S.Amdt. 1923

SA 1923. Mr. McCAIN (for himself and Mrs. Hagan) submitted an
amendment intended to be proposed to amendment SA 1836 proposed by Mr.
Reid (for Ms. Cantwell (for herself, Mr. Johnson of South Dakota, Mr.
Graham, Mr. Shelby, Mr. Warner, Mr. Schumer, Mr. Brown of Ohio, Mrs.
Hagan, Mr. Coons, Mr. Akaka, Mrs. Murray, Ms. Landrieu, Mr. Kerry, and
Mr. Kirk)) to the bill H.R. 3606, to increase American job creation and
economic growth by improving access to the public capital markets for
emerging growth companies; which was ordered to lie on the table; as
follows:

At the end, add the following:

TITLE __--FOREIGN EARNINGS REINVESTMENT

SEC. _01. SHORT TITLE.

This title may be cited as the ``Foreign Earnings
Reinvestment Act''.

SEC. __. 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) Applicable financial statement.--Section 965(c)(1) of
such Code is amended by striking ``June 30, 2003'' each place
it appears and inserting ``September 30, 2011''.
(D) 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:

[[Page S1858]]

``(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.
______