To amend the Internal Revenue Code of 1986 to repeal the double taxation of corporate profits.

Amends the Internal Revenue Code to exclude dividends from gross income.

[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 45 Introduced in House (IH)]







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 Representatives 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 chapter 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 INDIVIDUALS.

    ``(a) Exclusion From Gross Income.--Gross income 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 section--
            ``(1) Certain dividends excluded.--Subsection (a) shall not 
        apply to any dividend from a corporation which for the taxable 
        year of the corporation in which the distribution is made is a 
        corporation exempt from tax under section 521 (relating 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 sections 854(a) and 857(c).
            ``(3) Certain nonresident aliens ineligible for 
        exclusion.--In the case of a nonresident alien individual, 
        subsection (a) shall apply only in determining the taxes 
        imposed for the taxable year pursuant to sections 871(b)(1) and 
        877(b).
            ``(4) Dividends from employee stock ownership 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 paragraph (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 paragraph (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 dividends received by 
        individuals) and'' after ``For purposes of''.
            (7) Section 857(c) of such Code is amended to read as 
        follows:
    ``(c) Restrictions Applicable to Dividends Received From Real 
Estate Investment Trusts.--
            ``(1) Treatment for section 116.--For purposes of section 
        116 (relating to exclusion of dividends received by 
        individuals), a capital gain dividend (as defined in subsection 
        (b)(3)(C)) received from a real estate investment trust which 
        meets the requirements of this part shall not be considered as 
        a dividend.
            ``(2) Treatment for section 243.--For purposes of section 
        243 (relating to deductions for dividends received by 
        corporations), a dividend received from a real estate 
        investment trust which meets the requirements of this part 
        shall not be considered as a dividend.''.
            (8) The table of sections for part III of subchapter B of 
        chapter 1 of such Code is amended by inserting after the item 
        relating to section 115 the following new item:

                              ``Sec. 116. Exclusion of dividends 
                                        received by individuals.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.
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