I 
116TH CONGRESS 
2D SESSION 
H. R. 7477 
To require the Secretary of Labor to establish a program to provide grants 
for job guarantee programs. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 1, 2020 
Mrs. WATSON COLEMAN (for herself and Ms. OMAR) introduced the following 
bill; which was referred to the Committee on Ways and Means, and in 
addition to the Committee on Education and Labor, 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 con-
cerned 
A BILL 
To require the Secretary of Labor to establish a program 
to provide grants for job guarantee programs. 
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 ‘‘Workforce Promotion 
and Access Act’’ or the ‘‘WPA Act’’. 
SEC. 2. JOB GUARANTEE GRANT PROGRAM. 
(a) DEFINITIONS.—In this section: 
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(1) ELIGIBLE ENTITY.—The term ‘‘eligible enti-
ty’’ means an entity that is a political subdivision of 
a State, Tribal entity, outlying area, or a combina-
tion of contiguous political subdivisions or Tribal en-
tities that— 
(A) has an unemployment rate that is 
equal to the lower of 10 or 100 percent of the 
national unemployment rate, as determined by 
the Bureau of Labor Statistics (except in the 
case of Tribal entities which may submit their 
own employment data where no such Federal 
data is available for such entities) based on the 
most recent data available at the time the Sec-
retary solicits applications for grants under this 
section; and 
(B) submits an application in accordance 
with subsection (e). 
(2) JOB
GUARANTEE
PROGRAM.—The term 
‘‘job guarantee program’’ means a program that 
meets the requirements of subsection (c). 
(3) RURAL
AREA.—The term ‘‘rural area’’ 
means an area that is located outside of an urban 
area. 
(4) TRIBAL ENTITY.—The term ‘‘Tribal entity’’ 
means an Indian tribe or tribal organization as such 
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terms are defined in section 4 of the Indian Self-De-
termination Act (25 U.S.C. 5304). 
(5) URBAN
AREA.—The term ‘‘urban area’’ 
means an urbanized area (a region of 50,000 or 
more residents) and an urbanized cluster (and area 
encompassing between 2,500 and 50,000 residents), 
according to the Census Bureau’s urban-rural classi-
fication in the 2010 census. 
(6) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Labor. 
(7) WIOA DEFINITIONS.—The terms ‘‘adult 
education and literacy activities’’, ‘‘career planning’’, 
‘‘individual with a barrier to employment’’, ‘‘in-de-
mand industry sector or occupation’’, ‘‘local board’’, 
‘‘outlying area’’, ‘‘recognized postsecondary creden-
tial’’, ‘‘State’’, ‘‘State board’’, ‘‘supportive services’’, 
and ‘‘workplace learning advisor’’ have the meanings 
given such terms in section 3 of the Workforce Inno-
vation and Opportunity Act (29 U.S.C. 3102). 
(b) ESTABLISHMENT.— 
(1) IN GENERAL.—The Secretary shall establish 
a program to provide competitive grants to eligible 
entities to establish programs to ensure that any in-
dividual within the area served by the entity who ap-
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plies for a job through the program will be provided 
with employment as provided for in this section. 
(2) TERMINATION.—Federal funding for a job 
guarantee program established under a grant under 
this section shall terminate on the earlier of— 
(A) the end of the 3-year period beginning 
on the date of the grant; or 
(B) the date of any revocation of the 
grantee as an eligible entity. 
(3) GRANT RENEWAL.—An eligible entity that 
receives a grant under this section may reapply 
under this section for an additional grant after the 
first 3-year grant period. 
(c) JOB GUARANTEE PROGRAMS.—A job guarantee 
program meets the requirements of this subsection if the 
jobs provided under such program— 
(1) are available to any individual who— 
(A) is 18 years of age or older; and 
(B) resides in the eligible entity as of the 
date that the grant is awarded under this sub-
section to such eligible entity, 
except that participants in the program may be dis-
ciplined, released, or suspended from further partici-
pation in jobs under the program if they are found 
to be negligent, or generally disruptive to the work-
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place involved under procedures established by the 
Secretary that provide for an opportunity for a re-
view of such determinations; 
(2) are, with respect to individual participants, 
included as part of an established bargaining unit 
and covered by any applicable collective bargaining 
agreement in effect if similarly situated employees 
are part of such unit and represented by an exclu-
sive bargaining representative; 
(3) are available for the duration of the pro-
gram; 
(4) provide a wage of not less than the greater 
of— 
(A) $15 per hour, or the hourly wage oth-
erwise required to be paid to employees in area 
to be served under the program, whichever is 
greater; 
(B) the prevailing wage in the area in-
volved for a similar job as required by chapter 
67 of title 41, United States Code, and other 
related laws; or 
(C) the applicable wage under an applica-
ble collective bargaining agreement as provided 
for under paragraph (2); 
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(5) provide for coverage of the worker under a 
health insurance program that is comparable to that 
offered to Federal employees under the Federal Em-
ployee Health Benefits Program; and 
(6) provide at a minimum— 
(A) family and medical leave consistent 
with the provisions of the Family and Medical 
Leave Act of 1993 and applicable State law, ex-
cept that such leave shall be paid leave; and 
(B) the Emergency Paid Sick Leave Act 
under division E of the Families First 
Coronavirus Response Act (29 U.S.C. 2601 
note). 
(d) OTHER USES.—Funds may be used to provide 
workers in a job guarantee program with— 
(1) supportive services, which can include trans-
portation, child care, dependent care, housing, and 
needs-related payments, that are necessary to enable 
an individual to participate in activities authorized 
under this Act; 
(2) access to a workplace learning advisor to 
support the education, skill development, job train-
ing, career panning, and credentials required to 
progress toward career goals of such employees in 
order to meet employer requirements related to job 
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openings and career advancements that support eco-
nomic self-sufficiency; 
(3) adult education and literacy activities, in-
cluding those provided by public libraries; 
(4) activities that assist justice involved individ-
uals, formerly incarcerated individuals, and individ-
uals with criminal records in reentering the work-
force; and 
(5) financial literacy activities including those 
described in section 129(b)(2)(D) of the Workforce 
Innovation and Opportunity Act. 
(e) APPLICATIONS.—An eligible entity seeking a 
grant under this section shall submit an application to the 
Secretary at such time, in such manner, and containing 
such information as the Secretary may require. Such ap-
plication shall include— 
(1) a description of the geographic area and 
population that the entity intends to serve under the 
job guarantee program established under the grant, 
including the area unemployment rate, underemploy-
ment rate, unemployment rate for individuals with 
disabilities, poverty rate, housing vacancy rate, crime 
rate, household income, home-ownership rate, labor 
force participation rate, and educational attainment; 
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(2) to extent practicable, a description of the 
jobs that will be offered under the job guarantee 
program, including— 
(A) a description of supports provided to 
individuals with disabilities and accommoda-
tions required under the Americans with Dis-
abilities Act of 1990 (42 U.S.C. 12101 et seq.); 
and 
(B) a description of supports and proce-
dures to ensure job access and opportunities for 
individuals with criminal records, including in-
formation on physical and programmatic acces-
sibility, in accordance with section 188 of the 
Workforce Innovation and Opportunity Act, if 
applicable, and the Americans with Disabilities 
Act of 1990, for individuals with disabilities; 
(3) the need in the area for jobs to be per-
formed, including for jobs designated as a high-skill, 
high-wage or in-demand industry sector or occupa-
tion by the Secretary, State board, or local board; 
(4) a description of State, local, or philan-
thropic funding, including through coordination and 
in-kind or non-financial support, if any, that will be 
provided to assist in carrying out the job guarantee 
program; 
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(f) SELECTION.—In awarding such grant under this 
section, the Secretary shall consider diversity in geo-
graphic location, urban-rural composition, and political en-
tity, including the representation of Tribal entities. 
(g) AMOUNT OF GRANT.— 
(1) ESTABLISHMENT OF FUND.—There is es-
tablished in the Treasury of the United States a sep-
arate account to be known as the ‘‘Job Guarantee 
Program Trust Fund’’ (referred to in this section as 
the ‘‘Fund’’). 
(2) TRANSFERS TO FUND.—There is hereby ap-
propriated to the Fund amounts equivalent to— 
(A) taxes received in the Treasury under 
subchapter C of chapter 36 of the Internal Rev-
enue Code of 1986; and 
(B) interest earned on investment of 
amounts in the Fund under rules similar to the 
rules of section 9602(b) of such Code. 
(3) USE OF AMOUNTS.—The Secretary shall use 
amounts in the Fund to make payments to grantees 
under grants under this section in accordance with 
paragraph (4). 
(4) PAYMENTS.— 
(A) IN GENERAL.—The Secretary shall de-
termine the annual amount of a grant under 
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this section based on a formula to be developed 
by the Secretary. 
(B) 
PAYMENTS.—The 
Secretary 
shall 
make payments to grantees under this section 
in a manner determined appropriate by the Sec-
retary. The Secretary shall not make subse-
quent payments to a grantee after the initial 
payment until the grantee certifies to the Sec-
retary that the grantee has expended, trans-
ferred, or obligated not less than 80 percent of 
the most recent payment made under this sub-
section. 
(h) LIMITATIONS.—An eligible entity may not use 
amounts received under a grant under this section to— 
(1) employ individuals who will replace, or lead 
to the displacement of, existing employees, positions, 
or individuals who would otherwise perform similar 
employment, or disrupt existing contracts and collec-
tive bargaining agreements, as defined in section 
181(b) of the Workforce Innovation and Opportunity 
Act (Public Law 113–128); 
(2) perform functions otherwise prohibited by 
Federal, State, or local laws; and 
(3) carry out other prohibited activities, as de-
termined by the Secretary. 
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(i) FEDERAL PROVISION
OF JOBS
IN PROGRAM 
SITES.— 
(1) GUIDANCE.—Not later than 30 days after 
the date on which the Secretary awards the first 
grant under this section, the Secretary shall— 
(A) provide guidance to the heads of ap-
propriate Federal agencies to notify such agen-
cies of job guarantee programs established 
under the grants awarded under this section; 
(B) request that such agencies notify the 
Secretary, within 30 days of the date on which 
the guidance is received under paragraph (1), 
of the number and types of jobs that each such 
agency would make available through each of 
the programs; and 
(C) ensure that each such agency makes 
best efforts to provide jobs through the pro-
grams established under such grants. 
(2) APPLICATION
OF
PROVISIONS.—The re-
quirements of subsection (c) relating to wages and 
benefits provided to participants in jobs provided 
under job guarantee programs, and the limitations 
in subsection (h), shall apply to Federal agencies 
and jobs provided under this subsection, except that 
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a Federal agency shall employ each individual under 
this subsection for up to 3 years. 
(3) LISTING OF JOBS ON WEBSITE.—The Sec-
retary shall establish procedures to ensure that jobs 
identified under paragraph (1)(B) are listed on the 
appropriate public internet website as provided for 
under subsection (e)(5)(A). 
(4) REIMBURSEMENT.—At the end of each fis-
cal year, the Secretary shall transfer from the Fund 
to each Federal agency that employs individuals 
under a job guarantee program under this section, 
an amount necessary to reimburse such agency for 
the full cost of employing each such individual dur-
ing such fiscal year. 
(j) TRAINING.— 
(1) IN GENERAL.—The Secretary shall develop 
procedures to support up to 8 weeks of paid training 
(through privately or publicly funded training pro-
grams, such as those provided by the public work-
force system) to participants in order to perform du-
ties required by job guarantee programs under this 
section, including a new period of training, not to 
exceed 8 weeks, prior to commencing any new job 
under the program. 
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(2) SPECIFIC POPULATIONS.—With respect to 
certain populations with barriers to employment (as 
defined in section 3(24) of the Workforce Innovation 
and Opportunity Act (Public Law 113–128)), the 8- 
week training period may include specific job-related 
training and counseling and other general skills 
training to prepare such individuals to reenter the 
workforce. 
(k) PRIORITIES AND AUDITS.— 
(1) PRIORITIES.—Prior to awarding the initial 
grants under this section, the Secretary shall issue 
a list of national job priorities relating to jobs that 
may be carried out under job guarantee programs, 
that shall include child care, care for seniors and in-
dividuals with disabilities, clean energy jobs, commu-
nity investment projects, and sustainable infrastruc-
ture activities. The Secretary shall take State board 
and local board suggestions into consideration when 
issuing such list. 
(2) AUDITS.— 
(A) IN GENERAL.—The Secretary, acting 
through the Inspector General of the Depart-
ment of Labor, shall carry out annual audits of 
the use of grant funds provided to eligible enti-
ties under this section. 
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(B) ALLOCATION AGREEMENTS AND MIS-
USE OF FUNDS.— 
(i) ALLOCATION
AGREEMENTS.—An 
eligible entity shall enter into an allocation 
agreement with the Secretary that shall 
provide that the Secretary shall recoup any 
amounts paid to the entity under a grant 
under this section if the results of an audit 
under subparagraph (A) include a finding 
that there was an intentional or reckless 
misuse of such funds by such entity. 
(ii) LOSS OF ELIGIBILITY.—An eligi-
ble entity that is determined to have fal-
sified or otherwise misstated data in any 
report submitted to the Secretary with the 
intent to deceive or mislead the Secretary 
shall be ineligible to receive additional 
funds under this section. 
(l) REPORTS.—Not later than 90 days after the end 
of each calendar year for which an eligible entity obligates 
or expends any amounts made available under a grant 
under this section, the eligible entity shall submit to the 
Secretary a report that— 
(1) specifies the amount of grant funds obli-
gated or expended for the preceding fiscal year; 
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(2) specifies any purposes for which the funds 
were obligated or expended; and 
(3) includes any other information that the Sec-
retary may require to more effectively administer the 
grant program under this section, including the indi-
cators of performance under section 116(b)(2)(A)(i) 
of the Workforce Innovation and Opportunity Act 
(29 U.S.C. 3141(b)(2)(A)(i)), with the performance 
data disaggregated by race, ethnicity, sex, age, and 
membership in a population specified in section 
3(24) of such Act (29 U.S.C. 3102(24)). 
(m) EVALUATION.—The Chief Evaluation Officer at 
the Department of Labor shall provide for the conduct of 
an evaluation of the program, using a rigorous design and 
evaluation methods to assess the implementation of the 
programs and their impact on— 
(1) overall employment, public-sector employ-
ment, and private-sector employment; 
(2) private sector employment, wages, and ben-
efits; 
(3) poverty rate; 
(4) public assistance spending and other Fed-
eral spending in the area served by the program; 
(5) child health and educational outcomes; 
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(6) health and well-being of those with mental, 
emotional, and behavioral health needs; 
(7) incarceration rates; 
(8) the environment, including air quality and 
water quality; 
(9) the indicators of performance as described 
in subsection (l)(3); and 
(10) other economic development and individual 
outcome indicators, as determined by the Secretary. 
(n) EXPANSION OF WORK OPPORTUNITY CREDIT TO 
INCLUDE
PARTICIPANTS
IN
JOB
GUARANTEE
PRO-
GRAMS.— 
(1) IN GENERAL.—Subsection (d) of section 51 
of the Internal Revenue Code of 1986 is amended— 
(A) in paragraph (1)— 
(i) in subparagraph (I), by striking 
‘‘or’’ at the end, 
(ii) in subparagraph (J), by striking 
the period at the end and inserting ‘‘, or’’, 
and 
(iii) by adding at the end the fol-
lowing new subparagraph: 
‘‘(K) a qualified participant in a job guar-
antee program.’’, and 
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(B) by adding at the end the following new 
paragraph: 
‘‘(16) QUALIFIED PARTICIPANT IN A JOB GUAR-
ANTEE PROGRAM.—The term ‘qualified participant 
in a job guarantee program’ means any individual 
who is certified by the designated local agency as 
having participated in a job guarantee program 
under section 2 of the Federal Jobs Guarantee Pro-
gram Act of 2020 for not less than 3 months during 
the 6-month period ending on the hiring date.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to individuals who 
begin work for the employer after December 31, 
2020. 
(o) APPROPRIATIONS.—From funds in the Treasury 
not otherwise appropriated, there are appropriated to the 
Secretary such sums as may be necessary to carry out this 
section. 
SEC. 3. TRANSACTION TAX. 
(a) IN GENERAL.—Chapter 36 of the Internal Rev-
enue Code of 1986 is amended by inserting after sub-
chapter B the following new subchapter: 
‘‘Subchapter C—Tax on Trading Transactions 
‘‘Sec. 4475. Tax on trading transactions. 
‘‘Sec. 4476. Derivative defined. 
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‘‘SEC. 4475. TAX ON TRADING TRANSACTIONS. 
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed 
a tax on each covered transaction with respect to any secu-
rity. 
‘‘(b) RATE OF TAX.—The tax imposed under sub-
section (a) with respect to any covered transaction shall 
be 0.1 percent of the specified base amount with respect 
to such covered transaction. 
‘‘(c) SPECIFIED BASE AMOUNT.—For purposes of 
this section, the term ‘specified base amount’ means— 
‘‘(1) except as provided in paragraph (2), the 
fair market value of a security (determined as of the 
time of the covered transaction), and 
‘‘(2) in the case of any payment with respect to 
a derivative, the amount of such payment. 
‘‘(d) COVERED TRANSACTION.—For purposes of this 
section— 
‘‘(1) IN GENERAL.—The term ‘covered trans-
action’ means— 
‘‘(A) except as provided in subparagraph 
(B), any purchase if— 
‘‘(i) such purchase occurs on, or is 
subject to the rules of, a qualified board or 
exchange located in the United States, or 
‘‘(ii) the purchaser or seller is a 
United States person, and 
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‘‘(B) any transaction with respect to a de-
rivative if— 
‘‘(i) such derivative is traded on, or is 
subject to the rules of, a qualified board or 
exchange located in the United States, or 
‘‘(ii) any party with rights under such 
derivative is a United States person. 
‘‘(2) EXCEPTION FOR INITIAL ISSUES.—No tax 
shall be imposed under subsection (a) on any cov-
ered transaction with respect to the initial issuance 
of any security described in subparagraph (A), (B), 
or (C) of subsection (e)(1). 
‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) SECURITY.—For purposes of this section, 
the term ‘security’ means— 
‘‘(A) any share of stock in a corporation, 
‘‘(B) any partnership or beneficial owner-
ship interest in a partnership or trust, 
‘‘(C) except as provided in paragraph (2), 
any note, bond, debenture, or other evidence of 
indebtedness, and 
‘‘(D) any derivative (as defined in section 
4476). 
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‘‘(2) EXCEPTION FOR CERTAIN TRADED SHORT- 
TERM INDEBTEDNESS.—A note, bond, debenture, or 
other evidence of indebtedness which— 
‘‘(A) is traded on, or is subject to the rules 
of, a qualified board or exchange located in the 
United States, and 
‘‘(B) has a fixed maturity of not more 
than 100 days, 
shall not be treated as described in paragraph 
(1)(C). 
‘‘(3) QUALIFIED BOARD OR EXCHANGE.—The 
term ‘qualified board or exchange’ has the meaning 
given such term by section 1256(g)(7). 
‘‘(f) BY WHOM PAID.— 
‘‘(1) IN GENERAL.—The tax imposed by this 
section shall be paid by— 
‘‘(A) in the case of a transaction which oc-
curs on, or is subject to the rules of, a qualified 
board or exchange located in the United States, 
such qualified board or exchange, and 
‘‘(B) in the case of a purchase not de-
scribed in subparagraph (A) which is executed 
by a broker (as defined in section 6045(c)(1)) 
which is a United States person, such broker. 
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‘‘(B) CERTAIN DEEMED EXCHANGES.—In 
the case of a distribution treated as an ex-
change for stock under section 302 or 331, the 
corporation making such distribution shall be 
treated as having purchased such stock for pur-
poses of this section. 
‘‘(2) PAYMENTS
WITH
RESPECT
TO
DERIVA-
TIVES TREATED AS SEPARATE TRANSACTIONS.—Ex-
cept as otherwise provided by the Secretary, any 
payment with respect to any derivative shall be 
treated as a separate transaction for purposes of 
this section. 
‘‘(h) APPLICATION
TO
TRANSACTIONS
BY
CON-
TROLLED FOREIGN CORPORATIONS.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, a controlled foreign corporation shall be treated 
as a United States person. 
‘‘(2) SPECIAL RULES FOR PAYMENT OF TAX ON 
DIRECT, ETC., TRANSACTIONS.—In the case of any 
transaction which is a covered transaction solely by 
reason of paragraph (1) and which is not described 
in subsection (f)(1)— 
‘‘(A) PAYMENT BY UNITED STATES SHARE-
HOLDERS.—Any tax which would (but for this 
paragraph) be payable under subsection (f)(2) 
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by the controlled foreign corporation shall, in 
lieu thereof, be paid by the United States 
shareholders of such controlled foreign corpora-
tion as provided in subparagraph (B). 
‘‘(B) PRO
RATA
SHARES.—Each such 
United States shareholder shall pay the same 
proportion of such tax as— 
‘‘(i) the stock which such United 
States shareholder owns (within the mean-
ing of section 958(a)) in such controlled 
foreign corporation, bears to 
‘‘(ii) the stock so owned by all United 
States shareholders in such controlled for-
eign corporation. 
‘‘(C) DEFINITIONS.—For purposes of this 
subsection, the terms ‘United States share-
holder’ and ‘controlled foreign corporation’ have 
the meanings given such terms in sections 
951(b) and 957(a), respectively. 
‘‘(i) ADMINISTRATION.—The Secretary shall carry 
out this section in consultation with the Securities and Ex-
change Commission and the Commodity Futures Trading 
Commission. 
‘‘(j) GUIDANCE; REGULATIONS.—The Secretary 
shall— 
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‘‘(1) provide guidance regarding such informa-
tion reporting concerning covered transactions as the 
Secretary deems appropriate, and 
‘‘(2) prescribe such regulations as are necessary 
or appropriate to prevent avoidance of the purposes 
of this section, including the use of non-United 
States persons in such transactions. 
‘‘SEC. 4476. DERIVATIVE DEFINED. 
‘‘(a) IN GENERAL.—For purposes of this subchapter, 
except as otherwise provided in this section, the term ‘de-
rivative’ means any contract (including any option, for-
ward contract, futures contract, short position, swap, or 
similar contract) the value of which, or any payment or 
other transfer with respect to which, is (directly or indi-
rectly) determined by reference to one or more of the fol-
lowing: 
‘‘(1) Any share of stock in a corporation. 
‘‘(2) Any partnership or beneficial ownership 
interest in a partnership or trust. 
‘‘(3) Any evidence of indebtedness. 
‘‘(4) Except as provided in subsection (b)(1), 
any real property. 
‘‘(5) Any commodity which is actively traded 
(within the meaning of section 1092(d)(1)). 
‘‘(6) Any currency. 
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‘‘(7) Any rate, price, amount, index, formula, or 
algorithm. 
‘‘(8) Any other item as the Secretary may pre-
scribe. 
Except as provided in regulations prescribed by the Sec-
retary to prevent the avoidance of the purposes of this 
subchapter, such term shall not include any item described 
in paragraphs (1) through (8). 
‘‘(b) EXCEPTIONS.— 
‘‘(1) CERTAIN REAL PROPERTY.— 
‘‘(A) IN GENERAL.—For purposes of this 
subchapter, the term ‘derivative’ shall not in-
clude any contract with respect to interests in 
real 
property 
(as 
defined 
in 
section 
856(c)(5)(C)) if such contract requires physical 
delivery of such real property. 
‘‘(B) OPTIONS TO SETTLE IN CASH.— 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A), a contract which pro-
vides for an option of cash settlement shall 
not be treated as requiring physical deliv-
ery of real property unless the option is— 
‘‘(I) not exercisable uncondition-
ally, and 
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‘‘(II) exercisable only in unusual 
and exceptional circumstances. 
‘‘(ii) 
OPTION
OF
CASH
SETTLE-
MENT.—For purposes of clause (i), a con-
tract provides an option of cash settlement 
if the contract settles in (or could be set-
tled in) cash or property other than the 
underlying real property. 
‘‘(2) SECURITIES LENDING, SALE-REPURCHASE, 
AND
SIMILAR
FINANCING
TRANSACTIONS.—To the 
extent provided by the Secretary, for purposes of 
this subchapter, the term ‘derivative’ shall not in-
clude the right to the return of the same or substan-
tially identical securities transferred in a securities 
lending transaction, sale-repurchase transaction, or 
similar financing transaction. 
‘‘(3) OPTIONS RECEIVED IN CONNECTION WITH 
THE PERFORMANCE OF SERVICES.—For purposes of 
this subchapter, the term ‘derivative’ shall not in-
clude any option described in section 83(e)(3) re-
ceived in connection with the performance of serv-
ices. 
‘‘(4) INSURANCE CONTRACTS, ANNUITIES, AND 
ENDOWMENTS.—For purposes of this subchapter, 
the term ‘derivative’ shall not include any insurance, 
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annuity, or endowment contract issued by an insur-
ance company to which subchapter L applies (or 
issued by any foreign corporation to which such sub-
chapter would apply if such foreign corporation were 
a domestic corporation). 
‘‘(5) DERIVATIVES WITH RESPECT TO STOCK 
OF
MEMBERS
OF
SAME
WORLDWIDE
AFFILIATED 
GROUP.—For purposes of this subchapter, the term 
‘derivative’ shall not include any derivative (deter-
mined without regard to this paragraph) with re-
spect to stock issued by any member of the same 
worldwide affiliated group (as defined in section 
864(f)) in which the taxpayer is a member. 
‘‘(6) COMMODITIES USED IN NORMAL COURSE 
OF TRADE OR BUSINESS.—For purposes of this sub-
chapter, the term ‘derivative’ shall not include any 
contract with respect to any commodity if— 
‘‘(A) such contract requires physical deliv-
ery with the option of cash settlement only in 
unusual and exceptional circumstances, and 
‘‘(B) such commodity is used (and is used 
in quantities with respect to which such deriva-
tive relates) in the normal course of the tax-
payer’s trade or business (or, in the case of an 
individual, for personal consumption). 
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‘‘(c) CONTRACTS WITH EMBEDDED DERIVATIVE 
COMPONENTS.— 
‘‘(1) IN GENERAL.—If a contract has derivative 
and nonderivative components, then each derivative 
component shall be treated as a derivative for pur-
poses of this subchapter. If the derivative component 
cannot be separately valued, then the entire contract 
shall be treated as a derivative for purposes of this 
subchapter. 
‘‘(2) EXCEPTION FOR CERTAIN EMBEDDED DE-
RIVATIVE COMPONENTS OF DEBT INSTRUMENTS.—A 
debt instrument shall not be treated as having a de-
rivative component merely because— 
‘‘(A) such debt instrument is denominated 
in a nonfunctional currency (as defined in sec-
tion 988(c)(1)(C)(ii)), or 
‘‘(B) payments with respect to such debt 
instrument are determined by reference to the 
value of a nonfunctional currency (as so de-
fined). 
‘‘(d) TREATMENT OF AMERICAN DEPOSITORY RE-
CEIPTS AND SIMILAR INSTRUMENTS.—Except as other-
wise provided by the Secretary, for purposes of this sub-
chapter, American depository receipts (and similar instru-
ments) with respect to shares of stock in foreign corpora-
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tions shall be treated as shares of stock in such foreign 
corporations.’’. 
(b) INFORMATION REPORTING WITH RESPECT TO 
CONTROLLED
FOREIGN
CORPORATIONS.—Section 
6038(a)(1)(B) of such Code is amended by inserting ‘‘and 
transactions which are covered transactions for purposes 
of section 4475 by reason of the application of section 
4475(h)(1) to such corporation’’ before the semicolon at 
the end. 
(c) CONFORMING AMENDMENT.—The table of sub-
chapters for chapter 36 of such Code is amended by in-
serting after the item relating to subchapter B the fol-
lowing new item: 
‘‘SUBCHAPTER C. TAX ON TRADING TRANSACTIONS’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transactions after December 31, 
2020. 
Æ 
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