[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1173 Introduced in Senate (IS)]







104th CONGRESS
  1st Session
                                S. 1173

 To amend the Internal Revenue Code of 1986 to allow a corporation to 
elect the pooling method of determining foreign tax credits in certain 
                     cases, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

               August 10 (legislative day, July 10), 1995

 Mr. Gregg (for himself and Mr. Smith) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to allow a corporation to 
elect the pooling method of determining foreign tax credits in certain 
                     cases, and for other purposes.
    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. ELECTION OF POOLING METHOD OF DETERMINING FOREIGN TAX CREDIT 
              IN CERTAIN CASES.

    (a) In General.--Section 902(c) of the Internal Revenue Code of 
1986 is amended by redesignating paragraph (7) as paragraph (8) and by 
inserting after paragraph (6) the following new paragraph:
            ``(7) Special rule where domestic corporation acquires 80 
        percent of foreign corporation before december 31, 1986.--
                    ``(A) In general.--For purposes of applying 
                subsection (a), if a domestic corporation elects the 
                application of this paragraph in accordance with 
                subparagraph (B) and if the ownership requirement of 
                subparagraph (C) is met with respect to any foreign 
                corporation, the post-1986 undistributed earnings and 
                the post-1986 foreign income taxes of such foreign 
                corporation shall be determined by taking into account 
                the amount of earnings and profits of the foreign 
                corporation (computed in accordance with sections 
                964(a) and 986) accumulated in, and the amount of 
                foreign income taxes of such foreign corporation paid 
                with respect to, all periods beginning on and after the 
                1st day of the 1st taxable year in which such ownership 
                requirement is met.
                    ``(B) Irrevocable election.--A domestic corporation 
                shall make the election allowed under this paragraph in 
                such manner as the Secretary shall prescribe. Such 
                election--
                            ``(i) shall be made on or before the due 
                        date (including extensions) for filing the 
                        return of tax for the taxable year for which 
                        the election is being made,
                            ``(ii) shall apply to each foreign 
                        corporation with respect to which the domestic 
                        corporation may apply the rules of section 
                        902(a), and
                            ``(iii) once made, shall be irrevocable for 
                        all subsequent taxable years.
                    ``(C) Ownership requirement.--The ownership 
                requirement of this subparagraph is met with respect to 
                any foreign corporation if the domestic corporation 
                owns within the meaning of section 958(a), or is 
                considered as owning by applying the rules of ownership 
                of section 958(b), 80 percent or more of the total 
                combined voting power of all classes of stock entitled 
                to vote of such foreign corporation.''.
    (b) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply with respect to taxable years beginning after December 
        31, 1986.
            (2) Time for filing election when return filed.--For any 
        taxable year beginning after December 31, 1986, with respect to 
        which a domestic corporation has filed a return of income tax 
        imposed under chapter 1 of the Internal Revenue Code of 1986 
        prior to the date of enactment of this Act, a domestic 
        corporation may make the election allowed under section 
        902(c)(7) of the Internal Revenue Code of 1986 within 120 days 
        of the date of enactment of this Act, but only if for such 
        taxable year any one or more of the following conditions 
        exists:
                    (A) The period of limitations for assessment and 
                collection, as defined in section 6501(a) of such Code, 
                has not expired.
                    (B) If the limitations period described in 
                paragraph (1) has been extended by agreement between 
                the Secretary and the taxpayer pursuant to section 
                6501(c)(4) of such Code, such extended period has not 
                expired.
                    (C) The period of limitations for filing a claim 
                for refund pursuant to section 6511(a) of such Code has 
                not expired.
                    (D) The proper amount of tax due for the taxable 
                year is the subject of a petition to the Tax Court 
                pursuant to section 6213 of such Code and a decision of 
                the Tax Court on the merits of the petition, if any, 
                has not yet become final.
                    (E) The proper amount of tax due for the taxable 
                year is the subject of a civil action for refund before 
                a Federal district pursuant to section 1346(a) of title 
                28, United States Code, or before the Federal Court of 
                Claims pursuant to section 1491(a)(1) of such title, 
                and a decision on the merits of the refund action, if 
                any, has not yet become final.
                                 <all>