Sec. 504. Limitation on earnings stripping by expatriated entities

258 words·~1 min read·/bill/113/s/277/is/section-504

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Subsection

(j)of section 163 of the Internal Revenue Code of 1986 is amended— by redesignating paragraph

(9)as paragraph (10), and by inserting after paragraph

(8)the following new paragraph: In the case of a corporation to which this subsection applies which is an expatriated entity, this subsection shall apply to such corporation with the following modifications: Paragraph (2)(A) shall be applied without regard to clause

(ii)thereof. Paragraph (1)(B) shall be applied— without regard to the parenthetical, and by substituting in the 1st succeeding taxable year and in the 2nd through 10th succeeding taxable years to the extent not previously taken into account under this subparagraph for in the succeeding taxable year . Paragraph (2)(B) shall be applied— without regard to clauses

(ii)and (iii), and by substituting 25 percent of the adjusted taxable income of the corporation for such taxable year for the matter of clause (i)(II) thereof. For purposes of this paragraph— With respect to a corporation and a taxable year, the term expatriated entity has the meaning given such term by section 7874(a)(2), determined as if such section and the regulations under such section as in effect on the first day of such taxable year applied to all taxable years of the corporation beginning after July 10, 1989. The term expatriated entity does not include a surrogate foreign corporation which is treated as a domestic corporation by reason of section 7874(b). . The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.