Sec. 3001. Reduction in corporate tax rate

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Section 11(b) is amended to read as follows: Except as otherwise provided in this subsection, the amount of the tax imposed by subsection

(a)shall be 20 percent of taxable income. In the case of a personal service corporation (as defined in section 448(d)(2)), the amount of the tax imposed by subsection

(a)shall be 25 percent of taxable income. Any reference to the rate imposed under this section or to the highest rate in effect under this section (or any similar reference) shall be determined without regard to the rate imposed with respect to personal service corporations (as so defined). . Part I of subchapter P of chapter 1 is amended by striking section 1201 (and by striking the item relating to such section in the table of sections for such part). Section 12 is amended by striking paragraph (4). Section 527(b) is amended— by striking paragraph (2), and by striking all that precedes is hereby imposed and inserting: A tax . Section 594(a) is amended by striking taxes imposed by section 11 or 1201(a) and inserting tax imposed by section 11 . Section 691(c)(4) is amended by striking 1201, . Section 801(a) is amended— by striking paragraph (2), and by striking all that precedes is hereby imposed and inserting: A tax . Section 831(e) is amended by striking paragraph

(1)and by redesignating paragraphs

(2)and

(3)as paragraphs

(1)and (2), respectively. Sections 832(c)(5) and 834(b)(1)(D) are each amended by striking sec. 1201 and following, . Section 852(b)(3)(A) is amended by striking section 1201(a) and inserting section 11(b)(1) . Section 857(b)(3) is amended— by striking subparagraph

(A)and redesignating subparagraphs

(B)through

(F)as subparagraphs

(A)through (E), respectively, in subparagraph (C), as so redesignated— by striking subparagraph (A)(ii) in clause

(i)thereof and inserting paragraph

(1), by striking the tax imposed by subparagraph (A)(ii) in clauses

(ii)and

(iv)thereof and inserting the tax imposed by paragraph

(1)on undistributed capital gain , in subparagraph (E), as so redesignated, by striking subparagraph

(B)or

(D)and inserting subparagraph

(A)or

(C), and by adding at the end the following new subparagraph: For purposes of this paragraph, the term undistributed capital gain means the excess of the net capital gain over the deduction for dividends paid (as defined in section 561) determined with reference to capital gain dividends only. . Section 882(a)(1) is amended by striking , or 1201(a) . Section 1374(b) is amended by striking paragraph (4). Section 1381(b) is amended by striking taxes imposed by section 11 or 1201 and inserting tax imposed by section 11 . Section 6655(g)(1)(A)(i) is amended by striking or 1201(a), . Section 7518(g)(6)(A) is amended by striking or 1201(a) . Section 1445(e)(1) is amended by striking 35 percent (or, to the extent provided in regulations, 20 percent) and inserting 20 percent . Section 1445(e)(2) is amended by striking 35 percent and inserting 20 percent . Section 1445(e)(6) is amended by striking 35 percent (or, to the extent provided in regulations, 20 percent) and inserting 20 percent . Part I of subchapter B of chapter 5 is amended by striking section 1551 (and by striking the item relating to such section in the table of sections for such part). Section 12 is amended by striking paragraph (6). Section 535(c)(5) is amended to read as follows: For limitation on credit provided in paragraph

(2)or

(3)in the case of certain controlled corporations, see section 1561. . Section 1561 , as amended by the preceding provisions of this Act, is amended to read as follows: The component members of a controlled group of corporations on a December 31 shall, for their taxable years which include such December 31, be limited for purposes of this subtitle to one $250,000 ($150,000 if any component member is a corporation described in section 535(c)(2)(B)) amount for purposes of computing the accumulated earnings credit under section 535(c)(2) and (3). Such amount shall be divided equally among the component members of such group on such December 31 unless the Secretary prescribes regulations permitting an unequal allocation of such amount. If a corporation has a short taxable year which does not include a December 31 and is a component member of a controlled group of corporations with respect to such taxable year, then for purposes of this subtitle, the amount to be used in computing the accumulated earnings credit under section 535(c)(2) and

(3)of such corporation for such taxable year shall be the amount specified in subsection

(a)with respect to such group, divided by the number of corporations which are component members of such group on the last day of such taxable year. For purposes of the preceding sentence, section 1563(b) shall be applied as if such last day were substituted for December 31. . The table of sections for part II of subchapter B of chapter 5 is amended by striking the item relating to section 1561 and inserting the following new item: Sec. 1561. Limitation on accumulated earnings credit in the case of certain controlled corporations. . Section 7518(g)(6)(A) is amended— by striking With respect to the portion and inserting In the case of a taxpayer other than a corporation, with respect to the portion , and by striking (34 percent in the case of a corporation) . Section 243(a)(1) is amended by striking 70 percent and inserting 50 percent . Section 243(c)(1) is amended— by striking 80 percent and inserting 65 percent , and by striking 70 percent and inserting 50 percent . The heading for section 243(c) is amended by striking and inserting Retention of 80-percent dividend received deduction . Increased percentage Section 245(c)(1)(B) is amended— by striking 70 percent and inserting 50 percent , and by striking 80 percent and inserting 65 percent . Section 246(b)(3) is amended— by striking 80 percent in subparagraph

(A)and inserting 65 percent , and by striking 70 percent in subparagraph

(B)and inserting 50 percent . Section 246A(a)(1) is amended— by striking 70 percent and inserting 50 percent , and by striking 80 percent and inserting 65 percent . Section 861(a)(2) is amended— by striking 100/70th and inserting 100/50th in subparagraph (B), and in the flush sentence at the end— by striking 100/80th and inserting 100/65th , and by striking 100/70th and inserting 100/50th . Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years beginning after December 31, 2017. The amendments made by paragraphs (2), (3), and

(4)of subsection

(b)shall apply to distributions after December 31, 2017. A normalization method of accounting shall not be treated as being used with respect to any public utility property for purposes of section 167 or 168 of the Internal Revenue Code of 1986 if the taxpayer, in computing its cost of service for ratemaking purposes and reflecting operating results in its regulated books of account, reduces the excess tax reserve more rapidly or to a greater extent than such reserve would be reduced under the average rate assumption method. If, as of the first day of the taxable year that includes the date of enactment of this Act— the taxpayer was required by a regulatory agency to compute depreciation for public utility property on the basis of an average life or composite rate method, and the taxpayer’s books and underlying records did not contain the vintage account data necessary to apply the average rate assumption method, the taxpayer will be treated as using a normalization method of accounting if, with respect to such jurisdiction, the taxpayer uses the alternative method for public utility property that is subject to the regulatory authority of that jurisdiction. For purposes of this subsection— The term excess tax reserve means the excess of— the reserve for deferred taxes (as described in section 168(i)(9)(A)(ii) of the Internal Revenue Code of 1986 as in effect on the day before the date of the enactment of this Act), over the amount which would be the balance in such reserve if the amount of such reserve were determined by assuming that the corporate rate reductions provided in this Act were in effect for all prior periods. The average rate assumption method is the method under which the excess in the reserve for deferred taxes is reduced over the remaining lives of the property as used in its regulated books of account which gave rise to the reserve for deferred taxes. Under such method, if timing differences for the property reverse, the amount of the adjustment to the reserve for the deferred taxes is calculated by multiplying— the ratio of the aggregate deferred taxes for the property to the aggregate timing differences for the property as of the beginning of the period in question, by the amount of the timing differences which reverse during such period. The alternative method is the method in which the taxpayer— computes the excess tax reserve on all public utility property included in the plant account on the basis of the weighted average life or composite rate used to compute depreciation for regulatory purposes, and reduces the excess tax reserve ratably over the remaining regulatory life of the property. If, for any taxable year ending after the date of the enactment of this Act, the taxpayer does not use a normalization method of accounting, the taxpayer’s tax for the taxable year shall be increased by the amount by which it reduces its excess tax reserve more rapidly than permitted under a normalization method of accounting.