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D. Tax Reform Acts of 1962 and 1976
Subpart F was added to the Internal Revenue Code of 1954 by
section 12 of the Revenue Act of 1962, Pub. L. 87-834, 76 Stat.
960. H.R. 10650, 87th Cong., 2d Sess. (1962) (H.R. 10650), is
the bill that, when enacted, became the Revenue Act of 1962. The
committee reports accompanying H.R. 10650, both in the House of
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
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