1.This Act may be cited as the
International Tax Competitiveness Act
of 2011
.
2.Treatment of
foreign corporations managed and controlled in the United States as domestic
corporations
(a)Section 7701 of the Internal Revenue Code of 1986 is
amended by redesignating subsection (p) as subsection (q) and by inserting
after subsection (o) the following new subsection:
(p)Certain
corporations managed and controlled in the United States treated as domestic
for income tax
(1)Notwithstanding subsection (a)(4), in the case of a
corporation described in paragraph (2) if—
(A)the corporation
would not otherwise be treated as a domestic corporation for purposes of this
title, but
(B)the management and
control of the corporation occurs, directly or indirectly, primarily within the
United States,
then,
solely for purposes of chapter 1 (and any other provision of this title
relating to chapter 1), the corporation shall be treated as a domestic
corporation.(2)
(A)A corporation is described in this paragraph if—
(i)the stock of such
corporation is regularly traded on an established securities market, or
(ii)the aggregate gross assets of such
corporation (or any predecessor thereof), including assets under management for
investors, whether held directly or indirectly, at any time during the taxable
year or any preceding taxable year is $50,000,000 or more.
(B)A corporation shall not be treated as described in this
paragraph if—
(i)such corporation
was treated as a corporation described in this paragraph in a preceding taxable
year,
(ii)such
corporation—
(I)is not regularly
traded on an established securities market, and
(II)has, and is reasonably expected to continue
to have, aggregate gross assets (including assets under management for
investors, whether held directly or indirectly) of less than $50,000,000,
and
(iii)the Secretary
grants a waiver to such corporation under this subparagraph.
(C)Exception from
gross assets testSubparagraph (A)(ii) shall not apply to a
corporation which is a controlled foreign corporation (as defined in section
957) and which is a member of an affiliated group (as defined section 1504, but
determined without regard to section 1504(b)(3)) the common parent of
which—
(i)is
a domestic corporation (determined without regard to this subsection),
and
(ii)has substantial
assets (other than cash and cash equivalents and other than stock of foreign
subsidiaries) held for use in the active conduct of a trade or business in the
United States.
(3)
(A)The Secretary shall prescribe regulations for purposes of
determining cases in which the management and control of a corporation is to be
treated as occurring primarily within the United States.
(B)Executive
officers and senior managementSuch regulations shall provide
that—
(i)the management and
control of a corporation shall be treated as occurring primarily within the
United States if substantially all of the executive officers and senior
management of the corporation who exercise day-to-day responsibility for making
decisions involving strategic, financial, and operational policies of the
corporation are located primarily within the United States, and
(ii)individuals who
are not executive officers and senior management of the corporation (including
individuals who are officers or employees of other corporations in the same
chain of corporations as the corporation) shall be treated as executive
officers and senior management if such individuals exercise the day-to-day
responsibilities of the corporation described in clause (i).
(C)Corporations
primarily holding investment assetsSuch regulations shall also provide that
the management and control of a corporation shall be treated as occurring
primarily within the United States if—
(i)the assets of such
corporation (directly or indirectly) consist primarily of as sets being managed
on behalf of investors, and
(ii)decisions about
how to invest the assets are made in the United
States.
.
(b)The amendments made by this section shall apply to taxable
years beginning on or after the date which is 2 years after the date of the
enactment of this Act.
3.Current taxation of
royalties and other income from intangibles received from a controlled foreign
corporation
(a)Repeal of
look-Thru rule for royalties received from controlled foreign
corporationsParagraph (6) of
section 954(c) of the Internal Revenue Code of 1986 is amended—
(1)by striking
rents, and royalties
in subparagraph (A) and inserting
and rents
, and
(2)by striking
, rent, or royalty
both places it appears in subparagraph (B)
and inserting or rent
.
(b)Entities not
permitted To be disregarded in determining royaltiesSubsection
(c) of section 954 of the Internal Revenue Code of 1986 is amended by adding at
the end the following new paragraph:
(7)All royalties
taken into accountFor
purposes of determining the foreign personal holding company income which
consists of royalties, this subsection shall be applied without regard to any
election to disregard any entity which would be taken into account for Federal
income tax purposes but for such
election.
.
(c)Certain other
income derived from United States intangibles taken into account as subpart F
incomeSubsection (d) of section 954 of the Internal Revenue Code
of 1986 is amended by adding at the end the following new paragraph:
(5)Special rule for
certain products produced pursuant to intangibles made available by United
States personsFor purposes
of this subsection, personal property shall be treated as having been purchased
from a related person if any intangible property (within the meaning of section
936(h)(3)(B)) made available to a controlled foreign corporation, directly or
indirectly, by a related person which is a United States person contributes,
directly or indirectly, to the production of such personal property by the
controlled foreign corporation. The preceding sentence shall not apply to any
personal property produced directly by the controlled foreign corporation,
without regard to any election to disregard any entity which would be taken
into account for Federal income tax purposes but for such
election.
.
(d)The amendments made by this section shall apply to taxable
years of foreign corporations beginning after December 31, 2011, and to taxable
years of United States shareholders within which or with which such tax years
of such foreign corporations end.
4.Taxation of boot
received in reorganizations
(a)Paragraph (2) of
section 356(a) of the Internal Revenue Code of 1986 is amended—
(1)by striking
If an exchange
and
inserting
Except as otherwise provided by the
Secretary—(A)If an
exchange
;
(2)by striking
then there shall be
and all that follows through February
28, 1913
and inserting then the amount of other property or
money shall be treated as a dividend to the extent of the earnings and profits
of the corporation
; and
(3)by adding at the
end the following new subparagraph:
(B)In the case
of a reorganization described in section 368(a)(1)(D) with respect to which the
requirements of subparagraphs (A) and (B) of section 354(b)(1) are met (or any
other reorganization specified by the Secretary), in applying subparagraph
(A)—
(i)the earnings and
profits of each corporation which is a party to the reorganization shall be
taken into account, and
(ii)the amount which
is a dividend (and source thereof) shall be determined under rules similar to
the rules of paragraphs (2) and (5) of section
304(b).
.
(b)Paragraph (7) of section 312(n) of the Internal Revenue
Code of 1986 is amended by adding at the end the following: A similar
rule shall apply to an exchange to which section 356(a)(1)
applies.
.
(c)Paragraph (1) of section 356(a) of the Internal Revenue
Code of 1986 is amended by striking then the gain
and inserting
then (except as provided in paragraph (2)) the gain
.
(d)The amendments made by
this section shall apply to exchanges after the date of the enactment of this
Act.