[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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