What does Preamble of HR 364 do?

This bill proposes to amend the Internal Revenue Code of 1986. The proposed amendment aims to modify residence and source rules. The stated purpose of the bill is to provide for economic recovery in the possessions of the United States.

What does SHORT TITLE. of HR 364 do?

This bill is formally titled the Territorial Tax Equity and Economic Growth Act of 2025.

What does MODIFICATION TO RESIDENCE AND SOURCE RULES INVOLVING of HR 364 do?

This section modifies Internal Revenue Code Section 937 regarding residence and source rules for possessions. It amends the definition of a bona fide resident, increasing the substantial presence threshold to 122 days for Guam, American Samoa, the Northern Mariana Islands, Puerto Rico, or the Virgin Islands. The section modifies source rules, specifying that income must be attributable to an office or fixed place of business within the United States to be considered. It clarifies the application of section 864(c)(2) for determining if income is effectively connected with a trade or business within a possession. Income from activities within the United States that are preparatory or auxiliary in nature will not be treated as income from sources within the United States or effectively connected with a trade or business within the United States. Section 865(j)(3) of the Internal Revenue Code is amended to include a reference to section 932. The amendments apply to taxable years beginning after December 31, 2024.

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Territorial Tax Equity and Economic Growth Act of 2025 — HR. 364

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

Author: Stacey Plaskett (D-VI)

TL;DR (AI)

This bill amends the Internal Revenue Code to modify residence and source rules for U.S. possessions, including Guam, American Samoa, the Northern Mariana Islands, Puerto Rico, and the Virgin Islands.
It increases the substantial presence threshold for determining bona fide residency to 122 days and clarifies rules regarding income sourced within these territories.
The changes apply to taxable years beginning after December 31, 2024.

119th Congressin committeeOfficial page

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Other Sections

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

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