S.Amdt. 640

1. 1

   Change 1: Strikes title II

   Strikes

   In S. 1054 · Placed on Calendar Senate

   Struck: TITLE II--PARTIAL EXCLUSION OF DIVIDENDS

   Struck: SEC. 201. PARTIAL EXCLUSION OF DIVIDENDS RECEIVED BY INDIVIDUALS.

   Struck: (a) General Rule.--Part III of subchapter B of chapter 1 is amended by inserting after section 115 the following new section:

   Struck: "SEC. 116. PARTIAL EXCLUSION OF DIVIDENDS RECEIVED BY INDIVIDUALS.

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   Struck: "(a) Exclusion From Gross Income.--

   Struck: "(1) In general.--Gross income does not include qualified dividend income received during the taxable year by an individual.

   Struck: "(2) Limitation.--Paragraph (1) shall apply to qualified dividend income of a taxpayer only to the extent such income does not exceed the sum of--

   Struck: "(A) $500 ($250 in the case of a married individual filing a separate return), plus "(B) 10 percent (20 percent in the case of taxable years beginning after 2007) of such income in excess of the amount applicable under subparagraph (A).

   Struck: "(b) Qualified Dividend Income.--For purposes of this subsection--

   Struck: "(1) In general.--The term 'qualified dividend income' means dividends received with respect to any share of stock of--

   Struck: "(A) any domestic corporation, or

   Struck: "(B) any foreign corporation but only if such share of stock is readily tradable on an established securities market.

   Struck: "(2) Certain dividends excluded.--Such term shall not include--

   Struck: "(A) any dividend from a corporation which for the taxable year of the corporation in which the distribution is made, or the preceding taxable year, is a corporation exempt from tax under section 501 or 521,

   Struck: "(B) any amount allowed as a deduction under section 591 (relating to deduction for dividends paid by mutual savings banks, etc.), and

   Struck: "(C) any dividend described in section 404(k).

   Struck: "(3) Exclusion of dividends of certain foreign corporations.--Such term shall not include any dividend from a foreign corporation which for the taxable year of the corporation in which the distribution was made, or the preceding taxable year, is a foreign personal holding company (as defined in section 552), a foreign investment company (as defined in section 1246(b)), or a passive foreign investment company (as defined in section 1297).

   Struck: "(4) Coordination with section 246(c).--Such term shall not include any dividend on any share of stock--

   Struck: "(A) with respect to which the holding period requirements of section 246(c) are not met, or

   Struck: "(B) to the extent that the taxpayer is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property.

   Struck: "(c) Special Rules.--

   Struck: "(1) Amounts taken into account as investment income.-- Qualified dividend income shall not include any amount which the taxpayer takes into account as investment income under section 163(d)(4)(B).

   Struck: "(2) Coordination with foreign tax credit and deduction.-- No credit shall be allowed under section 901, and no deduction shall be allowed under this chapter, for any taxes paid or accrued with respect to any income excludable under this section.

   Struck: "(3) Extraordinary dividends.--If an individual receives, with respect to any share of stock, qualified dividend income from 1 or more dividends which are extraordinary dividends (within the meaning of section 1059(c)), any loss on the sale or exchange of such share shall, to the extent of such dividends, be treated as long-term capital loss.

   Struck: "(4) Certain nonresident aliens ineligible for exclusion.--In the case of a nonresident alien individual, subsection (a) shall apply only in determining the tax imposed for the taxable year by sections 871(b)(1) and 877(b).

   Struck: "(5) Exclusion disregarded in determining income for certain purposes.--Subsection (a) shall not apply for purposes of determining amounts of income under sections 32(i), 86(b), 135(b), 137(b), 219(g), 221(b), 222(b), 408A(c)(3), 469(i), and 530(c), or subpart A of part IV of subchapter A.

   Struck: "(6) Treatment of dividends from regulated investment companies and real estate investment trusts.--A dividend from a regulated investment company or real estate investment trust shall be subject to the limitations prescribed in sections 854 and 857.".

   Struck: (b) Exclusion of Dividends From Investment Income.--Subparagraph (B) of section 163(d)(4) (defining net investment income) is amended by adding at the end the following flush sentence: "Such term shall include qualified dividend income (as defined in section 116(b)) only to the extent the taxpayer elects to treat such income as investment income for purposes of this subsection.".

   Struck: (c) Treatment of Dividends From Regulated Investment Companies.--

   Struck: (1) Subsection (a) of section 854 (relating to dividends received from regulated investment companies) is amended by inserting "section 116 (relating to partial exclusion of dividends received by individuals) and" after "For purposes of".

   Struck: (2) Paragraph (1) of section 854(b) (relating to other dividends) is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph:

   Struck: "(B) Exclusion under section 116.--

   Struck: "(i) In general.--If the aggregate dividends received by a regulated investment company during any taxable year are less than 95 percent of its gross income, then, in computing the exclusion under section 116, rules similar to the rules of subparagraph (A) shall apply.

   Struck: "(ii) Gross income.--For purposes of clause (i), in the case of 1 or more sales or other dispositions of stock or securities, the term 'gross income' includes only the excess of--

   Struck: "(I) the net short-term capital gain from such sales or dispositions, over "(II) the net long-term capital loss from such sales or dispositions.".

   Struck: (3) Subparagraph (C) of section 854(b)(1), as redesignated by paragraph (2), is amended by striking "subparagraph (A)" and inserting "subparagraph (A) or (B)".

   Struck: (4) Paragraph (2) of section 854(b) is amended by inserting "the exclusion under section 116 and" after "for purposes of".

   Struck: (5) Subsection (b) of section 854 is amended by adding at the end the following new paragraph:

   Struck: "(5) Coordination with section 116.--For purposes of paragraph (1)(B), an amount shall be treated as a dividend only if the amount is qualified dividend income (within the meaning of section 116(b)).".

   Struck: (d) Treatment of Dividends Received From Real Estate Investment Trusts.--Section 857(c) (relating to restrictions applicable to dividends received from real estate investment trusts) is amended to read as follows:

   Struck: "(c) Restrictions Applicable To Dividends Received From Real Estate Investment Trusts.--

   Struck: "(1) Section 243.--For purposes of section 243 (relating to deductions for dividends received by corporations), a dividend received from a real estate investment trust which meets the requirements of this part shall not be considered a dividend.

   Struck: "(2) Section 116.--For purposes of section 116 (relating to exclusion of dividends), rules similar to the rules of section 854(b)(1)(B) shall apply to dividends received from a real estate trust which meets the requirements of this part.".

   Struck: (e) Conforming Amendments.--

   Struck: (1) Subsection (f) of section 301 is amended adding at the end the following new paragraph:

   Struck: "(4) For partial exclusion from gross income of dividends received by individuals, see section 116.".

   Struck: (2) Paragraph (1) of section 306(a) is amended by adding at the end the following new subparagraph:

   Struck: "(D) Treatment as dividend.--For purposes of section 116, any amount treated as ordinary income under this paragraph shall be treated as a dividend received from the corporation.".

   Struck: (3)(A) Subpart C of part II of subchapter C of chapter 1 (relating to collapsible corporations) is repealed.

   Struck: (B)(i) Section 338(h) is amended by striking paragraph (14).

   Struck: (ii) Sections 467(c)(5)(C), 1255(b)(2), and 1257(d) are each amended by striking ", 341(e)(12),".

   Struck: (iii) The table of subparts for part II of subchapter C of chapter 1 is amended by striking the item related to subpart C.

   Struck: (4) Section 531(a) is amended by inserting "90 percent (80 percent in the case of taxable years beginning after 2007) of" after "equal to".

   Struck: (5) Section 541(a) is amended by inserting "90 percent (80 percent in the case of taxable years beginning after 2007) of" after "equal to".

   Struck: (6) Section 584(c) is amended by adding at the end the following new flush sentence: "The proportionate share of each participant in the amount of dividends received by the common trust fund and to which section 116 applies shall be considered for purposes of such paragraph as having been received by such participant.".

   Struck: (7) Section 643(a) is amended by redesignating paragraph (7) as paragraph (8) and by inserting after paragraph (6) the following new paragraph:

   Struck: "(7) Excluded dividends.--There shall be included the amount of any dividends excluded from gross income under section 116 (relating to partial exclusion of dividends).".

   Struck: (8) Paragraph (5) of section 702(a) is amended to read as follows:

   Struck: "(5) dividends with respect to which section 116 or part VII of subchapter B applies,".

   Struck: (f) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 2003.

   Original wording

   Strike title II.

2. 2

   Change 2: Adds SEC. 529. REFUND OF EMPLOYEE PAYROLL TAXES at the end of subtitle C of title V

   Adds a section

   In S. 1054 · Placed on Calendar Senate

   (c) Effective Date.--The amendments made by this section shall apply to amounts paid or accrued after the date of enactment of this section in taxable years ending after such date.

   Inserted: SEC. 529. REFUND OF EMPLOYEE PAYROLL TAXES.

   Inserted: (a) Payment of Refunds.--

   Inserted: (1) In general.--The Secretary of the Treasury shall pay, out of any money in the Treasury not otherwise appropriated, to each individual an amount equal to the lesser of--

   Inserted: (A) $765, or

   Inserted: (B) the amount of the individual's social security taxes for 2001.

   Inserted: (2) Payment in installments.--The Secretary of the Treasury shall make the payment under paragraph (1) in two equal installments--

   Inserted: (A) the first of which shall be paid on the date which is 2 months after the date of the enactment of this Act, and

   Inserted: (B) the second of which shall be paid on December 1, 2003. The Secretary may, after notice to the Senate and House of Representatives, make adjustments in the timing of each installment to the extent the adjustments are administratively necessary.

   Inserted: (3) No interest.--No interest shall be allowed on any payment required by this subsection.

   Inserted: (4) Certain individuals not eligible.--No payment shall be made under this subsection to--

   Inserted: (A) any estate or trust,

   Inserted: (B) any nonresident alien, or

   Show 23 more inserted paragraphsShow less

   Inserted: (C) any individual with respect to whom a deduction under section 151 of such Code is allowable to another taxpayer for a taxable year beginning in 2001.

   Inserted: (5) Social security taxes.--For purposes of this subsection--

   Inserted: (A) In general.--The term "social security taxes" has the meaning given such term by section 24(d)(2) of the Internal Revenue Code of 1986.

   Inserted: (B) State and local employees not covered by social security system.--In the case of any individual--

   Inserted: (i) whose service is not treated as employment by reason of section 3121(b)(7) of such Code (relating to exemption for State and local employees), and

   Inserted: (ii) who, without regard to this subparagraph, has no social security taxes for 2001, the term "social security taxes" shall include the individual's employee contributions to a governmental pension plan by reason of the service described in clause (i).

   Inserted: (b) 2002 Refund for Individuals Not Receiving Full 2001 Refund.--Subchapter B of chapter 65 (relating to abatements, credits, and refunds) is amended by adding at the end the following new section:

   Inserted: "SEC. 6429. REFUND OF CERTAIN 2002 PAYROLL TAXES.

   Inserted: "(a) In General.--Each eligible individual shall be treated as having made a payment against the tax imposed by chapter 1 for such individual's first taxable year beginning in 2002 in an amount equal to the payroll tax refund amount for such taxable year.

   Inserted: "(b) Payroll Tax Refund Amount.--For purposes of subsection (a), the payroll tax refund amount is the excess (if any) of--

   Inserted: "(1) the lesser of--

   Inserted: "(A) $765, or

   Inserted: "(B) the amount of the individual's social security taxes for 2002, over

   Inserted: "(2) the amount of the payment to the individual under section 529(a) of the Jobs and Growth Tax Relief Reconciliation Act of 2003.

   Inserted: "(c) Eligible Individual.--For purposes of this section, the term 'eligible individual' means any individual other than--

   Inserted: "(1) any estate or trust,

   Inserted: "(2) any nonresident alien, or

   Inserted: "(3) any individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in 2002.

   Inserted: "(d) Timing of Payments.--In the case of any overpayment attributable to this section, the Secretary shall, subject to the provisions of this title, refund or credit such overpayment as rapidly as possible and, to the extent practicable, before December 31, 2003.

   Inserted: "(e) No Interest.--No interest shall be allowed on any overpayment attributable to this section.

   Inserted: "(f) Social Security Taxes.--For purposes of this section, the term 'social security taxes' has the meaning given such term by section 529(a)(5) of the Jobs and Growth Tax Relief Reconciliation Act of 2003."

   Inserted: (c) Clerical Amendment.--The table of sections for subchapter B of chapter 65 of such Code is amended by adding at the end the following new item:

   Inserted: "Sec. 6429. Refund of certain 2002 payroll taxes."

   Original wording

   At the end of subtitle C of title V, insert:

Read automatically from the Congressional Record. Check the original before relying on it.

As printed