I
105TH CONGRESS
2D SESSION
H. R. 3908
To amend the Internal Revenue Code of 1986 to exclude from gross income
the dividends paid by tobacco companies which meet youth smoking
reduction targets.
IN THE HOUSE OF REPRESENTATIVES
MAY 20, 1998
Mr. BRYANT introduced the following bill; which was referred to the Commit-
tee on Way and Means, and in addition to the Committee on Commerce,
for a period to be subsequently determined 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 exclude
from gross income the dividends paid by tobacco compa-
nies which meet youth smoking reduction targets.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Investing in Our Chil-
dren’s Health Act of 1998’’.
SEC. 2. EXCLUSION FROM GROSS INCOME FOR DIVIDENDS
FROM TOBACCO COMPANIES WHICH MEET
YOUTH SMOKING REDUCTION TARGETS.
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
items specifically excluded from gross income) is amended
by inserting after section 115 the following new section:
‘‘SEC. 116. DIVIDENDS FROM TOBACCO COMPANIES WHICH
ACHIEVE YOUTH SMOKING REDUCTION TAR-
GETS.
‘‘(a) IN GENERAL.—In the case of an individual,
gross income does not include any dividend paid by a cor-
poration to the extent such dividend is attributable to
qualifying earnings and profits.
‘‘(b) QUALIFYING EARNINGS AND PROFITS.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘qualifying earnings and profits’
means earnings and profits—
‘‘(A) which are from the manufacture in,
or the importation into, the United States of
any tobacco product, and
‘‘(B) which are for any taxable year begin-
ning in a calendar year with respect to which
there has been a reduction in the underage use
of such product of not less than the applicable
percentage of the baseline level.
‘‘(2) APPLICABLE PERCENTAGE.—For purposes
of subparagraph (A), the applicable percentage for
any taxable year is the applicable percentage deter-
mined under the following table for the calendar
year in which such taxable year begins.
Applicable
Calendar year:
percentage:
2002 .........................................................................................
2003 .........................................................................................
2004 .........................................................................................
2005 .........................................................................................
2006 .........................................................................................
2007 .........................................................................................
2008 .........................................................................................
2009 .........................................................................................
2010 or thereafter ....................................................................
90.
‘‘(c) YOUTH SMOKING REDUCTION TARGET.—For
purposes of this section, the baseline level for any tobacco
product manufactured or imported by any corporation,
and whether the requirement of subsection (b)(2) has been
met, shall be determined by the Secretary of Health and
Human Services in accordance with section 3 of the In-
vesting in Our Children’s Health Act of 1998.
‘‘(d) SPECIAL RULES.—For purposes of this sec-
tion—
‘‘(1) A dividend from a regulated investment
company shall be subject to the limitation prescribed
in section 854(c).
‘‘(2) The amount of dividends properly allocable
to a beneficiary under section 652 or 662 shall be
deemed to have been received by the beneficiary rat-
ably on the same date that the dividends were re-
ceived by the estate or trust.
‘‘(e) CERTAIN NONRESIDENT ALIENS INELIGIBLE
FOR EXCLUSION.—In the case of a nonresident alien indi-
vidual, subsection (a) shall apply only—
‘‘(1) in determining the tax imposed for the
taxable year pursuant to section 871(b)(1) and only
in respect of dividends which are effectively con-
nected with the conduct of a trade or business with-
in the United States, or
‘‘(2) in determining the tax imposed for the
taxable year pursuant to section 877(b).’’
(b) CONFORMING AMENDMENTS.—
(1) Subsection (c) of section 584 of such Code
is amended by adding at the end the following new
sentence:
‘‘The proportionate share of each participant in the
amount of dividends received by the common trust fund
and to which section 116 applies shall be considered for
purposes of such section as having been received by such
participant.’’
(2) Subsection (a) of section 643 of such Code
is amended by inserting after paragraph (7) the fol-
lowing new paragraph: