A bill to amend the Internal Revenue Code of 1954 to clarify the exception from foreign base company income for foreign corporations not availed of to reduce taxes.

Amends the Internal Revenue Code to exclude from foreign base company income certain foreign personal holding company income whether or not the transaction giving rise to such income was voluntary or was mandated by law or other action of a foreign government.

Specifies that such income shall be excluded only if: (1) the recipient and payor of the income are foreign corporations that are members of the same affiliated group; (2) a U.S. shareholder owns more than 50 percent of the stock of both corporations; (3) the corporations were in existence for at least the five-year period ending immediately prior to the date of acquisition of its stock by the U.S. shareholder; and (4) either the payor or such foreign corporation was engaged in the active conduct of a trade or business during such five-year period.