H.R. 2186

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2186 Introduced in House (IH)]

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119th CONGRESS
1st Session
H. R. 2186

To amend the Internal Revenue Code of 1986 to restore the limitation on 
downward attribution of stock ownership in applying constructive 
ownership rules.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

March 18, 2025

Mr. Estes (for himself and Ms. Moore of Wisconsin) 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 restore the limitation on 
downward attribution of stock ownership in applying constructive 
ownership rules.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. RESTORATION OF LIMITATION ON DOWNWARD ATTRIBUTION OF STOCK 
OWNERSHIP IN APPLYING CONSTRUCTIVE OWNERSHIP RULES.

(a) In General.--Section 958(b) of the Internal Revenue Code of 
1986 is amended--
(1) by inserting after paragraph (3) the following:
``(4) Subparagraphs (A), (B), and (C) of section 318(a)(3) 
shall not be applied so as to consider a United States person 
as owning stock which is owned by a person who is not a United 
States person.'', and
(2) by striking ``Paragraph (1)'' in the last sentence and 
inserting ``Paragraphs (1) and (4)''.
(b) Foreign Controlled United States Shareholders.--Subpart F of 
part III of subchapter N of chapter 1 of such Code is amended by 
inserting after section 951A the following new section:

``SEC. 951B. AMOUNTS INCLUDED IN GROSS INCOME OF FOREIGN CONTROLLED 
UNITED STATES SHAREHOLDERS.

``(a) In General.--In the case of any foreign controlled United 
States shareholder of a foreign controlled foreign corporation--
``(1) this subpart (other than sections 951A, 951(b), and 
957) shall be applied with respect to such shareholder 
(separately from, and in addition to, the application of this 
subpart without regard to this section)--
``(A) by substituting `foreign controlled United 
States shareholder' for `United States shareholder' 
each place it appears therein, and
``(B) by substituting `foreign controlled foreign 
corporation' for `controlled foreign corporation' each 
place it appears therein, and
``(2) section 951A shall be applied with respect to such 
shareholder--
``(A) by treating each reference to `United States 
shareholder' in such section as including a reference 
to such shareholder, and
``(B) by treating each reference to `controlled 
foreign corporation' in such section as including a 
reference to such foreign controlled foreign 
corporation.
``(b) Foreign Controlled United States Shareholder.--For purposes 
of this section, the term `foreign controlled United States 
shareholder' means, with respect to any foreign corporation, any United 
States person which would be a United States shareholder with respect 
to such foreign corporation if--
``(1) section 951(b) were applied by substituting `more 
than 50 percent' for `10 percent or more', and
``(2) section 958(b) were applied without regard to 
paragraph (4) thereof.
``(c) Foreign Controlled Foreign Corporation.--For purposes of this 
section, the term `foreign controlled foreign corporation' means a 
foreign corporation, other than a controlled foreign corporation, which 
would be a controlled foreign corporation if section 957(a) were 
applied--
``(1) by substituting `foreign controlled United States 
shareholders' for `United States shareholders', and
``(2) by substituting `section 958(b) (other than paragraph 
(4) thereof)' for `section 958(b)'.
``(d) Regulations.--The Secretary shall prescribe such regulations 
or other guidance as may be necessary or appropriate to carry out the 
purposes of this section, including regulations or other guidance--
``(1) to treat a foreign controlled United States 
shareholder or a foreign controlled foreign corporation as a 
United States shareholder or as a controlled foreign 
corporation, respectively, for purposes of provisions of this 
title other than this subpart, and
``(2) to prevent the avoidance of the purposes of this 
section.''.
(c) Clerical Amendment.--The table of sections for subpart F of 
part III of subchapter N of chapter 1 is amended by inserting after the 
item relating to section 951A the following new item:

``Sec. 951B. Amounts included in gross income of foreign controlled 
United States shareholders.''.
(d) Effective Date.--The amendments made by this section shall 
apply to--
(1) the last taxable year of foreign corporations beginning 
before January 1, 2025, and each subsequent taxable year of 
such foreign corporations, and
(2) taxable years of United States persons in which or with 
which such taxable years of foreign corporations end.
(e) No Inference.--The amendments made by this section shall not be 
construed to create any inference with respect to the proper 
application of any provision of the Internal Revenue Code of 1986 with 
respect to taxable years beginning before the taxable years to which 
such amendments apply.
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