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Representatives (the House) and in the Senate, discuss the
impetus for subpart F: to wit, to end the “tax deferral”
resulting from the failure of our income tax system to tax the
foreign source income of American controlled foreign corporations
until such income is distributed to the corporation’s American
shareholders as dividends. H. Rept. 1447, 87th Cong., 2d Sess.
(1962), 1962-3 C.B. 405, 461; S. Rept. 1881, 87th Cong., 2d Sess.
(1962), 1962-3 C.B. 707, 784. The committees did not attempt to
eliminate such tax deferral completely, but they did address
certain “tax haven” devices. See S. Rept. 1881, supra, 1962-3
C.B. at 784. With respect to that portion of subpart F dealing
with investments in U.S. property (the repatriation provision),
the Committee on Finance said: “Generally, earnings brought back
to the United States are taxed to the shareholders on the grounds
that this is substantially the equivalent of a dividend being
paid to them.” S. Rept. 1881, supra, 1962-3 C.B. at 794. Accord
H. Rept. 1447, supra, 1962-3 C.B. at 469. With respect to the
exceptions to U.S. property for section 956 deposits (which both
tax writing committees referred to as “bank accounts”) and the
other items contained in section 956(b)(2), the Committee on
Finance explained: “The exceptions * * * however, are believed
to be normal commercial transactions without intention to permit
the funds to remain in the United States indefinitely (except in
the case of the last category where full U.S. corporate tax is
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