S.Amdt. 1836

SA 1836. Mr. HATCH submitted an amendment intended to be proposed by
him to the bill H.R. 1, to provide for reconciliation pursuant to
titles II and V of the concurrent resolution on the budget for fiscal
year 2018; which was ordered to lie on the table; as follows:

On page 480, between lines 11 and 12, insert the following:
``(3) Increased rate for certain banks and securities
dealers.--
``(A) In general.--In the case of an applicable taxpayer
described in subparagraph (B) for any taxable year--
``(i) paragraphs (1)(A) and (2)(A) shall each be applied by
substituting `11 percent' for `10 percent', and
``(ii) paragraph (2)(A) shall be applied by substituting
`13.5 percent' for `12.5 percent'.
``(B) Taxpayer described.--An applicable taxpayer is
described in this subparagraph if such taxpayer is a member
of an affiliated group (as defined in section 1504(a)(1))
which includes--

[[Page S7730]]

``(i) a bank (as defined in section 581), or
``(ii) a registered securities dealer under section 15(a)
of the Securities Exchange Act of 1934.
On page 489, strike lines 3 through 19, and insert:
``(g) Exception for Certain Payments Made in the Ordinary
Course of Trade or Business.--For purposes of this section--
``(1) In general.--Except as provided in paragraph (3), any
qualified derivative payment shall not be treated as a base
erosion payment.
``(2) Qualified derivative payment.--
``(A) In general.--The term `qualified derivative payment'
means any payment made by a taxpayer pursuant to a derivative
with respect to which the taxpayer--
``(i) recognizes gain or loss as if such derivative were
sold for its fair market value on the last business day of
the taxable year (and such additional times as required by
this title or the taxpayer's method of accounting),
``(ii) treats any gain or loss so recognized as ordinary,
and
``(iii) treats the character of all items of income,
deduction, gain, or loss with respect to a payment pursuant
to the derivative as ordinary.
``(B) Reporting requirement.--No payments shall be treated
as qualified derivative payments under subparagraph (A) for
any taxable year unless the taxpayer includes in the
information required to be reported under section 6038B(b)(2)
with respect to such taxable year such information as is
necessary to identify the payments to be so treated and such
other information as the Secretary determines necessary to
carry out the provisions of this subsection.
``(3) Exceptions for payments otherwise treated as base
erosion payments.--This subsection shall not apply to any
qualified derivative payment if--
``(A) the payment would be treated as a base erosion
payment if it were not made pursuant to a derivative,
including any interest, royalty, or service payment, or
``(B) in the case of a contract which has derivative and
nonderivative components, the payment is properly allocable
to the nonderivative component.
``(4) Derivative defined.--For purposes of this
subsection--
``(A) In general.--The term `derivative' means any contract
(including any option, forward contract, futures contract,
short position, swap, or similar contract) the value of
which, or any payment or other transfer with respect to
which, is (directly or indirectly) determined by reference to
one or more of the following:
``(i) Any share of stock in a corporation.
``(ii) Any evidence of indebtedness.
``(iii) Any commodity which is actively traded.
``(iv) Any currency.
``(v) Any rate, price, amount, index, formula, or
algorithm.
``(B) Treatment of american depository receipts and similar
instruments.--Except as otherwise provided by the Secretary,
for purposes of this part, American depository receipts (and
similar instruments) with respect to shares of stock in
foreign corporations shall be treated as shares of stock in
such foreign corporations.
``(h) Regulations.--The Secretary shall prescribe such
regulations or other guidance as may be necessary or
appropriate to carry out the provisions of this section,
including regulations--
``(1) providing for such adjustments to the application of
this section as are necessary to prevent the avoidance of the
purposes of this section, including through--
``(A) the use of unrelated persons, conduit transactions,
or other intermediaries, or
``(B) transactions or arrangements designed, in whole or in
part--
``(i) to characterize payments otherwise subject to this
section as payments not subject to this section, or
``(ii) to substitute payments not subject to this section
for payments otherwise subject to this section and
``(2) for the application of subsection (g), including
rules to prevent the avoidance of the exceptions under
subsection (g)(3).
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