To amend the Internal Revenue Code of 1986 to restore the limitation on downward attribution of stock ownership in applying constructive ownership rules.
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Progress
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- Introduced
- Passed House
- Passed Senate
- To President
- Became Law
Overview
This bill amends the Internal Revenue Code to restore a limitation on how stock ownership is attributed when determining if a person is considered an ‘owner’ for tax purposes. Specifically, it clarifies rules for foreign corporations and shareholders, ensuring that a United States person is not considered to own stock solely because it’s owned by a non-US person. It also modifies how the tax code treats foreign controlled corporations and shareholders, aiming to prevent tax avoidance strategies.
Key provisions
- Restores a limitation on downward attribution of stock ownership for constructive ownership rules.
- Defines ‘foreign controlled United States shareholder’ for purposes of Subpart F.
- Defines ‘foreign controlled foreign corporation’ for purposes of Subpart F.
- Modifies the application of sections 951A, 951(b), and 957 to treat foreign corporations as US corporations where applicable.
- Requires the Secretary to issue regulations to clarify the application of these changes.
- Applies the changes to the last taxable year of foreign corporations beginning before January 1, 2025, and subsequent years.
- Extends the application of the changes to the taxable years of US persons.
- Prohibits the use of these changes to create an inference about the proper application of other tax code provisions.
Who is affected
- Foreign corporations
- Foreign shareholders
Bill text
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