To amend the Internal Revenue Code of 1986 to allow a temporary dividends received deduction for 2011 or 2012.

Summary: Freedom to Invest Act of 2011 - Amends the Internal Revenue Code to: (1) extend the election allowed to a U.S. corporation to deduct dividends received from a controlled foreign corporation to the corporation's last taxable year beginning before the enactment of this Act or the first taxable year beginning during the one-year period beginning on such enactment date, and (2) reduce the amount of such tax deduction for corporations that fail to maintain specified employment levels for full-time U.S. employees.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Freedom to Invest Act of 2011''.

SEC. 2. TEMPORARY DIVIDENDS RECEIVED DEDUCTION ALLOWED FOR 2011 OR 
              2012.

    (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.--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) Limitation.--Paragraph (1) of section 965(b) of such Code 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.''.
    (c) 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 $25,000 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) Threshold Period.--Section 965 of such Code is amended by 
striking ``June 30, 2003'' each place it occurs and inserting ``June 
30, 2010''.
    (e) Base Period.--Paragraph (2) of subsection 965(c) of such Code 
is amended by inserting at the end of subparagraph (A) the following 
flush sentence: ``For purposes of this paragraph, taxable years shall 
not include any year for which an election under section 965 was in 
effect.''.
    (f) Indebtedness Determination Date.--Subparagraph (B) of section 
965(b)(3) of such Code is amended by striking ``October 3, 2004'' and 
inserting ``January 19, 2011''.
    (g) Conforming Amendments.--
            (1) Subsection 965(c) of such Code, as amended by 
        subsection (e), is amended by striking paragraph (1) and 
        redesignating paragraphs (2), (3), (4), and (5) as paragraphs 
        (1), (2), (3), and (4), respectively.
            (2) Paragraph 965(c)(4) of such Code, as redesignated by 
        paragraph (1), 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.''.
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years ending on or after the date of the enactment of 
this Act.