H.R. 2186

119 HR 2186 IH: To amend the Internal Revenue Code of 1986 to restore the limitation on downward attribution of stock ownership in applying constructive ownership rules.
 U.S. House of Representatives
 2025-03-18
 text/xml
 EN
 Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
 I  119th CONGRESS  1st Session  H. R. 2186  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.
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:
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.