S. 4185

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 4185 Introduced in Senate (IS)]

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119th CONGRESS
2d Session
S. 4185

To amend the Internal Revenue Code of 1986 to end the tax-free 
treatment of certain corporate reorganizations that involve large 
corporations.

_______________________________________________________________________

IN THE SENATE OF THE UNITED STATES

March 25, 2026

Mr. Whitehouse (for himself and Mr. Hawley) 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 end the tax-free 
treatment of certain corporate reorganizations that involve large 
corporations.

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 ``Stop Subsidizing Giant Mergers 
Act''.

SEC. 2. MODIFICATION OF RULES RELATING TO CORPORATE REORGANIZATIONS FOR 
CERTAIN LARGE CORPORATIONS.

(a) Acquisitive Reorganizations.--Section 368(a)(2) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
``(I) Special rules with respect to certain 
acquisitive reorganizations described in paragraph 
(1)(a), (1)(b), (1)(c), and (1)(d).--
``(i) In general.--A merger, consolidation, 
acquisition, or transfer which is described in 
clause (ii) shall not be treated as a merger, 
consolidation, acquisition, or transfer 
described in paragraph (1)(A), (1)(B), (1)(C), 
or (1)(D).
``(ii) Transactions described.--A merger, 
consolidation, acquisition, or transfer is 
described in this clause if--
``(I) such merger, consolidation, 
acquisition, or transfer is, or is 
treated as, the acquisition of the 
stock or assets of another corporation,
``(II) such merger, consolidation, 
acquisition, or transfer is not 
excepted under clause (iii), and
``(III) the combined average annual 
gross receipts of the acquiring 
corporation and the acquired 
corporation for the 3-taxable year 
period which precedes the taxable year 
in which the merger, consolidation, 
acquisition, or transfer is completed 
exceeds $500,000,000.
``(iii) Exceptions.--A merger, 
consolidation, acquisition, or transfer is 
excepted under this clause if--
``(I) either the acquiring 
corporation or the acquired corporation 
controls the other immediately before 
(and, if both corporations continue to 
exist, after) the merger, 
consolidation, acquisition, or transfer 
(as the case may be),
``(II) any other corporation 
controls both the acquiring corporation 
and the acquired corporation 
immediately before (and, if both 
corporations continue to exist, after) 
the merger, consolidation, acquisition, 
or transfer (as the case may be), or
``(III) either the acquiring 
corporation or the acquired corporation 
meets the gross receipts test of 
section 448(c)(1) for the taxable year 
in which the merger, consolidation, 
acquisition, or transfer is completed.
``(iv) Aggregation and other special 
rules.--Rules similar to the rules of 
paragraphs (2) and (3) of section 448(c) shall 
apply for purposes of clause (i)(II), except 
that (unless otherwise provided by the 
Secretary) the rules of section 448(c)(2) shall 
not apply in determining the average annual 
gross receipts of the acquired corporation.
``(v) Inflation adjustment.--In the case of 
any taxable year beginning after 2026, the 
dollar amount in clause (ii)(III) shall be 
increased by an amount equal to--
``(I) such dollar amount, 
multiplied by
``(II) the cost-of-living 
adjustment determined under section 
1(f)(3) for the calendar year in which 
such taxable year begins, determined by 
substituting `calendar year 2025' for 
`calendar year 2016' in subparagraph 
(A)(ii) thereof.
If any amount as increased under the preceding 
sentence is not a multiple of $1,000,000, such 
amount shall be rounded to the nearest multiple 
of $1,000,000.
``(vi) Regulations and guidance.--The 
Secretary may prescribe such regulations and 
other guidance as are necessary or appropriate 
to carry out, and to prevent the abuse of the 
purposes of, this subparagraph, including 
rules--
``(I) to prevent the avoidance of 
the application of this subparagraph 
through the use of a series of 
transactions designed and executed as 
parts of a unitary plan, and
``(II) for the nonapplication of 
the rules of clause (i) where such 
nonapplication is consistent with the 
purposes of this subparagraph.''.
(b) Transfers to Corporations Controlled by Transferors.--Section 
351 is amended by redesignating subsection (h) as subsection (i) and by 
inserting after subsection (g) the following new subsection:
``(h) Special Rule With Respect to Multiple Transferors.--
``(1) In general.--Subsection (a) shall not apply to any 
transfer of property by two or more persons which are 
corporations if the combined average annual gross receipts of 
such persons for the 3-taxable year period which precedes the 
taxable year of the transfer exceeds $500,000,000.
``(2) Exception.--Clause (i) shall not apply if--
``(A) such persons control the corporation to which 
the property is transferred immediately before the 
transfer,
``(B) another corporation controls all such persons 
and the corporation to which the property is 
transferred immediately before the transfer, or
``(C) all such persons meet the gross receipts test 
of section 448(c)(1) for the taxable year in which the 
transfer is made.
``(3) Aggregation and other special rules.--Rules similar 
to the rules of paragraphs (2) and (3) of section 448(c) shall 
apply for purposes of paragraph (1).
``(4) Inflation adjustment.--In the case of any taxable 
year beginning after 2026, the dollar amount in paragraph (1) 
shall be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined 
under section 1(f)(3) for the calendar year in which 
such taxable year begins, determined by substituting 
`calendar year 2025' for `calendar year 2016' in 
subparagraph (A)(ii) thereof.
If any amount as increased under the preceding sentence is not 
a multiple of $1,000,000, such amount shall be rounded to the 
nearest multiple of $1,000,000.
``(5) Regulations and guidance.--The Secretary may 
prescribe such regulations and other guidance as are necessary 
or appropriate to carry out, and to prevent the abuse of the 
purposes of, this subparagraph, including rules--
``(A) to prevent the avoidance of the application 
of this subsection through the use of a series of 
transactions designed and executed as parts of a 
unitary plan, and
``(B) for the nonapplication of the rules of 
paragraph (1) where such nonapplication is consistent 
with the purposes of this subsection.''.
(c) Effective Date.--The amendments made by this section shall 
apply to transfers after the date of the enactment of this Act.
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