[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 1671 Introduced in Senate (IS)]
112th CONGRESS
1st Session
S. 1671
To amend the Internal Revenue Code of 1986 to allow a temporary
dividends received deduction for dividends received from a controlled
foreign corporation.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
October 6, 2011
Mrs. Hagan (for herself, Mr. McCain, Mrs. Boxer, Mr. Blunt, Mr. Graham,
Mr. Isakson, Ms. Murkowski, Mr. Brown of Massachusetts, and Mr.
Manchin) introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to allow a temporary
dividends received deduction for dividends received from a controlled
foreign corporation.
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 ``Foreign Earnings Reinvestment Act''.
SEC. 2. ALLOWANCE OF TEMPORARY DIVIDENDS RECEIVED DEDUCTION FOR
DIVIDENDS RECEIVED FROM A CONTROLLED FOREIGN CORPORATION.
(a) Applicability of Provision.--
(1) In general.--Subsection (f) of section 965 is amended
to read as follows:
``(f) Election; Election Year.--
``(1) In general.--The taxpayer may elect to apply this
section to--
``(A) the taxpayer's last taxable year which begins
before the date of the enactment of the Foreign
Earnings Reinvestment Act, or
``(B) 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 on or
before the due date (including extensions) for filing the
return of tax for such taxable year.
``(C) Election year.--For purposes of this section,
the term `election year' means the taxable year--
``(i) which begins after the date that is
one year before the date of the enactment of
the Foreign Earnings Reinvestment Act, and
``(ii) to which the taxpayer elects under
paragraph (1) to apply this section.''.
(2) Conforming amendments.--
(A) Extraordinary dividends.--Section 965(b)(2) of
such Code is amended--
(i) by striking ``June 30, 2003'' and
inserting ``September 30, 2011'', and
(ii) by adding at the end the following new
sentence: ``The amounts described in clauses
(i), (ii), and (iii) shall not include any
amounts which were taken into account in
determining the deduction under subsection (a)
for any prior taxable year.''.
(B) Determinations relating to related party
indebtedness.--Section 965(b)(3)(B) of such Code is
amended by striking ``October 3, 2004'' and inserting
``September 30, 2011''.
(C) Determinations relating to base period.--
Section 965(c)(2) of such Code is amended by striking
``June 30, 2003'' and inserting ``September 30, 2011''.
(b) Deduction Includes Current and Accumulated Foreign Earnings.--
(1) In general.--Paragraph (1) of section 965(b) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(1) In general.--The amount of dividends taken into
account under subsection (a) shall not exceed the sum of the
current and accumulated earnings and profits described in
section 959(c)(3) for the year a deduction is claimed under
subsection (a), without diminution by reason of any
distributions made during the election year, for all controlled
foreign corporations of the United States shareholder.''.
(2) Conforming amendments.--
(A) Section 965(c) of such Code, as amended by
subsection (a), is amended by striking paragraph (1)
and by redesignating paragraphs (2), (3), (4), and (5),
as paragraphs (1), (2), (3), and (4), respectively.
(B) Paragraph (4) of section 965(c) of such Code,
as redesignated by subparagraph (A), is amended to read
as follows:
``(4) Controlled groups.--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.''.
(c) Amount of Deduction.--
(1) In general.--Paragraph (1) of section 965(a) of the
Internal Revenue Code of 1986 is amended by striking ``85
percent'' and inserting ``75 percent''.
(2) Bonus deduction in subsequent taxable year for
increasing jobs.--Section 965 of such Code is amended by adding
at the end the following new subsection:
``(g) Bonus Deduction.--
``(1) In general.--In the case of any taxpayer who makes an
election to apply this section, there shall be allowed as a
deduction for the first taxable year following the election
year an amount equal to the applicable percentage of the cash
dividends which are taken into account under subsection (a)
with respect to such taxpayer for the election year.
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage is the amount which bears the
same ratio (not greater than 1) to 10 percent as--
``(A) the excess (if any) of--
``(i) the qualified payroll of the taxpayer
for the calendar year which begins with or
within the first taxable year following the
election year, over
``(ii) the qualified payroll of the
taxpayer for calendar year 2010, bears to
``(B) 10 percent of the qualified payroll of the
taxpayer for calendar year 2010.''
``(3) Qualified payroll.--For purposes of this paragraph:
``(A) In general.--The term `qualified payroll'
means, with respect to a taxpayer for any calendar
year, the aggregate wages (as defined in section
3121(a)) paid by the corporation during such calendar
year.
``(B) Exception for changes in ownership of trades
or businesses.--
``(i) Acquisitions.--If, after December 31,
2009, and before the close of the first taxable
year following the election year, a taxpayer
acquires the trade or business of a
predecessor, then the qualified payroll of such
taxpayer for any calendar year shall be
increased by so much of the qualified payroll
of the predecessor for such calendar year as
was attributable to the trade or business
acquired by the taxpayer.
``(ii) Dispositions.--If, after December
31, 2009, and before the close of the first
taxable year following the election year, a
taxpayer disposes of a trade or business,
then--
``(I) the qualified payroll of such
taxpayer for calendar year 2010 shall
be decreased by the amount of wages for
such calendar year as were attributable
to the trade or business which was
disposed of by the taxpayer, and
``(II) if the disposition occurs
after the beginning of the first
taxable year following the election
year, the qualified payroll of such
taxpayer for the calendar year which
begins with or within such taxable year
shall be decreased by the amount of
wages for such calendar year as were
attributable to the trade or business
which was disposed of by the taxpayer.
``(C) Special rule.--For purposes of determining
qualified payroll for any calendar year after calendar
year 2011, such term shall not include wages paid to
any individual if such individual received compensation
from the taxpayer for services performed--
``(i) after the date of the enactment of
this paragraph, and
``(ii) at a time when such individual was
not an employee of the taxpayer.''.
(3) Reduction for failure to maintain employment levels.--
Paragraph (4) of section 965(b) of such Code (relating to
limitations) is amended to read as follows:
``(4) Reduction in benefits for failure to maintain
employment levels.--
``(A) In general.--If, during the period consisting
of the calendar month in which the taxpayer first
receives a distribution described in subsection (a)(1)
and the succeeding 23 calendar months, the taxpayer
does not maintain an average employment level at least
equal to the taxpayer's prior average employment, an
additional amount equal to $75,000 multiplied by the
number of employees by which the taxpayer's average
employment level during such period falls below the
prior average employment (but not exceeding the
aggregate amount allowed as a deduction pursuant to
subsection (a)(1)) shall be taken into income by the
taxpayer during the taxable year that includes the
final day of such period.
``(B) Average employment level.--For purposes of
this paragraph, the taxpayer's average employment level
for a period shall be the average number of full-time
United States employees of the taxpayer, measured at
the end of each month during the period.
``(C) Prior average employment.--For purposes of
this paragraph, the taxpayer's `prior average
employment' shall be the average number of full-time
United States employees of the taxpayer during the
period consisting of the 24 calendar months immediately
preceding the calendar month in which the taxpayer
first receives a distribution described in subsection
(a)(1).
``(D) Full-time united states employee.--For
purposes of this paragraph--
``(i) In general.--The term `full-time
United States employee' means an individual who
provides services in the United States as a
full-time employee, based on the employer's
standards and practices; except that regardless
of the employer's classification of the
employee, an employee whose normal schedule is
40 hours or more per week is considered a full-
time employee.
``(ii) Exception for changes in ownership
of trades or businesses.--Such term does not
include--
``(I) any individual who was an
employee, on the date of acquisition,
of any trade or business acquired by
the taxpayer during the 24-month period
referred to in subparagraph (A), and
``(II) any individual who was an
employee of any trade or business
disposed of by the taxpayer during the
24-month period referred to in
subparagraph (A) or the 24-month period
referred to in subparagraph (C).
``(E) Aggregation rules.--In determining the
taxpayer's average employment level and prior average
employment, all domestic members of a controlled group
shall be treated as a single taxpayer.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment of this
Act.
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