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H.R. 767 (108th): Homeland Investment Act of 2003


The text of the bill below is as of Feb 13, 2003 (Introduced). The bill was not enacted into law.


HR 767 IH

108th CONGRESS

1st Session

H. R. 767

To amend the Internal Revenue Code of 1986 to encourage investing of foreign earnings within the United States for productive business purposes.

IN THE HOUSE OF REPRESENTATIVES

February 13, 2003

Mr. ENGLISH (for himself, Mr. DREIER, Mr. BRADY of Texas, and Ms. DUNN) introduced the following bill; which was referred to the Committee on Ways and Means


A BILL

To amend the Internal Revenue Code of 1986 to encourage investing of foreign earnings within the United States for productive business 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 ‘Homeland Investment Act of 2003’.

SEC. 2. TOLL TAX ON EXCESS QUALIFIED FOREIGN DISTRIBUTION AMOUNT.

    (a) IN GENERAL- Subpart F of part III of subchapter N of chapter 1 of the Internal Revenue Code of 1986 (relating to controlled foreign corporations) is amended by adding at the end the following new section:

‘SEC. 965. TOLL TAX IMPOSED ON EXCESS QUALIFIED FOREIGN DISTRIBUTION AMOUNT

    ‘(a) TOLL TAX IMPOSED ON EXCESS QUALIFIED FOREIGN DISTRIBUTION AMOUNT- If a taxpayer elects the application of this section, a tax shall be imposed on the taxpayer in an amount equal to 5.25 percent of--

      ‘(1) the excess qualified foreign distribution amount, and

      ‘(2) the amount determined under section 78 that is attributable to such excess qualified foreign distribution amount.

    Such tax shall be imposed in lieu of the tax imposed under section 1 or 11 on such amounts.

    ‘(b) EXCESS QUALIFIED FOREIGN DISTRIBUTION AMOUNT-

      ‘(1) IN GENERAL- The term ‘excess qualified foreign distribution amount’ means the excess (if any) of--

        ‘(A) dividends received by the taxpayer during the taxable year from corporations that are controlled foreign corporations in which the taxpayer is a United States shareholder on the date such dividends are paid, over

        ‘(B) the base dividend amount.

      ‘(2) BASE DIVIDEND AMOUNT- The term ‘base dividend amount’ means an amount not less than the average amount of dividends received during the fixed base period from corporations that are controlled foreign corporations in which the taxpayer is a United States shareholder on the date such dividends are paid.

      ‘(3) FIXED BASE PERIOD-

        ‘(A) IN GENERAL- The term ‘fixed base period’ means each of 3 taxable years which are among the 5 most recent taxable years of the taxpayer ending on or before December 31, 2002, determined by disregarding--

          ‘(i) the 1 taxable year for which the corporation had the highest amount of dividends from controlled foreign corporations relative to the other 4 taxable years, and

          ‘(ii) the one taxable year for which the corporation had the lowest amount of dividends from controlled foreign corporations relative to the other 4 taxable years.

        ‘(B) SHORTER PERIOD- If the taxpayer has fewer than 5 taxable years ending on or before December 31, 2002, then in lieu of applying subparagraph (b)(3)(A), the fixed base period shall mean such shorter period representing all of the taxable years beginning on or before December 31, 2002. Rules similar to the rules of section 41(f)(3) shall apply in the case of acquisitions or dispositions of controlled foreign corporations beginning after the fixed base period.

    ‘(c) DEFINITIONS AND SPECIAL RULES-

      ‘(1) DIVIDENDS- For purposes of this section, the term ‘dividend’ means a dividend as defined in section 316, except that the term shall also include amounts described in section 951(a)(1)(B), and shall exclude amounts described in section 78.

      ‘(2) CONTROLLED FOREIGN CORPORATIONS AND UNITED STATES SHAREHOLDERS- For purpose of this section, the term ‘controlled foreign corporation’ shall have the same meaning as under section 957(a) and the term ‘United States shareholder’ shall have the same meaning as under section 951(b).

      ‘(3) FOREIGN TAX CREDITS- The amount of any income, war, profits, or excess profits taxes paid (or deemed paid under sections 902 and 960) or accrued by the taxpayer with respect to the excess qualified foreign distribution amount for which a credit would be allowable under section 901 in the absence of this section shall be reduced by 85 percent.

      ‘(4) FOREIGN TAX CREDIT LIMITATION- For all purposes of section 904, there shall be disregarded 85 percent of--

        ‘(A) the excess qualified foreign distribution amount, and

        ‘(B) the amount determined under section 78 that is attributable to such excess qualified foreign distribution amount.

      ‘(5) TREATMENT OF CONSOLIDATED GROUPS- Members of an affiliated group of corporations filing a consolidated return under section 1501 shall be treated as a single taxpayer in applying the rules of this section.

      ‘(6) DESIGNATION OF DIVIDENDS- The taxpayer shall designate the particular dividends received during the taxable year from one or more controlled foreign corporations in which it is a United States shareholder that are dividends excluded from the excess qualified foreign distribution amount. The total amount of such designated dividends shall equal the base dividend amount.

    ‘(d) ELECTION-

      ‘(1) IN GENERAL- An election under this section shall be made on the taxpayer’s timely filed income tax return for the taxable year (determined by taking extensions into account) and, once made, may be revoked only with the consent of the Secretary.

      ‘(2) ALL CONTROLLED FOREIGN CORPORATIONS- The election shall apply to all controlled foreign corporations in which the taxpayer is a United States shareholder during the taxable year.

      ‘(3) CONSOLIDATED GROUPS- If a taxpayer is a member of an affiliated group of corporations filing a consolidated return under section 1501 for the taxable year, an election under this section shall be made by the common parent of the affiliated group which includes the taxpayer, and shall apply to all members of the affiliated group.

    ‘(e) REGULATIONS- The Secretary shall prescribe such regulations as may be necessary and appropriate to carry out the purposes of this section, including regulations under section 55 and regulations addressing corporations that, during the fixed base period or thereafter, join or leave an affiliated group of corporations filing a consolidated return.’.

    (b) CLERICAL AMENDMENT- The table of sections for such subpart is amended by adding at the end the following new item:

‘Sec. 965. Toll tax imposed on excess qualified foreign distribution amount.’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply only to the first taxable year of the electing taxpayer ending 120 days after the date of the enactment of this Act.