I 

111TH CONGRESS 

1ST SESSION H. R. 507 

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

received deduction for taxable years beginning in 2008 or 2009. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 14, 2009 

Mr. BRADY of Texas (for himself, Mr. SAM JOHNSON of Texas, and Mr. 

HERGER) 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 taxable years 

beginning in 2008 or 2009. 

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

3 SECTION 1. TEMPORARY DIVIDENDS RECEIVED DEDUC4 TION ALLOWED FOR 2009 OR 2010. 

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

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

7 amended to read as follows: 


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1 ‘‘(f) ELECTION.—In the case of any taxable year be2 ginning after September 30, 2008, the taxpayer may elect 

3 to apply this section to— 

4 ‘‘(1) the taxpayer’s last taxable year which be5 gins before the date of the enactment of this sub6 section, or 

7 ‘‘(2) the taxpayer’s first taxable year which be8 gins during the 1-year period beginning on such 

9 date. 

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

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

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

13 (b) FAILURE TO MAINTAIN EMPLOYMENT LEV14 ELS.—Subsection (b) of section 965 of such Code (relating 

15 to limitations) is amended by adding at the end the fol16 lowing: 

17 ‘‘(5) REDUCTION IN BENEFITS FOR FAILURE

18 TO MAINTAIN EMPLOYMENT LEVELS.— 

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

20 consisting of the calendar month in which the 

21 taxpayer first receives a distribution described 

22 in paragraph (1) and the succeeding 23 cal23 endar months, the taxpayer does not maintain 

24 an average employment level at least equal to 

25 the taxpayer’s prior average employment, an 


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1 additional amount equal to $25,000 multiplied 

2 by the number of employees by which the tax3 payers average employment level during such 

4 period falls below the prior average employment 

5 (but not exceeding the aggregate amount al6 lowed as a deduction pursuant to paragraph 

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

8 during the taxable year that includes the final 

9 day of such period. 

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

11 purposes of this paragraph, the taxpayer’s 

12 ‘prior average employment’ shall be the average 

13 number of employees of the taxpayer during the 

14 period consisting of the 24 calendar months im15 mediately preceding the calendar month in 

16 which the taxpayer first receives a distribution 

17 described in paragraph (1). 

18 ‘‘(C) AGGREGATION RULES.—In deter19 mining the taxpayer’s average employment level 

20 and prior average employment, all domestic 

21 members of a controlled group shall be treated 

22 as a single taxpayer.’’. 

23 (c) THRESHOLD PERIOD.—Section 965 of such Code 

24 is amended by striking ‘‘June 30, 2003’’ each place it oc25 curs and inserting ‘‘June 30, 2008’’. 


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1 (d) BASE PERIOD.—Subparagraph (A) of section 

2 965(c)(2) of such Code (as amended by subsection (c)) 

3 is amended to read as follows: 

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

5 are the 3 taxable years— 

6 ‘‘(i) which are among the 6 most re7 cent taxable years ending on or before 

8 June 30, 2008, and 

9 ‘‘(ii) which are determined by dis10 regarding— 

11 ‘‘(I) 1 taxable year for which the 

12 sum of the amounts described in 

13 clauses (i), (ii), and (iii) of subsection 

14 (b)(2)(B) is the largest, 

15 ‘‘(II) 1 taxable year for which 

16 such sum is the smallest, and 

17 ‘‘(III) the taxable year for which 

18 an election was made before the en19 actment of this subclause.’’. 

20 (e) INDEBTEDNESS DETERMINATION DATE.—Sub21 paragraph (B) of section 965(b)(3) of such Code is 

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

23 ‘‘January 13, 2009’’. 


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

2 this section shall apply to taxable years ending after the 

3 date of the enactment of this Act. 

Æ 


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