International Tax Simplification for American Competitiveness Act

TABLE OF CONTENTS:

Title I: Treatment of Passive Foreign Investment Companies

Title II: Treatment of Controlled Foreign Corporations

Title III: Other Provisions

International Tax Simplification for American Competitiveness Act - Title I: Treatment of Passive Foreign Investment Companies - Amends the Internal Revenue Code to exempt U.S. shareholders of a controlled foreign corporation (CFC) from passive foreign investment company (PFIC) inclusion.

(Sec. 102) Allows a U.S shareholder of a PFIC to elect to include the difference between such stock's fair market value and adjusted basis as income, or the difference between adjusted basis and fair market value or unreversed inclusions as a deduction.

(Sec. 103) Modifies the definition of "passive income."

Title II: Treatment of Controlled Foreign Corporations - Amends the Code to treat the gain on certain CFC stock sales as dividends.

(Sec. 203) Revises specified indirect (deemed taxes paid) foreign tax credit provisions.

(Sec. 204) Excludes certain active finance-related income from inclusion as foreign personal holding company income.

(Sec. 205) Applies, for foreign tax credit purposes, income category "look-through" rules to dividends earned by certain noncontrolled U.S.-foreign corporations providing specified information. Applies a single foreign tax credit limitation where such information is not provided.

(Sec. 206) Directs the Secretary of the Treasury to conduct a study on the feasibility of treating all European Union countries as one country for purposes of certain same-country exceptions with respect to controlled foreign corporations.

(Sec. 207) Increases the amount of income used to determine the taxability of foreign base company income or insurance income with respect to CFCs.

(Sec. 208) Permits use of U.S. generally accepted accounting principles with respect to CFCs.

(Sec. 209) Excludes income from the transportation of oil or gas within a foreign country from the definition of "foreign base company oil related income."

(Sec. 210) Provides a deduction for dividends received from certain foreign corporations. Applies constructive ownership provisions to certain foreign ownership requirements with respect to post-1986 undistributed U.S. earnings.

Title III: Other Provisions - Amends the Code with respect to certain foreign tax credit determinations to provide that accrued taxes shall be translated into dollars by using the average exchange rate for the year to which such taxes relate.

(Sec. 302) Allows a taxpayer to elect a specified alternative minimum foreign tax credit limitation.

(Sec. 303) Provides for recognition of taxable gain with respect to certain property transfers by a U.S. person to a foreign corporation.

(Sec. 306) Applies uniform capitalization rules to foreign taxpayers with respect to income connected with the conduct of a U.S. trade or business.

(Sec. 307) Extends the excess foreign tax carryover or carryback period.

(Sec. 308) Provides for recharacterization of overall domestic loss by treating certain U.S. source income as non-U.S. source income.

(Sec. 309) Includes computer software within the category of foreign sales corporation property. Eliminates the special 50 percent rule relating to foreign sales corporation transactions of military property.

(Sec. 310) Provides special rules with respect to financial services income and interest.

(Sec. 311) Excludes from consideration as U.S. property certain assets acquired by securities or commodities dealers.

(Sec. 312) Exempts from taxation certain regulated investment company dividends received by nonresident aliens.

Treats certain regulated investment company stock owned by nonresident noncitizens as non-U.S.property for estate tax purposes.

(Sec. 313) Excludes nonenforceable preliminary agreements from the definition of "intangible property."

(Sec. 314) Directs the Secretary of the Treasury to conduct a study of the interest allocation rules.