H.R. 2031 - Would Provide Intangible Property Transfer Incentives

117TH CONGRESS
1ST SESSION

H.R. 2031

To amend the Internal Revenue Code of 1986 to encourage the transfer of intangible
property from controlled foreign corporations to United States shareholders.

IN THE HOUSE OF REPRESENTATIVES

MARCH 18, 2021

Mr. LAHOOD (for himself and Mr. FERGUSON) 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 encourage the transfer of intangible property from controlled foreign corporations to United States shareholders.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SPECIAL RULES FOR TRANSFERS OF INTANGIBLE PROPERTY FROM CONTROLLED FOREIGN CORPORATIONS TO UNITED STATES SHAREHOLDERS.

(a) IN GENERAL. — Subpart F of part III of subchapter N of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

"SEC. 966. TRANSFERS OF INTANGIBLE PROPERTY TO UNITED STATES SHAREHOLDERS.

"(a) IN GENERAL. — If a controlled foreign corporation holds intangible property on the date of the enactment of this section and thereafter distributes such property to a domestic corporation which is a United States shareholder with respect to such controlled foreign corporation —

"(1) for purposes of part I of subchapter C and any other provision of this title specified by the Secretary, the fair market value of such property on the date of such distribution shall be treated as not exceeding the adjusted basis of such property immediately before such distribution, and

"(2) if any portion of such distribution is not a dividend —

"(A) no gain shall be recognized by such United States shareholder with respect to such distribution, and

"(B) the adjusted basis of such property in the hands of such United States shareholder immediately after such distribution shall be the adjusted basis of such property in the hands of such controlled foreign corporation immediately before such distribution reduced by the amount (if any) of gain not recognized by reason of subparagraph (A) (determined after the application of paragraph (1)).

"(b) INTANGIBLE PROPERTY. — For purposes of this section, the term 'intangible property' means any —

"(1) patent, copyright, license, invention, formula, process, design, pattern, know-how, or format,

"(2) method, program, system, procedure, campaign, survey, study, forecast, estimate, or technical data,

"(3) computer software (as defined in section 197(e)(3)(B)), or

"(4) any similar item, which has substantial value independent of the services of any individual.".

(b) CONFORMING AMENDMENTS. —

(1) Section 197(f)(2)(B)(i) of such Code is amended by inserting "966(a)," after "731,".

(2) The table of sections for subpart F of part III of subchapter N of chapter 1 of such Code is amended by adding at the end the following new item:

"Sec. 966. Transfers of intangible property to United States shareholders.".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to distributions made in taxable years of foreign corporations beginning after December 31, 2021, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.