[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1355 Introduced in Senate (IS)]

  1st Session
                                S. 1355

 To amend the Internal Revenue Code of 1986 to end deferral for United 
   States shareholders on income of controlled foreign corporations 
       attributable to property imported into the United States.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 23, 1995

Mr. Dorgan (for himself, Mr. Daschle, Mr. Conrad, Mr. Levin, Mr. Reid, 
  Mr. Wellstone, Mr. Simon, Mr. Feingold, Mr. Kennedy, Mr. Leahy, Mr. 
  Harkin, Mr. Byrd, Mr. Ford, Mr. Kerrey, Mr. Bumpers, and Mr. Kerry) 
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 end deferral for United 
   States shareholders on income of controlled foreign corporations 
       attributable to property imported into the United States.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``American Jobs and Manufacturing 
Preservation Act of 1995''.

SEC. 2. TAXATION OF INCOME OF CONTROLLED FOREIGN CORPORATIONS 
              ATTRIBUTABLE TO IMPORTED PROPERTY.

    (a) General Rule.--Subsection (a) of section 954 of the Internal 
Revenue Code of 1986 (defining foreign base company income) is amended 
by striking ``and'' at the end of paragraph (4), by striking the period 
at the end of paragraph (5) and inserting ``, and'', and by adding at 
the end the following new paragraph:
            ``(6) imported property income for the taxable year 
        (determined under subsection (h) and reduced as provided in 
        subsection (b)(5)).''
    (b) Definition of Imported Property Income.--Section 954 of such 
Code is amended by adding at the end the following new subsection:
    ``(h) Imported Property Income.--
            ``(1) In general.--For purposes of subsection (a)(6), the 
        term `imported property income' means income (whether in the 
        form of profits, commissions, fees, or otherwise) derived in 
        connection with--
                    ``(A) manufacturing, producing, growing, or 
                extracting imported property,
                    ``(B) the sale, exchange, or other disposition of 
                imported property, or
                    ``(C) the lease, rental, or licensing of imported 
                property.
        Such term shall not include any foreign oil and gas extraction 
        income (within the meaning of section 907(c)) or any foreign 
        oil related income (within the meaning of section 907(c)).
            ``(2) Imported property.--For purposes of this subsection--
                    ``(A) In general.--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.
                    ``(B) 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--
                            ``(i) such property would be imported into 
                        the United States, or
                            ``(ii) such property would be used as a 
                        component in other property which would be 
                        imported into the United States.
                    ``(C) Exception for property subsequently 
                exported.--The term `imported property' does not 
                include any property which is imported into the United 
                States and which--
                            ``(i) 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
                            ``(ii) is used by the controlled foreign 
                        corporation or a related person as a component 
                        in other property which is so sold, leased, or 
                        rented.
            ``(3) Definitions and special rules.--
                    ``(A) Import.--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 an intangible (as defined 
                in section 936(b)(3)(B)) in the United States.
                    ``(B) Unrelated person.--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.
                    ``(C) 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.''
    (c) Separate Application of Limitations on Foreign Tax Credit for 
Imported Property Income.--
            (1) In general.--Paragraph (1) of section 904(d) of such 
        Code (relating to separate application of section with respect 
        to certain categories of income) is amended by striking ``and'' 
        at the end of subparagraph (H), by redesignating subparagraph 
        (I) as subparagraph (J), and by inserting after subparagraph 
        (H) the following new subparagraph:
                    ``(I) imported property income, and''.
            (2) Imported property income defined.--Paragraph (2) of 
        section 904(d) of such Code is amended by redesignating 
        subparagraphs (H) and (I) as subparagraphs (I) and (J), 
        respectively, and by inserting after subparagraph (G) the 
        following new subparagraph:
                    ``(H) 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(h)).''
            (3) Look-thru rules to apply.--Subparagraph (F) of section 
        904(d)(3) of such Code is amended by striking ``or (E)'' and 
        inserting ``(E), or (H)''.
    (d) Technical Amendments.--
            (1) Clause (iii) of section 952(c)(1)(B) of such Code 
        (relating to certain prior year deficits may be taken into 
        account) is amended by inserting the following subclause after 
        subclause (II) (and by redesignating the following subclauses 
        accordingly):
                            ``(III) imported property income,''.
            (2) Paragraph (5) of section 954(b) of such Code (relating 
        to deductions to be taken into account) 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''.
    (e) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years of 
        foreign corporations beginning after December 31, 1995, and to 
        taxable years of United States shareholders within which or 
        with which such taxable years of such foreign corporations end.
            (2) Subsection (c).--The amendments made by subsection (c) 
        shall apply to taxable years beginning after December 31, 1995.
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