H.R. 7044 – To amend the Internal Revenue Code of 1986 to allow a temporary dividends recei…

110th CONGRESS

2d Session

H. R. 7044

IN THE HOUSE OF REPRESENTATIVES

September 24, 2008

Mr. English of Pennsylvania (for himself and Mr. Brady of Texas) 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 allow a temporary dividends received deduction for taxable years beginning in 2008 or 2009.

Temporary dividends received deduction allowed for 2008 or 2009

(a)

Election

Subsection (f) of section 965 of the Internal Revenue Code of 1986 (relating to election) is amended to read as follows:

(f)

Election

In the case of any taxable year beginning after September 30, 2007, the taxpayer may elect to apply this section to—

(1)

the taxpayer’s last taxable year which begins before the date of the enactment of this subsection, or

(2)

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.

(b)

Failure To maintain employment levels

Subsection (b) of section 965 of such Code (relating to limitations) is amended by adding at the end the following:

(5)

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 paragraph (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 $25,000 multiplied by the number of employees by which the taxpayers average employment level during such period falls below the prior average employment (but not exceeding the aggregate amount allowed as a deduction pursuant to paragraph (1)) shall be taken into income by the taxpayer during the taxable year that includes the final day of such period.

(B)

Prior average employment

For purposes of this paragraph, the taxpayer’s prior average employment shall be the average number of 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 paragraph (1).

(C)

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.

(c)

Threshold period

Section 965 of such Code is amended by striking June 30, 2003 each place it occurs and inserting June 30, 2007.

(d)

Base period

Subparagraph (A) of section 965(c)(2) of such Code (as amended by subsection (c)) is amended to read as follows:

(A)

In general

The base period years are the 3 taxable years—

(i)

which are among the 6 most recent taxable years ending on or before June 30, 2007, and

(ii)

which are determined by disregarding—

(I)

1 taxable year for which the sum of the amounts described in clauses (i), (ii), and (iii) of subsection (b)(2)(B) is the largest,

(II)

1 taxable year for which such sum is the smallest, and

(III)

the taxable year for which an election was made before the enactment of this subclause.

(e)

Indebtedness determination date

Subparagraph (B) of section 965(b)(3) of such Code is amended by striking October 3, 2004 and inserting September 24, 2008.

(f)

Effective date

The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act.

To amend the Internal Revenue Code of 1986 to allow a temporary dividends received deduction for taxable years beginning in 2008 or 2009.

Legislative Activity

Bill Text