Territorial Economic Recovery Act

I 116TH CONGRESS 2D SESSION H. R. 6648 To amend the Internal Revenue Code of 1986 to exclude certain amounts from the tested income of controlled foreign corporations, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 1, 2020 Ms. PLASKETT (for herself and Ms. VELA´ZQUEZ) 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 exclude certain amounts from the tested income of controlled foreign corporations, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Territorial Economic 4 Recovery Act’’. 5 VerDate Sep 11 2014 04:04 May 02, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H6648.IH H6648 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 6648 IH SEC. 2. INCOME OF CERTAIN QUALIFIED POSSESSION COR- 1 PORATIONS EXCLUDED FROM TESTED IN- 2 COME. 3 (a) IN GENERAL.—Section 951A of the Internal Rev- 4 enue Code of 1986 is amended— 5 (1) in subsection (c)(2)(A)(i), by striking ‘‘and’’ 6 at the end of subclause IV, by striking ‘‘over’’ and 7 inserting ‘‘and’’ at the end of subclause (V), and by 8 adding at the end the following new subclause: 9 ‘‘(VI) any income of a qualified 10 possession corporation that is effec- 11 tively connected with the active con- 12 duct of a trade or business within a 13 possession of the United States, 14 over’’; and 15 (2) by adding at the end the following new sub- 16 sections: 17 ‘‘(g) POSSESSION OF THE UNITED STATES.—For 18 purposes of this section, the term ‘possession of the United 19 States’ means Puerto Rico, the Virgin Islands, and any 20 specified possession described in section 931(c). 21 ‘‘(h) QUALIFIED POSSESSION CORPORATION.—For 22 purposes of this section, the term ‘qualified possession cor- 23 poration’ means any controlled foreign corporation for any 24 taxable year, if, for the three-year period (or the period 25 during which the controlled foreign corporation has been 26 VerDate Sep 11 2014 04:04 May 02, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H6648.IH H6648 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 6648 IH in existence, if shorter) ending in the taxable year pre- 1 ceding the taxable year in which the determination is 2 made— 3 ‘‘(1) 80 percent or more of the gross income of 4 such corporation was derived from sources within a 5 possession of the United States, and 6 ‘‘(2) 75 percent or more of the gross income of 7 such corporation was effectively connected with the 8 active conduct of a trade or business within a pos- 9 session of the United States.’’. 10 (b) EFFECTIVE DATE.—The amendments made by 11 this section shall apply with respect to taxable years begin- 12 ning after December 31, 2019. 13 Æ VerDate Sep 11 2014 04:04 May 02, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6301 E:\BILLS\H6648.IH H6648 kjohnson on DSK79L0C42PROD with BILLS