Extension and modification of dividends received deduction for certain repatriated foreign earnings

(a)

In general

Section 965 of such Code is amended by adding at the end the following new subsection:

(g)

Temporary extension and modification

(1)

In general

In the case of an election under this subsection, subsection (f)(1) shall be applied by substituting the date of the enactment of subsection (g) for the date of the enactment of this section. (2)

Percentage deductible

(A)

In general

In the case of an election under this subsection, subsection (a)(1) shall be applied by substituting the applicable percentage for 85 percent. (B)

Applicable percentage

For purposes of this section, the applicable percentage is 29 percent, increased by the number of percentage points determined with respect to the taxpayer under subparagraph (C). (C)

Increased deduction for payroll expansion

(i)

In general

For purposes of subparagraph (B), the number of percentage points determined with respect to a taxpayer under this subparagraph shall be— (I)so much of the percentage increase, if any, in the taxpayer’s qualified payroll for all quarters ending during the taxable year as compared to the qualified payroll for the same quarters during the taxpayer’s taxable year ending during 2010 as does not exceed 14 percent, multiplied by (II)4. (ii)

Qualified payroll

For purposes of this subparagraph, the term qualified payroll means the amount of all wages (within the meaning of section 3121(a)) paid or incurred by the taxpayer to the employees of such taxpayer, except that, with respect to each such employee, such wages shall be taken into account only to the extent that such wages do not exceed the contribution and benefit base as determined under section 230 of the Social Security Act. (iii)

Railway labor

In the case of remuneration subject to the tax imposed by section 3221(a), clause (ii) shall be applied by substituting all compensation (within the meaning of section 3231(e)) for all wages (within the meaning of section 3121(a)). (iv)

Special rule for converted employees

For purposes of this subparagraph— (I)

In general

The wages of any specified individual shall not be taken into account. (II)

Specified individual

Except as provided by the Secretary, the term specified individual means any individual who, during the 2-year period ending on the date of the enactment of this subsection, performed services directly or indirectly for the taxpayer and was treated for purposes of employment taxes as not an employee with respect to the performance of such services. (3)

Special rules

(A)

Recapture in case of payroll decrease during recapture period

The Secretary shall, by regulations, provide for recapturing any portion of the benefit under any deduction allowable by this subsection, and attributable to paragraph (2)(C), to the extent— (i)the taxpayer’s qualified payroll for all quarters ending during the taxable year for which the such deduction was allowed, exceeds (ii)the taxpayer’s qualified payroll for all quarters ending during either of the 2 taxable years following the taxable year with respect to which such deduction was allowed. (B)

Controlled groups

All employers treated as a single employer under section (a) or (b) of section 52 shall be treated as a single employer for purposes of this subsection.

(b)

Conforming amendment

(1)Subsection (b) of section 965 of such Code is amended by striking paragraph (4). (2)Section 965 of such Code is amended by striking June 30, 2003 each place it occurs and inserting June 30, 2010. (3)Subparagraph (B) of section 965(b)(3) of such Code is amended by striking October 3, 2004 and inserting October 1, 2011. (c)

Effective date

The amendment made by this section shall apply to taxable years ending on or after the date of the enactment of this Act