I 
110TH CONGRESS 
2D SESSION 
H. R. 6374 
To amend the Internal Revenue Code of 1986 to repeal the shipping invest-
ment withdrawal rules in section 955 and to provide an incentive to 
reinvest foreign shipping earnings in the United States. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 25, 2008 
Mr. MCDERMOTT (for himself, Mr. ENGLISH of Pennsylvania, and Ms. 
SCHWARTZ) introduced the following bill; which was referred to the Com-
mittee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to repeal 
the shipping investment withdrawal rules in section 955 
and to provide an incentive to reinvest foreign shipping 
earnings in the United States. 
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 ‘‘American Shipping Re-
investment Act of 2008’’. 
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SEC. 2. REPEAL OF QUALIFIED SHIPPING INVESTMENT 
WITHDRAWAL RULES. 
(a) IN GENERAL.—Section 955 of the Internal Rev-
enue Code of 1986 (relating to withdrawal of previously 
excluded subpart F income from qualified investment) is 
hereby repealed. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 951(a)(1)(A) of such Code is 
amended by adding ‘‘and’’ at the end of clause (i) 
and by striking clause (iii). 
(2) Section 951(a)(3) of such Code (relating to 
the limitation on pro rata share of previously ex-
cluded subpart F income withdrawn from invest-
ment) is hereby repealed. 
(3) Section 964(b) of such Code is amended by 
striking ‘‘, 955,’’. 
(4) The table of sections for subpart F of part 
III of subchapter N of chapter 1 of such Code is 
amended by striking the item relating to section 
955. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years of controlled for-
eign corporations ending on or after the date of the enact-
ment of this Act, and to taxable years of United States 
shareholders in which or with which such taxable years 
of controlled foreign corporations end. 
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SEC. 3. TEMPORARY DIVIDENDS RECEIVED DEDUCTION 
FOR PREVIOUSLY UNTAXED FOREIGN BASE 
COMPANY SHIPPING INCOME. 
(a) IN GENERAL.—Section 965 of the Internal Rev-
enue Code of 1986 (relating to temporary dividends re-
ceived deduction) is amended by adding at the end the 
following new subsection: 
‘‘(g) TEMPORARY DIVIDENDS RECEIVED DEDUCTION 
FOR FOREIGN BASE COMPANY SHIPPING INCOME.— 
‘‘(1) IN GENERAL.—In the case of a corpora-
tion which is a United States shareholder and for 
which the election under this subsection is in effect 
for the taxable year, there shall be allowed as a de-
duction an amount equal to 85 percent of the cash 
distributions which are received during such taxable 
year by such shareholder from controlled foreign cor-
porations to the extent that the distributions are at-
tributable to income— 
‘‘(A) which was derived by the controlled 
foreign corporation in taxable years beginning 
before January 1, 2005, and 
‘‘(B) which would, without regard to the 
year earned, be described in section 954(f) (as 
in effect before the enactment of the American 
Jobs Creation Act of 2004). 
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‘‘(2) INDIRECT DIVIDENDS.—A rule similar to 
the rule of subsection (a)(2) shall apply, determined 
by treating cash distributions which are so attrib-
utable as cash dividends. 
‘‘(3) LIMITATION.—The amount of dividends 
taken into account under this subsection shall not 
exceed the amount permitted to be taken into ac-
count under paragraphs (1), (3), and (4) of sub-
section (b), determined as if such paragraphs ap-
plied to this subsection. 
‘‘(4) TAXPAYER
ELECTION
AND
DESIGNA-
TION.—For purposes of paragraph (1), a United 
States shareholder may, on its return for the taxable 
year to which this subsection applies— 
‘‘(A) elect to apply paragraph (3) of sec-
tion 959(c) before paragraphs (1) and (2) 
thereof, and 
‘‘(B) designate the extent, if any, to which 
a cash distribution reduces a controlled foreign 
corporation’s earnings and profits attributable 
to— 
‘‘(i) foreign base company shipping in-
come (determined under section 954(f) as 
in effect before the enactment of the Amer-
ican Jobs Creation Act of 2004), or 
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‘‘(ii) other earnings and profits. 
‘‘(5) ELECTION.—The taxpayer may elect to 
apply this subsection to— 
‘‘(A) the taxpayer’s last taxable year which 
begins before the date of the enactment of this 
subsection, or 
‘‘(B) 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 exten-
sions) for filing the return of tax for such taxable 
year. 
‘‘(6) 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 paragraph (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-
payers average employment level during such 
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period falls below the prior average employment 
(but not exceeding the aggregate amount al-
lowed as a deduction pursuant to paragraph 
(1)) shall be taken into income by the taxpayer 
during the taxable year that includes the final 
day of such period. 
‘‘(B) PRIOR AVERAGE EMPLOYMENT.—For 
purposes of this paragraph, the taxpayer’s 
‘prior average employment’ shall be the average 
number of employees of the taxpayer during the 
period consisting of the 24 calendar months im-
mediately preceding the calendar month in 
which the taxpayer first receives a distribution 
described in paragraph (1). 
‘‘(C) AGGREGATION
RULES.—In deter-
mining the taxpayer’s average employment level 
and prior average employment, all domestic 
members of a controlled group (as defined in 
section 264(e)(5)(B)) shall be treated as a sin-
gle taxpayer.’’. 
(b) CONFORMING AMENDMENT.—Subsection (f) of 
section 965 of such Code is amended by inserting ‘‘other 
than subsection (g)’’ after ‘‘this section’’ in the material 
preceding paragraph (1). 
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(c) 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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