To amend the Internal Revenue Code of 1986 to allow a dividends paid deduction.

January 8, 2003

Mr. PETRI (for himself, Mr. KIRK, and Mr. FRANKS of Arizona) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to allow a dividends paid deduction.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Dividend Payment Incentive Act of 2003'.

SEC. 2. DIVIDENDS PAID DEDUCTION.

(a) IN GENERAL- Part VIII of subchapter B of chapter 1 of the Internal Revenue Code of 1986 (relating to special deductions for corporations) is amended by adding at the end the following new section:

`SEC. 250. DIVIDENDS PAID DEDUCTION.

`(a) IN GENERAL- In the case of a C corporation, there shall be allowed as a deduction for the taxable year an amount equal to the amount of dividends paid during such year.

`(b) EXCEPTIONS- Subsection (a) shall not apply to any dividend from--

`(1) a regulated investment company,

`(2) a real estate investment trust, or

`(3) a corporation which for the taxable year of the corporation in which the distribution is made or the preceding taxable year is a corporation exempt from tax under section 501 or 521.

`(c) DISALLOWANCE OF DIVIDENDS RECEIVED DEDUCTION- No deduction shall be allowed under this chapter by reason of the receipt of any dividend for which a deduction is allowed under this section.'

(b) CLERICAL AMENDMENT- The table of sections for part VIII of subchapter B of chapter 1 of such Code is amended by adding at the end the following new item:

`Sec. 250. Dividends paid deduction.'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2003.

END