‘‘(ii) is wholly owned by corporations 
which are members of the same affiliated 
group as such United States shareholder. 
‘‘(2) QUALIFIED
CORPORATION.—The term 
‘qualified corporation’ means any corporation if such 
corporation meets the following requirements: 
‘‘(A) 
SOURCE
QUALIFICATION.—Eighty 
percent or more of the gross income of the cor-
poration for the 3-year period immediately pre-
ceding the close of the taxable year (or for such 
part of such period immediately preceding the 
close of such taxable year as may be applicable) 
was derived from sources within a possession of 
the United States (determined without regard 
to section 904(f)). 
‘‘(B) TRADE
OR
BUSINESS
QUALIFICA-
TION.—Seventy-five percent or more of the 
gross income of the corporation for such period 
or such part thereof was derived from the active 
conduct of a trade or business within a posses-
sion of the United States. 
‘‘(3) SPECIAL
RULE
FOR
SEPARATE
AND 
CLEARLY IDENTIFIED UNITS OF FOREIGN CORPORA-
TIONS.— 
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‘‘(A) IN
GENERAL.—In the case of a 
United States shareholder of a foreign corpora-
tion which— 
‘‘(i) is not a qualified corporation but 
with respect to which the ownership re-
quirements of paragraph (1)(B)(ii) are 
met, and 
‘‘(ii) has an eligible foreign business 
unit which, if such unit were a corporation, 
would be a qualified corporation with re-
spect to which such ownership require-
ments would be met, 
then, for purposes of this section, the United 
States shareholder may elect to treat such unit 
as a separate foreign corporation which meets 
the requirements of paragraph (1)(B) and with 
respect to which such shareholder is a United 
States shareholder. 
‘‘(B) 
ELIGIBLE
FOREIGN
BUSINESS 
UNIT.—For purposes of this paragraph, the 
term ‘eligible foreign business unit’ means a 
separate and clearly identified foreign unit of a 
trade or business, including a partnership or an 
entity treated as disregarded as a separate enti-
ty from its owner (under section 7701 or other 
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provision under this title), which maintains sep-
arate books and records. 
‘‘(C) SPECIAL ELECTION FOR AFFILIATED 
GROUPS.—In the case of an affiliated group de-
scribed in paragraph (1)(B)(ii), the election 
under subparagraph (A) with respect to any eli-
gible foreign business unit shall be made by the 
common parent of such group and shall apply 
uniformly to all members of such group which 
are United States shareholders with respect to 
the foreign corporation which has such unit. 
‘‘(c) WAGE AND ASSET LIMITATION.— 
‘‘(1) IN GENERAL.—The wage and asset limita-
tion with respect to any qualified corporation for any 
taxable year is an amount equal to the sum of the 
following amounts: 
‘‘(A) Forty percent of the sum of— 
‘‘(i) the aggregate amount of the 
qualified corporation’s qualified possession 
wages for such taxable year, plus 
‘‘(ii) the allocable employee fringe 
benefit expenses of the qualified corpora-
tion for such taxable year. 
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‘‘(B) Twenty-five percent of the deprecia-
tion allowances for the taxable year with respect 
to qualified tangible property. 
‘‘(C) In the case of a qualified domestic 
corporation described in subsection (b)(1)(A), 
the amount of the possession income taxes for 
the taxable year attributable to income de-
scribed in subsection (a)(2)(A)(i). 
‘‘(2) QUALIFIED
POSSESSION
WAGES.—For 
purposes of this section— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
possession wages’ means wages paid or incurred 
by the qualified corporation during the taxable 
year in connection with the active conduct of a 
trade or business within a possession of the 
United States to any employee for services per-
formed in such possession, but only if such 
services are performed while the principal place 
of employment of such employee is within such 
possession. 
‘‘(B) LIMITATION ON AMOUNT OF WAGES 
TAKEN INTO ACCOUNT.— 
‘‘(i) IN
GENERAL.—The amount of 
wages which may be taken into account 
under subparagraph (A) with respect to 
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any employee for any taxable year shall 
not exceed the contribution and benefit 
base determined under section 230 of the 
Social Security Act for the calendar year 
in which such taxable year begins. 
‘‘(ii) TREATMENT OF PART-TIME EM-
PLOYEES, ETC.—If— 
‘‘(I) any employee is not em-
ployed by the qualified corporation on 
a substantially full-time basis at all 
times during the taxable year, or 
‘‘(II) the principal place of em-
ployment of any employee with the 
qualified corporation is not within a 
possession at all times during the tax-
able year, 
the limitation applicable under clause (i) 
with respect to such employee shall be the 
appropriate portion (as determined by the 
Secretary) of the limitation which would 
otherwise be in effect under clause (i). 
‘‘(C) TREATMENT
OF
CERTAIN
EMPLOY-
EES.—The term ‘qualified possession wages’ 
shall not include any wages paid to employees 
who are assigned by the employer to perform 
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services for another person, unless the principal 
trade or business of the employer is to make 
employees available for temporary periods to 
other persons in return for compensation. All 
qualified corporations treated as 1 corporation 
under subsection (f)(1) shall be treated as 1 
employer for purposes of the preceding sen-
tence. 
‘‘(D) WAGES.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), the term ‘wages’ has 
the meaning given to such term by sub-
section (b) of section 3306 (determined 
without regard to any dollar limitation 
contained in such section). For purposes of 
the preceding sentence, such subsection (b) 
shall be applied as if the term ‘United 
States’ included all possessions of the 
United States. 
‘‘(ii) SPECIAL
RULE
FOR
AGRICUL-
TURAL LABOR AND RAILWAY LABOR.—In 
any case to which subparagraph (A) or (B) 
of paragraph (1) of section 51(h) applies, 
the term ‘wages’ has the meaning given to 
such term by section 51(h)(2). 
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under this chapter to the qualified corporation 
for such taxable year with respect to— 
‘‘(i) employer contributions under a 
stock bonus, pension, profit-sharing, or an-
nuity plan, 
‘‘(ii) 
employer-provided 
coverage 
under any accident or health plan for em-
ployees, and 
‘‘(iii) the cost of life or disability in-
surance provided to employees. 
Any amount treated as wages under paragraph 
(2)(D) shall not be taken into account under 
this subparagraph. 
‘‘(4) DEPRECIATION RULES.—For purposes of 
this section— 
‘‘(A) DEPRECIATION
ALLOWANCES.—The 
term ‘depreciation allowances’ means the depre-
ciation deductions allowable (or, in the case of 
a foreign corporation, which would be allowable 
if such foreign corporation were a domestic cor-
poration) under section 167 to the qualified cor-
poration. 
‘‘(B) QUALIFIED TANGIBLE PROPERTY.— 
The term ‘qualified tangible property’ means 
any tangible property— 
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‘‘(i) which is used by the qualified cor-
poration in a possession of the United 
States in the active conduct of a trade or 
business within such possession, 
‘‘(ii) to which section 168 applies, and 
‘‘(iii) which is not 3-year property for 
purposes of such section. 
‘‘(d) 
INTANGIBLE
LOW-TAXED
INCOME
TAX 
AMOUNT.—For purposes of this section— 
‘‘(1) IN
GENERAL.—The intangible low-taxed 
income tax amount is an amount equal to the lesser 
of— 
‘‘(A) the eligible possession intangible low- 
tax income tax amount, or 
‘‘(B) the global intangible low-taxed in-
come tax amount. 
‘‘(2) ELIGIBLE POSSESSION INTANGIBLE LOW- 
TAXED INCOME TAX AMOUNT.— 
‘‘(A) IN GENERAL.—The eligible possession 
intangible low-taxed income tax amount is an 
amount equal to the excess of— 
‘‘(i) the product of— 
‘‘(I) the rate in effect under sec-
tion 11 for the taxable year, and 
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‘‘(II) the sum of the possession 
intangible low-taxed income amount 
for such taxable year and the amount 
which would be treated as a dividend 
under section 78 if only amounts at-
tributable to such possession intan-
gible low-tax income amount were 
taken into account under such section 
for such taxable year, reduced by the 
possession ILTI deduction for such 
taxable year, over 
‘‘(ii) an amount equal to the amount 
described in section 960(d), determined— 
‘‘(I) by substituting ‘possession 
intangible low-taxed income amount 
(as defined in section 30E(d)(2)(B))’ 
for ‘global intangible low-taxed income 
(as defined in section 951A(b))’ in 
paragraph (2)(A) thereof, and 
‘‘(II) by only taking into account 
income from the active conduct of a 
trade or business and from sources 
(determined under rules similar to the 
rules of part I of chapter N) within 
possessions of the United States for 
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purposes of determining the amounts 
under paragraphs (2)(B) and (3) 
thereof. 
‘‘(B) POSSESSION INTANGIBLE LOW-TAXED 
INCOME
AMOUNT.—The possession intangible 
low-taxed income amount is equal to the 
amount of global intangible low-taxed income 
(as defined in section 951A(b)) for the taxable 
year, determined— 
‘‘(i) by only taking into account in-
come from the active conduct of a trade or 
business and from sources (determined 
under rules similar to the rules of part I 
of chapter N) within possessions of the 
United States for purposes of determining 
the tested income and tested loss, and 
‘‘(ii) for purposes of determining the 
qualified business asset investment, by only 
taking into account specified tangible prop-
erty which is predominantly used— 
‘‘(I) in the production of income 
described in clause (i), and 
‘‘(II) in possessions of the United 
States. 
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‘‘(C) POSSESSION ILTI DEDUCTION.—The 
possession ILTI deduction is 50 percent (37.5 
percent in the case of taxable years beginning 
after December 31, 2025) of— 
‘‘(i) the possession intangible low- 
taxed income amount (if any) for such tax-
able year, and 
‘‘(ii) the amount which would be 
treated as a dividend under section 78 if 
only amounts attributable to the amount 
described in clause (i) were taken into ac-
count. 
Rules similar to the rules of section 250(a)(2) 
(applied by substituting ‘possession intangible 
low-taxed income amount (as defined in section 
30E(d)(2)(B))’ for ‘global intangible low-taxed 
income amount’ in subsection (a)(1)(B)(i) for 
purposes of determining the amount described 
and taken into account therein) shall apply for 
purposes of this subparagraph. 
‘‘(3) GLOBAL INTANGIBLE LOW-TAXED INCOME 
TAX AMOUNT.—For purposes of this subsection, the 
global intangible low-taxed income tax amount is an 
amount equal to the excess of— 
‘‘(A) the product of— 
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‘‘(i) the rate in effect under section 11 
for the taxable year, and 
‘‘(ii) the sum of global intangible low- 
taxed income amount determined under 
section 951A(b) for such taxable year and 
the amount which would be treated as a 
dividend under section 78 if only amounts 
attributable to such global intangible low- 
taxed income amount were taken into ac-
count under such section for such taxable 
year, reduced by an amount equal to the 
amount 
determined 
under 
section 
250(a)(1)(B), over 
‘‘(B) an amount equal to the amount de-
scribed in section 960(d) (determined after the 
application of section 904). 
‘‘(e) POSSESSION.—The term ‘possession of the 
United States’ includes the Commonwealth of Puerto Rico 
and the Virgin Islands. 
‘‘(f) CREDIT NOT ALLOWED AGAINST CERTAIN 
TAXES.—The credit provided by subsection (a) shall not 
be allowed against the tax imposed by— 
‘‘(1) section 531 (relating to the tax on accu-
mulated earnings), 
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‘‘(2) section 541 (relating to personal holding 
company tax), or 
‘‘(3) section 1351 (relating to recoveries of for-
eign expropriation losses). 
‘‘(g) OTHER RULES.— 
‘‘(1) DENIAL OF DOUBLE BENEFIT.— 
‘‘(A) BRANCHES.—In the case of a quali-
fied domestic corporation described in sub-
section (b)(1)(A)— 
‘‘(i) no credit or deduction shall be al-
lowed under this chapter for— 
‘‘(I) the portion of the wages or 
salaries paid or incurred for the tax-
able year which is equal to the 
amount of wages taken into account 
in determining the wage and asset 
limitation under subsection (c)(1)(A), 
‘‘(II) the portion of employee 
fringe benefit expenses for the taxable 
year which is equal to the amount of 
such expenses taken into account in 
determining the wage and asset limi-
tation under subsection (c)(1)(A), and 
‘‘(III) the portion of depreciation 
allowances for the taxable year which 
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is equal to the amount of such allow-
ances taken into account under sub-
section (c)(1)(B), and 
‘‘(ii) any tax of a foreign country or 
a possession of the United States which is 
paid or accrued with respect to taxable in-
come which is taken into account in com-
puting 
the 
credit 
under 
subsection 
(a)(2)(A) shall not be treated as income, 
war profits, or excess profits taxes paid or 
accrued to a foreign country or possession 
of the United States, and no deduction 
shall be allowed under this title with re-
spect to any amounts so paid or accrued. 
‘‘(B) CONTROLLED
FOREIGN
CORPORA-
TIONS.—In the case of a qualified domestic cor-
poration described in subsection (b)(1)(B), for 
purposes of determining tested income or tested 
loss under section 951A— 
‘‘(i) the deductions described in sec-
tion 
951A(c)(2)(A)(ii) 
attributable 
to 
wages shall be reduced by the amounts de-
scribed in subparagraph (A)(i)(I), 
‘‘(ii) the deductions described in sec-
tion 951A(c)(2)(A)(ii) attributable to em-
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ployee fringe benefit expenses shall be re-
duced by the amounts described in sub-
paragraph (A)(i)(II), and 
‘‘(iii) the deductions described in sec-
tion 951A(c)(2)(A)(ii) attributable to de-
preciation allowances shall be reduced by 
the amounts described in subparagraph 
(A)(i)(III). 
‘‘(2) CARRYOVER OF CERTAIN UNUSED LIMITA-
TION.— 
‘‘(A) BRANCHES.— 
‘‘(i) IN GENERAL.—In the case of a 
qualified domestic corporation described in 
subsection (b)(1)(A), if the wage and asset 
limitation with respect to such corporation 
exceeds the amount described in subsection 
(a)(2)(A)(i), then such excess shall be a 
carryover to the first preceding taxable 
year and to any of the first 10 succeeding 
taxable years, in that order, and, subject to 
the limitations of clause (ii), shall be added 
to the wage and asset limitation for the 
taxable year to which it is carried. 
‘‘(ii) 
LIMITATION.—The 
unused 
amount which may be taken into account 
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under clause (i) for any taxable year shall 
not exceed the amount (if any) by which 
the 
amount 
described 
in 
subsection 
(a)(2)(A)(i) for such taxable year exceeds 
the sum of— 
‘‘(I) the wage and asset limita-
tion with respect to such corporation 
for such taxable year determined with-
out regard to this paragraph, and 
‘‘(II) the amounts which, by rea-
son of this paragraph, are carried to 
such taxable year and are attributable 
to taxable years before the unused 
amount. 
‘‘(B) CONTROLLED
FOREIGN
CORPORA-
TIONS.— 
‘‘(i) IN GENERAL.—In the case of a 
qualified domestic corporation described in 
subsection (b)(1)(B), if the amount de-
scribed in subsection (a)(2)(B)(ii) for any 
taxable year exceeds the intangible low- 
taxed income tax amount, then such excess 
shall be a carryover to the first preceding 
taxable year and to any of the first 10 suc-
ceeding taxable years, in that order, and, 
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subject to the limitations of clause (ii), 
shall be added to the amount described in 
subsection (a)(2)(B)(ii) for the taxable 
year to which it is carried. 
‘‘(ii) 
LIMITATION.—The 
unused 
amount which may be taken into account 
under clause (i) for any taxable year shall 
not exceed the amount (if any) by which 
the 
intangible 
low-taxed 
income 
tax 
amount for such taxable year exceeds the 
sum of— 
‘‘(I) the amount described in sub-
section (a)(2)(B)(ii) for such taxable 
year determined without regard to 
this paragraph, and 
‘‘(II) the amounts which, by rea-
son of this paragraph, are carried to 
such taxable year and are attributable 
to taxable years before the unused 
amount. 
‘‘(3) SEPARATE APPLICATION TO EACH POSSES-
SION.—For purposes of determining the amount of 
the credit allowed under this section, this section 
shall be applied separately with respect to each pos-
session.’’. 
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(b) CONFORMING AMENDMENTS.— 
(1) Section 904(b) of the Internal Revenue 
Code of 1986 is amended by redesignating para-
graph (4) as paragraph (5) and by inserting after 
paragraph (3) the following new paragraph: 
‘‘(4) COORDINATION WITH SECTION 30E.—For 
purposes of subsection (a), in the case of a qualified 
domestic 
corporation 
described 
in 
section 
30E(b)(1)(A), the taxable income shall not include 
any portion thereof taken into account for purposes 
of the credit (if any) allowed by section 30E (with-
out regard to subsection (c) thereof).’’. 
(2) Section 904(f)(1) of such Code is amended 
by inserting ‘‘and section 30E’’ after ‘‘For purposes 
of this subpart’’. 
(3) Section 904(g)(1) of such Code is amended 
by striking ‘‘section 936’’ and inserting ‘‘section 
30E’’. 
(4) The table of sections for subpart B of part 
IV of subchapter A of chapter 1 of such Code is 
amended by adding at the end the following: 
‘‘Sec. 30E. Possession economic activity credit.’’. 
(c) TREATMENT OF CREDIT UNDER BEAT.—Section 
59A(b)(1)(B)(ii) of the Internal Revenue Code of 1986 is 
amended by redesignating subclause (II) as subclause 
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(III) and by inserting after subclause (I) the following new 
subclause: 
‘‘(II) the credit allowed under 
section 30E, plus’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
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