What does Preamble of Territorial Economic Recovery Act do?

This bill proposes to amend the Internal Revenue Code of 1986. The amendment aims to exclude certain amounts from the tested income of controlled foreign corporations. The bill is referred to the Committee on Ways and Means.

What does SHORT TITLE. of Territorial Economic Recovery Act do?

This bill is formally titled the Territorial Economic Recovery Act.

What does INCOME OF CERTAIN QUALIFIED POSSESSION CORPORATIONS EXCLUDED of Territorial Economic Recovery Act do?

This section amends Section 951A of the Internal Revenue Code of 1986. It modifies the definition of 'possession of the United States' to include Puerto Rico, the Virgin Islands, and specified possessions described in section 931(c). It introduces the term 'qualified possession corporation,' defined as a controlled foreign corporation meeting specific income thresholds. To qualify, a corporation must derive 80% or more of its gross income from sources within a possession of the United States and 75% or more of its gross income effectively connected with the active conduct of a trade or business within a possession. The amendments apply to taxable years of foreign corporations beginning after December 31, 2023, and to taxable years of United States shareholders.

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Territorial Economic Recovery Act

Last updated: 1/13/2025 · Introduced: 1/13/2025

Author: Stacey Plaskett (D-VI)

TL;DR (AI)

The bill expands the definition of 'possession of the United States' to include Puerto Rico and the Virgin Islands for tax purposes.
It creates a new category of 'qualified possession corporation' for foreign corporations that primarily generate income from business activities within these territories.
The bill excludes certain income from controlled foreign corporations meeting the 'qualified possession corporation' criteria from being tested for U.S. tax purposes.

119th Congressin committeeOfficial page

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Other Sections

Includes provisions on preamble, short title., and 1 more.

3 sections

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