This bill restores the limitation on downward attribution rules to 50% of stock ownership in applying constructive ownership rules to controlled foreign corporations.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5751 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 5751
To amend the Internal Revenue Code of 1986 to restore the limitation on
downward attribution of stock ownership in applying constructive
ownership rules.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 27, 2023
Mr. Ferguson (for himself, Ms. Moore of Wisconsin, Mr. Estes, Mr.
Schneider, Mrs. Steel, and Mr. Panetta) introduced the following bill;
which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to restore the limitation on
downward attribution of stock ownership in applying constructive
ownership rules.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. RESTORATION OF LIMITATION ON DOWNWARD ATTRIBUTION OF STOCK
OWNERSHIP IN APPLYING CONSTRUCTIVE OWNERSHIP RULES.
(a) In General.--Section 958(b) of the Internal Revenue Code of
1986 is amended--
(1) by inserting after paragraph (3) the following:
``(4) Subparagraphs (A), (B), and (C) of section 318(a)(3)
shall not be applied so as to consider a United States person
as owning stock which is owned by a person who is not a United
States person.'', and
(2) by striking ``Paragraph (1)'' in the last sentence and
inserting ``Paragraphs (1) and (4)''.
(b) Foreign Controlled United States Shareholders.--Subpart F of
part III of subchapter N of chapter 1 of such Code is amended by
inserting after section 951A the following new section:
``SEC. 951B. AMOUNTS INCLUDED IN GROSS INCOME OF FOREIGN CONTROLLED
UNITED STATES SHAREHOLDERS.
``(a) In General.--In the case of any foreign controlled United
States shareholder of a foreign controlled foreign corporation--
``(1) this subpart (other than sections 951A, 951(b), and
957) shall be applied with respect to such shareholder
(separately from, and in addition to, the application of this
subpart without regard to this section)--
``(A) by substituting `foreign controlled United
States shareholder' for `United States shareholder'
each place it appears therein, and
``(B) by substituting `foreign controlled foreign
corporation' for `controlled foreign corporation' each
place it appears therein, and
``(2) section 951A shall be applied with respect to such
shareholder--
``(A) by treating each reference to `United States
shareholder' in such section as including a reference
to such shareholder, and
``(B) by treating each reference to `controlled
foreign corporation' in such section as including a
reference to such foreign controlled foreign
corporation.
``(b) Foreign Controlled United States Shareholder.--For purposes
of this section, the term `foreign controlled United States
shareholder' means, with respect to any foreign corporation, any United
States person which would be a United States shareholder with respect
to such foreign corporation if--
``(1) section 951(b) were applied by substituting `more
than 50 percent' for `10 percent or more', and
``(2) section 958(b) were applied without regard to
paragraph (4) thereof.
``(c) Foreign Controlled Foreign Corporation.--For purposes of this
section, the term `foreign controlled foreign corporation' means a
foreign corporation, other than a controlled foreign corporation, which
would be a controlled foreign corporation if section 957(a) were
applied--
``(1) by substituting `foreign controlled United States
shareholders' for `United States shareholders', and
``(2) by substituting `section 958(b) (other than paragraph
(4) thereof)' for `section 958(b)'.
``(d) Regulations.--The Secretary shall prescribe such regulations
or other guidance as may be necessary or appropriate to carry out the
purposes of this section, including regulations or other guidance--
``(1) to treat a foreign controlled United States
shareholder or a foreign controlled foreign corporation as a
United States shareholder or as a controlled foreign
corporation, respectively, for purposes of provisions of this
title other than this subpart, and
``(2) to prevent the avoidance of the purposes of this
section.''.
(c) Clerical Amendment.--The table of sections for subpart F of
part III of subchapter N of chapter 1 is amended by inserting after the
item relating to section 951A the following new item:
``Sec. 951B. Amounts included in gross income of foreign controlled
United States shareholders.''.
(d) Effective Date.--The amendments made by this section shall
apply to--
(1) the last taxable year of foreign corporations beginning
before January 1, 2023, and each subsequent taxable year of
such foreign corporations, and
(2) taxable years of United States persons in which or with
which such taxable years of foreign corporations end.
(e) No Inference.--The amendments made by this section shall not be
construed to create any inference with respect to the proper
application of any provision of the Internal Revenue Code of 1986 with
respect to taxable years beginning before the taxable years to which
such amendments apply.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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