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SECTION 1. SHORT TITLE.

This Act may be cited as the ''Investing in U.S. Territories, Not
Corporations Act of 2011''.

SEC. 2. LIMITATION ON GOVERNMENT ASSISTANCE TO RUM PRODUCERS.

Subsection (e) of section 7652 of the Internal Revenue Code of 1986
(relating to shipments of rum to the United States) is amended by
redesignating paragraphs (3) and (4) as paragraphs (4) and (5),
respectively, and by inserting after paragraph (2) the following new
paragraph:
''(3) Limitation on government assistance to rum
producers.--
''(A) In general.--If the amount of direct and
indirect government assistance paid or incurred by any
covered government during any calendar year to persons
producing rum within the jurisdiction of such
government exceeds the limitation under subparagraph
(B), the amount which would (but for this paragraph) be
covered into the treasury of such government under this
subsection shall be reduced for each of the 2
succeeding calendar years by the amount of such excess.
''(B) Limitation.--The limitation under this
subparagraph is the amount equal to 15 percent of the
amount which would (but for this paragraph) be covered
into the treasury of such government under this section
for the calendar year.
''(C) Separate application to each producer.--The
provisions of subparagraphs (A) and (B) shall also be
applied separately to each rum producer, taking into
account only the assistance paid or incurred by any
covered government to such producer and only such
producer's production to which subsection (a)(3) or
(b)(3) applies, whichever is applicable.
''(D) Government assistance.--For purposes of this
paragraph--
''(i) Direct government assistance.--The
term 'direct government assistance' includes
any transfer of funds, grant, subsidy (other
than any generally available tax subsidy),
loan, equity investment, loan guarantee,
production or marketing incentive, income or
price support, provision of goods or services
(other than generally available infrastructure
and public services), and such other assistance
provided by a covered government as the
Secretary identifies as consistent with the
purposes of this paragraph.
''(ii) Indirect government assistance.--The
term 'indirect government assistance' includes
any amounts expended by a covered government--
''(I) to promote, market, or
otherwise support the rum industry
within the jurisdiction of such
government,
''(II) to pay principal and
interest on, and expenses related to,
indebtedness incurred, the proceeds of
which are used to provide rum
subsidies, or
''(III) for any other purpose
identified by the Secretary as
consistent with the purposes of this
paragraph.
''(iii) Certain debt-financed payments
excluded.--The terms 'direct government
assistance' and 'indirect government
assistance' shall not include any payment made
by a covered government to a rum producer out
of funds raised through a loan (including the
issuance of a debt instrument), but shall
include any payment of principal and interest
on the loan (or debt instrument).
''(E) Annual reports.--Each covered government
shall, for each calendar year, submit a report to the
Secretary detailing the amount and type of direct and
indirect government assistance provided by such
government to each rum producer during such calendar
year and to rum producers in the aggregate during such
year. Such report shall be submitted at such time, and
in such form, as is prescribed by the Secretary.
''(F) Covered government.--For purposes of this
paragraph, the term 'covered government' means the
government of Puerto Rico and the government of the
Virgin Islands.''.

SEC. 3. MAXIMUM AND MINIMUM ALLOCATIONS OF RUM EXCISE TAXES BETWEEN
PUERTO RICO AND THE VIRGIN ISLANDS.

Section 7652 of the Internal Revenue Code of 1986 is amended by
inserting after subsection (h) the following new subsection:
''(i) Limitations on Allocation of Rum Excise Taxes Between Puerto
Rico and the Virgin Islands.--
''(1) In general.--Notwithstanding subsections (a), (b),
and (e), if, without regard to this subsection and subsection
(e)(3), the Secretary determines that the respective shares of
Puerto Rico and the Virgin Islands of the aggregate amount to
be covered into their treasuries under this section for any
calendar year are not within the parameters of paragraph (2),
the Secretary shall increase or decrease such shares to the
extent necessary to bring them within such parameters.
''(2) Parameters.--The parameters of this paragraph are
that--
''(A) Puerto Rico's share shall be at least 65
percent but not more than 70 percent of such aggregate
amount, and
''(B) the Virgin Islands's share shall be at least
30 percent but not more than 35 percent of such
aggregate amount.
''(3) Application with subsection (e)(3).--This subsection
shall be applied before subsection (e)(3).''.

SEC. 4. DENIAL OF COVER OVER FOR RUM REDISTILLED INTO CANE NEUTRAL
SPIRITS.

Section 7652 of the Internal Revenue Code of 1986 is amended by
inserting after subsection (i) the following new subsection:
''(j) Denial of Cover Over for Rum Redistilled Into Cane Neutral
Spirits.--No amount shall be covered over under subsection (a) or (b)
with respect to rum which is redistilled into cane neutral spirits
after being brought into the United States. The Secretary shall
prescribe such information reporting as the Secretary determines
necessary to carry out the preceding sentence.''.

SEC. 5. EFFECTIVE DATE.

(a) In General.--Except as provided in subsection (b), the
amendments made by this section shall apply to calendar years after
2011.
(b) Denial of Cover Over for Rum Redistilled Into Cane Neutral
Spirits.--The amendment made by section 4 shall apply to rum brought
into the United States after the date of the enactment of this Act.
Investing in U.S. Territories, Not Corporations Act of 2011 - Amends the Internal Revenue Code, with respect to shipments of rum to the United States from Puerto Rico and the Virgin Islands, to: (1) limit during a two-year period the amount of direct and indirect government assistance by the governments of Puerto Rico and the Virgin Islands to rum producers from rum excise taxes covered-over into the treasuries of such governments to 15% of the amounts covered-over, (2) impose limitations on the allocation of rum excise taxes between Puerto Rico and the Virgin Islands, and (3) deny any payment of rum excise taxes covered over into the treasuries of Puerto Rico and the Virgin Islands for rum redistilled into cane neutral spirits after being brought into the United States.