To amend the Internal Revenue Code of 1986 to encourage the transfer of intangible property from controlled foreign corporations to United States shareholders.
Bill: H.R.2031 | Sponsor: Rep. LaHood, Darin (R-IL)
Policy area: Taxation

Summary:
This bill excludes from gross income, for income tax purposes, gains from distributions of intangible property by controlled foreign corporations to U.S. domestic corporations. The bill defines intangible property to include patents, copyrights, licenses, formulas, computer software, and similar items with substantial value.

To amend the Internal Revenue Code of 1986 to encourage the transfer of 
  intangible property from controlled foreign corporations to United 
                          States shareholders.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SPECIAL RULES FOR TRANSFERS OF INTANGIBLE PROPERTY FROM 
              CONTROLLED FOREIGN CORPORATIONS TO UNITED STATES 
              SHAREHOLDERS.

    (a) In General.--Subpart F of part III of subchapter N of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 966. TRANSFERS OF INTANGIBLE PROPERTY TO UNITED STATES 
              SHAREHOLDERS.

    ``(a) In General.--If a controlled foreign corporation holds 
intangible property on the date of the enactment of this section and 
thereafter distributes such property to a domestic corporation which is 
a United States shareholder with respect to such controlled foreign 
corporation--
            ``(1) for purposes of part I of subchapter C and any other 
        provision of this title specified by the Secretary, the fair 
        market value of such property on the date of such distribution 
        shall be treated as not exceeding the adjusted basis of such 
        property immediately before such distribution, and
            ``(2) if any portion of such distribution is not a 
        dividend--
                    ``(A) no gain shall be recognized by such United 
                States shareholder with respect to such distribution, 
                and
                    ``(B) the adjusted basis of such property in the 
                hands of such United States shareholder immediately 
                after such distribution shall be the adjusted basis of 
                such property in the hands of such controlled foreign 
                corporation immediately before such distribution 
                reduced by the amount (if any) of gain not recognized 
                by reason of subparagraph (A) (determined after the 
                application of paragraph (1)).
    ``(b) Intangible Property.--For purposes of this section, the term 
`intangible property' means any--
            ``(1) patent, copyright, license, invention, formula, 
        process, design, pattern, know-how, or format,
            ``(2) method, program, system, procedure, campaign, survey, 
        study, forecast, estimate, or technical data,
            ``(3) computer software (as defined in section 
        197(e)(3)(B)), or
            ``(4) any similar item, which has substantial value 
        independent of the services of any individual.''.
    (b) Conforming Amendments.--
            (1) Section 197(f)(2)(B)(i) of such Code is amended by 
        inserting ``966(a),'' after ``731,''.
            (2) The table of sections for subpart F of part III of 
        subchapter N of chapter 1 of such Code is amended by adding at 
        the end the following new item:

``Sec. 966. Transfers of intangible property to United States 
                            shareholders.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions made in taxable years of foreign corporations 
beginning after December 31, 2021, and to taxable years of United 
States shareholders in which or with which such taxable years of 
foreign corporations end.
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