Section 1 Short title
This Act may be cited as the “Putting America First Corporate Tax Act”.
Putting America First Corporate Tax Act
A BILL
To amend the Internal Revenue Code of 1986 to end tax deferrals on profits accumulated offshore and to terminate the deferral of active income of controlled foreign corporations.
Sec. 2 Inclusion in subpart F income of investments by controlled foreign corporations with respect to members of foreign group which includes United States shareholder
In general— Section 956(a)(1)(A) of the Internal Revenue Code of 1986 is amended to read as follows:
“(A) such shareholder’s pro rata share of the average of—
“(i) the amounts of United States property, and
“(ii) in the case of a controlled foreign corporation which is a member of an expanded affiliated group the common parent of which is not a United States person, the amount of foreign group property,”
Foreign group property— Section 956 of such Code is amended by redesignating subsections (d) and (e) as subsections (e) and (f), respectively, and by inserting after subsection (c) the following new subsection:
“(d) Foreign group property; expanded affiliated group—For purposes of this section—
“(1) Foreign group property
“(A) In general—The term foreign group property means any stock or obligation of any foreign person which is not a controlled foreign corporation.
“(B) Exceptions—Such term shall not include—
“(i) the stock or obligation of any entity if less than 25 percent of the total combined voting power of such entity, immediately after the acquisition of any stock in such entity by the controlled foreign corporation, is owned (directly or indirectly) by the common parent referred to in subsection (a)(1)(A)(ii), and
“(ii) property described in subparagraph (C), (I), (J), or (K) of subsection (c)(2), applied by substituting “foreign person” for “United States person” in such subparagraphs (C) and (J).
“(2) Expanded affiliated group—The term expanded affiliated group means an affiliated group as defined in section 1504(a), determined—
“(A) by substituting “more than 50 percent” for “at least 80 percent” each place it appears, and
“(B) without regard to paragraphs (2) and (3) of section 1504(b).
“(3) Application to non-corporate entities—In the case of any entity which is not a corporation—
“(A) any reference in this subsection to stock shall be treated as a reference to any equity or profits interest in such entity, and
“(B) except as otherwise provided by the Secretary, paragraph (1)(B)(i) shall be applied by substituting “25 percent (by value) of the beneficial interests in such entity” for “25 percent of the total combined voting power of such entity”.”
Application of rules for pledges and guarantees— Section 956(e) of such Code, as so redesignated, is amended to read as follows:
“(e) Pledges and guarantees—For purposes of subsection (a), a controlled foreign corporation shall, under regulations prescribed by the Secretary, be considered as holding—
“(1) an obligation of a United States person if such controlled foreign corporation is a pledgor or guarantor of such obligation, and
“(2) an obligation of a foreign person if such controlled foreign corporation or, to the extent provided under such regulations, any United States shareholder of such controlled foreign corporation, is a pledgor or guarantor of such obligation.”
Application of limitation on amount of foreign taxes deemed paid with respect to section 956 inclusions— Notwithstanding section 214(b) of Public Law 111–226, section 960(c) of the Internal Revenue Code of 1986 shall apply to acquisitions of foreign group property (as defined in 956(d) of such Code, as amended by this section) after December 31, 2010, in addition to acquisitions of United States property (as defined in section 956(c) of such Code) after such date.
Effective date— The amendments made by this section shall apply to taxable years of controlled foreign corporations ending after the date of the enactment of this Act and to taxable years of United States shareholders in which or with which such taxable years of controlled foreign corporations end.
Sec. 3 Termination of deferral of active income of controlled foreign corporations
In general— Section 952 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
“(d) Special application of subpart
“(1) In general—For taxable years beginning after December 31, 2014, notwithstanding any other provision of this subpart, the term subpart F income means, in the case of any controlled foreign corporation, the income of such corporation derived from any foreign country.
“(2) Applicable rules—Rules similar to the rules under the last sentence of subsection (a) and subsection (d) shall apply to this subsection.”
Effective date— The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 2014.