Modification of deduction for foreign-derived intangible income and global intangible low-taxed income

(a) In general Section 250(a) is amended to read as follows: (a) Allowance of deduction In the case of a domestic corporation for any taxable year, there shall be allowed as a deduction an amount equal to the sum of— (1) 37.5 percent of the foreign-derived intangible income of such domestic corporation for such taxable year, plus (2) 50 percent of— (A) the global intangible low-taxed income amount (if any) which is included in the gross income of such domestic corporation under section 951A for such taxable year, and (B) the amount treated as a dividend received by such corporation under section 78 which is attributable to the amount described in subparagraph (A).. (b) Deduction not To apply against dividends received deduction limitation Section 246(b)(1) is amended by striking subsection (a) and (b) of section 245, and section 250 the first place it appears and inserting and subsection (a) and (b) of section 245. (c) Deduction taken into account in determining net operating loss deduction Section 172(d) is amended by striking paragraph (9). (d) Expense apportionment limited to directly related expenses Section 250(b)(3)(A)(ii) is amended to read as follows: (ii) expenses and deductions (including taxes) directly related to such gross income.. (e) Deduction for foreign-Derived deduction eligible income (1) In general Section 250(a)(1), as amended by subsection (a), is amended by striking foreign-derived intangible income and inserting foreign-derived deduction eligible income. (2) Conforming amendments (A) Section 250(b), as amended by subsection (c), is amended— (i) by striking paragraphs (1) and (2), (ii) by redesignating paragraphs (4) and (5) as paragraphs (1) and (2), respectively, and by moving such paragraphs before paragraph (3), (iii) in paragraph (2)(B)(ii), as so redesignated, by striking paragraph (4)(B) and inserting paragraph (1)(B), and (iv) by striking intangible in the heading thereof and inserting deduction eligible. (B) (i) The heading for section 250 is amended by striking intangible in the heading thereof and inserting deduction eligible. (ii) The item relating to section 250 in the table of sections for part VIII of subchapter B of chapter 1 is amended by striking intangible and inserting deduction eligible. (f) Look-Thru for interest payments Section 250(b)(2), as redesignated under subsection (e), is amended by adding at the end the following: For purposes of this subsection, foreign-derived deduction eligible income shall include interest paid by a controlled foreign corporation to corporation that is a United States shareholder with respect to such foreign corporation if such controlled foreign corporation is related (within the meaning of section 954(d)) to such United States shareholder and such interest is an amount which is described in section 951A(c)(2)(A)(ii) with respect to such controlled foreign corporation. To the extent provided by the Secretary in regulations, the preceding sentence shall not apply to interest paid by a controlled foreign corporation to a related United States shareholder if such interest is directly related to interest expense of such shareholder (or another related person).. (g) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2025.