‘‘SEC. 966. INCOME INCLUSION FOR LOANS TO UNITED 
STATES SHAREHOLDERS FROM CONTROLLED 
FOREIGN CORPORATIONS. 
‘‘(a) IN GENERAL.—In the case of a United States 
shareholder, there shall be included in income for the tax-
able year an amount equal to the disqualified CFC loan 
amount. 
‘‘(b) DISQUALIFIED CFC LOAN AMOUNT.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the disqualified CFC loan amount for any tax-
able year is an amount equal to the lesser of— 
‘‘(A) the aggregate amount of obligations 
of the United States shareholder which origi-
nated in such taxable year and are held (di-
rectly or indirectly) by controlled foreign cor-
porations, or 
‘‘(B) the foreign group earnings amount. 
‘‘(2) EXCEPTION.—In determining the amount 
of obligations under subparagraph (A), there shall 
be excluded any obligation described in section 
956(c)(2)(C). 
‘‘(3) CARRYFORWARD OF CERTAIN AMOUNTS.— 
If, for any taxable year, the amount under subpara-
graph (A) exceeds the amount under subparagraph 
(B), such excess shall be taken into account as an 
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obligation to which subparagraph (A) applies for the 
succeeding taxable year. 
‘‘(4) FOREIGN
GROUP
EARNINGS
AMOUNT.— 
For purposes of this section, the term ‘foreign group 
earnings amount’ means the aggregate earnings and 
profits of all controlled foreign corporations in the 
worldwide affiliated group (as defined in section 
864(f)(1)(C)) of the United States shareholder, de-
termined— 
‘‘(A) as of the last day of the taxable year 
of the United States shareholder, and 
‘‘(B) without regard to any distributions 
made during such taxable year. 
‘‘(c) DENIAL OF INTEREST DEDUCTION.—No deduc-
tion shall be allowed for interest paid or accrued with re-
spect to obligations taken into account under subsection 
(b). 
‘‘(d) 
TREATMENT
OF
INCOME
SOURCE.—Any 
amount included in income under subsection (a) shall be 
treated as income from sources within the United States.’’. 
(b) COORDINATION WITH SECTION 956.—Paragraph 
(2) of section 956(c) is amended by striking ‘‘and’’ at the 
end of subparagraph (K), by striking the period at the 
end of subparagraph (L)(ii) and inserting ‘‘; and’’, and 
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by inserting after subparagraph (L) the following new sub-
paragraph: 
‘‘(M) any obligation which is taken into ac-
count in determining the disqualified CFC loan 
amount under section 966.’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart F of part III of subchapter N of chapter 1 
is amended by adding at the end the following new item: 
‘‘Sec. 966. Income inclusion for loans to certain United States shareholders 
from controlled foreign corporations.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations originated after the 
date of the of this Act. 
Æ 
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