(2) entering into contracts, including contracts 
for the services of experts and consultants as au-
thorized by section 3109 of title 5, United States 
Code, without regard to any other provision of law 
regarding public contracts; 
(3) designating financial institutions as finan-
cial agents of the Government, and they shall per-
form all such reasonable duties related to this title 
as financial agents of the Government as may be re-
quired of them; 
(4) establishing vehicles that are authorized, 
subject to supervision by the Secretary, to provide, 
and make payments on, the insures referred to in 
subsection (a) and issue obligations; and 
(5) issuing such regulations and other guidance 
as may be necessary or appropriate to define terms 
or carry out the authorities of this title. 
SEC. 502. CONSIDERATIONS. 
(a) SECRETARY CONSIDERATION.—In exercising the 
authorities granted in this title, the Secretary shall take 
into consideration means for— 
(1) protecting the taxpayer; 
(2) providing stability or preventing disruption 
to the financial markets or banking system; and 
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(3) taking appropriate steps to manage any 
conflicts of interest in the hiring of contractors or 
advisors. 
(b) RULEMAKING
EXEMPTION.—Any regulation 
issued under the authority provided in this title shall not 
be subject to the rulemaking provisions as set forth in sec-
tion 553 of title 5, United States Code. 
SEC. 503. INSURANCE PREMIUMS. 
(a) INSURANCE PREMIUMS.—The Secretary shall col-
lect premiums from each financial institution, as such 
term is defined in section 111 of this title, in order to 
fund the Mortgage-Backed Securities Fund established in 
section 105 and used to satisfy obligations incurred under 
this title. 
(b) PREMIUM COLLECTION.—The premium collected 
pursuant to subsection (a) shall be collected from each fi-
nancial institution notwithstanding such institution’s ap-
plication, if any, for insures set forth in section 101(a). 
(c) AUTHORITY TO BASE INSURANCE PREMIUM ON 
PRODUCT RISK.—In establishing the insurance premium 
under subsection (a), the Secretary may provide for vari-
ations in such rates according to the credit risk associated 
with the mortgage-backed security held by a financial in-
stitution as such term is defined in section 111. 
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(d) SUFFICIENT LEVEL.—The premium referred to 
in subsection (a) shall be set by the Secretary at a level 
necessary to maintain a level of funding in the Mortgage- 
Backed Securities Fund, as established in section 104, 
sufficient to meet anticipated claims based upon actuarial 
analysis. 
(e) EXPIRATION.—The Secretary may cease col-
lecting premiums set forth in subsection (a) if he deter-
mines the Mortgage-Backed Securities Fund has sufficient 
reserves to meet anticipated claims as described in sub-
section (d). 
SEC. 504. MORTGAGE-BACKED SECURITIES FUND. 
(a) COLLECTED PREMIUMS.—The Secretary shall de-
posit premiums collected pursuant to section 103(a) of 
this title into the Mortgage-Backed Securities Fund as es-
tablished in subsection (b). 
(b) MORTGAGE-BACKED SECURITIES FUND.—There 
is hereby established a Mortgage-Backed Securities Fund 
(in this title referred to as the ‘‘Fund’’). 
(c) AUTHORITY.—Premiums deposited in the Fund 
pursuant to subsection section (a) shall be invested in obli-
gations of the United States, or kept in cash on hand or 
on deposit, as necessary. 
(d) PAYMENTS FROM THE FUND.—The Secretary 
shall make payments from amounts deposited in the Fund 
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to fulfill the obligations of the insurance provided to finan-
cial institutions as set forth in section 101(a). 
(e) FUND SUFFICIENCY.—The Secretary shall in-
crease insurance premiums if he determines, after con-
sultation with the Government Accountability Office, to a 
level sufficient to assure reserves in the Fund will meet 
anticipated needs. 
(f) TRANSFER AUTHORITY.—The Secretary of the 
Treasury is authorized and directed to loan to the Fund, 
on such terms as may be fixed by the Secretary, such 
funds as in the Secretary’s judgment are from time to 
time required for purposes of this title. 
SEC. 505. PAYMENT OF INSURANCE PREMIUMS. 
(a) PAYMENT AND SUBROGATION.—If a financial in-
stitution that holds a mortgage-backed security on Sep-
tember 24, 2008, for which insurance is provided pursuant 
to this title, is unable to make any payment of principal 
of or interest on such security, the Secretary shall make 
such payment as and when due, in cash, and upon such 
payment shall be subrogated fully to the rights satisfied 
by such payment. 
(b) CONTRACT.—The Secretary is hereby authorized, 
in connection with any insurance under this title, whether 
before or after any default, to provide by contract with 
the holder, referred to in subsection (a), for the extin-
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guishment, upon default by the holder, of any redemption, 
equitable, legal, or other right, title, or interest of the 
holder in any mortgage or mortgages constituting the 
trust or pool against which the mortgage-backed securities 
insured under this title are issued; and with respect to 
any issue of such insured securities, in the event of default 
and pursuant otherwise to the terms of the contract, the 
mortgages that constitute such trust or pool backing the 
security shall become the absolute property of the U.S. 
Treasury, subject only to the unsatisfied rights of the 
holders of the mortgage-backed securities based on and 
backed by such trust or pool. 
(c) LIMITATION
ON APPLICATION
OF LAW.—No 
State or local law, and no Federal law, shall preclude or 
limit the exercise of the Secretary’s— 
(1) power to contract with the issuer on the 
terms set forth in subsection (b); or 
(2) authorization to enforce any such contract 
with the holder; or 
(3) the rights, as provided in subsection (b), in 
the mortgages constituting the trust or pool against 
which such insured securities are issued. 
(d) FULL FAITH AND CREDIT.—The full faith and 
credit of the United States is pledged to the payment of 
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all amounts which may be required to be paid under any 
insurance under this title. 
SEC. 506. FUNDING. 
For the purpose of the authorities granted in this 
title, and for the costs of administering those authorities, 
the Secretary may use funds from the amounts in the 
Mortgage-Backed Securities Fund. Any funds expended 
from the Fund for actions authorized by this title, includ-
ing the payment of administrative expenses, shall be 
deemed appropriated at the time of such expenditure. 
SEC. 507. JUDICIAL REVIEW AND RELATED MATTERS. 
(a) JUDICIAL REVIEW.— 
(1) STANDARD.—Actions by the Secretary pur-
suant to the authority of this Act shall be subject to 
chapter 7 of title 5, United States Code, including 
that such final actions shall be held unlawful and set 
aside if found to be arbitrary, capricious, an abuse 
of discretion, or not in accordance with law. 
(2) LIMITATIONS ON EQUITABLE RELIEF.— 
(A) INJUNCTION.—No injunction or other 
form of equitable relief shall be issued against 
the Secretary for actions pursuant to section 
101, 102, 106, and 109, other than to remedy 
a violation of the Constitution. 
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(B) TEMPORARY
RESTRAINING
ORDER.— 
Any request for a temporary restraining order 
against the Secretary for actions pursuant to 
this Act shall be considered and granted or de-
nied by the court within 3 days of the date of 
the request. 
(C) PRELIMINARY INJUNCTION.—Any re-
quest for a preliminary injunction against the 
Secretary for actions pursuant to this Act shall 
be considered and granted or denied by the 
court on an expedited basis consistent with the 
provisions of rule 65(b)(3) of the Federal Rules 
of Civil Procedure, or any successor thereto. 
(D) PERMANENT
INJUNCTION.—Any re-
quest for a permanent injunction against the 
Secretary for actions pursuant to this Act shall 
be considered and granted or denied by the 
court on an expedited basis. Whenever possible, 
the court shall consolidate trial on the merits 
with any hearing on a request for a preliminary 
injunction, consistent with the provisions of rule 
65(a)(2) of the Federal Rules of Civil Proce-
dure, or any successor thereto. 
(3) LIMITATION ON ACTIONS BY PARTICIPATING 
COMPANIES.—No action or claims may be brought 
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against the Secretary by any person that divests its 
assets with respect to its participation in a program 
under this Act, except as provided in paragraph (1), 
other than as expressly provided in a written con-
tract with the Secretary. 
(4) STAYS.—Any injunction or other form of 
equitable relief issued aginst the Secretary for ac-
tions pursuant to section 101, 102, 106, and 109, 
shall be automatically stayed. The stay shall be lift-
ed unless the Secretary seeks a stay from a higher 
court within 3 calendar days after the date on which 
the relief is issued. 
(b) RELATED MATTERS.— 
(1) TREATMENT OF HOMEOWNERS’ RIGHTS.— 
The terms of any residential mortgage loan that is 
part of any purchase by the Secretary under this Act 
shall remain subject to all claims and defenses that 
would otherwise apply, notwithstanding the exercise 
of authority by the Secretary under this Act. 
(2) SAVINGS CLAUSE.—Any exercise of the au-
thority of the Secretary pursuant to this Act shall 
not impair the claims or defenses that would other-
wise apply with respect to persons other than the 
Secretary. Except as established in any contract, a 
servicer of pooled residential mortgages owes any 
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duty to determine whether the net present value of 
the payments on the loan, as modified, is likely to 
be greater than the anticipated net recovery that 
would result from foreclosure to all investors and 
holders of beneficial interests in such investment, 
but not to any individual or groups of investors or 
beneficial interest holders, and shall be deemed to 
act in the best interests of all such investors or hold-
ers of beneficial interests if the servicer agrees to or 
implements a modification or workout plan when the 
servicer takes reasonable loss mitigation actions, in-
cluding partial payments. 
SEC. 508. CREDIT REFORM. 
(a) IN GENERAL.—Subject to subsection (b), the 
costs of insures made under this title shall be determined 
as provided under the Federal Credit Reform Act of 1990 
(2 U.S.C. 661 et seq.), as applicable. 
(b) COSTS.—For the purposes of Section 502(5) of 
the Federal Credit Reform Act of 1990 (2 U.S.C. 
661a(5)), the cost of each guarantee of a mortgage-backed 
security under this title shall be calculated by— 
(1) adjusting the discount rate in section 
502(5)(E) (2 U.S.C. 661a(5)(E)) for market risks; 
and 
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(2) using the difference between the current es-
timate, consistent with subparagraph (b)(1) under 
the terms of the insured mortgage-backed security 
and the current estimate consistent with subpara-
graph (b)(1) under the terms of the insured. 
SEC. 509. REPORTS TO CONGRESS. 
Within 60 days of the first exercise of the authority 
set forth in section 101(a), and semiannually thereafter, 
the Secretary shall report to the Committees on the Budg-
et, Financial Services, and Ways and Means of the House 
of Representatives and the Committees on the Budget, Fi-
nance, and Banking, Housing, and Urban Affairs of the 
Senate with respect to the authorities exercised under this 
title and the considerations required by section 102. 
SEC. 510. DEFINITIONS. 
For purposes of this title, the following definitions 
shall apply: 
(1) FINANCIAL
INSTITUTION.—The term ‘‘fi-
nancial institution’’ means any institution including, 
but not limited to, banks, thrifts, credit unions, 
broker-dealers, insurance companies, and the trust-
ees administering mortgage-backed securities trusts, 
having significant operations in the United States; 
and, upon the Secretary’s determination in consulta-
tion with the Chairman of the Board of Governors 
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of the Federal Reserve, holds or has issued applica-
ble mortgage-backed securities. 
(2) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of the Treasury. 
(3) MORTGAGE-BACKED SECURITY.—The term 
‘‘mortgage-backed security’’ means securities, obliga-
tions, other instruments, or other securities, other 
than those guaranteed by the Government National 
Mortgage Association, as shall be based on and 
backed by a trust or pool composed of mortgages 
that in each case was originated or issued on or be-
fore September 24, 2008. 
(4) 
UNITED
STATES.—The 
term 
‘‘United 
States’’ means the States, territories, and posses-
sions of the United States and the District of Co-
lumbia. 
SEC. 511. ANNUAL REPORT AND AUDIT BY THE GOVERN-
MENT ACCOUNTABILITY OFFICE. 
(a) ANNUAL REPORT ON THE MORTGAGE-BACKED 
SECURITIES FUND.—The Secretary shall annually submit 
to Congress a full report of its operations, activities, budg-
et, receipts, and expenditures for the preceding 12-month 
period. The report shall include, with respect to the Mort-
gage-Backed Securities Fund, an analysis of— 
(1) the current financial condition of such fund; 
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(2) the purpose, effect, and estimated cost of 
each resolution action taken for payment of insur-
ance during the preceding year; 
(3) the extent to which the actual costs pro-
vided to, or for the benefit of, resulting from insur-
ance during the preceding year exceeded the esti-
mated costs of such costs reported in a previous 
year, as applicable; 
(4) the exposure of the Mortgage-Backed Secu-
rities Fund to changes in those economic factors 
most likely to affect the condition of that Fund; 
(5) a current estimate of the resources needed 
for the Mortgage-Backed Securities Fund to achieve 
the purposes of this title; 
(6) an analysis of the sufficiency of the pre-
mium collections, actual and projected, in meeting 
the costs of the Fund; and 
(7) any findings, conclusions, and recommenda-
tions for legislative and administrative actions con-
sidered appropriate to future activities of the Mort-
gage-Backed Securities Fund. 
(b) SPECIAL REPORT.—Within 45 days of the enact-
ment of this Act, the Comptroller General shall provide 
to the committees of Congress referred to in subsection 
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(d), and other relevant committees, an initial report on 
the Fund. 
(c) ANNUAL AUDIT OF THE MORTGAGE-BACKED SE-
CURITIES FUND.— 
(1) AUDIT REQUIRED.—The Comptroller Gen-
eral shall audit annually the financial transactions of 
the Mortgage-Backed Securities Fund (the ‘‘Fund’’) 
in accordance with generally accepted Government 
auditing standards. 
(2) ACCESS
TO
BOOKS
AND
RECORDS.—All 
books, records, accounts, reports, files, and property 
belonging to or used by the Department of the 
Treasury that are directly related to the operations 
and determination as to the amounts in the Fund, 
or by an independent certified public accountant re-
tained to audit the Fund’s financial statements, 
shall be made available to the Comptroller General. 
(d) REPORT OF THE AUDIT.—A report of the audit 
conducted under subsection (c) of this section shall be 
made by the Comptroller General to the Congress not later 
than July 15th of the year following the year covered by 
such audit. The report to the Congress shall set forth the 
scope of the audit and shall include a statement of assets 
and liabilities and surplus or deficit of the Fund; a state-
ment of surplus or deficit analysis; a statement of income 
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and expenses; a statement of sources and application of 
funds and such comments and information as may be 
deemed necessary to inform Congress, together with such 
recommendations with respect thereto as the Comptroller 
General may deem advisable. The report shall also show 
specifically any program, expenditure, or other financial 
transaction or undertaking observed in the course of the 
audit, which, in the opinion of the Comptroller General, 
has been carried on or made without authority of law. A 
copy of each report shall be furnished to the President, 
to the Secretary of the Treasury, and to Committee on 
Banking, Housing, and Urban Affairs, the Committee on 
the Budget, and the Committee on Finance of the Senate 
and the Committee on Financial Services, the Committee 
on the Budget, and the Committee on Ways and Means 
of the House of Representatives. 
(e) ASSISTANCE IN AUDIT.—For the purpose of con-
ducting such audit the Comptroller General is authorized 
in his discretion to employ by contract, without regard to 
section 5 of title 41 of the United States Code, profes-
sional services of firms and organizations of certified pub-
lic accountants, with the concurrence of the Secretary, for 
temporary periods or for special purposes. 
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TITLE VI—UNLEASHING 
PRIVATE CAPITAL 
SEC. 601. 5-YEAR CARRYBACK OF LOSSES. 
(a) IN GENERAL.—Subparagraph (H) of section 
172(b)(1) of the Internal Revenue Code of 1986 is amend-
ed to read as follows: 
‘‘(H) 5-YEAR
CARRYBACK
OF
CERTAIN 
LOSSES.— 
‘‘(i) TAXABLE YEARS ENDING DURING 
2001 AND 2002.—In the case of a net oper-
ating loss for any taxable year ending dur-
ing 2001 or 2002, subparagraph (A)(i) 
shall be applied by substituting ‘5’ for ‘2’ 
and subparagraph (F) shall not apply. 
‘‘(ii) TAXABLE YEARS ENDING DUR-
ING 2007, 2008, AND 2009.—In the case of 
a net operating loss for any taxable year 
ending during 2007, 2008, or 2009— 
‘‘(I) subparagraph (A)(i) shall be 
applied by substituting ‘5’ for ‘2’; 
‘‘(II) subparagraph (E)(ii) shall 
be applied by substituting ‘4’ for ‘2’; 
and 
‘‘(III) subparagraph (F) shall not 
apply.’’. 
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(b) TEMPORARY SUSPENSION OF 90 PERCENT LIMIT 
ON CERTAIN NOL CARRYBACKS AND CARRYOVERS.— 
(1) IN
GENERAL.—Subclause (I) of section 
56(d)(1)(A)(ii) of such Code is amended— 
(A) by inserting ‘‘and 2007, 2008, or 
2009’’ after ‘‘2001 or 2002’’; and 
(B) by inserting ‘‘and 2007, 2008, and 
2009’’ after ‘‘2001 and 2002’’. 
(2) CONFORMING AMENDMENT.—Subclause (I) 
of section 56(d)(1)(A)(i) of such Code is amended by 
inserting ‘‘amount of such’’ before ‘‘deduction de-
scribed in clause (ii)(I)’’. 
(c) ANTI-ABUSE RULES.—The Secretary of the 
Treasury or the Secretary’s designee shall prescribe such 
rules as are necessary to prevent the abuse of the purposes 
of the amendments made by this section, including 
antistuffing rules, antichurning rules (including rules re-
lating to sale-leasebacks), and rules similar to the rules 
under section 1091 of the Internal Revenue Code of 1986 
relating to losses from wash sales. 
(d) EFFECTIVE DATES.— 
(1) SUBSECTION (a).— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), the amendments made by 
subsection (a) shall apply to net operating 
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losses arising in taxable years ending in 2007, 
2008, or 2009. 
(B) ELECTION.—In the case of any tax-
payer with a net operating loss for a taxable 
year ending during 2007 or 2008— 
(i) any election made under section 
172(b)(3) of the Internal Revenue Code of 
1986 may (notwithstanding such section) 
be revoked before October 15, 2009; and 
(ii) any election made under section 
172(j) of such Code shall (notwithstanding 
such section) be treated as timely made if 
made before October 15, 2009. 
(2) SUBSECTION (b).—The amendments made 
by subsection (b) shall apply to taxable years ending 
after December 31, 2006. 
SEC. 602. INCENTIVES TO REINVEST FOREIGN EARNINGS IN 
UNITED STATES. 
(a) IN GENERAL.—Section 965 of the Internal Rev-
enue Code of 1986 is amended to read as follows: 
‘‘SEC. 965. DEDUCTION FOR DIVIDENDS RECEIVED. 
‘‘(a) DEDUCTION.— 
‘‘(1) IN GENERAL.—In the case of a corpora-
tion which is a United States shareholder and for 
which the election under this section is in effect for 
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the taxable year, there shall be allowed as a deduc-
tion an amount equal to the applicable percentage of 
cash dividends which are received during such tax-
able year by such shareholder from controlled for-
eign corporations. 
‘‘(2) APPLICABLE PERCENTAGE.—For purposes 
of paragraph (1)— 
‘‘(A) IN GENERAL.—Except as provided by 
subparagraph (B), the term ‘applicable percent-
age’ means 85 percent. 
‘‘(B) DISTRESSED DEBT.—In the case of 
dividends received with respect to which the re-
quirements of subsection (b)(4)(B) are met, 
such term means 100 percent. 
‘‘(3) DIVIDENDS PAID INDIRECTLY FROM CON-
TROLLED FOREIGN CORPORATIONS.—If, within the 
taxable year for which the election under this section 
is in effect, a United States shareholder receives a 
cash distribution from a controlled foreign corpora-
tion which is excluded from gross income under sec-
tion 959(a), such distribution shall be treated for 
purposes of this section as a cash dividend to the ex-
tent of any amount included in income by such 
United 
States 
shareholder 
under 
section 
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951(a)(1)(A) as a result of any cash dividend during 
such taxable year to— 
‘‘(A) such controlled foreign corporation 
from another controlled foreign corporation that 
is in a chain of ownership described in section 
958(a); or 
‘‘(B) any other controlled foreign corpora-
tion in such chain of ownership, but only to the 
extent of cash distributions described in section 
959(b) which are made during such taxable 
year to the controlled foreign corporation from 
which such United States shareholder received 
such distribution. 
‘‘(b) LIMITATIONS.— 
‘‘(1) IN GENERAL.—The amount of dividends 
taken into account under subsection (a) shall not ex-
ceed the greater of— 
‘‘(A) $500,000,000; 
‘‘(B) the amount shown on the applicable 
financial statement as earnings permanently re-
invested outside the United States; or 
‘‘(C) in the case of an applicable financial 
statement which fails to show a specific amount 
of earnings permanently reinvested outside the 
United States and which shows a specific 
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amount of tax liability attributable to such 
earnings, the amount equal to the amount of 
such liability divided by 0.35. 
The amounts described in subparagraphs (B) and 
(C) shall be treated as being zero if there is no such 
statement or such statement fails to show a specific 
amount of such earnings or liability, as the case may 
be. 
‘‘(2) DIVIDENDS MUST BE EXTRAORDINARY.— 
The amount of dividends taken into account under 
subsection (a) shall not exceed the excess (if any) 
of— 
‘‘(A) the cash dividends received during 
the taxable year by such shareholder from con-
trolled foreign corporations; over— 
‘‘(B) the sum of— 
‘‘(i) the dividends received during the 
base period year by such shareholder from 
controlled foreign corporations; 
‘‘(ii) the amounts includible in such 
shareholder’s gross income for the base pe-
riod year under section 951(a)(1)(B) with 
respect to controlled foreign corporations; 
and 
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‘‘(iii) the amounts that would have 
been included for the base period year but 
for section 959(a) with respect to con-
trolled foreign corporations. 
The amount taken into account under clause 
(iii) for the base period year shall not include 
any amount which is not includible in gross in-
come by reason of an amount described in 
clause (ii) with respect to a prior taxable year. 
Amounts described in subparagraph (B) for the 
base period year shall be such amounts as 
shown on the most recent return filed for such 
year; except that amended returns filed after 
June 30, 2007, shall not be taken into account. 
‘‘(3) REDUCTION OF BENEFIT IF INCREASE IN 
RELATED PARTY INDEBTEDNESS.—The amount of 
dividends which would (but for this paragraph) be 
taken into account under subsection (a) shall be re-
duced by the excess (if any) of— 
‘‘(A) the amount of indebtedness of the 
controlled foreign corporation to any related 
person (as defined in section 954(d)(3)) as of 
the close of the taxable year for which the elec-
tion under this section is in effect; over 
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States shareholder, the amount applicable 
under subparagraph (B) or (C) of subsection 
(b)(1) shall be divided among such shareholders 
under regulations prescribed by the Secretary. 
‘‘(d) DENIAL OF FOREIGN TAX CREDIT; DENIAL OF 
CERTAIN EXPENSES.— 
‘‘(1) FOREIGN TAX CREDIT.—No credit shall be 
allowed under section 901 for any taxes paid or ac-
crued (or treated as paid or accrued) with respect to 
the deductible portion of— 
‘‘(A) any dividend; or 
‘‘(B) any amount described in subsection 
(a)(2) which is included in income under section 
951(a)(1)(A). 
No deduction shall be allowed under this chapter for 
any tax for which credit is not allowable by reason 
of the preceding sentence. 
‘‘(2) EXPENSES.—No deduction shall be al-
lowed for expenses properly allocated and appor-
tioned to the deductible portion described in para-
graph (1). 
‘‘(3) DEDUCTIBLE PORTION.—For purposes of 
paragraph (1), unless the taxpayer otherwise speci-
fies, the deductible portion of any dividend or other 
amount is the amount which bears the same ratio to 
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the amount of such dividend or other amount as the 
amount allowed as a deduction under subsection (a) 
for the taxable year bears to the amount described 
in subsection (b)(2)(A) for such year. 
‘‘(4) COORDINATION WITH SECTION 78.—Sec-
tion 78 shall not apply to any tax which is not allow-
able as a credit under section 901 by reason of this 
subsection. 
‘‘(e) INCREASE IN TAX ON INCLUDED AMOUNTS NOT 
REDUCED BY CREDITS, ETC.— 
‘‘(1) IN GENERAL.—Any tax under this chapter 
by reason of nondeductible CFC dividends shall not 
be treated as tax imposed by this chapter for pur-
poses of determining— 
‘‘(A) the amount of any credit allowable 
under this chapter; or 
‘‘(B) the amount of the tax imposed by 
section 55. 
Subparagraph (A) shall not apply to the credit 
under section 53 or to the credit under section 27(a) 
with respect to taxes which are imposed by foreign 
countries and possessions of the United States and 
are attributable to such dividends. 
‘‘(2) LIMITATION ON REDUCTION IN TAXABLE 
INCOME, ETC.— 
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‘‘(A) IN GENERAL.—The taxable income of 
any United States shareholder for any taxable 
year shall in no event be less than the amount 
of nondeductible CFC dividends received during 
such year. 
‘‘(B) COORDINATION WITH SECTION 172.— 
The nondeductible CFC dividends for any tax-
able year shall not be taken into account— 
‘‘(i) in determining under section 172 
the amount of any net operating loss for 
such taxable year; and 
‘‘(ii) in determining taxable income 
for such taxable year for purposes of the 
second sentence of section 172(b)(2). 
‘‘(3) NONDEDUCTIBLE
CFC
DIVIDENDS.—For 
purposes of this subsection, the term ‘nondeductible 
CFC dividends’ means the excess of the amount of 
dividends taken into account under subsection (a) 
over the deduction allowed under subsection (a) for 
such dividends. 
‘‘(f) ELECTION.—The taxpayer may elect to apply 
this section to— 
‘‘(1) the taxpayer’s last taxable year which be-
gins before the date of the enactment of this section; 
or 
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