I 
118TH CONGRESS 
2D SESSION 
H. R. 7024 
To make improvements to the child tax credit, to provide tax incentives 
to promote economic growth, to provide special rules for the taxation 
of certain residents of Taiwan with income from sources within the 
United States, to provide tax relief with respect to certain Federal 
disasters, to make improvements to the low-income housing tax credit, 
and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 17, 2024 
Mr. SMITH of Missouri introduced the following bill; which was referred to the 
Committee on Ways and Means, and in addition to the Committee on 
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 committee concerned 
A BILL 
To make improvements to the child tax credit, to provide 
tax incentives to promote economic growth, to provide 
special rules for the taxation of certain residents of Tai-
wan with income from sources within the United States, 
to provide tax relief with respect to certain Federal disas-
ters, to make improvements to the low-income housing 
tax credit, 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; TABLE OF CONTENTS; ETC. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Tax Relief for American Families and Workers Act of 
2024’’. 
(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 of 
this Act is as follows: 
Sec. 1. Short title; table of contents; etc. 
TITLE I—TAX RELIEF FOR WORKING FAMILIES 
Sec. 101. Per-child calculation of refundable portion of child tax credit. 
Sec. 102. Increase in refundable portion. 
Sec. 103. Inflation of credit amount. 
Sec. 104. Rule for determination of earned income. 
TITLE II—AMERICAN INNOVATION AND GROWTH 
Sec. 201. Deduction for domestic research and experimental expenditures. 
Sec. 202. Extension of allowance for depreciation, amortization, or depletion in 
determining the limitation on business interest. 
Sec. 203. Extension of 100 percent bonus depreciation. 
Sec. 204. Increase in limitations on expensing of depreciable business assets. 
TITLE III—INCREASING GLOBAL COMPETITIVENESS 
Subtitle A—United States-Taiwan Expedited Double-Tax Relief Act 
Sec. 301. Short title. 
Sec. 302. Special rules for taxation of certain residents of Taiwan. 
Subtitle B—United States-Taiwan Tax Agreement Authorization Act 
Sec. 311. Short title. 
Sec. 312. Definitions. 
Sec. 313. Authorization to negotiate and enter into agreement. 
Sec. 314. Consultations with Congress. 
Sec. 315. Approval and implementation of agreement. 
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Sec. 316. Submission to Congress of agreement and implementation policy. 
Sec. 317. Consideration of approval legislation and implementing legislation. 
Sec. 318. Relationship of agreement to Internal Revenue Code of 1986. 
Sec. 319. Authorization of subsequent tax agreements relative to Taiwan. 
Sec. 320. United States treatment of double taxation matters with respect to 
Taiwan. 
TITLE IV—ASSISTANCE FOR DISASTER-IMPACTED COMMUNITIES 
Sec. 401. Short title. 
Sec. 402. Extension of rules for treatment of certain disaster-related personal 
casualty losses. 
Sec. 403. Exclusion from gross income for compensation for losses or damages 
resulting from certain wildfires. 
Sec. 404. East Palestine disaster relief payments. 
TITLE V—MORE AFFORDABLE HOUSING 
Sec. 501. State housing credit ceiling increase for low-income housing credit. 
Sec. 502. Tax-exempt bond financing requirement. 
TITLE VI—TAX ADMINISTRATION AND ELIMINATING FRAUD 
Sec. 601. Increase in threshold for requiring information reporting with respect 
to certain payees. 
Sec. 602. Enforcement provisions with respect to COVID-related employee re-
tention credits. 
TITLE I—TAX RELIEF FOR 
WORKING FAMILIES 
SEC. 101. PER-CHILD CALCULATION OF REFUNDABLE POR-
TION OF CHILD TAX CREDIT. 
(a) IN GENERAL.—Subparagraph (A) of section 
24(h)(5) is amended to read as follows: 
‘‘(A) IN GENERAL.—In applying subsection 
(d)— 
‘‘(i) the amount determined under 
paragraph (1)(A) of such subsection with 
respect to any qualifying child shall not ex-
ceed $1,400, and such paragraph shall be 
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applied without regard to paragraph (4) of 
this subsection, and 
‘‘(ii) paragraph (1)(B) of such sub-
section shall be applied by multiplying each 
of— 
‘‘(I) 
the 
amount 
determined 
under clause (i) thereof, and 
‘‘(II) 
the 
excess 
determined 
under clause (ii) thereof, 
by the number of qualifying children of the 
taxpayer.’’. 
(b) CONFORMING AMENDMENT.—The heading of 
paragraph (5) of section 24(h) is amended by striking 
‘‘MAXIMUM AMOUNT OF’’ and inserting ‘‘SPECIAL RULES 
FOR’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2022. 
SEC. 102. INCREASE IN REFUNDABLE PORTION. 
(a) IN GENERAL.—Paragraph (5) of section 24(h) is 
amended by redesignating subparagraph (B) as subpara-
graph (C) and by inserting after subparagraph (A) the 
following new subparagraph: 
‘‘(B) AMOUNTS
FOR
2023, 
2024, 
AND 
2025.—In the case of a taxable year beginning 
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after 2022, subparagraph (A) shall be applied 
by substituting for ‘$1,400’— 
‘‘(i) in the case of taxable year 2023, 
‘$1,800’, 
‘‘(ii) in the case of taxable year 2024, 
‘$1,900’, and 
‘‘(iii) in the case of taxable year 2025, 
‘$2,000’.’’. 
(b) CONFORMING AMENDMENT.—Subparagraph (C) 
of section 24(h)(5), as redesignated by subsection (a), is 
amended by inserting ‘‘and before 2023’’ after ‘‘2018’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2022. 
SEC. 103. INFLATION OF CREDIT AMOUNT. 
(a) IN GENERAL.—Paragraph (2) of section 24(h) is 
amended— 
(1) by striking ‘‘AMOUNT.—Subsection’’ and in-
serting ‘‘AMOUNT.— 
‘‘(A) IN GENERAL.—Subsection’’, and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(B) ADJUSTMENT
FOR
INFLATION.—In 
the case of a taxable year beginning after 2023, 
the $2,000 amounts in subparagraph (A) and 
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paragraph (5)(B)(iii) shall each be increased by 
an amount equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘2022’ for 
‘2016’ in subparagraph (A)(ii) thereof. 
If any increase under this clause is not a mul-
tiple of $100, such increase shall be rounded to 
the next lowest multiple of $100.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2023. 
SEC. 104. RULE FOR DETERMINATION OF EARNED INCOME. 
(a) IN GENERAL.—Paragraph (6) of section 24(h) of 
the Internal Revenue Code of 1986 is amended— 
(1) by striking ‘‘CREDIT.—Subsection’’ and in-
serting ‘‘CREDIT.— 
‘‘(A) IN GENERAL.—Subsection’’, and 
(2) by adding at the end the following new sub-
paragraphs: 
‘‘(B) RULE
FOR
DETERMINATION
OF 
EARNED INCOME.— 
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‘‘(i) IN GENERAL.—In the case of a 
taxable year beginning after 2023, if the 
earned income of the taxpayer for such 
taxable year is less than the earned income 
of the taxpayer for the preceding taxable 
year, subsection (d)(1)(B)(i) may, at the 
election of the taxpayer, be applied by sub-
stituting— 
‘‘(I) the earned income for such 
preceding taxable year, for 
‘‘(II) the earned income for the 
current taxable year. 
‘‘(ii) APPLICATION
TO
JOINT
RE-
TURNS.—For purposes of clause (i), in the 
case of a joint return, the earned income 
of the taxpayer for the preceding taxable 
year shall be the sum of the earned income 
of each spouse for such preceding taxable 
year.’’. 
(b) ERRORS
TREATED
AS
MATHEMATICAL
ER-
RORS.—Paragraph (2) of section 6213(g) of the Internal 
Revenue Code of 1986 is amended by striking ‘‘and’’ at 
the end of subparagraph (U), by striking the period at 
the end of subparagraph (V) and inserting ‘‘, and’’, and 
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by inserting after subparagraph (V) the following new sub-
paragraph: 
‘‘(W) in the case of a taxpayer electing the 
application of section 24(h)(6)(B) for any tax-
able year, an entry on a return of earned in-
come pursuant to such section which is incon-
sistent with the amount of such earned income 
determined by the Secretary for the preceding 
taxable year.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2023. 
TITLE II—AMERICAN 
INNOVATION AND GROWTH 
SEC. 201. DEDUCTION FOR DOMESTIC RESEARCH AND EX-
PERIMENTAL EXPENDITURES. 
(a) DELAY OF AMORTIZATION OF DOMESTIC RE-
SEARCH AND EXPERIMENTAL EXPENDITURES.—Section 
174 is amended by adding at the end the following new 
subsection: 
‘‘(e) SUSPENSION OF APPLICATION OF SECTION TO 
DOMESTIC RESEARCH
AND EXPERIMENTAL EXPENDI-
TURES.—In the case of any domestic research or experi-
mental expenditures (as defined in section 174A(b)), this 
section— 
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‘‘(c) AMORTIZATION
OF CERTAIN DOMESTIC RE-
SEARCH AND EXPERIMENTAL EXPENDITURES.— 
‘‘(1) IN GENERAL.—At the election of the tax-
payer, made in accordance with regulations or other 
guidance provided by the Secretary, in the case of 
domestic research or experimental expenditures 
which would (but for subsection (a)) be chargeable 
to capital account but not chargeable to property of 
a character which is subject to the allowance under 
section 167 (relating to allowance for depreciation, 
etc.) or section 611 (relating to allowance for deple-
tion), subsection (a) shall not apply and the tax-
payer shall— 
‘‘(A) charge such expenditures to capital 
account, and 
‘‘(B) be allowed an amortization deduction 
of such expenditures ratably over such period of 
not less than 60 months as may be selected by 
the taxpayer (beginning with the month in 
which the taxpayer first realizes benefits from 
such expenditures). 
‘‘(2) TIME FOR AND SCOPE OF ELECTION.—The 
election provided by paragraph (1) may be made for 
any taxable year, but only if made not later than the 
time prescribed by law for filing the return for such 
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taxable year (including extensions thereof). The 
method so elected, and the period selected by the 
taxpayer, shall be adhered to in computing taxable 
income for the taxable year for which the election is 
made and for all subsequent taxable years unless, 
with the approval of the Secretary, a change to a 
different method (or to a different period) is author-
ized with respect to part or all of such expenditures. 
The election shall not apply to any expenditure paid 
or incurred during any taxable year before the tax-
able year for which the taxpayer makes the election. 
‘‘(d) ELECTION TO CAPITALIZE EXPENSES.—In the 
case of a taxpayer which elects (at such time and in such 
manner as the Secretary may provide) the application of 
this subsection, subsections (a) and (c) shall not apply and 
domestic research or experimental expenditures shall be 
chargeable to capital account. Such election shall not 
apply to any expenditure paid or incurred during any tax-
able year before the taxable year for which the taxpayer 
makes the election and may be made with respect to part 
of the expenditures paid or incurred during any taxable 
year only with the approval of the Secretary. 
‘‘(e) SPECIAL RULES.— 
‘‘(1) LAND AND OTHER PROPERTY.—This sec-
tion shall not apply to any expenditure for the acqui-
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sition or improvement of land, or for the acquisition 
or improvement of property to be used in connection 
with the research or experimentation and of a char-
acter which is subject to the allowance under section 
167 (relating to allowance for depreciation, etc.) or 
section 611 (relating to allowance for depletion); but 
for purposes of this section allowances under section 
167, and allowances under section 611, shall be con-
sidered as expenditures. 
‘‘(2) EXPLORATION EXPENDITURES.—This sec-
tion shall not apply to any expenditure paid or in-
curred for the purpose of ascertaining the existence, 
location, extent, or quality of any deposit of ore or 
other mineral (including oil and gas). 
‘‘(3) SOFTWARE DEVELOPMENT.—For purposes 
of this section, any amount paid or incurred in con-
nection with the development of any software shall 
be treated as a research or experimental expendi-
ture. 
‘‘(f) TERMINATION.— 
‘‘(1) IN GENERAL.—This section shall not apply 
to amounts paid or incurred in taxable years begin-
ning after December 31, 2025. 
‘‘(2) CHANGE IN METHOD OF ACCOUNTING.—In 
the case of a taxpayer’s first taxable year beginning 
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after December 31, 2025, paragraph (1) (and the 
corresponding application of section 174) shall be 
treated as a change in method of accounting for pur-
poses of section 481 and— 
‘‘(A) such change shall be treated as initi-
ated by the taxpayer, 
‘‘(B) such change shall be treated as made 
with the consent of the Secretary, and 
‘‘(C) such change shall be applied only on 
a cut-off basis for any domestic research or ex-
perimental expenditures paid or incurred in tax-
able years beginning after December 31, 2025, 
and no adjustment under section 481(a) shall 
be made.’’. 
(c) COORDINATION WITH CERTAIN OTHER PROVI-
SIONS.— 
(1) RESEARCH CREDIT.— 
(A) Section 41(d)(1)(A) is amended by in-
serting ‘‘or domestic research or experimental 
expenditures under section 174A’’ after ‘‘sec-
tion 174’’. 
(B) Section 280C(c)(1) is amended to read 
as follows: 
‘‘(1) IN GENERAL.—The domestic research or 
experimental expenditures otherwise taken into ac-
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count under section 174 or 174A (as the case may 
be) shall be reduced by the amount of the credit al-
lowed under section 41(a).’’. 
(2) AMT ADJUSTMENT.—Section 56(b)(2) is 
amended by striking ‘‘174(a)’’ each place it appears 
and inserting ‘‘174A(a)’’. 
(3) OPTIONAL
10-YEAR
WRITEOFF.—Section 
59(e)(2)(B) is amended by striking ‘‘section 174(a) 
(relating to research and experimental expendi-
tures)’’ and inserting ‘‘section 174A(a) (relating to 
temporary rules for domestic research and experi-
mental expenditures)’’. 
(4) QUALIFIED SMALL ISSUE BONDS.—Section 
144(a)(4)(C)(iv) is amended by striking ‘‘174(a)’’ 
and inserting ‘‘174A(a)’’. 
(5) 
START-UP
EXPENDITURES.—Section 
195(c)(1) is amended by striking ‘‘or 174’’ in the 
last sentence and inserting ‘‘174, or 174A’’. 
(6) CAPITAL EXPENDITURES.— 
(A) Section 263(a)(1)(B) is amended by 
inserting ‘‘ or 174A’’ after ‘‘174’’. 
(B) Section 263A(c)(2) is amended by in-
serting ‘‘or 174A’’ after ‘‘174’’. 
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(7) ACTIVE
BUSINESS
COMPUTER
SOFTWARE 
ROYALTIES.—Section 543(d)(4)(A)(i) is amended by 
inserting ‘‘174A,’’ after ‘‘174,’’. 
(8) SOURCE
RULES.—Section 864(g)(2) is 
amended in the last sentence— 
(A) by striking ‘‘treated as deferred ex-
penses under subsection (b) of section 174’’ and 
inserting ‘‘allowed as an amortization deduction 
under section 174(a) or section 174A(c),’’, and 
(B) by striking ‘‘such subsection’’ and in-
serting ‘‘such section (as the case may be)’’. 
(9) BASIS ADJUSTMENT.—Section 1016(a)(14) 
is amended by striking ‘‘deductions as deferred ex-
penses under section 174(b)(1) (relating to research 
and experimental expenditures)’’ and inserting ‘‘de-
ductions under section 174 or 174A’’. 
(10) 
SMALL
BUSINESS
STOCK.—Section 
1202(e)(2)(B) is amended by striking ‘‘research and 
experimental expenditures under section 174’’ and 
inserting ‘‘specified research or experimental expend-
itures under section 174 or domestic research or ex-
perimental expenditures under section 174A’’. 
(d) CONFORMING AMENDMENTS.— 
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(1) Section 13206 of Public Law 115–97 is 
amended by striking subsection (b) (relating to 
change in method of accounting). 
(2) The table of sections for part VI of sub-
chapter B of chapter 1 is amended by inserting after 
the item relating to section 174 the following new 
item: 
‘‘Sec. 174A. Temporary rules for domestic research and experimental expendi-
tures.’’. 
(e) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to amounts paid or incurred 
in taxable years beginning after December 31, 2021. 
(2) COORDINATION WITH RESEARCH CREDIT.— 
The amendment made by subsection (c)(1)(B) shall 
apply to taxable years beginning after December 31, 
2022. 
(3) REPEAL
OF
SUPERCEDED
CHANGE
IN 
METHOD OF ACCOUNTING RULES.—The amendment 
made by subsection (d)(1) shall take effect as if in-
cluded in Public Law 115–97. 
(4) NO INFERENCE WITH RESPECT TO COORDI-
NATION WITH RESEARCH CREDIT FOR PRIOR PERI-
ODS.—The 
amendment 
made 
by 
subsection 
(c)(1)(B) shall not be construed to create any infer-
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ence with respect to the proper application of section 
280C(c) of the Internal Revenue Code of 1986 with 
respect to taxable years beginning before January 1, 
2023. 
(f) TRANSITION RULES.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided by the Secretary, an election made under sub-
section (c) or (d) of section 174A of the Internal 
Revenue Code of 1986 (as added by this section) for 
the taxpayer’s first taxable year beginning after De-
cember 31, 2021, shall not fail to be treated as time-
ly made (or as made on the return) if made during 
the 1-year period beginning on the date of the enact-
ment of this Act on an amended return for the tax-
payer’s first taxable year beginning after December 
31, 2021, or in such other manner as the Secretary 
may provide. 
(2) ELECTION
REGARDING
TREATMENT
AS 
CHANGE IN METHOD OF ACCOUNTING.—In the case 
of any taxpayer which (as of the date of the enact-
ment of this Act) had adopted a method of account-
ing provided by section 174 of the Internal Revenue 
Code of 1986 (as in effect prior to the amendments 
made by this section) for the taxpayer’s first taxable 
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year beginning after December 31, 2021, and elects 
the application of this paragraph— 
(A) the amendments made by this section 
shall be treated as a change in method of ac-
counting for purposes of section 481 of such 
Code, 
(B) such change shall be treated as initi-
ated by the taxpayer for the taxpayer’s imme-
diately succeeding taxable year, 
(C) such change shall be treated as made 
with the consent of the Secretary, 
(D) such change shall be applied on a 
modified cut-off basis, taking into account for 
purposes of section 481(a) of such Code only 
the domestic research or experimental expendi-
tures (as defined in section 174A(b) of such 
Code (as added by this section) and determined 
by applying the rules of section 174A(e) of such 
Code) paid or incurred in the taxpayer’s first 
taxable year beginning after December 31, 
2021, and not allowed as a deduction in such 
taxable year, and 
(E) in the case of a taxpayer which elects 
the application of this subparagraph, the 
amount of such change (as determined under 
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subparagraph (D)) shall be taken into account 
ratably over the 2-taxable-year period beginning 
with the taxable year referred to in subpara-
graph (B). 
(3) ELECTION
REGARDING
10-YEAR
WRITE-
OFF.— 
(A) IN
GENERAL.—Except as otherwise 
provided by the Secretary, an eligible taxpayer 
which files, during the 1-year period beginning 
on the date of the enactment of this Act, an 
amended income tax return for the taxable year 
described in subparagraph (B)(ii) may elect the 
application of section 59(e) of the Internal Rev-
enue Code of 1986 with respect to qualified ex-
penditures described in section 59(e)(2)(B) of 
such Code (as amended by subsection (c)(3)) 
with respect to such taxable year. Such election 
shall be filed with such amended income tax re-
turn and shall be effective only to the extent 
that such election would have been effective if 
filed with the original income tax return for 
such taxable year (determined after taking into 
account the amendment made by subsection 
(c)(3)). 
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(B) ELIGIBLE
TAXPAYER.—For purposes 
of subparagraph (A), the term ‘‘eligible tax-
payer’’ means any taxpayer which— 
(i) does not elect the application of 
paragraph (2), and 
(ii) filed an income tax return for 
such taxpayer’s first taxable year begin-
ning after December 31, 2021, before the 
earlier of— 
(I) the due date for such return, 
and 
(II) the date of the enactment of 
this Act. 
(4) 
ELECTION
REGARDING
COORDINATION 
WITH RESEARCH CREDIT.—Except as otherwise pro-
vided by the Secretary, an eligible taxpayer (as de-
fined in paragraph (3)(B) without regard to clause 
(i) thereof) which files, during the 1-year period be-
ginning on the date of the enactment of this Act, an 
amended income tax return for the taxpayer’s first 
taxable year beginning after December 31, 2021, 
may, notwithstanding subparagraph (C) of section 
280C(c)(2) of the Internal Revenue Code of 1986 
make, or revoke, on such amended return the elec-
tion under such section for such taxable year. 
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SEC. 202. EXTENSION OF ALLOWANCE FOR DEPRECIATION, 
AMORTIZATION, OR DEPLETION IN DETER-
MINING THE LIMITATION ON BUSINESS IN-
TEREST. 
(a) IN GENERAL.—Section 163(j)(8)(A)(v) is amend-
ed by striking ‘‘January 1, 2022’’ and inserting ‘‘January 
1, 2026’’. 
(b) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendment made by 
this section shall apply to taxable years beginning 
after December 31, 2023. 
(2) ELECTION TO APPLY EXTENSION RETRO-
ACTIVELY.—In the case of a taxpayer which elects 
(at such time and in such manner as the Secretary 
may provide) the application of this paragraph, 
paragraph (1) shall be applied by substituting ‘‘De-
cember 31, 2021’’ for ‘‘December 31, 2023’’. 
SEC. 203. EXTENSION OF 100 PERCENT BONUS DEPRECIA-
TION. 
(a) IN GENERAL.—Section 168(k)(6)(A) is amend-
ed— 
(1) in clause (i)— 
(A) by striking ‘‘2023’’ and inserting 
‘‘2026’’, and 
(B) by adding ‘‘and’’ at the end, and 
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TITLE III—INCREASING GLOBAL 
COMPETITIVENESS 
Subtitle A—United States-Taiwan 
Expedited Double-Tax Relief Act 
SEC. 301. SHORT TITLE. 
This subtitle may be cited as the ‘‘United States-Tai-
wan Expedited Double-Tax Relief Act’’. 
SEC. 302. SPECIAL RULES FOR TAXATION OF CERTAIN 
RESIDENTS OF TAIWAN. 
(a) IN GENERAL.—Subpart D of part II of sub-
chapter N of chapter 1 is amended by inserting after sec-
tion 894 the following new section: 
‘‘SEC. 894A. SPECIAL RULES FOR QUALIFIED RESIDENTS OF 
TAIWAN. 
‘‘(a) CERTAIN
INCOME
FROM
UNITED
STATES 
SOURCES.— 
‘‘(1) INTEREST, DIVIDENDS, AND ROYALTIES, 
ETC.— 
‘‘(A) IN GENERAL.—In the case of interest 
(other than original issue discount), dividends, 
royalties, 
amounts 
described 
in 
section 
871(a)(1)(C), and gains described in section 
871(a)(1)(D) received by or paid to a qualified 
resident of Taiwan— 
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‘‘(i) sections 871(a), 881(a), 1441(a), 
1441(c)(5), and 1442(a) shall each be ap-
plied by substituting ‘the applicable per-
centage 
(as 
defined 
in 
section 
894A(a)(1)(C))’ for ‘30 percent’ each place 
it appears, and 
‘‘(ii) sections 871(a), 881(a), and 
1441(c)(1) shall each be applied by sub-
stituting ‘a United States permanent es-
tablishment of a qualified resident of Tai-
wan’ for ‘a trade or business within the 
United States’ each place it appears. 
‘‘(B) EXCEPTIONS.— 
‘‘(i) IN GENERAL.—Subparagraph (A) 
shall not apply to— 
‘‘(I) any dividend received from 
or paid by a real estate investment 
trust which is not a qualified REIT 
dividend, 
‘‘(II) any amount subject to sec-
tion 897, 
‘‘(III) any amount received from 
or paid by an expatriated entity (as 
defined in section 7874(a)(2)) to a 
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foreign related person (as defined in 
section 7874(d)(3)), and 
‘‘(IV) any amount which is in-
cluded in income under section 860C 
to the extent that such amount does 
not exceed an excess inclusion with re-
spect to a REMIC. 
‘‘(ii) QUALIFIED
REIT
DIVIDEND.— 
For purposes of clause (i)(I), the term 
‘qualified REIT dividend’ means any divi-
dend received from or paid by a real estate 
investment trust if such dividend is paid 
with respect to a class of shares that is 
publicly traded and the recipient of the 
dividend is a person who holds an interest 
in any class of shares of the real estate in-
vestment trust of not more than 5 percent. 
‘‘(C) 
APPLICABLE
PERCENTAGE.—For 
purposes of applying subparagraph (A)(i)— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), the term ‘applicable 
percentage’ means 10 percent. 
‘‘(ii) 
SPECIAL
RULES
FOR
DIVI-
DENDS.— In the case of any dividend in 
respect of stock received by or paid to a 
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qualified resident of Taiwan, the applicable 
percentage shall be 15 percent (10 percent 
in the case of a dividend which meets the 
requirements of subparagraph (D) and is 
received by or paid to an entity taxed as 
a corporation in Taiwan). 
‘‘(D) REQUIREMENTS
FOR
LOWER
DIVI-
DEND RATE.— 
‘‘(i) IN GENERAL.—The requirements 
of this subparagraph are met with respect 
to any dividend in respect of stock in a 
corporation if, at all times during the 12- 
month period ending on the date such 
stock becomes ex-dividend with respect to 
such dividend— 
‘‘(I) the dividend is derived by a 
qualified resident of Taiwan, and 
‘‘(II) such qualified resident of 
Taiwan has held directly at least 10 
percent (by vote and value) of the 
total outstanding shares of stock in 
such corporation. 
For purposes of subclause (II), a person 
shall be treated as directly holding a share 
of stock during any period described in the 
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preceding sentence if the share was held by 
a corporation from which such person later 
acquired that share and such corporation 
was, at the time the share was acquired, 
both a connected person to such person 
and a qualified resident of Taiwan. 
‘‘(ii) EXCEPTION
FOR
RICS
AND 
REITS.—Notwithstanding clause (i), the re-
quirements of this subparagraph shall not 
be treated as met with respect to any divi-
dend paid by a regulated investment com-
pany or a real estate investment trust. 
‘‘(2) QUALIFIED WAGES.— 
‘‘(A) IN GENERAL.—No tax shall be im-
posed under this chapter (and no amount shall 
be withheld under section 1441(a) or chapter 
24) with respect to qualified wages paid to a 
qualified resident of Taiwan who— 
‘‘(i) is not a resident of the United 
States (determined without regard to sub-
section (c)(3)(E)), or 
‘‘(ii) is employed as a member of the 
regular component of a ship or aircraft op-
erated in international traffic. 
‘‘(B) QUALIFIED WAGES.— 
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‘‘(i) IN GENERAL.—The term ‘quali-
fied wages’ means wages, salaries, or simi-
lar remunerations with respect to employ-
ment involving the performance of personal 
services within the United States which— 
‘‘(I) are paid by (or on behalf of) 
any employer other than a United 
States person, and 
‘‘(II) are not borne by a United 
States permanent establishment of 
any person other than a United States 
person. 
‘‘(ii) EXCEPTIONS.—Such term shall 
not include directors’ fees, income derived 
as an entertainer or athlete, income de-
rived as a student or trainee, pensions, 
amounts paid with respect to employment 
with the United States, any State (or polit-
ical subdivision thereof), or any possession 
of the United States (or any political sub-
division thereof), or other amounts speci-
fied in regulations or guidance under sub-
section (f)(1)(F). 
‘‘(3) INCOME DERIVED FROM ENTERTAINMENT 
OR ATHLETIC ACTIVITIES.— 
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‘‘(A) IN GENERAL.—No tax shall be im-
posed under this chapter (and no amount shall 
be withheld under section 1441(a) or chapter 
24) with respect to income derived by an enter-
tainer or athlete who is a qualified resident of 
Taiwan from personal activities as such per-
formed in the United States if the aggregate 
amount of gross receipts from such activities 
for the taxable year do not exceed $30,000. 
‘‘(B) 
EXCEPTION.—Subparagraph 
(A) 
shall not apply with respect to— 
‘‘(i) income which is qualified wages 
(as defined in paragraph (2)(B), deter-
mined without regard to clause (ii) there-
of), or 
‘‘(ii) income which is effectively con-
nected with a United States permanent es-
tablishment. 
‘‘(b) INCOME CONNECTED WITH A UNITED STATES 
PERMANENT ESTABLISHMENT
OF
A QUALIFIED RESI-
DENT OF TAIWAN.— 
‘‘(1) IN GENERAL.— 
‘‘(A) IN
GENERAL.—In lieu of applying 
sections 871(b) and 882, a qualified resident of 
Taiwan that carries on a trade or business 
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within the United States through a United 
States permanent establishment shall be taxable 
as provided in section 1, 11, 55, or 59A, on its 
taxable income which is effectively connected 
with such permanent establishment. 
‘‘(B) DETERMINATION
OF
TAXABLE
IN-
COME.—In determining taxable income for pur-
poses of paragraph (1), gross income includes 
only gross income which is effectively connected 
with the permanent establishment. 
‘‘(2) TREATMENT OF DISPOSITIONS OF UNITED 
STATES REAL PROPERTY.—In the case of a qualified 
resident of Taiwan, section 897(a) shall be applied— 
‘‘(A) by substituting ‘carried on a trade or 
business within the United States through a 
United States permanent establishment’ for 
‘were engaged in a trade or business within the 
United States’, and 
‘‘(B) by substituting ‘such United States 
permanent establishment’ for ‘such trade or 
business’. 
‘‘(3) 
TREATMENT
OF
BRANCH
PROFITS 
TAXES.—In the case of any corporation which is a 
qualified resident of Taiwan, section 884 shall be ap-
plied— 
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‘‘(A) by substituting ‘10 percent’ for ‘30 
percent ’ in subsection (a) thereof, and 
‘‘(B) by substituting ‘a United States per-
manent establishment of a qualified resident of 
Taiwan’ for ‘the conduct of a trade or business 
within the United States’ in subsection (d)(1) 
thereof. 
‘‘(4) SPECIAL RULE WITH RESPECT TO INCOME 
DERIVED FROM CERTAIN ENTERTAINMENT OR ATH-
LETIC ACTIVITIES.— 
‘‘(A) IN
GENERAL.—Paragraph (1) shall 
not apply to the extent that the income is de-
rived— 
‘‘(i) in respect of entertainment or 
athletic activities performed in the United 
States, and 
‘‘(ii) by a qualified resident of Taiwan 
who is not the entertainer or athlete per-
forming such activities. 
‘‘(B) 
EXCEPTION.—Subparagraph 
(A) 
shall not apply if the person described in sub-
paragraph (A)(ii) is contractually authorized to 
designate the individual who is to perform such 
activities. 
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‘‘(5) SPECIAL RULE WITH RESPECT TO CER-
TAIN AMOUNTS.—Paragraph (1) shall not apply to 
any income which is wages, salaries, or similar re-
muneration with respect to employment or with re-
spect to any amount which is described in subsection 
(a)(2)(B)(ii). 
‘‘(c) QUALIFIED RESIDENT OF TAIWAN.—For pur-
poses of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified resi-
dent of Taiwan’ means any person who— 
‘‘(A) is liable to tax under the laws of Tai-
wan by reason of such person’s domicile, resi-
dence, place of management, place of incorpora-
tion, or any similar criterion, 
‘‘(B) is not a United States person (deter-
mined without regard to paragraph (3)(E)), 
and 
‘‘(C) in the case of an entity taxed as a 
corporation in Taiwan, meets the requirements 
of paragraph (2). 
‘‘(2) LIMITATION
ON
BENEFITS
FOR
COR-
PORATE ENTITIES OF TAIWAN.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graphs (E) and (F), an entity meets the re-
quirements of this paragraph only if it— 
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‘‘(i) meets the ownership and income 
requirements of subparagraph (B), 
‘‘(ii) meets the publicly traded re-
quirements of subparagraph (C), or 
‘‘(iii) meets the qualified subsidiary 
requirements of subparagraph (D). 
‘‘(B) OWNERSHIP AND INCOME REQUIRE-
MENTS.—The requirements of this subpara-
graph are met for an entity if— 
‘‘(i) at least 50 percent (by vote and 
value) of the total outstanding shares of 
stock in such entity are owned directly or 
indirectly by qualified residents of Taiwan, 
and 
‘‘(ii) less than 50 percent of such enti-
ty’s gross income (and in the case of an 
entity that is a member of a tested group, 
less than 50 percent of the tested group’s 
gross income) is paid or accrued, directly 
or indirectly, in the form of payments that 
are deductible for purposes of the income 
taxes imposed by Taiwan, to persons who 
are not— 
‘‘(I) qualified residents of Tai-
wan, or 
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‘‘(II) United States persons who 
meet such requirements with respect 
to the United States as determined by 
the Secretary to be equivalent to the 
requirements of this subsection (deter-
mined without regard to paragraph 
(1)(B)) with respect to residents of 
Taiwan. 
‘‘(C) 
PUBLICLY
TRADED
REQUIRE-
MENTS.—An entity meets the requirements of 
this subparagraph if— 
‘‘(i) the principal class of its shares 
(and any disproportionate class of shares) 
of such entity are primarily and regularly 
traded on an established securities market 
in Taiwan, or 
‘‘(ii) the primary place of manage-
ment and control of the entity is in Taiwan 
and all classes of its outstanding shares 
described in clause (i) are regularly traded 
on an established securities market in Tai-
wan. 
‘‘(D) QUALIFIED
SUBSIDIARY
REQUIRE-
MENTS.—An entity meets the requirement of 
this subparagraph if— 
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try through a broker, general commission 
agent, or any other agent of an inde-
pendent status, provided that such persons 
are acting in the ordinary course of their 
business as independent agents. 
‘‘(3) TESTED GROUP.—The term ‘tested group’ 
includes, with respect to any entity taxed as a cor-
poration in Taiwan, such entity and any other entity 
taxed as a corporation in Taiwan that— 
‘‘(A) participates as a member with such 
entity in a tax consolidation, fiscal unity, or 
similar regime that requires members of the 
group to share profits or losses, or 
‘‘(B) shares losses with such entity pursu-
ant to a group relief or other loss sharing re-
gime. 
‘‘(4) CONNECTED PERSON.—Two persons shall 
be ‘connected persons’ if one owns, directly or indi-
rectly, at least 50 percent of the interests in the 
other (or, in the case of a corporation, at least 50 
percent of the aggregate vote and value of the cor-
poration’s shares) or another person owns, directly 
or indirectly, at least 50 percent of the interests (or, 
in the case of a corporation, at least 50 percent of 
the aggregate vote and value of the corporation’s 
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