[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 4011 Introduced in Senate (IS)]
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118th CONGRESS
2d Session
S. 4011
To amend the Internal Revenue Code of 1986 to end the tax-free
treatment of certain corporate reorganizations that involve large
corporations.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 21, 2024
Mr. Whitehouse (for himself and Mr. Vance) 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 end the tax-free
treatment of certain corporate reorganizations that involve large
corporations.
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 ``Stop Subsidizing Giant Mergers
Act''.
SEC. 2. MODIFICATION OF RULES RELATING TO CORPORATE REORGANIZATIONS FOR
CERTAIN LARGE CORPORATIONS.
(a) Acquisitive Reorganizations.--Section 368(a)(2) of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
subparagraph:
``(I) Special rules with respect to certain
acquisitive reorganizations described in paragraph
(1)(a), (1)(b), (1)(c), and (1)(d).--
``(i) In general.--A merger, consolidation,
acquisition, or transfer which is described in
clause (ii) shall not be treated as a merger,
consolidation, acquisition, or transfer
described in paragraph (1)(A), (1)(B), (1)(C),
or (1)(D).
``(ii) Transactions described.--A merger,
consolidation, acquisition, or transfer is
described in this clause if--
``(I) such merger, consolidation,
acquisition, or transfer is, or is
treated as, the acquisition of the
stock or assets of another corporation,
``(II) such merger, consolidation,
acquisition, or transfer is not
excepted under clause (iii), and
``(III) the combined average annual
gross receipts of the acquiring
corporation and the acquired
corporation for the 3-taxable year
period which precedes the taxable year
in which the merger, consolidation,
acquisition, or transfer is completed
exceeds $500,000,000.
``(iii) Exceptions.--A merger,
consolidation, acquisition, or transfer is
excepted under this clause if--
``(I) either the acquiring
corporation or the acquired corporation
controls the other immediately before
(and, if both corporations continue to
exist, after) the merger,
consolidation, acquisition, or transfer
(as the case may be),
``(II) any other corporation
controls both the acquiring corporation
and the acquired corporation
immediately before (and, if both
corporations continue to exist, after)
the merger, consolidation, acquisition,
or transfer (as the case may be), or
``(III) either the acquiring
corporation or the acquired corporation
meets the gross receipts test of
section 448(c)(1) for the taxable year
in which the merger, consolidation,
acquisition, or transfer is completed.
``(iv) Aggregation and other special
rules.--Rules similar to the rules of
paragraphs (2) and (3) of section 448(c) shall
apply for purposes of clause (i)(II), except
that (unless otherwise provided by the
Secretary) the rules of section 448(c)(2) shall
not apply in determining the average annual
gross receipts of the acquired corporation.
``(v) Inflation adjustment.--In the case of
any taxable year beginning after 2024, the
dollar amount in clause (ii)(III) shall be
increased by an amount equal to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for the calendar year in which
such taxable year begins, determined by
substituting `calendar year 2023' for
`calendar year 2016' in subparagraph
(A)(ii) thereof.
If any amount as increased under the preceding
sentence is not a multiple of $1,000,000, such
amount shall be rounded to the nearest multiple
of $1,000,000.
``(vi) Regulations and guidance.--The
Secretary may prescribe such regulations and
other guidance as are necessary or appropriate
to carry out, and to prevent the abuse of the
purposes of, this subparagraph, including
rules--
``(I) to prevent the avoidance of
the application of this subparagraph
through the use of a series of
transactions designed and executed as
parts of a unitary plan, and
``(II) for the nonapplication of
the rules of clause (i) where such
nonapplication is consistent with the
purposes of this subparagraph.''.
(b) Transfers to Corporations Controlled by Transferors.--Section
351 is amended by redesignating subsection (h) as subsection (i) and by
inserting after subsection (g) the following new subsection:
``(h) Special Rule With Respect to Multiple Transferors.--
``(1) In general.--Subsection (a) shall not apply to any
transfer of property by two or more persons which are
corporations if the combined average annual gross receipts of
such persons for the 3-taxable year period which precedes the
taxable year of the transfer exceeds $500,000,000.
``(2) Exception.--Clause (i) shall not apply if--
``(A) such persons control the corporation to which
the property is transferred immediately before the
transfer,
``(B) another corporation controls all such persons
and the corporation to which the property is
transferred immediately before the transfer, or
``(C) all such persons meet the gross receipts test
of section 448(c)(1) for the taxable year in which the
transfer is made.
``(3) Aggregation and other special rules.--Rules similar
to the rules of paragraphs (2) and (3) of section 448(c) shall
apply for purposes of paragraph (1).
``(4) Inflation adjustment.--In the case of any taxable
year beginning after 2024, the dollar amount in paragraph (1)
shall be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
such taxable year begins, determined by substituting
`calendar year 2023' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
If any amount as increased under the preceding sentence is not
a multiple of $1,000,000, such amount shall be rounded to the
nearest multiple of $1,000,000.
``(5) Regulations and guidance.--The Secretary may
prescribe such regulations and other guidance as are necessary
or appropriate to carry out, and to prevent the abuse of the
purposes of, this subparagraph, including rules--
``(A) to prevent the avoidance of the application
of this subsection through the use of a series of
transactions designed and executed as parts of a
unitary plan, and
``(B) for the nonapplication of the rules of
paragraph (1) where such nonapplication is consistent
with the purposes of this subsection.''.
(c) Effective Date.--The amendments made by this section shall
apply to transfers after the date of the enactment of this Act.
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