118 HR 1055 IH: Territorial Economic Recovery Act U.S. House of Representatives 2023-02-14 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I118th CONGRESS1st SessionH. R. 1055IN THE HOUSE OF REPRESENTATIVESFebruary 14, 2023Ms. Plaskett (for herself and Ms. Velázquez) introduced the following bill; which was referred to the Committee on Ways and MeansA BILLTo amend the Internal Revenue Code of 1986 to exclude certain amounts from the tested income of controlled foreign corporations, and for other purposes.

1.

Short title

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

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.