H. R. 1—163 
‘‘(D) RELATED PARTY.—For purposes of this paragraph, 
the term ‘related party’ means any member of an affiliated 
group as defined in section 1504(a), determined— 
‘‘(i) by substituting ‘more than 50 percent’ for ‘at 
least 80 percent’ each place it appears, and 
‘‘(ii) without regard to paragraphs (2) and (3) of 
section 1504(b). 
Any person (other than a corporation) shall be treated 
as a member of such group if such person is controlled 
by members of such group (including any entity treated 
as a member of such group by reason of this sentence) 
or controls any such member. For purposes of the preceding 
sentence, control shall be determined under the rules of 
section 954(d)(3). 
‘‘(E) SOLD.—For purposes of this subsection, the terms 
‘sold’, ‘sells’, and ‘sale’ shall include any lease, license, 
exchange, or other disposition. 
‘‘(c) REGULATIONS.—The Secretary shall prescribe such regula-
tions or other guidance as may be necessary or appropriate to 
carry out the provisions of this section.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 172(d), as amended by this Act, is amended 
by adding at the end the following new paragraph: 
‘‘(9) 
DEDUCTION
FOR
FOREIGN-DERIVED
INTANGIBLE 
INCOME.—The deduction under section 250 shall not be 
allowed.’’. 
(2) Section 246(b)(1) is amended— 
(A) by striking ‘‘and subsection (a) and (b) of section 
245’’ the first place it appears and inserting ‘‘, subsection 
(a) and (b) of section 245, and section 250’’, 
(B) by striking ‘‘and subsection (a) and (b) of section 
245’’ the second place it appears and inserting ‘‘subsection 
(a) and (b) of section 245, and 250’’. 
(3) Section 469(i)(3)(F)(iii) is amended by striking ‘‘and 
222’’ and inserting ‘‘222, and 250’’. 
(4) The table of sections for part VIII of subchapter B 
of chapter 1 is amended by adding at the end the following 
new item: 
‘‘Sec. 250. Foreign-derived intangible income and global intangible low-taxed in-
come.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
CHAPTER 2—OTHER MODIFICATIONS OF SUBPART F 
PROVISIONS 
SEC. 14211. ELIMINATION OF INCLUSION OF FOREIGN BASE COMPANY 
OIL RELATED INCOME. 
(a) REPEAL.—Subsection (a) of section 954 is amended— 
(1) by inserting ‘‘and’’ at the end of paragraph (2), 
(2) by striking the comma at the end of paragraph (3) 
and inserting a period, and 
(3) by striking paragraph (5). 
(b) CONFORMING AMENDMENTS.—
H. R. 1—164 
(1) Section 952(c)(1)(B)(iii) is amended by striking subclause 
(I) and redesignating subclauses (II) through (V) as subclauses 
(I) through (IV), respectively. 
(2) Section 954(b) is amended— 
(A) by striking the second sentence of paragraph (4), 
(B) by striking ‘‘the foreign base company services 
income, and the foreign base company oil related income’’ 
in paragraph (5) and inserting ‘‘and the foreign base com-
pany services income’’, and 
(C) by striking paragraph (6). 
(3) Section 954 is amended by striking subsection (g). 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years of foreign corporations beginning after 
December 31, 2017, and to taxable years of United States share-
holders with or within which such taxable years of foreign corpora-
tions end. 
SEC. 14212. REPEAL OF INCLUSION BASED ON WITHDRAWAL OF PRE-
VIOUSLY EXCLUDED SUBPART F INCOME FROM QUALI-
FIED INVESTMENT. 
(a) IN GENERAL.—Subpart F of part III of subchapter N of 
chapter 1 is amended by striking section 955. 
(b) CONFORMING AMENDMENTS.— 
(1)(A) Section 951(a)(1)(A) is amended to read as follows: 
‘‘(A) his pro rata share (determined under paragraph 
(2)) of the corporation’s subpart F income for such year, 
and’’. 
(B) Section 851(b) is amended by striking ‘‘section 
951(a)(1)(A)(i)’’ in the flush language at the end and inserting 
‘‘section 951(a)(1)(A)’’. 
(C) Section 952(c)(1)(B)(i) is amended by striking ‘‘section 
951(a)(1)(A)(i)’’ and inserting ‘‘section 951(a)(1)(A)’’. 
(D) Section 953(c)(1)(C) is amended by striking ‘‘section 
951(a)(1)(A)(i)’’ and inserting ‘‘section 951(a)(1)(A)’’. 
(2) Section 951(a) is amended by striking paragraph (3). 
(3) Section 953(d)(4)(B)(iv)(II) is amended by striking ‘‘or 
amounts referred to in clause (ii) or (iii) of section 951(a)(1)(A)’’. 
(4) Section 964(b) is amended by striking ‘‘, 955,’’. 
(5) Section 970 is amended by striking subsection (b). 
(6) The table of sections for subpart F of part III of sub-
chapter N of chapter 1 is amended by striking the item relating 
to section 955. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years of foreign corporations beginning after 
December 31, 2017, and to taxable years of United States share-
holders in which or with which such taxable years of foreign corpora-
tions end. 
SEC. 14213. MODIFICATION OF STOCK ATTRIBUTION RULES FOR 
DETERMINING STATUS AS A CONTROLLED FOREIGN 
CORPORATION. 
(a) IN GENERAL.—Section 958(b) is amended— 
(1) by striking paragraph (4), and 
(2) by striking ‘‘Paragraphs (1) and (4)’’ in the last sentence 
and inserting ‘‘Paragraph (1)’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to—
H. R. 1—165 
(1) the last taxable year of foreign corporations beginning 
before January 1, 2018, and each subsequent taxable year 
of such foreign corporations, and 
(2) taxable years of United States shareholders in which 
or with which such taxable years of foreign corporations end. 
SEC. 14214. MODIFICATION OF DEFINITION OF UNITED STATES SHARE-
HOLDER. 
(a) IN GENERAL.—Section 951(b) is amended by inserting ‘‘, 
or 10 percent or more of the total value of shares of all classes 
of stock of such foreign corporation’’ after ‘‘such foreign corporation’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years of foreign corporations beginning after 
December 31, 2017, and to taxable years of United States share-
holders with or within which such taxable years of foreign corpora-
tions end. 
SEC. 14215. ELIMINATION OF REQUIREMENT THAT CORPORATION 
MUST BE CONTROLLED FOR 30 DAYS BEFORE SUBPART 
F INCLUSIONS APPLY. 
(a) IN GENERAL.—Section 951(a)(1) is amended by striking ‘‘for 
an uninterrupted period of 30 days or more’’ and inserting ‘‘at 
any time’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years of foreign corporations beginning after 
December 31, 2017, and to taxable years of United States share-
holders with or within which such taxable years of foreign corpora-
tions end. 
CHAPTER 3—PREVENTION OF BASE EROSION 
SEC. 14221. LIMITATIONS ON INCOME SHIFTING THROUGH INTAN-
GIBLE PROPERTY TRANSFERS. 
(a) DEFINITION OF INTANGIBLE ASSET.—Section 936(h)(3)(B) is 
amended— 
(1) by striking ‘‘or’’ at the end of clause (v), 
(2) by striking clause (vi) and inserting the following: 
‘‘(vi) any goodwill, going concern value, or 
workforce in place (including its composition and terms 
and conditions (contractual or otherwise) of its employ-
ment); or 
‘‘(vii) any other item the value or potential value 
of which is not attributable to tangible property or 
the services of any individual.’’, and 
(3) by striking the flush language after clause (vii), as 
added by paragraph (2). 
(b) CLARIFICATION OF ALLOWABLE VALUATION METHODS.— 
(1) FOREIGN CORPORATIONS.—Section 367(d)(2) is amended 
by adding at the end the following new subparagraph: 
‘‘(D) REGULATORY AUTHORITY.—For purposes of the last 
sentence of subparagraph (A), the Secretary shall require— 
‘‘(i) the valuation of transfers of intangible prop-
erty, including intangible property transferred with 
other property or services, on an aggregate basis, or 
‘‘(ii) the valuation of such a transfer on the basis 
of the realistic alternatives to such a transfer, 
if the Secretary determines that such basis is the most 
reliable means of valuation of such transfers.’’.
H. R. 1—166 
(2) 
ALLOCATION
AMONG
TAXPAYERS.—Section 
482 
is 
amended by adding at the end the following: ‘‘For purposes 
of this section, the Secretary shall require the valuation of 
transfers of intangible property (including intangible property 
transferred with other property or services) on an aggregate 
basis or the valuation of such a transfer on the basis of the 
realistic alternatives to such a transfer, if the Secretary deter-
mines that such basis is the most reliable means of valuation 
of such transfers.’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by this section 
shall apply to transfers in taxable years beginning after 
December 31, 2017. 
(2) NO INFERENCE.—Nothing in the amendment made by 
subsection (a) shall be construed to create any inference with 
respect to the application of section 936(h)(3) of the Internal 
Revenue Code of 1986, or the authority of the Secretary of 
the Treasury to provide regulations for such application, with 
respect to taxable years beginning before January 1, 2018. 
SEC. 14222. CERTAIN RELATED PARTY AMOUNTS PAID OR ACCRUED 
IN HYBRID TRANSACTIONS OR WITH HYBRID ENTITIES. 
(a) IN GENERAL.—Part IX of subchapter B of chapter 1 is 
amended by inserting after section 267 the following: 
‘‘SEC. 267A. CERTAIN RELATED PARTY AMOUNTS PAID OR ACCRUED 
IN HYBRID TRANSACTIONS OR WITH HYBRID ENTITIES. 
‘‘(a) IN GENERAL.—No deduction shall be allowed under this 
chapter for any disqualified related party amount paid or accrued 
pursuant to a hybrid transaction or by, or to, a hybrid entity. 
‘‘(b) DISQUALIFIED RELATED PARTY AMOUNT.—For purposes of 
this section— 
‘‘(1) DISQUALIFIED RELATED PARTY AMOUNT.—The term ‘dis-
qualified related party amount’ means any interest or royalty 
paid or accrued to a related party to the extent that— 
‘‘(A) such amount is not included in the income of 
such related party under the tax law of the country of 
which such related party is a resident for tax purposes 
or is subject to tax, or 
‘‘(B) such related party is allowed a deduction with 
respect to such amount under the tax law of such country. 
Such term shall not include any payment to the extent such 
payment is included in the gross income of a United States 
shareholder under section 951(a). 
‘‘(2) RELATED PARTY.—The term ‘related party’ means a 
related person as defined in section 954(d)(3), except that such 
section shall be applied with respect to the person making 
the payment described in paragraph (1) in lieu of the controlled 
foreign corporation otherwise referred to in such section. 
‘‘(c) HYBRID TRANSACTION.—For purposes of this section, the 
term ‘hybrid transaction’ means any transaction, series of trans-
actions, agreement, or instrument one or more payments with 
respect to which are treated as interest or royalties for purposes 
of this chapter and which are not so treated for purposes the 
tax law of the foreign country of which the recipient of such payment 
is resident for tax purposes or is subject to tax. 
‘‘(d) HYBRID ENTITY.—For purposes of this section, the term 
‘hybrid entity’ means any entity which is either—
H. R. 1—167 
‘‘(1) treated as fiscally transparent for purposes of this 
chapter but not so treated for purposes of the tax law of 
the foreign country of which the entity is resident for tax 
purposes or is subject to tax, or 
‘‘(2) treated as fiscally transparent for purposes of such 
tax law but not so treated for purposes of this chapter. 
‘‘(e) REGULATIONS.—The Secretary shall issue such regulations 
or other guidance as may be necessary or appropriate to carry 
out the purposes of this section, including regulations or other 
guidance providing for— 
‘‘(1) rules for treating certain conduit arrangements which 
involve a hybrid transaction or a hybrid entity as subject to 
subsection (a), 
‘‘(2) rules for the application of this section to branches 
or domestic entities, 
‘‘(3) rules for treating certain structured transactions as 
subject to subsection (a), 
‘‘(4) rules for treating a tax preference as an exclusion 
from income for purposes of applying subsection (b)(1) if such 
tax preference has the effect of reducing the generally 
applicable statutory rate by 25 percent or more, 
‘‘(5) rules for treating the entire amount of interest or 
royalty paid or accrued to a related party as a disqualified 
related party amount if such amount is subject to a participa-
tion exemption system or other system which provides for the 
exclusion or deduction of a substantial portion of such amount, 
‘‘(6) rules for determining the tax residence of a foreign 
entity if the entity is otherwise considered a resident of more 
than one country or of no country, 
‘‘(7) exceptions from subsection (a) with respect to— 
‘‘(A) cases in which the disqualified related party 
amount is taxed under the laws of a foreign country other 
than the country of which the related party is a resident 
for tax purposes, and 
‘‘(B) other cases which the Secretary determines do 
not present a risk of eroding the Federal tax base, 
‘‘(8) requirements for record keeping and information 
reporting in addition to any requirements imposed by section 
6038A.’’. 
(b) CONFORMING AMENDMENT.—The table of sections for part 
IX of subchapter B of chapter 1 is amended by inserting after 
the item relating to section 267 the following new item: 
‘‘Sec. 267A. Certain related party amounts paid or accrued in hybrid transactions 
or with hybrid entities.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 14223. SHAREHOLDERS OF SURROGATE FOREIGN CORPORATIONS 
NOT ELIGIBLE FOR REDUCED RATE ON DIVIDENDS. 
(a) IN GENERAL.—Section 1(h)(11)(C)(iii) is amended— 
(1) by striking ‘‘shall not include any foreign corporation’’ 
and inserting ‘‘shall not include— 
‘‘(I) any foreign corporation’’, 
(2) by striking the period at the end and inserting ‘‘, and’’, 
and 
(3) by adding at the end the following new subclause:
H. R. 1—168 
‘‘(II) any corporation which first becomes a 
surrogate foreign corporation (as defined in section 
7874(a)(2)(B)) after the date of the enactment of 
this subclause, other than a foreign corporation 
which is treated as a domestic corporation under 
section 7874(b).’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to dividends received after the date of the enactment 
of this Act. 
Subpart C—Modifications Related to Foreign Tax 
Credit System 
SEC. 14301. REPEAL OF SECTION 902 INDIRECT FOREIGN TAX CREDITS; 
DETERMINATION OF SECTION 960 CREDIT ON CURRENT 
YEAR BASIS. 
(a) REPEAL OF SECTION 902 INDIRECT FOREIGN TAX CREDITS.— 
Subpart A of part III of subchapter N of chapter 1 is amended 
by striking section 902. 
(b) DETERMINATION OF SECTION 960 CREDIT ON CURRENT YEAR 
BASIS.—Section 960, as amended by section 14201, is amended— 
(1) by striking subsection (c), by redesignating subsection 
(b) as subsection (c), by striking all that precedes subsection 
(c) (as so redesignated) and inserting the following: 
‘‘SEC. 960. DEEMED PAID CREDIT FOR SUBPART F INCLUSIONS. 
‘‘(a) IN GENERAL.—For purposes of subpart A of this part, 
if there is included in the gross income of a domestic corporation 
any item of income under section 951(a)(1) with respect to any 
controlled foreign corporation with respect to which such domestic 
corporation is a United States shareholder, such domestic corpora-
tion shall be deemed to have paid so much of such foreign corpora-
tion’s foreign income taxes as are properly attributable to such 
item of income. 
‘‘(b) SPECIAL RULES
FOR DISTRIBUTIONS FROM PREVIOUSLY 
TAXED EARNINGS AND PROFITS.—For purposes of subpart A of this 
part— 
‘‘(1) IN GENERAL.—If any portion of a distribution from 
a controlled foreign corporation to a domestic corporation which 
is a United States shareholder with respect to such controlled 
foreign corporation is excluded from gross income under section 
959(a), such domestic corporation shall be deemed to have 
paid so much of such foreign corporation’s foreign income taxes 
as— 
‘‘(A) are properly attributable to such portion, and 
‘‘(B) have not been deemed to have to been paid by 
such domestic corporation under this section for the taxable 
year or any prior taxable year. 
‘‘(2) TIERED CONTROLLED FOREIGN CORPORATIONS.—If sec-
tion 959(b) applies to any portion of a distribution from a 
controlled foreign corporation to another controlled foreign cor-
poration, such controlled foreign corporation shall be deemed 
to have paid so much of such other controlled foreign corpora-
tion’s foreign income taxes as— 
‘‘(A) are properly attributable to such portion, and
H. R. 1—169 
‘‘(B) have not been deemed to have been paid by a 
domestic corporation under this section for the taxable 
year or any prior taxable year.’’, 
(2) and by adding after subsection (d) (as added by section 
14201) the following new subsections: 
‘‘(e) FOREIGN INCOME TAXES.—The term ‘foreign income taxes’ 
means any income, war profits, or excess profits taxes paid or 
accrued to any foreign country or possession of the United States. 
‘‘(f) REGULATIONS.—The Secretary shall prescribe such regula-
tions or other guidance as may be necessary or appropriate to 
carry out the provisions of this section.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 78 is amended to read as follows: 
‘‘SEC. 78. GROSS UP FOR DEEMED PAID FOREIGN TAX CREDIT. 
‘‘If a domestic corporation chooses to have the benefits of sub-
part A of part III of subchapter N (relating to foreign tax credit) 
for any taxable year, an amount equal to the taxes deemed to 
be paid by such corporation under subsections (a), (b), and (d) 
of section 960 (determined without regard to the phrase ‘80 percent 
of’ in subsection (d)(1) thereof) for such taxable year shall be treated 
for purposes of this title (other than sections 245 and 245A) as 
a dividend received by such domestic corporation from the foreign 
corporation.’’. 
(2) Paragraph (4) of section 245(a) is amended to read 
as follows: 
‘‘(4) POST-1986 UNDISTRIBUTED EARNINGS.—The term ‘post- 
1986 undistributed earnings’ means the amount of the earnings 
and profits of the foreign corporation (computed in accordance 
with sections 964(a) and 986) accumulated in taxable years 
beginning after December 31, 1986— 
‘‘(A) as of the close of the taxable year of the foreign 
corporation in which the dividend is distributed, and 
‘‘(B) without diminution by reason of dividends distrib-
uted during such taxable year.’’. 
(3) Section 245(a)(10)(C) is amended by striking ‘‘902, 907, 
and 960’’ and inserting ‘‘907 and 960’’. 
(4) Sections 535(b)(1) and 545(b)(1) are each amended by 
striking ‘‘section 902(a) or 960(a)(1)’’ and inserting ‘‘section 
960’’. 
(5) Section 814(f)(1) is amended— 
(A) by striking subparagraph (B), and 
(B) by striking all that precedes ‘‘No income’’ and 
inserting the following: 
‘‘(1) TREATMENT OF FOREIGN TAXES.—’’. 
(6) Section 865(h)(1)(B) is amended by striking ‘‘902, 907,’’ 
and inserting ‘‘907’’. 
(7) Section 901(a) is amended by striking ‘‘sections 902 
and 960’’ and inserting ‘‘section 960’’. 
(8) Section 901(e)(2) is amended by striking ‘‘but is not 
limited to—’’ and all that follows through ‘‘that portion’’ and 
inserting ‘‘but is not limited to that portion’’. 
(9) Section 901(f) is amended by striking ‘‘sections 902 
and 960’’ and inserting ‘‘section 960’’. 
(10) Section 901(j)(1)(A) is amended by striking ‘‘902 or’’. 
(11) Section 901(j)(1)(B) is amended by striking ‘‘sections 
902 and 960’’ and inserting ‘‘section 960’’.
H. R. 1—170 
(12) Section 901(k)(2) is amended by striking ‘‘, 902,’’. 
(13) Section 901(k)(6) is amended by striking ‘‘902 or’’. 
(14) Section 901(m)(1)(B) is amended to read as follows: 
‘‘(B) in the case of a foreign income tax paid by a 
foreign corporation, shall not be taken into account for 
purposes of section 960.’’. 
(15) Section 904(d)(2)(E) is amended— 
(A) by amending clause (i) to read as follows: 
‘‘(i) NONCONTROLLED 10-PERCENT OWNED FOREIGN 
CORPORATION.—The term ‘noncontrolled 10-percent 
owned foreign corporation’ means any foreign corpora-
tion which is— 
‘‘(I) a specified 10-percent owned foreign cor-
poration (as defined in section 245A(b)), or 
‘‘(II) a passive foreign investment company (as 
defined in section 1297(a)) with respect to which 
the taxpayer meets the stock ownership require-
ments of section 902(a) (or, for purposes of applying 
paragraphs (3) and (4), the requirements of section 
902(b)). 
A controlled foreign corporation shall not be treated 
as a noncontrolled 10-percent owned foreign corpora-
tion with respect to any distribution out of its earnings 
and profits for periods during which it was a controlled 
foreign corporation. Any reference to section 902 in 
this clause shall be treated as a reference to such 
section as in effect before its repeal.’’, and 
(B) by striking ‘‘non-controlled section 902 corporation’’ 
in clause (ii) and inserting ‘‘noncontrolled 10-percent owned 
foreign corporation’’. 
(16) Section 904(d)(4) is amended— 
(A) by striking ‘‘noncontrolled section 902 corporation’’ 
each place it appears and inserting ‘‘noncontrolled 10-per-
cent owned foreign corporation’’, 
(B) by striking ‘‘NONCONTROLLED SECTION 902 CORPORA-
TIONS’’ in the heading thereof and inserting ‘‘NONCON-
TROLLED 10-PERCENT OWNED FOREIGN CORPORATIONS’’. 
(17) Section 904(d)(6)(A) is amended by striking ‘‘902, 907,’’ 
and inserting ‘‘907’’. 
(18) Section 904(h)(10)(A) is amended by striking ‘‘sections 
902, 907, and 960’’ and inserting ‘‘sections 907 and 960’’. 
(19) Section 904(k) is amended to read as follows: 
‘‘(k) CROSS REFERENCES.—For increase of limitation under sub-
section (a) for taxes paid with respect to amounts received which 
were included in the gross income of the taxpayer for a prior 
taxable year as a United States shareholder with respect to a 
controlled foreign corporation, see section 960(c).’’. 
(20) Section 905(c)(1) is amended by striking the last sen-
tence. 
(21) Section 905(c)(2)(B)(i) is amended to read as follows: 
‘‘(i) shall be taken into account for the taxable 
year to which such taxes relate, and’’. 
(22) Section 906(a) is amended by striking ‘‘(or deemed, 
under section 902, paid or accrued during the taxable year)’’. 
(23) Section 906(b) is amended by striking paragraphs (4) 
and (5). 
(24) Section 907(b)(2)(B) is amended by striking ‘‘902 or’’.
H. R. 1—171 
(25) Section 907(c)(3)(A) is amended— 
(A) by striking subparagraph (A) and inserting the 
following: 
‘‘(A) interest, to the extent the category of income of 
such interest is determined under section 904(d)(3),’’, and 
(B) by striking ‘‘section 960(a)’’ in subparagraph (B) 
and inserting ‘‘section 960’’. 
(26) Section 907(c)(5) is amended by striking ‘‘902 or’’. 
(27) Section 907(f)(2)(B)(i) is amended by striking ‘‘902 
or’’. 
(28) Section 908(a) is amended by striking ‘‘902 or’’. 
(29) Section 909(b) is amended— 
(A) by striking ‘‘section 902 corporation’’ in the matter 
preceding paragraph (1) and inserting ‘‘specified 10-percent 
owned foreign corporation (as defined in section 245A(b) 
without regard to paragraph (2) thereof)’’, 
(B) by striking ‘‘902 or’’ in paragraph (1), 
(C) by striking ‘‘by such section 902 corporation’’ and 
all that follows in the matter following paragraph (2) and 
inserting ‘‘by such specified 10-percent owned foreign cor-
poration or a domestic corporation which is a United States 
shareholder with respect to such specified 10-percent owned 
foreign corporation.’’, and 
(D) by striking ‘‘SECTION 902 CORPORATIONS’’ in the 
heading thereof and inserting ‘‘SPECIFIED
10-PERCENT 
OWNED FOREIGN CORPORATIONS’’. 
(30) Section 909(d) is amended by striking paragraph (5). 
(31) Section 958(a)(1) is amended by striking ‘‘960(a)(1)’’ 
and inserting ‘‘960’’. 
(32) Section 959(d) is amended by striking ‘‘Except as pro-
vided in section 960(a)(3), any’’ and inserting ‘‘Any’’. 
(33) Section 959(e) is amended by striking ‘‘section 960(b)’’ 
and inserting ‘‘section 960(c)’’. 
(34) Section 1291(g)(2)(A) is amended by striking ‘‘any dis-
tribution—’’ and all that follows through ‘‘but only if’’ and 
inserting ‘‘any distribution, any withholding tax imposed with 
respect to such distribution, but only if’’. 
(35) Section 1293(f) is amended by striking ‘‘and’’ at the 
end of paragraph (1), by striking the period at the end of 
paragraph (2) and inserting ‘‘, and’’, and by adding at the 
end the following new paragraph: 
‘‘(3) a domestic corporation which owns (or is treated under 
section 1298(a) as owning) stock of a qualified electing fund 
shall be treated in the same manner as a United States share-
holder of a controlled foreign corporation (and such qualified 
electing fund shall be treated in the same manner as such 
controlled foreign corporation) if such domestic corporation 
meets the stock ownership requirements of subsection (a) or 
(b) of section 902 (as in effect before its repeal) with respect 
to such qualified electing fund.’’. 
(36) Section 6038(c)(1)(B) is amended by striking ‘‘sections 
902 (relating to foreign tax credit for corporate stockholder 
in foreign corporation) and 960 (relating to special rules for 
foreign tax credit)’’ and inserting ‘‘section 960’’. 
(37) Section 6038(c)(4) is amended by striking subpara-
graph (C).
H. R. 1—172 
(38) The table of sections for subpart A of part III of 
subchapter N of chapter 1 is amended by striking the item 
relating to section 902. 
(39) The table of sections for subpart F of part III of 
subchapter N of chapter 1 is amended by striking the item 
relating to section 960 and inserting the following: 
‘‘Sec. 960. Deemed paid credit for subpart F inclusions.’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years of foreign corporations beginning after 
December 31, 2017, and to taxable years of United States share-
holders in which or with which such taxable years of foreign corpora-
tions end. 
SEC. 14302. SEPARATE FOREIGN TAX CREDIT LIMITATION BASKET FOR 
FOREIGN BRANCH INCOME. 
(a) IN GENERAL.—Section 904(d)(1), as amended by section 
14201, is amended by redesignating subparagraphs (B) and (C) 
as subparagraphs (C) and (D), respectively, and by inserting after 
subparagraph (A) the following new subparagraph: 
‘‘(B) foreign branch income,’’. 
(b) FOREIGN BRANCH INCOME.— 
(1) IN GENERAL.—Section 904(d)(2) is amended by inserting 
after subparagraph (I) the following new subparagraph: 
‘‘(J) FOREIGN BRANCH INCOME.— 
‘‘(i) IN GENERAL.—The term ‘foreign branch income’ 
means the business profits of such United States per-
son which are attributable to 1 or more qualified busi-
ness units (as defined in section 989(a)) in 1 or more 
foreign countries. For purposes of the preceding sen-
tence, the amount of business profits attributable to 
a qualified business unit shall be determined under 
rules established by the Secretary. 
‘‘(ii) EXCEPTION.—Such term shall not include any 
income which is passive category income.’’. 
(2) CONFORMING AMENDMENT.—Section 904(d)(2)(A)(ii), as 
amended by section 14201, is amended by striking ‘‘income 
described in paragraph (1)(A) and’’ and inserting ‘‘income 
described in paragraph (1)(A), foreign branch income, and’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 14303. SOURCE OF INCOME FROM SALES OF INVENTORY DETER-
MINED SOLELY ON BASIS OF PRODUCTION ACTIVITIES. 
(a) IN GENERAL.—Section 863(b) is amended by adding at the 
end the following: ‘‘Gains, profits, and income from the sale or 
exchange of inventory property described in paragraph (2) shall 
be allocated and apportioned between sources within and without 
the United States solely on the basis of the production activities 
with respect to the property.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 14304. ELECTION TO INCREASE PERCENTAGE OF DOMESTIC TAX-
ABLE INCOME OFFSET BY OVERALL DOMESTIC LOSS 
TREATED AS FOREIGN SOURCE. 
(a) IN GENERAL.—Section 904(g) is amended by adding at the 
end the following new paragraph:
H. R. 1—173 
‘‘(5) ELECTION
TO
INCREASE
PERCENTAGE
OF
TAXABLE 
INCOME TREATED AS FOREIGN SOURCE.— 
‘‘(A) IN
GENERAL.—If any pre-2018 unused overall 
domestic loss is taken into account under paragraph (1) 
for any applicable taxable year, the taxpayer may elect 
to have such paragraph applied to such loss by substituting 
a percentage greater than 50 percent (but not greater than 
100 percent) for 50 percent in subparagraph (B) thereof. 
‘‘(B) PRE-2018 UNUSED OVERALL DOMESTIC LOSS.—For 
purposes of this paragraph, the term ‘pre-2018 unused 
overall domestic loss’ means any overall domestic loss 
which— 
‘‘(i) arises in a qualified taxable year beginning 
before January 1, 2018, and 
‘‘(ii) has not been used under paragraph (1) for 
any taxable year beginning before such date. 
‘‘(C) APPLICABLE TAXABLE YEAR.—For purposes of this 
paragraph, the term ‘applicable taxable year’ means any 
taxable year of the taxpayer beginning after December 
31, 2017, and before January 1, 2028.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2017. 
PART II—INBOUND TRANSACTIONS 
SEC. 14401. BASE EROSION AND ANTI-ABUSE TAX. 
(a) IMPOSITION OF TAX.—Subchapter A of chapter 1 is amended 
by adding at the end the following new part: 
‘‘PART VII—BASE EROSION AND ANTI-ABUSE 
TAX 
‘‘Sec. 59A. Tax on base erosion payments of taxpayers with substantial gross re-
ceipts. 
‘‘SEC. 59A. TAX ON BASE EROSION PAYMENTS OF TAXPAYERS WITH 
SUBSTANTIAL GROSS RECEIPTS. 
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed on each 
applicable taxpayer for any taxable year a tax equal to the base 
erosion minimum tax amount for the taxable year. Such tax shall 
be in addition to any other tax imposed by this subtitle. 
‘‘(b) BASE EROSION MINIMUM TAX AMOUNT.—For purposes of 
this section— 
‘‘(1) IN GENERAL.—Except as provided in paragraphs (2) 
and (3), the term ‘base erosion minimum tax amount’ means, 
with respect to any applicable taxpayer for any taxable year, 
the excess (if any) of— 
‘‘(A) an amount equal to 10 percent (5 percent in the 
case of taxable years beginning in calendar year 2018) 
of the modified taxable income of such taxpayer for the 
taxable year, over 
‘‘(B) an amount equal to the regular tax liability (as 
defined in section 26(b)) of the taxpayer for the taxable 
year, reduced (but not below zero) by the excess (if any) 
of— 
‘‘(i) the credits allowed under this chapter against 
such regular tax liability, over
H. R. 1—174 
‘‘(ii) the sum of— 
‘‘(I) the credit allowed under section 38 for 
the taxable year which is properly allocable to 
the research credit determined under section 41(a), 
plus 
‘‘(II) the portion of the applicable section 38 
credits not in excess of 80 percent of the lesser 
of the amount of such credits or the base erosion 
minimum tax amount (determined without regard 
to this subclause). 
‘‘(2) MODIFICATIONS FOR TAXABLE YEARS BEGINNING AFTER 
2025.—In the case of any taxable year beginning after December 
31, 2025, paragraph (1) shall be applied— 
‘‘(A) by substituting ‘12.5 percent’ for ‘10 percent’ in 
subparagraph (A) thereof, and 
‘‘(B) by reducing (but not below zero) the regular tax 
liability (as defined in section 26(b)) for purposes of 
subparagraph (B) thereof by the aggregate amount of the 
credits allowed under this chapter against such regular 
tax liability rather than the excess described in such 
subparagraph. 
‘‘(3) INCREASED RATE FOR CERTAIN BANKS AND SECURITIES 
DEALERS.— 
‘‘(A) IN GENERAL.—In the case of a taxpayer described 
in subparagraph (B) who is an applicable taxpayer for 
any taxable year, the percentage otherwise in effect under 
paragraphs (1)(A) and (2)(A) shall each be increased by 
one percentage point. 
‘‘(B) TAXPAYER
DESCRIBED.—A taxpayer is described 
in this subparagraph if such taxpayer is a member of 
an affiliated group (as defined in section 1504(a)(1)) which 
includes— 
‘‘(i) a bank (as defined in section 581), or 
‘‘(ii) a registered securities dealer under section 
15(a) of the Securities Exchange Act of 1934. 
‘‘(4) APPLICABLE SECTION 38 CREDITS.—For purposes of para-
graph (1)(B)(ii)(II), the term ‘applicable section 38 credits’ 
means the credit allowed under section 38 for the taxable 
year which is properly allocable to— 
‘‘(A) the low-income housing credit determined under 
section 42(a), 
‘‘(B) the renewable electricity production credit deter-
mined under section 45(a), and 
‘‘(C) the investment credit determined under section 
46, but only to the extent properly allocable to the energy 
credit determined under section 48. 
‘‘(c) MODIFIED TAXABLE INCOME.—For purposes of this section— 
‘‘(1) IN
GENERAL.—The term ‘modified taxable income’ 
means the taxable income of the taxpayer computed under 
this chapter for the taxable year, determined without regard 
to— 
‘‘(A) any base erosion tax benefit with respect to any 
base erosion payment, or 
‘‘(B) the base erosion percentage of any net operating 
loss deduction allowed under section 172 for the taxable 
year. 
‘‘(2) BASE EROSION TAX BENEFIT.—
H. R. 1—175 
‘‘(A) IN GENERAL.—The term ‘base erosion tax benefit’ 
means— 
‘‘(i) any deduction described in subsection (d)(1) 
which is allowed under this chapter for the taxable 
year with respect to any base erosion payment, 
‘‘(ii) in the case of a base erosion payment described 
in subsection (d)(2), any deduction allowed under this 
chapter for the taxable year for depreciation (or 
amortization in lieu of depreciation) with respect to 
the property acquired with such payment, 
‘‘(iii) in the case of a base erosion payment 
described in subsection (d)(3)— 
‘‘(I) any reduction under section 803(a)(1)(B) 
in the gross amount of premiums and other consid-
eration on insurance and annuity contracts for 
premiums and other consideration arising out of 
indemnity insurance, and 
‘‘(II) any deduction under section 832(b)(4)(A) 
from the amount of gross premiums written on 
insurance contracts during the taxable year for 
premiums paid for reinsurance, and 
‘‘(iv) in the case of a base erosion payment 
described in subsection (d)(4), any reduction in gross 
receipts with respect to such payment in computing 
gross income of the taxpayer for the taxable year for 
purposes of this chapter. 
‘‘(B) TAX BENEFITS DISREGARDED IF TAX WITHHELD ON 
BASE EROSION PAYMENT.— 
‘‘(i) IN
GENERAL.—Except as provided in clause 
(ii), any base erosion tax benefit attributable to any 
base erosion payment— 
‘‘(I) on which tax is imposed by section 871 
or 881, and 
‘‘(II) with respect to which tax has been 
deducted and withheld under section 1441 or 1442, 
shall not be taken into account in computing modified 
taxable income under paragraph (1)(A) or the base 
erosion percentage under paragraph (4). 
‘‘(ii) EXCEPTION.—The amount not taken into 
account in computing modified taxable income by rea-
son of clause (i) shall be reduced under rules similar 
to the rules under section 163(j)(5)(B) (as in effect 
before the date of the enactment of the Tax Cuts and 
Jobs Act). 
‘‘(3) SPECIAL RULES FOR DETERMINING INTEREST FOR WHICH 
DEDUCTION ALLOWED.—For purposes of applying paragraph (1), 
in the case of a taxpayer to which section 163(j) applies for 
the taxable year, the reduction in the amount of interest for 
which a deduction is allowed by reason of such subsection 
shall be treated as allocable first to interest paid or accrued 
to persons who are not related parties with respect to the 
taxpayer and then to such related parties. 
‘‘(4) BASE
EROSION
PERCENTAGE.—For purposes of para-
graph (1)(B)— 
‘‘(A) IN GENERAL.—The term ‘base erosion percentage’ 
means, for any taxable year, the percentage determined 
by dividing—
H. R. 1—176 
‘‘(i) the aggregate amount of base erosion tax bene-
fits of the taxpayer for the taxable year, by 
‘‘(ii) the sum of— 
‘‘(I) the aggregate amount of the deductions 
(including deductions described in clauses (i) and 
(ii) of paragraph (2)(A)) allowable to the taxpayer 
under this chapter for the taxable year, plus 
‘‘(II) the base erosion tax benefits described 
in clauses (iii) and (iv) of paragraph (2)(A) allow-
able to the taxpayer for the taxable year. 
‘‘(B) CERTAIN ITEMS NOT TAKEN INTO ACCOUNT.—The 
amount under subparagraph (A)(ii) shall be determined 
by not taking into account— 
‘‘(i) any deduction allowed under section 172, 245A, 
or 250 for the taxable year, 
‘‘(ii) any deduction for amounts paid or accrued 
for services to which the exception under subsection 
(d)(5) applies, and 
‘‘(iii) any deduction for qualified derivative pay-
ments which are not treated as a base erosion payment 
by reason of subsection (h). 
‘‘(d) BASE EROSION PAYMENT.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘base erosion payment’ means 
any amount paid or accrued by the taxpayer to a foreign person 
which is a related party of the taxpayer and with respect 
to which a deduction is allowable under this chapter. 
‘‘(2) PURCHASE
OF
DEPRECIABLE
PROPERTY.—Such term 
shall also include any amount paid or accrued by the taxpayer 
to a foreign person which is a related party of the taxpayer 
in connection with the acquisition by the taxpayer from such 
person of property of a character subject to the allowance 
for depreciation (or amortization in lieu of depreciation). 
‘‘(3) REINSURANCE PAYMENTS.—Such term shall also include 
any premium or other consideration paid or accrued by the 
taxpayer to a foreign person which is a related party of the 
taxpayer for any reinsurance payments which are taken into 
account under sections 803(a)(1)(B) or 832(b)(4)(A). 
‘‘(4) CERTAIN PAYMENTS TO EXPATRIATED ENTITIES.— 
‘‘(A) IN GENERAL.—Such term shall also include any 
amount paid or accrued by the taxpayer with respect to 
a person described in subparagraph (B) which results in 
a reduction of the gross receipts of the taxpayer. 
‘‘(B) PERSON DESCRIBED.—A person is described in this 
subparagraph if such person is a— 
‘‘(i) surrogate foreign corporation which is a related 
party of the taxpayer, but only if such person first 
became a surrogate foreign corporation after November 
9, 2017, or 
‘‘(ii) foreign person which is a member of the same 
expanded affiliated group as the surrogate foreign cor-
poration. 
‘‘(C) DEFINITIONS.—For purposes of this paragraph— 
‘‘(i) SURROGATE FOREIGN CORPORATION.—The term 
‘surrogate foreign corporation’ has the meaning given 
such term by section 7874(a)(2)(B) but does not include 
a foreign corporation treated as a domestic corporation 
under section 7874(b).
H. R. 1—177 
‘‘(ii) EXPANDED
AFFILIATED
GROUP.—The term 
‘expanded affiliated group’ has the meaning given such 
term by section 7874(c)(1). 
‘‘(5) EXCEPTION FOR CERTAIN AMOUNTS WITH RESPECT TO 
SERVICES.—Paragraph (1) shall not apply to any amount paid 
or accrued by a taxpayer for services if— 
‘‘(A) such services are services which meet the require-
ments for eligibility for use of the services cost method 
under section 482 (determined without regard to the 
requirement that the services not contribute significantly 
to fundamental risks of business success or failure), and 
‘‘(B) such amount constitutes the total services cost 
with no markup component. 
‘‘(e) APPLICABLE TAXPAYER.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘applicable taxpayer’ means, 
with respect to any taxable year, a taxpayer— 
‘‘(A) which is a corporation other than a regulated 
investment company, a real estate investment trust, or 
an S corporation, 
‘‘(B) the average annual gross receipts of which for 
the 3-taxable-year period ending with the preceding taxable 
year are at least $500,000,000, and 
‘‘(C) the base erosion percentage (as determined under 
subsection (c)(4)) of which for the taxable year is 3 percent 
(2 percent in the case of a taxpayer described in subsection 
(b)(3)(B)) or higher. 
‘‘(2) GROSS RECEIPTS.— 
‘‘(A) SPECIAL RULE FOR FOREIGN PERSONS.—In the case 
of a foreign person the gross receipts of which are taken 
into account for purposes of paragraph (1)(B), only gross 
receipts which are taken into account in determining 
income which is effectively connected with the conduct 
of a trade or business within the United States shall be 
taken into account. In the case of a taxpayer which is 
a foreign person, the preceding sentence shall not apply 
to the gross receipts of any United States person which 
are aggregated with the taxpayer’s gross receipts by reason 
of paragraph (3). 
‘‘(B) OTHER RULES MADE APPLICABLE.—Rules similar 
to the rules of subparagraphs (B), (C), and (D) of section 
448(c)(3) shall apply in determining gross receipts for pur-
poses of this section. 
‘‘(3) AGGREGATION RULES.—All persons treated as a single 
employer under subsection (a) of section 52 shall be treated 
as 1 person for purposes of this subsection and subsection 
(c)(4), except that in applying section 1563 for purposes of 
section 52, the exception for foreign corporations under section 
1563(b)(2)(C) shall be disregarded. 
‘‘(f) FOREIGN PERSON.—For purposes of this section, the term 
‘foreign person’ has the meaning given such term by section 
6038A(c)(3). 
‘‘(g) RELATED PARTY.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘related party’ means, with 
respect to any applicable taxpayer— 
‘‘(A) any 25-percent owner of the taxpayer,
H. R. 1—178 
‘‘(B) any person who is related (within the meaning 
of section 267(b) or 707(b)(1)) to the taxpayer or any 25- 
percent owner of the taxpayer, and 
‘‘(C) any other person who is related (within the 
meaning of section 482) to the taxpayer. 
‘‘(2) 25-PERCENT
OWNER.—The term ‘25-percent owner’ 
means, with respect to any corporation, any person who owns 
at least 25 percent of— 
‘‘(A) the total voting power of all classes of stock of 
a corporation entitled to vote, or 
‘‘(B) the total value of all classes of stock of such 
corporation. 
‘‘(3) SECTION 318 TO APPLY.—Section 318 shall apply for 
purposes of paragraphs (1) and (2), except that— 
‘‘(A) ‘10 percent’ shall be substituted for ‘50 percent’ 
in section 318(a)(2)(C), and 
‘‘(B) subparagraphs (A), (B), and (C) of section 318(a)(3) 
shall not be applied so as to consider a United States 
person as owning stock which is owned by a person who 
is not a United States person. 
‘‘(h) EXCEPTION FOR CERTAIN PAYMENTS MADE IN THE ORDINARY 
COURSE OF TRADE OR BUSINESS.—For purposes of this section— 
‘‘(1) IN GENERAL.—Except as provided in paragraph (3), 
any qualified derivative payment shall not be treated as a 
base erosion payment. 
‘‘(2) QUALIFIED DERIVATIVE PAYMENT.— 
‘‘(A) IN GENERAL.—The term ‘qualified derivative pay-
ment’ means any payment made by a taxpayer pursuant 
to a derivative with respect to which the taxpayer— 
‘‘(i) recognizes gain or loss as if such derivative 
were sold for its fair market value on the last business 
day of the taxable year (and such additional times 
as required by this title or the taxpayer’s method of 
accounting), 
‘‘(ii) treats any gain or loss so recognized as ordi-
nary, and 
‘‘(iii) treats the character of all items of income, 
deduction, gain, or loss with respect to a payment 
pursuant to the derivative as ordinary. 
‘‘(B) REPORTING REQUIREMENT.—No payments shall be 
treated as qualified derivative payments under subpara-
graph (A) for any taxable year unless the taxpayer includes 
in the information required to be reported under section 
6038B(b)(2) with respect to such taxable year such informa-
tion as is necessary to identify the payments to be so 
treated and such other information as the Secretary deter-
mines necessary to carry out the provisions of this sub-
section. 
‘‘(3) EXCEPTIONS
FOR
PAYMENTS
OTHERWISE
TREATED
AS 
BASE EROSION PAYMENTS.—This subsection shall not apply to 
any qualified derivative payment if— 
‘‘(A) the payment would be treated as a base erosion 
payment if it were not made pursuant to a derivative, 
including any interest, royalty, or service payment, or 
‘‘(B) in the case of a contract which has derivative 
and nonderivative components, the payment is properly 
allocable to the nonderivative component.
H. R. 1—179 
‘‘(4) DERIVATIVE
DEFINED.—For purposes of this sub-
section— 
‘‘(A) IN GENERAL.—The term ‘derivative’ means any 
contract (including any option, forward contract, futures 
contract, short position, swap, or similar contract) the value 
of which, or any payment or other transfer with respect 
to which, is (directly or indirectly) determined by reference 
to one or more of the following: 
‘‘(i) Any share of stock in a corporation. 
‘‘(ii) Any evidence of indebtedness. 
‘‘(iii) Any commodity which is actively traded. 
‘‘(iv) Any currency. 
‘‘(v) Any rate, price, amount, index, formula, or 
algorithm. 
Such term shall not include any item described in clauses 
(i) through (v). 
‘‘(B) TREATMENT OF AMERICAN DEPOSITORY RECEIPTS 
AND SIMILAR INSTRUMENTS.—Except as otherwise provided 
by the Secretary, for purposes of this part, American deposi-
tory receipts (and similar instruments) with respect to 
shares of stock in foreign corporations shall be treated 
as shares of stock in such foreign corporations. 
‘‘(C) EXCEPTION FOR CERTAIN CONTRACTS.—Such term 
shall not include any insurance, annuity, or endowment 
contract issued by an insurance company to which sub-
chapter L applies (or issued by any foreign corporation 
to which such subchapter would apply if such foreign cor-
poration were a domestic corporation). 
‘‘(i) REGULATIONS.—The Secretary shall prescribe such regula-
tions or other guidance as may be necessary or appropriate to 
carry out the provisions of this section, including regulations— 
‘‘(1) providing for such adjustments to the application of 
this section as are necessary to prevent the avoidance of the 
purposes of this section, including through— 
‘‘(A) the use of unrelated persons, conduit transactions, 
or other intermediaries, or 
‘‘(B) transactions or arrangements designed, in whole 
or in part— 
‘‘(i) to characterize payments otherwise subject to 
this section as payments not subject to this section, 
or 
‘‘(ii) to substitute payments not subject to this 
section for payments otherwise subject to this section 
and 
‘‘(2) for the application of subsection (g), including rules 
to prevent the avoidance of the exceptions under subsection 
(g)(3).’’. 
(b) REPORTING REQUIREMENTS AND PENALTIES.— 
(1) IN
GENERAL.—Subsection (b) of section 6038A is 
amended to read as follows: 
‘‘(b) REQUIRED INFORMATION.— 
‘‘(1) IN
GENERAL.—For purposes of subsection (a), the 
information described in this subsection is such information 
as the Secretary prescribes by regulations relating to— 
‘‘(A) the name, principal place of business, nature of 
business, and country or countries in which organized or 
resident, of each person which—
H. R. 1—180 
‘‘(i) is a related party to the reporting corporation, 
and 
‘‘(ii) had any transaction with the reporting cor-
poration during its taxable year, 
‘‘(B) the manner in which the reporting corporation 
is related to each person referred to in subparagraph (A), 
and 
‘‘(C) transactions between the reporting corporation 
and each foreign person which is a related party to the 
reporting corporation. 
‘‘(2) ADDITIONAL
INFORMATION
REGARDING
BASE
EROSION 
PAYMENTS.—For purposes of subsection (a) and section 6038C, 
if the reporting corporation or the foreign corporation to whom 
section 6038C applies is an applicable taxpayer, the information 
described in this subsection shall include— 
‘‘(A) such information as the Secretary determines nec-
essary to determine the base erosion minimum tax amount, 
base erosion payments, and base erosion tax benefits of 
the taxpayer for purposes of section 59A for the taxable 
year, and 
‘‘(B) such other information as the Secretary deter-
mines necessary to carry out such section. 
For purposes of this paragraph, any term used in this para-
graph which is also used in section 59A shall have the same 
meaning as when used in such section.’’. 
(2) INCREASE IN PENALTY.—Paragraphs (1) and (2) of section 
6038A(d) are each amended by striking ‘‘$10,000’’ and inserting 
‘‘$25,000’’. 
(c) DISALLOWANCE OF CREDITS AGAINST BASE EROSION TAX.— 
Paragraph (2) of section 26(b) is amended by inserting after 
subparagraph (A) the following new subparagraph: 
‘‘(B) section 59A (relating to base erosion and anti- 
abuse tax),’’. 
(d) CONFORMING AMENDMENTS.— 
(1) The table of parts for subchapter A of chapter 1 is 
amended by adding after the item relating to part VI the 
following new item: 
‘‘PART VII. BASE EROSION AND ANTI-ABUSE TAX’’. 
(2) Paragraph (1) of section 882(a), as amended by this 
Act, is amended by inserting ‘‘or 59A,’’ after ‘‘section 11,’’. 
(3) Subparagraph (A) of section 6425(c)(1), as amended 
by section 13001, is amended to read as follows: 
‘‘(A) the sum of— 
‘‘(i) the tax imposed by section 11, or subchapter 
L of chapter 1, whichever is applicable, plus 
‘‘(ii) the tax imposed by section 59A, over’’. 
(4)(A) Subparagraph (A) of section 6655(g)(1), as amended 
by sections 12001 and 13001, is amended by striking ‘‘plus’’ 
at the end of clause (i), by redesignating clause (ii) as clause 
(iii), and by inserting after clause (i) the following new clause: 
‘‘(ii) the tax imposed by section 59A, plus’’. 
(B) Subparagraphs (A)(i) and (B)(i) of section 6655(e)(2), 
as amended by sections 12001 and 13001, are each amended 
by inserting ‘‘and modified taxable income’’ after ‘‘taxable 
income’’.
H. R. 1—181 
(C) Subparagraph (B) of section 6655(e)(2) is amended by 
adding at the end the following new clause: 
‘‘(iii) MODIFIED TAXABLE INCOME.—The term ‘modi-
fied taxable income’ has the meaning given such term 
by section 59A(c)(1).’’. 
(e) EFFECTIVE DATE.—The amendments made by this section 
shall apply to base erosion payments (as defined in section 59A(d) 
of the Internal Revenue Code of 1986, as added by this section) 
paid or accrued in taxable years beginning after December 31, 
2017. 
PART III—OTHER PROVISIONS 
SEC. 14501. RESTRICTION ON INSURANCE BUSINESS EXCEPTION TO 
PASSIVE FOREIGN INVESTMENT COMPANY RULES. 
(a) IN GENERAL.—Section 1297(b)(2)(B) is amended to read 
as follows: 
‘‘(B) derived in the active conduct of an insurance 
business by a qualifying insurance corporation (as defined 
in subsection (f)),’’. 
(b) QUALIFYING INSURANCE CORPORATION DEFINED.—Section 
1297 is amended by adding at the end the following new subsection: 
‘‘(f) QUALIFYING INSURANCE CORPORATION.—For purposes of 
subsection (b)(2)(B)— 
‘‘(1) IN GENERAL.—The term ‘qualifying insurance corpora-
tion’ means, with respect to any taxable year, a foreign corpora-
tion— 
‘‘(A) which would be subject to tax under subchapter 
L if such corporation were a domestic corporation, and 
‘‘(B) the applicable insurance liabilities of which con-
stitute more than 25 percent of its total assets, determined 
on the basis of such liabilities and assets as reported on 
the corporation’s applicable financial statement for the last 
year ending with or within the taxable year. 
‘‘(2) ALTERNATIVE FACTS AND CIRCUMSTANCES TEST FOR CER-
TAIN CORPORATIONS.—If a corporation fails to qualify as a quali-
fied insurance corporation under paragraph (1) solely because 
the percentage determined under paragraph (1)(B) is 25 percent 
or less, a United States person that owns stock in such corpora-
tion may elect to treat such stock as stock of a qualifying 
insurance corporation if— 
‘‘(A) the percentage so determined for the corporation 
is at least 10 percent, and 
‘‘(B) under regulations provided by the Secretary, based 
on the applicable facts and circumstances— 
‘‘(i) the corporation is predominantly engaged in 
an insurance business, and 
‘‘(ii) such failure is due solely to runoff-related 
or rating-related circumstances involving such insur-
ance business. 
‘‘(3) APPLICABLE INSURANCE LIABILITIES.—For purposes of 
this subsection— 
‘‘(A) IN
GENERAL.—The term ‘applicable insurance 
liabilities’ means, with respect to any life or property and 
casualty insurance business— 
‘‘(i) loss and loss adjustment expenses, and
H. R. 1—182 
‘‘(ii) reserves (other than deficiency, contingency, 
or unearned premium reserves) for life and health 
insurance risks and life and health insurance claims 
with respect to contracts providing coverage for mor-
tality or morbidity risks. 
‘‘(B) LIMITATIONS
ON
AMOUNT
OF
LIABILITIES.—Any 
amount determined under clause (i) or (ii) of subparagraph 
(A) shall not exceed the lesser of such amount— 
‘‘(i) as reported to the applicable insurance regu-
latory body in the applicable financial statement 
described in paragraph (4)(A) (or, if less, the amount 
required by applicable law or regulation), or 
‘‘(ii) as determined under regulations prescribed 
by the Secretary. 
‘‘(4) OTHER DEFINITIONS AND RULES.—For purposes of this 
subsection— 
‘‘(A) APPLICABLE
FINANCIAL
STATEMENT.—The term 
‘applicable financial statement’ means a statement for 
financial reporting purposes which— 
‘‘(i) is made on the basis of generally accepted 
accounting principles, 
‘‘(ii) is made on the basis of international financial 
reporting standards, but only if there is no statement 
that meets the requirement of clause (i), or 
‘‘(iii) except as otherwise provided by the Secretary 
in regulations, is the annual statement which is 
required to be filed with the applicable insurance regu-
latory body, but only if there is no statement which 
meets the requirements of clause (i) or (ii). 
‘‘(B) APPLICABLE INSURANCE REGULATORY BODY.—The 
term ‘applicable insurance regulatory body’ means, with 
respect to any insurance business, the entity established 
by law to license, authorize, or regulate such business 
and to which the statement described in subparagraph 
(A) is provided.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2017. 
SEC. 14502. REPEAL OF FAIR MARKET VALUE METHOD OF INTEREST 
EXPENSE APPORTIONMENT. 
(a) IN GENERAL.—Paragraph (2) of section 864(e) is amended 
to read as follows: 
‘‘(2) GROSS INCOME AND FAIR MARKET VALUE METHODS MAY 
NOT BE USED FOR INTEREST.—All allocations and apportion-
ments of interest expense shall be determined using the 
adjusted bases of assets rather than on the basis of the fair 
market value of the assets or gross income.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2017. 
TITLE II 
SEC. 20001. OIL AND GAS PROGRAM. 
(a) DEFINITIONS.—In this section: 
(1) COASTAL PLAIN.—The term ‘‘Coastal Plain’’ means the 
area identified as the 1002 Area on the plates prepared by
H. R. 1—183 
the United States Geological Survey entitled ‘‘ANWR Map – 
Plate 1’’ and ‘‘ANWR Map – Plate 2’’, dated October 24, 2017, 
and on file with the United States Geological Survey and the 
Office of the Solicitor of the Department of the Interior. 
(2) SECRETARY.—The term ‘‘Secretary’’ means the Secretary 
of the Interior, acting through the Bureau of Land Management. 
(b) OIL AND GAS PROGRAM.— 
(1) IN
GENERAL.—Section 1003 of the Alaska National 
Interest Lands Conservation Act (16 U.S.C. 3143) shall not 
apply to the Coastal Plain. 
(2) ESTABLISHMENT.— 
(A) IN GENERAL.—The Secretary shall establish and 
administer a competitive oil and gas program for the 
leasing, development, production, and transportation of oil 
and gas in and from the Coastal Plain. 
(B) PURPOSES.—Section 303(2)(B) of the Alaska 
National Interest Lands Conservation Act (Public Law 96– 
487; 94 Stat. 2390) is amended— 
(i) in clause (iii), by striking ‘‘and’’ at the end; 
(ii) in clause (iv), by striking the period at the 
end and inserting ‘‘; and’’; and 
(iii) by adding at the end the following: 
‘‘(v) to provide for an oil and gas program on 
the Coastal Plain.’’. 
(3) MANAGEMENT.—Except as otherwise provided in this 
section, the Secretary shall manage the oil and gas program 
on the Coastal Plain in a manner similar to the administration 
of lease sales under the Naval Petroleum Reserves Production 
Act of 1976 (42 U.S.C. 6501 et seq.) (including regulations). 
(4) ROYALTIES.—Notwithstanding the Mineral Leasing Act 
(30 U.S.C. 181 et seq.), the royalty rate for leases issued pursu-
ant to this section shall be 16.67 percent. 
(5) RECEIPTS.—Notwithstanding the Mineral Leasing Act 
(30 U.S.C. 181 et seq.), of the amount of adjusted bonus, rental, 
and royalty receipts derived from the oil and gas program 
and operations on Federal land authorized under this section— 
(A) 50 percent shall be paid to the State of Alaska; 
and 
(B) the balance shall be deposited into the Treasury 
as miscellaneous receipts. 
(c) 2 LEASE SALES WITHIN 10 YEARS.— 
(1) REQUIREMENT.— 
(A) IN GENERAL.—Subject to subparagraph (B), the Sec-
retary shall conduct not fewer than 2 lease sales area- 
wide under the oil and gas program under this section 
by not later than 10 years after the date of enactment 
of this Act. 
(B) SALE ACREAGES; SCHEDULE.— 
(i) ACREAGES.—The Secretary shall offer for lease 
under the oil and gas program under this section— 
(I) not fewer than 400,000 acres area-wide 
in each lease sale; and 
(II) those areas that have the highest potential 
for the discovery of hydrocarbons. 
(ii) SCHEDULE.—The Secretary shall offer—
H. R. 1—184 
(I) the initial lease sale under the oil and 
gas program under this section not later than 4 
years after the date of enactment of this Act; and 
(II) a second lease sale under the oil and gas 
program under this section not later than 7 years 
after the date of enactment of this Act. 
(2) RIGHTS-OF-WAY.—The Secretary shall issue any rights- 
of-way or easements across the Coastal Plain for the explo-
ration, development, production, or transportation necessary 
to carry out this section. 
(3) SURFACE DEVELOPMENT.—In administering this section, 
the Secretary shall authorize up to 2,000 surface acres of Fed-
eral land on the Coastal Plain to be covered by production 
and support facilities (including airstrips and any area covered 
by gravel berms or piers for support of pipelines) during the 
term of the leases under the oil and gas program under this 
section. 
SEC. 20002. LIMITATIONS ON AMOUNT OF DISTRIBUTED QUALIFIED 
OUTER CONTINENTAL SHELF REVENUES. 
Section 105(f)(1) of the Gulf of Mexico Energy Security Act 
of 2006 (43 U.S.C. 1331 note; Public Law 109–432) is amended 
by striking ‘‘exceed $500,000,000 for each of fiscal years 2016 
through 2055.’’ and inserting the following: ‘‘exceed— 
‘‘(A) $500,000,000 for each of fiscal years 2016 through 
2019; 
‘‘(B) $650,000,000 for each of fiscal years 2020 and 
2021; and 
‘‘(C) $500,000,000 for each of fiscal years 2022 through 
2055.’’. 
SEC. 20003. STRATEGIC PETROLEUM RESERVE DRAWDOWN AND SALE. 
(a) DRAWDOWN AND SALE.— 
(1) IN
GENERAL.—Notwithstanding section 161 of the 
Energy Policy and Conservation Act (42 U.S.C. 6241), except 
as provided in subsections (b) and (c), the Secretary of Energy 
shall draw down and sell from the Strategic Petroleum Reserve 
7,000,000 barrels of crude oil during the period of fiscal years 
2026 through 2027. 
(2) DEPOSIT OF AMOUNTS RECEIVED FROM SALE.—Amounts 
received from a sale under paragraph (1) shall be deposited 
in the general fund of the Treasury during the fiscal year 
in which the sale occurs. 
(b) EMERGENCY PROTECTION.—The Secretary of Energy shall 
not draw down and sell crude oil under subsection (a) in a quantity 
that would limit the authority to sell petroleum products under 
subsection (h) of section 161 of the Energy Policy and Conservation 
Act (42 U.S.C. 6241) in the full quantity authorized by that sub-
section.
H. R. 1—185 
(c) LIMITATION.—The Secretary of Energy shall not drawdown 
or conduct sales of crude oil under subsection (a) after the date 
on which a total of $600,000,000 has been deposited in the general 
fund of the Treasury from sales authorized under that subsection. 
Speaker of the House of Representatives. 
Vice President of the United States and
President of the Senate.