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Problem:SECTION 1. SHORT TITLE.

This Act may be cited as the ''Invest in the U.S.A. Act of 2003''.

SEC. 2. TOLL TAX ON EXCESS QUALIFIED FOREIGN DISTRIBUTION AMOUNT.

(a) In General.--Subpart F of part III of subchapter N of chapter 1
of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:

''SEC. 965. TOLL TAX IMPOSED ON EXCESS QUALIFIED FOREIGN DISTRIBUTION
AMOUNT.

''(a) Toll Tax Imposed on Excess Qualified Foreign Distribution
Amount.--If a corporation elects the application of this section, a tax
shall be imposed on the taxpayer in an amount equal to 5.25 percent
of--
''(1) the taxpayer's excess qualified foreign distribution
amount, and
''(2) the amount determined under section 78 which is
attributable to such excess qualified foreign distribution
amount.
Such tax shall be imposed in lieu of the tax imposed under section 11
or 55 on the amounts described in paragraphs (1) and (2) for such
taxable year.
''(b) Excess Qualified Foreign Distribution Amount.--For purposes
of this section--
''(1) In general.--The term 'excess qualified foreign
distribution amount' means the excess (if any) of--
''(A) dividends received by the taxpayer during the
taxable year which are--
''(i) from 1 or more corporations which are
controlled foreign corporations in which the
taxpayer is a United States shareholder on the
date such dividends are paid, and
''(ii) described in a domestic reinvestment
plan approved by the taxpayer's president,
chief executive officer, or comparable official
before the payment of such dividends and
subsequently approved by the taxpayer's board
of directors, management committee, executive
committee, or similar body, which plan shall
provide for the reinvestment of such dividends
in the United States, including as a source for
the funding of worker hiring and training;
infrastructure; research and development;
capital investments; or the financial
stabilization of the corporation for the
purposes of job retention or creation, over
''(B) the base dividend amount.
''(2) Base dividend amount.--The term 'base dividend
amount' means an amount designated under subsection (c)(7), but
not less than the average amount of dividends received during
the fixed base period from 1 or more corporations which are
controlled foreign corporations in which the taxpayer is a
United States shareholder on the date such dividends are paid.
''(3) Fixed base period.--
''(A) In general.--The term 'fixed base period'
means each of 3 taxable years which are among the 5
most recent taxable years of the taxpayer ending on or
before December 31, 2002, determined by disregarding--
''(i) the 1 taxable year for which the
taxpayer had the highest amount of dividends
from 1 or more corporations which are
controlled foreign corporations relative to the
other 4 taxable years, and
''(ii) the 1 taxable year for which the
taxpayer had the lowest amount of dividends
from such corporations relative to the other 4
taxable years.
''(B) Shorter period.--If the taxpayer has fewer
than 5 taxable years ending on or before December 31,
2002, then in lieu of applying subparagraph (A), the
fixed base period shall mean such shorter period
representing all of the taxable years of the taxpayer
ending on or before December 31, 2002.
''(c) Definitions and Special Rules.--For purposes of this
section--
''(1) Dividends.--The term 'dividend' means a dividend as
defined in section 316, except that the term shall also include
amounts described in section 951(a)(1)(B), and shall exclude
amounts described in sections 78 and 959.
''(2) Controlled foreign corporations and united states
shareholders.--The term 'controlled foreign corporation' shall
have the same meaning as under section 957(a) and the term
'United States shareholder' shall have the same meaning as
under section 951(b).
''(3) Foreign tax credits.--The amount of any income, war,
profits, or excess profit taxes paid (or deemed paid under
sections 902 and 960) or accrued by the taxpayer with respect
to the excess qualified foreign distribution amount for which a
credit would be allowable under section 901 in the absence of
this section, shall be reduced by 85 percent.
''(4) Foreign tax credit limitation.--For all purposes of
section 904, there shall be disregarded 85 percent of--
''(A) the excess qualified foreign distribution
amount,
''(B) the amount determined under section 78 which
is attributable to such excess qualified foreign
distribution amount, and
''(C) the amounts (including assets, gross income,
and other relevant bases of apportionment) which are
attributable to the excess qualified foreign
distribution amount which would, determined without
regard to this section, be used to apportion the
expenses, losses, and deductions of the taxpayer under
section 861 and 864 in determining its taxable income
from sources without the United States.
For purposes of applying subparagraph (C), the principles of
section 864(e)(3)(A) shall apply.
''(5) Treatment of acquisitions and dispositions.--Rules
similar to the rules of section 41(f)(3) shall apply in the
case of acquisitions or dispositions of controlled foreign
corporations occurring on or after the first day of the
earliest taxable year taken into account in determining the
fixed base period.
''(6) Treatment of consolidated groups.--Members of an
affiliated group of corporations filing a consolidated return
under section 1501 shall be treated as a single taxpayer in
applying the rules of this section.
''(7) Designation of dividends.--Subject to subsection
(b)(2), the taxpayer shall designate the particular dividends
received during the taxable year from 1 or more corporations
which are controlled foreign corporations in which it is a
United States shareholder which are dividends excluded from the
excess qualified foreign distribution amount. The total amount
of such designated dividends shall equal the base dividend
amount.
''(8) Treatment of expenses, losses, and deductions.--Any
expenses, losses, or deductions of the taxpayer allowable under
subchapter B--
''(A) shall not be applied to reduce the amounts
described in subsection (a)(1), and
''(B) shall be applied to reduce other income of
the taxpayer (determined without regard to the amounts
described in subsection (a)(1)).
''(d) Election.--
''(1) In general.--An election under this section shall be
made on the taxpayer's timely filed income tax return for the
taxable year (determined by taking extensions into account)
ending 120 days or more after the date of the enactment of this
section, and, once made, may be revoked only with the consent
of the Secretary.
''(2) All controlled foreign corporations.--The election
shall apply to all corporations which are controlled foreign
corporations in which the taxpayer is a United States
shareholder during the taxable year.
''(3) Consolidated groups.--If a taxpayer is a member of an
affiliated group of corporations filing a consolidated return
under section 1501 for the taxable year, an election under this
section shall be made by the common parent of the affiliated
group which includes the taxpayer, and shall apply to all
members of the affiliated group.
''(e) Regulations.--The Secretary shall prescribe such regulations
as may be necessary and appropriate to carry out the purposes of this
section, including regulations under section 55 and regulations
addressing corporations which, during the fixed base period or
thereafter, join or leave an affiliated group of corporations filing a
consolidated return.''.
(b) Conforming Amendment.--The table of sections for subpart F of
part III of subchapter N of chapter 1 of the Internal Revenue Code of
1986 is amended by adding at the end the following new item:

''Sec. 965. Toll tax imposed on excess
qualified foreign distribution
amount.''.
(c) Effective Date.--The amendments made by this section shall
apply only to the first taxable year of the electing taxpayer ending
120 days or more after the date of the enactment of this Act.
Solution:
Invest in the U.S.A. Act of 2003 - Amends the Internal Revenue Code to permit a U.S. corporation doing business abroad to elect to have its foreign earnings taxed in the United States for one year at a rate equal to 5.25 percent of the excess qualified foreign distribution and the amount attributable to such corporation as controlled foreign-earned dividends in lieu of being taxed under alternative minimum tax or corporate rates, if dividends received are reinvested in the United States in an approved plan.Limits foreign tax credits with respect to dividends taxed at such 5.25 percent rate.