I 
108TH CONGRESS 
1ST SESSION H. R. 1162
To amend the Internal Revenue Service Code of 1986 to allow a deduction 
for certain distributions from a controlled foreign corporation to encour-
age companies to invest in worker hiring and training, infrastructure 
investments, capital investments, financial stabilization of the company, 
and research and development. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 6, 2003
Mr. SMITH of Washington (for himself, Mr. DOOLEY of California, Mr. MCIN-
TYRE, Mr. TURNER of Texas, Ms. ESHOO, Ms. LOFGREN, Mr. REYES, 
Mr. COOPER, Mr. JOHN, Mrs. TAUSCHER, Mr. CASE, Mrs. MCCARTHY 
of New York, Mrs. JONES of Ohio, Mr. KIND, Mr. SCOTT of Georgia, 
Mr. BAIRD, and Mr. DAVIS of Florida) introduced the following bill; 
which was referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Service Code of 1986 to 
allow a deduction for certain distributions from a con-
trolled foreign corporation to encourage companies to 
invest in worker hiring and training, infrastructure in-
vestments, capital investments, financial stabilization of 
the company, and research and development.
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 ‘‘Invest in America Act 
of 2003’’. 
SEC. 2. DEDUCTION BY UNITED STATES SHAREHOLDERS 
FOR DIVIDENDS RECEIVED FROM A CON-
TROLLED FOREIGN CORPORATION. 
(a) IN GENERAL.—Subpart F of part III of sub-
chapter N of chapter 1 of the Internal Revenue Code of 
1986 (relating to controlled foreign corporations) is 
amended by adding at the end the following new section: 
‘‘SEC. 965. DIVIDENDS RECEIVED DEDUCTION. 
‘‘(a) GENERAL RULE.—In the case of a United 
States shareholder, if such shareholder elects the applica-
tion of this section, there shall be allowed as a deduction 
for the taxable year an amount equal to the excess of—
‘‘(1) 85 percent of qualified distributions, over 
‘‘(2) the average of qualified distributions 
amounts for the period of 3 taxable years (or the pe-
riod the taxpayer was in existence, if shorter) ending 
in 2000, 2001, and 2002. 
‘‘(b) QUALIFIED DISTRIBUTION.—
‘‘(1) IN
GENERAL.—The term ‘qualified dis-
tribution’ means, with respect to a taxable year, the 
sum of—
‘‘(A) dividend (as defined by section 316), 
and
‘‘(B) the amount described in section 
951(a)(1)(B), 
received from a controlled foreign corporation during 
the first taxable year of the shareholder ending after 
90 days after the date of the enactment of the In-
vest in America Act of 2003. 
‘‘(2) EXCEPTION.—Such term shall not include 
amounts described in section 951(a)(1)(A). 
‘‘(3) REQUIREMENT TO REINVEST IN UNITED 
STATES.—No amount described in subparagraph (A) 
or (B) of paragraph (1) shall be treated as a quali-
fied distribution for purposes of this section unless 
such amount is reinvested in the United States pur-
suant to a plan approved by the president or chief 
executive officer of the United States shareholder 
prior to the distribution from which such amount is 
derived and subsequently approved by the Board of 
Directors (or management committee) of such 
United States shareholder, which plan shall describe 
expenditures to be made from such amount. 
‘‘(c) DISALLOWANCE OF FOREIGN TAX CREDIT.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, no credit shall be allowed under section 901 for 
any taxes paid or accrued (or treated as paid or ac-
crued) with respect to the portion of the qualified
distribution allowed as a deduction under subsection 
(a) for the taxable year. 
‘‘(2) PORTION DETERMINED.—For purposes of 
paragraph (1), the portion of the qualified distribu-
tion to which paragraph (1) applies shall be the 
amount which bears the same ratio to the credit al-
lowed under section 901 (determined without regard 
to this paragraph) for the taxable year as such por-
tion bears to the total qualified distributions for the 
taxable year. 
‘‘(d) TERMINATION.—Subsection (a) shall apply only 
to the first taxable year of a United States shareholder 
ending after 90 days after the date of the enactment of 
the Invest in America Act of 2003.’’.
(b) ALTERNATIVE MINIMUM TAX.—Subparagraph 
(C) of section 56(g)(4)(C) of such Code is amended by 
adding at the end the following new clause: 
‘‘(v) SPECIAL RULE FOR CERTAIN DIS-
TRIBUTIONS FROM CONTROLLED FOREIGN 
CORPORATIONS.—Clause (i) shall not apply 
to any deduction allowable under section 
965.’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart F of part III of subchapter N of chapter 1
of such Code is amended by adding at the end the fol-
lowing new item:
‘‘Sec. 965. Dividends received deduction.’’.
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act.
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