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TITLE
VIII --REVENUE PROVISIONS
"(1)
IN GENERAL. --The taxable income of an expatriated
entity for any taxable year which includes any
portion of the applicable period shall in no event
be less than the inversion gain of the entity for
the taxable year. "(2)
EXPATRIATED ENTITY. --For purposes of this
subsection -- "(A)
IN GENERAL. --The term 'expatriated entity' means -- "(i)
the domestic corporation or partnership referred to
in subparagraph (B)(i) with respect to which a
foreign corporation is a surrogate foreign
corporation, and "(ii)
any "(B)
SURROGATE FOREIGN CORPORATION. --A foreign
corporation shall be treated as a surrogate foreign
corporation if, pursuant to a plan (or a series of
related transactions) -- "(i)
the entity completes after "(ii)
after the acquisition at least 60 percent of the
stock (by vote or value) of the entity is held -- "(I)
in the case of an acquisition with respect to a
domestic corporation, by former shareholders of the
domestic corporation by reason of holding stock in
the domestic corporation, or "(II)
in the case of an acquisition with respect to a
domestic partnership, by former partners of the
domestic partnership by reason of holding a capital
or profits interest in the domestic partnership, and "(iii)
after the acquisition the expanded affiliated group
which includes the entity does not have substantial
business activities in the foreign country in which,
or under the law of which, the entity is created or
organized, when compared to the total business
activities of such expanded affiliated group. An
entity otherwise described in clause (i) with
respect to any domestic corporation or partnership
trade or business shall be treated as not so
described if, on or before "(3)
COORDINATION WITH SUBSECTION (b). --Paragraph (1)
shall not apply to any entity which is treated as a
domestic corporation under subsection (b).
"(1)
EXPANDED AFFILIATED GROUP. --The term 'expanded
affiliated group' means an affiliated group as
defined in section 1504(a) but without regard to
section 1504(b)(3), except that section 1504(a)
shall be applied by substituting 'more than 50
percent' for 'at least 80 percent' each place it
appears. "(2)
CERTAIN STOCK DISREGARDED. --There shall not be
taken into account in determining ownership under
subsection (a)(2)(B)(ii) -- "(A)
stock held by members of the expanded affiliated
group which includes the foreign corporation, or "(B)
stock of such foreign corporation which is sold in a
public offering related to the acquisition described
in subsection (a)(2)(B)(i). "(3)
"(4)
CERTAIN TRANSFERS DISREGARDED. --The transfer of
properties or liabilities (including by contribution
or distribution) shall be disregarded if such
transfers are part of a plan a principal purpose of
which is to avoid the purposes of this section. "(5)
SPECIAL RULE FOR RELATED PARTNERSHIPS. --For
purposes of applying subsection (a)(2)(B)(ii) to the
acquisition of a trade or business of a domestic
partnership, except as provided in regulations, all
partnerships which are under common control (within
the meaning of section 482) shall be treated as 1
partnership. "(6)
REGULATIONS. --The Secretary shall prescribe such
regulations as may be appropriate to determine
whether a corporation is a surrogate foreign
corporation, including regulations -- "(A)
to treat warrants, options, contracts to acquire
stock, convertible debt interests, and other similar
interests as stock, and "(B)
to treat stock as not stock.
"(1)
APPLICABLE PERIOD. --The term 'applicable period'
means the period -- "(A)
beginning on the first date properties are acquired
as part of the acquisition described in subsection
(a)(2)(B)(i), and "(B)
ending on the date which is 10 years after the last
date properties are acquired as part of such
acquisition. "(2)
INVERSION GAIN. --The term 'inversion gain' means
the income or gain recognized by reason of the
transfer during the applicable period of stock or
other properties by an expatriated entity, and any
income received or accrued during the applicable
period by reason of a license of any property by an
expatriated entity -- "(A)
as part of the acquisition described in subsection
(a)(2)(B)(i), or "(B)
after such acquisition if the transfer or license is
to a foreign related person. Subparagraph
(B) shall not apply to property described in section
1221(a)(1) in the hands of the expatriated entity. "(3)
FOREIGN RELATED PERSON. --The term 'foreign related
person' means, with respect to any expatriated
entity, a foreign person which -- "(A)
is related (within the meaning of section 267(b) or
707(b)(1)) to such entity, or "(B)
is under the same common control (within the meaning
of section 482) as such entity.
"(1)
CREDITS NOT ALLOWED AGAINST TAX ON INVERSION GAIN.
--Credits (other than the credit allowed by section
901) shall be allowed against the tax imposed by
this chapter on an expatriated entity for any
taxable year described in subsection (a) only to the
extent such tax exceeds the product of -- "(A)
the amount of the inversion gain for the taxable
year, and "(B)
the highest rate of tax specified in section
11(b)(1). For
purposes of determining the credit allowed by
section 901, inversion gain shall be treated as from
sources within the United States. "(2)
SPECIAL RULES FOR PARTNERSHIPS. --In the case of an
expatriated entity which is a partnership -- "(A)
subsection (a)(1) shall apply at the partner rather
than the partnership level, "(B)
the inversion gain of any partner for any taxable
year shall be equal to the sum of -- "(i)
the partner's distributive share of inversion gain
of the partnership for such taxable year, plus "(ii)
gain recognized for the taxable year by the partner
by reason of the transfer during the applicable
period of any partnership interest of the partner in
such partnership to the surrogate foreign
corporation, and "(C)
the highest rate of tax specified in the rate
schedule applicable to the partner under this
chapter shall be substituted for the rate of tax
referred to in paragraph (1). "(3)
COORDINATION WITH SECTION 172 "(4)
STATUTE OF LIMITATIONS. -- "(A)
IN GENERAL. --The statutory period for the
assessment of any deficiency attributable to the
inversion gain of any taxpayer for any pre-inversion
year shall not expire before the expiration of 3
years from the date the Secretary is notified by the
taxpayer (in such manner as the Secretary may
prescribe) of the acquisition described in
subsection (a)(2)(B)(i) to which such gain relates
and such deficiency may be assessed before the
expiration of such 3-year period notwithstanding the
provisions of any other law or rule of law which
would otherwise prevent such assessment. "(B)
"(i)
any portion of the applicable period is included in
such taxable year, and "(ii)
such year ends before the taxable year in which the
acquisition described in subsection (a)(2)(B)(i) is
completed.
"(1)
the use of related persons, pass-through or other
noncorporate entities, or other intermediaries, or "(2)
transactions designed to have persons cease to be
(or not become) members of expanded affiliated
groups or related persons.".
"Sec.
7874. Rules relating to expatriated entities and
their foreign parents.".
"CHAPTER
45 --PROVISIONS RELATING TO EXPATRIATED ENTITIES "Sec.
4985. Stock compensation of insiders in expatriated
corporations.
"(1)
the rate of tax specified in section 1(h)(1)(C),
multiplied by "(2)
the value (determined under subsection (b)) of the
specified stock compensation held (directly or
indirectly) by or for the benefit of such individual
or a member of such individual's family (as defined
in section 267) at any time during the 12-month
period beginning on the date which is 6 months
before the expatriation date.
"(1)
IN GENERAL. --The value of specified stock
compensation shall be -- "(A)
in the case of a stock option (or other similar
right) or a stock appreciation right, the fair value
of such option or right, and "(B)
in any other case, the fair market value of such
compensation. "(2)
DATE FOR DETERMINING VALUE. --The determination of
value shall be made -- "(A)
in the case of specified stock compensation held on
the expatriation date, on such date, "(B)
in the case of such compensation which is canceled
during the 6 months before the expatriation date, on
the day before such cancellation, and "(C)
in the case of such compensation which is granted
after the expatriation date, on the date such
compensation is granted.
"(1)
any stock option which is exercised on the
expatriation date or during the 6-month period
before such date and to the stock acquired in such
exercise, if income is recognized under section 83
on or before the expatriation date with respect to
the stock acquired pursuant to such exercise, and "(2)
any other specified stock compensation which is
exercised, sold, exchanged, distributed, cashed-out,
or otherwise paid during such period in a
transaction in which income, gain, or loss is
recognized in full.
"(1)
DISQUALIFIED INDIVIDUAL. --The term 'disqualified
individual' means, with respect to a corporation,
any individual who, at any time during the 12-month
period beginning on the date which is 6 months
before the expatriation date -- "(A)
is subject to the requirements of section 16(a) of
the Securities Exchange Act of 1934 with respect to
such corporation or any member of the expanded
affiliated group which includes such corporation, or "(B)
would be subject to such requirements if such
corporation or member were an issuer of equity
securities referred to in such section. "(2)
EXPATRIATED CORPORATION; EXPATRIATION DATE. -- "(A)
EXPATRIATED CORPORATION. --The term 'expatriated
corporation' means any corporation which is an
expatriated entity (as defined in section
7874(a)(2)). Such term includes any predecessor or
successor of such a corporation. "(B)
EXPATRIATION DATE. --The term 'expatriation date'
means, with respect to a corporation, the date on
which the corporation first becomes an expatriated
corporation. "(3)
SPECIFIED STOCK COMPENSATION. -- "(A)
IN GENERAL. --The term 'specified stock
compensation' means payment (or right to payment)
granted by the expatriated corporation (or by any
member of the expanded affiliated group which
includes such corporation) to any person in
connection with the performance of services by a
disqualified individual for such corporation or
member if the value of such payment or right is
based on (or determined by reference to) the value
(or change in value) of stock in such corporation
(or any such member). "(B)
EXCEPTIONS. --Such term shall not include -- "(i)
any option to which part II of subchapter D of
chapter 1 applies, or "(ii)
any payment or right to payment from a plan referred
to in section 280G(b)(6). "(4)
EXPANDED AFFILIATED GROUP. --The term 'expanded
affiliated group' means an affiliated group (as
defined in section 1504(a) without regard to section
1504(b)(3)); except that section 1504(a) shall be
applied by substituting 'more than 50 percent' for
'at least 80 percent' each place it appears.
"(1)
CANCELLATION OF RESTRICTION. --The cancellation of a
restriction which by its terms will never lapse
shall be treated as a grant. "(2)
PAYMENT OR REIMBURSEMENT OF TAX BY CORPORATION
TREATED AS SPECIFIED STOCK COMPENSATION. --Any
payment of the tax imposed by this section directly
or indirectly by the expatriated corporation or by
any member of the expanded affiliated group which
includes such corporation -- "(A)
shall be treated as specified stock compensation,
and "(B)
shall not be allowed as a deduction under any
provision of chapter 1. "(3)
CERTAIN RESTRICTIONS IGNORED. --Whether there is
specified stock compensation, and the value thereof,
shall be determined without regard to any
restriction other than a restriction which by its
terms will never lapse. "(4)
PROPERTY TRANSFERS. --Any transfer of property shall
be treated as a payment and any right to a transfer
of property shall be treated as a right to a
payment. "(5)
OTHER ADMINISTRATIVE PROVISIONS. --For purposes of
subtitle F, any tax imposed by this section shall be
treated as a tax imposed by subtitle A.
"(G)
COORDINATION WITH EXCISE TAX ON SPECIFIED STOCK
COMPENSATION. --The dollar limitation contained in
paragraph (1) with respect to any covered employee
shall be reduced (but not below zero) by the amount
of any payment (with respect to such employee) of
the tax imposed by section 4985 directly or
indirectly by the expatriated corporation (as
defined in such section) or by any member of the
expanded affiliated group (as defined in such
section) which includes such corporation.".
"Chapter
45. Provisions relating to expatriated
entities.".
"(1)
IN GENERAL. --Every nonresident alien individual to
whom this section applies and who, within the
10-year period immediately preceding the close of
the taxable year, lost United States citizenship
shall be taxable for such taxable year in the manner
provided in subsection (b) if the tax imposed
pursuant to such subsection (after any reduction in
such tax under the last sentence of such subsection)
exceeds the tax which, without regard to this
section, is imposed pursuant to section 871. "(2)
INDIVIDUALS SUBJECT TO THIS SECTION. --This section
shall apply to any individual if -- "(A)
the average annual net income tax (as defined in
section 38(c)(1)) of such individual for the period
of 5 taxable years ending before the date of the
loss of United States citizenship is greater than
$124,000, "(B)
the net worth of the individual as of such date is
$2,000,000 or more, or "(C)
such individual fails to certify under penalty of
perjury that he has met the requirements of this
title for the 5 preceding taxable years or fails to
submit such evidence of such compliance as the
Secretary may require. In
the case of the loss of United States citizenship in
any calendar year after 2004, such $124,000 amount
shall be increased by an amount equal to such dollar
amount multiplied by the cost-of-living adjustment
determined under section 1(f)(3) for such calendar
year by substituting '2003' for '1992' in
subparagraph (B) thereof. Any increase under the
preceding sentence shall be rounded to the nearest
multiple of $1,000.".
"(1)
IN GENERAL. --Subparagraphs (A) and (B) of
subsection (a)(2) shall not apply to an individual
described in paragraph (2) or (3). "(2)
DUAL CITIZENS. -- "(A)
IN GENERAL. --An individual is described in this
paragraph if -- "(i)
the individual became at birth a citizen of the
United States and a citizen of another country and
continues to be a citizen of such other country, and "(ii)
the individual has had no substantial contacts with
the United States. "(B)
SUBSTANTIAL CONTACTS. --An individual shall be
treated as having no substantial contacts with the
United States only if the individual -- "(i)
was never a resident of the United States (as
defined in section 7701(b)), "(ii)
has never held a United States passport, and "(iii)
was not present in the United States for more than
30 days during any calendar year which is 1 of the
10 calendar years preceding the individual's loss of
United States citizenship. "(3)
CERTAIN MINORS. --An individual is described in this
paragraph if -- "(A)
the individual became at birth a citizen of the
United States, "(B)
neither parent of such individual was a citizen of
the United States at the time of such birth, "(C)
the individual's loss of United States citizenship
occurs before such individual attains age 181/2 ,
and "(D)
the individual was not present in the United States
for more than 30 days during any calendar year which
is 1 of the 10 calendar years preceding the
individual's loss of United States
citizenship.".
"(1)
gives notice of an expatriating act or termination
of residency (with the requisite intent to
relinquish citizenship or terminate residency) to
the Secretary of State or the Secretary of Homeland
Security, and "(2)
provides a statement in accordance with section
6039G.".
"(1)
IN GENERAL. --This section shall not apply to any
individual to whom this section would otherwise
apply for any taxable year during the 10-year period
referred to in subsection (a) in which such
individual is physically present in the United
States at any time on more than 30 days in the
calendar year ending in such taxable year, and such
individual shall be treated for purposes of this
title as a citizen or resident of the United States,
as the case may be, for such taxable year. "(2)
EXCEPTION. -- "(A)
IN GENERAL. --In the case of an individual described
in any of the following subparagraphs of this
paragraph, a day of physical presence in the United
States shall be disregarded if the individual is
performing services in the United States on such day
for an employer. The preceding sentence shall not
apply if -- "(i)
such employer is related (within the meaning of
section 267 and 707) to such individual, or "(ii)
such employer fails to meet such requirements as the
Secretary may prescribe by regulations to prevent
the avoidance of the purposes of this paragraph. Not
more than 30 days during any calendar year may be
disregarded under this subparagraph. "(B)
INDIVIDUALS WITH TIES TO OTHER COUNTRIES. --An
individual is described in this subparagraph if -- "(i)
the individual becomes (not later than the close of
a reasonable period after loss of United States
citizenship or termination of residency) a citizen
or resident of the country in which -- "(I)
such individual was born, "(II)
if such individual is married, such individual's
spouse was born, or "( "(ii)
the individual becomes fully liable for income tax
in such country. "(C)
MINIMAL PRIOR PHYSICAL PRESENCE IN THE UNITED
STATES. --An individual is described in this
subparagraph if, for each year in the 10-year period
ending on the date of loss of United States
citizenship or termination of residency, the
individual was physically present in the United
States for 30 days or less. The rule of section
7701(b)(3)(D)(ii) shall apply for purposes of this
subparagraph.".
"(A)
CERTAIN INDIVIDUALS. --Paragraph (2) shall not apply
in the case of a donor to whom section 877(b)
applies for the taxable year which includes the date
of the transfer. "(B)
CREDIT FOR FOREIGN
"(A)
IN GENERAL. --In the case of a transfer of stock in
a foreign corporation described in subparagraph (B)
by a donor to whom section 877(b) applies for the
taxable year which includes the date of the transfer
-- "(i)
section 2511(a) shall be applied without regard to
whether such stock is situated within the United
States, and "(ii)
the value of such stock for purposes of this chapter
shall be its U.S.-asset value determined under
subparagraph (C). "(B)
FOREIGN CORPORATION DESCRIBED. --A foreign
corporation is described in this subparagraph with
respect to a donor if -- "(i)
the donor owned (within the meaning of section
958(a)) at the time of such transfer 10 percent or
more of the total combined voting power of all
classes of stock entitled to vote of the foreign
corporation, and "(ii)
such donor owned (within the meaning of section
958(a)), or is considered to have owned (by applying
the ownership rules of section 958(b)), at the time
of such transfer, more than 50 percent of -- "(I)
the total combined voting power of all classes of
stock entitled to vote of such corporation, or "(II)
the total value of the stock of such corporation. "(C)
U.S.-ASSET VALUE. --For purposes of subparagraph
(A), the U.S.-asset value of stock shall be the
amount which bears the same ratio to the fair market
value of such stock at the time of transfer as -- "(i)
the fair market value (at such time) of the assets
owned by such foreign corporation and situated in
the United States, bears to "(ii)
the total fair market value (at such time) of all
assets owned by such foreign corporation.".
"(1)
the taxpayer's "(2)
the mailing address of such individual's principal
foreign residence, "(3)
the foreign country in which such individual is
residing, "(4)
the foreign country of which such individual is a
citizen, "(5)
information detailing the income, assets, and
liabilities of such individual, "(6)
the number of days during any portion of which that
the individual was physically present in the United
States during the taxable year, and "(7)
such other information as the Secretary may
prescribe.".
"(1)
an individual is required to file a statement under
subsection (a) for any taxable year, and "(2)
fails to file such a statement with the Secretary on
or before the date such statement is required to be
filed or fails to include all the information
required to be shown on the statement or includes
incorrect information,
"(1)
a description of the acquisition, "(2)
the name and address of each shareholder of the
acquired corporation who is required to recognize
gain (if any) as a result of the acquisition, "(3)
the amount of money and the fair market value of
other property transferred to each such shareholder
as part of such acquisition, and "(4)
such other information as the Secretary may
prescribe.
"(1)
REPORTING. --Any person who holds stock as a nominee
for another person shall furnish in the manner
prescribed by the Secretary to such other person the
information provided by the corporation under
subsection (d). "(2)
REPORTING TO NOMINEES. --In the case of stock held
by any person as a nominee, references in this
section (other than in subsection (c)) to a
shareholder shall be treated as a reference to the
nominee.
"(1)
the name, address, and phone number of the
information contact of the person required to make
such return, "(2)
the information required to be shown on such return
with respect to such shareholder, and "(3)
such other information as the Secretary may
prescribe.
"(ii)
section 6043A(a) (relating to returns relating to
taxable mergers and acquisitions),".
"(F) |
