in the Trust Fund shall be available only for purposes of
making payments under section 2.
SEC. 4. ELIMINATION OF DOUBLE TAX ON DIVIDENDS.
(a) DIVIDENDS RECEIVED BY INDIVIDUALS.—
(1) IN GENERAL.—Part III of subchapter B of
chapter 1 of the Code (relating to items specifically
excluded from gross income) is amended by inserting
after section 115 the following new section:
‘‘SEC. 116. EXCLUSION OF DIVIDENDS RECEIVED BY INDI-
VIDUALS.
‘‘(a) EXCLUSION.—Gross income does not include
amounts received by an individual as dividends from do-
mestic corporations.
‘‘(b) NATIONAL DIVIDEND PAYMENT.—For purposes
of subsection (a), amounts received by an individual as
national dividend payments under the National Dividend
Act of 1993 shall be treated as dividends from domestic
corporations.’’
(2) TECHNICAL, CONFORMING, AND CLERICAL
AMENDMENTS.—
(A) The table of sections for part III of
subchapter B of chapter 1 of the Code is
amended by inserting after the item relating to
section 115 the following new item:
‘‘Sec. 116. Exclusion of dividends received by individuals.’’
(B) Subsection (g) of section 301 of the
Code (relating to special rules for distributions
of property by corporations) is amended by in-
serting after paragraph (3) the following new
paragraph (4):
‘‘(4) For exclusion from gross income of divi-
dends received by individuals, see section 116.’’
(C) Subsection (a) of section 643 of the
Code (relating to certain definitions with re-
spect to the taxation of estates, trusts and
beneficiaries) is amended by inserting after
paragraph (6) the following new paragraph (7):
‘‘(7) DIVIDENDS.—There shall be included the
amount of any dividends excluded from gross income
pursuant to section 116 (relating to exclusion of
dividends).’’
(b) DIVIDENDS RECEIVED BY CORPORATIONS.—
(1) IN
GENERAL.—Subsection (a) of section
243 of the Code (relating to dividends received by
corporations) is amended to read as follows:
‘‘(a) GENERAL RULE.—In the case of a corporation,
there shall be allowed as a deduction an amount equal to
100 percent of the amount received as dividends from a
domestic corporation which is subject to taxation under
this chapter.’’
(2) 
DIVIDENDS
ON
CERTAIN
PREFERRED
STOCK.—Section 244 of the Code (relating to divi-
dends received on certain preferred stock) is amend-
ed to read as follows:
‘‘SEC. 244. DIVIDENDS RECEIVED ON CERTAIN PREFERRED
STOCK.
‘‘In the case of a corporation, there shall be allowed
as a deduction an amount computed as follows:
‘‘(1) First determine the amount received as
dividends on the preferred stock of a public utility
which is subject to taxation under this chapter and
with respect to which the deduction provided in sec-
tion 247 for dividends paid is allowable.
‘‘(2) Then multiply the amount determined
under paragraph (1) by the fraction—
‘‘(A) the numerator of which is 14 percent,
and
‘‘(B) the denominator of which is that per-
centage which equals the highest rate of tax
specified in section 11(b).
‘‘(3) Finally ascertain the amount which is 100
percent of the excess of—
‘‘(A) the amount determined under para-
graph (1), over
‘‘(B) the amount determined under para-
graph (2).’’
(3) TECHNICAL, CONFORMING
AND
CLERICAL
AMENDMENTS.—
(A) Section 243 of the Code (relating to
dividends received by corporations) is amended
by striking out subsections (b) and (c) and by
redesignating subsections (d) and (e) as sub-
sections (b) and (c), respectively.
(B) Subsection (b) of section 246 of the
Code (relating to rules applying to deductions
for dividends received) is amended—
(i) in paragraph (1) by striking out
‘‘243(a)(1), 244(a)’’ each time it appears
and inserting in lieu thereof ‘‘243, 244’’
and by striking out ‘‘the percentage deter-
mined under paragraph (3) of’’, and
(ii) by striking out paragraph (3).
(C)(i) 
Subparagraph 
(A) 
of 
section
805(a)(4) of the Code (relating to dividends re-
ceived by life insurance companies) is amended
by striking out all that follows ‘‘subparagraph
(B))’’ and insert in lieu thereof a period.
(ii) Subparagraph (B) of section 805(a)(4)
of the Code is amended—