[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 397 Introduced in Senate (IS)]

114th CONGRESS
  1st Session
                                 S. 397

    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

                            February 5, 2015

  Mr. McCain 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 of the 
        Internal Revenue Code of 1986 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 ``December 31, 2014'', 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 
                ``December 31, 2014''.
                    (C) Determinations relating to base period.--
                Section 965(c)(2) of such Code is amended by striking 
                ``June 30, 2003'' and inserting ``December 31, 2014''.
    (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 the Internal Revenue Code of 
        1986 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 2014, bears to
                    ``(B) 10 percent of the qualified payroll of the 
                taxpayer for calendar year 2014.
            ``(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, 
                        2013, 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, 2013, 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 2014 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 2015, 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 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.
                                 <all>