I 
108TH CONGRESS 
1ST SESSION 
H. R. 45
To amend the Internal Revenue Code of 1986 to repeal the double taxation 
of corporate profits. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 7, 2003
Mr. COLLINS introduced the following bill; which was referred to the 
Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to repeal 
the double taxation of corporate profits.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. REPEAL OF DOUBLE TAXATION OF CORPORATE 
PROFITS. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to 
amounts 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 FROM GROSS INCOME.—Gross in-
come does not include dividends otherwise includible in 
gross income which are received during the taxable year 
by an individual. 
‘‘(b) SPECIAL RULES.—For purposes of this sec-
tion—
‘‘(1) CERTAIN
DIVIDENDS
EXCLUDED.—Sub-
section (a) shall not apply to any dividend from a 
corporation which for the taxable year of the cor-
poration in which the distribution is made is a cor-
poration exempt from tax under section 521 (relat-
ing to farmers’ cooperative associations). 
‘‘(2) EXCLUSION NOT TO APPLY TO CAPITAL 
GAIN
DIVIDENDS
FROM
REGULATED
INVESTMENT 
COMPANIES
AND
REAL
ESTATE
INVESTMENT 
TRUSTS.—
‘‘For treatment of capital gain dividends, see sec-
tions 854(a) and 857(c).
‘‘(3) CERTAIN
NONRESIDENT
ALIENS
INELI-
GIBLE
FOR
EXCLUSION.—In the case of a non-
resident alien individual, subsection (a) shall apply 
only in determining the taxes imposed for the tax-
able year pursuant to sections 871(b)(1) and 877(b).
‘‘(4) DIVIDENDS FROM EMPLOYEE STOCK OWN-
ERSHIP PLANS.—Subsection (a) shall not apply to 
any dividend described in section 404(k).’’. 
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (A) of section 32(i)(2) of 
such Code is amended by inserting ‘‘(determined 
without regard to section 116)’’ before the comma. 
(2) Subparagraph (B) of section 86(b)(2) of 
such Code is amended to read as follows: 
‘‘(B) increased by the sum of—
‘‘(i) the amount of interest received or 
accrued by the taxpayer during the taxable 
year which is exempt from tax, and 
‘‘(ii) the amount of dividends received 
during the taxable year which are excluded 
from gross income under section 116.’’. 
(3) Subsection (d) of section 135 of such Code 
is amended by redesignating paragraph (4) as para-
graph (5) and by inserting after paragraph (3) the 
following new paragraph: 
‘‘(4) COORDINATION WITH SECTION 116.—This 
section shall be applied before section 116.’’. 
(4) Subsection (c) of section 584 of such Code 
is amended by adding at the end the following new 
flush 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.’’. 
(5) Subsection (a) of section 643 of such Code 
is amended by redesignating paragraph (7) as para-
graph (8) and by inserting after paragraph (6) the 
following new paragraph: 
‘‘(7) DIVIDENDS.—There shall be included the 
amount of any dividends excluded from gross income 
pursuant to section 116.’’. 
(6) Section 854(a) of such Code is amended by 
inserting ‘‘section 116 (relating to exclusion of divi-
dends received by individuals) and’’ after ‘‘For pur-
poses of’’. 
(7) Section 857(c) of such Code is amended to 
read as follows: 
‘‘(c) RESTRICTIONS APPLICABLE TO DIVIDENDS RE-
CEIVED FROM REAL ESTATE INVESTMENT TRUSTS.—
‘‘(1) TREATMENT FOR SECTION 116.—For pur-
poses of section 116 (relating to exclusion of divi-
dends received by individuals), a capital gain divi-
dend (as defined in subsection (b)(3)(C)) received 
from a real estate investment trust which meets the