Bill > HR1086

This bill, titled the Offshoring Prevention Act, aims to amend the Internal Revenue Code of 1986 to tax income earned by controlled foreign corporations (CFCs) that is related to "imported property." A CFC is a foreign corporation where U.S. shareholders own more than 50% of the voting power or value. The bill defines "imported property income" as income derived from manufacturing, producing, growing, extracting, selling, exchanging, leasing, renting, or licensing property that is imported into the United States by the CFC or a related person, or property that is reasonably expected to be imported into the U.S. when sold to an unrelated party. Importantly, this definition excludes foreign oil and gas extraction income and foreign oil-related income, and it includes exceptions for property subsequently exported or for certain agricultural commodities not grown in the U.S. commercially. The bill also makes changes to the foreign tax credit rules, creating a separate category for imported property income to potentially limit the ability to claim credits for taxes paid on this type of income. These changes are intended to discourage companies from shifting profits to foreign subsidiaries by treating income from property imported back into the U.S. as taxable income for U.S. shareholders.