[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 260 Introduced in Senate (IS)]
111th CONGRESS
1st Session
S. 260
To amend the Internal Revenue Code of 1986 to provide for the taxation
of income of controlled foreign corporations attributable to imported
property.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 15, 2009
Mr. Dorgan (for himself, Ms. Mikulski, Mr. Feingold, Mr. Durbin, Mr.
Johnson, Mr. Brown, Mr. Leahy, Mr. Harkin, Mr. Kennedy, Mr. Whitehouse,
Mr. Kohl, Ms. Stabenow, and Mrs. Feinstein) 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 provide for the taxation
of income of controlled foreign corporations attributable to imported
property.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. 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 the period at the end of paragraph (5) and inserting ``,
and'', by redesignating paragraph (5) as paragraph (4), and by adding
at the end the following new paragraph:
``(5) imported property income for the taxable year
(determined under subsection (j) and reduced as provided in
subsection (b)(5)).''.
(b) 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:
``(j) Imported Property Income.--
``(1) In general.--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--
``(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.
``(D) 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.
``(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 intangible property (as
defined in section 936(h)(3)(B)) in the United States.
``(B) 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.
``(C) 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.
``(D) 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 the
Internal Revenue Code of 1986 (relating to separate application
of section with respect to certain categories of income) 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:
``(B) imported property income, and''.
(2) 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:
``(I) 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)).''.
(3) Conforming amendment.--Clause (ii) of section
904(d)(2)(A) of such Code is amended by inserting ``or imported
property income'' after ``passive category income''.
(d) Technical Amendments.--
(1) Clause (iii) of section 952(c)(1)(B) of the Internal
Revenue Code of 1986 (relating to certain prior year deficits
may be taken into account) is amended--
(A) by redesignating subclauses (II), (III), (IV),
and (V) as subclauses (III), (IV), (V), and (VI), and
(B) by inserting after subclause (I) the following
new subclause:
``(II) imported property income,''.
(2) The last sentence of paragraph (4) of section 954(b) of
such Code (relating to exception for certain income subject to
high foreign taxes) is amended by striking ``subsection
(a)(5)'' and inserting ``subsection (a)(4)''.
(3) 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.--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.
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