I 

108TH CONGRESS 

1ST SESSION H. R. 767

To amend the Internal Revenue Code of 1986 to encourage investing of 

foreign earnings within the United States for productive business purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 13, 2003

Mr. ENGLISH (for himself, Mr. DREIER, Mr. BRADY of Texas, and Ms. DUNN) 

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 encourage 

investing of foreign earnings within the United States 

for productive business purposes.

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 ‘‘Homeland Investment 

5 Act of 2003’’. 

6 SEC. 2. TOLL TAX ON EXCESS QUALIFIED FOREIGN DIS7 TRIBUTION AMOUNT. 

8 (a) IN GENERAL.—Subpart F of part III of sub9 chapter N of chapter 1 of the Internal Revenue Code of 
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1 1986 (relating to controlled foreign corporations) is 

2 amended by adding at the end the following new section: 

3 ‘‘SEC. 965. TOLL TAX IMPOSED ON EXCESS QUALIFIED FOR4 EIGN DISTRIBUTION AMOUNT 

5 ‘‘(a) TOLL TAX IMPOSED ON EXCESS QUALIFIED

6 FOREIGN DISTRIBUTION AMOUNT.—If a taxpayer elects 

7 the application of this section, a tax shall be imposed on 

8 the taxpayer in an amount equal to 5.25 percent of—

9 ‘‘(1) the excess qualified foreign distribution 

10 amount, and 

11 ‘‘(2) the amount determined under section 78 

12 that is attributable to such excess qualified foreign 

13 distribution amount. 

14 Such tax shall be imposed in lieu of the tax imposed under 

15 section 1 or 11 on such amounts. 

16 ‘‘(b) EXCESS QUALIFIED FOREIGN DISTRIBUTION

17 AMOUNT.—

18 ‘‘(1) IN GENERAL.—The term ‘excess qualified 

19 foreign distribution amount’ means the excess (if 

20 any) of—

21 ‘‘(A) dividends received by the taxpayer 

22 during the taxable year from corporations that 

23 are controlled foreign corporations in which the 

24 taxpayer is a United States shareholder on the 

25 date such dividends are paid, over 
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1 ‘‘(B) the base dividend amount. 

2 ‘‘(2) BASE DIVIDEND AMOUNT.—The term 

3 ‘base dividend amount’ means an amount not less 

4 than the average amount of dividends received dur5 ing the fixed base period from corporations that are 

6 controlled foreign corporations in which the taxpayer 

7 is a United States shareholder on the date such divi8 dends are paid. 

9 ‘‘(3) FIXED BASE PERIOD.—

10 ‘‘(A) IN GENERAL.—The term ‘fixed base 

11 period’ means each of 3 taxable years which are 

12 among the 5 most recent taxable years of the 

13 taxpayer ending on or before December 31, 

14 2002, determined by disregarding—

15 ‘‘(i) the 1 taxable year for which the 

16 corporation had the highest amount of 

17 dividends from controlled foreign corpora18 tions relative to the other 4 taxable years, 

19 and 

20 ‘‘(ii) the one taxable year for which 

21 the corporation had the lowest amount of 

22 dividends from controlled foreign corpora23 tions relative to the other 4 taxable years. 

24 ‘‘(B) SHORTER PERIOD.—If the taxpayer 

25 has fewer than 5 taxable years ending on or be-
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1 fore December 31, 2002, then in lieu of apply2 ing subparagraph (b)(3)(A), the fixed base pe3 riod shall mean such shorter period rep4 resenting all of the taxable years beginning on 

5 or before December 31, 2002. Rules similar to 

6 the rules of section 41(f)(3) shall apply in the 

7 case of acquisitions or dispositions of controlled 

8 foreign corporations beginning after the fixed 

9 base period. 

10 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—

11 ‘‘(1) DIVIDENDS.—For purposes of this section, 

12 the term ‘dividend’ means a dividend as defined in 

13 section 316, except that the term shall also include 

14 amounts described in section 951(a)(1)(B), and shall 

15 exclude amounts described in section 78. 

16 ‘‘(2) CONTROLLED FOREIGN CORPORATIONS

17 AND UNITED STATES SHAREHOLDERS.—For purpose 

18 of this section, the term ‘controlled foreign corpora19 tion’ shall have the same meaning as under section 

20 957(a) and the term ‘United States shareholder’ 

21 shall have the same meaning as under section 

22 951(b). 

23 ‘‘(3) FOREIGN TAX CREDITS.—The amount of 

24 any income, war, profits, or excess profits taxes paid 

25 (or deemed paid under sections 902 and 960) or ac-
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1 crued by the taxpayer with respect to the excess 

2 qualified foreign distribution amount for which a 

3 credit would be allowable under section 901 in the 

4 absence of this section shall be reduced by 85 per5 cent. 

6 ‘‘(4) FOREIGN TAX CREDIT LIMITATION.—For 

7 all purposes of section 904, there shall be dis8 regarded 85 percent of—

9 ‘‘(A) the excess qualified foreign distribu10 tion amount, and 

11 ‘‘(B) the amount determined under section 

12 78 that is attributable to such excess qualified 

13 foreign distribution amount. 

14 ‘‘(5) TREATMENT OF CONSOLIDATED

15 GROUPS.—Members of an affiliated group of cor16 porations filing a consolidated return under section 

17 1501 shall be treated as a single taxpayer in apply18 ing the rules of this section. 

19 ‘‘(6) DESIGNATION OF DIVIDENDS.—The tax20 payer shall designate the particular dividends re21 ceived during the taxable year from one or more 

22 controlled foreign corporations in which it is a 

23 United States shareholder that are dividends ex24 cluded from the excess qualified foreign distribution 
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1 amount. The total amount of such designated divi2 dends shall equal the base dividend amount. 

3 ‘‘(d) ELECTION.—

4 ‘‘(1) IN GENERAL.—An election under this sec5 tion shall be made on the taxpayer’s timely filed in6 come tax return for the taxable year (determined by 

7 taking extensions into account) and, once made, may 

8 be revoked only with the consent of the Secretary. 

9 ‘‘(2) ALL CONTROLLED FOREIGN CORPORA10 TIONS.—The election shall apply to all controlled 

11 foreign corporations in which the taxpayer is a 

12 United States shareholder during the taxable year. 

13 ‘‘(3) CONSOLIDATED GROUPS.—If a taxpayer is 

14 a member of an affiliated group of corporations fil15 ing a consolidated return under section 1501 for the 

16 taxable year, an election under this section shall be 

17 made by the common parent of the affiliated group 

18 which includes the taxpayer, and shall apply to all 

19 members of the affiliated group. 

20 ‘‘(e) REGULATIONS.—The Secretary shall prescribe 

21 such regulations as may be necessary and appropriate to 

22 carry out the purposes of this section, including regula23 tions under section 55 and regulations addressing corpora24 tions that, during the fixed base period or thereafter, join 
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1 or leave an affiliated group of corporations filing a consoli2 dated return.’’. 

3 (b) CLERICAL AMENDMENT.—The table of sections 

4 for such subpart is amended by adding at the end the fol5 lowing new item:

‘‘Sec. 965. Toll tax imposed on excess qualified foreign distribution amount.’’.

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

7 this section shall apply only to the first taxable year of 

8 the electing taxpayer ending 120 days after the date of 

9 the enactment of this Act.

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