To amend the Internal Revenue Code of 1986 to encourage investing of foreign earnings within the United States for productive business purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Homeland Investment Act of 2003''.

SEC. 2. TOLL TAX ON EXCESS QUALIFIED FOREIGN DISTRIBUTION AMOUNT.

    (a) In General.--Subpart F of part III of subchapter N of chapter 1 
of the Internal Revenue Code of 1986 (relating to controlled foreign 
corporations) is amended by adding at the end the following new 
section:

``SEC. 965. TOLL TAX IMPOSED ON EXCESS QUALIFIED FOREIGN DISTRIBUTION 
              AMOUNT

    ``(a) Toll Tax Imposed on Excess Qualified Foreign Distribution 
Amount.--If a taxpayer elects the application of this section, a tax 
shall be imposed on the taxpayer in an amount equal to 5.25 percent 
of--
            ``(1) the excess qualified foreign distribution amount, and
            ``(2) the amount determined under section 78 that is 
        attributable to such excess qualified foreign distribution 
        amount.
Such tax shall be imposed in lieu of the tax imposed under section 1 or 
11 on such amounts.
    ``(b) Excess Qualified Foreign Distribution Amount.--
            ``(1) In general.--The term `excess qualified foreign 
        distribution amount' means the excess (if any) of--
                    ``(A) dividends received by the taxpayer during the 
                taxable year from corporations that are controlled 
                foreign corporations in which the taxpayer is a United 
                States shareholder on the date such dividends are paid, 
                over
                    ``(B) the base dividend amount.
            ``(2) Base dividend amount.--The term `base dividend 
        amount' means an amount not less than the average amount of 
        dividends received during the fixed base period from 
        corporations that are controlled foreign corporations in which 
        the taxpayer is a United States shareholder on the date such 
        dividends are paid.
            ``(3) Fixed base period.--
                    ``(A) In general.--The term `fixed base period' 
                means each of 3 taxable years which are among the 5 
                most recent taxable years of the taxpayer ending on or 
                before December 31, 2002, determined by disregarding--
                            ``(i) the 1 taxable year for which the 
                        corporation had the highest amount of dividends 
                        from controlled foreign corporations relative 
                        to the other 4 taxable years, and
                            ``(ii) the one taxable year for which the 
                        corporation had the lowest amount of dividends 
                        from controlled foreign corporations relative 
                        to the other 4 taxable years.
                    ``(B) Shorter period.--If the taxpayer has fewer 
                than 5 taxable years ending on or before December 31, 
                2002, then in lieu of applying subparagraph (b)(3)(A), 
                the fixed base period shall mean such shorter period 
                representing all of the taxable years beginning on or 
                before December 31, 2002. Rules similar to the rules of 
                section 41(f)(3) shall apply in the case of 
                acquisitions or dispositions of controlled foreign 
                corporations beginning after the fixed base period.
    ``(c) Definitions and Special Rules.--
            ``(1) Dividends.--For purposes of this section, the term 
        `dividend' means a dividend as defined in section 316, except 
        that the term shall also include amounts described in section 
        951(a)(1)(B), and shall exclude amounts described in section 
        78.
            ``(2) Controlled foreign corporations and united states 
        shareholders.--For purpose of this section, the term 
        `controlled foreign corporation' shall have the same meaning as 
        under section 957(a) and the term `United States shareholder' 
        shall have the same meaning as under section 951(b).
            ``(3) Foreign tax credits.--The amount of any income, war, 
        profits, or excess profits taxes paid (or deemed paid under 
        sections 902 and 960) or accrued by the taxpayer with respect 
        to the excess qualified foreign distribution amount for which a 
        credit would be allowable under section 901 in the absence of 
        this section shall be reduced by 85 percent.
            ``(4) Foreign tax credit limitation.--For all purposes of 
        section 904, there shall be disregarded 85 percent of--
                    ``(A) the excess qualified foreign distribution 
                amount, and
                    ``(B) the amount determined under section 78 that 
                is attributable to such excess qualified foreign 
                distribution amount.
            ``(5) Treatment of consolidated groups.--Members of an 
        affiliated group of corporations filing a consolidated return 
        under section 1501 shall be treated as a single taxpayer in 
        applying the rules of this section.
            ``(6) Designation of dividends.--The taxpayer shall 
        designate the particular dividends received during the taxable 
        year from one or more controlled foreign corporations in which 
        it is a United States shareholder that are dividends excluded 
        from the excess qualified foreign distribution amount. The 
        total amount of such designated dividends shall equal the base 
        dividend amount.
    ``(d) Election.--
            ``(1) In general.--An election under this section shall be 
        made on the taxpayer's timely filed income tax return for the 
        taxable year (determined by taking extensions into account) 
        and, once made, may be revoked only with the consent of the 
        Secretary.
            ``(2) All controlled foreign corporations.--The election 
        shall apply to all controlled foreign corporations in which the 
        taxpayer is a United States shareholder during the taxable 
        year.
            ``(3) Consolidated groups.--If a taxpayer is a member of an 
        affiliated group of corporations filing a consolidated return 
        under section 1501 for the taxable year, an election under this 
        section shall be made by the common parent of the affiliated 
        group which includes the taxpayer, and shall apply to all 
        members of the affiliated group.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary and appropriate to carry out the purposes of this 
section, including regulations under section 55 and regulations 
addressing corporations that, during the fixed base period or 
thereafter, join or leave an affiliated group of corporations filing a 
consolidated return.''.
    (b) Clerical Amendment.--The table of sections for such subpart is 
amended by adding at the end the following new item:

                              ``Sec. 965. Toll tax imposed on excess 
                                        qualified foreign distribution 
                                        amount.''.
    (c) Effective Date.--The amendments made by this section shall 
apply only to the first taxable year of the electing taxpayer ending 
120 days after the date of the enactment of this Act.

Summary: Homeland Investment Act of 2003 - Amends the Internal Revenue Code to permit a US corporation doing business abroad to elect to have its foreign earnings taxed in the United States for one year at a rate equal to 5.25 percent of the excess qualified foreign distribution and the amount attributable to such corporation as controlled foreign-earned dividends in lieu of being taxed under individual or corporate rates. Limits foreign tax credits with respect to dividends taxed at such 5.25 percent rate.