S.Amdt. 1805

1. Rewrites section 103

   Replaces

   Removes section 103.

   Inserted: SEC. __. TREATMENT OF FOREIGN CORPORATIONS MANAGED AND CONTROLLED IN THE UNITED STATES AS DOMESTIC CORPORATIONS.

   Inserted: (a) In General.--Section 7701 (relating to definitions) is amended by redesignating subsection (o) as subsection (p) and by inserting after subsection (n) the following new subsection:

   Inserted: "(o) Certain Corporations Managed and Controlled in the United States Treated as Domestic for Income Tax.--

   Inserted: "(1) In general.--Notwithstanding subsection (a)(4), in the case of a corporation described in paragraph (2) if--

   Inserted: "(A) the corporation would not otherwise be treated as a domestic corporation for purposes of this title, but

   Inserted: "(B) the management and control of the corporation occurs, directly or indirectly, primarily within the United States, then, solely for purposes of chapter 1 (and any other provision of this title relating to chapter 1), the corporation shall be treated as a domestic corporation.

   Inserted: "(2) Corporation described.--

   Inserted: "(A) In general.--A corporation is described in this paragraph if--

   Inserted: "(i) section 7874(b) would apply to such corporation but for the application of the date in section 7874(a)(2)(B)(i) or the last sentence of section 7874(a)(2)(B), and

   Inserted: "(ii)(I) the stock of such corporation is regularly traded on an established securities market, or

   Inserted: "(II) the aggregate gross assets of such corporation (or any predecessor thereof), including assets under management for investors, whether held directly or indirectly, at any time during the taxable year or any preceding taxable year is $50,000,000 or more.

   Inserted: "(B) Waiver for certain corporations.--A corporation shall not be treated as described in this paragraph if--

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   Inserted: "(i) such corporation was treated as a corporation described in this paragraph in a preceding taxable year,

   Inserted: "(ii) such corporation--

   Inserted: "(I) is not regularly traded on an established securities market, and

   Inserted: "(II) has, and is reasonably expected to continue to have, aggregate gross assets (including assets under management for investors, whether held directly or indirectly) of less than $50,000,000, and

   Inserted: "(iii) the Secretary grants a waiver to such corporation under this subparagraph.

   Inserted: "(C) Exception from gross assets test.--Subparagraph (A)(ii)(II) shall not apply to a corporation which is a controlled foreign corporation (as defined in section 957) and which is a member of an affiliated group (as defined section 1504, but determined without regard to section 1504(b)(3)) the common parent of which--

   Inserted: "(i) is a domestic corporation (determined without regard to this subsection), and

   Inserted: "(ii) has substantial assets (other than cash and cash equivalents and other than stock of foreign subsidiaries) held for use in the active conduct of a trade or business in the United States.

   Inserted: "(3) Management and control.--

   Inserted: "(A) In general.--The Secretary shall prescribe regulations for purposes of determining cases in which the management and control of a corporation is to be treated as occurring primarily within the United States.

   Inserted: "(B) Executive officers and senior management.--Such regulations shall provide that--

   Inserted: "(i) the management and control of a corporation shall be treated as occurring primarily within the United States if substantially all of the executive officers and senior management of the corporation who exercise day-to-day responsibility for making decisions involving strategic, financial, and operational policies of the corporation are located primarily within the United States, and

   Inserted: "(ii) individuals who are not executive officers and senior management of the corporation (including individuals who are officers or employees of other corporations in the same chain of corporations as the corporation) shall be treated as executive officers and senior management if such individuals exercise the day-to day responsibilities of the corporation described in clause (i).

   Inserted: "(C) Corporations primarily holding investment assets.--Such regulations shall also provide that the management and control of a corporation shall be treated as occurring primarily within the United States if--

   Inserted: "(i) the assets of such corporation (directly or indirectly) consist primarily of assets being managed on behalf of investors, and

   Inserted: "(ii) decisions about how to invest the assets are made in the United States.".

   Inserted: (b) Effective Date.--The amendments made by this section shall apply to taxable years beginning on or after the date which is 2 years after the date of the enactment of this Act.

   Original wording

   Strike section 103 and insert the following:

Read automatically from the Congressional Record. Check the original before relying on it.

As printed