substantial risk of forfeiture if such person’s rights
to such compensation are conditioned upon the fu-
ture performance of substantial services by any indi-
vidual.’’
(b) CLERICAL AMENDMENT.—The table of sections
for such subpart A is amended by adding at the end the
following new item:
‘‘Sec. 409A. Denial of deferral for funded deferred compensation
of corporate insiders if corporation funds defined
contribution plan with employer stock.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts deferred after the date
of the enactment of this Act.
SEC. 4. INCLUSION IN INCOME OF CERTAIN DEFERRED
AMOUNTS OF INSIDERS OF CORPORATIONS
WHICH 
EXPATRIATE 
TO 
AVOID 
UNITED
STATES INCOME TAX.
(a) IN GENERAL.—Part II of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
items specifically included in gross income) is amended by
adding at the end the following new section:
‘‘SEC. 91. UNREALIZED GAIN ON STOCK OPTIONS OF INSID-
ERS OF CORPORATIONS WHICH EXPATRIATE
TO AVOID UNITED STATES INCOME TAX.
‘‘(a) IN GENERAL.—In the case of a corporate insider
of any expatriate corporation, the gross income of such
insider (for the taxable year during which such corpora-
tion becomes an expatriate corporation) shall include as
ordinary income the net unrealized built-in gain on options
held by such insider to acquire stock in such corporation
or in any member of the expanded affiliated group which
includes such corporation. Proper adjustments shall be
made in the amount of any gain or loss subsequently real-
ized with respect to such options for any amount included
in gross income under the preceding sentence.
‘‘(b) DEFINITIONS.—For purposes of this section—
‘‘(1) CORPORATE
INSIDER.—The term ‘cor-
porate insider’ means, with respect to a corporation,
any individual who is subject to the requirements of
section 16(a) of the Securities Exchange Act of
1934 with respect to such corporation.
‘‘(2) EXPATRIATE CORPORATION.—
‘‘(A) IN GENERAL.—The term ‘expatriate
corporation’ means the acquiring corporation in
a corporate expatriation transaction.
‘‘(B) CORPORATE
EXPATRIATION
TRANS-
ACTION.—For purposes of this paragraph—
‘‘(i) IN
GENERAL.—The term ‘cor-
porate expatriation transaction’ means any
transaction if—
‘‘(I) a nominally foreign corpora-
tion (referred to in this subparagraph
as the ‘acquiring corporation’) ac-
quires, as a result of such transaction,
directly or indirectly substantially all
of the properties held directly or indi-
rectly by a domestic corporation, and
‘‘(II) immediately after the trans-
action, more than 80 percent of the
stock (by vote or value) of the acquir-
ing corporation is held by former
shareholders of the domestic corpora-
tion by reason of holding stock in the
domestic corporation.
‘‘(ii) LOWER STOCK OWNERSHIP RE-
QUIREMENT
IN
CERTAIN
CASES.—Sub-
clause (II) of clause (i) shall be applied by
substituting ‘50 percent’ for ‘80 percent’
with respect to any nominally foreign cor-
poration if—
‘‘(I) such corporation does not
have substantial business activities
(when compared to the total business
activities of the expanded affiliated
group) in the foreign country in which
or under the law of which the corpora-
tion is created or organized, and
‘‘(II) the stock of the corporation
is publicly traded and the principal
market for the public trading of such
stock is in the United States.
‘‘(iii) PARTNERSHIP TRANSACTIONS.—
The term ‘corporate expatriation trans-
action’ includes any transaction if—
‘‘(I) a nominally foreign corpora-
tion (referred to in this paragraph as
the ‘acquiring corporation’) acquires,
as a result of such transaction, di-
rectly or indirectly properties consti-
tuting a trade or business of a domes-
tic partnership,
‘‘(II) immediately after the trans-
action, more than 80 percent of the
stock (by vote or value) of the acquir-
ing corporation is held by former
partners of the domestic partnership
or related foreign partnerships (deter-
mined without regard to stock of the
acquiring corporation which is sold in
a public offering related to the trans-
action), and
‘‘(III) the acquiring corporation
meets the requirements of subclauses
(I) and (II) of clause (ii).
‘‘(iv) SPECIAL RULES.—For purposes
of this subparagraph—
‘‘(I) a series of related trans-
actions shall be treated as 1 trans-
action, and
‘‘(II) stock held by members of
the expanded affiliated group which
includes the acquiring corporation
shall not be taken into account in de-
termining ownership.
‘‘(v) NOMINALLY FOREIGN CORPORA-
TION.—The term ‘nominally foreign cor-
poration’ means any corporation which
would (but for this subparagraph) be treat-
ed as a foreign corporation.
‘‘(3) NET REALIZED BUILT-IN GAIN.—The term
‘net unrealized built-in gain’ means, with respect to
options to acquire stock in any corporation, the
amount which would be required to be included in
gross income were such options exercised.
‘‘(4) EXPANDED
AFFILIATED
GROUP.—The
term ‘expanded affiliated group’ means an affiliated
group (as defined in section 1504(a) without regard
to section 1504(b)).’’
(b) CLERICAL AMENDMENT.—The table of sections
for such part II is amended by adding at the end the fol-
lowing new item:
‘‘Sec. 91. Certain deferred amounts of insiders of corporations
which expatriate to avoid United States income
tax.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to corporate expatria-
tion transactions completed after September 11, 2001,
and to taxable years ending after such date.
SEC. 5. GOLDEN PARACHUTE EXCISE TAX TO APPLY TO DE-
FERRED COMPENSATION PAID BY CORPORA-
TION AFTER MAJOR DECLINE IN STOCK
VALUE OR CORPORATION DECLARES BANK-
RUPTCY.
(a) IN GENERAL.—Section 4999 of the Internal Rev-
enue Code of 1986 (relating to golden parachute pay-
ments) is amended by redesignating subsection (c) as sub-
section (d) and by inserting after subsection (b) the fol-
lowing new subsection:
‘‘(c) TAX TO APPLY TO DEFERRED COMPENSATION
PAID AFTER MAJOR STOCK VALUE DECLINE OR BANK-
RUPTCY.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘excess parachute payment’ includes