Sec. 4211. Foreign intangible income subject to taxation at reduced rate; intangible income treated as subpart F income
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Paragraph
(1)of section 954(a), as amended by the preceding provisions of this Act, is amended by redesignating subparagraph
(D)as subparagraph
(E)and by inserting after subparagraph
(C)the following new subparagraph: the foreign base company intangible income for the taxable year (determined under subsection
(f)and reduced as provided in subsection (b)(5)), and . Section 954 of such Code is amended by inserting after subsection
(e)the following new subsection: For purposes of this section— The term foreign base company intangible income means, with respect to any corporation for any taxable year, the excess of— so much of the adjusted gross income of the corporation as exceeds 10 percent of the corporation’s qualified business asset investment, over the applicable percentage of such corporation’s foreign personal holding company income, foreign base company sales income, foreign base company services income, and foreign base company oil related income. For purposes of paragraph (1), the term applicable percentage means, with respect to any corporation for any taxable year, the ratio (expressed as a percentage) of— the excess described in paragraph (1)(A), divided by the adjusted gross income of the corporation. The term qualified business asset investment means, with respect to any corporation for any taxable year, the aggregate of the corporation’s adjusted bases (determined as of the close of such taxable year and after any adjustments with respect to such taxable year) in specified tangible property— used in a trade or business of the corporation, and of a type with respect to which a deduction is allowable under section 168. For purposes of subparagraph (A), the adjusted basis in any property shall be determined without regard to any provision of this title (or any other provision of law) which is enacted after the date of the enactment of this section. The Secretary shall issue such regulations or other guidance as the Secretary determines appropriate to prevent the avoidance of the purposes of this paragraph, including regulations or other guidance which provide for the treatment of property if— such property is transferred, or held, temporarily, or the avoidance of the purposes of this paragraph is a factor in the transfer or holding of such property. For purposes of this subsection— The term adjusted gross income means, with respect to any corporation, the gross income of such corporation reduced by such corporation’s commodities gross income. The term commodities gross income means, with respect to any corporation, the gross income of such corporation which is derived from commodities which are produced or extracted by such corporation. The term specified tangible property means any tangible property unless such property is used in the production of commodities gross income. In the case of property which is used in the production of commodities gross income and other gross income, such property shall be treated as specified tangible property in the same proportion that the adjusted gross income produced with respect to such property bears to the total gross income produced with respect to such property. The term commodity means any commodity described in section 475(e)(2). . Paragraph
(2)of section 954(a), as amended by preceding provisions of this Act, is amended by inserting or foreign base company intangible income after foreign base company sales income . Paragraph
(5)of section 954(b) is amended by inserting the foreign base company intangible income, before and the foreign base company oil related income . Part VIII of subchapter B of chapter 1 is amended by adding at the end the following new section: In the case of a domestic corporation for any taxable year, there shall be allowed as a deduction an amount equal to the applicable percentage of the lesser of— the sum of— the foreign percentage multiplied by the net imputed intangible income of such domestic corporation for such taxable year, plus in the case of a domestic corporation which is a United States shareholder with respect to any controlled foreign corporation, the foreign percentage (determined with respect to such controlled foreign corporation) multiplied by any foreign base company intangible income (as defined in section 954(f)) of such controlled foreign corporation which is included in the gross income of such domestic corporation under section 951 for such taxable year, or taxable income of such domestic corporation (determined without regard to this section) for the taxable year. For purposes of this subsection, the term net imputed intangible income means the excess of— the excess described in section 954(f)(1)(A), over the deductions properly allocable to the amount described in paragraph (1). For purposes of this section— The term foreign percentage means, with respect to any corporation for any taxable year, the ratio (expressed as a percentage) of— the foreign-derived adjusted gross income of such corporation for such taxable year, over the adjusted gross income of such corporation for such taxable year. The term foreign-derived adjusted gross income means, with respect to any corporation for any taxable year, any adjusted gross income of such corporation which is derived in connection with— property which is sold for use, consumption, or disposition outside the United States, or services provided with respect to persons or property located outside the United States. Property shall not be treated as sold for use, consumption, or disposition outside the United States if the taxpayer knew, or had reason to know, that such property would be ultimately sold for use, consumption, or disposition in the United States. If property is sold to a related party, such sale shall not be treated as for use, consumption or disposition outside the United States unless— such property is ultimately sold for use, consumption or disposition outside the United States, or such property is resold to an unrelated party outside the United States and no related party knew or had reason to know that such property would be ultimately sold for use, consumption, or disposition in the United States. Rules similar to the rules of clauses
(i)and
(ii)shall apply with respect to services described in subparagraph (A)(ii). For purposes of this paragraph, the term related party means any member of an affiliated group as defined in section 1504(a), determined— by substituting more than 50 percent for at least 80 percent each place it appears, and without regard to paragraphs
(2)and
(3)of section 1504(b). Any person (other than a corporation) shall be treated as a member of such group if such person is controlled by members of such group (including any entity treated as a member of such group by reason of this sentence) or controls any such member. For purposes of the preceding sentence, control shall be determined under the rules of section 954(d)(3). The term adjusted gross income has the meaning given such term by section 954(f)(4). For purposes of this section, the term applicable percentage means, with respect to any taxable year of the domestic corporation referred to in subsection (a), the percentage determined in accordance with the following table: In the case of any taxable year beginning in: The applicable percentage is: 2015 55 percent 2016 52 percent 2017 48 percent 2018 44 percent 2019 or thereafter 40 percent. The Secretary may prescribe such regulations or other guidance as may be necessary or appropriate to carry out the provisions of this section. . Clause
(i)of section 163(j)(6)(A), as amended by the preceding provisions of this Act, is amended by striking and at the end of subclause
(II)and by adding at the end the following new subclause: any deduction allowable under section 250, and . Subparagraph
(C)of section 170(b)(2) is amended by striking and at the end of clause (iv), by redesignating clause
(v)as clause (vi), and by inserting after clause
(iv)the following new clause: section 250, and . Subsection
(d)of section 172, as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraph: The deduction under section 250 shall not be allowed. . Paragraph
(1)of section 246(b) is amended by striking and 247 and inserting 247, and 250 . Clause
(iii)of section 469(i)(3)(D), as amended by the preceding provisions of this Act, is amended by striking and 222 and inserting 222, and 250 . The amendments made by subsection
(a)shall apply to taxable years of foreign corporations beginning after December 31, 2014, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end. The amendments made by subsection
(b)shall apply to taxable years beginning after December 31, 2014.