Sec. 13011. Dividends paid deduction
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Part VIII of subchapter B of chapter 1 is amended by inserting after section 241 the following: Sec. 242. Dividends paid deduction. In the case of an eligible corporation, there shall be allowed as a deduction an amount equal to zero percent of the aggregate amount of applicable dividends paid by the corporation during the taxable year. For purposes of this section— The term applicable dividend means, with respect to an eligible corporation, any distribution by the eligible corporation during a taxable year which is— treated as a dividend for purposes of this chapter, and paid out of its applicable earnings and profits.
For purposes of paragraph (1)(B), dividends shall be treated as paid— first, out of exempt earnings and profits, second, out of applicable earnings and profits, and finally, out of earnings and profits not described in subparagraph
(A)or (B). Such term shall not include— any amount allowed as a deduction under section 591 (relating to deduction for dividends paid by mutual savings banks, etc.), and any dividend described in paragraph
(2)of section 404(k) (relating to deduction for dividends paid on certain employer securities). For purposes of this title, an eligible corporation may elect on its return of tax for any taxable year to treat any distribution made on or before the 15th day of the 4th month following the close of the taxable year as having been made immediately before the close of the taxable year. The preceding sentence shall not apply for purposes of determining the time the distribution was received by the shareholder to whom the distribution was made. The term applicable earnings and profits means, with respect to any corporation for any taxable year, its earnings and profits for the taxable year and its earnings and profits accumulated in prior taxable years beginning after December 31, 2018. For purposes of the preceding sentence, earnings and profits for the taxable year shall be determined without regard to the deduction under this section for the taxable year. The applicable earnings and profits of a corporation shall not include any exempt earnings and profits (as defined in paragraph (6)). If a corporation which is a United States shareholder in a controlled foreign corporation, or is a shareholder in a foreign corporation with respect to which the shareholder meets the stock ownership requirements of section 902(a), receives a dividend (other than a dividend to which subparagraph
(B)applies) from such controlled foreign corporation or such foreign corporation, the earnings and profits from such dividend shall not be treated as applicable earnings and profits of the corporation receiving such dividend to the extent of any portion of the dividend not properly allocable (as determined under section 316, as modified by section 959(c) in the case of such controlled foreign corporation) to applicable earnings and profits of such controlled foreign corporation or such foreign corporation. The term exempt earnings and profits means, with respect to any corporation for any taxable year, its earnings and profits for the taxable year and its earnings and profits accumulated in prior taxable years beginning after December 31, 2018, which are properly allocable to exempt amounts received or accrued by the corporation. The term exempt amounts means, with respect to any corporation— any dividend to the extent of the deduction allowable to the corporation under section 243, 245, or 245A with respect to the dividend, any foreign-derived intangible income (as defined in section 250(b)) or global intangible low-taxed income (as defined in section 951A(b)) to the extent of the deduction allowable to the corporation under section 250 with respect to any such income, any increase in subpart F income by reason of section 965 to the extent of the deduction allowable to the corporation under section 965(c)(1) with respect to any such income, and any other amount to the extent such amount is exempt from taxation under this title. The Secretary shall prescribe rules for the proper allocation of dividends to earnings and profits for purposes of applying this subsection. For purposes of paragraph (4)(C), such rules shall include rules requiring in appropriate cases the look through to earnings and profits of members of any affiliated group including a controlled foreign corporation or foreign corporation described in such paragraph where the earnings and profits of such controlled foreign corporation or such foreign corporation are attributable to distributions received from other members of the group. For purposes of this section, the term eligible corporation means any domestic corporation other than— a regulated investment company, a real estate investment trust, an S corporation, a corporation which is exempt from tax under section 501 or 521, an organization taxable under subchapter T of this chapter (relating to cooperative organizations), a cooperative governed by the rules applicable to cooperatives as in effect before the enactment of subchapter T, or a DISC or former DISC. Each eligible corporation which makes payments of dividends during the reporting period for any taxable year shall make a return, according to the forms and regulations prescribed by the Secretary, setting forth— the aggregate amount of such dividends, the aggregate amount of such dividends with respect to which the corporation is claiming a deduction under this section for the taxable year, the aggregate amount of such dividends which the corporation paid during the period beginning on the 1st day of the reporting taxable year and ending on the 15th day of the 4th month of such taxable year which the corporation elected under subsection (b)(4) to treat as paid in the preceding taxable year, the aggregate amount of such dividends which the corporation paid during the period beginning on the 1st day of the taxable year following the reporting taxable year and ending on the 15th day of the 4th month of such following taxable year which the corporation elected under subsection (b)(4) to treat as paid in the reporting taxable year, and such other information with respect to such dividends as the Secretary shall require for the administration of this section. For purposes of this subsection— The term reporting period means with, respect to any taxable year, the period beginning on the 1st day of the taxable year and ending on the 15th day of the 4th month following the close of the taxable year. Any return under paragraph
(1)with respect to any taxable year shall be included with the return of income tax for such taxable year. . Section 6652 , as amended by subtitle E of this Act, is amended by adding at the end the following new subsection: In the case of a failure to make a return required under section 242(d) containing the information required by such section by the due date for the return, the eligible corporation shall pay (on notice and demand by the Secretary and in the same manner as tax) a penalty of $1,000 per day for each day such failure continues unless it is shown that such failure is due to reasonable cause. The maximum amount of the penalty under this paragraph with respect to any failure for a taxable year shall not exceed $250,000. For purposes of this subsection, the term eligible corporation has the meaning given such term by section 242(c). . Subsection
(d)of section 172 , as amended by section 11011, is amended by adding at the end the following new paragraph: The deduction under section 242 shall not be allowed. . Subparagraph
(A)of section 172(b)(2), as amended by section 13302, is amended by striking and
(5)and inserting (5), and
(8). Part VIII of subchapter B of chapter 1 is amended— by striking the table of sections and inserting the following: Subpart A. Allowance of special deductions. Subpart B. Dividends paid deduction. Subpart C. Dividends received deductions. Subpart D. Other deductions. Sec. 241. Allowance of special deductions. , by inserting the following before section 243: Sec. 243. Dividends received by corporations. Sec. 245. Dividends received from certain foreign corporations. Sec. 245A. Deduction for foreign-source portion of dividends received by domestic corporations from specified 10-percent owned foreign corporations. Sec. 246. Rules applying to deductions for dividends received. Sec. 246A. Dividends received deduction reduced where portfolio stock is debt financed. , and by inserting the following before section 248: Sec. 248. Organizational expenditures. Sec. 249. Limitation of deduction of bond premium on repurchase. Sec. 250. Foreign-derived intangible income and global intangible low-taxed income. . The amendments made by this section shall apply to dividends paid in taxable years of the payor beginning after December 31, 2018.