[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7305 Introduced in House (IH)]







110th CONGRESS
  2d Session
                                H. R. 7305

To immediately terminate the authority of the Secretary of the Treasury 
  under the Emergency Economic Stabilization Act of 2008 to purchase 
troubled assets, to require the Secretary to make insurance of troubled 
   mortgage-backed securities available for purchase, and to provide 
 incentives to reinvest foreign earnings in the United States, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 20, 2008

 Mr. Gohmert introduced the following bill; which was referred to the 
 Committee on Financial Services, and in addition to the Committee on 
   Ways and Means, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
To immediately terminate the authority of the Secretary of the Treasury 
  under the Emergency Economic Stabilization Act of 2008 to purchase 
troubled assets, to require the Secretary to make insurance of troubled 
   mortgage-backed securities available for purchase, and to provide 
 incentives to reinvest foreign earnings in the United States, and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Responsibly Ending Authority to 
Purchase Act of 2008'' or the ``REAP Act of 2008''.

SEC. 2. TERMINATION OF PURCHASE AUTHORITY.

    (a) In General.--The authorities provided under section 101(a) of 
the Emergency Economic Stabilization Act of 2008 (Public Law 110-343), 
excluding section 101(a)(3) of such Act, shall terminate immediately 
upon the enactment of this Act.
    (b) Rule of Construction.--The termination under subsection (a) 
shall apply to any authority of the Secretary of the Treasury under the 
Emergency Economic Stabilization Act of 2008 to purchase preferred or 
other stock or equity in any financial institution.
    (c) Conforming Amendment.--The Emergency Economic Stabilization Act 
of 2008 is amended by striking section 120.

SEC. 3. IMPLEMENTATION OF PROGRAM FOR INSURANCE OF TROUBLED MORTGAGE-
              BACKED SECURITIES.

    (a) In General.--Section 102 of the Emergency Economic 
Stabilization Act of 2008 (Public Law 110-343) is amended--
            (1) in the section heading, by striking ``assets'' and 
        inserting ``mortgage-backed securities'';
            (2) by striking ``troubled asset'' and ``troubled assets'' 
        each place such terms appear and inserting ``troubled asset'' 
        and ``troubled mortgage-backed securities'', respectively;
            (3) in subsection (a)--
                    (A) in paragraph (1)--
                            (i) by striking ``If the Secretary 
                        established the program authorized under 
                        section 101, then the Secretary shall 
                        establish'' and inserting ``Not later than the 
                        expiration of the 60-day period beginning upon 
                        the date of the enactment of the Responsibly 
                        Ending Authority to Purchase Act of 2008, the 
                        Secretary shall establish and implement''; and
                            (ii) by striking ``, including mortgage-
                        backed securities'';
                    (B) in the first sentence of paragraph (2), by 
                striking ``may'' and inserting ``shall''; and
                    (C) in the first sentence of paragraph (3), by 
                striking ``may'' and inserting ``shall, subject to 
                compliance by such financial institution with any terms 
                and conditions established by the Secretary,'';
            (4) in subsection (c)(4), by striking ``Troubled Assets'' 
        and inserting ``Troubled Mortgage-Backed Securities'';
            (5) in subsection (d)--
                    (A) in the subsection heading, by striking 
                ``Troubled Assets'' and inserting ``Troubled Mortgage-
                Backed Securities''; and
                    (B) in paragraph (1), by striking ``Troubled 
                Assets'' and inserting ``Troubled Mortgage-Backed 
                Securities''; and
            (6) by adding at the end the following new subsection:
    ``(e) Termination.--
            ``(1) In general.--The authority of the Secretary to issue 
        guarantees and commitments for guarantees under this section 
        shall terminate on December 31, 2009.
            ``(2) Extension upon certification.--The Secretary, upon 
        submission of a written certification to Congress, may extend 
        the authority specified in paragraph (1) to expire not later 
        than 2 years from the date of enactment of this Act. Such 
        certification shall include a justification of why the 
        extension is necessary to assist American families and 
        stabilize financial markets, as well as the expected cost to 
        the taxpayers for such an extension.''.
    (b) Definition.--Section 3 of the Emergency Economic Stabilization 
Act of 2008 (Public Law 110-343) is amended by adding at the end the 
following new paragraph:
            ``(10) Troubled mortgage-backed security.--The term 
        `troubled mortgage-backed security' means a residential or 
        commercial mortgage or any security, obligation, or other 
        instrument that is based on or related to such mortgages, that 
        in each case was originated or issued on or before March 14, 
        2008.''.
    (c) Limitations on Guarantee Authority.--Paragraph (4) of 
subsection (c) of section 102 of the Emergency Economic Stabilization 
Act of 2008 (Public Law 110-343) is amended to read as follows:
            ``(4) Limitations on guarantee authority.--The difference 
        between the aggregate amount of outstanding obligations 
        guaranteed under this section and the balance in the Troubled 
        Mortgage-Backed Securities Insurance Financing Fund may not at 
        any time exceed the remaining purchase authority limit under 
        section 115 at such time.''.

SEC. 4. INCENTIVES TO REINVEST FOREIGN EARNINGS IN UNITED STATES.

    (a) In General.--Section 965 of the Internal Revenue Code of 1986 
is amended to read as follows:

``SEC. 965. DEDUCTION FOR DIVIDENDS RECEIVED.

    ``(a) Deduction.--
            ``(1) In general.--In the case of a corporation which is a 
        United States shareholder and for which the election under this 
        section is in effect for the taxable year, there shall be 
        allowed as a deduction an amount equal to the applicable 
        percentage of cash dividends which are received during such 
        taxable year by such shareholder from controlled foreign 
        corporations.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1)--
                    ``(A) In general.--Except as provided by 
                subparagraph (B), the term `applicable percentage' 
                means 85 percent.
                    ``(B) Distressed debt.--In the case of dividends 
                received with respect to which the requirements of 
                subsection (b)(4)(B) are met, such term means 100 
                percent.
            ``(3) Dividends paid indirectly from controlled foreign 
        corporations.--If, within the taxable year for which the 
        election under this section is in effect, a United States 
        shareholder receives a cash distribution from a controlled 
        foreign corporation which is excluded from gross income under 
        section 959(a), such distribution shall be treated for purposes 
        of this section as a cash dividend to the extent of any amount 
        included in income by such United States shareholder under 
        section 951(a)(1)(A) as a result of any cash dividend during 
        such taxable year to--
                    ``(A) such controlled foreign corporation from 
                another controlled foreign corporation that is in a 
                chain of ownership described in section 958(a), or
                    ``(B) any other controlled foreign corporation in 
                such chain of ownership, but only to the extent of cash 
                distributions described in section 959(b) which are 
                made during such taxable year to the controlled foreign 
                corporation from which such United States shareholder 
                received such distribution.
    ``(b) Limitations.--
            ``(1) In general.--The amount of dividends taken into 
        account under subsection (a) shall not exceed the greater of--
                    ``(A) $500,000,000,
                    ``(B) the amount shown on the applicable financial 
                statement as earnings permanently reinvested outside 
                the United States, or
                    ``(C) in the case of an applicable financial 
                statement which fails to show a specific amount of 
                earnings permanently reinvested outside the United 
                States and which shows a specific amount of tax 
                liability attributable to such earnings, the amount 
                equal to the amount of such liability divided by 0.35.
        The amounts described in subparagraphs (B) and (C) shall be 
        treated as being zero if there is no such statement or such 
        statement fails to show a specific amount of such earnings or 
        liability, as the case may be.
            ``(2) Dividends must be extraordinary.--The amount of 
        dividends taken into account under subsection (a) shall not 
        exceed the excess (if any) of--
                    ``(A) the cash dividends received during the 
                taxable year by such shareholder from controlled 
                foreign corporations, over
                    ``(B) the sum of--
                            ``(i) the dividends received during the 
                        base period year by such shareholder from 
                        controlled foreign corporations,
                            ``(ii) the amounts includible in such 
                        shareholder's gross income for the base period 
                        year under section 951(a)(1)(B) with respect to 
                        controlled foreign corporations, and
                            ``(iii) the amounts that would have been 
                        included for the base period year but for 
                        section 959(a) with respect to controlled 
                        foreign corporations.
                The amount taken into account under clause (iii) for 
                the base period year shall not include any amount which 
                is not includible in gross income by reason of an 
                amount described in clause (ii) with respect to a prior 
                taxable year. Amounts described in subparagraph (B) for 
                the base period year shall be such amounts as shown on 
                the most recent return filed for such year; except that 
                amended returns filed after June 30, 2007, shall not be 
                taken into account.
            ``(3) Reduction of benefit if increase in related party 
        indebtedness.--The amount of dividends which would (but for 
        this paragraph) be taken into account under subsection (a) 
        shall be reduced by the excess (if any) of--
                    ``(A) the amount of indebtedness of the controlled 
                foreign corporation to any related person (as defined 
                in section 954(d)(3)) as of the close of the taxable 
                year for which the election under this section is in 
                effect, over
                    ``(B) the amount of indebtedness of the controlled 
                foreign corporation to any related person (as so 
                defined) as of the close of September 26, 2008.
        All controlled foreign corporations with respect to which the 
        taxpayer is a United States shareholder shall be treated as 1 
        controlled foreign corporation for purposes of this paragraph. 
        The Secretary may prescribe such regulations as may be 
        necessary or appropriate to prevent the avoidance of the 
        purposes of this paragraph, including regulations which provide 
        that cash dividends shall not be taken into account under 
        subsection (a) to the extent such dividends are attributable to 
        the direct or indirect transfer (including through the use of 
        intervening entities or capital contributions) of cash or other 
        property from a related person (as so defined) to a controlled 
        foreign corporation.
            ``(4) Requirements.--
                    ``(A) Requirement to invest in united states.--
                Except as provided by subparagraph (B), subsection (a) 
                shall not apply to any dividend received by a United 
                States shareholder unless the amount of the dividend is 
                invested in the United States pursuant to a domestic 
                reinvestment plan which--
                            ``(i) is approved by the taxpayer's 
                        president, chief executive officer, or 
                        comparable official before the payment of such 
                        dividend and subsequently approved by the 
                        taxpayer's board of directors, management 
                        committee, executive committee, or similar 
                        body, and
                            ``(ii) provides for the reinvestment of 
                        such dividend in the United States (other than 
                        as payment for executive compensation), 
                        including as a source for the funding of worker 
                        hiring and training, infrastructure, research 
                        and development, capital investments, or the 
                        financial stabilization of the corporation for 
                        the purposes of job retention or creation.
                    ``(B) Distressed debt.--The requirements of this 
                subparagraph are met if amounts repatriated are 
                invested in distressed debt (as defined by the 
                Secretary) for at least one year.
    ``(c) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Applicable financial statement.--The term `applicable 
        financial statement' means--
                    ``(A) with respect to a United States shareholder 
                which is required to file a financial statement with 
                the Securities and Exchange Commission (or which is 
                included in such a statement so filed by another 
                person), the most recent audited annual financial 
                statement (including the notes which form an integral 
                part of such statement) of such shareholder (or which 
                includes such shareholder)--
                            ``(i) which was so filed on or before June 
                        30, 2007, and
                            ``(ii) which was certified on or before 
                        June 30, 2007, as being prepared in accordance 
                        with generally accepted accounting principles, 
                        and
                    ``(B) with respect to any other United States 
                shareholder, the most recent audited financial 
                statement (including the notes which form an integral 
                part of such statement) of such shareholder (or which 
                includes such shareholder)--
                            ``(i) which was certified on or before June 
                        30, 2007, as being prepared in accordance with 
                        generally accepted accounting principles, and
                            ``(ii) which is used for the purposes of a 
                        statement or report--
                                    ``(I) to creditors,
                                    ``(II) to shareholders, or
                                    ``(III) for any other substantial 
                                nontax purpose.
            ``(2) Base period year.--
                    ``(A) In general.--The base period year is the 
                first taxable year ending in 2007.
                    ``(B) Mergers, acquisitions, etc.--
                            ``(i) In general.--Rules similar to the 
                        rules of subparagraphs (A) and (B) of section 
                        41(f)(3) shall apply for purposes of this 
                        paragraph.
                            ``(ii) Spin-offs, etc.--If there is a 
                        distribution to which section 355 (or so much 
                        of section 356 as relates to section 355) 
                        applies during the base period year and the 
                        controlled corporation (within the meaning of 
                        section 355) is a United States shareholder--
                                    ``(I) the controlled corporation 
                                shall be treated as being in existence 
                                during the period that the distributing 
                                corporation (within the meaning of 
                                section 355) is in existence, and
                                    ``(II) for purposes of applying 
                                subsection (b)(2) to the controlled 
                                corporation and the distributing 
                                corporation, amounts described in 
                                subsection (b)(2)(B) which are received 
                                or includible by the distributing 
                                corporation or controlled corporation 
                                (as the case may be) before the 
                                distribution referred to in subclause 
                                (I) from a controlled foreign 
                                corporation shall be allocated between 
                                such corporations in proportion to 
                                their respective interests as United 
                                States shareholders of such controlled 
                                foreign corporation immediately after 
                                such distribution.
                        Subclause (II) shall not apply if neither the 
                        controlled corporation nor the distributing 
                        corporation is a United States shareholder of 
                        such controlled foreign corporation immediately 
                        after such distribution.
            ``(3) Dividend.--The term `dividend' shall not include 
        amounts includible in gross income as a dividend under section 
        78, 367, or 1248. In the case of a liquidation under section 
        332 to which section 367(b) applies, the preceding sentence 
        shall not apply to the extent the United States shareholder 
        actually receives cash as part of the liquidation.
            ``(4) Coordination with dividends received deduction.--No 
        deduction shall be allowed under section 243 or 245 for any 
        dividend for which a deduction is allowed under this section.
            ``(5) Controlled groups.--
                    ``(A) In general.--All United States shareholders 
                which are members of an affiliated group filing a 
                consolidated return under section 1501 shall be treated 
                as one United States shareholder.
                    ``(B) Application of $500,000,000 limit.--All 
                corporations which are treated as a single employer 
                under section 52(a) shall be limited to one 
                $500,000,000 amount in subsection (b)(1)(A), and such 
                amount shall be divided among such corporations under 
                regulations prescribed by the Secretary.
                    ``(C) Permanently reinvested earnings.--If a 
                financial statement is an applicable financial 
                statement for more than 1 United States shareholder, 
                the amount applicable under subparagraph (B) or (C) of 
                subsection (b)(1) shall be divided among such 
                shareholders under regulations prescribed by the 
                Secretary.
    ``(d) Denial of Foreign Tax Credit; Denial of Certain Expenses.--
            ``(1) Foreign tax credit.--No credit shall be allowed under 
        section 901 for any taxes paid or accrued (or treated as paid 
        or accrued) with respect to the deductible portion of--
                    ``(A) any dividend, or
                    ``(B) any amount described in subsection (a)(2) 
                which is included in income under section 951(a)(1)(A).
        No deduction shall be allowed under this chapter for any tax 
        for which credit is not allowable by reason of the preceding 
        sentence.
            ``(2) Expenses.--No deduction shall be allowed for expenses 
        properly allocated and apportioned to the deductible portion 
        described in paragraph (1).
            ``(3) Deductible portion.--For purposes of paragraph (1), 
        unless the taxpayer otherwise specifies, the deductible portion 
        of any dividend or other amount is the amount which bears the 
        same ratio to the amount of such dividend or other amount as 
        the amount allowed as a deduction under subsection (a) for the 
        taxable year bears to the amount described in subsection 
        (b)(2)(A) for such year.
            ``(4) Coordination with section 78.--Section 78 shall not 
        apply to any tax which is not allowable as a credit under 
        section 901 by reason of this subsection.
    ``(e) Increase in Tax on Included Amounts Not Reduced by Credits, 
etc.--
            ``(1) In general.--Any tax under this chapter by reason of 
        nondeductible CFC dividends shall not be treated as tax imposed 
        by this chapter for purposes of determining--
                    ``(A) the amount of any credit allowable under this 
                chapter, or
                    ``(B) the amount of the tax imposed by section 55.
        Subparagraph (A) shall not apply to the credit under section 53 
        or to the credit under section 27(a) with respect to taxes 
        which are imposed by foreign countries and possessions of the 
        United States and are attributable to such dividends.
            ``(2) Limitation on reduction in taxable income, etc.--
                    ``(A) In general.--The taxable income of any United 
                States shareholder for any taxable year shall in no 
                event be less than the amount of nondeductible CFC 
                dividends received during such year.
                    ``(B) Coordination with section 172.--The 
                nondeductible CFC dividends for any taxable year shall 
                not be taken into account--
                            ``(i) in determining under section 172 the 
                        amount of any net operating loss for such 
                        taxable year, and
                            ``(ii) in determining taxable income for 
                        such taxable year for purposes of the 2nd 
                        sentence of section 172(b)(2).
            ``(3) Nondeductible cfc dividends.--For purposes of this 
        subsection, the term `nondeductible CFC dividends' means the 
        excess of the amount of dividends taken into account under 
        subsection (a) over the deduction allowed under subsection (a) 
        for such dividends.
    ``(f) Election.--The taxpayer may elect to apply this section to--
            ``(1) the taxpayer's last taxable year which begins before 
        the date of the enactment of this section, or
            ``(2) the taxpayer's first taxable year which begins during 
        the 1-year period beginning on such date.
Such election may be made for a taxable year only if made before the 
due date (including extensions) for filing the return of tax for such 
taxable year.''.
    (b) Clerical Amendment.--The item in the table of sections for 
subpart F of part III of subchapter N of chapter 1 of such Code 
relating to section 965 is amended to read as follows:

``Sec. 965. Deduction for dividends received.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending on or after the date of the enactment of 
this Act.
                                 <all>