II
117th CONGRESS
1st Session
S. 2680
IN THE SENATE OF THE UNITED STATES
August 9, 2021
Ms. Warren (for herself, Mr. King, Mr. Merkley, Mr. Markey, and Mr. Whitehouse) 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 impose a tax on real profits of certain corporations.
Short title
This Act may be cited as the Real Corporate Profits Tax Act of 2021
.
Imposition of additional tax on real corporate profits
Imposition of tax
In general
Subtitle A of the Internal Revenue Code of 1986 is amended by adding at the end the following new chapter:
Tax on corporate book income
Sec. 1476. Tax on book income.
Sec. 1477. Credit for income taxes paid.
Tax on book income
In general
In addition to any other tax, in the case of a corporation, there is imposed a tax for each taxable year on so much of the adjusted net book income of the corporation as exceeds $100,000,000.
Amount of tax
The amount of tax imposed under subsection (a) shall be 7 percent.
Adjusted net book income
For purposes of this section—
In general
The term adjusted net book income means the net income or loss of the taxpayer set forth on the taxpayer's applicable financial statement as required to be reported (or as would have been properly reported if the taxpayer were so required) on the taxpayer’s financial statement net income or loss reconciliation for the fiscal year ending with or within such taxable year, determined without regard to the tax imposed by this section and adjusted as provided in this subsection.
Group of entities
For purposes of this subsection—
if the financial results of a taxpayer are reported on the applicable financial statement for a group of entities, such statement shall be treated as the applicable financial statement of the taxpayer, and
if the taxpayer files a consolidated return for any taxable year, adjusted net book income for such taxable year shall take into account items on the taxpayer's applicable financial statement which are properly allocable to members of such group included on such return.
Applicable financial statement
For purposes of this subsection, the term applicable financial statement has the meaning given such term under section 451(b)(3).
Exception
Subsection (a) shall not apply to a corporation subject to the tax imposed under subchapter M (relating to regulated investment companies and real estate investment trusts).
Application to foreign corporations
In the case of a foreign corporation, the tax imposed by subsection (a) shall apply only to those items on the taxpayer’s applicable financial statement as are properly allocable to the income of the taxpayer which is effectively connected with the conduct of a trade or business within the United States (as determined under rules similar to the rules in section 882).
Regulations
The Secretary shall prescribe such regulations and guidance as necessary to carry out the purposes of this section, including regulations and guidance related to the application of this section to consolidated financial statements.
Credit for income taxes paid
In general
In the case of a taxpayer other than an S corporation, there shall be allowed a credit against the tax imposed by section 1476 for any taxable year an amount equal to 33 percent of so much of the taxpayer’s net regular tax liability for the taxable year as exceeds the product of—
the highest rate of tax specified in section 11, and
the dollar amount described in section 1476(a).
Net regular tax liability
For purposes of this section, the term net regular tax liability means the regular tax liability imposed under chapter 1 reduced by the sum of the credits allowable under subparts A, B and D of part IV of subchapter A of chapter 1.
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Clerical amendment
The table of chapter for the Internal Revenue Code of 1986 is amended to read as follows:
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Denial of income tax deduction
Section 275(a)(1) of the Internal Revenue Code of 1986 is amended by striking and
at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting ; and
, and by adding at the end the following new paragraph:
the tax imposed by chapter 4A.
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Effective date
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.