IN THE SENATE OF THE UNITED STATES
January 25 (legislative day, January 5), 2011
Mr. Whitehouse (for himself, Mr. Leahy, Mr. Sanders, Mrs. Boxer, Mr. Durbin, Mr. Brown of Ohio, and Mr. Harkin) introduced the following bill; which was read twice and referred to the Committee on Finance
To amend the Internal Revenue Code of 1986 to provide for the taxation of income of controlled foreign corporations attributable to imported property.
This Act may be cited as the
Taxation of income of controlled foreign corporations attributable to imported property
Subsection (a) of section 954 of the Internal Revenue Code
of 1986 is amended by striking the period at the end of paragraph (5) and
, and, by redesignating paragraph (5) as paragraph
(4), and by adding at the end the following new paragraph:
imported property income for the taxable year (determined under subsection (j) and reduced as provided in subsection (b)(5)).
Definition of Imported Property Income
Section 954 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
Imported Property Income
For purposes of subsection (a)(5), the term imported property income means income (whether in the form of profits, commissions, fees, or otherwise) derived in connection with—
manufacturing, producing, growing, or extracting imported property;
the sale, exchange, or other disposition of imported property; or
the lease, rental, or licensing of imported property.
For purposes of this subsection—
Except as otherwise provided in this paragraph, the term imported property means property which is imported into the United States by the controlled foreign corporation or a related person.
Imported property includes certain property imported by unrelated persons
The term imported property includes any property imported into the United States by an unrelated person if, when such property was sold to the unrelated person by the controlled foreign corporation (or a related person), it was reasonable to expect that—
such property would be imported into the United States; or
such property would be used as a component in other property which would be imported into the United States.
Exception for property subsequently exported
The term imported property does not include any property which is imported into the United States and which—
before substantial use in the United States, is sold, leased, or rented by the controlled foreign corporation or a related person for direct use, consumption, or disposition outside the United States; or
is used by the controlled foreign corporation or a related person as a component in other property which is so sold, leased, or rented.
Exception for certain agricultural commodities
The term imported property does not include any agricultural commodity which is not grown in the United States in commercially marketable quantities.
Definitions and special rules
For purposes of this subsection, the term import means entering, or withdrawal from warehouse, for consumption or use. Such term includes any grant of the right to use intangible property (as defined in section 936(h)(3)(B)) in the United States.
For purposes of this subsection, the term United States includes the Commonwealth of Puerto Rico, the Virgin Islands of the United States, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.
For purposes of this subsection, the term unrelated person means any person who is not a related person with respect to the controlled foreign corporation.
Coordination with foreign base company sales income
For purposes of this section, the term foreign base company sales income shall not include any imported property income.
Separate Application of Limitations on Foreign Tax Credit for Imported Property Income
Paragraph (1) of section 904(d) of the Internal Revenue
Code of 1986 is amended by striking
and at the end of
subparagraph (A), by redesignating subparagraph (B) as subparagraph (C), and by
inserting after subparagraph (A) the following new subparagraph:
imported property income, and
Imported property income defined
Paragraph (2) of section 904(d) of such Code is amended by redesignating subparagraphs (I), (J), and (K) as subparagraphs (J), (K), and (L), respectively, and by inserting after subparagraph (H) the following new subparagraph:
Imported property income
The term imported property income means any income received or accrued by any person which is of a kind which would be imported property income (as defined in section 954(j)).
Clause (ii) of section 904(d)(2)(A) of such Code is
amended by inserting
or imported property income after
passive category income.
Clause (iii) of section 952(c)(1)(B) of the Internal Revenue Code of 1986 is amended—
by redesignating subclauses (II), (III), (IV), and (V) as subclauses (III), (IV), (V), and (VI), and
by inserting after subclause (I) the following new subclause:
imported property income,
The last sentence
of paragraph (4) of section 954(b) of such Code is amended by striking
subsection (a)(5) and inserting
Paragraph (5) of
section 954(b) of such Code is amended by striking
and the foreign base
company oil related income and inserting
the foreign base
company oil related income, and the imported property income.
The amendments made by this section shall apply to taxable years of foreign corporations beginning after the date of the enactment of this Act, and to taxable years of United States shareholders within which or with which such taxable years of such foreign corporations end.