1. Special rules for transfers of intangible property from controlled foreign corporations to United States shareholders (a) In general Subpart F of part III of subchapter N of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: 966. Transfers of intangible property to United States shareholders (a) In general If a controlled foreign corporation holds intangible property on the date of the enactment of this section and thereafter distributes such property to a domestic corporation which is a United States shareholder with respect to such controlled foreign corporation— (1) for purposes of part I of subchapter C and any other provision of this title specified by the Secretary, the fair market value of such property on the date of such distribution shall be treated as not exceeding the adjusted basis of such property immediately before such distribution, and (2) if any portion of such distribution is not a dividend— (A) no gain shall be recognized by such United States shareholder with respect to such distribution, and (B) the adjusted basis of such property in the hands of such United States shareholder immediately after such distribution shall be the adjusted basis of such property in the hands of such controlled foreign corporation immediately before such distribution reduced by the amount (if any) of gain not recognized by reason of subparagraph (A) (determined after the application of paragraph (1)). (b) Intangible property For purposes of this section, the term intangible property means any— (1) patent, copyright, license, invention, formula, process, design, pattern, know-how, or format, (2) method, program, system, procedure, campaign, survey, study, forecast, estimate, or technical data, (3) computer software (as defined in section 197(e)(3)(B)), or (4) any similar item, which has substantial value independent of the services of any individual. . (b) Conforming amendments (1) Section 197(f)(2)(B)(i) of such Code is amended by inserting 966(a), after