I 
114TH CONGRESS 
1ST SESSION H. R. 1790 
To amend the Internal Revenue Code of 1986 to modify the treatment 
of foreign corporations, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 14, 2015 
Ms. SCHAKOWSKY introduced the following bill; which was referred to the 
Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to modify 
the treatment of foreign corporations, 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. 
This Act may be cited as the ‘‘Corporate Tax Dodg-
ing Prevention Act’’. 
SEC. 2. DEFERRAL OF ACTIVE INCOME OF CONTROLLED 
FOREIGN CORPORATIONS. 
Section 952 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new sub-
section: 
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‘‘(e) SPECIAL APPLICATION OF SUBPART.— 
‘‘(1) IN GENERAL.—For taxable years begin-
ning after December 31, 2015, notwithstanding any 
other provision of this subpart, the term ‘subpart F 
income’ means, in the case of any controlled foreign 
corporation, the income of such corporation derived 
from any foreign country. 
‘‘(2) APPLICABLE RULES.—Rules similar to the 
rules under the last sentence of subsection (a) and 
subsection (d) shall apply to this subsection.’’. 
SEC. 3. MODIFICATIONS OF FOREIGN TAX CREDIT RULES 
APPLICABLE TO LARGE INTEGRATED OIL 
COMPANIES WHICH ARE DUAL CAPACITY 
TAXPAYERS. 
(a) IN GENERAL.—Section 901 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
(n) as subsection (o) and by inserting after subsection (m) 
the following new subsection: 
‘‘(n) SPECIAL RULES RELATING TO LARGE INTE-
GRATED OIL COMPANIES WHICH ARE DUAL CAPACITY 
TAXPAYERS.— 
‘‘(1) GENERAL
RULE.—Notwithstanding any 
other provision of this chapter, any amount paid or 
accrued by a dual capacity taxpayer which is a large 
integrated oil company to a foreign country or pos-
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session of the United States for any period shall not 
be considered a tax— 
‘‘(A) if, for such period, the foreign coun-
try or possession does not impose a generally 
applicable income tax, or 
‘‘(B) to the extent such amount exceeds 
the amount (determined in accordance with reg-
ulations) which— 
‘‘(i) is paid by such dual capacity tax-
payer pursuant to the generally applicable 
income tax imposed by the country or pos-
session, or 
‘‘(ii) would be paid if the generally ap-
plicable income tax imposed by the country 
or possession were applicable to such dual 
capacity taxpayer. 
Nothing in this paragraph shall be construed to 
imply the proper treatment of any such amount 
not in excess of the amount determined under 
subparagraph (B). 
‘‘(2) DUAL
CAPACITY
TAXPAYER.—For pur-
poses of this subsection, the term ‘dual capacity tax-
payer’ means, with respect to any foreign country or 
possession of the United States, a person who— 
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‘‘(A) is subject to a levy of such country or 
possession, and 
‘‘(B) receives (or will receive) directly or 
indirectly a specific economic benefit (as deter-
mined in accordance with regulations) from 
such country or possession. 
‘‘(3) GENERALLY APPLICABLE INCOME TAX.— 
For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘generally 
applicable income tax’ means an income tax (or 
a series of income taxes) which is generally im-
posed under the laws of a foreign country or 
possession on income derived from the conduct 
of a trade or business within such country or 
possession. 
‘‘(B) EXCEPTIONS.—Such term shall not 
include a tax unless it has substantial applica-
tion, by its terms and in practice, to— 
‘‘(i) persons who are not dual capacity 
taxpayers, and 
‘‘(ii) persons who are citizens or resi-
dents of the foreign country or possession. 
‘‘(4) LARGE INTEGRATED OIL COMPANY.—For 
purposes of this subsection, the term ‘large inte-
grated oil company’ means, with respect to any tax-
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able year, an integrated oil company (as defined in 
section 291(b)(4)) which— 
‘‘(A) had gross receipts in excess of 
$1,000,000,000 for such taxable year, and 
‘‘(B) has an average daily worldwide pro-
duction of crude oil of at least 500,000 barrels 
for such taxable year.’’. 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to taxes paid or accrued in 
taxable years beginning after the date of the enact-
ment of this Act. 
(2) 
CONTRARY
TREATY
OBLIGATIONS 
UPHELD.—The amendments made by this section 
shall not apply to the extent contrary to any treaty 
obligation of the United States. 
SEC. 4. REINSTITUTION OF PER COUNTRY FOREIGN TAX 
CREDIT. 
(a) IN GENERAL.—Subsection (a) of section 904 of 
the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(a) LIMITATION.—The amount of the credit in re-
spect of the tax paid or accrued to any foreign country 
or possession of the United States shall not exceed the 
same proportion of the tax against which such credit is 
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taken which the taxpayer’s taxable income from sources 
within such country or possession (but not in excess of 
the taxpayer’s entire taxable income) bears to such tax-
payer’s entire taxable income for the same taxable year.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2015. 
SEC. 5. TREATMENT OF FOREIGN CORPORATIONS MAN-
AGED AND CONTROLLED IN THE UNITED 
STATES AS DOMESTIC CORPORATIONS. 
(a) IN GENERAL.—Section 7701 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
(p) as subsection (q) and by inserting 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 
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‘‘(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— 
‘‘(i) the stock of such corporation is 
regularly traded on an established securi-
ties market, or 
‘‘(ii) the aggregate gross assets of 
such corporation (or any predecessor there-
of), including assets under management 
for investors, whether held directly or indi-
rectly, at any time during the taxable year 
or 
any 
preceding 
taxable 
year 
is 
$50,000,000 or more. 
‘‘(B) GENERAL
EXCEPTION.—A corpora-
tion shall not be treated as described in this 
paragraph if— 
‘‘(i) such corporation was treated as a 
corporation described in this paragraph in 
a preceding taxable year, 
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‘‘(ii) such corporation— 
‘‘(I) is not regularly traded on an 
established securities market, and 
‘‘(II) has, and is reasonably ex-
pected to continue to have, aggregate 
gross assets (including assets under 
management for investors, whether 
held directly or indirectly) of less than 
$50,000,000, and 
‘‘(iii) the Secretary grants a waiver to 
such corporation under this subparagraph. 
‘‘(C) EXCEPTION
FROM
GROSS
ASSETS 
TEST.—Subparagraph (A)(ii) shall not apply to 
a corporation which is a controlled foreign cor-
poration (as defined in section 957) and which 
is a member of an affiliated group (as defined 
section 1504, but determined without regard to 
section 1504(b)(3)) the common parent of 
which— 
‘‘(i) is a domestic corporation (deter-
mined without regard to this subsection), 
and 
‘‘(ii) has substantial assets (other 
than cash and cash equivalents and other 
than stock of foreign subsidiaries) held for 
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use in the active conduct of a trade or 
business in the United States. 
‘‘(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. 
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SEC. 6. RESTRICTIONS ON DEDUCTION FOR INTEREST EX-
PENSE OF MEMBERS OF FINANCIAL REPORT-
ING GROUPS WITH EXCESS DOMESTIC IN-
DEBTEDNESS. 
(a) IN GENERAL.—Section 163 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
(n) as subsection (o) and by inserting after subsection (m) 
the following new subsection: 
‘‘(n) RESTRICTION ON DEDUCTION FOR INTEREST 
EXPENSE
OF
MEMBERS
OF
FINANCIAL
REPORTING 
GROUPS WITH EXCESS DOMESTIC INDEBTEDNESS.— 
‘‘(1) IN GENERAL.—In the case of any corpora-
tion which is a member of an applicable financial re-
porting group the common parent of which is a for-
eign corporation, the deduction allowed under this 
chapter for interest paid or accrued by the corpora-
tion during the taxable year shall not exceed the ap-
plicable limitation for the taxable year. 
‘‘(2) CARRYFORWARD.—Any amount disallowed 
under paragraph (1) for any taxable year shall be 
treated as interest paid or accrued in the succeeding 
taxable year. 
‘‘(3) APPLICABLE LIMITATION.—For purposes 
of this subsection— 
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‘‘(A) IN GENERAL.—The applicable limita-
tion with respect to a taxpayer for any taxable 
year is the sum of— 
‘‘(i) the greater of— 
‘‘(I) 
the 
taxpayer’s 
allocable 
share of the applicable financial re-
porting group’s net interest expense 
for the taxable year, or 
‘‘(II) 10 percent of the taxpayer’s 
adjusted taxable income for the tax-
able year, plus 
‘‘(ii) 
the 
excess 
limitation 
carryforwards to the taxable year from any 
preceding taxable year. 
‘‘(B) LIMITATION
NOT
LESS
THAN
IN-
CLUDIBLE
INTEREST.—The applicable limita-
tion under subparagraph (A) for any taxable 
year shall not be less than the amount of inter-
est includible in the gross income of the tax-
payer for the taxable year. 
‘‘(C) 
EXCESS
LIMITATION 
CARRYFORWARD.—If the applicable limitation 
of a taxpayer for any taxable year (determined 
without regard to carryforwards under subpara-
graph (A)(ii)) exceeds the interest paid or ac-
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crued by the taxpayer during the taxable year, 
such excess shall be an excess limitation 
carryforward to the 1st succeeding taxable year 
and the 2nd and 3rd succeeding taxable years 
to the extent not previously taken into account 
under this paragraph. 
‘‘(4) ALLOCABLE SHARE OF NET INTEREST EX-
PENSE.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—A taxpayer’s allocable 
share of an applicable financial reporting 
group’s net interest expense for any taxable 
year shall be the amount (not less than zero) 
which bears the same ratio to such net interest 
expense as— 
‘‘(i) the net earnings of the taxpayer, 
bears to 
‘‘(ii) the aggregate net earnings of all 
members of the applicable financial report-
ing group. 
‘‘(B) NET
EARNINGS.—The term ‘net 
earnings’ means, with respect to any taxpayer, 
the earnings of the taxpayer— 
‘‘(i) computed without regard to any 
reduction allowable for— 
‘‘(I) net interest expense, 
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‘‘(II) taxes, or 
‘‘(III) depreciation, amortization, 
or depletion, and 
‘‘(ii) computed with such other adjust-
ments as the Secretary may by regulations 
prescribe. 
‘‘(C) BURDEN ON TAXPAYER.—If a tax-
payer elects not to compute its allocable share, 
or fails to establish to the satisfaction of the 
Secretary the amount of its allocable share, for 
any taxable year, the allocable share shall be 
zero. 
‘‘(5) NET INTEREST EXPENSE AND NET EARN-
INGS DETERMINATIONS.—For purposes of this sub-
section— 
‘‘(A) NET INTEREST EXPENSE.—Any de-
termination of net interest expense for any tax-
able year shall be made— 
‘‘(i) on the basis of the applicable fi-
nancial statement of the applicable finan-
cial reporting group for the last financial 
reporting year ending with or within the 
taxable year, and 
‘‘(ii) under United States tax prin-
ciples. 
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