Freedom to Invest Act of 2013

To amend the Internal Revenue Code of 1986 to allow a temporary dividends received deduction for 2013 or 2014. 1. Short title This Act may be cited as the Freedom to Invest Act of 2013 2. Temporary dividends received deduction allowed for 2013 or 2014 (a) Election Subsection (f) of section 965 of the Internal Revenue Code of 1986 (relating to election) is amended to read as follows: (f) Election The taxpayer may elect to apply this section to— (1) the taxpayer’s last taxable year which begins before the date of the enactment of this subsection, or (2) the taxpayer’s first taxable year which begins during the 1-year period beginning on such date. Such election may be made for a taxable year only if made on or before the due date (including extensions) for filing the return of tax for such taxable year. . (b) Limitation Paragraph (1) of section 965(b) of such Code is amended to read as follows: (1) In general The amount of dividends taken into account under subsection (a) shall not exceed the sum of the current and accumulated earnings and profits described in section 959(c)(3) for the year a deduction is claimed under subsection (a), without diminution by reason of any distributions made during the election year, for all controlled foreign corporations of the United States shareholder. . (c) Failure To maintain employment levels Paragraph (4) of section 965(b) of such Code (relating to limitations) is amended to read as follows: (4) Reduction in benefits for failure to maintain employment levels (A) In general If, during the period consisting of the calendar month in which the taxpayer first receives a distribution described in subsection (a)(1) and the succeeding 23 calendar months, the taxpayer does not maintain an average employment level at least equal to the taxpayer’s prior average employment, an additional amount equal to $25,000 multiplied by the number of employees by which the taxpayer’s average employment level during such period falls below the prior average employment (but not exceeding the aggregate amount allowed as a deduction pursuant to subsection (a)(1)) shall be taken into income by the taxpayer during the taxable year that includes the final day of such period. (B) Average employment level For purposes of this paragraph, the taxpayer’s average employment level for a period shall be the average number of full-time United States employees of the taxpayer, measured at the end of each month during the period. (C) Prior average employment For purposes of this paragraph, the taxpayer’s prior average employment (D) Full-time United States employee For purposes of this paragraph— (i) In general The term full-time United States employee (ii) Exception for changes in ownership of trades or businesses Such term does not include— (I) any individual who was an employee, on the date of acquisition, of any trade or business acquired by the taxpayer during the 24-month period referred to in subparagraph (A); and (II) any individual who was an employee of any trade or business disposed of by the taxpayer during the 24-month period referred to in subparagraph (A) or the 24-month period referred to in subparagraph (C). (E) Aggregation rules In determining the taxpayer’s average employment level and prior average employment, all domestic members of a controlled group shall be treated as a single taxpayer. . (d) Threshold period Section 965 of such Code is amended by striking June 30, 2003 June 30, 2012 (e) Base period Paragraph (2) of subsection 965(c) of such Code is amended by inserting at the end of subparagraph (A) the following flush sentence: For purposes of this paragraph, taxable years shall not include any year for which an election under section 965 was in effect. (f) Indebtedness determination date Subparagraph (B) of section 965(b)(3) of such Code is amended by striking October 3, 2004 January 11, 2013 (g) Conforming amendments (1) Subsection 965(c) of such Code, as amended by subsection (e), is amended by striking paragraph (1) and redesignating paragraphs (2), (3), (4), and (5) as paragraphs (1), (2), (3), and (4), respectively. (2) Paragraph 965(c)(4) of such Code, as redesignated by paragraph (1), is amended to read as follows: (4) Controlled groups All United States shareholders which are members of an affiliated group filing a consolidated return under section 1501 shall be treated as one United States shareholder. . (h) Effective date The amendments made by this section shall apply to taxable years ending on or after the date of the enactment of this Act.

Summary: Freedom to Invest Act of 2013 - Amends the Internal Revenue Code to: (1) extend the election allowed to a U.S. corporation to deduct dividends received from a controlled foreign corporation to the corporation's last taxable year beginning before the enactment of this Act or the first taxable year beginning during the one-year period beginning on such enactment date, and (2) reduce the amount of such tax deduction for corporations that fail to maintain specified employment levels for full-time U.S. employees.