II 

111TH CONGRESS 

1ST SESSION S. 1610 

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. 

IN THE SENATE OF THE UNITED STATES 

AUGUST 6, 2009 

Ms. CANTWELL (for herself, Mr. VITTER, Ms. LANDRIEU, Mrs. MURRAY, and 

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

referred to the Committee on Finance 

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. 

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 ‘‘American Shipping Re5 investment Act of 2009’’. 


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1 SEC. 2. REPEAL OF QUALIFIED SHIPPING INVESTMENT 

2 WITHDRAWAL RULES. 

3 (a) IN GENERAL.—Section 955 of the Internal Rev4 enue Code of 1986 (relating to withdrawal of previously 

5 excluded subpart F income from qualified investment) is 

6 hereby repealed. 

7 (b) CONFORMING AMENDMENTS.— 

8 (1) Section 951(a)(1)(A) of the Internal Rev9 enue Code of 1986 is amended by adding ‘‘and’’ at 

10 the end of clause (i) and by striking clause (iii). 

11 (2) Section 951(a)(1)(A)(ii) is amended by 

12 striking ‘‘, and’’ at the end and inserting ‘‘, except 

13 that in applying this clause amounts invested in less 

14 developed country corporations described in section 

15 955(c)(2) (as so in effect) shall not be treated as in16 vestments in less developed countries.’’. 

17 (3) Section 951(a)(3) of such Code (relating to 

18 the limitation on pro rata share of previously ex19 cluded subpart F income withdrawn from invest20 ment) is hereby repealed. 

21 (4) Section 964(b) of such Code is amended by 

22 striking ‘‘, 955,’’. 

23 (5) The table of sections for subpart F of part 

24 III of subchapter N of chapter 1 of such Code is 

25 amended by striking the item relating to section 

26 955. 


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

2 this section shall apply to taxable years of controlled for3 eign corporations ending on or after the date of the enact4 ment of this Act, and to taxable years of United States 

5 shareholders in which or with which such taxable years 

6 of controlled foreign corporations end. 

7 SEC. 3. ONE-TIME TEMPORARY DIVIDENDS RECEIVED DE8 DUCTION FOR PREVIOUSLY UNTAXED FOR9 EIGN BASE COMPANY SHIPPING INCOME. 

10 (a) IN GENERAL.—In the case of a corporation which 

11 is a United States shareholder and for which an election 

12 under this section is made for the taxable year, for pur13 poses of the Internal Revenue Code of 1986, there shall 

14 be allowed as a deduction in computing taxable income 

15 under section 63 of such Code an amount equal to 85 per16 cent of the cash distributions which are received during 

17 such taxable year by such shareholder from controlled for18 eign corporations to the extent that the distributions are 

19 attributable to income— 

20 (1) which was derived by the controlled foreign 

21 corporation in taxable years beginning before Janu22 ary 1, 2005, and 

23 (2) which would, without regard to the year 

24 earned, be described in section 954(f) (as in effect 


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1 before the enactment of the American Jobs Creation 

2 Act of 2004). 

3 (b) INDIRECT DIVIDENDS.—A rule similar to the rule 

4 of section 965(a)(2) of the Internal Revenue Code of 1986 

5 shall apply, determined by treating cash distributions 

6 which are so attributable as cash dividends. 

7 (c) LIMITATION.—The amount of dividends taken 

8 into account under this section shall not exceed the 

9 amount permitted to be taken into account under para10 graphs (1), (3) (determined by substituting ‘‘December 

11 31, 2008’’ for ‘‘October 3, 2004’’), and (4) of section 

12 965(b) of the Internal Revenue Code of 1986, determined 

13 as if such paragraphs applied to this section. 

14 (d) TAXPAYER ELECTION AND DESIGNATION.—For 

15 purposes of subsection (a), a taxpayer may, on its return 

16 for the taxable year to which this section applies— 

17 (1) elect to apply paragraph (3) of section 

18 959(c) of the Internal Revenue Code of 1986 before 

19 paragraphs (1) and (2) thereof, and 

20 (2) designate the extent, if any, to which a cash 

21 distribution reduces a controlled foreign corpora22 tion’s earnings and profits attributable to— 

23 (A) foreign base company shipping income 

24 (determined under section 954(f) of the Inter25 nal Revenue Code of 1986 as in effect before 


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1 the enactment of the American Jobs Creation 

2 Act of 2004), or 

3 (B) other earnings and profits. 

4 (e) ELECTION.— 

5 (1) IN GENERAL.—The taxpayer may elect to 

6 apply this section to— 

7 (A) the taxpayer’s last taxable year which 

8 begins before the date of the enactment of this 

9 Act, or 

10 (B) the taxpayer’s first taxable year which 

11 begins during the 1-year period beginning on 

12 such date. 

13 (2) TIMING OF ELECTION AND ONE-TIME ELEC14 TION.—Such election may be made for a taxable 

15 year— 

16 (A) only if made on or before the due date 

17 (including extensions) for filing the return of 

18 tax for such taxable year, and 

19 (B) only if no election has been made 

20 under this section or section 965 of the Internal 

21 Revenue Code of 1986 with respect to the same 

22 distribution for any other taxable year of the 

23 taxpayer. 

24 (f) REDUCTION IN BENEFITS FOR FAILURE TO

25 MAINTAIN EMPLOYMENT LEVELS.— 


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1 (1) IN GENERAL.—If, during the period con2 sisting of the calendar month in which the taxpayer 

3 first receives a distribution described in subsection 

4 (a) and the succeeding 23 calendar months, the tax5 payer does not maintain an average employment 

6 level at least equal to the taxpayer’s prior average 

7 employment, an additional amount equal to $25,000 

8 multiplied by the number of employees by which the 

9 taxpayer’s average employment level during such pe10 riod falls below the prior average employment (but 

11 not exceeding the aggregate amount allowed as a de12 duction pursuant to subsection (a)) shall be taken 

13 into account as income by the taxpayer during the 

14 taxable year that includes the final day of such pe15 riod. 

16 (2) PRIOR AVERAGE EMPLOYMENT.—For pur17 poses of this paragraph, the taxpayer’s ‘‘prior aver18 age employment’’ shall be the average number of full 

19 time equivalent employees of the taxpayer during the 

20 period consisting of the 24 calendar months imme21 diately preceding the calendar month in which the 

22 taxpayer first receives a distribution described in 

23 subsection (a). 

24 (3) AGGREGATION RULES.—In determining the 

25 taxpayer’s average employment level and prior averVerDate Nov 24 2008 04:53 Aug 07, 2009 Jkt 079200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1610.IS S1610

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1 age employment, all domestic members of a con2 trolled group (as defined in section 264(e)(5)(B) of 

3 the Internal Revenue Code of 1986) shall be treated 

4 as a single taxpayer. 

5 (g) SPECIAL RULES.—Rules similar to the rules of 

6 subsections (d) and (e) and paragraphs (3), (4), and (5) 

7 of subsection (c) of section 965 of the Internal Revenue 

8 Code of 1986 shall apply for purposes of this section. 

9 (h) EFFECTIVE DATE.—This section shall apply to 

10 taxable years ending on or after the date of the enactment 

11 of this Act. 

Æ 


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