I 
110TH CONGRESS 
2D SESSION 
H. R. 7264 
To amend the Internal Revenue Code of 1986 to provide for economic 
stabilization, capital utilization, and enterprise reform, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 3, 2008 
Mr. KING of Iowa (for himself, Mrs. BACHMANN, Mr. LINDER, Mr. GINGREY, 
Mr. BROUN of Georgia, Ms. FOXX, Mr. ROHRABACHER, Mr. POE, Mr. 
SALI, and Mr. GOHMERT) introduced the following bill; which was re-
ferred to the Committee on Ways and Means, and in addition to the 
Committee on Financial Services, for a period to be subsequently deter-
mined by the Speaker, in each case for consideration of such provisions 
as fall within the jurisdiction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
for economic stabilization, capital utilization, and enter-
prise reform, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE, ETC. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Reliable Economic Stabilization, Capital Utilization, and 
Enterprise Reform Act of 2008’’. 
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(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title, etc. 
TITLE I—INCENTIVES FOR ECONOMIC STABILIZATION AND 
CAPITAL UTILIZATION 
Sec. 101. Reduction in capital gain rate for sales and exchanges for certain 
troubled assets. 
Sec. 102. 5-year carryback of losses. 
Sec. 103. Incentives to reinvest foreign earnings in United States. 
Sec. 104. Gain or loss from sale or exchange of certain preferred stock. 
Sec. 105. Repeal of Community Reinvestment Act. 
Sec. 106. Net worth certificate program. 
TITLE II—GOVERNMENT-SPONSORED ENTERPRISES FREE 
MARKET REFORM 
Sec. 201. Short title. 
Sec. 202. Definitions. 
Sec. 203. Termination of current conservatorship. 
Sec. 204. Limitation of enterprise authority upon emergence from conservator-
ship. 
Sec. 205. Requirement to periodically renew charter until wind down and dis-
solution. 
Sec. 206. Required wind down of operations and dissolution of enterprise. 
TITLE I—INCENTIVES FOR ECO-
NOMIC STABILIZATION AND 
CAPITAL UTILIZATION 
SEC. 101. REDUCTION IN CAPITAL GAIN RATE FOR SALES 
AND EXCHANGES FOR CERTAIN TROUBLED 
ASSETS. 
(a) IN GENERAL.—Part I of subchapter P of chapter 
1 of the Internal Revenue Code of 1986 (relating to treat-
ment of capital gains) is amended by adding at the end 
the following new section: 
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‘‘SEC. 1203. GAIN ON TROUBLED ASSETS. 
‘‘(a) IN GENERAL.—Gross income shall not include 
the applicable percentage of any gain from the sale or ex-
change of a troubled asset held for more than 1 year. 
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 
subsection (a), the applicable percentage shall be deter-
mined in accordance with the following table: 
‘‘In the case of sales and exchanges— 
The applicable 
After: 
Before: 
percentage is: 
Date of enactment of this sec-
tion .....................................
End of 2-year period begin-
ning on such date ..............
100 percent 
End of such 2-year period ......
End of 4-year period begin-
ning on such date ..............
67 percent 
End of such 4-year period ......
End of 6-year period begin-
ning on such date ..............
33 percent 
End of such 6-year period ......
................................................
0 percent. 
‘‘(c) TROUBLED ASSETS.—The term ‘troubled assets’ 
means residential or commercial mortgages and any secu-
rities, obligations, or other instruments that are based on 
or related to such mortgages, that in each case was origi-
nated or issued on or before March 14, 2008, the purchase 
of which the Secretary determines promotes financial mar-
ket stability and which are acquired after the date of en-
actment of this section and before January 1, 2010.’’. 
(b) CONFORMING AMENDMENT.—The table of sec-
tions for part I of subchapter P of chapter 1 of such Code 
is amended by adding at the end the following new item: 
‘‘Sec. 1203. Gain on troubled assets.’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to sales and exchanges after the 
date of the enactment of this Act. 
SEC. 102. 5-YEAR CARRYBACK OF LOSSES. 
(a) IN GENERAL.—Subparagraph (H) of section 
172(b)(1) of the Internal Revenue Code of 1986 is amend-
ed to read as follows: 
‘‘(H) 5-YEAR
CARRYBACK
OF
CERTAIN 
LOSSES.— 
‘‘(i) TAXABLE YEARS ENDING DURING 
2001 AND 2002.—In the case of a net oper-
ating loss for any taxable year ending dur-
ing 2001 or 2002, subparagraph (A)(i) 
shall be applied by substituting ‘5’ for ‘2’ 
and subparagraph (F) shall not apply. 
‘‘(ii) TAXABLE YEARS ENDING DUR-
ING 2007, 2008, AND 2009.—In the case of 
a net operating loss for any taxable year 
ending during 2007, 2008, or 2009— 
‘‘(I) subparagraph (A)(i) shall be 
applied by substituting ‘5’ for ‘2’, 
‘‘(II) subparagraph (E)(ii) shall 
be applied by substituting ‘4’ for ‘2’, 
and 
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‘‘(III) subparagraph (F) shall not 
apply.’’. 
(b) TEMPORARY SUSPENSION OF 90 PERCENT LIMIT 
ON CERTAIN NOL CARRYBACKS AND CARRYOVERS.— 
(1) IN
GENERAL.—Subclause (I) of section 
56(d)(1)(A)(ii) of such Code is amended— 
(A) by inserting ‘‘and 2007, 2008, or 
2009’’ after ‘‘2001 or 2002’’, and 
(B) by inserting ‘‘and 2007, 2008, and 
2009’’ after ‘‘2001 and 2002’’. 
(2) CONFORMING AMENDMENT.—Subclause (I) 
of section 56(d)(1)(A)(i) of such Code is amended by 
inserting ‘‘amount of such’’ before ‘‘deduction de-
scribed in clause (ii)(I)’’. 
(c) ANTI-ABUSE RULES.—The Secretary of the 
Treasury or the Secretary’s designee shall prescribe such 
rules as are necessary to prevent the abuse of the purposes 
of the amendments made by this section, including 
antistuffing rules, antichurning rules (including rules re-
lating to sale-leasebacks), and rules similar to the rules 
under section 1091 of the Internal Revenue Code of 1986 
relating to losses from wash sales. 
(d) EFFECTIVE DATES.— 
(1) SUBSECTION (a).— 
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(A) IN GENERAL.—Except as provided in 
subparagraph (B), the amendments made by 
subsection (a) shall apply to net operating 
losses arising in taxable years ending in 2007, 
2008, or 2009. 
(B) ELECTION.—In the case of any tax-
payer with a net operating loss for a taxable 
year ending during 2007 or 2008— 
(i) any election made under section 
172(b)(3) of the Internal Revenue Code of 
1986 may not withstanding such section) 
be revoked before October 15, 2009, and 
(ii) any election made under section 
172(j) of such Code shall (notwithstanding 
such section) be treated as timely made if 
made before October 15, 2009. 
(2) SUBSECTION (b).—The amendments made 
by subsection (b) shall apply to taxable years ending 
after December 31, 2006. 
SEC. 103. INCENTIVES TO REINVEST FOREIGN EARNINGS IN 
UNITED STATES. 
(a) IN GENERAL.—Section 965 of the Internal Rev-
enue Code of 1986 is amended to read as follows: 
‘‘SEC. 965. DEDUCTION FOR DIVIDENDS RECEIVED. 
‘‘(a) DEDUCTION.— 
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‘‘(1) IN GENERAL.—In the case of a corpora-
tion which is a United States shareholder and for 
which the election under this section is in effect for 
the taxable year, there shall be allowed as a deduc-
tion an amount equal to the applicable percentage of 
cash dividends which are received during such tax-
able year by such shareholder from controlled for-
eign corporations. 
‘‘(2) APPLICABLE PERCENTAGE.—For purposes 
of paragraph (1)— 
‘‘(A) IN GENERAL.—Except as provided by 
subparagraph (B), the term ‘applicable percent-
age’ means 85 percent. 
‘‘(B) DISTRESSED DEBT.—In the case of 
dividends received with respect to which the re-
quirements of subsection (b)(4)(B) are met, 
such term means 100 percent. 
‘‘(3) DIVIDENDS PAID INDIRECTLY FROM CON-
TROLLED FOREIGN CORPORATIONS.—If, within the 
taxable year for which the election under this section 
is in effect, a United States shareholder receives a 
cash distribution from a controlled foreign corpora-
tion which is excluded from gross income under sec-
tion 959(a), such distribution shall be treated for 
purposes of this section as a cash dividend to the ex-
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tent of any amount included in income by such 
United 
States 
shareholder 
under 
section 
951(a)(1)(A) as a result of any cash dividend during 
such taxable year to— 
‘‘(A) such controlled foreign corporation 
from another controlled foreign corporation that 
is in a chain of ownership described in section 
958(a), or 
‘‘(B) any other controlled foreign corpora-
tion in such chain of ownership, but only to the 
extent of cash distributions described in section 
959(b) which are made during such taxable 
year to the controlled foreign corporation from 
which such United States shareholder received 
such distribution. 
‘‘(b) LIMITATIONS.— 
‘‘(1) IN GENERAL.—The amount of dividends 
taken into account under subsection (a) shall not ex-
ceed the greater of— 
‘‘(A) $500,000,000, 
‘‘(B) the amount shown on the applicable 
financial statement as earnings permanently re-
invested outside the United States, or 
‘‘(C) in the case of an applicable financial 
statement which fails to show a specific amount 
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of earnings permanently reinvested outside the 
United States and which shows a specific 
amount of tax liability attributable to such 
earnings, the amount equal to the amount of 
such liability divided by 0.35. 
The amounts described in subparagraphs (B) and 
(C) shall be treated as being zero if there is no such 
statement or such statement fails to show a specific 
amount of such earnings or liability, as the case may 
be. 
‘‘(2) DIVIDENDS MUST BE EXTRAORDINARY.— 
The amount of dividends taken into account under 
subsection (a) shall not exceed the excess (if any) 
of— 
‘‘(A) the cash dividends received during 
the taxable year by such shareholder from con-
trolled foreign corporations, over 
‘‘(B) the sum of— 
‘‘(i) the dividends received during the 
base period year by such shareholder from 
controlled foreign corporations, 
‘‘(ii) the amounts includible in such 
shareholder’s gross income for the base pe-
riod year under section 951(a)(1)(B) with 
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respect to controlled foreign corporations, 
and 
‘‘(iii) the amounts that would have 
been included for the base period year but 
for section 959(a) with respect to con-
trolled foreign corporations. 
The amount taken into account under clause 
(iii) for the base period year shall not include 
any amount which is not includible in gross in-
come by reason of an amount described in 
clause (ii) with respect to a prior taxable year. 
Amounts described in subparagraph (B) for the 
base period year shall be such amounts as 
shown on the most recent return filed for such 
year; except that amended returns filed after 
June 30, 2007, shall not be taken into account. 
‘‘(3) REDUCTION OF BENEFIT IF INCREASE IN 
RELATED PARTY INDEBTEDNESS.—The amount of 
dividends which would (but for this paragraph) be 
taken into account under subsection (a) shall be re-
duced by the excess (if any) of— 
‘‘(A) the amount of indebtedness of the 
controlled foreign corporation to any related 
person (as defined in section 954(d)(3)) as of 
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