Modifies rules for treating foreign corporations as domestic corporations under the Internal Revenue Code of 1986.
Treats a foreign corporation as a domestic corporation if:
It would be a surrogate foreign corporation with an ownership threshold of 80% instead of 60%.
It is an inverted domestic corporation, defined by specific acquisition criteria and ownership or management conditions post-acquisition.
Specifies that a foreign corporation will not be considered an inverted domestic corporation if, after acquisition, the group has substantial business activities in the corporation’s country of organization, adhering to regulations effective as of January 18, 2017.
Directs the Secretary to issue regulations for determining when the management and control of an expanded affiliated group occur primarily within the United States, focusing on the location and responsibilities of executive officers and senior management.
Defines significant domestic business activities for an expanded affiliated group as having at least 25% of employees, employee compensation, assets, or income based in the United States, with potential for the Secretary to adjust these thresholds.
Makes conforming amendments to align with the new definitions and rules, including adjustments to existing clauses and subsections related to the treatment of foreign corporations and inverted domestic corporations.
Applies the amendments to taxable years ending after May 8, 2014.