[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1055 Introduced in House (IH)]

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118th CONGRESS
  1st Session
                                H. R. 1055

 To amend the Internal Revenue Code of 1986 to exclude certain amounts 
  from the tested income of controlled foreign corporations, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 14, 2023

 Ms. Plaskett (for herself and Ms. Velazquez) introduced the following 
      bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to exclude certain amounts 
  from the tested income of controlled foreign corporations, 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. SHORT TITLE.

    This Act may be cited as the ``Territorial Economic Recovery Act''.

SEC. 2. INCOME OF CERTAIN QUALIFIED POSSESSION CORPORATIONS EXCLUDED 
              FROM TESTED INCOME.

    (a) In General.--Section 951A of the Internal Revenue Code of 1986 
is amended--
            (1) in subsection (c)(2)(A)(i), by striking ``and'' at the 
        end of subclause (IV), by striking ``over'' at the end of 
        subclause (V) and inserting ``and'', and by adding at the end 
        the following new subclause:
                                    ``(VI) any income of a qualified 
                                possession corporation that is 
                                effectively connected with the active 
                                conduct of a trade or business within a 
                                possession of the United States, 
                                over''; and
            (2) by adding at the end the following new subsections:
    ``(g) Possession of the United States.--For purposes of this 
section, the term `possession of the United States' means Puerto Rico, 
the Virgin Islands, and any specified possession described in section 
931(c).
    ``(h) Qualified Possession Corporation.--For purposes of this 
section, the term `qualified possession corporation' means any 
controlled foreign corporation for any taxable year, if, for the 3-year 
period (or the period during which the controlled foreign corporation 
has been in existence, if shorter) ending in the taxable year preceding 
the taxable year in which the determination is made--
            ``(1) 80 percent or more of the gross income of such 
        corporation was derived from sources within a possession of the 
        United States, and
            ``(2) 75 percent or more of the gross income of such 
        corporation was effectively connected with the active conduct 
        of a trade or business within a possession of the United 
        States.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years of foreign corporations beginning after December 
31, 2022, and to taxable years of United States shareholders in which 
or with which such taxable years of foreign corporations end.
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