Short title; etc

(a)

Short Title

This Act may be cited as the

Growing Our Manufacturing Employment Act

or the

GoMe Act

. (b)

Amendment of 1986 Code

Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

Manufacturer’s jobs credit

(a)

In General

Subpart D of part IV of subchapter A of chapter 1 (relating to business-related credits) is amended by adding at the end the following:

45O.

Manufacturer’s jobs credit

(a)

General Rule

For purposes of section 38, in the case of an eligible taxpayer, the manufacturer’s jobs credit determined under this section is an amount equal to the lesser of the following: (1)The excess of the W–2 wages paid by the taxpayer during the taxable year over the W–2 wages paid by the taxpayer during the preceding taxable year. (2)The W–2 wages paid by the taxpayer during the taxable year to any employee who is an eligible TAA recipient (as defined in section 35(c)(2)) or an eligible alternative TAA recipient (as defined in section 35(c)(3)) for any month during such taxable year. (3)31.7 percent of the W–2 wages paid by the taxpayer during the taxable year. (b)

Limitation

The amount of credit determined under subsection (a) shall be reduced by an amount which bears the same ratio to the amount of the credit (determined without regard to this subsection) as— (1)the excess of the W–2 wages paid by the taxpayer to employees outside the United States during the taxable year over such wages paid during the most recent taxable year ending before the date of the enactment of this section, bears to (2)the excess of the W–2 wages paid by the taxpayer to employees within the United States during the taxable year over such wages paid during such most recent taxable year. (c)

Eligible Taxpayer

For purposes of this section, the term eligible taxpayer means any taxpayer— (1)which has domestic production gross receipts for the taxable year and the preceding taxable year, and (2)which is not treated at any time during the taxable year as an inverted domestic corporation under section 7874. (d)

Definitions

For purposes of this section, W–2 wages and domestic production gross receipts shall be determined in the same manner as under section 199. (e)

Certain Rules Made Applicable

For purposes of this section, rules similar to the rules of section 52 shall apply. (f)

Termination

This section shall not apply to any taxable year beginning after December 31, 2009.

(b)

Credit To Be Part of General Business Credit

Section 38(b) (relating to current year business credit) is amended by striking plus at the end of paragraph (30), by striking the period at the end of paragraph (31) and inserting , plus, and by adding at the end the following:

(32)the manufacturer’s jobs credit determined under section 45O.

(c)

Clerical Amendment

The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following:

Sec. 45O. Manufacturer’s jobs credit

(d)

Effective Date

The amendments made by this section shall apply to taxable years beginning after December 31, 2007.

Extension of research credit

(a)

In general

Section 41(h)(1)(B) is amended by striking 2007 and inserting 2012. (b)

Conforming amendment

Section 45C(b)(1)(D) is amended by striking 2007 and inserting 2012. (c)

Effective date

The amendments made by this section shall apply to amounts paid or incurred after December 31, 2007.

Clarification of economic substance doctrine

(a)

In General

Section 7701 is amended by redesignating subsection (p) as subsection (q) and by inserting after subsection (o) the following new subsection:

(p)

Clarification of Economic Substance Doctrine; Etc

(1)

General rules

(A)

In general

In any case in which a court determines that the economic substance doctrine is relevant for purposes of this title to a transaction (or series of transactions), such transaction (or series of transactions) shall have economic substance only if the requirements of this paragraph are met. (B)

Definition of economic substance

For purposes of subparagraph (A)— (i)

In general

A transaction has economic substance only if— (I)the transaction changes in a meaningful way (apart from Federal tax effects) the taxpayer’s economic position, and (II)the taxpayer has a substantial nontax purpose for entering into such transaction and the transaction is a reasonable means of accomplishing such purpose.

In applying subclause (II), a purpose of achieving a financial accounting benefit shall not be taken into account in determining whether a transaction has a substantial nontax purpose if the origin of such financial accounting benefit is a reduction of income tax.

(ii)

Special rule where taxpayer relies on profit potential

A transaction shall not be treated as having economic substance by reason of having a potential for profit unless— (I)the present value of the reasonably expected pre-tax profit from the transaction is substantial in relation to the present value of the expected net tax benefits that would be allowed if the transaction were respected, and (II)the reasonably expected pre-tax profit from the transaction exceeds a risk-free rate of return. (C)

Treatment of fees and foreign taxes

Fees and other transaction expenses and foreign taxes shall be taken into account as expenses in determining pre-tax profit under subparagraph (B)(ii). (2)

Special rules for transactions with tax-indifferent parties

(A)

Special rules for financing transactions

The form of a transaction which is in substance the borrowing of money or the acquisition of financial capital directly or indirectly from a tax-indifferent party shall not be respected if the present value of the deductions to be claimed with respect to the transaction is substantially in excess of the present value of the anticipated economic returns of the person lending the money or providing the financial capital. A public offering shall be treated as a borrowing, or an acquisition of financial capital, from a tax-indifferent party if it is reasonably expected that at least 50 percent of the offering will be placed with tax-indifferent parties. (B)

Artificial income shifting and basis adjustments

The form of a transaction with a tax-indifferent party shall not be respected if— (i)it results in an allocation of income or gain to the tax-indifferent party in excess of such party’s economic income or gain, or (ii)it results in a basis adjustment or shifting of basis on account of overstating the income or gain of the tax-indifferent party. (3)

Definitions and special rules

For purposes of this subsection— (A)

Economic substance doctrine

The term economic substance doctrine means the common law doctrine under which tax benefits under subtitle A with respect to a transaction are not allowable if the transaction does not have economic substance or lacks a business purpose. (B)

Tax-indifferent party

The term tax-indifferent party means any person or entity not subject to tax imposed by subtitle A. A person shall be treated as a tax-indifferent party with respect to a transaction if the items taken into account with respect to the transaction have no substantial impact on such person’s liability under subtitle A. (C)

Exception for personal transactions of individuals

In the case of an individual, this subsection shall apply only to transactions entered into in connection with a trade or business or an activity engaged in for the production of income. (D)

Treatment of lessors

In applying paragraph (1)(B)(ii) to the lessor of tangible property subject to a lease— (i)the expected net tax benefits with respect to the leased property shall not include the benefits of— (I)depreciation, (II)any tax credit, or (III)any other deduction as provided in guidance by the Secretary, and (ii)subclause (II) of paragraph (1)(B)(ii) shall be disregarded in determining whether any of such benefits are allowable. (4)

Other common law doctrines not affected

Except as specifically provided in this subsection, the provisions of this subsection shall not be construed as altering or supplanting any other rule of law, and the requirements of this subsection shall be construed as being in addition to any such other rule of law. (5)

Regulations

The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection. Such regulations may include exemptions from the application of this subsection.

(b)

Effective Date

The amendments made by this section shall apply to transactions entered into after the date of the enactment of this Act.