II 

113TH CONGRESS 

2D SESSION S. 1957 

To establish the American Infrastructure Fund, to provide bond guarantees 

and make loans to States, local governments, and infrastructure providers 

for investments in certain infrastructure projects, and to provide equity 

investments in such projects, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 16, 2014 

Mr. BENNET (for himself, Mr. BLUNT, Mr. WARNER, Ms. AYOTTE, Ms. LANDRIEU, Mr. KING, Mr. GRAHAM, Mr. COATS, Mr. HOEVEN, Mr. BEGICH, 

and Mr. KIRK) introduced the following bill; which was read twice and 

referred to the Committee on Finance 

A BILL 

To establish the American Infrastructure Fund, to provide 

bond guarantees and make loans to States, local governments, and infrastructure providers for investments in 

certain infrastructure projects, and to provide equity investments in such projects, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Partnership to Build 

5 America Act of 2014’’. 

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1 SEC. 2. AMERICAN INFRASTRUCTURE FUND. 

2 (a) AMERICAN INFRASTRUCTURE FUND.— 

3 (1) IN GENERAL.—There is established a wholly 

4 owned Government corporation— 

5 (A) which shall be called the American In6 frastructure Fund (referred to in this Act as 

7 the ‘‘AIF’’); 

8 (B) which shall be headed by the Board of 

9 Trustees established under subsection (b); 

10 (C) which may have separate subaccounts 

11 or subsidiaries for funds used to make loans, 

12 bond guarantees, and equity investments under 

13 this section; 

14 (D) which shall be available to the AIF to 

15 pay for the costs of carrying out this section, 

16 including the compensation of the Board and 

17 other employees of the AIF; and 

18 (E) the funds of which may be invested by 

19 the Board in such manner as the Board deter20 mines appropriate. 

21 (2) DEPOSITS TO AIF.—All funds received from 

22 bond issuances, loan payments, bond guarantee fees, 

23 and any other funds received in carrying out this 

24 section shall be held by AIF. 

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1 (3) LIMITATIONS.—The charter of the AIF 

2 shall limit its activities to those activities described 

3 as the mission of the Board under subsection (b)(2). 

4 (4) OVERSIGHT.—The AIF shall register with 

5 the Securities and Exchange Commission and the 

6 Chairman shall report to Congress annually as to 

7 whether the AIF is fulfilling the mission of the 

8 Board under subsection (b)(2). 

9 (5) TREATMENT OF AIF.— 

10 (A) ACCOUNTS.—Title 31, United States 

11 Code, is amended in each of sections 9107(c)(3) 

12 and 9108(d)(2)— 

13 (i) by inserting ‘‘the American Infra14 structure Fund,’’ after ‘‘the Regional 

15 Banks for Cooperatives,’’; and 

16 (ii) by striking ‘‘those banks’’ and in17 serting ‘‘those entities’’. 

18 (B) BONDS.—Section 149(b)(3)(A)(i) of 

19 the Internal Revenue Code of 1986 is amended 

20 by inserting ‘‘American Infrastructure Fund,’’ 

21 after ‘‘Federal Home Loan Mortgage Corpora22 tion,’’. 

23 (b) BOARD OF TRUSTEES.— 

24 (1) IN GENERAL.—There is established a Board 

25 of Trustees of the AIF (referred to in this submstockstill on DSK4VPTVN1PROD with BILLS

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1 section as the ‘‘Board’’), which shall be composed of 

2 9 members who— 

3 (A) have substantial experience in bond 

4 guarantees or municipal credit; and 

5 (B) to the greatest extent practicable, have 

6 extensive experience working with municipal 

7 credit, risk management, and infrastructure fi8 nance. 

9 (2) MISSION.—The mission of the Board is— 

10 (A) to operate the AIF and its subsidiaries 

11 to be a low cost provider of bond guarantees, 

12 loans, and equity investments to State and local 

13 governments and infrastructure providers for 

14 urban and rural infrastructure projects that— 

15 (i) provide a positive economic impact; 

16 and 

17 (ii) meet such other standards as the 

18 Board may develop; 

19 (B) to operate the AIF in a self-sustaining 

20 manner so as to allow the AIF to repay its in21 frastructure bonds when such bonds are due; 

22 (C) to not have a profit motive, but to seek 

23 at all times to pursue its mission of providing 

24 low cost bond guarantees and loans while— 

25 (i) covering its costs; 

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1 (ii) maintaining such reserves as may 

2 be needed; and 

3 (iii) applying prudent underwriting 

4 standards; 

5 (D) to only consider projects put forth by 

6 State and local governments and not to seek 

7 projects directly; 

8 (E) to always make clear that no taxpayer 

9 money supports the AIF or ever will support 

10 the AIF; and 

11 (F) to engage in no other activities other 

12 than those permitted under this section. 

13 (3) MEMBERSHIP.— 

14 (A) INITIAL MEMBERS.— 

15 (i) APPOINTMENT.—Not later than 

16 150 days after the date on which bonds 

17 are first issued under subsection (d), the 

18 President shall appoint, with the advice 

19 and consent of the Senate, as members of 

20 the Board— 

21 (I) 2 individuals from a list of at 

22 least 5 individuals selected by the 

23 Speaker of the House of Representa24 tives; 

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1 (II) 2 individuals from a list of 

2 at least 5 individuals selected by the 

3 Minority Leader of the House of Rep4 resentatives; 

5 (III) 2 individuals from a list of 

6 at least 5 individuals selected by the 

7 Majority Leader of the Senate; 

8 (IV) 2 individuals from a list of 

9 at least 5 individuals selected by the 

10 Minority Leader of the Senate; and 

11 (V) 1 individual selected at will 

12 by the President. 

13 (ii) SUBMISSION OF LISTS.—Each of 

14 the lists described in clause (i) shall be 

15 submitted to the President not later than 

16 90 days after the date on which bonds are 

17 first issued under subsection (d). If any of 

18 such lists are submitted after the date re19 quired under this clause, the President 

20 may appoint the 2 members of the Board 

21 who were to be selected from such list at 

22 will. 

23 (B) STAGGERED TERMS.—The members of 

24 the Board appointed pursuant to subparagraph 

25 (A)(i) shall serve staggered terms, with 2 each 

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1 of the initial members of the Board serving for 

2 terms of 5, 6, 7, and 8 years, respectively, and 

3 the initial Chair selected under subparagraph 

4 (D) serving for 9 years. The decision of which 

5 Board members, other than the Chair, serve for 

6 which initial terms shall be made by the mem7 bers of the Board drawing lots. 

8 (C) ADDITIONAL MEMBERS.— 

9 (i) IN GENERAL.—Except as provided 

10 in subparagraph (A), if the term of a 

11 member of the Board expires or otherwise 

12 becomes vacant, the President shall ap13 point a replacement for such member, with 

14 the advice and consent of the Senate, from 

15 among a list of at least 5 individuals sub16 mitted by the Board. 

17 (ii) TERM OF SERVICE.— 

18 (I) IN GENERAL.—Each member 

19 of the Board appointed to replace a 

20 member whose term is expiring shall 

21 serve for a 7-year term. 

22 (II) VACANCIES.—Any member 

23 of the Board appointed to fill a va24 cancy occurring before the expiration 

25 of the term to which that member’s 

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1 predecessor was appointed shall be ap2 pointed only for the remainder of the 

3 term. 

4 (D) CHAIR.—The members of the Board 

5 shall choose 1 member to serve as the Chair of 

6 the Board for a term of 7 years, except that the 

7 initial Chair shall serve for a term of 9 years, 

8 pursuant to subsection (B). 

9 (E) CONTINUATION OF SERVICE.—Each 

10 member of the Board may continue to serve 

11 after the expiration of the term of office to 

12 which that member was appointed until a suc13 cessor has been appointed. 

14 (F) CONFLICTS OF INTEREST.—No mem15 ber of the Board may have a financial interest 

16 in, or be employed by, a Qualified Infrastruc17 ture Project (‘‘QIP’’) related to assistance pro18 vided under this section or any entity that has 

19 purchased bonds under subsection (d). Owning 

20 municipal credit of any State or local govern21 ment or owning the securities of a diversified 

22 company that engages in infrastructure activi23 ties, provided those activities constitute less 

24 than 20 percent of the company’s revenues, or 

25 investing in broadly held investment funds shall 

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1 not be deemed to create a conflict of interest. 

2 The Board may issue regulations to define 

3 terms used under this subparagraph. 

4 (4) COMPENSATION.—The members of the 

5 Board shall be compensated at an amount to be set 

6 by the Board, but under no circumstances may such 

7 compensation be higher than the rate prescribed for 

8 level IV of the Executive Schedule under section 

9 5315 of title 5, United States Code. 

10 (5) STAFF.—The Board shall employ and set 

11 compensation for such staff as the Board determines 

12 as is necessary to carry out the activities and mis13 sion of the AIF, and such staff may be paid without 

14 regard to the provisions of chapter 51 and sub15 chapter III of chapter 53, United States Code, relat16 ing to classification and General Schedule pay rates. 

17 (6) PROCEDURES.—The Board shall establish 

18 such procedures as are necessary to carry out this 

19 section. 

20 (7) CORPORATE GOVERNANCE STANDARDS.— 

21 (A) BOARD COMMITTEES GENERALLY.— 

22 The Board shall maintain all of the committees 

23 required to be maintained by the board of direc24 tors of an issuer listed on the New York Stock 

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1 Exchange as of the date of the enactment of 

2 this section. 

3 (B) RISK MANAGEMENT COMMITTEE.—The 

4 Board shall maintain a risk management com5 mittee, which shall— 

6 (i) employ additional staff who are 

7 certified by the Board as having significant 

8 and relevant experience in insurance un9 derwriting and credit risk management; 

10 and 

11 (ii) establish the risk management 

12 policies used by the Board. 

13 (C) STANDARDS.—The Board shall, to the 

14 extent practicable, follow all standards with re15 spect to corporate governance that are required 

16 to be followed by the board of directors of an 

17 issuer listed on the New York Stock Exchange 

18 as of the date of the enactment of this section. 

19 (8) BIENNIAL REPORTS.—Not less frequently 

20 than once every 2 years, the Board shall produce a 

21 report that describes, of the materials, goods, and 

22 products that were used to construct, or to support 

23 the construction of, qualified infrastructure projects 

24 (as described in subsection (c)) and received financ25 ing from the American Infrastructure Fund within 

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1 the most recent 2 calendar years, the percentage of 

2 such materials, goods, and products that were cre3 ated, sourced, or manufactured in the United States. 

4 (c) INFRASTRUCTURE INVESTMENT.— 

5 (1) ENTITIES ELIGIBLE FOR ASSISTANCE.—The 

6 AIF may provide assistance to State and local gov7 ernment entities, nonprofit infrastructure providers, 

8 private parties, and public-private partnerships (re9 ferred to in this section as ‘‘eligible entities’’) to help 

10 finance qualified infrastructure projects (referred to 

11 in this subsection as ‘‘QIPs’’). 

12 (2) FORMS OF ASSISTANCE.—The AIF may— 

13 (A) provide bond guarantees to debt issued 

14 by eligible entities; 

15 (B) make loans, including subordinated 

16 loans, to eligible entities; and 

17 (C) make equity investments in QIPs. 

18 (3) QUALIFIED INFRASTRUCTURE PROJECTS.— 

19 A project qualifies as a QIP under this section if— 

20 (A) the project is sponsored by a State or 

21 local government; 

22 (B) the infrastructure is, or will be, owned 

23 by a State or local government; 

24 (C) the project involves the construction, 

25 maintenance, improvement, or repair of a transmstockstill on DSK4VPTVN1PROD with BILLS

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1 portation, energy, water, communications, or 

2 educational facility; and 

3 (D) the recipient of bond guarantees, 

4 loans, equity investments, or any other financ5 ing technique authorized under this Act pro6 vides written assurances prescribed by the AIF 

7 that the project will be performed in compliance 

8 with the requirements of all Federal laws that 

9 would otherwise apply to similar projects to 

10 which the United States is a party. 

11 (4) APPLICATION FOR ASSISTANCE.— 

12 (A) IN GENERAL.—A State or local gov13 ernment that wishes to receive a loan or bond 

14 guarantee under this section shall submit an 

15 application to the Board in such form and man16 ner and containing such information as the 

17 Board may require. 

18 (B) REQUIREMENT FOR PUBLIC SPONSOR19 SHIP OF PRIVATE ENTITIES.—A private entity 

20 may only receive a bond guarantee, loan, or eq21 uity investment under this section if the State 

22 or local government for the jurisdiction in which 

23 the nonprofit infrastructure provider or private 

24 partner is located submits an application pursu25 ant to subparagraph (A) on behalf of such nonmstockstill on DSK4VPTVN1PROD with BILLS

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1 profit infrastructure provider or private part2 ner. 

3 (5) LIMITATIONS ON SINGLE STATE AWARDS.— 

4 (A) ANNUAL LIMITATION.—The Board 

5 shall set an annual limit, as a percentage of 

6 total assistance provided under this section dur7 ing a year, on the amount of assistance a single 

8 State (including local governments and other 

9 infrastructure providers within such State) may 

10 receive in assistance provided under this sec11 tion. 

12 (B) CUMULATIVE LIMITATION.—The 

13 Board shall set a limit, as a percentage of total 

14 assistance provided under this section out15 standing at any one time, on the amount of as16 sistance a single State (including local govern17 ments and other infrastructure providers within 

18 such State) may receive in assistance provided 

19 under this section. 

20 (6) LOAN SPECIFICATIONS.—Loans made under 

21 this section shall have such maturity and carry such 

22 interest rate as the Board determines appropriate. 

23 (7) BOND GUARANTEE.—The Board shall 

24 charge such fees for Bond guarantees made under 

25 this section as the Board determines appropriate. 

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1 (8) EQUITY INVESTMENTS.—With respect to a 

2 QIP, the amount of an equity investment made by 

3 the AIF in such QIP may not exceed 20 percent of 

4 the total cost of the QIP. 

5 (9) PUBLIC-PRIVATE PARTNERSHIP REQUIRE6 MENTS.—At least 35 percent of the assistance pro7 vided under this section shall be provided to QIPs 

8 for which at least 10 percent of the financing for 

9 such QIPs comes from private debt or equity. 

10 (10) PROHIBITION ON PRINCIPAL FORGIVE11 NESS.—With respect to a loan made under this sec12 tion, the Board may not forgive any amount of prin13 cipal on such loan. 

14 (d) AMERICAN INFRASTRUCTURE BONDS.— 

15 (1) IN GENERAL.—Not later than 90 days after 

16 the date of the enactment of this Act, the Secretary, 

17 acting through the AIF, shall issue bonds, which 

18 shall be called ‘‘American Infrastructure Bonds’’. 

19 The proceeds from the American Infrastructure 

20 Bonds shall be deposited into the AIF. 

21 (2) FORMS AND DENOMINATIONS; INTEREST.— 

22 American Infrastructure Bonds shall— 

23 (A) be in such forms and denominations as 

24 determined by the Secretary, and shall have a 

25 50-year maturity; and 

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1 (B) bear interest of 1 percent. 

2 (3) NO FULL FAITH AND CREDIT.—Interest 

3 and principal payments paid to holders of American 

4 Infrastructure Bonds shall be paid from the AIF, to 

5 the extent funds are available, and shall not be 

6 backed by the full faith and credit of the United 

7 States. 

8 (4) AMOUNT OF BONDS.—The aggregate face 

9 amount of the bonds issued under this subsection 

10 shall be $50,000,000,000. 

11 (5) SALE OF AMERICAN INFRASTRUCTURE

12 BONDS.— 

13 (A) COMPETITIVE BIDDING PROCESS.— 

14 The Secretary shall sell $50,000,000,000 of 

15 American Infrastructure Bonds— 

16 (i) through a competitive bidding 

17 process that encourages aggressive bidding; 

18 (ii) with prospective purchasers bid19 ding on how low of a multiplier they will 

20 accept (for purposes of subsection (b)(1) of 

21 section 966 of the Internal Revenue Code 

22 of 1986) when purchasing the American 

23 Infrastructure Bonds, for purposes of ap24 plying the foreign earnings exclusion de25 scribed under that section; and 

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1 (iii) in a manner that ensures no enti2 ties participating in the bidding may 

3 collude or coordinate their bids. 

4 (B) LIMITATION.—The multiplier de5 scribed in subparagraph (A)(ii) may not be 

6 greater than 6. 

7 (6) REIMBURSEMENT OF COSTS.—The Board 

8 shall repay the Secretary, from funds in the AIF, for 

9 the costs to the Secretary in carrying out this sub10 section. 

11 (e) ADDITIONAL BONDS.— 

12 (1) IN GENERAL.—The Board may issue such 

13 other bonds as the Board determines appropriate, 

14 the proceeds from which shall be deposited into the 

15 AIF. 

16 (2) NO FULL FAITH AND CREDIT.—Interest 

17 and principal payments paid to holders of bonds 

18 issued pursuant to paragraph (1) shall be paid from 

19 the AIF, to the extent funds are available, and shall 

20 not be backed by the full faith and credit of the 

21 United States. 

22 (f) DEFINITIONS.—For purposes of this section: 

23 (1) INFRASTRUCTURE PROVIDER.—The term 

24 ‘‘infrastructure provider’’ means an entity that seeks 

25 to finance a QIP. 

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1 (2) SECRETARY.—The term ‘‘Secretary’’ means 

2 the Secretary of the Treasury. 

3 (3) STATE.—The term ‘‘State’’ means each of 

4 the several States, the District of Columbia, any ter5 ritory or possession of the United States, and each 

6 Federally recognized Indian tribe. 

7 SEC. 3. FOREIGN EARNINGS EXCLUSION FOR PURCHASE OF 

8 INFRASTRUCTURE BONDS. 

9 (a) IN GENERAL.—Subpart F of part III of sub10 chapter N of chapter 1 of the Internal Revenue Code of 

11 1986 is amended by adding at the end the following new 

12 section: 

13 ‘‘SEC. 966. FOREIGN EARNINGS EXCLUSION FOR PURCHASE 

14 OF INFRASTRUCTURE BONDS. 

15 ‘‘(a) EXCLUSION.—In the case of a corporation which 

16 is a United States shareholder and for which the election 

17 under this section is in effect for the taxable year, gross 

18 income does not include an amount equal to the qualified 

19 cash dividend amount. 

20 ‘‘(b) QUALIFIED CASH DIVIDEND AMOUNT.—For 

21 purposes of this section, the term ‘qualified cash dividend 

22 amount’ means an amount of the cash dividends which 

23 are received during a taxable year by such shareholder 

24 from controlled foreign corporations equal to— 

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1 ‘‘(1) the multiplier determined under section 

2 2(d)(5) of the Partnership to Build America Act of 

3 2014 for such shareholder, multiplied by 

4 ‘‘(2) the face amount of qualified infrastructure 

5 bonds acquired at its original issue (directly or 

6 through an underwriter) by such shareholder. 

7 ‘‘(c) LIMITATIONS.— 

8 ‘‘(1) IN GENERAL.—The amount of dividends 

9 taken into account under subsection (a) for a tax10 able year shall not exceed the lesser of— 

11 ‘‘(A) the cash dividends received by the 

12 taxpayer for such taxable year, or 

13 ‘‘(B) the amount shown on the applicable 

14 financial statement as earnings permanently re15 invested outside the United States. 

16 ‘‘(2) DIVIDENDS MUST BE EXTRAORDINARY.— 

17 The amount of dividends taken into account under 

18 subsection (a) shall not exceed the excess (if any) 

19 of— 

20 ‘‘(A) the cash dividends received during 

21 the taxable year by such shareholder from con22 trolled foreign corporations, over 

23 ‘‘(B) the annual average for the base pe24 riod years of the cash dividends received during 

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1 each base period year by such shareholder from 

2 controlled foreign corporations. 

3 ‘‘(3) REDUCTION OF BENEFIT IF INCREASE IN

4 RELATED PARTY INDEBTEDNESS.—The amount of 

5 dividends which would (but for this paragraph) be 

6 taken into account under subsection (a) shall be re7 duced by the excess (if any) of— 

8 ‘‘(A) the amount of indebtedness of the 

9 controlled foreign corporation to any related 

10 person (as defined in section 954(d)(3)) as of 

11 the close of the taxable year for which the elec12 tion under this section is in effect, over 

13 ‘‘(B) the amount of indebtedness of the 

14 controlled foreign corporation to any related 

15 person (as so defined) as of the close of the pre16 ceding taxable year. 

17 ‘‘(4) TREATMENT OF CONTROLLED FOREIGN

18 CORPORATIONS.—All controlled foreign corporations 

19 with respect to which the taxpayer is a United 

20 States shareholder shall be treated as 1 controlled 

21 foreign corporation for purposes of this subsection. 

22 The Secretary may prescribe such regulations as 

23 may be necessary or appropriate to prevent the 

24 avoidance of the purposes of this subsection, includ25 ing regulations providing that cash dividends shall 

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1 not be taken into account under subsection (a) to 

2 the extent such dividends are attributable to the di3 rect or indirect transfer (including through the use 

4 of intervening entities or capital contributions) of 

5 cash or other property from a related person (as so 

6 defined) to a controlled foreign corporation. 

7 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur8 poses of this section— 

9 ‘‘(1) QUALIFIED INFRASTRUCTURE BONDS.— 

10 The term ‘qualified infrastructure bond’ means a 

11 bond issued under section 2(d) of the Partnership to 

12 Build America Act of 2014. 

13 ‘‘(2) APPLICABLE FINANCIAL STATEMENT.— 

14 The term ‘applicable financial statement’ means, 

15 with respect to a taxable year— 

16 ‘‘(A) with respect to a United States 

17 shareholder which is required to file a financial 

18 statement with the Securities and Exchange 

19 Commission (or which is included in such a 

20 statement so filed by another person), the most 

21 recent audited annual financial statement (in22 cluding the notes which form an integral part 

23 of such statement) of such shareholder (or 

24 which includes such shareholder)— 

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1 ‘‘(i) which was so filed for such tax2 able year, and 

3 ‘‘(ii) which is certified as being pre4 pared in accordance with generally accept5 ed accounting principles, and 

6 ‘‘(B) with respect to any other United 

7 States shareholder, the most recent audited fi8 nancial statement (including the notes which 

9 form an integral part of such statement) of 

10 such shareholder (or which includes such share11 holder)— 

12 ‘‘(i) which is certified as being pre13 pared in accordance with generally accept14 ed accounting principles, and 

15 ‘‘(ii) which is used for the purposes of 

16 a statement or report— 

17 ‘‘(I) to creditors, 

18 ‘‘(II) to shareholders, or 

19 ‘‘(III) for any other substantial 

20 nontax purpose. 

21 ‘‘(3) BASE PERIOD YEARS.— 

22 ‘‘(A) IN GENERAL.—The base period years 

23 are the 3 taxable years— 

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1 ‘‘(i) which are among the 5 most re2 cent preceding taxable years ending before 

3 the taxable year, and 

4 ‘‘(ii) which are determined by dis5 regarding— 

6 ‘‘(I) 1 taxable year for which the 

7 amount described in subsection 

8 (c)(2)(B) is the largest, and 

9 ‘‘(II) 1 taxable year for which 

10 such amount is the smallest. 

11 ‘‘(B) SHORTER PERIOD.—If the taxpayer 

12 has fewer than 5 taxable years ending before 

13 the taxable year, then in lieu of applying sub14 paragraph (A), the base period years shall in15 clude all the taxable years of the taxpayer end16 ing before such taxable year. 

17 ‘‘(C) MERGERS, ACQUISITIONS, ETC.— 

18 ‘‘(i) IN GENERAL.—Rules similar to 

19 the rules of subparagraphs (A) and (B) of 

20 section 41(f)(3) shall apply for purposes of 

21 this paragraph. 

22 ‘‘(ii) SPIN-OFFS, ETC.—If there is a 

23 distribution to which section 355 (or so 

24 much of section 356 as relates to section 

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1 ferred to in subparagraph (A)(i) and the 

2 controlled corporation (within the meaning 

3 of section 355) is a United States share4 holder— 

5 ‘‘(I) the controlled corporation 

6 shall be treated as being in existence 

7 during the period that the distributing 

8 corporation (within the meaning of 

9 section 355) is in existence, and 

10 ‘‘(II) for purposes of applying 

11 subsection (c)(2) to the controlled cor12 poration and the distributing corpora13 tion, amounts described in subsection 

14 (c)(2)(B) which are received or includ15 able by the distributing corporation or 

16 controlled corporation (as the case 

17 may be) before the distribution re18 ferred to in subclause (I) from a con19 trolled foreign corporation shall be al20 located between such corporations in 

21 proportion to their respective interests 

22 as United States shareholders of such 

23 controlled foreign corporation imme24 diately after such distribution. 

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1 ‘‘(iii) EXCEPTION.—Subclause (II) of 

2 clause (ii) shall not apply if neither the 

3 controlled corporation nor the distributing 

4 corporation is a United States shareholder 

5 of such controlled foreign corporation im6 mediately after such distribution. 

7 ‘‘(4) DIVIDEND.—The term ‘dividend’ shall not 

8 include amounts includable in gross income as a div9 idend under section 78, 367, or 1248. In the case 

10 of a liquidation under section 332 to which section 

11 367(b) applies, the preceding sentence shall not 

12 apply to the extent the United States shareholder 

13 actually receives cash as part of the liquidation. 

14 ‘‘(5) COORDINATION WITH DIVIDEND RECEIVED

15 DEDUCTION.—No deduction shall be allowed under 

16 section 243 or 245 for any dividend which is ex17 cluded from income by subsection (a). 

18 ‘‘(6) CONTROLLED GROUPS.—All United States 

19 shareholders which are members of an affiliated 

20 group filing a consolidated return under section 

21 1501 shall be treated as one United States share22 holder. 

23 ‘‘(7) REPORTING.—The Secretary shall require 

24 by regulation or other guidance the reporting of 

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1 such information as the Secretary may require to 

2 carry out this section. 

3 ‘‘(e) DENIAL OF FOREIGN TAX CREDIT; DENIAL OF

4 CERTAIN EXPENSES.— 

5 ‘‘(1) FOREIGN TAX CREDIT.— 

6 ‘‘(A) IN GENERAL.—No credit shall be al7 lowed under section 901 for any taxes paid or 

8 accrued (or treated as paid or accrued) with re9 spect to the excluded portion of any dividend. 

10 ‘‘(B) DENIAL OF DEDUCTION OF RELATED

11 TAX.—No deduction shall be allowed under this 

12 chapter for any tax for which credit is not al13 lowable by reason of the preceding sentence. 

14 ‘‘(2) EXPENSES.—No deduction shall be al15 lowed for expenses directly allocable to the exclud16 able portion described in paragraph (1). 

17 ‘‘(3) EXCLUDABLE PORTION.—For purposes of 

18 paragraph (1), unless the taxpayer otherwise speci19 fies, the excludable portion of any dividend or other 

20 amount is the amount which bears the same ratio to 

21 the amount of such dividend or other amount as the 

22 amount excluded from income under subsection (a) 

23 for the taxable year bears to the amount described 

24 in subsection (c)(2)(A) for such year. 

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1 ‘‘(4) COORDINATION WITH SECTION 78.—Sec2 tion 78 shall not apply to any tax which is not allow3 able as a credit under section 901 by reason of this 

4 subsection. 

5 ‘‘(f) ELECTION TO HAVE SECTION APPLY.—A tax6 payer may elect to have this section apply for any taxable 

7 year.’’. 

8 (b) CLERICAL AMENDMENT.—The table of sections 

9 for subpart F of part III of subchapter N of chapter 1 

10 of such Code is amended by adding at the end the fol11 lowing new item: 

‘‘966. Foreign earnings exclusion for purchase of infrastructure bonds.’’. 

12 (c) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to dividends received for taxable 

14 years ending after the date of the enactment of this Act. 

Æ 

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