I 
114TH CONGRESS 
1ST SESSION 
H. R. 788 
To amend the Internal Revenue Code of 1986 to allow a temporary dividends 
received deduction for dividends received from a controlled foreign corporation. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 5, 2015 
Mr. FRANKS of Arizona 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 allow a 
temporary dividends received deduction for dividends re-
ceived from a controlled foreign corporation. 
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 ‘‘Foreign Earnings Re-
investment Act’’. 
SEC. 2. ALLOWANCE OF TEMPORARY DIVIDENDS RECEIVED 
DEDUCTION 
FOR 
DIVIDENDS 
RECEIVED 
FROM A CONTROLLED FOREIGN CORPORA-
TION. 
(a) APPLICABILITY OF PROVISION.— 
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(1) IN GENERAL.—Subsection (f) of section 965 
of the Internal Revenue Code of 1986 is amended to 
read as follows: 
‘‘(f) ELECTION; ELECTION YEAR.— 
‘‘(1) IN GENERAL.—The taxpayer may elect to 
apply this section to— 
‘‘(A) the taxpayer’s last taxable year which 
begins before the date of the enactment of the 
Foreign Earnings Reinvestment Act, 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. 
‘‘(C) ELECTION
YEAR.—For purposes of 
this section, the term ‘election year’ means the 
taxable year— 
‘‘(i) which begins after the date that 
is one year before the date of the enact-
ment of the Foreign Earnings Reinvest-
ment Act, and 
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‘‘(ii) to which the taxpayer elects 
under paragraph (1) to apply this sec-
tion.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) EXTRAORDINARY DIVIDENDS.—Section 
965(b)(2) of such Code is amended— 
(i) by striking ‘‘June 30, 2003’’ and 
inserting ‘‘December 31, 2014’’, and 
(ii) by adding at the end the following 
new sentence: ‘‘The amounts described in 
clauses (i), (ii), and (iii) shall not include 
any amounts which were taken into ac-
count in determining the deduction under 
subsection (a) for any prior taxable year.’’. 
(B) DETERMINATIONS RELATING TO RE-
LATED
PARTY
INDEBTEDNESS.—Section 
965(b)(3)(B) of such Code is amended by strik-
ing ‘‘October 3, 2004’’ and inserting ‘‘Decem-
ber 31, 2014’’. 
(C) DETERMINATIONS RELATING TO BASE 
PERIOD.—Section 965(c)(2) of such Code is 
amended by striking ‘‘June 30, 2003’’ and in-
serting ‘‘December 31, 2014’’. 
(b) DEDUCTION INCLUDES CURRENT AND ACCUMU-
LATED FOREIGN EARNINGS.— 
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(1) IN
GENERAL.—Paragraph (1) of section 
965(b) of the Internal Revenue Code of 1986 is 
amended to read as follows: 
‘‘(1) IN GENERAL.—The amount of dividends 
taken into account under subsection (a) shall not ex-
ceed the sum of the current and accumulated earn-
ings and profits described in section 959(c)(3) for 
the year a deduction is claimed under subsection (a), 
without diminution by reason of any distributions 
made during the election year, for all controlled for-
eign corporations of the United States shareholder.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 965(c) of such Code, as 
amended by subsection (a), is amended by 
striking paragraph (1) and by redesignating 
paragraphs (2), (3), (4), and (5), as paragraphs 
(1), (2), (3), and (4), respectively. 
(B) Paragraph (4) of section 965(c)of such 
Code, as redesignated by subparagraph (A), is 
amended to read as follows: 
‘‘(4) CONTROLLED GROUPS.—All United States 
shareholders which are members of an affiliated 
group filing a consolidated return under section 
1501 shall be treated as one United States share-
holder.’’. 
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(c) AMOUNT OF DEDUCTION.— 
(1) IN
GENERAL.—Paragraph (1) of section 
965(a) of the Internal Revenue Code of 1986 is 
amended by striking ‘‘85 percent’’ and inserting ‘‘75 
percent’’. 
(2) BONUS DEDUCTION IN SUBSEQUENT TAX-
ABLE YEAR FOR INCREASING JOBS.—Section 965 of 
the Internal Revenue Code of 1986 is amended by 
adding at the end the following new subsection: 
‘‘(g) BONUS DEDUCTION.— 
‘‘(1) IN GENERAL.—In the case of any taxpayer 
who makes an election to apply this section, there 
shall be allowed as a deduction for the first taxable 
year following the election year an amount equal to 
the applicable percentage of the cash dividends 
which are taken into account under subsection (a) 
with respect to such taxpayer for the election year. 
‘‘(2) APPLICABLE PERCENTAGE.—For purposes 
of paragraph (1), the applicable percentage is the 
amount which bears the same ratio (not greater 
than 1) to 10 percent as— 
‘‘(A) the excess (if any) of— 
‘‘(i) the qualified payroll of the tax-
payer for the calendar year which begins 
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the trade or business acquired by the tax-
payer. 
‘‘(ii) DISPOSITIONS.—If, after Decem-
ber 31, 2013, and before the close of the 
first taxable year following the election 
year, a taxpayer disposes of a trade or 
business, then— 
‘‘(I) the qualified payroll of such 
taxpayer for calendar year 2014 shall 
be decreased by the amount of wages 
for such calendar year as were attrib-
utable to the trade or business which 
was disposed of by the taxpayer, and 
‘‘(II) if the disposition occurs 
after the beginning of the first taxable 
year following the election year, the 
qualified payroll of such taxpayer for 
the calendar year which begins with 
or within such taxable year shall be 
decreased by the amount of wages for 
such calendar year as were attrib-
utable to the trade or business which 
was disposed of by the taxpayer. 
‘‘(C) SPECIAL RULE.—For purposes of de-
termining qualified payroll for any calendar 
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year after calendar year 2015, such term shall 
not include wages paid to any individual if such 
individual received compensation from the tax-
payer for services performed— 
‘‘(i) after the date of the enactment of 
this paragraph, and 
‘‘(ii) at a time when such individual 
was not an employee of the taxpayer.’’. 
(3) REDUCTION
FOR
FAILURE
TO
MAINTAIN 
EMPLOYMENT
LEVELS.—Paragraph (4) of section 
965(b) of such Code is amended to read as follows: 
‘‘(4) 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 subsection (a)(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 $75,000 multiplied 
by the number of employees by which the tax-
payer’s average employment level during such 
period falls below the prior average employment 
(but not exceeding the aggregate amount al-
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lowed as a deduction pursuant to subsection 
(a)(1)) shall be taken into income by the tax-
payer during the taxable year that includes the 
final day of such period. 
‘‘(B) AVERAGE
EMPLOYMENT
LEVEL.— 
For purposes of this paragraph, the taxpayer’s 
average employment level for a period shall be 
the average number of full-time United States 
employees of the taxpayer, measured at the end 
of each month during the period. 
‘‘(C) PRIOR AVERAGE EMPLOYMENT.—For 
purposes of this paragraph, the taxpayer’s 
‘prior average employment’ shall be the average 
number of full-time United States employees of 
the taxpayer during the period consisting of the 
24 calendar months immediately preceding the 
calendar month in which the taxpayer first re-
ceives a distribution described in subsection 
(a)(1). 
‘‘(D) FULL-TIME
UNITED
STATES
EM-
PLOYEE.—For purposes of this paragraph— 
‘‘(i) IN
GENERAL.—The term ‘full- 
time United States employee’ means an in-
dividual who provides services in the 
United States as a full-time employee, 
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based on the employer’s standards and 
practices; except that regardless of the em-
ployer’s classification of the employee, an 
employee whose normal schedule is 40 
hours or more per week is considered a 
full-time employee. 
‘‘(ii) EXCEPTION
FOR
CHANGES
IN 
OWNERSHIP OF TRADES OR BUSINESSES.— 
Such term does not include— 
‘‘(I) any individual who was an 
employee, on the date of acquisition, 
of any trade or business acquired by 
the taxpayer during the 24-month pe-
riod referred to in subparagraph (A), 
and 
‘‘(II) any individual who was an 
employee of any trade or business dis-
posed of by the taxpayer during the 
24-month period referred to in sub-
paragraph (A) or the 24-month period 
referred to in subparagraph (C). 
‘‘(E) AGGREGATION
RULES.—In deter-
mining the taxpayer’s average employment level 
and prior average employment, all domestic 
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members of a controlled group shall be treated 
as a single taxpayer.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
Æ 
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