I 108th CONGRESS 2d Session H. R. 5396 IN THE HOUSE OF REPRESENTATIVES November 19, 2004 Mr. Acevedo-Vilá introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to allow a deduction for a portion of any dividend received by a domestic corporation from a qualified foreign corporation.

1.

Short title

This Act may be cited as the Financial Transactions Equity Act of 2004.

2.

Dividend received deduction for dividends received from qualified foreign corporations

(a)

In general

Section 245 of the Internal Revenue Code of 1986 (relating to dividends received from certain foreign corporations) is amended by adding at the end the following new subsection: (d)

Dividends received from corporations organized under the laws of the Commonwealth of Puerto Rico

(1)

In general

In the case of dividends received by a domestic corporation from a corporation organized under the laws of the Commonwealth of Puerto Rico, there shall be allowed as a deduction an amount equal to the percent (specified in section 243 for the taxable year) of such dividends. (2)

Exclusion of certain dividends

Paragraph (1) shall not apply to any dividend received from a corporation organized under the laws of the Commonwealth of Puerto Rico to the extent that the dividend consists of earnings and profits accumulated during a taxable year that such corporation was a controlled foreign corporation (as defined in section 957). (3)

Coordination with section 1248

For purposes of this subsection, the term dividend does not include any amount treated as a dividend under section 1248.. (b)

Effective date

The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.