II 

110TH CONGRESS 

2D SESSION S. 3359 

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 

JULY 29 (legislative day, JULY 28), 2008 

Ms. CANTWELL (for herself and Mr. SMITH) 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 2008’’. 


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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6 hereby repealed. 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 such Code is 

9 amended by adding ‘‘and’’ at the end of clause (i) 

10 and by striking clause (iii). 

11 (2) Section 951(a)(3) of such Code (relating to 

12 the limitation on pro rata share of previously ex13 cluded subpart F income withdrawn from invest14 ment) is hereby repealed. 

15 (3) Section 964(b) of such Code is amended by 

16 striking ‘‘, 955,’’. 

17 (4) The table of sections for subpart F of part 

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

19 amended by striking the item relating to section 

20 955. 

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

22 this section shall apply to taxable years of controlled for23 eign corporations ending on or after the date of the enact24 ment of this Act, and to taxable years of United States 

25 shareholders in which or with which such taxable years 

26 of controlled foreign corporations end. 


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1 SEC. 3. TEMPORARY DIVIDENDS RECEIVED DEDUCTION 

2 FOR PREVIOUSLY UNTAXED FOREIGN BASE 

3 COMPANY SHIPPING INCOME. 

4 (a) IN GENERAL.—Section 965 of the Internal Rev5 enue Code of 1986 (relating to temporary dividends re6 ceived deduction) is amended by adding at the end the 

7 following new subsection: 

8 ‘‘(g) TEMPORARY DIVIDENDS RECEIVED DEDUCTION

9 FOR FOREIGN BASE COMPANY SHIPPING INCOME.— 

10 ‘‘(1) IN GENERAL.—In the case of a corpora11 tion which is a United States shareholder and for 

12 which the election under this subsection is in effect 

13 for the taxable year, there shall be allowed as a de14 duction an amount equal to 85 percent of the cash 

15 distributions which are received during such taxable 

16 year by such shareholder from controlled foreign cor17 porations to the extent that the distributions are at18 tributable to income— 

19 ‘‘(A) which was derived by the controlled 

20 foreign corporation in taxable years beginning 

21 before January 1, 2005, and 

22 ‘‘(B) which would, without regard to the 

23 year earned, be described in section 954(f) (as 

24 in effect before the enactment of the American 

25 Jobs Creation Act of 2004). 


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1 ‘‘(2) INDIRECT DIVIDENDS.—A rule similar to 

2 the rule of subsection (a)(2) shall apply, determined 

3 by treating cash distributions which are so attrib4 utable as cash dividends. 

5 ‘‘(3) LIMITATION.—The amount of dividends 

6 taken into account under this subsection shall not 

7 exceed the amount permitted to be taken into ac8 count under paragraphs (1), (3), and (4) of sub9 section (b), determined as if such paragraphs ap10 plied to this subsection. 

11 ‘‘(4) TAXPAYER ELECTION AND DESIGNA12 TION.—For purposes of paragraph (1), a United 

13 States shareholder may, on its return for the taxable 

14 year to which this subsection applies— 

15 ‘‘(A) elect to apply paragraph (3) of sec16 tion 959(c) before paragraphs (1) and (2) 

17 thereof, and 

18 ‘‘(B) designate the extent, if any, to which 

19 a cash distribution reduces a controlled foreign 

20 corporation’s earnings and profits attributable 

21 to— 

22 ‘‘(i) foreign base company shipping in23 come (determined under section 954(f) as 

24 in effect before the enactment of the Amer25 ican Jobs Creation Act of 2004), or 


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1 ‘‘(ii) other earnings and profits. 

2 ‘‘(5) ELECTION.—The taxpayer may elect to 

3 apply this subsection to— 

4 ‘‘(A) the taxpayer’s last taxable year which 

5 begins before the date of the enactment of this 

6 subsection, or 

7 ‘‘(B) the taxpayer’s first taxable year 

8 which begins during the 1-year period beginning 

9 on such date. 

10 Such election may be made for a taxable year only 

11 if made on or before the due date (including exten12 sions) for filing the return of tax for such taxable 

13 year. 

14 ‘‘(6) REDUCTION IN BENEFITS FOR FAILURE

15 TO MAINTAIN EMPLOYMENT LEVELS.— 

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

17 consisting of the calendar month in which the 

18 taxpayer first receives a distribution described 

19 in paragraph (1) and the succeeding 23 cal20 endar months, the taxpayer does not maintain 

21 an average employment level at least equal to 

22 the taxpayer’s prior average employment, an 

23 additional amount equal to $25,000 multiplied 

24 by the number of employees by which the tax25 payers average employment level during such 


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1 period falls below the prior average employment 

2 (but not exceeding the aggregate amount al3 lowed as a deduction pursuant to paragraph 

4 (1)) shall be taken into income by the taxpayer 

5 during the taxable year that includes the final 

6 day of such period. 

7 ‘‘(B) PRIOR AVERAGE EMPLOYMENT.—For 

8 purposes of this paragraph, the taxpayer’s 

9 ‘prior average employment’ shall be the average 

10 number of employees of the taxpayer during the 

11 period consisting of the 24 calendar months im12 mediately preceding the calendar month in 

13 which the taxpayer first receives a distribution 

14 described in paragraph (1). 

15 ‘‘(C) AGGREGATION RULES.—In deter16 mining the taxpayer’s average employment level 

17 and prior average employment, all domestic 

18 members of a controlled group (as defined in 

19 section 264(e)(5)(B)) shall be treated as a sin20 gle taxpayer.’’. 

21 (b) CONFORMING AMENDMENT.—Subsection (f) of 

22 section 965 of such Code is amended by inserting ‘‘other 

23 than subsection (g)’’ after ‘‘this section’’ in the material 

24 preceding paragraph (1). 


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

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

3 the date of the enactment of this Act. 

Æ 


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