This bill closes a tax loophole that allows some U.S. corporations with foreign subsidiaries to avoid paying taxes on certain profits. Specifically, it targets "round-tripped" income—profits from U.S.-based business activities that companies shift abroad to lower-tax countries and then bring back to the United States. The legislation modifies how the IRS calculates global intangible low-taxed income, reducing the tax deduction available to large multinational corporations on earnings that are traced back to U.S. operations or customers. Smaller businesses with average annual gross receipts below $100 million are exempt from these new restrictions. The changes apply to tax years beginning after the bill's enactment, affecting primarily large multinational corporations that use foreign subsidiaries to reduce their U.S. tax liability.
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