S.Amdt. 3025

SA 3025. Mr. KYL submitted an amendment intended to be proposed to amendment SA 3011 proposed by Mr. Frist to the bill S. 1637, to amend the Internal Revenue Code of 1986 to comply with the World Trade Organization rulings on the FSC/ETI benefit in a manner that preserves jobs and production activities in the United States, to reform and simplify the international taxation rules of the United States, and for other purposes; which was ordered to lie on the table; as follows:

Strike section 662 of the instructions and insert the following:

SEC. 662. NONATTRIBUTION OF CERTAIN MANUFACTURING BY PERSONS OTHER THAN CONTROLLED FOREIGN CORPORATION.

(a) In General.--Section 954(d) (defining foreign base company sales income) is amended by adding at the end the following new paragraph: “(5) Nonattribution of certain manufacturing activities.--For purposes of this subsection, in determining whether income of a controlled foreign corporation is foreign base company sales income, any manufacturing, production, or construction by a person other than an individual who is an employee of the corporation shall not be attributed to the corporation, and property manufactured, produced, or constructed by such person for the corporation pursuant to a contractual arrangement shall not be considered as property sold on behalf of another person by the corporation.”. (b) Effective Date.--(1) In general.--The amendment made by this section shall apply to taxable years of controlled foreign corporations beginning on or after the date of the enactment of this Act, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end. (2) No inference.--Nothing in the amendment made by this section shall be construed to infer the proper treatment of manufacturing, production, or construction for taxable years beginning before the date of the enactment of this Act.