Deterring Adversarial Access to Americans’ Data Act

Section 7701(a)(51) of the Internal Revenue Code of 1986 is amended—

(1) in subparagraph (D)(i), by striking or at the end of subclause (I), by striking the period at the end of subclause (II) and inserting, or and by adding at the end the following new subclause:, and

(III) which uses foreign adversary-controlled technology during the taxable year.

(2) in subparagraph (I), by adding at the end the following new clause:

The term foreign adversary-controlled technology means any information and communications technology or service that is—

(I) designed, developed, manufactured, or provided by a specified foreign entity or foreign-influenced entity described in subclause (I) or (II) of subparagraph (D), or

(II) dependent on, or interoperable with, any other hardware, firmware, operating system, middleware, driver, embedded software, cloud service, or network component described in subclause (I) for core functionality.

The term information and communications technology or service means any hardware, software, or other product or service primarily intended to fulfill or enable the function of information or data processing, storage, retrieval, or communication by electronic means, including transmission, storage, and display.

Section 168(k)(2) of such Code is amended—

(1) in subparagraph (A)—

(A) in clause (i)—

(i) by striking or at the end of subclause (III),

(ii) by striking and or in subclause (V) and inserting or, and

(iii) by striking and at the end of subclause (VI),

(B) in clause (ii), by striking the period at the end and inserting a comma, and

(C) by adding at the end the following new clauses:, and

(iii) which is not foreign adversary-controlled technology, and

(iv) which is not property owned by a prohibited foreign entity.

(2) by adding at the end the following new subparagraph:

The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of clauses (iii) and (iv) of subparagraph (A).

Section 174A(d) of such Code is amended by adding at the end the following new paragraph:

This section shall not apply to any amount paid or incurred—

(A) for the acquisition or development of foreign adversary-controlled technology, or

(B) by a prohibited foreign entity.

Section 163(j)(8)(A) of such Code is amended by striking and at the end of clause (v) and by inserting after clause (vi) the following new clause:

(vii) any item of income, gain, deduction, or loss which is attributable to—

(I) foreign adversary-controlled technology, or

(II) a trade or business owned by a prohibited foreign entity, and

Section 163(j)(11) of such Code is amended by inserting and which items of income, gain, deduction, or loss are attributable to foreign adversary-controlled technology or a trade or business owned by a prohibited foreign entity under paragraph (8)(A)(vii) before the period at the end.

Section 41(d)(4) of such Code is amended by adding at the end the following new subparagraph:

No credit shall be allowed to a taxpayer under subsection (a) for any taxable year if the taxpayer is a specified foreign entity or a foreign-influenced entity.

The amendments made by this section shall apply to taxable years beginning after the date which is one year after the date of the enactment of this Act.