[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 750 Introduced in Senate (IS)]







109th CONGRESS
  1st Session
                                 S. 750

   To amend the Internal Revenue Code of 1986 to allow look-through 
      treatment of payments between related foreign corporations.


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                   IN THE SENATE OF THE UNITED STATES

                             April 11, 2005

    Mr. Kyl 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 look-through 
      treatment of payments between related foreign corporations.

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

SECTION 1. LOOK-THROUGH TREATMENT OF PAYMENTS BETWEEN RELATED 
              CONTROLLED FOREIGN CORPORATIONS UNDER THE FOREIGN 
              PERSONAL HOLDING COMPANY RULES.

    (a) In General.--Section 954(c) of the Internal Revenue Code of 
1986 (relating to foreign personal holding company income) is amended 
by adding at the end the following new paragraph:
            ``(6) Look-thru rule for related controlled foreign 
        corporations.--For purposes of this subsection, dividends, 
        interest, rents, and royalties received or accrued from a 
        controlled foreign corporation which is a related person shall 
        not be treated as foreign personal holding company income to 
        the extent attributable or properly allocable (determined under 
        rules similar to the rules of subparagraphs (C) and (D) of 
        section 904(d)(3)) to income of the related person which is not 
        subpart F income. For purposes of this paragraph, interest 
        shall include factoring income which is treated as income 
        equivalent to interest for purposes of paragraph (1)(E). The 
        Secretary shall prescribe such regulations as may be 
        appropriate to prevent the abuse of the purposes of this 
        paragraph.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years of foreign corporations ending after January 1, 2005, 
and to taxable years of United States shareholders with or within which 
such taxable years of foreign corporations end.
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