H.R.62 - International Tax Competitiveness Act of 2011
To amend the Internal Revenue Code of 1986 to reduce international tax avoidance and restore a level playing field for American businesses.
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SECTION 1. SHORT TITLE.
SEC. 2. TREATMENT OF FOREIGN CORPORATIONS MANAGED AND CONTROLLED IN THE UNITED STATES AS DOMESTIC CORPORATIONS.
(a) In General- Section 7701 of the Internal Revenue Code of 1986 (relating to definitions) is amended by redesignating subsection (p) as subsection (q) and by inserting after subsection (o) the following new subsection:CommentsClose CommentsPermalink
‘(ii) the aggregate gross assets of such corporation (or any predecessor thereof), including assets under management for investors, whether held directly or indirectly, at any time during the taxable year or any preceding taxable year is $50,000,000 or more.CommentsClose CommentsPermalink
‘(II) has, and is reasonably expected to continue to have, aggregate gross assets (including assets under management for investors, whether held directly or indirectly) of less than $50,000,000, andCommentsClose CommentsPermalink
‘(C) EXCEPTION FROM GROSS ASSETS TEST- Subparagraph (A)(ii) shall not apply to a corporation which is a controlled foreign corporation (as defined in section 957) and which is a member of an affiliated group (as defined section 1504, but determined without regard to section 1504(b)(3)) the common parent of which--CommentsClose CommentsPermalink
‘(ii) has substantial assets (other than cash and cash equivalents and other than stock of foreign subsidiaries) held for use in the active conduct of a trade or business in the United States.CommentsClose CommentsPermalink
‘(A) IN GENERAL- The Secretary shall prescribe regulations for purposes of determining cases in which the management and control of a corporation is to be treated as occurring primarily within the United States.CommentsClose CommentsPermalink
‘(i) the management and control of a corporation shall be treated as occurring primarily within the United States if substantially all of the executive officers and senior management of the corporation who exercise day-to-day responsibility for making decisions involving strategic, financial, and operational policies of the corporation are located primarily within the United States, andCommentsClose CommentsPermalink
‘(ii) individuals who are not executive officers and senior management of the corporation (including individuals who are officers or employees of other corporations in the same chain of corporations as the corporation) shall be treated as executive officers and senior management if such individuals exercise the day-to-day responsibilities of the corporation described in clause (i).CommentsClose CommentsPermalink
‘(C) CORPORATIONS PRIMARILY HOLDING INVESTMENT ASSETS- Such regulations shall also provide that the management and control of a corporation shall be treated as occurring primarily within the United States if--CommentsClose CommentsPermalink
(b) Effective Date- The amendments made by this section shall apply to taxable years beginning on or after the date which is 2 years after the date of the enactment of this Act.CommentsClose CommentsPermalink
SEC. 3. CURRENT TAXATION OF ROYALTIES AND OTHER INCOME FROM INTANGIBLES RECEIVED FROM A CONTROLLED FOREIGN CORPORATION.
(a) Repeal of Look-Thru Rule for Royalties Received From Controlled Foreign Corporations- Paragraph (6) of section 954(c) of the Internal Revenue Code of 1986 is amended--CommentsClose CommentsPermalink
(b) Entities Not Permitted To Be Disregarded in Determining Royalties- Subsection (c) of section 954 of such Code is amended by adding at the end the following new paragraph:CommentsClose CommentsPermalink
‘(7) ALL ROYALTIES TAKEN INTO ACCOUNT- For purposes of determining the foreign personal holding company income which consists of royalties, this subsection shall be applied without regard to any election to disregard any entity which would be taken into account for Federal income tax purposes but for such election.’.CommentsClose CommentsPermalink
(c) Certain Other Income Derived From United States Intangibles Taken Into Account as Subpart F Income- Subsection (d) of section 954 of such Code is amended by adding at the end the following new paragraph:CommentsClose CommentsPermalink
‘(5) SPECIAL RULE FOR CERTAIN PRODUCTS PRODUCED PURSUANT TO INTANGIBLES MADE AVAILABLE BY UNITED STATES PERSONS- For purposes of this subsection, personal property shall be treated as having been purchased from a related person if any intangible property (within the meaning of section 936(h)(3)(B)) made available to a controlled foreign corporation, directly or indirectly, by a related person which is a United States person contributes, directly or indirectly, to the production of such personal property by the controlled foreign corporation. The preceding sentence shall not apply to any personal property produced directly by the controlled foreign corporation, without regard to any election to disregard any entity which would be taken into account for Federal income tax purposes but for such election.’.CommentsClose CommentsPermalink
(d) Effective Date- The amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2011, and to taxable years of United States shareholders within which or with which such tax years of such foreign corporations end.CommentsClose CommentsPermalink
SEC. 4. TAXATION OF BOOT RECEIVED IN REORGANIZATIONS.
(2) by striking ‘then there shall be’ and all that follows through ‘February 28, 1913’ and inserting ‘then the amount of other property or money shall be treated as a dividend to the extent of the earnings and profits of the corporation’; andCommentsClose CommentsPermalink
‘(B) CERTAIN REORGANIZATIONS- In the case of a reorganization described in section 368(a)(1)(D) with respect to which the requirements of subparagraphs (A) and (B) of section 354(b)(1) are met (or any other reorganization specified by the Secretary), in applying subparagraph (A)--CommentsClose CommentsPermalink
(b) Earnings and Profits- Paragraph (7) of section 312(n) of such Code is amended by adding at the end the following: ‘A similar rule shall apply to an exchange to which section 356(a)(1) applies.’.CommentsClose CommentsPermalink
(c) Conforming Amendment- Paragraph (1) of section 356(a) of such Code is amended by striking ‘then the gain’ and inserting ‘then (except as provided in paragraph (2)) the gain’.CommentsClose CommentsPermalink