REVENUE_NN1 PROPOSALS_NN2 
In_PRP the_AT0 Fiscal_AJ0 Year_NN1 2022_CRD Budget_NN1 ,_PUN the_AT0 President_NN1 proposes_VVZ a_AT0 number_NN1 of_PRF reforms_NN2 to_PRP the_AT0 Internal_AJ0 Revenue_NN1 Code_NN1 (_PUL Code_NN1 )_PUR that_DT0 would_VM0 modernize_VVI our_DPS tax_NN1 system_NN1 to_TO0 respond_VVI to_PRP today_AV0 's_POS challenges_NN2 ._SENT These_DT0 changes_NN2 would_VM0 raise_VVI revenue_NN1 ,_PUN improve_VVB tax_NN1 administration_NN1 ,_PUN and_CJC make_VVB the_AT0 tax_NN1 system_NN1 more_AV0 equitable_AJ0 and_CJC efficient_AJ0 ._SENT 
The_AT0 American_AJ0 Jobs_NN2 Plan_NN1 includes_VVZ revenue_NN1 proposals_NN2 that_CJT reform_VVB corporate_AJ0 taxation_NN1 ,_PUN support_NN1 housing_NN1 and_CJC infrastructure_NN1 ,_PUN and_CJC prioritize_VVB clean_AJ0 energy_NN1 ._SENT Reforms_NN2 to_PRP the_AT0 corporate_AJ0 income_NN1 tax_NN1 aim_NN1 to_TO0 collect_VVI sufficient_AJ0 revenue_NN1 ,_PUN build_VVB a_AT0 fairer_AJC tax_NN1 system_NN1 ,_PUN and_CJC reduce_VVB tax_NN1 incentives_NN2 that_CJT encourage_VVB profit_NN1 shifting_NN1 and_CJC offshoring_NN1 ._SENT Housing_NN1 and_CJC infrastructure_NN1 tax_NN1 credits_NN2 would_VM0 support_VVI low-income_AJ0 housing_NN1 ,_PUN economic_AJ0 development_NN1 ,_PUN and_CJC public_AJ0 school_NN1 and_CJC transportation_NN1 infrastructure_NN1 ._SENT The_AT0 American_AJ0 Jobs_NN2 Plan_NN1 would_VM0 eliminate_VVI all_DT0 fossil_NN1 fuel_NN1 subsidies_NN2 that_CJT linger_VVB in_PRP the_AT0 Code_NN1 ,_PUN while_CJS substantially_AV0 expanding_AJ0 tax_NN1 incentives_NN2 that_CJT encourage_VVB clean_AJ0 energy_NN1 sources_NN2 ,_PUN energy_NN1 efficiency_NN1 ,_PUN carbon_NN1 sequestration_NN1 ,_PUN and_CJC electric_AJ0 vehicle_NN1 adoption_NN1 ._SENT 
The_AT0 American_AJ0 Families_NN2 Plan_NN1 includes_VVZ revenue_NN1 proposals_NN2 that_CJT strengthen_VVB the_AT0 taxation_NN1 of_PRF high-income_AJ0 taxpayers_NN2 ,_PUN expand_VVB tax_NN1 credits_NN2 for_PRP low-_AJ0 and_CJC middle-income_AJ0 workers_NN2 and_CJC families_NN2 ,_PUN and_CJC invest_VVB in_PRP improved_AJ0 taxpayer_NN1 compliance_NN1 and_CJC service_NN1 ._SENT Income_NN1 tax_NN1 rates_NN2 for_PRP those_DT0 with_PRP the_AT0 highest_AJS incomes_NN2 would_VM0 increase_VVI ,_PUN and_CJC loopholes_NN2 ,_PUN such_DT0 as_PRP the_AT0 carried_VVN interest_NN1 preference_NN1 and_CJC the_AT0 like-kind_AJ0 real_AJ0 estate_NN1 preference_NN1 ,_PUN would_VM0 be_VBI eliminated_VVN for_PRP those_DT0 with_PRP the_AT0 highest_AJS incomes_NN2 ._SENT Reformed_AJ0 taxation_NN1 of_PRF capital_NN1 income_NN1 would_VM0 even_AV0 the_AT0 tax_NN1 treatment_NN1 of_PRF labor_NN1 and_CJC capital_NN1 income_NN1 and_CJC eliminate_VVB a_AT0 loophole_NN1 that_CJT lets_VVZ substantial_AJ0 capital_NN1 gains_NN2 income_NN1 escape_NN1 taxation_NN1 forever_AV0 ._SENT The_AT0 economic_AJ0 security_NN1 of_PRF families_NN2 and_CJC workers_NN2 would_VM0 be_VBI supported_VVN through_PRP more_DT0 generous_AJ0 child_NN1 tax_NN1 credits_NN2 ,_PUN an_AT0 expanded_AJ0 earned_AJ0 income_NN1 tax_NN1 credit_NN1 ,_PUN expanded_AJ0 child_NN1 and_CJC dependent_AJ0 care_NN1 tax_NN1 credits_NN2 ,_PUN and_CJC more_AV0 generous_AJ0 premium_NN1 tax_NN1 credits_NN2 ._SENT Finally_AV0 ,_PUN transformative_AJ0 investments_NN2 in_PRP taxpayer_NN1 compliance_NN1 would_VM0 provide_VVI the_AT0 Internal_AJ0 Revenue_NN1 Service_NN1 with_PRP the_AT0 resources_NN2 and_CJC information_NN1 that_CJT it_PNP needs_VVZ to_TO0 build_VVI a_AT0 fairer_AJC and_CJC more_AV0 efficient_AJ0 tax_NN1 administration_NN1 system_NN1 ._SENT 
REFORM_NN1 CORPORATE_AJ0 TAXATION_NN1 
RAISE_VVB THE_AT0 CORPORATE_AJ0 INCOME_NN1 TAX_NN1 RATE_NN1 TO_PRP 28_CRD PERCENT_NN0 
Current_AJ0 Law_NN1 
Income_NN1 of_PRF a_AT0 business_NN1 entity_NN1 can_VM0 be_VBI subject_AJ0 to_PRP federal_AJ0 income_NN1 tax_NN1 in_PRP a_AT0 manner_NN1 that_CJT varies_VVZ depending_VVG upon_PRP the_AT0 classification_NN1 of_PRF the_AT0 entity_NN1 for_PRP federal_AJ0 income_NN1 tax_NN1 purposes_NN2 ._SENT Most_DT0 small_AJ0 businesses_NN2 are_VBB owned_VVN by_PRP individuals_NN2 and_CJC taxed_VVN as_CJS "_PUQ pass-through_AJ0 "_PUQ entities_NN2 ,_PUN meaning_VVG that_CJT their_DPS income_NN1 is_VBZ passed_VVN through_AVP to_PRP their_DPS owners_NN2 who_PNQ are_VBB taxed_VVN under_PRP the_AT0 individual_AJ0 income_NN1 tax_NN1 system_NN1 ._SENT Most_DT0 large_AJ0 businesses_NN2 ,_PUN including_PRP substantially_AV0 all_DT0 publicly_AV0 traded_AJ0 businesses_NN2 ,_PUN are_VBB classified_VVN as_CJS "_PUQ C_ZZ0 corporations_NN2 "_PUQ because_CJS these_DT0 corporations_NN2 are_VBB subject_AJ0 to_PRP the_AT0 rules_NN2 of_PRF subchapter_NN1 C_ZZ0 of_PRF chapter_NN1 1_CRD of_PRF the_AT0 Internal_AJ0 Revenue_NN1 Code_NN1 (_PUL Code_NN1 )_PUR and_CJC pay_VVB an_AT0 entity-level_AJ0 income_NN1 tax_NN1 ._SENT Additionally_AV0 ,_PUN taxable_AJ0 shareholders_NN2 of_PRF such_DT0 corporations_NN2 generally_AV0 pay_VVB federal_AJ0 income_NN1 tax_NN1 on_PRP most_DT0 distributions_NN2 attributable_AJ0 to_PRP their_DPS ownership_NN1 in_PRP the_AT0 corporation_NN1 ._SENT Some_DT0 mid-sized_AJ0 businesses_NN2 choose_VVB a_AT0 pass-through_AJ0 form_NN1 of_PRF entity_NN1 classification_NN1 (_PUL under_PRP subchapter_NN1 K_ZZ0 or_CJC subchapter_NN1 S_ZZ0 of_PRF chapter_NN1 1_CRD of_PRF the_AT0 Code_NN1 )_PUR while_CJS others_NN2 choose_VVB the_AT0 C_ZZ0 corporation_NN1 form_NN1 of_PRF entity_NN1 classification_NN1 ._SENT 
C_ZZ0 corporations_NN2 determine_VVB their_DPS taxable_AJ0 income_NN1 ,_PUN credits_NN2 ,_PUN and_CJC tax_NN1 liability_NN1 according_VVG to_PRP the_AT0 Code_NN1 and_CJC regulations_NN2 promulgated_VVN thereunder_AV0 ._SENT The_AT0 Tax_NN1 Cuts_NN2 and_CJC Jobs_NN2 Act_NN1 of_PRF 2017_CRD replaced_VVD a_AT0 graduated_AJ0 tax_NN1 schedule_NN1 (_PUL with_PRP most_DT0 corporate_AJ0 income_NN1 taxed_VVN at_PRP a_AT0 marginal_AJ0 and_CJC average_AJ0 rate_NN1 of_PRF 35_CRD percent_NN0 )_PUR with_PRP a_AT0 flat_AJ0 tax_NN1 of_PRF 21_CRD percent_NN0 applied_VVN to_PRP all_DT0 C_ZZ0 corporations_NN2 ._SENT 
Reasons_NN2 for_PRP Change_NN1 
Raising_VVG the_AT0 corporate_AJ0 income_NN1 tax_NN1 rate_NN1 is_VBZ an_AT0 administratively_AV0 simple_AJ0 way_NN1 to_TO0 raise_VVI revenue_NN1 in_PRP order_NN1 to_TO0 pay_VVI for_PRP the_AT0 Administration_NN1 's_POS infrastructure_NN1 proposals_NN2 and_CJC other_AJ0 long-run_AJ0 drivers_NN2 of_PRF spending_NN1 growth_NN1 ._SENT Furthermore_AV0 ,_PUN a_AT0 corporate_AJ0 tax_NN1 rate_NN1 increase_NN1 can_VM0 increase_VVI the_AT0 progressivity_NN1 of_PRF the_AT0 tax_NN1 system_NN1 and_CJC help_NN1 reduce_VVB income_NN1 inequality_NN1 ._SENT Additionally_AV0 ,_PUN a_AT0 significant_AJ0 share_NN1 of_PRF the_AT0 effects_NN2 of_PRF the_AT0 corporate_AJ0 tax_NN1 increase_NN1 would_VM0 be_VBI borne_VVN by_PRP foreign_AJ0 investors_NN2 ._SENT Therefore_AV0 ,_PUN some_DT0 of_PRF the_AT0 revenue_NN1 raised_VVN by_PRP this_DT0 proposal_NN1 would_VM0 result_VVI in_PRP no_AT0 additional_AJ0 federal_AJ0 income_NN1 tax_NN1 burden_NN1 to_PRP U.S._NP0 persons_NN2 ._SENT Also_AV0 ,_PUN the_AT0 majority_NN1 of_PRF U.S._NP0 equity_NN1 income_NN1 is_VBZ untaxed_AJ0 by_PRP the_AT0 U.S._NP0 government_NN1 at_PRP the_AT0 individual_AJ0 level_NN1 ,_PUN so_AV0 the_AT0 corporate_AJ0 tax_NN1 is_VBZ a_AT0 primary_AJ0 mechanism_NN1 for_PRP taxing_VVG such_DT0 capital_NN1 income_NN1 ._SENT 
Proposal_NN1 
The_AT0 proposal_NN1 would_VM0 increase_VVI the_AT0 income_NN1 tax_NN1 rate_NN1 for_PRP C_ZZ0 corporations_NN2 from_PRP 21_CRD percent_NN0 to_PRP 28_CRD percent_NN0 ._SENT 
The_AT0 proposal_NN1 would_VM0 be_VBI effective_AJ0 for_PRP taxable_AJ0 years_NN2 beginning_VVG after_PRP December_NP0 31_CRD ,_PUN 2021._CRD For_PRP taxable_AJ0 years_NN2 beginning_VVG after_PRP January_NP0 1_CRD ,_PUN 2021_CRD and_CJC before_PRP January_NP0 1_CRD ,_PUN 2022_CRD ,_PUN the_AT0 tax_NN1 rate_NN1 would_VM0 be_VBI equal_AJ0 to_PRP 21_CRD percent_NN0 plus_PRP 7_CRD percent_NN0 times_PRP the_AT0 portion_NN1 of_PRF the_AT0 taxable_AJ0 year_NN1 that_CJT occurs_VVZ in_PRP 2022._CRD 
REVISE_VVB THE_AT0 GLOBAL_AJ0 MINIMUM_AJ0 TAX_NN1 REGIME_NN1 ,_PUN DISALLOW_VVB DEDUCTIONS_NN2 ATTRIBUTABLE_AJ0 TO_PRP EXEMPT_AJ0 INCOME_NN1 ,_PUN AND_CJC LIMIT_NN1 INVERSIONS_NN2 
Current_AJ0 Law_NN1 
Global_AJ0 minimum_AJ0 tax_NN1 regime_NN1 with_PRP respect_NN1 to_PRP controlled_AJ0 foreign_AJ0 corporation_NN1 earnings_NN2 
Any_DT0 U.S._NP0 shareholder_NN1 of_PRF a_AT0 controlled_AJ0 foreign_AJ0 corporation_NN1 (_PUL CFC_NP0 )_PUR is_VBZ taxed_VVN annually_AV0 in_PRP the_AT0 United_NP0 States_NP0 under_PRP the_AT0 global_AJ0 minimum_AJ0 tax_NN1 in_PRP section_NN1 951A_CRD of_PRF the_AT0 Internal_AJ0 Revenue_NN1 Code_NN1 with_PRP respect_NN1 to_PRP all_DT0 of_PRF its_DPS CFCs_NN2 ._SENT A_AT0 U.S._NP0 shareholder_NN1 's_POS global_AJ0 minimum_AJ0 tax_NN1 inclusion_NN1 is_VBZ determined_VVN by_PRP combining_VVG its_DPS pro_AJ0 rata_NN1 share_NN1 of_PRF the_AT0 tested_AJ0 income_NN1 (_PUL or_CJC tested_AJ0 loss_NN1 )_PUR of_PRF all_DT0 its_DPS CFCs_NN2 ._SENT A_AT0 CFC_NP0 's_POS tested_AJ0 income_NN1 is_VBZ the_AT0 excess_NN1 of_PRF certain_AJ0 gross_AJ0 income_NN1 of_PRF the_AT0 CFC_NP0 over_PRP the_AT0 deductions_NN2 of_PRF the_AT0 CFC_NP0 that_CJT are_VBB properly_AV0 allocable_AJ0 to_PRP the_AT0 CFC_NP0 gross_AJ0 tested_AJ0 income_NN1 ._SENT A_AT0 CFC_NP0 's_POS tested_AJ0 loss_NN1 is_VBZ the_AT0 excess_NN1 of_PRF the_AT0 CFC_NP0 's_POS properly_AV0 allocable_AJ0 deductions_NN2 over_PRP the_AT0 CFC_NP0 's_POS gross_AJ0 tested_AJ0 income_NN1 ._SENT The_AT0 U.S._NP0 shareholder_NN1 's_POS actual_AJ0 global_AJ0 minimum_AJ0 tax_NN1 inclusion_NN1 reflects_VVZ a_AT0 reduction_NN1 for_PRP a_AT0 10_CRD percent_NN0 return_NN1 on_PRP certain_AJ0 foreign_AJ0 tangible_AJ0 property_NN1 (_PUL referred_VVN to_PRP as_AV0 qualified_AJ0 business_NN1 asset_NN1 income_NN1 ,_PUN or_CJC QBAI_NP0 )_PUR ._SENT QBAI_NP0 is_VBZ generally_AV0 tangible_AJ0 property_NN1 eligible_AJ0 for_PRP depreciation_NN1 ,_PUN such_DT0 as_PRP buildings_NN2 or_CJC machinery_NN1 ,_PUN but_CJC does_VDZ not_XX0 include_VVI assets_NN2 that_CJT are_VBB not_XX0 depreciable_AJ0 (_PUL such_DT0 as_PRP land_NN1 )_PUR nor_CJC intangible_AJ0 assets_NN2 ._SENT 
Under_PRP section_NN1 250_CRD ,_PUN subject_NN1 to_PRP a_AT0 taxable_AJ0 income_NN1 limitation_NN1 ,_PUN a_AT0 corporate_AJ0 U.S._NP0 shareholder_NN1 is_VBZ generally_AV0 allowed_VVN 50-percent_AJ0 deduction_NN1 against_PRP its_DPS global_AJ0 minimum_AJ0 tax_NN1 inclusion_NN1 ._SENT The_AT0 section_NN1 250_CRD deduction_NN1 generally_AV0 results_VVZ in_PRP a_AT0 10.5-percent_AJ0 U.S._NP0 effective_AJ0 tax_NN1 rate_NN1 on_PRP a_AT0 corporate_AJ0 U.S._NP0 shareholder_NN1 's_POS global_AJ0 minimum_AJ0 tax_NN1 inclusion_NN1 under_PRP the_AT0 current_AJ0 U.S._NP0 corporate_AJ0 tax_NN1 rate_NN1 of_PRF 21_CRD percent_NN0 ._SENT The_AT0 50-percent_AJ0 deduction_NN1 is_VBZ scheduled_VVN to_TO0 be_VBI reduced_VVN to_PRP 37.5_CRD percent_NN0 starting_VVG in_PRP 2026._CRD 
Certain_AJ0 foreign_AJ0 income_NN1 taxes_NN2 paid_VVN by_PRP a_AT0 CFC_NP0 can_VM0 be_VBI credited_VVN against_PRP a_AT0 corporate_AJ0 U.S._NP0 shareholder_NN1 's_POS U.S._NP0 tax_NN1 liability_NN1 attributable_AJ0 to_PRP its_DPS global_AJ0 minimum_AJ0 tax_NN1 inclusion_NN1 ._SENT The_AT0 allowable_AJ0 credit_NN1 is_VBZ limited_VVN to_PRP 80_CRD percent_NN0 of_PRF the_AT0 amount_NN1 of_PRF the_AT0 foreign_AJ0 income_NN1 taxes_NN2 properly_AV0 allocable_AJ0 to_PRP a_AT0 CFC_NP0 's_POS tested_AJ0 income_NN1 taken_VVN into_PRP account_NN1 as_PRP part_NN1 of_PRF the_AT0 global_AJ0 minimum_AJ0 tax_NN1 inclusion_NN1 ._SENT Under_PRP final_AJ0 Treasury_NN1 regulations_NN2 promulgated_VVN in_PRP 2020_CRD ,_PUN if_CJS the_AT0 foreign_AJ0 effective_AJ0 tax_NN1 rate_NN1 on_PRP the_AT0 gross_AJ0 income_NN1 of_PRF a_AT0 CFC_NP0 that_CJT would_VM0 otherwise_AV0 be_VBI part_NN1 of_PRF a_AT0 global_AJ0 minimum_AJ0 tax_NN1 inclusion_NN1 exceeds_VVZ 90_CRD percent_NN0 of_PRF the_AT0 U.S._NP0 corporate_AJ0 income_NN1 tax_NN1 rate_NN1 ,_PUN the_AT0 U.S._NP0 shareholder_NN1 of_PRF the_AT0 CFC_NP0 is_VBZ generally_AV0 permitted_VVN to_TO0 exclude_VVI that_CJT gross_AJ0 income_NN1 (_PUL and_CJC the_AT0 associated_AJ0 deductions_NN2 and_CJC foreign_AJ0 income_NN1 taxes_NN2 )_PUR from_PRP its_DPS global_AJ0 minimum_AJ0 tax_NN1 inclusion_NN1 ._SENT A_AT0 similar_AJ0 statutory_AJ0 rule_NN1 applies_VVZ for_PRP purposes_NN2 of_PRF certain_AJ0 subpart_NN1 F_ZZ0 income_NN1 ._SENT Subpart_NN1 F_ZZ0 taxes_NN2 certain_AJ0 foreign_AJ0 income_NN1 earned_VVD indirectly_AV0 by_PRP U.S._NP0 persons_NN2 at_PRP full_AJ0 U.S._NP0 tax_NN1 rates_NN2 ._SENT 
A_AT0 single_AJ0 foreign_AJ0 tax_NN1 credit_NN1 limitation_NN1 generally_AV0 applies_VVZ to_PRP a_AT0 corporate_AJ0 U.S._NP0 shareholder_NN1 's_POS global_AJ0 minimum_AJ0 tax_NN1 inclusion_NN1 ._SENT Therefore_AV0 ,_PUN foreign_AJ0 income_NN1 taxes_NN2 paid_VVN to_PRP a_AT0 high-tax_AJ0 foreign_AJ0 jurisdiction_NN1 can_VM0 be_VBI used_VVN to_TO0 reduce_VVI the_AT0 U.S._NP0 tax_NN1 liability_NN1 with_PRP respect_NN1 to_PRP global_AJ0 minimum_AJ0 tax_NN1 income_NN1 earned_VVN in_PRP lower-tax_AJ0 jurisdictions_NN2 ._SENT Thus_AV0 ,_PUN generally_AV0 ,_PUN a_AT0 U.S._NP0 shareholder_NN1 's_POS aggregate_AJ0 U.S._NP0 tax_NN1 (_PUL after_PRP accounting_NN1 for_PRP the_AT0 allocation_NN1 of_PRF U.S._NP0 shareholder_NN1 deductions_NN2 )_PUR on_PRP its_DPS global_AJ0 minimum_AJ0 tax_NN1 inclusion_NN1 is_VBZ reduced_VVN by_PRP reference_NN1 to_PRP the_AT0 average_AJ0 foreign_AJ0 effective_AJ0 tax_NN1 rate_NN1 on_PRP its_DPS aggregate_AJ0 global_AJ0 minimum_AJ0 tax_NN1 income_NN1 rather_AV0 than_CJS the_AT0 effective_AJ0 tax_NN1 rates_NN2 in_PRP each_DT0 individual_AJ0 foreign_AJ0 jurisdiction_NN1 where_AVQ income_NN1 is_VBZ actually_AV0 earned_VVN ._SENT 
Treatment_NN1 of_PRF deductions_NN2 properly_AV0 allocable_AJ0 to_TO0 exempt_VVI income_NN1 
Certain_AJ0 dividends_NN2 received_VVN by_PRP a_AT0 domestic_AJ0 corporation_NN1 from_PRP foreign_AJ0 corporations_NN2 are_VBB effectively_AV0 exempt_AJ0 from_PRP U.S._NP0 tax_NN1 by_PRP reason_NN1 of_PRF the_AT0 100-percent_AJ0 deduction_NN1 allowed_VVN with_PRP respect_NN1 to_PRP such_DT0 dividends_NN2 under_PRP section_NN1 245A_CRD ._SENT Specifically_AV0 ,_PUN section_NN1 245A_CRD provides_VVZ a_AT0 domestic_AJ0 corporation_NN1 a_AT0 deduction_NN1 equal_AJ0 to_PRP the_AT0 foreign-source_AJ0 portion_NN1 of_PRF a_AT0 dividend_NN1 received_VVN from_PRP a_AT0 specified_AJ0 10-percent_AJ0 owned_AJ0 foreign_AJ0 corporation_NN1 ,_PUN but_CJC only_AV0 if_CJS the_AT0 domestic_AJ0 corporation_NN1 is_VBZ a_AT0 U.S._NP0 shareholder_NN1 of_PRF the_AT0 foreign_AJ0 corporation_NN1 ._SENT 
Section_NN1 265_CRD (_PUL a_AT0 )_PUR (_PUL 1_CRD )_PUR generally_AV0 disallows_VVZ a_AT0 deduction_NN1 for_PRP any_DT0 amount_NN1 that_DT0 is_VBZ allocable_AJ0 to_PRP certain_AJ0 classes_NN2 of_PRF income_NN1 that_DT0 is_VBZ wholly_AV0 exempt_AJ0 from_PRP U.S._NP0 tax_NN1 ._SENT For_PRP purposes_NN2 of_PRF determining_VVG a_AT0 taxpayer_NN1 's_POS foreign_AJ0 tax_NN1 credit_NN1 limitation_NN1 ,_PUN tax_VVB exempt_AJ0 assets_NN2 and_CJC their_DPS associated_AJ0 income_NN1 are_VBB disregarded_VVN under_PRP section_NN1 864_CRD (_PUL e_ZZ0 )_PUR (_PUL 3_CRD )_PUR ._SENT Section_NN1 904_CRD (_PUL b_ZZ0 )_PUR (_PUL 4_CRD )_PUR applies_VVZ to_TO0 disregard_VVI (_PUL solely_AV0 for_PRP purposes_NN2 of_PRF the_AT0 foreign_AJ0 tax_NN1 credit_NN1 limitation_NN1 )_PUR deductions_NN2 allocable_AJ0 to_PRP income_NN1 from_PRP foreign_AJ0 stock_NN1 other_AJ0 than_CJS global_AJ0 minimum_AJ0 tax_NN1 or_CJC subpart_NN1 F_ZZ0 income_NN1 inclusions_NN2 ,_PUN for_PRP determining_VVG a_AT0 taxpayer_NN1 's_POS foreign_AJ0 tax_NN1 credit_NN1 limitation_NN1 ._SENT 
Limitations_NN2 on_PRP the_AT0 ability_NN1 of_PRF domestic_AJ0 corporations_NN2 to_PRP expatriate_NN1 
Section_NN1 7874_CRD applies_VVZ to_PRP certain_AJ0 transactions_NN2 (_PUL known_VVN as_PRP "_PUQ inversion_NN1 transactions_NN2 "_PUQ )_PUR in_PRP which_DTQ a_AT0 U.S._NP0 corporation_NN1 is_VBZ acquired_VVN by_PRP a_AT0 foreign_AJ0 corporation_NN1 (_PUL "_PUQ foreign_AJ0 acquiring_AJ0 corporation_NN1 "_PUQ )_PUR in_PRP a_AT0 transaction_NN1 where_AVQ (_PUL 1_CRD )_PUR substantially_AV0 all_DT0 of_PRF the_AT0 assets_NN2 held_VVD directly_AV0 or_CJC indirectly_AV0 by_PRP the_AT0 domestic_AJ0 corporation_NN1 are_VBB acquired_VVN directly_AV0 or_CJC indirectly_AV0 by_PRP the_AT0 foreign_AJ0 acquiring_AJ0 corporation_NN1 ;_PUN (_PUL 2_CRD )_PUR the_AT0 former_DT0 shareholders_NN2 of_PRF the_AT0 domestic_AJ0 corporation_NN1 hold_NN1 at_PRP least_AV0 a_AT0 60-percent_AJ0 ownership_NN1 interest_NN1 in_PRP the_AT0 foreign_AJ0 acquiring_AJ0 corporation_NN1 by_PRP reason_NN1 of_PRF the_AT0 acquisition_NN1 ;_PUN and_CJC (_PUL 3_CRD )_PUR the_AT0 foreign_AJ0 acquiring_AJ0 corporation_NN1 ,_PUN together_AV0 with_PRP its_DPS expanded_AJ0 affiliated_AJ0 group_NN1 ,_PUN does_VDZ not_XX0 conduct_VVI substantial_AJ0 business_NN1 activities_NN2 in_PRP the_AT0 country_NN1 in_PRP which_DTQ the_AT0 foreign_AJ0 acquiring_AJ0 corporation_NN1 is_VBZ created_VVN or_CJC organized_VVN ._SENT Similar_AJ0 provisions_NN2 apply_VVB to_PRP acquisitions_NN2 of_PRF domestic_AJ0 partnerships_NN2 ._SENT 
The_AT0 tax_NN1 consequences_NN2 of_PRF an_AT0 inversion_NN1 transaction_NN1 depend_VVB on_PRP the_AT0 level_NN1 of_PRF continuing_VVG former_DT0 shareholder_NN1 ownership_NN1 ._SENT If_CJS the_AT0 continuing_AJ0 former_DT0 shareholder_NN1 ownership_NN1 of_PRF the_AT0 foreign_AJ0 acquiring_AJ0 corporation_NN1 is_VBZ at_PRP least_AV0 80_CRD percent_NN0 (_PUL by_PRP vote_NN1 or_CJC value_NN1 )_PUR ,_PUN the_AT0 foreign_AJ0 acquiring_AJ0 corporation_NN1 is_VBZ treated_VVN as_PRP a_AT0 domestic_AJ0 corporation_NN1 for_PRP all_DT0 U.S._NP0 tax_NN1 purposes_NN2 (_PUL the_AT0 "_PUQ 80-percent_AJ0 test_NN1 "_PUQ )_PUR ._SENT If_CJS the_AT0 continuing_AJ0 former_DT0 shareholder_NN1 ownership_NN1 is_VBZ at_PRP least_AV0 60_CRD percent_NN0 but_CJC less_AV0 than_CJS 80_CRD percent_NN0 (_PUL by_PRP vote_NN1 or_CJC value_NN1 )_PUR ,_PUN the_AT0 foreign_AJ0 acquiring_AJ0 corporation_NN1 is_VBZ respected_VVN as_CJS foreign_AJ0 but_CJC full_AJ0 U.S._NP0 tax_NN1 must_VM0 generally_AV0 be_VBI paid_VVN with_PRP respect_NN1 to_PRP certain_AJ0 income_NN1 or_CJC gain_NN1 recognized_VVN by_PRP the_AT0 expatriated_AJ0 U.S._NP0 entity_NN1 and_CJC its_DPS affiliates_NN2 in_PRP connection_NN1 with_PRP the_AT0 inversion_NN1 or_CJC within_PRP the_AT0 ten_CRD year_NN1 period_NN1 ending_VVG after_PRP the_AT0 completion_NN1 of_PRF the_AT0 inversion_NN1 (_PUL the_AT0 "_PUQ 60-percent_AJ0 test_NN1 "_PUQ )_PUR ._SENT Furthermore_AV0 ,_PUN the_AT0 Tax_NN1 Cuts_NN2 and_CJC Jobs_NN2 Act_NN1 of_PRF 2017_CRD (_PUL TCJA_NP0 )_PUR adopted_VVD several_DT0 anti-abuse_AJ0 provisions_NN2 that_CJT apply_VVB to_PRP inversion_NN1 transactions_NN2 that_CJT satisfy_VVB the_AT0 60-percent_AJ0 test_NN1 ._SENT 
Reasons_NN2 for_PRP Change_NN1 
Global_AJ0 minimum_AJ0 tax_NN1 regime_NN1 
The_AT0 reduction_NN1 to_PRP global_AJ0 minimum_AJ0 tax_NN1 inclusions_NN2 for_PRP a_AT0 percentage_NN1 of_PRF certain_AJ0 foreign_AJ0 tangible_AJ0 assets_NN2 incentivizes_VVZ U.S._NP0 multinational_AJ0 companies_NN2 to_TO0 invest_VVI in_PRP tangible_AJ0 assets_NN2 abroad_AV0 rather_AV0 than_CJS domestically_AV0 ._SENT The_AT0 elimination_NN1 of_PRF QBAI_NP0 would_VM0 eliminate_VVI this_DT0 perverse_AJ0 investment_NN1 incentive_NN1 while_CJS simplifying_VVG the_AT0 taxation_NN1 of_PRF CFCs_NN2 ._SENT 
The_AT0 difference_NN1 between_PRP the_AT0 effective_AJ0 U.S._NP0 tax_NN1 rate_NN1 on_PRP global_AJ0 minimum_AJ0 tax_NN1 inclusions_NN2 versus_PRP the_AT0 effective_AJ0 U.S._NP0 tax_NN1 rate_NN1 on_PRP income_NN1 earned_VVD directly_AV0 by_PRP U.S._NP0 companies_NN2 that_CJT results_NN2 from_PRP the_AT0 section_NN1 250_CRD deduction_NN1 incentivizes_VVZ U.S._NP0 companies_NN2 to_TO0 locate_VVI profits_NN2 and_CJC operations_NN2 offshore_AV0 ._SENT Reducing_VVG the_AT0 section_NN1 250_CRD deduction_NN1 for_PRP these_DT0 foreign_AJ0 earnings_NN2 would_VM0 reduce_VVI this_DT0 perverse_AJ0 incentive_NN1 ._SENT 
The_AT0 determination_NN1 of_PRF a_AT0 U.S._NP0 company_NN1 's_POS global_AJ0 minimum_AJ0 tax_NN1 inclusion_NN1 and_CJC residual_AJ0 U.S._NP0 tax_NN1 liability_NN1 on_PRP such_DT0 inclusions_NN2 on_PRP a_AT0 global_AJ0 blended_AJ0 basis_NN1 incentivizes_VVZ U.S._NP0 companies_NN2 with_PRP operations_NN2 in_PRP high-tax_AJ0 jurisdictions_NN2 to_TO0 invest_VVI in_PRP lower-tax_AJ0 jurisdictions_NN2 ,_PUN to_TO0 take_VVI advantage_NN1 of_PRF the_AT0 automatic_AJ0 global_AJ0 averaging_NN1 under_PRP the_AT0 existing_AJ0 global_AJ0 minimum_AJ0 tax_NN1 regime_NN1 ._SENT In_PRP some_DT0 cases_NN2 ,_PUN U.S._NP0 companies_NN2 may_VM0 have_VHI an_AT0 incentive_NN1 to_TO0 locate_VVI operations_NN2 in_PRP jurisdictions_NN2 with_PRP corporate_AJ0 income_NN1 tax_NN1 rates_NN2 higher_AJC than_CJS the_AT0 United_NP0 States_NP0 ,_PUN to_TO0 average_VVI these_DT0 high_AJ0 taxes_NN2 against_PRP low-taxed_AJ0 income_NN1 earned_VVD elsewhere_AV0 ._SENT This_DT0 automatic_AJ0 blending_NN1 feature_NN1 exacerbates_VVZ the_AT0 race_NN1 to_PRP the_AT0 bottom_NN1 on_PRP corporate_AJ0 income_NN1 tax_NN1 rates_NN2 and_CJC encourages_VVZ U.S._NP0 companies_NN2 to_PRP report_NN1 profits_NN2 (_PUL as_CJS well_AV0 as_CJS the_AT0 activities_NN2 that_CJT give_VVB rise_NN1 to_PRP those_DT0 profits_NN2 )_PUR in_PRP offshore_AJ0 jurisdictions_NN2 rather_AV0 than_CJS in_PRP the_AT0 United_NP0 States_NP0 ,_PUN creating_VVG a_AT0 perverse_AJ0 "_PUQ America_NP0 last_ORD "_PUQ tax_NN1 policy_NN1 ._SENT Similar_AJ0 global_AJ0 blending_NN1 concerns_NN2 arise_VVB with_PRP respect_NN1 to_PRP high_AJ0 and_CJC low-taxed_AJ0 income_NN1 earned_VVN through_PRP foreign_AJ0 branches_NN2 ._SENT 
In_PRP contrast_NN1 ,_PUN determining_VVG a_AT0 taxpayer_NN1 's_POS global_AJ0 minimum_AJ0 tax_NN1 inclusion_NN1 and_CJC residual_AJ0 U.S._NP0 tax_NN1 liability_NN1 on_PRP such_DT0 inclusions_NN2 on_PRP a_AT0 jurisdiction-by-jurisdiction_NN1 basis_NN1 would_VM0 be_VBI a_AT0 stronger_AJC deterrent_NN1 to_TO0 profit_VVI shifting_AJ0 and_CJC offshoring_AJ0 because_CJS residual_AJ0 U.S._NP0 tax_NN1 would_VM0 be_VBI due_AJ0 on_PRP every_AT0 dollar_NN1 earned_VVN in_PRP a_AT0 low-tax_AJ0 jurisdiction_NN1 at_PRP the_AT0 minimum_AJ0 rate_NN1 ,_PUN with_PRP no_AT0 ability_NN1 to_TO0 reduce_VVI that_CJT residual_AJ0 U.S._NP0 tax_NN1 for_PRP excess_AJ0 foreign_AJ0 taxes_NN2 paid_VVN to_PRP higher-tax_AJ0 jurisdictions_NN2 ._SENT 
