I 

113TH CONGRESS 

1ST SESSION H. R. 2862 

To amend the Internal Revenue Code of 1986 to allow a temporary dividends 

received deduction for 2013 or 2014. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 30, 2013 

Mr. MATHESON introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to allow a 

temporary dividends received deduction for 2013 or 2014. 

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 ‘‘Freedom to Invest Act 

5 of 2013’’. 

6 SEC. 2. TEMPORARY DIVIDENDS RECEIVED DEDUCTION AL7 LOWED FOR 2013 OR 2014. 

8 (a) ELECTION.—Subsection (f) of section 965 of the 

9 Internal Revenue Code of 1986 (relating to election) is 

10 amended to read as follows: 


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1 ‘‘(f) ELECTION.—The taxpayer may elect to apply 

2 this section to— 

3 ‘‘(1) the taxpayer’s last taxable year which be4 gins before the date of the enactment of this sub5 section, or 

6 ‘‘(2) the taxpayer’s first taxable year which be7 gins during the 1-year period beginning on such 

8 date. 

9 Such election may be made for a taxable year only if made 

10 on or before the due date (including extensions) for filing 

11 the return of tax for such taxable year.’’. 

12 (b) LIMITATION.—Paragraph (1) of section 965(b) of 

13 such Code is amended to read as follows: 

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

15 taken into account under subsection (a) shall not ex16 ceed the sum of the current and accumulated earn17 ings and profits described in section 959(c)(3) for 

18 the year a deduction is claimed under subsection (a), 

19 without diminution by reason of any distributions 

20 made during the election year, for all controlled for21 eign corporations of the United States shareholder.’’. 

22 (c) FAILURE TO MAINTAIN EMPLOYMENT LEV23 ELS.—Paragraph (4) of section 965(b) of such Code (re24 lating to limitations) is amended to read as follows: 


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1 ‘‘(4) REDUCTION IN BENEFITS FOR FAILURE

2 TO MAINTAIN EMPLOYMENT LEVELS.— 

3 ‘‘(A) IN GENERAL.—If, during the period 

4 consisting of the calendar month in which the 

5 taxpayer first receives a distribution described 

6 in subsection (a)(1) and the succeeding 23 cal7 endar months, the taxpayer does not maintain 

8 an average employment level at least equal to 

9 the taxpayer’s prior average employment, an 

10 additional amount equal to $25,000 multiplied 

11 by the number of employees by which the tax12 payer’s average employment level during such 

13 period falls below the prior average employment 

14 (but not exceeding the aggregate amount al15 lowed as a deduction pursuant to subsection 

16 (a)(1)) shall be taken into income by the tax17 payer during the taxable year that includes the 

18 final day of such period. 

19 ‘‘(B) AVERAGE EMPLOYMENT LEVEL.— 

20 For purposes of this paragraph, the taxpayer’s 

21 average employment level for a period shall be 

22 the average number of full-time United States 

23 employees of the taxpayer, measured at the end 

24 of each month during the period. 


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1 ‘‘(C) PRIOR AVERAGE EMPLOYMENT.—For 

2 purposes of this paragraph, the taxpayer’s 

3 ‘prior average employment’ shall be the average 

4 number of full-time United States employees of 

5 the taxpayer during the period consisting of the 

6 24 calendar months immediately preceding the 

7 calendar month in which the taxpayer first re8 ceives a distribution described in subsection 

9 (a)(1). 

10 ‘‘(D) FULL-TIME UNITED STATES EM11 PLOYEE.—For purposes of this paragraph— 

12 ‘‘(i) IN GENERAL.—The term ‘full13 time United States employee’ means an in14 dividual who provides services in the 

15 United States as a full-time employee, 

16 based on the employer’s standards and 

17 practices; except that regardless of the em18 ployer’s classification of the employee, an 

19 employee whose normal schedule is 40 

20 hours or more per week is considered a 

21 full-time employee. 

22 ‘‘(ii) EXCEPTION FOR CHANGES IN

23 OWNERSHIP OF TRADES OR BUSINESSES.— 

24 Such term does not include— 


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1 ‘‘(I) any individual who was an 

2 employee, on the date of acquisition, 

3 of any trade or business acquired by 

4 the taxpayer during the 24-month pe5 riod referred to in subparagraph (A); 

6 and 

7 ‘‘(II) any individual who was an 

8 employee of any trade or business dis9 posed of by the taxpayer during the 

10 24-month period referred to in sub11 paragraph (A) or the 24-month period 

12 referred to in subparagraph (C). 

13 ‘‘(E) AGGREGATION RULES.—In deter14 mining the taxpayer’s average employment level 

15 and prior average employment, all domestic 

16 members of a controlled group shall be treated 

17 as a single taxpayer.’’. 

18 (d) THRESHOLD PERIOD.—Section 965 of such Code 

19 is amended by striking ‘‘June 30, 2003’’ each place it oc20 curs and inserting ‘‘June 30, 2012’’. 

21 (e) BASE PERIOD.—Paragraph (2) of subsection 

22 965(c) of such Code is amended by inserting at the end 

23 of subparagraph (A) the following flush sentence: ‘‘For 

24 purposes of this paragraph, taxable years shall not include 


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1 any year for which an election under section 965 was in 

2 effect.’’. 

3 (f) INDEBTEDNESS DETERMINATION DATE.—Sub4 paragraph (B) of section 965(b)(3) of such Code is 

5 amended by striking ‘‘October 3, 2004’’ and inserting 

6 ‘‘January 11, 2013’’. 

7 (g) CONFORMING AMENDMENTS.— 

8 (1) Subsection 965(c) of such Code, as amend9 ed by subsection (e), is amended by striking para10 graph (1) and redesignating paragraphs (2), (3), 

11 (4), and (5) as paragraphs (1), (2), (3), and (4), re12 spectively. 

13 (2) Paragraph 965(c)(4) of such Code, as re14 designated by paragraph (1), is amended to read as 

15 follows: 

16 ‘‘(4) CONTROLLED GROUPS.—All United States 

17 shareholders which are members of an affiliated 

18 group filing a consolidated return under section 

19 1501 shall be treated as one United States share20 holder.’’. 

21 (h) EFFECTIVE DATE.—The amendments made by 

22 this section shall apply to taxable years ending on or after 

23 the date of the enactment of this Act. 

Æ 


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