article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Corporate Tax Fairness and Shareholder Rights Act of 2003''. SEC. 2. PREVENTION OF CORPORATE EXPATRIATION TO AVOID UNITED STATES INCOME TAX. (a) In General.--Paragraph (4) of section 7701(a) of the Internal Revenue Code of 1986 (defining domestic) is amended to read as follows: ``(4) Domestic.-- ``(A) In general.--Except as provided in subparagraph (B), the term `domestic' when applied to a corporation or partnership means created or organized in the United States or under the law of the United States or of any State unless, in the case of a partnership, the Secretary provides otherwise by regulations. ``(B) Certain corporations treated as domestic.-- ``(i) In general.--The acquiring corporation in a corporate expatriation transaction shall be treated as a domestic corporation. ``(ii) Corporate expatriation transaction.--For purposes of this subparagraph, the term `corporate expatriation transaction' means any transaction if-- ``(I) a nominally foreign corporation (referred to in this subparagraph as the `acquiring corporation') acquires, as a result of such transaction, directly or indirectly substantially all of the properties held directly or indirectly by a domestic corporation, and ``(II) immediately after the transaction, more than 80 percent of the stock (by vote or value) of the acquiring corporation is held by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation. ``(iii) Lower stock ownership requirement in certain cases.--Subclause (II) of clause (ii) shall be applied by substituting `50 percent' for `80 percent' with respect to any nominally foreign corporation if-- ``(I) such corporation does not have substantial business activities (when compared to the total business activities of the expanded affiliated group) in the foreign country in which or under the law of which the corporation is created or organized, and ``(II) the stock of the corporation is publicly traded and the principal market for the public trading of such stock is in the United States. ``(iv) Partnership transactions.--The term `corporate expatriation transaction' includes any transaction if-- ``(I) a nominally foreign corporation (referred to in this subparagraph as the `acquiring corporation') acquires, as a result of such transaction, directly or indirectly properties constituting a trade or business of a domestic partnership, ``(II) immediately after the transaction, more than 80 percent of the stock (by vote or value) of the acquiring corporation is held by former partners of the domestic partnership or related foreign partnerships (determined without regard to stock of the acquiring corporation which is sold in a public offering related to the transaction), and ``(III) the acquiring corporation meets the requirements of subclauses (I) and (II) of clause (iii). ``(v) Special rules.--For purposes of this subparagraph-- ``(I) a series of related transactions shall be treated as 1 transaction, and ``(II) stock held by members of the expanded affiliated group which includes the acquiring corporation shall not be taken into account in determining ownership. ``(vi) Other definitions.--For purposes of this subparagraph-- ``(I) Nominally foreign corporation.--The term `nominally foreign corporation' means any corporation which would (but for this subparagraph) be treated as a foreign corporation. ``(II) Expanded affiliated group.-- The term `expanded affiliated group' means an affiliated group (as defined in section 1504(a) without regard to section 1504(b)). ``(III) Related foreign partnership.--A foreign partnership is related to a domestic partnership if they are under common control (within the meaning of section 482), or they shared the same trademark or tradename.''. (b) Effective Dates.-- (1) In general.--The amendment made by this section shall apply to corporate expatriation transactions completed after September 11, 2001. (2) Special rule.--The amendment made by this section shall also apply to corporate expatriation transactions completed after December 31, 1996, and before September 11, 2001, but only with respect to taxable years of the acquiring corporation beginning after December 31, 2003. SEC. 3. DISCLOSURE OF CORPORATE EXPATRIATION TRANSACTIONS. (a) In General.--Section 14 of the Securities Exchange Act of 1934 (15 U.S.C. 78n) is amended by adding at the end the following new subsection: ``(i) Proxy Solicitations in Connection With Corporate Expatriation Transactions.-- ``(1) Disclosure to shareholders of effects of corporate expatriation transaction.--The Commission shall, by rule, require that each domestic issuer shall prominently disclose, as a separate and distinct document accompanying each proxy statement relating to a corporate expatriation transaction-- ``(A) the number of employees of the domestic issuer that would be located in the new foreign jurisdiction of incorporation or organization of that issuer upon completion of the corporate expatriation transaction; ``(B) the percentage of the total assets of the domestic issuer that would be located within the new foreign jurisdiction of incorporation or organization of that issuer upon completion of the corporate expatriation transaction; ``(C) how the rights of holders of the securities of the domestic issuer would be impacted by a completed corporate expatriation transaction; ``(D) that as a result of a completed corporate expatriation transaction, any taxable holder of the securities of the domestic issuer shall be subject to the taxation of any capital gains realized with respect to such securities; and ``(E) the estimated tax benefit that would be realized by the domestic issuer upon completion of the corporate expatriation transaction. ``(2) Disclosure to commission of results of vote.--Upon the approval of any corporate expatriation transaction by the holders of the securities of a domestic issuer, that issuer shall provide to the Commission, in a form and manner to be determined by the Commission, information as to how each holder of record of a voting security of that domestic issuer (or a proxy there for) voted with respect to the corporate expatriation transaction. ``(3) Definitions.--In this subsection, the following definitions shall apply: ``(A) Corporate expatriation transaction.--The term `corporate expatriation transaction' means any transaction, or series of related transactions, in which an entity organized under the laws of a foreign country acquires, directly or indirectly, substantially all of the voting securities in, or substantially all of the assets of, a domestic issuer, and-- ``(i) immediately after completion of the transaction, more than 80 percent of the securities (by vote or value) of the acquiring foreign entity will be held by persons that were security holders of the domestic issuer immediately prior to the transaction; or ``(ii) immediately after completion of the transaction, more than 50 percent of the securities (by vote or value) of the acquiring foreign entity will be held by persons that were security holders of the domestic issuer immediately prior to the transaction, and-- ``(I) such foreign entity will not have substantial business activities in the foreign country in which it is organized; and ``(II) the securities of the foreign entity will be publicly traded, and the principal market for the public trading of such securities will be in the United States. ``(B) Domestic issuer.--The term `domestic issuer' means an issuer created or organized in the United States or under the law of the United States or of any State.''. (b) Effective Date.--Section 14(i) of the Securities Exchange Act of 1934 (as added by this section) shall apply with respect to corporate expatriation transactions (as defined in that section 14(i)) proposed on and after the date of enactment of this Act. SEC. 4. MODIFICATIONS TO EXPENSING UNDER SECTION 179. (a) Increase of Amount Which May Be Expensed.-- (1) In general.--Paragraph (1) of section 179(b) of the Internal Revenue Code of 1986 (relating to dollar limitation) is amended to read as follows: ``(1) Dollar limitation.--The aggregate cost which may be taken into account under subsection (a) for any taxable year shall not exceed $75,000 ($25,000 in the case of taxable years beginning after December 31, 2007).''. (2) Increase in phaseout threshold.--Paragraph (2) of section 179(b) of such Code is amended by striking ``$200,000'' and inserting ``$325,000 ($200,000 in the case of taxable years beginning after December 31, 2007)''. (b) Effective Date.--The amendments made by this section shall apply to property placed in service in taxable years beginning after December 31, 2002.
summary: Corporate Tax Fairness and Shareholder Rights Act of 2003 - Amends the Internal Revenue Code (IRC) by determining that acquiring corporations in"corporate expatriation transactions" shall be considered domestic corporations. Defines a "corporate expatriation transaction" as, with certain exceptions, one in which a "nominally foreign corporation" acquires substantially all of the properties held by a domestic corporation and in which, immediately after the transaction, more than 80 percent of the stock of the acquiring corporation is held by former shareholders of the domestic corporation. Lowers the 80 percent threshold to 50 percent when the acquiring "nominally foreign corporation" lacks substantial business activities in the foreign country in which it was created and organized compared to the total activities of the "expanded affiliated group" and the stock is publicly traded, with the principal market of trading being the United States. Defines the terms "nominally foreign corporation" and "expanded affiliated group."Applies similar rules to partnership transactions.Establishes that a series of related transactions relevant to the Act shall be handled as a single transaction.Amends the Securities Act of 1934 to require: (1) disclosure to shareholders, and effects of, corporate expatriation transaction; and (2) disclosure to the SEC of the approval of any corporate expatriate transaction.Amends the IRC to temporarily (through 2007) increase the expensing limit and phaseout threshold.