I 
115TH CONGRESS 
1ST SESSION H. R. 1670 
To eliminate the incentive for corporations to continue to hold accumulated 
earnings offshore, to invest in domestic infrastructure, to provide for 
international tax reform, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 22, 2017 
Mr. DELANEY (for himself, Mr. YOHO, Mr. AGUILAR, Mr. BERA, Mrs. 
BUSTOS, Ms. GABBARD, Ms. HANABUSA, Ms. KELLY of Illinois, Ms. 
KUSTER of New Hampshire, Mr. LANGEVIN, Mr. SEAN PATRICK MALO-
NEY of New York, Ms. MCCOLLUM, Mr. MCKINLEY, Mr. MOULTON, Mr. 
NORCROSS, Mr. PERLMUTTER, Mr. POLIS, Mr. QUIGLEY, Mr. RUPPERS-
BERGER, Ms. SINEMA, and Mr. SOTO) introduced the following bill; which 
was referred to the Committee on Ways and Means, and in addition to 
the Committees on Transportation and Infrastructure, and Rules, 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 com-
mittee concerned 
A BILL 
To eliminate the incentive for corporations to continue to 
hold accumulated earnings offshore, to invest in domestic 
infrastructure, to provide for international tax reform, 
and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE; ETC. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Infrastructure 2.0 Act’’. 
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment 
to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; etc. 
TITLE I—DEEMED REPATRIATION AND INVESTMENT IN 
DOMESTIC INFRASTRUCTURE 
Sec. 101. Elimination of incentive for corporations to continue to hold accumu-
lated earnings offshore. 
Sec. 102. American Infrastructure Fund. 
Sec. 103. Dedication of remaining revenues to highway trust fund. 
Sec. 104. Highway Trust Fund Solvency Commission. 
Sec. 105. Regional infrastructure accelerator pilot program. 
TITLE II—DEADLINE FOR INTERNATIONAL TAX REFORM 
Sec. 201. 18-month deadline for international tax reform. 
TITLE III—FALLBACK INTERNATIONAL TAX REFORM 
Sec. 300. General effective date of title. 
Subtitle A—Reform of Taxation of Income Earned by Controlled Foreign 
Corporations 
PART I—GENERAL PROVISIONS 
Sec. 301. Modifications to subpart F income. 
Sec. 302. Deemed repatriation upon transition to fallback international tax re-
form. 
PART II—FOREIGN TAX CREDIT LIMITATIONS 
Sec. 311. Reform of foreign tax credit limitation. 
Sec. 312. Denial of credit and deduction for foreign taxes with respect to ex-
cluded subpart F income. 
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PART III—EXPENSE DISALLOWANCE 
Sec. 321. Disallowance of deduction for expenses allocable to exempt income of 
a controlled foreign corporation. 
PART IV—OTHER PROVISIONS RELATING TO SUBPART F 
SUBPART A—PREVIOUSLY DEFERRED FOREIGN INCOME 
Sec. 331. Treatment of previously deferred foreign income. 
SUBPART B—OTHER PROVISIONS 
Sec. 336. Elimination of 30-day requirement. 
Sec. 337. Modification of definition of United States shareholder. 
Subtitle B—Reform of Foreign Tax Credit Provisions 
Sec. 341. Repeal of section 902 indirect foreign tax credits; foreign tax credit 
related to subpart F income. 
Sec. 342. Repeal of rule suspending foreign taxes and credits until related in-
come is taken into account. 
TITLE 
I—DEEMED 
REPATRI-
ATION AND INVESTMENT IN 
DOMESTIC INFRASTRUCTURE 
SEC. 101. ELIMINATION OF INCENTIVE FOR CORPORATIONS 
TO 
CONTINUE 
TO 
HOLD 
ACCUMULATED 
EARNINGS OFFSHORE. 
(a) IN GENERAL.—Section 965 is amended to read 
as follows: 
‘‘SEC. 965. ELIMINATION OF INCENTIVE TO HOLD ACCUMU-
LATED EARNINGS AND PROFITS OFFSHORE. 
‘‘(a) TREATMENT OF DEFERRED FOREIGN INCOME 
AS SUBPART F INCOME.—In the case of the last taxable 
year of a deferred foreign income corporation which ends 
before the date of the enactment of the Infrastructure 2.0 
Act, the subpart F income of such foreign corporation (as 
otherwise determined for such taxable year under section 
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which such taxpayer is a United States share-
holder, if— 
‘‘(i) such specified foreign corporation 
has a deficit in post-1986 earnings and 
profits, and 
‘‘(ii) as of the date of the introduction 
of Infrastructure 2.0 Act— 
‘‘(I) such corporation was a spec-
ified foreign corporation, and 
‘‘(II) such taxpayer was a United 
States shareholder of such corpora-
tion. 
‘‘(C) SPECIFIED E&P DEFICIT.—The term 
‘specified E&P deficit’ means, with respect to 
any E&P deficit foreign corporation, the 
amount of the deficit referred to in subpara-
graph (B). 
‘‘(c) DEDUCTION FOR PORTION OF INCLUDED IN-
COME.—In the case of a United States shareholder of a 
deferred foreign income corporation, there shall be allowed 
as a deduction for the taxable year in which an amount 
is included in the gross income of such United States 
shareholder under section 951(a)(1) by reason of this sec-
tion an amount equal to 75 percent of the amount so in-
cluded in gross income. 
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‘‘(d) DEFERRED FOREIGN INCOME CORPORATION; 
ACCUMULATED
POST-1986 DEFERRED
FOREIGN
IN-
COME.—For purposes of this section— 
‘‘(1) DEFERRED
FOREIGN
INCOME
CORPORA-
TION.—The term ‘deferred foreign income corpora-
tion’ means, with respect to any United States 
shareholder, any specified foreign corporation of 
such United States shareholder which has accumu-
lated post-1986 deferred foreign income (as of the 
close of the taxable year referred to in subsection 
(a)) greater than zero. 
‘‘(2) ACCUMULATED POST-1986 DEFERRED FOR-
EIGN
INCOME.—The term ‘accumulated post-1986 
deferred foreign income’ means the post-1986 earn-
ings and profits except to the extent such earnings— 
‘‘(A) are attributable to income of the 
specified foreign corporation which is effectively 
connected with the conduct of a trade or busi-
ness within the United States and subject to 
tax under this chapter, 
‘‘(B) if distributed, would— 
‘‘(i) in the case of a controlled foreign 
corporation, be excluded from the gross in-
come of a United States shareholder under 
section 959, or 
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‘‘(ii) in the case of any passive foreign 
investment company (as defined in section 
1297) other than a controlled foreign cor-
poration, be treated as a distribution which 
is not a dividend, or 
‘‘(C) in the case of any passive foreign in-
vestment company (as so defined), is properly 
attributable to an unreversed inclusion of a 
United States person under section 1296. 
To the extent provided in regulations or other guid-
ance prescribed by the Secretary, in the case of any 
controlled foreign corporation which has share-
holders which are not United States shareholders, 
accumulated post-1986 deferred foreign income shall 
be appropriately reduced by amounts which would be 
described in subparagraph (B)(i) if such share-
holders were United States shareholders. Such regu-
lations or other guidance may provide a similar rule 
for purposes of subparagraphs (B)(ii) and (C). 
‘‘(3) POST-1986 EARNINGS AND PROFITS.—The 
term ‘post-1986 earnings and profits’ means the 
earnings and profits of the foreign corporation (com-
puted in accordance with sections 964(a) and 986) 
accumulated in taxable years beginning after Decem-
ber 31, 1986, and determined— 
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‘‘(A) as of the close the taxable year re-
ferred to in subsection (a), and 
‘‘(B) without diminution by reason of divi-
dends distributed during such taxable year. 
‘‘(e) SPECIFIED FOREIGN CORPORATION.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, 
the 
term 
‘specified 
foreign 
corporation’ 
means— 
‘‘(A) any controlled foreign corporation, 
and 
‘‘(B) any section 902 corporation (as de-
fined in section 909(d)(5)). 
‘‘(2) APPLICATION TO SECTION 902 CORPORA-
TIONS.—For purposes of section 951, a section 902 
corporation (as so defined) shall be treated as a con-
trolled foreign corporation solely for purposes of tak-
ing into account the subpart F income of such cor-
poration under subsection (a) (and for purposes of 
applying subsection (f)). 
‘‘(f) DETERMINATIONS OF PRO RATA SHARE.—For 
purposes of this section, the determination of any United 
States shareholder’s pro rata share of any amount with 
respect to any specified foreign corporation shall be deter-
mined under rules similar to the rules of section 951(a)(2) 
by treating such amount in the same manner as subpart 
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F income (and by treating such specified foreign corpora-
tion as a controlled foreign corporation). 
‘‘(g) DISALLOWANCE
OF FOREIGN TAX CREDIT, 
ETC.— 
‘‘(1) IN GENERAL.—No credit shall be allowed 
under section 901 for the applicable percentage of 
any taxes paid or accrued (or treated as paid or ac-
crued) with respect to any amount for which a de-
duction is allowed under this section. 
‘‘(2) APPLICABLE PERCENTAGE.—For purposes 
of this subsection, the term ‘applicable percentage’ 
means the percentage specified in subsection (c). 
‘‘(3) DENIAL
OF
DEDUCTION.—No deduction 
shall be allowed under this chapter for any tax for 
which credit is not allowable under section 901 by 
reason of paragraph (1) (determined by treating the 
taxpayer as having elected the benefits of subpart A 
of part III of subchapter N). 
‘‘(4) COORDINATION WITH SECTION 78.—Sec-
tion 78 shall not apply to any tax for which credit 
is not allowable under section 901 by reason of para-
graph (1). 
‘‘(h) ELECTION TO PAY LIABILITY
IN INSTALL-
MENTS.— 
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‘‘(1) IN GENERAL.—In the case of a United 
States shareholder of a deferred foreign income cor-
poration, such United States shareholder may elect 
to pay the net tax liability under this section in 8 
installments of the following amounts: 
‘‘(A) 8 percent of the net tax liability in 
the case of each of the first 5 of such install-
ments, 
‘‘(B) 15 percent of the net tax liability in 
the case of the 6th such installment, 
‘‘(C) 20 percent of the net tax liability in 
the case of the 7th such installment, and 
‘‘(D) 25 percent of the net tax liability in 
the case of the 8th such installment. 
‘‘(2) DATE FOR PAYMENT OF INSTALLMENTS.— 
If an election is made under paragraph (1), the first 
installment shall be paid on the due date (deter-
mined without regard to any extension of time for 
filing the return) for the return of tax for the tax-
able year described in subsection (b) and each suc-
ceeding installment shall be paid on the due date (as 
so determined) for the return of tax for the taxable 
year following the taxable year with respect to which 
the preceding installment was made. 
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‘‘(3) ACCELERATION OF PAYMENT.—If there is 
an addition to tax for failure to pay timely assessed 
with respect to any installment required under this 
subsection, a liquidation or sale of substantially all 
the assets of the taxpayer (including in a title 11 or 
similar case), a cessation of business by the tax-
payer, or any similar circumstance, then the unpaid 
portion of all remaining installments shall be due on 
the date of such event (or in the case of a title 11 
or similar case, the day before the petition is filed). 
The preceding sentence shall not apply to the sale 
of substantially all the assets of a taxpayer to a 
buyer if such buyer enters into an agreement with 
the Secretary under which such buyer is liable for 
the remaining installments due under this subsection 
in the same manner as if such buyer were the tax-
payer. 
‘‘(4) PRORATION OF DEFICIENCY TO INSTALL-
MENTS.—If an election is made under paragraph (1) 
to pay the net tax liability under this section in in-
stallments and a deficiency has been assessed with 
respect to such net tax liability, the deficiency shall 
be prorated to the installments payable under para-
graph (1). The part of the deficiency so prorated to 
any installment the date for payment of which has 
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not arrived shall be collected at the same time as, 
and as a part of, such installment. The part of the 
deficiency so prorated to any installment the date 
for payment of which has arrived shall be paid upon 
notice and demand from the Secretary. This sub-
section shall not apply if the deficiency is due to 
negligence, to intentional disregard of rules and reg-
ulations, or to fraud with intent to evade tax. 
‘‘(5) ELECTION.—Any election under paragraph 
(1) shall be made not later than the due date for the 
return of tax for the taxable year described in sub-
section (a) and shall be made in such manner as the 
Secretary may provide. 
‘‘(6) NET
TAX
LIABILITY
UNDER
THIS
SEC-
TION.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The net tax liability 
under this section with respect to any United 
States shareholder is the excess (if any) of— 
‘‘(i) such taxpayer’s net income tax 
for the taxable year described in subsection 
(a), over 
‘‘(ii) such taxpayer’s net income tax 
for such taxable year determined without 
regard to this section. 
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‘‘(B) NET INCOME TAX.—The term ‘net 
income tax’ means the regular tax liability re-
duced by the credits allowed under subparts A, 
B, and D of part IV of subchapter A. 
‘‘(i) INCLUSION
OF DEFERRED FOREIGN INCOME 
UNDER THIS SECTION NOT TO TRIGGER RECAPTURE OF 
OVERALL
FOREIGN
LOSS.—For purposes of section 
904(f)(1), in the case of a United States shareholder of 
a deferred foreign income corporation, such United States 
shareholder’s taxable income from sources without the 
United States shall be determined without regard to this 
section. 
‘‘(j) REGULATIONS.—The Secretary may prescribe 
such regulations or other guidance as may be necessary 
or appropriate to carry out the provisions of this section.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subpart F of part III of subchapter N of chapter 1 
of such Code is amended by striking the item relating to 
section 965 and inserting the following: 
‘‘Sec. 965. Elimination of incentive to hold accumulated earnings and profits 
offshore.’’. 
SEC. 102. AMERICAN INFRASTRUCTURE FUND. 
(a) AMERICAN INFRASTRUCTURE FUND.— 
(1) IN GENERAL.—There is established a wholly 
owned Government corporation— 
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(A) which shall be called the American In-
frastructure Fund (referred to in this Act as 
the ‘‘AIF’’); 
(B) which shall be headed by the Board of 
Trustees established under subsection (b); 
(C) which may have separate subaccounts 
or subsidiaries for funds used to make loans, 
bond guarantees, and equity investments under 
this section; 
(D) which shall be available to the AIF to 
pay for the costs of carrying out this section, 
including the compensation of the Board and 
other employees of the AIF; and 
(E) the funds of which may be invested by 
the Board in such manner as the Board deter-
mines appropriate. 
(2) DEPOSITS TO AIF.—All funds received from 
bond issuances, loan payments, bond guarantee fees, 
and any other funds received in carrying out this 
section shall be held by AIF. 
(3) LIMITATIONS.—The charter of the AIF 
shall limit its activities to those activities described 
as the mission of the Board under subsection (b)(2). 
(4) OVERSIGHT.—The AIF shall register with 
the Securities and Exchange Commission and the 
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Chairman shall report to Congress annually as to 
whether the AIF is fulfilling the mission of the 
Board under subsection (b)(2). 
(5) TREATMENT OF AIF.— 
(A) ACCOUNTS.—Title 31, United States 
Code, is amended in each of sections 9107(c)(3) 
and 9108(d)(2)— 
(i) by inserting ‘‘the American Infra-
structure Fund,’’ after ‘‘the Regional 
Banks for Cooperatives,’’; and 
(ii) by striking ‘‘those banks’’ and in-
serting ‘‘those entities’’. 
(B) BONDS.—Section 149(b)(3)(A)(i) is 
amended by inserting ‘‘American Infrastructure 
Fund,’’ after ‘‘Federal Home Loan Mortgage 
Corporation,’’. 
(b) BOARD OF TRUSTEES.— 
(1) IN GENERAL.—There is established a Board 
of Trustees of the AIF (referred to in this sub-
section as the ‘‘Board’’), which shall be composed of 
9 members who— 
(A) have substantial experience in bond 
guarantees or municipal credit; and 
(B) to the greatest extent practicable, have 
extensive experience working with municipal 
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credit, risk management, and infrastructure fi-
nance. 
(2) MISSION.—The mission of the Board is— 
(A) to operate the AIF and its subsidiaries 
to be a low cost provider of bond guarantees, 
loans, and equity investments to State and local 
governments and infrastructure providers for 
urban and rural infrastructure projects that— 
(i) provide a positive economic impact; 
and 
(ii) meet such other standards as the 
Board may develop; 
(B) to operate the AIF in a self-sustaining 
manner; 
(C) to not have a profit motive, but to seek 
at all times to pursue its mission of providing 
low cost bond guarantees and loans while— 
(i) covering its costs; 
(ii) maintaining such reserves as may 
be needed; and 
(iii) applying prudent underwriting 
standards; 
(D) to only consider projects put forth by 
State and local governments and not to seek 
projects directly; and 
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(E) to engage in no other activities other 
than those permitted under this section. 
(3) MEMBERSHIP.— 
(A) INITIAL MEMBERS.— 
(i) APPOINTMENT.—Not later than 
150 days after the date of the enactment 
of this Act, the President shall appoint, 
with the advice and consent of the Senate, 
as members of the Board— 
(I) 2 individuals from a list of at 
least 5 individuals selected by the 
Speaker of the House of Representa-
tives; 
(II) 2 individuals from a list of 
at least 5 individuals selected by the 
Minority Leader of the House of Rep-
resentatives; 
(III) 2 individuals from a list of 
at least 5 individuals selected by the 
Majority Leader of the Senate; 
(IV) 2 individuals from a list of 
at least 5 individuals selected by the 
Minority Leader of the Senate; and 
(V) 1 individual selected at will 
by the President. 
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(ii) SUBMISSION OF LISTS.—Each of 
the lists described in clause (i) shall be 
submitted to the President not later than 
90 days after the date of the enactment of 
this Act. If any of such lists are submitted 
after the date required under this clause, 
the President may appoint the 2 members 
of the Board who were to be selected from 
such list at will. 
(B) STAGGERED TERMS.—The members of 
the Board appointed pursuant to subparagraph 
(A)(i) shall serve staggered terms, with 2 each 
of the initial members of the Board serving for 
terms of 5, 6, 7, and 8 years, respectively, and 
the initial Chair selected under subparagraph 
(D) serving for 9 years. The decision of which 
Board members, other than the Chair, serve for 
which initial terms shall be made by the mem-
bers of the Board drawing lots. 
(C) ADDITIONAL MEMBERS.— 
(i) IN GENERAL.—Except as provided 
in subparagraph (A), if the term of a 
member of the Board expires or otherwise 
becomes vacant, the President shall ap-
point a replacement for such member, with 
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the advice and consent of the Senate, from 
among a list of at least 5 individuals sub-
mitted by the Board. 
(ii) TERM OF SERVICE.— 
(I) IN GENERAL.—Each member 
of the Board appointed to replace a 
member whose term is expiring shall 
serve for a 7-year term. 
(II) VACANCIES.—Any member 
of the Board appointed to fill a va-
cancy occurring before the expiration 
of the term to which that member’s 
predecessor was appointed shall be ap-
pointed only for the remainder of the 
term. 
(D) CHAIR.—The members of the Board 
shall choose 1 member to serve as the Chair of 
the Board for a term of 7 years, except that the 
initial Chair shall serve for a term of 9 years, 
pursuant to subparagraph (B). 
(E) CONTINUATION
OF
SERVICE.—Each 
member of the Board may continue to serve 
after the expiration of the term of office to 
which that member was appointed until a suc-
cessor has been appointed. 
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(F) CONFLICTS OF INTEREST.—No mem-
ber of the Board may have a financial interest 
in, or be employed by, a Qualified Infrastruc-
ture Project (‘‘QIP’’) related to assistance pro-
vided under this section. Owning municipal 
credit of any State or local government or own-
ing the securities of a diversified company that 
engages in infrastructure activities, provided 
those activities constitute less than 20 percent 
of the company’s revenues, or investing in 
broadly held investment funds shall not be 
deemed to create a conflict of interest. The 
Board may issue regulations to define terms 
used under this subparagraph. 
(4) COMPENSATION.—The members of the 
Board shall be compensated at an amount to be set 
by the Board, but under no circumstances may such 
compensation be higher than the rate prescribed for 
level IV of the Executive Schedule under section 
5315 of title 5, United States Code. 
(5) STAFF.—The Board shall employ and set 
compensation for such staff as the Board determines 
as is necessary to carry out the activities and mis-
sion of the AIF, and such staff may be paid without 
regard to the provisions of chapter 51 and sub-
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chapter III of chapter 53, United States Code, relat-
ing to classification and General Schedule pay rates. 
(6) PROCEDURES.—The Board shall establish 
such procedures as are necessary to carry out this 
section. 
(7) CORPORATE GOVERNANCE STANDARDS.— 
(A) BOARD
COMMITTEES
GENERALLY.— 
The Board shall maintain all of the committees 
required to be maintained by the board of direc-
tors of an issuer listed on the New York Stock 
Exchange as of the date of the enactment of 
this section. 
(B) RISK MANAGEMENT COMMITTEE.—The 
Board shall maintain a risk management com-
mittee, which shall— 
(i) employ additional staff who are 
certified by the Board as having significant 
and relevant experience in insurance un-
derwriting and credit risk management; 
and 
(ii) establish the risk management 
policies used by the Board. 
(C) STANDARDS.—The Board shall, to the 
extent practicable, follow all standards with re-
spect to corporate governance that are required 
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to be followed by the board of directors of an 
issuer listed on the New York Stock Exchange 
as of the date of the enactment of this section. 
(8) BIENNIAL REPORTS.—Not less frequently 
than once every 2 years, the Board shall produce a 
report that describes, of the materials, goods, and 
products that were used to construct, or to support 
the construction of, qualified infrastructure projects 
(as described in subsection (c)) and received financ-
ing from the American Infrastructure Fund within 
the most recent 2 calendar years, the percentage of 
such materials, goods, and products that were cre-
ated, sourced, or manufactured in the United States. 
(c) INFRASTRUCTURE INVESTMENT.— 
(1) ENTITIES ELIGIBLE FOR ASSISTANCE.—The 
AIF may provide assistance to State and local gov-
ernment entities, nonprofit infrastructure providers, 
private parties, and public-private partnerships (re-
ferred to in this section as ‘‘eligible entities’’) to help 
finance qualified infrastructure projects (referred to 
in this subsection as ‘‘QIPs’’). 
(2) FORMS OF ASSISTANCE.—The AIF may— 
(A) provide bond guarantees to debt issued 
by eligible entities; 
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(B) make loans, including subordinated 
loans, to eligible entities; and 
(C) make equity investments in QIPs. 
(3) QUALIFIED INFRASTRUCTURE PROJECTS.— 
A project qualifies as a QIP under this section if— 
(A) the project is sponsored by a State or 
local government; 
(B) the infrastructure is, or will be, owned 
by a State or local government; 
(C) the project involves the construction, 
maintenance, improvement, or repair of a trans-
portation, energy, water, communications, or 
educational facility; 
(D) the recipient of bond guarantees, 
loans, equity investments, or any other innova-
tive financing technique authorized under this 
Act provides written assurances prescribed by 
the AIF that the project will be performed in 
compliance with the requirements of all Federal 
laws that would otherwise apply to similar 
projects to which the United States is a party; 
and 
(E) in the case of a public transportation 
capital project as defined in section 5302 of 
title 49, United States Code, the recipient of 
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bond guarantees, loans, equity investments, or 
any other innovative financing technique au-
thorized under this Act complies with the grant 
requirements applicable to grants made under 
section 5309 of such title. 
(4) APPLICATION FOR ASSISTANCE.— 
(A) IN GENERAL.—A State or local gov-
ernment that wishes to receive a loan or bond 
guarantee under this section shall submit an 
application to the Board in such form and man-
ner and containing such information as the 
Board may require. 
(B) REQUIREMENT FOR PUBLIC SPONSOR-
SHIP OF PRIVATE ENTITIES.—A private entity 
may only receive a bond guarantee, loan, or eq-
uity investment under this section if the State 
or local government for the jurisdiction in which 
the nonprofit infrastructure provider or private 
partner is located submits an application pursu-
ant to subparagraph (A) on behalf of such non-
profit infrastructure provider or private part-
ner. 
(5) LIMITATIONS ON SINGLE STATE AWARDS.— 
(A) ANNUAL
LIMITATION.—The Board 
shall set an annual limit, as a percentage of 
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total assistance provided under this section dur-
ing a year, on the amount of assistance a single 
State (including local governments and other 
infrastructure providers within such State) may 
receive in assistance provided under this sec-
tion. 
(B) 
CUMULATIVE
LIMITATION.—The 
Board shall set a limit, as a percentage of total 
assistance provided under this section out-
standing at any one time, on the amount of as-
sistance a single State (including local govern-
ments and other infrastructure providers within 
such State) may receive in assistance provided 
under this section. 
(6) LOAN SPECIFICATIONS.—Loans made under 
this section shall have such maturity and carry such 
interest rate as the Board determines appropriate. 
(7) BOND
GUARANTEE.—The Board shall 
charge such fees for Bond guarantees made under 
this section as the Board determines appropriate. 
(8) EQUITY INVESTMENTS.—With respect to a 
QIP, the amount of an equity investment made by 
the AIF in such QIP may not exceed 20 percent of 
the total cost of the QIP. 
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(9) PUBLIC-PRIVATE
PARTNERSHIP
REQUIRE-
MENTS.—At least 35 percent of the assistance pro-
vided under this section shall be provided to QIPs 
for which at least 10 percent of the financing for 
such QIPs comes from private debt or equity. 
(10) PROHIBITION
ON
PRINCIPAL
FORGIVE-
NESS.—With respect to a loan made under this sec-
tion, the Board may not forgive any amount of prin-
cipal on such loan. 
(d) DEFINITIONS.—For purposes of this section: 
(1) INFRASTRUCTURE
PROVIDER.—The term 
‘‘infrastructure provider’’ means an entity that seeks 
to finance a QIP. 
(2) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of the Treasury. 
(3) STATE.—The term ‘‘State’’ means each of 
the several States, the District of Columbia, any ter-
ritory or possession of the United States, and each 
federally recognized Indian tribe. 
(e) APPROPRIATION.—Out of money in the Treasury 
not otherwise appropriated, there is hereby appropriated 
$50,000,000,000 to the American Infrastructure Fund. 
Amounts appropriated under this subsection shall remain 
available without fiscal year limitation. 
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SEC. 103. DEDICATION OF REMAINING REVENUES TO HIGH-
WAY TRUST FUND. 
(a) IN GENERAL.—Section 9503(f) is amended by re-
designating paragraphs (5) through (10) as paragraphs 
(6) through (11), respectively, and by inserting after para-
graph (4) the following new paragraph: 
‘‘(5) APPROPRIATION
OF
REVENUES
ATTRIB-
UTABLE TO SECTION 965.— 
‘‘(A) INITIAL
APPROPRIATION.—Out of 
money in the Treasury not otherwise appro-
priated, 
there 
is 
hereby 
appropriated 
$100,000,000,000 to the Highway Trust Fund. 
‘‘(B) REMAINING REVENUES.— 
‘‘(i) IN GENERAL.—Out of money in 
the Treasury not otherwise appropriated, 
there are hereby appropriated to the High-
way Trust Fund the excess of— 
‘‘(I) amounts equivalent to the 
aggregate net tax liabilities under sec-
tion 965 (as defined in such section) 
received in the Treasury, over 
‘‘(II) $150,025,000,000. 
‘‘(ii) ADDITIONAL
TRANSFERS
ONLY 
AFTER
REVENUES
EQUALING
INITIAL 
TRANSFERS HAVE BEEN RECEIVED IN THE 
TREASURY.—For purposes of applying sec-
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tion 9601 to clause (i), no transfer shall be 
made under clause (i) until the Secretary 
estimates that the amount described in 
clause (i)(I) has exceeded the amount de-
scribed in clause (i)(II).’’. 
(b) TRANSFERS TO MASS TRANSIT ACCOUNT.—Sec-
tion 9503(e)(2) of such Code is amended by striking ‘‘the 
mass transit portion’’ and inserting ‘‘20 percent of the 
amounts appropriated to the Highway Trust Fund under 
subsection (f)(5), and the mass transit portion’’. 
SEC. 104. HIGHWAY TRUST FUND SOLVENCY COMMISSION. 
(a) ESTABLISHMENT.—There is established in the 
legislative branch a commission to be known as the ‘‘High-
way Trust Fund Solvency Commission’’ (in this section 
referred to as the ‘‘Commission’’). 
(b) DUTY OF THE COMMISSION.—Not later than 1 
year after the initial meeting of the Commission, the Com-
mission shall transmit to Congress a written report that 
includes recommendations and proposed legislation for 
achieving long-term solvency of the Highway Trust Fund. 
(c) MEMBERS.— 
(1) NUMBER AND APPOINTMENT.—The Com-
mission shall be composed of 9 members. Of the 
members of the Commission— 
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(A) 1 member shall be appointed by the 
President of the United States; 
(B) 1 member shall be appointed by the 
chairman of the Committee on Finance of the 
Senate; 
(C) 1 member shall be appointed by the 
ranking minority member of the Committee on 
Finance of the Senate; 
(D) 1 member shall be appointed by the 
chairman of the Committee on Ways and Means 
of the House of Representatives; 
(E) 1 member shall be appointed by the 
ranking minority member of the Committee on 
Ways and Means of the House of Representa-
tives; 
(F) 1 member shall be appointed by the 
chairman of the Committee on Environment 
and Public Works of the Senate; 
(G) 1 member shall be appointed by the 
ranking minority member of the Committee on 
Environment and Public Works of the Senate; 
(H) 1 member shall be appointed by the 
chairman of the Committee on Transportation 
and Infrastructure of the House of Representa-
tives; and 
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(I) 1 member shall be appointed by the 
ranking minority member of the Committee on 
Transportation and Infrastructure of the House 
of Representatives. 
(2) TIMING OF APPOINTMENTS.—Each of the 
appointments made under paragraph (1) shall be 
made not later than 45 days after the date of the 
enactment of this Act. 
(3) TERMS; VACANCIES.—Each member shall be 
appointed for the life of the Commission, and a va-
cancy in the Commission shall be filled in the man-
ner in which the original appointment was made. 
(4) COMPENSATION.— 
(A) IN GENERAL.—Members of the Com-
mission shall serve without pay. 
(B) TRAVEL
EXPENSES.—Each member 
shall receive travel expenses, including per diem 
in lieu of subsistence, in accordance with appli-
cable provisions under subchapter I of chapter 
57 of title 5, United States Code. 
(d) OPERATION
AND POWERS
OF
THE COMMIS-
SION.— 
(1) CHAIR.—The chairperson of the Commis-
sion shall be elected by the members of the Commis-
sion. 
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(2) MEETINGS.—The Commission shall meet 
not later than 30 days after the members of the 
Commission have been appointed, and at such times 
thereafter as the chairperson shall determine. 
(3) RULES OF PROCEDURE.—The chairperson 
shall, with the approval of a majority of the mem-
bers of the Commission, establish written rules of 
procedure for the Commission, which shall include a 
quorum requirement to conduct the business of the 
Commission. 
(4) HEARINGS.—The Commission may, for the 
purpose of carrying out this section, hold hearings, 
sit and act at times and places, take testimony, and 
receive evidence as the Commission considers appro-
priate. 
(5) OBTAINING OFFICIAL DATA.—The Commis-
sion may secure directly from any department or 
agency of the United States, including the Congres-
sional Budget Office and the Government Account-
ability Office, any information or technical assist-
ance necessary to enable it to carry out this section. 
Upon request of the chairperson of the Commission, 
the head of that department or agency shall furnish 
that information or technical assistance to the Com-
mission. 
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(6) CONTRACT AUTHORITY.—The Commission 
may contract with and compensate government and 
private agencies or persons for any purpose nec-
essary to enable it to carry out this section. 
(7) MAILS.—The Commission may use the 
United States mails in the same manner and under 
the same conditions as other departments and agen-
cies of the United States. 
(e) PERSONNEL.— 
(1) DIRECTOR.—The Commission shall have a 
Director who shall be appointed by the Commission. 
The Director shall be paid at a rate of pay equiva-
lent to the annual rate of basic pay for a comparable 
position paid under the Executive Schedule, subject 
to the approval of the chairperson of the Commis-
sion. 
(2) STAFF.—The Director may appoint and fix 
the pay of additional staff as the Director considers 
appropriate. 
(3) EXPERTS AND CONSULTANTS.—The Com-
mission may procure temporary and intermittent 
services under section 3109(b) of title 5, United 
States Code, but at rates for individuals not to ex-
ceed the daily equivalent of the annual rate of basic 
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pay for a comparable position paid under the Execu-
tive Schedule. 
(4) STAFF OF FEDERAL AGENCIES.—Upon re-
quest of the Commission, the head of any Federal 
department or agency may detail, without reim-
bursement, any of the personnel of that department 
or agency to the Commission to assist it in carrying 
out its duties under this section. 
(5) ADMINISTRATIVE
SUPPORT
SERVICES.— 
Upon the request of the Commission, the Adminis-
trator of General Services shall provide to the Com-
mission, on a reimbursable basis, the administrative 
support services necessary for the Commission to 
carry out its responsibilities under this section. 
(f) TERMINATION.—The Commission shall terminate 
not later than 60 days after the submission of the report 
described in subsection (b). 
(g) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated such sums as may be nec-
essary to carry out this section. 
(h) EXPEDITED CONSIDERATION
OF COMMISSION 
RECOMMENDATIONS.— 
(1) EXPEDITED CONSIDERATION.— 
(A) INTRODUCTION OF APPROVAL BILL.— 
The majority leader of each House or a des-
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ignee shall (by request) introduce an approval 
bill as described in paragraph (3) not later than 
the third day of session of that House after the 
date of receipt of the report transmitted to the 
Congress under subsection (b). 
(B) CONSIDERATION
IN
THE
HOUSE
OF 
REPRESENTATIVES.— 
(i) REFERRAL AND REPORTING.—Any 
committee of the House of Representatives 
to which an approval bill is referred shall 
report it to the House without amendment 
not later than the third legislative day 
after the date of its introduction. If a com-
mittee fails to report the bill within that 
period or the House has adopted a concur-
rent resolution providing for adjournment 
sine die at the end of a Congress, such 
committee shall be automatically dis-
charged from further consideration of the 
bill and it shall be placed on the appro-
priate calendar. 
(ii) 
PROCEEDING
TO
CONSIDER-
ATION.—Not later than 3 legislative days 
after the approval bill is reported or a 
committee has been discharged from fur-
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ther consideration thereof, it shall be in 
order to move to proceed to consider the 
approval bill in the House. Such a motion 
shall be in order only at a time designated 
by the Speaker in the legislative schedule 
within two legislative days after the day on 
which the proponent announces an inten-
tion to the House to offer the motion pro-
vided that such notice may not be given 
until the approval bill is reported or a com-
mittee has been discharged from further 
consideration thereof. Such a motion shall 
not be in order after the House has dis-
posed of a motion to proceed with respect 
to that special message. The previous ques-
tion shall be considered as ordered on the 
motion to its adoption without intervening 
motion. A motion to reconsider the vote by 
which the motion is disposed of shall not 
be in order. 
(iii) CONSIDERATION.—If the motion 
to proceed is agreed to, the House shall 
immediately proceed to consider the ap-
proval bill in the House without inter-
vening motion. The approval bill shall be 
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considered as read. All points of order 
against the approval bill and against its 
consideration are waived. The previous 
question shall be considered as ordered on 
the approval bill to its passage without in-
tervening motion except 4 hours of debate 
equally divided and controlled by the pro-
ponent and an opponent and one motion to 
limit debate on the bill. A motion to recon-
sider the vote on passage of the approval 
bill shall not be in order. 
(C) CONSIDERATION IN THE SENATE.— 
(i) COMMITTEE ACTION.—The appro-
priate committee of the Senate shall report 
without amendment the approval bill not 
later than the third session day after intro-
duction. If a committee fails to report the 
approval bill within that period or the Sen-
ate has adopted a concurrent resolution 
providing for adjournment sine die at the 
end of a Congress, the Committee shall be 
automatically discharged from further con-
sideration of the approval bill and it shall 
be placed on the appropriate calendar. 
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(ii) MOTION TO PROCEED.—Not later 
than 3 session days after the approval bill 
is reported in the Senate or the committee 
has been discharged thereof, it shall be in 
order for any Senator to move to proceed 
to consider the approval bill in the Senate. 
The motion shall be decided without debate 
and the motion to reconsider shall be 
deemed to have been laid on the table. 
Such a motion shall not be in order after 
the Senate has disposed of a prior motion 
to proceed with respect to the approval bill. 
(iii) CONSIDERATION.—If a motion to 
proceed to the consideration of the ap-
proval bill is agreed to, the Senate shall 
immediately proceed to consideration of 
the approval bill without intervening mo-
tion, order, or other business, and the ap-
proval bill shall remain the unfinished 
business of the Senate until disposed of. 
Consideration on the bill in the Senate 
under this subsection, and all debatable 
motions and appeals in connection there-
with, shall not exceed 10 hours equally di-
vided in the usual form. All points of order 
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against the approval bill or its consider-
ation are waived. Consideration in the Sen-
ate on any debatable motion or appeal in 
connection with the approval bill shall be 
limited to not more than 1 hour. A motion 
to postpone, or a motion to proceed to the 
consideration of other business, or a mo-
tion to recommit the approval bill is not in 
order. A motion to reconsider the vote by 
which the approval bill is agreed to or dis-
agreed to is not in order. 
(D) 
AMENDMENTS
PROHIBITED.—No 
amendment to, or motion to strike a provision 
from, an approval bill considered under this sec-
tion shall be in order in either the Senate or the 
House of Representatives. 
(E) COORDINATION
WITH
ACTION
BY 
OTHER HOUSE.— 
(i) IN GENERAL.—If, before passing 
the approval bill, one House receives from 
the other a bill— 
(I) the approval bill of the other 
House shall not be referred to a com-
mittee; and 
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(II) the procedure in the receiv-
ing House shall be the same as if no 
approval bill had been received from 
the other House until the vote on pas-
sage, when the bill received from the 
other House shall supplant the ap-
proval bill of the receiving House. 
(ii) 
EXCEPTION.—This 
paragraph 
shall not apply to the House of Represent-
atives. 
(2) LIMITATION.—Paragraph (1) shall apply 
only to an approval bill described in paragraph (3) 
and introduced pursuant to paragraph (1)(A). 
(3) APPROVAL BILL DESCRIBED.—For purposes 
of paragraph (1), a bill described in this paragraph 
is a bill— 
(A) which consists of the proposed legisla-
tion which is included in such report to carry 
out the recommendations made by the Commis-
sion in the report; and 
(B) the title of which is as follows: ‘‘A bill 
to carry out the recommendations of the High-
way Trust Fund Solvency Commission.’’. 
(4) EXTENDED TIME PERIOD.—If Congress ad-
journs at the end of a Congress and an approval bill 
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was then pending in either House of Congress or a 
committee thereof, or an approval bill had not yet 
been introduced with respect to a special message, 
then within the first 3 days of session of the next 
Congress, the Commission shall transmit to Con-
gress an additional special message containing all of 
the information in the previous, pending special mes-
sage. An approval bill may be introduced within the 
first five days of session of such next Congress and 
shall be treated as an approval bill under this sec-
tion, and the time periods described in subpara-
graphs (B) and (C) of paragraph (1) shall com-
mence on the day of introduction of that approval 
bill. 
SEC. 105. REGIONAL INFRASTRUCTURE ACCELERATOR 
PILOT PROGRAM. 
(a) IN GENERAL.—Not later than 90 days after the 
date of enactment of this Act, the Secretary of Transpor-
tation shall establish a regional infrastructure accelerator 
pilot program (in this section referred to as the ‘‘Pro-
gram’’) to assist certain State, local, and regional public 
entities to develop improved priorities and financing strat-
egies for the accelerated development of covered infra-
structure projects. 
(b) ACCELERATOR ESTABLISHMENT AUTHORITY.— 
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(1) IN
GENERAL.—In carrying out the Pro-
gram, the Secretary is authorized to establish re-
gional infrastructure accelerators that will— 
(A) serve a defined geographic area; and 
(B) act as a resource to State, local, and 
regional public entities in that area in accord-
ance with this section. 
(2) APPLICATIONS.—To be eligible for a re-
gional infrastructure accelerator under the Program, 
State, local, and regional public entities shall submit 
to the Secretary an application proposing an accel-
erator at such time, in such form, and containing 
such information as the Secretary determines is ap-
propriate. 
(3) NUMBER.—To the extent practicable, the 
Secretary shall establish at least 5 regional infra-
structure accelerators under the Program. 
(4) GEOGRAPHIC
DIVERSITY.—In establishing 
regional infrastructure accelerators under the Pro-
gram, the Secretary shall consider the need for geo-
graphic diversity among such accelerators. 
(c) ACCELERATOR COMPOSITION.— 
(1) IN GENERAL.—Each regional infrastructure 
accelerator established under subsection (b) shall in-
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clude a membership composed of at least the fol-
lowing: 
(A) A representative of each State, local, 
or regional public entity in the area served by 
the accelerator that participated in the applica-
tion that resulted in the establishment of the 
accelerator. 
(B) A representative of a State, local, or 
regional public entity located outside the area 
served by the accelerator with experience in in-
novative infrastructure financing. 
(C) A representative of a financing entity 
that intends to finance covered infrastructure 
projects in the area served by the accelerator. 
(D) A representative of a construction or 
development entity that intends to develop cov-
ered infrastructure projects in the area served 
by the accelerator. 
(E) A representative of the Department of 
Transportation. 
(F) A representative of the Department of 
the Treasury. 
(G) A representative of the Environmental 
Protection Agency. 
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(H) A representative of another Federal 
department or agency with jurisdiction over 
covered infrastructure projects intended for the 
area served by the accelerator. 
(2) LOCAL REPRESENTATION REQUIREMENT.— 
At least 60 percent of the membership of each re-
gional infrastructure accelerator established under 
subsection (b) shall be composed of representatives 
of State, local, and regional public entities located in 
the area served by the accelerator. 
(3) DIVERSE
PERSPECTIVES.—Each regional 
infrastructure accelerator established under sub-
section (b) shall have a membership that represents 
a diverse set of public and private perspectives. 
(d) REGIONAL
INFRASTRUCTURE
ACCELERATION 
PLAN.—Each regional infrastructure accelerator estab-
lished under subsection (b) shall develop and implement 
a regional infrastructure acceleration plan for the area 
served by the accelerator that— 
(1) describes how the accelerator will promote 
investment in covered infrastructure projects, includ-
ing through— 
(A) providing guidance and feedback to 
State, local, and regional public entities with re-
spect to infrastructure priorities, financing 
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strategies, and other matters relating to such 
projects; 
(B) evaluating and promoting innovative 
financing methods; 
(C) connecting sources of financing to the 
public sponsors of such projects; 
(D) establishing standards to measure the 
life-cycle impacts of investments in such 
projects; and 
(E) providing technical assistance and in-
formation on best practices with respect to such 
projects from predevelopment activities through 
maintenance; 
(2) assesses regional and multimodal ap-
proaches to advancing innovative investment in cov-
ered infrastructure projects; and 
(3) develops strategies for— 
(A) transparency with respect to covered 
infrastructure project analysis to ensure the 
public interest is protected; 
(B) predevelopment capital programs to fa-
cilitate the creation of a catalog of covered in-
frastructure projects available for investment; 
(C) the bundling of smaller-scale and rural 
projects into project pools for investment; and 
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(D) the multimodal integration of trans-
portation projects. 
(e) PROGRAM TERMINATION.—The Program shall 
terminate on the date that is 10 years after the date on 
which the Program is established under subsection (a). 
(f) COVERED
INFRASTRUCTURE
PROJECT
DE-
FINED.—In this section, the term ‘‘covered infrastructure 
project’’ means a project— 
(1) sponsored by a State, local, or regional pub-
lic entity; and 
(2) that involves the construction, maintenance, 
improvement, or repair of a transportation, energy, 
water, communications, or educational facility that 
is, or will be, owned by such an entity. 
(g) APPROPRIATION.—Out of money in the Treasury 
not otherwise appropriated, there is hereby appropriated 
$25,000,000 to the Department of Transportation to 
carry out the Program. Amounts appropriated under this 
subsection shall remain available without fiscal year limi-
tation. 
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TITLE II—DEADLINE FOR 
INTERNATIONAL TAX REFORM 
SEC. 201. 18-MONTH DEADLINE FOR INTERNATIONAL TAX 
REFORM. 
Notwithstanding any provision of title III, the provi-
sions of, and amendments made by, title III shall not take 
effect if a bill which reforms the corporate international 
tax system by eliminating the incentive to hold earnings 
in low-tax foreign jurisdictions is enacted into law during 
the 18-month period which begins on the date of the en-
actment of this Act. 
TITLE III—FALLBACK 
INTERNATIONAL TAX REFORM 
SEC. 300. GENERAL EFFECTIVE DATE OF TITLE. 
For purposes of this title, the term ‘‘applicable date’’ 
means the date which is 18 months after the date of the 
enactment of this Act. 
Subtitle A—Reform of Taxation of 
Income Earned by Controlled 
Foreign Corporations 
PART I—GENERAL PROVISIONS 
SEC. 301. MODIFICATIONS TO SUBPART F INCOME. 
(a) IN GENERAL.—Subpart F of part III of sub-
chapter N of chapter 1 is amended by striking sections 
952 through 956 and inserting the following: 
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‘‘SEC. 952. SUBPART F INCOME DEFINED. 
‘‘(a) IN GENERAL.—For purposes of this subpart, the 
term ‘subpart F income’ means, with respect to any con-
trolled foreign corporation, the sum of— 
‘‘(1) the inclusion percentage of the corpora-
tion’s modified active income, plus 
‘‘(2) 100 percent of the corporation’s modified 
nonactive income. 
‘‘(b) MODIFIED ACTIVE INCOME.— 
‘‘(1) IN GENERAL.—The term ‘modified active 
income’ means, with respect to any controlled for-
eign corporation, the excess (if any) of— 
‘‘(A) the corporation’s active foreign mar-
ket income, over 
‘‘(B) the amount of the reduction under 
subsection (e) for deductions properly allocable 
to such income. 
‘‘(2) REDUCTION FOR CERTAIN LOSSES.— 
‘‘(A) IN
GENERAL.—The modified active 
income determined under paragraph (1) for any 
taxable year shall be reduced (but not below 
zero)— 
‘‘(i) first by any active foreign market 
loss for any prior taxable year, and 
‘‘(ii) then by any qualified loss for 
such taxable year (or for any prior taxable 
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year to the extent provided in subsection 
(c)(3)(B)). 
‘‘(B) LIMITATION.—An active foreign mar-
ket loss or qualified loss for any prior taxable 
year shall only be taken into account under sub-
paragraph (A)— 
‘‘(i) if the prior taxable year is a tax-
able year which begins on or after the ap-
plicable date (as defined in section 300 of 
the Infrastructure 2.0 Act), and for which 
the controlled foreign corporation was a 
controlled foreign corporation, and 
‘‘(ii) to the extent such loss has not 
been previously taken into account under 
this subsection. 
‘‘(3) ACTIVE
FOREIGN
MARKET
LOSS.—The 
term ‘active foreign market loss’ means, with respect 
to any taxable year, the amount by which the 
amount determined under paragraph (1)(B) exceeds 
the amount determined under paragraph (1)(A). 
‘‘(c) MODIFIED NONACTIVE INCOME.— 
‘‘(1) IN GENERAL.—The term ‘modified non-
active income’ means, with respect to any controlled 
foreign corporation, the excess (if any) of— 
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‘‘(A) the corporation’s gross income deter-
mined without regard to active foreign market 
income, over 
‘‘(B) the amount of the reduction under 
subsection (e) for deductions properly allocable 
to such gross income. 
‘‘(2) REDUCTION
FOR
QUALIFIED
LOSSES.— 
The amount determined under paragraph (1) for 
any taxable year shall be reduced (but not below 
zero) by any qualified loss for any prior taxable year 
beginning on or after the applicable date (as defined 
in section 300 of the Infrastructure 2.0 Act), for 
which the controlled foreign corporation was a con-
trolled foreign corporation, but only to the extent 
such loss has not been previously taken into account 
under subsection (b)(2) or this subsection. 
‘‘(3) QUALIFIED LOSS.—For purposes of this 
section— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
loss’ means, with respect to any taxable year, 
the amount by which the amount determined 
under paragraph (1)(B) exceeds the amount de-
termined under paragraph (1)(A). 
‘‘(B) ORDERING RULE FOR LOSSES CAR-
RIED
FROM
PRIOR
TAXABLE
YEARS.—In the 
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case of any qualified losses carried to a taxable 
year from 1 or more prior taxable years, such 
losses shall be taken into account— 
‘‘(i) first under paragraph (2), and 
‘‘(ii) then under subsection (b)(2)(B) 
to the extent such losses exceed the 
amount determined under paragraph (1). 
‘‘(d) INCLUSION PERCENTAGE.—For purposes of this 
section— 
‘‘(1) IN GENERAL.—The term ‘inclusion per-
centage’ means 20 percent increased by the number 
of percentage points (if any) determined under para-
graph (2). 
‘‘(2) ADDITIONAL
INCLUSION
FOR
EARNINGS 
NOT SUBJECT TO OECD AVERAGE FOREIGN TAX.— 
The number of percentage points determined under 
this paragraph with respect to any controlled foreign 
corporation for any taxable year, is the number of 
percentage points (not less than zero nor more than 
15) which bears the same ratio to 15 as— 
‘‘(A) the number of percentage points by 
which 25 percent exceeds the aggregate foreign 
rate of tax imposed on the modified active in-
come of such controlled foreign corporation for 
such taxable year, bears to 
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‘‘(B) 25. 
‘‘(e) EXCLUSION OF UNITED STATES INCOME.—For 
purposes of this subpart, any item of income of the con-
trolled foreign corporation which is effectively connected 
with the conduct by such corporation of a trade or busi-
ness within the United States shall not be taken into ac-
count in computing the subpart F income of such corpora-
tion unless such item is exempt from taxation (or is sub-
ject to a reduced rate of tax) pursuant to a treaty obliga-
tion of the United States. For purposes of this subsection, 
any exemption (or reductions) with respect to the tax im-
posed by section 884 shall not be taken into account. 
‘‘(f) DEDUCTIONS.—For purposes of subsections 
(b)(1)(B) and (c)(1)(B), the active foreign market income, 
and gross income other than active foreign market income, 
of a controlled foreign corporation shall each be reduced, 
under regulations prescribed by the Secretary, by any de-
ductions (including taxes) of such corporation properly al-
locable to items of income taken into account in computing 
such income. 
‘‘SEC. 953. ACTIVE FOREIGN MARKET INCOME. 
‘‘(a) ACTIVE FOREIGN MARKET INCOME DEFINED.— 
For purposes of this subpart, the term ‘active foreign mar-
ket income’ means, with respect to any controlled foreign 
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corporation, the aggregate of all items of income which 
are— 
‘‘(1) attributable to economically significant ac-
tivities with respect to a qualified trade or business, 
and 
‘‘(2) derived in connection with— 
‘‘(A) property which is sold, exchanged, or 
otherwise disposed of for use, consumption, or 
disposition outside of the United States, or 
‘‘(B) services which are provided outside of 
the United States with respect to persons or 
property located outside of the United States. 
‘‘(b) TREATMENT OF PASSIVE INCOME.— 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the term ‘active foreign 
market income’ shall not include the passive income 
(as defined in section 954) of a controlled foreign 
corporation. 
‘‘(2) ACTIVE
FOREIGN
MARKET
INCOME
IN-
CLUDES CERTAIN INCOME.—The term ‘active foreign 
market income’ shall include— 
‘‘(A) if the controlled foreign corporation 
or a qualified business unit of the corporation 
is an eligible controlled foreign corporation (as 
defined in section 954(c)), any item of income 
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of the corporation or unit which is qualified 
banking or financing income (as so defined), 
‘‘(B) if the controlled foreign corporation 
or a qualified business unit of the corporation 
is a qualifying insurance company (as defined 
in section 954(d)) or a qualifying insurance 
company branch (as so defined), any item of in-
come of the corporation or unit which is quali-
fied insurance income (as so defined), 
‘‘(C) any item of income which is rents or 
royalties derived from the ownership and oper-
ation (including leasing) of real or personal 
property which is not treated as passive income 
under section 954(a)(2)(A), and 
‘‘(D) in the case of a regular dealer in 
property which is property described in section 
954(a)(1)(B), forward contracts, option con-
tracts, or similar financial instruments (includ-
ing notional principal contracts and all instru-
ments referenced to commodities), any item of 
income from any transaction (including hedging 
transactions and transactions involving physical 
settlement) entered into in the ordinary course 
of such dealer’s trade or business as such a 
dealer. 
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‘‘(3) GAIN OR LOSS FROM SALES OF STOCK IN 
OTHER
CFCS.—If a controlled foreign corporation 
sells, exchanges, or otherwise disposes of stock in 
another controlled foreign corporation which is a re-
lated person to the selling corporation— 
‘‘(A) gain from such sale, exchange, or dis-
position shall be treated as active foreign mar-
ket income to the extent that such gain would 
have been excluded from gross income under 
section 1203 if the selling corporation were a 
United States shareholder in the other con-
trolled foreign corporation, and 
‘‘(B) loss from such sale, exchange, or dis-
position shall not be allowed to the extent such 
loss would have been disallowed under section 
1213 if the selling corporation were a United 
States shareholder in the other controlled for-
eign corporation. 
‘‘(4) GAIN OR LOSS FROM SALES OF INTERESTS 
IN 25-PERCENT OWNED PARTNERSHIPS.— 
‘‘(A) IN GENERAL.— 
‘‘(i) PORTION
TREATED
AS
ACTIVE 
FOREIGN MARKET INCOME.—In the case of 
any sale or exchange by a controlled for-
eign corporation of an interest in a part-
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nership with respect to which such cor-
poration is a 25-percent owner, gain or 
loss on such sale shall be taken into ac-
count in determining active foreign market 
income in the amount which bears the 
same ratio to the amount of such gain or 
loss as the controlled foreign corporation’s 
distributable share of the active foreign 
market income from the partnership over 
the applicable period bears to the con-
trolled foreign corporation’s distributable 
share of gross income from the partnership 
over such period. The Secretary shall pre-
scribe such regulations as may be appro-
priate to prevent abuse of the purposes of 
this paragraph, including regulations pro-
viding for coordination of this paragraph 
with the provisions of subchapter K. 
‘‘(ii) APPLICABLE PERIOD.—For pur-
poses of this subparagraph, the term ‘ap-
plicable period’ means, with respect to any 
interest in a partnership, the shorter of the 
3-taxable-year period immediately pre-
ceding the taxable year of the sale or ex-
change or the controlled foreign corpora-
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tion’s holding period in the interest. In no 
event shall the applicable period include 
any portion of any taxable year beginning 
before the applicable date (as defined in 
section 300 of the Infrastructure 2.0 Act). 
‘‘(B) 25-PERCENT OWNER.—For purposes 
of this paragraph, the term ‘25-percent owner’ 
means a controlled foreign corporation which 
owns directly 25 percent or more of the capital 
or profits interest in a partnership. For pur-
poses of the preceding sentence, if a controlled 
foreign corporation is a shareholder or partner 
of a corporation or a partnership, the controlled 
foreign corporation shall be treated as owning 
directly its proportionate share of any capital or 
profits interest in any partnership held directly 
or indirectly by such corporation or partnership. 
If a controlled foreign corporation is treated as 
owning a capital or profits interest in a part-
nership under constructive ownership rules 
similar to the rules of section 958(b), the con-
trolled foreign corporation shall be treated as 
owning such interest directly for purposes of 
this subparagraph. 
‘‘(c) TREATMENT OF INSURANCE INCOME.— 
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‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the term ‘active foreign 
market income’ shall not include the insurance in-
come (as defined in section 955(a)) of a controlled 
foreign corporation. 
‘‘(2) ACTIVE
FOREIGN
MARKET
INCOME
IN-
CLUDES
EXEMPT
INSURANCE
INCOME.—The term 
‘active foreign market income’ shall include exempt 
insurance income (as defined in section 955(c)) shall 
be treated as active foreign market income. 
‘‘(d) TREATMENT
OF INCOME FROM PROPERTY 
USED, CONSUMED, OR DISPOSED OF IN THE UNITED 
STATES.—For purposes of subsection (a)(2)(A)— 
‘‘(1) IN
GENERAL.—The term ‘active foreign 
market income’ shall not include income derived in 
connection with property which is sold, exchanged, 
or otherwise disposed of to any person if it was rea-
sonable for the controlled foreign corporation (or a 
related person) to expect that— 
‘‘(A) such property would be used, con-
sumed, or disposed of in the United States, or 
‘‘(B) such property would be used in the 
manufacture or production of, or as a compo-
nent part in, other property which would be 
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used, consumed, or disposed of in the United 
States. 
‘‘(2) CHAIN OF RELATED PERSONS.—If— 
‘‘(A) property is ultimately used, con-
sumed, or disposed of as described in subpara-
graph (A) or (B) of paragraph (1), and 
‘‘(B) all sales, exchanges, or dispositions of 
such property (or of the other property de-
scribed in paragraph (1)(B)) before the sale for 
use, consumption, or disposition in the United 
States are between related persons, 
then, for purposes of paragraph (1), there shall be 
deemed to have been a reasonable expectation that 
the property (or the other property described in 
paragraph (1)(B)) would be used, consumed, or dis-
posed of in the United States. 
‘‘(3) 
EXCEPTION
FOR
PROPERTY
SUBSE-
QUENTLY EXPORTED.—Paragraphs (1) and (2) shall 
not apply with respect to property which, after entry 
into the United States is— 
‘‘(A) sold, leased, rented, or licensed by the 
controlled foreign corporation or a related per-
son for direct use, consumption, or disposition 
outside the United States, or 
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‘‘(B) used by the controlled foreign cor-
poration or a related person as a component in 
other property which is so sold, leased, rented, 
or licensed. 
‘‘(4) RELATED
PERSON
DEFINED.—For pur-
poses of this subsection, the term ‘related person’ 
has the meaning given such term under section 
954(b). 
‘‘(e) ECONOMICALLY SIGNIFICANT ACTIVITIES.—For 
purposes of this section, the term ‘economically significant 
activities’ means, with respect to any item of income, ac-
tivities— 
‘‘(1) performed outside the United States, 
‘‘(2) performed by officers or employees of the 
controlled foreign corporation which are part of the 
management and operational functions of the cor-
poration, and 
‘‘(3) which make a substantial contribution to 
the production of such item of income. 
‘‘(f) QUALIFIED TRADE
OR BUSINESS.—For pur-
poses of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified trade 
or business’ means any trade or business which con-
sists of— 
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‘‘(A) manufacturing, producing, growing, 
or extracting property outside of the United 
States, or 
‘‘(B) providing services outside of the 
United States. 
‘‘(2) SPECIAL
RULE
FOR
SUBSTANTIAL
CON-
TRIBUTIONS TO MANUFACTURING AND SERVICES.— 
If a trade or business consists of making a substan-
tial contribution through the activities of the officers 
and employees of the controlled foreign corporation 
to a qualified trade or business which is described in 
subparagraph (A) or (B) of paragraph (1) of an-
other person, then the trade or business shall be 
treated as a qualified trade or business described in 
subparagraph (A) or (B) of paragraph (1), which-
ever is applicable. 
‘‘SEC. 954. DEFINITION OF PASSIVE INCOME. 
‘‘(a) PASSIVE INCOME.— 
‘‘(1) IN GENERAL.—For purposes of this part, 
the term ‘passive income’ means the portion of the 
gross income which consists of: 
‘‘(A) DIVIDENDS, ETC.—Dividends, inter-
est, royalties, rents, and annuities. 
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‘‘(B) 
CERTAIN
PROPERTY
TRANS-
ACTIONS.—The excess of gains over losses from 
the sale or exchange of property— 
‘‘(i) which gives rise to income de-
scribed in subparagraph (A) (after applica-
tion of paragraph (2)(A)) other than prop-
erty which gives rise to income not treated 
as passive income by reason of subsection 
(c) or (d) for the taxable year, 
‘‘(ii) which is an interest in a trust, 
partnership, or REMIC, or 
‘‘(iii) which does not give rise to any 
income. 
Gains and losses from the sale or exchange of 
any property which, in the hands of the con-
trolled foreign corporation, is property de-
scribed in section 1221(a)(1) shall not be taken 
into account under this subparagraph. 
‘‘(C) COMMODITIES
TRANSACTIONS.—The 
excess of gains over losses from transactions 
(including futures, forward, and similar trans-
actions) in any commodities. This subparagraph 
shall not apply to gains or losses which— 
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‘‘(i) arise out of commodity hedging 
transactions (as defined in paragraph 
(5)(A)), 
‘‘(ii) are active business gains or 
losses from the sale of commodities, but 
only if substantially all of the controlled 
foreign 
corporation’s 
commodities 
are 
property described in paragraph (1), (2), 
or (8) of section 1221(a), or 
‘‘(iii) are foreign currency gains or 
losses (as defined in section 988(b)) attrib-
utable to any section 988 transactions. 
‘‘(D) FOREIGN CURRENCY GAINS.—The ex-
cess of foreign currency gains over foreign cur-
rency losses (as defined in section 988(b)) at-
tributable to any section 988 transactions. This 
subparagraph shall not apply in the case of any 
transaction, other than a borrowing, directly re-
lated to the business needs of the controlled for-
eign corporation. 
‘‘(E) INCOME
EQUIVALENT
TO
INTER-
EST.—Any income equivalent to interest, in-
cluding income from commitment fees (or simi-
lar amounts) for loans actually made. 
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‘‘(F) INCOME FROM NOTIONAL PRINCIPAL 
CONTRACTS.— 
‘‘(i) IN GENERAL.—Net income from 
notional principal contracts. 
‘‘(ii) COORDINATION
WITH
OTHER 
CATEGORIES
OF
PASSIVE
INCOME.—Any 
item of income, gain, deduction, or loss 
from a notional principal contract entered 
into for purposes of hedging any item de-
scribed in any preceding subparagraph 
shall not be taken into account for pur-
poses of this subparagraph but shall be 
taken into account under such other sub-
paragraph. 
‘‘(G) PAYMENTS IN LIEU OF DIVIDENDS.— 
Payments in lieu of dividends which are made 
pursuant to an agreement to which section 
1058 applies. 
‘‘(H) PERSONAL SERVICE CONTRACTS.— 
‘‘(i) Amounts received under a con-
tract under which the corporation is to fur-
nish personal services if— 
‘‘(I) some person other than the 
corporation has the right to designate 
(by name or by description) the indi-
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vidual who is to perform the services, 
or 
‘‘(II) the individual who is to per-
form the services is designated (by 
name or by description) in the con-
tract, and 
‘‘(ii) amounts received from the sale 
or other disposition of such a contract. 
This subparagraph shall apply with respect to 
amounts received for services under a particular 
contract only if at some time during the taxable 
year 25 percent or more in value of the out-
standing stock of the corporation is owned, di-
rectly or indirectly, by or for the individual who 
has performed, is to perform, or may be des-
ignated (by name or by description) as the one 
to perform, such services. 
‘‘(2) EXCEPTION FOR CERTAIN AMOUNTS.— 
‘‘(A) RENTS AND ROYALTIES DERIVED IN 
ACTIVE
BUSINESS.—Passive income shall not 
include rents and royalties which are derived in 
the active conduct of a trade or business and 
which are received from a person other than a 
related person. For purposes of the preceding 
sentence, rents derived from leasing an aircraft 
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or vessel in foreign commerce shall not fail to 
be treated as derived in the active conduct of a 
trade or business if, as determined under regu-
lations prescribed by the Secretary, the active 
leasing expenses are not less than 10 percent of 
the profit on the lease. 
‘‘(B) EXCEPTION FOR DEALERS.—Except 
as provided by regulations, in the case of a reg-
ular dealer in property which is property de-
scribed in paragraph (1)(B), forward contracts, 
option contracts, or similar financial instru-
ments (including notional principal contracts 
and all instruments referenced to commodities), 
there shall not be taken into account in com-
puting passive income any item of income, gain, 
deduction, or loss from any transaction (includ-
ing hedging transactions and transactions in-
volving physical settlement) entered into in the 
ordinary course of such dealer’s trade or busi-
ness as such a dealer. 
‘‘(3) LOOK-THRU RULE FOR CERTAIN PARTNER-
SHIP SALES.— 
‘‘(A) IN
GENERAL.—In the case of any 
sale or exchange by a controlled foreign cor-
poration of an interest in a partnership with re-
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spect to which such corporation is a 25-percent 
owner, gain or loss on such sale shall be treated 
as being described in paragraph (1)(B)(ii) in 
the amount which bears the same ratio to the 
amount of such gain or loss as the controlled 
foreign corporation’s distributable share of pas-
sive income from the partnership over the appli-
cable 
period 
(as 
defined 
in 
section 
953(b)(4)(A)(ii)) bears to the controlled foreign 
corporation’s distributable share of gross in-
come from the partnership over such period. 
The Secretary shall prescribe such regulations 
as may be appropriate to prevent abuse of the 
purposes of this paragraph, including regula-
tions providing for the coordination of this 
paragraph with the provisions of subchapter K. 
‘‘(B) 25-PERCENT OWNER.—For purposes 
of this paragraph, the term ‘25-percent owner’ 
has the meaning given such term under section 
953(b)(4)(B). 
‘‘(4) DEFINITION AND SPECIAL RULES RELAT-
ING TO COMMODITY TRANSACTIONS.— 
‘‘(A) 
COMMODITY
HEDGING
TRANS-
ACTIONS.—For 
purposes 
of 
paragraph 
(1)(C)(i), the term ‘commodity hedging trans-
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action’ means any transaction with respect to a 
commodity if such transaction— 
‘‘(i) is a hedging transaction as de-
fined in section 1221(b)(2), determined— 
‘‘(I) without regard to subpara-
graph (A)(ii) thereof, 
‘‘(II) by applying subparagraph 
(A)(i) thereof by substituting ‘ordi-
nary property or property described in 
section 1231(b)’ for ‘ordinary prop-
erty’, and 
‘‘(III) by substituting ‘controlled 
foreign corporation’ for ‘taxpayer’ 
each place it appears, and 
‘‘(ii) is clearly identified as such in ac-
cordance with section 1221(a)(7). 
‘‘(B) TREATMENT OF DEALER ACTIVITIES 
UNDER PARAGRAPH (1)(C).—Commodities with 
respect to which gains and losses are not taken 
into account under paragraph (2)(B) in com-
puting a controlled foreign corporation’s passive 
income shall not be taken into account in apply-
ing the substantially all test under paragraph 
(1)(C)(ii) to such corporation. 
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‘‘(C) REGULATIONS.—The Secretary shall 
prescribe such regulations as are appropriate to 
carry out the purposes of paragraph (1)(C) in 
the case of transactions involving related per-
sons. 
‘‘(b) RELATED PERSON DEFINED.—For purposes of 
this section, a person is a related person with respect to 
a controlled foreign corporation, if— 
‘‘(1) such person is an individual, corporation, 
partnership, trust, or estate which controls, or is 
controlled by, the controlled foreign corporation, or 
‘‘(2) such person is a corporation, partnership, 
trust, or estate which is controlled by the same per-
son or persons which control the controlled foreign 
corporation. 
For purposes of the preceding sentence, control means, 
with respect to a corporation, the ownership, directly or 
indirectly, of stock possessing more than 50 percent of the 
total voting power of all classes of stock entitled to vote 
or of the total value of stock of such corporation. In the 
case of a partnership, trust, or estate, control means the 
ownership, directly or indirectly, of more than 50 percent 
(by value) of the beneficial interests in such partnership, 
trust, or estate. For purposes of this subsection, rules 
similar to the rules of section 958 shall apply. 
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‘‘(c) SPECIAL RULE FOR INCOME DERIVED IN THE 
ACTIVE CONDUCT OF BANKING, FINANCING, OR SIMILAR 
BUSINESSES.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(a)(1), passive income shall not include qualified 
banking or financing income of an eligible controlled 
foreign corporation. 
‘‘(2) ELIGIBLE
CONTROLLED
FOREIGN
COR-
PORATION.—For purposes of this subsection, the 
term ‘eligible controlled foreign corporation’ means 
any controlled foreign corporation if— 
‘‘(A) more than 80 percent of the gross in-
come of the controlled foreign corporation is de-
rived directly from the active and regular con-
duct of a lending, finance, or financial services 
business from transactions with customers 
which are located outside the United States and 
are not related persons, or 
‘‘(B) it is a regulated financial institution. 
‘‘(3) QUALIFIED BANKING OR FINANCING IN-
COME.—For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
banking or financing income’ means income of 
an 
eligible 
controlled 
foreign 
corporation 
which— 
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‘‘(i) is derived in the active conduct of 
a banking, financing, or similar business 
by such eligible controlled foreign corpora-
tion, 
‘‘(ii) is derived from one or more 
transactions— 
‘‘(I) with customers located in a 
country other than the United States, 
and 
‘‘(II) substantially all of the ac-
tivities in connection with which are 
conducted directly by the corporation 
in its home country, and 
‘‘(iii) is treated as earned by such cor-
poration in its home country for purposes 
of such country’s tax laws. 
‘‘(B) INCOME DERIVED FROM CUSTOMERS 
TO INCLUDE CERTAIN INVESTMENT INCOME.— 
For purposes of subparagraph (A), in the case 
of a regulated financial institution, income de-
rived from customers includes income derived 
from— 
‘‘(i) reserves that are required to be 
held pursuant to banking regulations, 
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‘‘(ii) deposits placed with the central 
bank (or equivalent thereof) in the cor-
poration’s home country, and 
‘‘(iii) investments in debt instruments 
issued by the home country. 
‘‘(C) SUBSTANTIAL
ACTIVITY
REQUIRE-
MENT FOR CROSS BORDER INCOME.—The term 
‘qualified banking or financing income’ shall 
not include income derived from 1 or more 
transactions with customers located in a coun-
try other than the home country of the eligible 
controlled foreign corporation unless such cor-
poration conducts substantial activity with re-
spect to a banking, financing, or similar busi-
ness in its home country. 
‘‘(D) DIRECT CONDUCT OF ACTIVITIES.— 
For purposes of subparagraph (A)(ii)(II), an 
activity shall be treated as conducted directly by 
an eligible controlled foreign corporation in its 
home country if the activity is performed by 
employees of a related person and— 
‘‘(i) the related person is a resident 
subject to tax under the laws of the home 
country of the corporation to which sub-
paragraph (A)(ii)(II) is being applied, 
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‘‘(ii) the activity is performed in such 
home country, and 
‘‘(iii) the related person is com-
pensated on an arm’s-length basis for the 
performance of the activity by its employ-
ees and such compensation is treated as 
earned by such person in such home coun-
try for purposes of the home country’s tax 
laws. 
‘‘(4) LENDING, FINANCE, OR FINANCIAL SERV-
ICES BUSINESS.—For purposes of this subsection, 
except as provided in regulations, the term ‘lending, 
finance, or financial services business’ means the 
business of— 
‘‘(A) making loans, 
‘‘(B) purchasing, selling, discounting, or 
negotiating on a regular basis accounts receiv-
able, notes, or installment obligations, 
‘‘(C) engaging in leasing (including enter-
ing into leases and purchasing, servicing, and 
disposing of leases and leased assets), 
‘‘(D) issuing letters of credit or providing 
guarantees, 
‘‘(E) providing charge and credit card 
services, 
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‘‘(F) performing trust services, including 
as a fiduciary, agent, or custodian, other than 
trust services provided by a broker or dealer in 
stock, securities, or other financial instruments, 
‘‘(G) arranging interest rate or currency 
futures, forwards, options, or notional principal 
contracts for, or entering into such transactions 
with, customers, 
‘‘(H) providing traveler’s check and money 
order services for customers, 
‘‘(I) providing correspondent bank services 
for customers, 
‘‘(J) engaging in hedging activities directly 
related to an activity described in any other 
subparagraph of this paragraph, 
‘‘(K) underwriting issues of stock, debt, or 
other securities for customers, 
‘‘(L) providing financial, investment advi-
sory, or investment management services, 
‘‘(M) purchasing or selling stock, debt in-
struments, interest rate or currency futures, or 
other securities or derivative financial products 
(including notional principal contracts) from or 
to customers and holding such stock, debt in-
struments, futures, or other securities or prod-
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ucts as inventory for sale to customers, unless 
such stock, debt instruments, futures, or other 
securities or products are not held in a dealer 
capacity, 
‘‘(N) effecting transactions in securities for 
customers as a securities broker, or 
‘‘(O) rendering services or making facilities 
available in connection with activities described 
in subparagraphs (A) through (N) carried on 
by— 
‘‘(i) the corporation rendering services 
or making facilities available, or 
‘‘(ii) another corporation which is a 
member of the same affiliated group (as 
defined in section 1504, but determined 
without regard to section 1504(b)(3)). 
‘‘(5) OTHER
DEFINITIONS.—For purposes of 
this subsection— 
‘‘(A) CUSTOMER.—The term ‘customer’ 
means, with respect to any controlled foreign 
corporation, any person which has a customer 
relationship with such corporation and which is 
acting in its capacity as such. 
‘‘(B) HOME
COUNTRY.—Except as pro-
vided in regulations, the term ‘home country’ 
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means, with respect to any entity, the country 
with respect to which the entity is a resident for 
purposes of the country’s income tax laws. 
‘‘(C) LOCATED.—Except as provided in 
regulations, for purposes of paragraph (3)(A)— 
‘‘(i) if a customer is a natural person, 
the customer is considered to be located in 
the country in which the customer is phys-
ically located when entering into the trans-
action, and 
‘‘(ii) if a customer is not a natural 
person, the customer is considered to be lo-
cated in the country from which the cus-
tomer enters into the transaction. 
‘‘(D) QUALIFIED
BUSINESS
UNIT.—The 
term ‘qualified business unit’ has the meaning 
given such term by section 989(a). 
‘‘(E) REGULATED
FINANCIAL
INSTITU-
TION.—Except as provided in regulations, the 
term ‘regulated financial institution’ means a 
controlled foreign corporation which— 
‘‘(i) is engaged in the active conduct 
of a banking business and is an institution 
licensed to do business as a bank in the 
United States (or is any other corporation 
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not so licensed which is specified by the 
Secretary in regulations), or 
‘‘(ii) satisfies each of the following 
conditions: 
‘‘(I) The corporation is directly 
or indirectly wholly owned by a do-
mestic corporation that is a bank (as 
defined in section 581) or a depository 
institution holding company (as de-
fined in section 3(w)(1) of the Federal 
Deposit Insurance Act (12 U.S.C. 
1813(w)(1))). 
‘‘(II) The corporation is subject 
to bank regulatory supervision in a ju-
risdiction the central bank of which 
(or equivalent thereof) is a member of 
the Basel Committee on Banking Su-
pervision. 
‘‘(III) The corporation is licensed 
and regulated in such jurisdiction as a 
bank. 
‘‘(6) SEPARATE
APPLICATION
TO
QUALIFIED 
BUSINESS UNITS.— 
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‘‘(A) IN GENERAL.—If a controlled foreign 
corporation has 1 or more qualified business 
units— 
‘‘(i) this subsection shall be applied 
separately to each such unit in the same 
manner as if it were a controlled foreign 
corporation, and 
‘‘(ii) if any such unit is treated as an 
eligible controlled foreign corporation after 
application of clause (i), the qualified 
banking or financing income of such unit 
shall be treated as qualified banking or fi-
nancing income of the controlled foreign 
corporation of which such unit is a part. 
‘‘(B) 
DETERMINATIONS
MADE
SEPA-
RATELY.—For purposes of the separate applica-
tion of this subsection to a controlled foreign 
corporation and its qualified business units— 
‘‘(i) in the case of the controlled for-
eign corporation, only activities and items 
of income, deduction, gain, or loss and ac-
tivities of such corporation not properly al-
locable or attributable to any qualified 
business unit of such corporation shall be 
taken into account, and 
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