Corporate Patriot Enforcement Act of 2003

        [Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 737 Introduced in House (IH)]

108th CONGRESS
1st Session
H. R. 737

To amend the Internal Revenue Code of 1986 to prevent corporate
expatriation to avoid United States income taxes.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

February 12, 2003

Mr. Neal of Massachusetts (for himself, Ms. Pelosi, Mr. Hoyer, Mr.
Menendez, Mr. Rangel, Mr. Stark, Mr. Matsui, Mr. Levin, Mr. McDermott,
Mr. Kleczka, Mr. Lewis of Georgia, Mr. McNulty, Mr. Jefferson, Mr.
Doggett, Mrs. Jones of Ohio, Mr. Abercrombie, Mr. Ackerman, Mr. Allen,
Mr. Baca, Ms. Baldwin, Ms. Berkley, Mr. Berman, Mr. Berry, Mr. Bishop
of New York, Ms. Corrine Brown of Florida, Mr. Brown of Ohio, Mrs.
Capps, Mr. Capuano, Mr. Cardoza, Ms. Carson of Indiana, Mr. Clay, Mr.
Conyers, Mr. Costello, Mr. Crowley, Mr. DeFazio, Mr. Delahunt, Ms.
DeLauro, Mr. Deutsch, Mr. Dingell, Mr. Engel, Mr. Evans, Mr. Farr, Mr.
Filner, Mr. Ford, Mr. Frank of Massachusetts, Mr. Frost, Mr. Gephardt,
Mr. Gordon, Mr. Grijalva, Mr. Hastings of Florida, Mr. Hinchey, Mr.
Hoeffel, Mr. Holden, Mrs. Johnson of Connecticut, Mr. Israel, Ms.
Kaptur, Mr. Kildee, Mr. Kind, Mr. Lampson, Mr. Langevin, Mr. Lantos,
Mr. Larson of Connecticut, Ms. Lee, Ms. Lofgren, Mrs. Lowey, Mr. Lynch,
Mr. Markey, Ms. McCarthy of Missouri, Ms. McCollum, Mr. McGovern, Mr.
Meehan, Mr. Michaud, Mr. George Miller of California, Mr. Nadler, Mrs.
Napolitano, Ms. Norton, Mr. Oberstar, Mr. Obey, Mr. Olver, Mr. Pallone,
Mr. Pascrell, Mr. Pastor, Mr. Payne, Mr. Rahall, Mr. Rodriguez, Mr.
Ross, Ms. Roybal-Allard, Mr. Rush, Mr. Ryan of Ohio, Mr. Sabo, Ms.
Loretta Sanchez of California, Ms. Linda T. Sanchez of California, Mr.
Sanders, Ms. Schakowsky, Mr. Schiff, Mr. Scott of Virginia, Mr.
Serrano, Mr. Sherman, Mr. Skelton, Ms. Solis, Mr. Strickland, Mr.
Stupak, Mr. Taylor of Mississippi, Mr. Thompson of Mississippi, Mr.
Tierney, Mr. Towns, Mr. Udall of Colorado, Mr. Udall of New Mexico, Mr.
Van Hollen, Ms. Velazquez, Mr. Visclosky, Ms. Watson, Mr. Waxman, Mr.
Wexler, Ms. Woolsey, and Mr. Wynn) introduced the following bill; which
was referred to the Committee on Ways and Means

_______________________________________________________________________

A BILL

To amend the Internal Revenue Code of 1986 to prevent corporate
expatriation to avoid United States income taxes.

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 ``Corporate Patriot Enforcement Act of
2003''.

SEC. 2. PREVENTION OF CORPORATE EXPATRIATION TO AVOID UNITED STATES
INCOME TAX.

(a) In General.--Paragraph (4) of section 7701(a) of the Internal
Revenue Code of 1986 (defining domestic) is amended to read as follows:
``(4) Domestic.--
``(A) In general.--Except as provided in
subparagraph (B), the term `domestic' when applied to a
corporation or partnership means created or organized
in the United States or under the law of the United
States or of any State unless, in the case of a
partnership, the Secretary provides otherwise by
regulations.
``(B) Certain corporations treated as domestic.--
``(i) In general.--The acquiring
corporation in a corporate expatriation
transaction shall be treated as a domestic
corporation.
``(ii) Corporate expatriation
transaction.--For purposes of this
subparagraph, the term `corporate expatriation
transaction' means any transaction if--
``(I) a nominally foreign
corporation (referred to in this
subparagraph as the `acquiring
corporation') acquires, as a result of
such transaction, directly or
indirectly substantially all of the
properties held directly or indirectly
by a domestic corporation, and
``(II) immediately after the
transaction, more than 80 percent of
the stock (by vote or value) of the
acquiring corporation is held by former
shareholders of the domestic
corporation by reason of holding stock
in the domestic corporation.
``(iii) Lower stock ownership requirement
in certain cases.--Subclause (II) of clause
(ii) shall be applied by substituting `50
percent' for `80 percent' with respect to any
nominally foreign corporation if--
``(I) such corporation does not
have substantial business activities
(when compared to the total business
activities of the expanded affiliated
group) in the foreign country in which
or under the law of which the
corporation is created or organized,
and
``(II) the stock of the corporation
is publicly traded and the principal
market for the public trading of such
stock is in the United States.
``(iv) Partnership transactions.--The term
`corporate expatriation transaction' includes
any transaction if--
``(I) a nominally foreign
corporation (referred to in this
subparagraph as the `acquiring
corporation') acquires, as a result of
such transaction, directly or
indirectly properties constituting a
trade or business of a domestic
partnership,
``(II) immediately after the
transaction, more than 80 percent of
the stock (by vote or value) of the
acquiring corporation is held by former
partners of the domestic partnership or
related foreign partnerships
(determined without regard to stock of
the acquiring corporation which is sold
in a public offering related to the
transaction), and
``(III) the acquiring corporation
meets the requirements of subclauses
(I) and (II) of clause (iii).
``(v) Special rules.--For purposes of this
subparagraph--
``(I) a series of related
transactions shall be treated as 1
transaction, and
``(II) stock held by members of the
expanded affiliated group which
includes the acquiring corporation
shall not be taken into account in
determining ownership.
``(vi) Other definitions.--For purposes of
this subparagraph--
``(I) Nominally foreign
corporation.--The term `nominally
foreign corporation' means any
corporation which would (but for this
subparagraph) be treated as a foreign
corporation.
``(II) Expanded affiliated group.--
The term `expanded affiliated group'
means an affiliated group (as defined
in section 1504(a) without regard to
section 1504(b)).
``(III) Related foreign
partnership.--A foreign partnership is
related to a domestic partnership if
they are under common control (within
the meaning of section 482), or they
shared the same trademark or
tradename.''
(b) Effective Dates.--
(1) In general.--The amendment made by this section shall
apply to corporate expatriation transactions completed after
September 11, 2001.
(2) Special rule.--The amendment made by this section shall
also apply to corporate expatriation transactions completed on
or before September 11, 2001, but only with respect to taxable
years of the acquiring corporation beginning after December 31,
2003.
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