119-hr363

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 363 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 363

 To amend the Internal Revenue Code of 1986 to exclude certain amounts 
 from the tested income of controlled foreign corporations, and for 
 other purposes.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 January 13, 2025

 Ms. Plaskett 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 exclude certain amounts 
 from the tested income of controlled foreign corporations, and for 
 other purposes.

 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 ``Territorial Economic Recovery Act''.

SEC. 2. INCOME OF CERTAIN QUALIFIED POSSESSION CORPORATIONS EXCLUDED 
 FROM TESTED INCOME.

    (a) In General.--

Section 951A of the Internal Revenue Code of 1986 
is amended--

    (1) in subsection
            (c) (2)
        (A)
            (i) , by striking ``and'' at the 
 end of subclause
            (IV) , by striking ``over'' at the end of 
 subclause
            (V) and inserting ``and'', and by adding at the end 
 the following new subclause:
 ``
            (VI) any income of a qualified 
 possession corporation that is 
 effectively connected with the active 
 conduct of a trade or business within a 
 possession of the United States, 
 over''; and

    (2) by adding at the end the following new subsections:
 ``

    (g) Possession of the United States.--For purposes of this 
section, the term `possession of the United States' means Puerto Rico, 
the Virgin Islands, and any specified possession described in 

section 931
            (c) .
 ``

    (h) Qualified Possession Corporation.--For purposes of this 
section, the term `qualified possession corporation' means any 
controlled foreign corporation for any taxable year, if, for the 3-year 
period (or the period during which the controlled foreign corporation 
has been in existence, if shorter) ending in the taxable year preceding 
the taxable year in which the determination is made--
 ``

    (1) 80 percent or more of the gross income of such 
 corporation was derived from sources within a possession of the 
 United States, and
 ``

    (2) 75 percent or more of the gross income of such 
 corporation was effectively connected with the active conduct 
 of a trade or business within a possession of the United 
 States.''.

    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years of foreign corporations beginning after December 
31, 2023, and to taxable years of United States shareholders in which 
or with which such taxable years of foreign corporations end.
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