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In H. Rept. 1447, the Committee on Ways and Means reported:
“Certain exceptions * * * [to the House's definition of U.S.
property] are made but these apply only where the property
located within the United States is ordinary and necessary to the
active conduct of the foreign corporation's business or
substantially the same trade or business”. H. Rept. 1447, supra,
1962-3 C.B. at 469 (emphasis added). H.R. 10650 as passed by the
House (the House bill) dealt more strictly with a controlled
foreign corporation’s investment of its earnings than did the
provision substituted by the Senate (which substitute was
accepted by the House). To escape tax, the House bill would have
required earnings invested outside of the United States (and the
few exceptions for domestic investments) to be invested in money
or property “ordinary and necessary for the active conduct of a
qualified trade or business” (the active conduct restriction).
H.R. 10650, 87th Cong., 2d Sess., sec. 13(a) (1962). The Senate
eliminated that restriction. It retained virtually unchanged,
however, the language of the House bill describing the few
permitted domestic investments. Since the House undoubtedly
understood that language to describe investments satisfying the
active conduct restriction, it can be inferred by the Senate's
nearly verbatim adoption of the same language that it also
understood that language to describe investments satisfying the
active conduct restriction, notwithstanding its elimination of
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