regard to 
the phrase ‘‘80 percent of’’ in subsection (d)(1) 
thereof)’’. 
(h) REPEAL OF HIGH TAX EXCLUSION FOR FOREIGN 
BASE COMPANY INCOME AND INSURANCE INCOME.— 
(1) IN GENERAL.—Section 954(b) is amended 
by striking paragraph (4). 
(2) 
CONFORMING
AMENDMENT.—Section 
904(d)(3)(E) is amended by striking the last sen-
tence. 
(i) ELIMINATION OF CARRYBACK OF FOREIGN TAX 
CREDIT.— 
(1) IN GENERAL.—Section 904(c) is amended— 
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(A) by striking ‘‘in the first preceding tax-
able year and in any of the first 10 succeeding 
taxable years, in that order’’ and inserting ‘‘in 
any of the first 10 succeeding taxable years, in 
order’’, 
(B) by striking ‘‘preceding or’’ each place 
it appears, and 
(C) by striking ‘‘CARRYBACK AND’’ in the 
heading thereof. 
(2) APPLICATION TO LIMITATION ON FOREIGN 
OIL AND GAS TAXES.—Section 907(f) is amended— 
(A) in paragraph (1), by striking ‘‘in the 
first preceding taxable year and’’, 
(B) in paragraph (2), by striking ‘‘pre-
ceding or’’ in the matter preceding subpara-
graph (A), 
(C) in paragraph (3)(B)— 
(i) by striking ‘‘in a preceding or suc-
ceeding’’ and inserting ‘‘in a succeeding’’, 
and 
(ii) by striking ‘‘in such preceding or 
succeeding’’ both places it appears and in-
serting ‘‘in such succeeding’’, and 
(D) 
in 
the 
heading, 
by 
striking 
‘‘CARRYBACK AND’’. 
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(j) TREATMENT OF FOREIGN BASE COMPANY OIL 
RELATED INCOME AS SUBPART F INCOME.— 
(1) IN GENERAL.—Section 954(a) is amended 
by striking ‘‘and’’ at the end of paragraph (2), by 
striking the period at the end of paragraph (3) and 
inserting ‘‘, and’’, and by adding at the end the fol-
lowing new paragraph: 
‘‘(4) the foreign base company oil related in-
come for the taxable year (determined under sub-
section (f) and reduced as provided in subsection 
(b)(5)).’’. 
(2) FOREIGN BASE COMPANY OIL RELATED IN-
COME.—Section 954 is amended by inserting after 
subsection (e) the following new subsection: 
‘‘(f) FOREIGN BASE COMPANY OIL RELATED IN-
COME.—For purposes of this section, the term ‘foreign 
base company oil related income’ means foreign oil related 
income (within the meaning of paragraphs (2) and (3) of 
section 907(c)) other than income derived from a source 
within a foreign country in connection with— 
‘‘(1) oil or gas which was extracted from an oil 
or gas well located in such foreign country, or 
‘‘(2) oil, gas, or a primary product of oil or gas 
which is sold by the foreign corporation or a related 
person for use or consumption within such country 
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or is loaded in such country on a vessel or aircraft 
as fuel for such vessel or aircraft. 
Such term shall not include any foreign personal holding 
company income (as defined in subsection (c)).’’. 
(3) CONFORMING AMENDMENTS.— 
(A) Section 952(c)(1)(B)(iii) is amended 
by redesignating subclauses (III) and (IV) as 
subclauses (IV) and (V), respectively, and by 
inserting after subclause (II) the following new 
subclause: 
‘‘(III) foreign base company oil 
related income.’’. 
(B) Section 954(b) is amended— 
(i) by striking ‘‘and the foreign base 
company services income’’ in paragraph 
(5) and inserting ‘‘the foreign base com-
pany services income, and the foreign base 
company oil related income’’, and 
(ii) by adding at the end the following 
new paragraph: 
‘‘(6) FOREIGN BASE COMPANY OIL RELATED IN-
COME NOT TREATED AS ANOTHER KIND OF FOREIGN 
BASE COMPANY INCOME.—Income of a corporation 
which is foreign base company oil related income 
shall not be considered foreign base company income 
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of such corporation under paragraph (2) or (3) of 
subsection (a).’’. 
(k) EFFECTIVE DATES.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years of foreign 
corporations beginning after December 31, 2024, 
and to taxable years of United States shareholders 
in which or with which such taxable years of foreign 
corporations end. 
(2) REGULATORY AUTHORITY AND COORDINA-
TION WITH OTHER PROVISIONS.—The amendments 
made by subsections (c) and (d) shall apply to tax-
able years of foreign corporations beginning after 
the date of the enactment of this Act, and to taxable 
years of United States shareholders in which or with 
which such taxable years of foreign corporations 
end. 
(3) REPEAL OF REDUCED RATE OF TAX; IN-
CREASE
IN
DEEMED
PAID
CREDIT.—The amend-
ments made by subsections (e) and (g) shall apply 
to taxable years beginning after December 31, 2024. 
(4) ELIMINATION OF CARRYBACK OF FOREIGN 
TAX CREDIT.—The amendment made by subsection 
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(i) shall apply to credits arising in taxable years be-
ginning after December 31, 2024. 
(l) NO INFERENCE REGARDING CERTAIN MODIFICA-
TIONS.—The amendments made by subsections (c) and 
(d) shall not be construed to create any inference with re-
spect to the proper application of any provision of the In-
ternal Revenue Code of 1986 with respect to any taxable 
year beginning before the taxable years to which such 
amendments apply. 
SEC. 3. COUNTRY-BY-COUNTRY APPLICATION OF LIMITA-
TION ON FOREIGN TAX CREDIT BASED ON 
TAXABLE UNITS. 
(a) IN GENERAL.—Section 904 is amended by insert-
ing after subsection (d) the following new subsection: 
‘‘(e) COUNTRY-BY-COUNTRY APPLICATION BASED ON 
TAXABLE UNITS.— 
‘‘(1) IN
GENERAL.—Subsection (d) (and the 
provisions of this title referred to in paragraph (1) 
of such subsection) shall be applied separately with 
respect to each country by taking into account the 
aggregate income properly attributable or otherwise 
allocable to a taxable unit of the taxpayer which is 
a tax resident of (or, in the case of a branch, is lo-
cated in) such country. 
‘‘(2) TAXABLE UNITS.— 
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‘‘(A) IN GENERAL.—Except as otherwise 
provided by the Secretary, each item shall be 
attributable or otherwise allocable to exactly 
one taxable unit of the taxpayer. 
‘‘(B) 
DETERMINATION
OF
TAXABLE 
UNITS.—Except as otherwise provided by the 
Secretary, the taxable units of a taxpayer are 
as follows: 
‘‘(i) GENERAL TAXABLE UNIT.—The 
person that is the taxpayer and that is not 
otherwise described in a separate clause of 
this subparagraph. 
‘‘(ii) CERTAIN
FOREIGN
CORPORA-
TIONS.—Each foreign corporation with re-
spect to which the taxpayer is a United 
States shareholder. 
‘‘(iii) INTERESTS
IN
PASS-THROUGH 
ENTITIES.—Each interest held (directly or 
indirectly) by the taxpayer or any foreign 
corporation referred to in clause (ii) in a 
pass-through entity if such pass-through 
entity is a tax resident of a country other 
than the country with respect to which 
such taxpayer or foreign corporation (as 
the case may be) is a tax resident. 
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‘‘(iv) BRANCHES.—Each branch (or 
portion thereof) the activities of which are 
directly or indirectly carried on by the tax-
payer or any foreign corporation referred 
to in clause (ii) and which give rise to a 
taxable presence in a country other than 
the country with respect to which such tax-
payer or foreign corporation (as the case 
may be) is a tax resident. 
‘‘(3) DEFINITIONS AND SPECIAL RULES.—For 
purposes of this subsection— 
‘‘(A) TAX RESIDENT.—Except as otherwise 
provided by the Secretary, the term ‘tax resi-
dent’ means a person or entity subject to tax 
under the tax law of a country as a resident. If 
an entity is organized under the law of a coun-
try, or resident in a country, that does not im-
pose an income tax with respect to such enti-
ties, such entity shall, except as provided by the 
Secretary, be treated as subject to tax under 
the tax law of such country for the purposes of 
the preceding sentence. 
‘‘(B) PASS-THROUGH ENTITY.—Except as 
otherwise provided by the Secretary, the term 
‘pass-through entity’ includes any partnership 
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or other entity to the extent that income, gain, 
deduction, or loss of the entity is taken into ac-
count in determining the income or loss of a 
person that owns (directly or indirectly) an in-
terest in such entity. 
‘‘(C) BRANCH.—Except as otherwise pro-
vided by the Secretary, the term ‘branch’ means 
a taxable presence of a tax resident in a coun-
try other than its country of residence as deter-
mined under such other country’s tax law. The 
Secretary shall provide regulations or other 
guidance applying such term to activities in a 
country that do not give rise to a taxable pres-
ence. 
‘‘(D) TREATMENT OF FISCALLY AUTONO-
MOUS
JURISDICTIONS.—Any fiscally autono-
mous jurisdiction shall be treated as a separate 
country. Any possession of the United States 
shall also be treated as a separate country. 
‘‘(E) 
POSSESSION
OF
THE
UNITED 
STATES.—The term ‘possession of the United 
States’ means each of American Samoa, the 
Commonwealth of the Northern Mariana Is-
lands, the Commonwealth of Puerto Rico, 
Guam, and the Virgin Islands. 
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‘‘(4) REGULATIONS.—The Secretary shall issue 
such regulations or other guidance as may be nec-
essary or appropriate to carry out, or prevent avoid-
ance of, the purposes of this subsection, including 
regulations or other guidance— 
‘‘(A) providing for the application of this 
subsection to an entity or arrangement that is 
considered a tax resident of more than one 
country or of no country, 
‘‘(B) providing for the application of this 
subsection to hybrid entities or hybrid trans-
actions (as such terms are used for purposes of 
section 267A), pass-through entities, passive 
foreign investment companies, trusts, and other 
entities or arrangements not otherwise de-
scribed in this subsection, and 
‘‘(C) providing for the assignment of any 
item (including foreign taxes and deductions) to 
taxable units, including in the case of amounts 
not otherwise taken into account in determining 
taxable income under this chapter.’’. 
(b) 
TREATMENT
OF
INADEQUATE
SUBSTAN-
TIATION.—Section 904(d)(4)(C)(ii) is amended by strik-
ing ‘‘paragraph (1)(A)’’ and inserting ‘‘paragraph 
(1)(C)’’. 
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(c) APPLICATION OF FOREIGN TAX CREDIT LIMITA-
TION WITH RESPECT TO FOREIGN BRANCHES.—Section 
904(d)(2)(J)(i) is amended— 
(1) by striking ‘‘qualified business units (as de-
fined in section 989(a)) in 1 or more foreign coun-
tries’’ and inserting ‘‘foreign branches described in 
section 904(e)(2)(B)(iv)’’, and 
(2) by striking ‘‘a qualified business unit’’ and 
inserting ‘‘a foreign branch’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2024. 
SEC. 4. LIMITATION ON DEDUCTION OF INTEREST BY DO-
MESTIC CORPORATIONS WHICH ARE MEM-
BERS OF AN INTERNATIONAL FINANCIAL RE-
PORTING GROUP. 
(a) IN GENERAL.—Section 163 is amended by redes-
ignating subsection (n) as subsection (p) and by inserting 
after subsection (m) the following new subsection: 
‘‘(n) LIMITATION ON DEDUCTION OF INTEREST BY 
DOMESTIC CORPORATIONS
IN INTERNATIONAL FINAN-
CIAL REPORTING GROUPS.— 
‘‘(1) IN GENERAL.—In the case of any domestic 
corporation which is a member of any international 
financial reporting group, the deduction under this 
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chapter for interest paid or accrued during the tax-
able year shall not exceed the sum of— 
‘‘(A) the allowable percentage of 110 per-
cent of the excess (if any) of— 
‘‘(i) the amount of such interest so 
paid or accrued, over 
‘‘(ii) the amount described in subpara-
graph (B), plus 
‘‘(B) the amount of interest includible in 
gross income of such corporation for such tax-
able year. 
‘‘(2) INTERNATIONAL
FINANCIAL
REPORTING 
GROUP.— 
‘‘(A) For purposes of this subsection, the 
term ‘international financial reporting group’ 
means, with respect to any reporting year, any 
group of entities which— 
‘‘(i) includes— 
‘‘(I) at least one foreign corpora-
tion engaged in a trade or business 
within the United States, or 
‘‘(II) at least one domestic cor-
poration and one foreign corporation, 
‘‘(ii) prepares consolidated financial 
statements with respect to such year, and 
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‘‘(iii) reports in such statements aver-
age annual gross receipts (determined in 
the aggregate with respect to all entities 
which are part of such group) for the 3-re-
porting-year period ending with such re-
porting year in excess of $100,000,000. 
‘‘(B) RULES
RELATING
TO
DETERMINA-
TION OF AVERAGE GROSS RECEIPTS.—For pur-
poses of subparagraph (A)(iii), rules similar to 
the rules of section 448(c)(3) shall apply. 
‘‘(3) ALLOWABLE PERCENTAGE.—For purposes 
of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘allowable 
percentage’ means, with respect to any domestic 
corporation for any taxable year, the ratio (ex-
pressed as a percentage and not greater than 
100 percent) of— 
‘‘(i) such corporation’s allocable share 
of the international financial reporting 
group’s reported net interest expense for 
the reporting year of such group which 
ends in or with such taxable year of such 
corporation, over 
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‘‘(ii) such corporation’s reported net 
interest expense for such reporting year of 
such group. 
‘‘(B) 
REPORTED
NET
INTEREST
EX-
PENSE.—The term ‘reported net interest ex-
pense’ means— 
‘‘(i) with respect to any international 
financial reporting group for any reporting 
year, the excess of— 
‘‘(I) the aggregate amount of in-
terest 
expense 
reported 
in 
such 
group’s consolidated financial state-
ments for such taxable year, over 
‘‘(II) the aggregate amount of in-
terest income reported in such group’s 
consolidated financial statements for 
such taxable year, and 
‘‘(ii) with respect to any domestic cor-
poration for any reporting year, the excess 
of— 
‘‘(I) the amount of interest ex-
pense of such corporation reported in 
the books and records of the inter-
national financial reporting group 
which are used in preparing such 
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zero or less, paragraph (1) shall not apply 
to any member of such group the EBITDA 
of which is above zero. 
‘‘(ii) 
NON-POSITIVE
ENTITY 
EBITDA.—In the case of any group mem-
ber the EBITDA of which is zero or less, 
paragraph (1) shall be applied without re-
gard to subparagraph (A) thereof. 
‘‘(4) CONSOLIDATED FINANCIAL STATEMENT.— 
For purposes of this subsection, the term ‘consoli-
dated financial statement’ means any consolidated 
financial statement described in paragraph (2)(A)(ii) 
if such statement is— 
‘‘(A) a financial statement which is cer-
tified as being prepared in accordance with gen-
erally accepted accounting principles, inter-
national financial reporting standards, or any 
other comparable method of accounting identi-
fied by the Secretary, and which is— 
‘‘(i) a 10–K (or successor form), or 
annual statement to shareholders, required 
to be filed with the United States Securi-
ties and Exchange Commission, 
‘‘(ii) an audited financial statement 
which is used for— 
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‘‘(I) credit purposes, 
‘‘(II) reporting to shareholders, 
partners, or other proprietors, or to 
beneficiaries, or 
‘‘(III) 
any 
other 
substantial 
nontax purpose, 
but only if there is no statement described 
in clause (i), or 
‘‘(iii) filed with any other Federal or 
State agency for nontax purposes, but only 
if there is no statement described in clause 
(i) or (ii), or 
‘‘(B) a financial statement which— 
‘‘(i) is used for a purpose described in 
subclause (I), (II), or (III) of subpara-
graph (A)(ii), or 
‘‘(ii) filed with any regulatory or gov-
ernmental body (whether domestic or for-
eign) specified by the Secretary, 
but only if there is no statement described in 
subparagraph (A). 
‘‘(5) REPORTING YEAR.—For purposes of this 
subsection, the term ‘reporting year’ means, with re-
spect to any international financial reporting group, 
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the year with respect to which the consolidated fi-
nancial statements are prepared. 
‘‘(6) APPLICATION TO CERTAIN ENTITIES.— 
‘‘(A) PARTNERSHIPS.—Except as other-
wise provided by the Secretary in paragraph 
(7), this subsection and subsection (o) shall 
apply to any partnership which is a member of 
any international financial reporting group 
under rules similar to the rules of section 
163(j)(4). 
‘‘(B) FOREIGN
CORPORATIONS
ENGAGED 
IN TRADE OR BUSINESS WITHIN THE UNITED 
STATES.—Except as otherwise provided by the 
Secretary in paragraph (7), any deduction for 
interest paid or accrued by a foreign corpora-
tion engaged in a trade or business within the 
United States shall be limited in a manner con-
sistent with the principles of this subsection. 
‘‘(C) CONSOLIDATED
GROUPS.—For pur-
poses of this subsection, the members of any 
group that file (or are required to file) a con-
solidated return with respect to the tax imposed 
by chapter 1 for a taxable year shall be treated 
as a single corporation. 
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‘‘(7) REGULATIONS.—The Secretary may issue 
such regulations or other guidance as are necessary 
or appropriate to carry out the purposes of this sub-
section.’’. 
(b) CARRYFORWARD OF DISALLOWED INTEREST.— 
(1) IN GENERAL.—Section 163 is amended by 
inserting after subsection (n), as added by sub-
section (a), the following new subsection: 
‘‘(o) CARRYFORWARD OF CERTAIN DISALLOWED IN-
TEREST.—The amount of any interest not allowed as a 
deduction for any taxable year by reason of subsection 
(j)(1) or (n)(1) (whichever imposes the lower limitation 
with respect to such taxable year) shall be treated as inter-
est (and as business interest for purposes of subsection 
(j)(1)) paid or accrued (and as interest expense reported 
as described in clause (i)(I) or (ii)(I) of subsection 
(n)(3)(B), as the case may be) in the succeeding taxable 
year. Interest paid or accrued in any taxable year (deter-
mined without regard to the preceding sentence) shall not 
be carried past the fifth taxable year following such tax-
able year, determined by treating interest as allowed as 
a deduction on a first-in, first-out basis.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 163(j)(2) is amended to read 
as follows: 
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‘‘(2) CARRYFORWARD CROSS-REFERENCE.—For 
carryforward treatment, see subsection (o).’’. 
(B) Section 163(j)(4)(B)(i)(I) is amended 
by striking ‘‘paragraph (2)’’ and inserting ‘‘sub-
section (o)’’. 
(C) Section 381(c)(20) is amended to read 
as follows: 
‘‘(20) CARRYFORWARD OF DISALLOWED INTER-
EST.—The carryover of disallowed interest described 
in section 163(o) to taxable years ending after the 
date of distribution or transfer.’’. 
(D) Section 382(d)(3) is amended to read 
as follows: 
‘‘(3) APPLICATION TO CARRYFORWARD OF DIS-
ALLOWED
INTEREST.—The term ‘pre-change loss’ 
shall include any carryover of disallowed interest de-
scribed in section 163(o) under rules similar to the 
rules of paragraph (1).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2024. 
SEC. 5. MODIFICATIONS TO RULES RELATING TO IN-
VERTED CORPORATIONS. 
(a) IN GENERAL.—Subsection (b) of section 7874 is 
amended to read as follows: 
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‘‘(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) 
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 December 
22, 2017, 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 
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‘‘(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 
holding stock in the domestic corpora-
tion, or 
‘‘(II) in the case of an acquisition 
with respect to a domestic partner-
ship, by former partners of the do-
mestic partnership by reason of hold-
ing a capital or profits interest in the 
domestic partnership, or 
‘‘(ii) the management and control of 
the expanded affiliated group which in-
cludes the entity occurs, directly or indi-
rectly, primarily within the United States, 
and such expanded affiliated group has 
significant domestic business activities. 
‘‘(3) EXCEPTION
FOR
CORPORATIONS
WITH 
SUBSTANTIAL
BUSINESS
ACTIVITIES
IN
FOREIGN 
COUNTRY OF ORGANIZATION.—A foreign corporation 
described in paragraph (2) shall not be treated as an 
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inverted domestic corporation if after the acquisition 
the expanded affiliated group which includes the en-
tity has substantial business activities in the foreign 
country in which or under the law of which the enti-
ty is created or organized when compared to the 
total business activities of such expanded affiliated 
group. For purposes of subsection (a)(2)(B)(iii) and 
the preceding sentence, the term ‘substantial busi-
ness activities’ shall have the meaning given such 
term under regulations in effect on December 22, 
2017, except that the Secretary may issue regula-
tions increasing the threshold percent in any of the 
tests under such regulations for determining if busi-
ness activities constitute substantial business activi-
ties for purposes of this paragraph. 
‘‘(4) MANAGEMENT AND CONTROL.—For pur-
poses of paragraph (2)(B)(ii)— 
‘‘(A) IN
GENERAL.—The Secretary shall 
prescribe regulations for purposes of deter-
mining cases in which the management and 
control of an expanded affiliated group is to be 
treated as occurring, directly or indirectly, pri-
marily within the United States. The regula-
tions prescribed under the preceding sentence 
shall apply to periods after December 22, 2017. 
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‘‘(B) EXECUTIVE OFFICERS AND SENIOR 
MANAGEMENT.—Such regulations shall provide 
that the management and control of an ex-
panded affiliated group shall be treated as oc-
curring, directly or indirectly, primarily within 
the United States if substantially all of the ex-
ecutive officers and senior management of the 
expanded affiliated group who exercise day-to- 
day responsibility for making decisions involving 
strategic, financial, and operational policies of 
the expanded affiliated group are based or pri-
marily located within the United States. Indi-
viduals who in fact exercise such day-to-day re-
sponsibilities shall be treated as executive offi-
cers and senior management regardless of their 
title. 
‘‘(5) SIGNIFICANT DOMESTIC BUSINESS ACTIVI-
TIES.—For purposes of paragraph (2)(B)(ii), an ex-
panded affiliated group has significant domestic 
business activities if at least 25 percent of— 
‘‘(A) the employees of the group are based 
in the United States, 
‘‘(B) the employee compensation incurred 
by the group is incurred with respect to employ-
ees based in the United States, 
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‘‘(C) the assets of the group are located in 
the United States, or 
‘‘(D) the income of the group is derived in 
the United States, 
determined in the same manner as such determina-
tions are made for purposes of determining substan-
tial business activities under regulations referred to 
in paragraph (3) as in effect on December 22, 2017, 
but applied by treating all references in such regula-
tions to ‘foreign country’ and ‘relevant foreign coun-
try’ as references to ‘the United States’. The Sec-
retary may issue regulations decreasing the thresh-
old percent in any of the tests under such regula-
tions for determining if business activities constitute 
significant domestic business activities for purposes 
of this paragraph.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Clause (i) of section 7874(a)(2)(B) is 
amended by striking ‘‘after March 4, 2003,’’ and in-
serting ‘‘after March 4, 2003, and before December 
23, 2017,’’. 
(2) Subsection (c) of section 7874 is amend-
ed— 
(A) in paragraph (2)— 
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(i) 
by 
striking 
‘‘subsection 
(a)(2)(B)(ii)’’ and inserting ‘‘subsections 
(a)(2)(B)(ii) and (b)(2)(B)(i)’’; and 
(ii) by inserting ‘‘or (b)(2)(A)’’ after 
‘‘(a)(2)(B)(i)’’ in subparagraph (B); 
(B) in paragraph (3), by inserting ‘‘or 
(b)(2)(B)(i), as the case may be,’’ after 
‘‘(a)(2)(B)(ii)’’; 
(C) in paragraph (5), by striking ‘‘sub-
section (a)(2)(B)(ii)’’ and inserting ‘‘sub-
sections (a)(2)(B)(ii) and (b)(2)(B)(i)’’; and 
(D) in paragraph (6), by inserting ‘‘or in-
verted domestic corporation, as the case may 
be,’’ after ‘‘surrogate foreign corporation’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after De-
cember 22, 2017. 
(d) EXTENSION OF LIMITATION ON ASSESSMENT.— 
If the period of limitation on assessment of tax resulting 
from the amendments made by subsection (a) expires be-
fore the end of the 3-year period beginning on the date 
of the enactment of this Act, such assessment (to the ex-
tent attributable to such amendments) may, nevertheless, 
be made before the close of such 3-year period. 
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SEC. 6. 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: 
‘‘(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— 
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‘‘(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 
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 
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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). 
‘‘(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. 
Æ 
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