Sec. 4002. Limitation on losses with respect to specified 10-percent owned foreign corporations

670 words·~3 min read·/bill/113/hr/1/ih/section-4002

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Section 961 is amended by adding at the end the following new subsection: If a domestic corporation received a dividend from a specified 10-percent owned foreign corporation (as defined in section 245A) in any taxable year, solely for purposes of determining loss on any disposition in such taxable year or any subsequent taxable year, the basis of such domestic corporation in the stock of such foreign corporation shall be reduced by the amount of any deduction allowable to such domestic corporation under section 245A with respect to such stock. .

The amendments made by this subsection shall apply to dividends received in taxable years beginning after December 31, 2014. Part II of subchapter B of chapter 1, as amended by the preceding provisions of this Act, is amended by adding at the end the following new section: If a domestic corporation transfers substantially all of the assets of a foreign branch (within the meaning of section 367(a)(3)(C)) to a specified 10-percent owned foreign corporation (as defined in section 245A) with respect to which it is a United States shareholder after such transfer, such domestic corporation shall include in gross income for the taxable year which includes such transfer an amount equal to the transferred loss amount with respect to such transfer.

The amount included in the gross income of the taxpayer under subsection

(a)for any taxable year shall not exceed the amount allowed as a deduction under section 245A for such taxable year (taking into account dividends received from all specified 10-percent owned foreign corporations with respect to which the taxpayer is a United States shareholder). Any amount not included in gross income for any taxable year by reason of paragraph

(1)shall, subject to the application of paragraph

(1)to the succeeding taxable year, be included in gross income for the succeeding taxable year. For purposes of this section, the term transferred loss amount means, with respect to any transfer of substantially all of the assets of a foreign branch, the excess (if any) of— the sum of losses— which were incurred by the foreign branch after December 31, 2014, and before the transfer, and with respect to which a deduction was allowed to the taxpayer, over the sum of— any taxable income of such branch for a taxable year after the taxable year in which the loss was incurred and through the close of the taxable year of the transfer, and any amount which is recognized under section 904(f)(3) on account of the transfer. In the case of a transfer not described in section 367(a)(3)(C), the transferred loss amount shall be reduced (but not below zero) by the amount of gain recognized by the taxpayer on account of the transfer (other than amounts taken into account under subsection (c)(2)(B)). In the case of a transfer described in section 367(a)(3)(C), the transferred loss amount shall not exceed the excess (if any) of— the excess of the amount described in section 367(a)(3)(C)(i) over the amount described in section 367(a)(3)(C)(ii) with respect to such transfer, over the amount of gain recognized under section 367(a)(3)(C) with respect to such transfer. Amounts included in gross income under this section shall be treated as derived from sources within the United States. Consistent with such regulations or other guidance as the Secretary may prescribe, proper adjustments shall be made in the adjusted basis of the taxpayer’s stock in the specified 10-percent owned foreign corporation to which the transfer is made, and in the transferee’s adjusted basis in the property transferred, to reflect amounts included in gross income under this section. . Subparagraph

(C)of section 367(a)(3) is amended by striking outside in the last sentence and inserting within . The table of subparts for such part, as amended by the preceding provisions of this Act, is amended by adding at the end the following new item: Sec. 92. Certain foreign branch losses transferred to specified 10-percent owned foreign corporations. . The amendments made by this subsection shall apply to transfers after December 31, 2014.