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‘‘(B) the sale, exchange, or other disposi-
tion of imported property, or
‘‘(C) the lease, rental, or licensing of im-
ported property.
Such term shall not include any foreign oil and gas
extraction income (within the meaning of section
907(c)) or any foreign oil related income (within the
meaning of section 907(c)).
‘‘(2) IMPORTED PROPERTY.—For purposes of
this subsection—
‘‘(A) IN GENERAL.—Except as otherwise
provided in this paragraph, the term ‘imported
property’ means property which is imported
into the United States by the controlled foreign
corporation or a related person.
‘‘(B) IMPORTED PROPERTY INCLUDES CER-
TAIN
PROPERTY
IMPORTED
BY
UNRELATED
PERSONS.—The term ‘imported property’ in-
cludes any property imported into the United
States by an unrelated person if, when such
property was sold to the unrelated person by
the controlled foreign corporation (or a related
person), it was reasonable to expect that—
‘‘(i) such property would be imported
into the United States, or
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‘‘(ii) such property would be used as
a component in other property which would
be imported into the United States.
‘‘(C) EXCEPTION FOR PROPERTY SUBSE-
QUENTLY
EXPORTED.—The term ‘imported
property’ does not include any property which is
imported into the United States and which—
‘‘(i) before substantial use in the
United States, is sold, leased, or rented by
the controlled foreign corporation or a re-
lated person for direct use, consumption,
or disposition outside the United States, or
‘‘(ii) is used by the controlled foreign
corporation or a related person as a com-
ponent in other property which is so sold,
leased, or rented.
‘‘(3) DEFINITIONS AND SPECIAL RULES.—
‘‘(A) IMPORT.—For purposes of this sub-
section, the term ‘import’ means entering, or
withdrawal from warehouse, for consumption or
use. Such term includes any grant of the right
to use an intangible (as defined in section
936(b)(3)(B)) in the United States.
‘‘(B) UNRELATED PERSON.—For purposes
of this subsection, the term ‘unrelated person’
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means any person who is not a related person
with respect to the controlled foreign corpora-
tion.
‘‘(C) COORDINATION WITH FOREIGN BASE
COMPANY SALES INCOME.—For purposes of this
section, the term ‘foreign base company sales
income’ shall not include any imported property
income.’’
(c) SEPARATE APPLICATION
OF LIMITATIONS
ON
FOREIGN TAX CREDIT FOR IMPORTED PROPERTY IN-
COME.—
(1) IN
GENERAL.—Paragraph (1) of section
904(d) (relating to separate application of section
with respect to certain categories of income) is
amended by striking ‘‘and’’ at the end of subpara-
graph (H), by redesignating subparagraph (I) as
subparagraph (J), and by inserting after subpara-
graph (H) the following new subparagraph:
‘‘(I) imported property income, and’’.
(2) IMPORTED PROPERTY INCOME DEFINED.—
Paragraph (2) of section 904(d) is amended by re-
designating subparagraphs (H) and (I) as subpara-
graphs (I) and (J), respectively, and by inserting
after subparagraph (G) the following new subpara-
graph:
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‘‘(H) IMPORTED PROPERTY INCOME.—The
term ‘imported property income’ means any in-
come received or accrued by any person which
is of a kind which would be imported property
income (as defined in section 954(h)).’’
(3) LOOK-THRU RULES TO APPLY.—Subpara-
graph (F) of section 904(d)(3) is amended by strik-
ing ‘‘or (E)’’ and inserting ‘‘(E), or (H)’’.
(d) TECHNICAL AMENDMENTS.—
(1) Clause (iii) of section 952(c)(1)(B) (relating
to certain prior year deficits may be taken into ac-
count) is amended by inserting the following
subclause after subclause (II) (and by redesignating
the following subclauses accordingly):
‘‘(III) imported property income,’’.
(2) Paragraph (5) of section 954(b) (relating to
deductions to be taken into account) is amended by
striking ‘‘and the foreign base company oil related
income’’ and inserting ‘‘the foreign base company oil
related income, and the imported property income’’.
(e) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section
shall apply to taxable years of foreign corporations
beginning after December 31, 1995, and to taxable
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years of United States shareholders within which or
with which such taxable years of such foreign cor-
porations end.
(2) SUBSECTION (c).—The amendments made
by subsection (c) shall apply to taxable years begin-
ning after December 31, 1995.
SEC. 3. REFUNDABLE CREDIT FOR NEW EMPLOYEES.
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 (relating to refundable credits) is
amended by redesignating section 35 as section 36 and
by inserting after section 34 the following new section:
‘‘SEC. 35. CREDIT FOR NEW EMPLOYEES.
‘‘(a) ALLOWANCE OF CREDIT.—There shall be al-
lowed as a credit against the tax imposed by this subtitle
for any taxable year an amount equal to 20 percent of
the qualified social security taxes paid or incurred by the
taxpayer during the taxable year.
‘‘(b) QUALIFIED SOCIAL SECURITY TAXES.—For
purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified social
security taxes’ means the amount of taxes imposed
by section 3111(a) with respect to wages of an em-
ployee for employment during the 2-year period be-
ginning with the day the employee begins work for
the employer.
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number of employees determined under this
subparagraph for a taxable year is an amount
equal to the excess (if any) of—
‘‘(i) the average daily number of full-
time equivalent employees of the taxpayer
for such taxable year, over
‘‘(ii) the average daily number of full-
time equivalent employees of the taxpayer
(or any predecessor) for the 3-taxable year
period immediately preceding such taxable
year.
‘‘(2) OTHER INELIGIBLE EMPLOYEES.—Quali-
fied social security taxes paid with respect to any
employee shall not be taken into account under sub-
section (a) if such employee—
‘‘(A) is a member of a targeted group with
respect to whom the employer has taken into
account wages in determining the amount of
the targeted jobs credit under section 51,
‘‘(B) is described in paragraph (1) of sec-
tion 51(i) (relating to related individuals), or
‘‘(C) is employed by the employer for less
than 120 days or has not completed at least
120 hours of service.
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‘‘(d) OTHER SPECIAL RULES.—For purposes of this
section—
‘‘(1) CONTROLLED
GROUPS.—All employers
treated as a single employer under subsection (a) or
(b) of section 52 shall be treated as a single em-
ployer.
‘‘(2) OTHER RULES.—Rules similar to the rules
of section 51(k) and subsections (c), (d), and (e) of
section 52 shall apply.’’
(b) CONFORMING AMENDMENTS.—The table of sec-
tions for subpart C of part IV of subchapter A of chapter
1 is amended by striking the item relating to section 35
and inserting the following new items:
‘‘Sec. 35. Credit for new employees.
‘‘Sec. 36. Overpayments of tax.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1995.
SEC. 4. REPORT ON ELIMINATION OF BUSINESS TAX PREF-
ERENCES.
The Secretary of the Treasury shall, as soon as prac-
ticable after the date of the enactment of this Act, report
to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the
Senate recommendations as to the elimination of, or
changes in, business tax preferences. Such recommenda-
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tions shall provide an increase in Federal revenues suffi-
cient to offset any overall decrease in Federal revenues
under the other provisions of this Act.
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