‘‘(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 cal-
endar 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 tax-
payer’s average employment level during such 
period falls below the prior average employment 
(but not exceeding the aggregate amount al-
lowed as a deduction pursuant to subsection 
(a)(1)) shall be taken into income by the tax-
payer 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. 
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‘‘(C) PRIOR AVERAGE EMPLOYMENT.—For 
purposes of this paragraph, the taxpayer’s 
‘prior average employment’ shall be the average 
number of full-time United States employees of 
the taxpayer during the period consisting of the 
24 calendar months immediately preceding the 
calendar month in which the taxpayer first re-
ceives a distribution described in subsection 
(a)(1). 
‘‘(D) FULL-TIME
UNITED
STATES
EM-
PLOYEE.—For purposes of this paragraph— 
‘‘(i) IN
GENERAL.—The term ‘full- 
time United States employee’ means an in-
dividual who provides services in the 
United States as a full-time employee, 
based on the employer’s standards and 
practices; except that regardless of the em-
ployer’s classification of the employee, an 
employee whose normal schedule is 40 
hours or more per week is considered a 
full-time employee. 
‘‘(ii) EXCEPTION
FOR
CHANGES
IN 
OWNERSHIP OF TRADES OR BUSINESSES.— 
Such term does not include— 
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‘‘(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 pe-
riod referred to in subparagraph (A); 
and 
‘‘(II) any individual who was an 
employee of any trade or business dis-
posed of by the taxpayer during the 
24-month period referred to in sub-
paragraph (A) or the 24-month period 
referred to in subparagraph (C). 
‘‘(E) AGGREGATION
RULES.—In deter-
mining 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’’ each place it oc-
curs and inserting ‘‘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 
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any year for which an election under section 965 was in 
effect.’’. 
(f) INDEBTEDNESS DETERMINATION DATE.—Sub-
paragraph (B) of section 965(b)(3) of such Code is 
amended by striking ‘‘October 3, 2004’’ and inserting 
‘‘January 11, 2013’’. 
(g) CONFORMING AMENDMENTS.— 
(1) Subsection 965(c) of such Code, as amend-
ed by subsection (e), is amended by striking para-
graph (1) and redesignating paragraphs (2), (3), 
(4), and (5) as paragraphs (1), (2), (3), and (4), re-
spectively. 
(2) Paragraph 965(c)(4) of such Code, as re-
designated 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 share-
holder.’’. 
(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. 
Æ 
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