SECTION 1. SHORT TITLE.

    This Act may be cited as the ``American Shipping Reinvestment Act 
of 2008''.

SEC. 2. REPEAL OF QUALIFIED SHIPPING INVESTMENT WITHDRAWAL RULES.

    (a) In General.--Section 955 of the Internal Revenue Code of 1986 
(relating to withdrawal of previously excluded subpart F income from 
qualified investment) is hereby repealed.
    (b) Conforming Amendments.--
            (1) Section 951(a)(1)(A) of such Code is amended by adding 
        ``and'' at the end of clause (i) and by striking clause (iii).
            (2) Section 951(a)(3) of such Code (relating to the 
        limitation on pro rata share of previously excluded subpart F 
        income withdrawn from investment) is hereby repealed.
            (3) Section 964(b) of such Code is amended by striking ``, 
        955,''.
            (4) The table of sections for subpart F of part III of 
        subchapter N of chapter 1 of such Code is amended by striking 
        the item relating to section 955.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years of controlled foreign corporations ending on or 
after the date of the enactment of this Act, and to taxable years of 
United States shareholders in which or with which such taxable years of 
controlled foreign corporations end.

SEC. 3. TEMPORARY DIVIDENDS RECEIVED DEDUCTION FOR PREVIOUSLY UNTAXED 
              FOREIGN BASE COMPANY SHIPPING INCOME.

    (a) In General.--Section 965 of the Internal Revenue Code of 1986 
(relating to temporary dividends received deduction) is amended by 
adding at the end the following new subsection:
    ``(g) Temporary Dividends Received Deduction for Foreign Base 
Company Shipping Income.--
            ``(1) In general.--In the case of a corporation which is a 
        United States shareholder and for which the election under this 
        subsection is in effect for the taxable year, there shall be 
        allowed as a deduction an amount equal to 85 percent of the 
        cash distributions which are received during such taxable year 
        by such shareholder from controlled foreign corporations to the 
        extent that the distributions are attributable to income--
                    ``(A) which was derived by the controlled foreign 
                corporation in taxable years beginning before January 
                1, 2005, and
                    ``(B) which would, without regard to the year 
                earned, be described in section 954(f) (as in effect 
                before the enactment of the American Jobs Creation Act 
                of 2004).
            ``(2) Indirect dividends.--A rule similar to the rule of 
        subsection (a)(2) shall apply, determined by treating cash 
        distributions which are so attributable as cash dividends.
            ``(3) Limitation.--The amount of dividends taken into 
        account under this subsection shall not exceed the amount 
        permitted to be taken into account under paragraphs (1), (3), 
        and (4) of subsection (b), determined as if such paragraphs 
        applied to this subsection.
            ``(4) Taxpayer election and designation.--For purposes of 
        paragraph (1), a United States shareholder may, on its return 
        for the taxable year to which this subsection applies--
                    ``(A) elect to apply paragraph (3) of section 
                959(c) before paragraphs (1) and (2) thereof, and
                    ``(B) designate the extent, if any, to which a cash 
                distribution reduces a controlled foreign corporation's 
                earnings and profits attributable to--
                            ``(i) foreign base company shipping income 
                        (determined under section 954(f) as in effect 
                        before the enactment of the American Jobs 
                        Creation Act of 2004), or
                            ``(ii) other earnings and profits.
            ``(5) Election.--The taxpayer may elect to apply this 
        subsection to--
                    ``(A) the taxpayer's last taxable year which begins 
                before the date of the enactment of this subsection, 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.
            ``(6) 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 
                (as defined in section 264(e)(5)(B)) shall be treated 
                as a single taxpayer.''.
    (b) Conforming Amendment.--Subsection (f) of section 965 of such 
Code is amended by inserting ``other than subsection (g)'' after ``this 
section'' in the material preceding paragraph (1).
    (c) 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.
American Shipping Reinvestment Act of 2008 - Amends the Internal Revenue Code to: (1) repeal shipping investment withdrawal tax rules; and (2) allow U.S. corporate shareholders a tax deduction for dividends attributable to foreign base company shipping income received from a controlled foreign corporation.
A bill to amend the Internal Revenue Code of 1986 to repeal the shipping investment withdrawal rules in section 955 and to provide an incentive to reinvest foreign shipping earnings in the United States.