H.R.2186 - To amend the Internal Revenue Code of 1986 to restore the limitation on downward attribution of stock ownership in applying constructive ownership rules. (119th Congress)
Summary
H.R.2186 aims to amend the Internal Revenue Code of 1986, specifically targeting the rules of constructive stock ownership. The bill seeks to restore limitations on downward attribution, preventing U.S. persons from being considered owners of stock held by non-U.S. persons. It also introduces provisions related to 'foreign controlled United States shareholders' and 'foreign controlled foreign corporations'.
Expected Effects
If enacted, H.R.2186 would alter how stock ownership is determined for tax purposes, particularly affecting multinational corporations and their U.S. shareholders. The changes could impact the calculation of taxable income and the application of certain tax rules related to foreign corporations. The bill also grants the Secretary of the Treasury the authority to issue regulations to prevent avoidance of the new provisions.
Potential Benefits
- Simplification of tax compliance for certain multinational corporations by clarifying stock ownership rules.
- Potential reduction in tax liabilities for some U.S. shareholders of foreign corporations.
- Clearer guidelines for determining 'foreign controlled United States shareholders' and 'foreign controlled foreign corporations'.
- May encourage U.S. companies to repatriate foreign earnings due to more favorable tax treatment.
- Provides regulatory flexibility to the Secretary of the Treasury to address unforeseen issues and prevent tax avoidance.
Most Benefited Areas:
Potential Disadvantages
- Increased complexity for tax professionals and businesses in understanding and applying the new rules.
- Potential for unintended loopholes that could be exploited for tax avoidance.
- May disproportionately benefit larger corporations with complex international structures.
- Could lead to revenue loss for the U.S. government if not carefully implemented.
- The changes could create uncertainty for businesses during the transition period.
Constitutional Alignment
The bill falls under the purview of Congress's power to lay and collect taxes, as outlined in Article I, Section 8, Clause 1 of the Constitution. The specific provisions relate to the Internal Revenue Code, which is a creation of federal law. The bill does not appear to infringe on any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).