II 

112TH CONGRESS 

1ST SESSION S. 626 

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 

MARCH 17, 2011 

Ms. CANTWELL (for herself, Mr. VITTER, Mr. CARPER, Mr. COCHRAN, Mr. 

INOUYE, Ms. LANDRIEU, and Mrs. MURRAY) 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 2011’’. 


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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6 hereby repealed. 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) of such Code is 

12 amended by striking ‘‘, and’’ at the end and insert13 ing ‘‘, except that in applying this clause amounts 

14 invested in less developed country corporations de15 scribed in section 955(c)(2) (as so in effect) shall 

16 not be treated as investments in less developed coun17 tries.’’. 

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

19 the limitation on pro rata share of previously ex20 cluded subpart F income withdrawn from invest21 ment) is hereby repealed. 

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

23 striking ‘‘, 955,’’. 

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

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


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1 amended by striking the item relating to section 

2 955. 

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

4 this section shall apply to taxable years of controlled for5 eign corporations ending on or after the date of the enact6 ment of this Act, and to taxable years of United States 

7 shareholders in which or with which such taxable years 

8 of controlled foreign corporations end. 

9 SEC. 3. ONE-TIME TEMPORARY DIVIDENDS RECEIVED DE10 DUCTION FOR PREVIOUSLY UNTAXED FOR11 EIGN BASE COMPANY SHIPPING INCOME. 

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

13 is a United States shareholder and for which an election 

14 under this section is made for the taxable year, for pur15 poses of the Internal Revenue Code of 1986, there shall 

16 be allowed as a deduction in computing taxable income 

17 under section 63 of such Code an amount equal to 85 per18 cent of the cash distributions which are received during 

19 such taxable year by such shareholder from controlled for20 eign corporations to the extent that the distributions are 

21 attributable to income— 

22 (1) which was derived by the controlled foreign 

23 corporation in taxable years beginning before Janu24 ary 1, 2005, and 


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

2 earned, be described in section 954(f) of such Code 

3 (as in effect before the enactment of the American 

4 Jobs Creation Act of 2004). 

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

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

7 shall apply, determined by treating cash distributions 

8 which are so attributable as cash dividends. 

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

10 into account under this section shall not exceed the 

11 amount permitted to be taken into account under para12 graphs (1), (3) (determined by substituting ‘‘December 

13 31, 2008’’ for ‘‘October 3, 2004’’), and (4) of section 

14 965(b) of the Internal Revenue Code of 1986, determined 

15 as if such paragraphs applied to this section. 

16 (d) TAXPAYER ELECTION AND DESIGNATION.—For 

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

18 for the taxable year to which this section applies— 

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

20 959(c) of the Internal Revenue Code of 1986 before 

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

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

23 distribution reduces a controlled foreign corpora24 tion’s earnings and profits attributable to— 


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1 (A) foreign base company shipping income 

2 (determined under section 954(f) of the Inter3 nal Revenue Code of 1986 as in effect before 

4 the enactment of the American Jobs Creation 

5 Act of 2004), or 

6 (B) other earnings and profits. 

7 (e) ELECTION.— 

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

9 apply this section to— 

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

11 begins before the date of the enactment of this 

12 Act, or 

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

14 begins during the 1-year period beginning on 

15 such date. 

16 (2) TIMING OF ELECTION AND ONE-TIME ELEC17 TION.—Such election may be made for a taxable 

18 year— 

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

20 (including extensions) for filing the return of 

21 tax for such taxable year, and 

22 (B) only if no election has been made 

23 under this section or section 965 of the Internal 

24 Revenue Code of 1986 with respect to the same 


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1 distribution for any other taxable year of the 

2 taxpayer. 

3 (f) REDUCTION IN BENEFITS FOR FAILURE TO

4 MAINTAIN EMPLOYMENT LEVELS.— 

5 (1) IN GENERAL.—If, during the period con6 sisting of the calendar month in which the taxpayer 

7 first receives a distribution described in subsection 

8 (a) and the succeeding 23 calendar months, the tax9 payer does not maintain an average employment 

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

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

12 multiplied by the number of employees by which the 

13 taxpayer’s average employment level during such pe14 riod falls below the prior average employment (but 

15 not exceeding the aggregate amount allowed as a de16 duction pursuant to subsection (a)) shall be taken 

17 into account as income by the taxpayer during the 

18 taxable year that includes the final day of such pe19 riod. 

20 (2) PRIOR AVERAGE EMPLOYMENT.—For pur21 poses of this paragraph, the taxpayer’s ‘‘prior aver22 age employment’’ shall be the average number of full 

23 time equivalent employees of the taxpayer during the 

24 period consisting of the 24 calendar months imme25 diately preceding the calendar month in which the 


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1 taxpayer first receives a distribution described in 

2 subsection (a). 

3 (3) AGGREGATION RULES.—In determining the 

4 taxpayer’s average employment level and prior aver5 age employment, all domestic members of a con6 trolled group (as defined in section 264(e)(5)(B) of 

7 the Internal Revenue Code of 1986) shall be treated 

8 as a single taxpayer. 

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

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

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

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

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

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

15 of this Act. 

Æ 


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