- 26 -
being paid).”9 S. Rept. 1881, supra, 1962-3 C.B. at 794; accord
H. Rept. 1447, supra, 1962-3 C.B. at 469.
Because U.S. property was defined to include, in general,
all tangible and intangible property located in the United
States, the scope of the repatriation provision proved too broad
for Congress, which, in 1976, limited it. See Tax Reform Act of
1976, Pub. L. 94-455, sec. 1021(a), 90 Stat. 1525 (adding section
956(b)(2)(F) and (G)). H.R. 10612, 94th Cong., 2d Sess. (1975),
is the bill that, when enacted, became the Tax Reform Act of
1976. The committee reports accompanying H.R. 10612, both in the
House and the Senate, state the committees’ views that the scope
of the repatriation provision is too broad. H. Rept. 94-658
(1975), 1976-3 C.B. (Vol. 2) 701, 908; S. Rept. 94-938 (1976),
1976-3 C.B. (Vol. 3) 57, 226. Both reports state that the
repatriation provision may have encouraged foreign corporations
to invest their profits abroad, with a detrimental effect upon
the U.S. balance of trade: “For example, a controlled foreign
corporation looking for a temporary investment for its working
capital is, by this provision, induced to purchase foreign rather
9 As originally enacted, sec. 956(b)(2) contained only the
exceptions set out as secs. 956(b)(2)(A) through (E) plus an
exception for assets of the controlled foreign corporation equal
to certain accumulated earnings and profits already subject to
income taxation in the United States (i.e., the “last category”
referred to in the quoted language from the report of the
Committee on Finance). The exception set out as sec.
956(b)(2)(F) was added by the Tax Reform Act of 1976, Pub. L. 94-
455, sec. 1021(a), 90 Stat. 1520.
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