Elimination of inclusion of foreign base company sales income and foreign base company services income

(a) Repeal Subsection (a) of section 954 is amended— (1) by striking the sum of and all that follows through the foreign personal holding company income in paragraph (1) and inserting the foreign personal holding company income, (2) by striking the comma after subsection (c) and reduced as provided in subsection (b)(5)) and inserting a period, and (3) by striking paragraphs (2) and (3). (b) Conforming amendments (1) (A) Section 954(d) is amended to read as follows: (d) Related person defined For purposes of this section, a person is a related person with respect to a controlled foreign corporation, if— (1) such person is an individual, corporation, partnership, trust, or estate which controls, or is controlled by, the controlled foreign corporation, or (2) such person is a corporation, partnership, trust, or estate which is controlled by the same person or persons which control the controlled foreign corporation. For purposes of the preceding sentence, control means, with respect to a corporation, the ownership, directly or indirectly, of stock possessing more than 50 percent of the total voting power of all classes of stock entitled to vote or of the total value of stock of such corporation. In the case of a partnership, trust, or estate, control means the ownership, directly or indirectly, of more than 50 percent (by value) of the beneficial interests in such partnership, trust, or estate. For purposes of this subsection, rules similar to the rules of section 958 shall apply.. (B) The following sections are amended by striking 954(d)(3) each place it appears and inserting 954(d): (i) Section 162(r)(6)(B)(ii). (ii) Section 250(b)(2)(D) (as redesignated by section 3). (iii) Section 267A(b)(2). (iv) Section 904(d)(2)(I). (v) Section 951A(c)(2)(A)(i)(IV). (vi) Section 953. (vii) Section 956(c)(2)(L)(ii)(II). (viii) Section 958(b). (ix) Section 971(f). (x) Section 988(a)(3)(C). (xi) Section 1297(b)(2). (xii) Subsections (d)(3)(A) and (e)(2)(B)(i) of section 1298. (xiii) Section 1471(e)(2). (xiv) Section 3121(z)(2). (C) Section 954(h)(5)(E) is amended by striking subsection (d)(3) and inserting subsection (d). (D) Subparagraphs (A) and (B) of section 954(i)(2) are each amended by striking subsection (d)(3) and inserting subsection (d). (2) Section 954 is amended by striking subsections (e) and (g). (c) Effective date The amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2025, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end.