Sec. 4. Modification of corporate tax rate
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Section 11(b) of the Internal Revenue Code of 1986 is amended to read as follows: The amount of the tax imposed by subsection
(a)shall be the sum of— 18 percent of so much of the taxable income as does not exceed $400,000, 21 percent of so much of the taxable income as exceeds $400,000 but does not exceed $5,000,000, and 26.5 percent of so much of the taxable income as exceeds $5,000,000. In the case of a corporation which has taxable income in excess of $10,000,000 for any taxable year, the amount of tax determined under the preceding sentence for such taxable year shall be increased by the lesser of
(i)3 percent of such excess, or
(ii)$287,000. Notwithstanding paragraph (1), the amount of the tax imposed by subsection
(a)on the taxable income of a qualified personal service corporation (as defined in section 448(d)(2)) shall be equal to 26.5 percent of the taxable income. . Section 1561 of the Internal Revenue Code of 1986 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— amounts in each taxable income bracket in the subparagraphs of section 11(b)(1) which do not aggregate more than the maximum amount in each such bracket to which a corporation which is not a component member of a controlled group is entitled, and 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). The amounts specified in paragraph
(1)shall be divided equally among the component members of such group on such December 31 unless all of such component members consent (at such time and in such manner as the Secretary shall by regulations prescribe) to an apportionment plan providing for an unequal allocation of such amounts. The amounts specified in paragraph
(2)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 amounts. Notwithstanding paragraph (1), in applying the last sentence of section 11(b)(1) to such component members, the taxable income of all such component members shall be taken into account and any increase in tax under such last sentence shall be divided among such component members in the same manner as amounts under paragraph (1). 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 in each taxable income bracket in the tax table in section 11(b) of such corporation for such taxable year, and 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)(1) or (2), as the case may be, 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 6 of such Code is amended by striking the item relating to section 1561 and inserting the following: Sec. 1561. Limitation on certain multiple tax benefits in the case of certain controlled corporations. . The amendments made by this section shall apply to taxable years beginning after December 31, 2021. 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 tax reserve deficit less rapidly or to a lesser 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 tax reserve deficit means the excess of— the amount which would be the balance in the reserve for deferred taxes (as described in section 168(i)(9)(A)(ii) of the Internal Revenue Code of 1986, or section 167(l)(3)(G)(ii) or 168(3)(3)(B)(ii) of such Code as in effect on the day before the date of the enactment of the Tax Reform Act of 1986) if the amount of such reserve were determined by assuming that the corporate rate increases provided in the amendments made by this section were in effect for all prior periods, over the balance in such reserve as of the day before such corporate rate increases take effect. The average rate assumption method is the method under which the tax reserve deficit 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 tax reserve deficit 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 tax reserve deficit 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 for the corporate rate increases provided in the amendments made by this section , such taxpayer shall not be treated as using a normalization method of accounting for purposes of subsections (f)(2) and (i)(9)(C) of section 168 of the Internal Revenue Code of 1986. The Secretary of the Treasury, or the Secretary’s designee, shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance to provide appropriate coordination between this subsection, section 13001(d) of Public Law 115–97 , and section 203(e) of the Tax Reform Act of 1986.
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Sec. 4
Modification of corporate tax rate
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