US Codex
Bill
Notes

To reinstate the taxation of foreign oil related income, and for other purposes.

S. 3804 · 115th Congress · Dec 21, 2018 · Lineage

A BILL

Section 1 Treatment of foreign oil related income as subpart F income

(a)
In general— Section 954(a) of the Internal Revenue Code of 1986 is amended by striking “and” at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting “, and”, and by adding at the end the following new paragraph:

“(4) the foreign base company oil related income for the taxable year (determined under subsection (g) and reduced as provided in subsection (b)(5)).”

(b)
Foreign base company oil related income— Section 954 of the Internal Revenue Code of 1986 is amended by inserting after subsection (e) the following new subsection:

“(g) Foreign base company oil related income—For purposes of this section—

“(1) In general—Except as otherwise provided in this subsection, the term foreign base company oil related income means foreign oil related income (within the meaning of paragraphs (2) and (3) of section 907(c)) other than income derived from a source within a foreign country in connection with—

“(A) oil or gas which was extracted from an oil or gas well located in such foreign country, or

“(B) oil, gas, or a primary product of oil or gas which is sold by the foreign corporation or a related person for use or consumption within such country or is loaded in such country on a vessel or aircraft as fuel for such vessel or aircraft.

“(2) Paragraph (1) applies only where corporation has produced 1,000 barrels per day or more

“(A) In general—The term foreign base company oil related income shall not include any income of a foreign corporation if such corporation is not a large oil producer for the taxable year.

“(B) Large oil producer—For purposes of subparagraph (A), the term large oil producer means any corporation if, for the taxable year or for the preceding taxable year, the average daily production of foreign crude oil and natural gas of the related group which includes such corporation equaled or exceeded 1,000 barrels.

“(C) Related group—The term related group means a group consisting of the foreign corporation and any other person who is a related person with respect to such corporation.

“(D) Average daily production of foreign crude oil and natural gas—For purposes of this paragraph, the average daily production of foreign crude oil or natural gas of any related group for any taxable year (and the conversion of cubic feet of natural gas into barrels) shall be determined under rules similar to the rules of section 613A except that only crude oil or natural gas from a well located outside the United States shall be taken into account.”

(c)
Conforming amendments—
(1)
Section 952(c)(1)(B)(iii) of the Internal Revenue Code of 1986 is amended by redesignating subclauses (I) through (IV) as subclause (II) through (V), respectively, and by inserting before subclause (II) (as so redesignated) the following:

“(I) foreign base company oil related income,”

(2)
Section 954(b) of such Code is amended—
(A)
by inserting at the end of paragraph (4) the following: “The preceding sentence shall not apply to foreign base company oil-related income described in subsection (a)(4).”,
(B)
by striking “and the foreign base company services income” in paragraph (5) and inserting “the foreign base company services income, and the foreign base company oil related income”, and
(C)
by adding at the end the following new paragraph:

“(6) Foreign base company oil related income not treated as another kind of base company income—Income of a corporation which is foreign base company oil related income shall not be considered foreign base company income of such corporation under paragraph (2) or (3) of subsection (a).”

(d)
Effective date— The amendments made by this section shall apply to taxable years of foreign corporations beginning after the date of the enactment of this Act and to taxable years of United States shareholders ending with or within which such taxable years of foreign corporations end.