H.R. 363

119th CONGRESS 1st Session

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 · Sponsor: Ms. Plaskett · Committee: Committee on Ways and Means

Table of contents

• H.R. 363
  • SEC. 1. Short title
  • SEC. 2. Income of certain qualified possession corporations excluded from tested income

SEC. 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
  • of the Internal Revenue Code of 1986 is amended— Section 951A
    • in subsection (c)(2)(A)(i), by striking at the end of subclause (IV), by striking at the end of subclause (V) and inserting over, and by adding at the end the following new subclause:
      • 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
      • (g) Possession of the united states
        • For purposes of this section, the term means Puerto Rico, the Virgin Islands, and any specified possession described in section 931(c). possession of the United States
      • (h) Qualified possession corporation
        • For purposes of this section, the term 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— qualified possession corporation
          • 80 percent or more of the gross income of such corporation was derived from sources within a possession of the United States, and
          • 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.
    • by adding at the end the following new subsections:
• (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.