article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Saving and Investment Act of 1993''. SEC. 2. ALLOWANCE OF DEDUCTION FOR DIVIDENDS PAID BY DOMESTIC CORPORATIONS. (a) In General.--Section 243 of the Internal Revenue Code of 1986 (relating to dividends received by corporations) is amended to read as follows: ``SEC. 243. DIVIDENDS PAID BY DOMESTIC CORPORATIONS. ``(a) General Rule.--In the case of a domestic corporation which is subject to taxation under this chapter, there shall be allowed as a deduction for the taxable year an amount equal to the dividends paid by such corporation during the taxable year. ``(b) Dividends.--For purposes of this section, the term `dividend' means any dividend (as defined in section 316) to which section 301 applies. ``(c) Certain Corporations Not Eligible.--No deduction shall be allowed under this section with respect to dividends paid by any corporation which is-- ``(1) an S corporation (as defined in section 1361(a)(1)); ``(2) a regulated investment company (as defined in section 851(a)); ``(3) a real estate investment trust (as defined in section 856(a)); or ``(4) a personal holding company (as defined in section 542). ``(d) Special Rules for Certain Distributions of Mutual Savings Banks, Etc.--For purposes of this section, any amount allowed as a deduction under section 591 (relating to deduction for dividends paid by mutual savings banks, etc.) shall not be treated as a dividend.'' (b) Repeal of Deductions for Dividends Received From Domestic Corporations and Rules Relating Thereto; Repeal of Deduction for Dividends Paid on Certain Preferred Stock of Public Utilities.-- Sections 244 (relating to dividends received on certain preferred stock), 246 (relating to rules applying to deductions for dividends received), and 247 (relating to dividends paid on certain preferred stock of public utilities) of such Code are hereby repealed. (c) Conforming Amendments.-- (1) Dividends received from certain foreign corporations.-- (A) Transfer of provision specifying deductible percentage of dividend received.--Paragraph (1) of section 245(a) of such Code (relating generally to dividends received from 10-percent owned foreign corporations) is amended by striking ``the percent (specified in section 243 for the taxable year)'' and inserting in lieu thereof ``85 percent (100 percent in the case of a small business investment company operating under the Small Business Investment Act of 1958 (15 U.S.C. 661 et seq.))''. (B) Transfer of limitation on aggregate amount of dividends received deduction, exclusion of certain dividends, etc.--Section 245 of such Code (relating to dividends received from certain foreign corporations) is amended by adding at the end the following new subsections: ``(e) Limitation and Special Rules.-- ``(1) Limitation on aggregate amount of deduction.-- ``(A) In general.--Except as provided by subparagraph (B), the aggregate amount of the deductions allowed by subsections (a) and (b) shall not exceed 80 percent of the taxable income computed without regard to-- ``(i) the deductions allowed by section 172, ``(ii) any adjustment under section 1059, and ``(iii) any capital loss carryback to the taxable year under section 1212(a)(1). ``(B) Effect of net operating loss.--Subparagraph (A) shall not apply for any taxable year for which there is a net operating loss (as determined under section 172). ``(2) Exclusion of certain dividends.-- ``(A) In general.--No deduction shall be allowed under subsection (a) or (b) in respect of any dividend on any share of stock-- ``(i) which is sold or otherwise disposed of in any case in which the taxpayer has held such share for 45 days or less, or ``(ii) to the extent that the taxpayer is under an obligation (whether pursuant to a short sale or otherwise) to make corresponding payments with respect to positions in substantially similar or related property. ``(B) 90-day rule in the case of certain preference dividends.--In the case of any stock having preference in dividends, the holding period specified in subparagraph (A)(i) shall be 90 days in lieu of 45 days if the taxpayer receives dividends with respect to such stock which are attributable to a period or periods aggregating in excess of 366 days. ``(C) Determination of holding periods.--For purposes of this subsection, in determining the period for which the taxpayer has held any share of stock-- ``(i) the day of disposition, but not the day of acquisition, shall be taken into account, ``(ii) there shall not be taken into account any day which is more than 45 days (or 90 days in the case of stock to which subparagraph (B) applies) after the date on which such share becomes ex-dividend, and ``(iii) paragraph (4) of section 1223 shall not apply. ``(D) Holding period reduced for periods where risk of loss diminished.--The holding periods determined under the preceding provisions of this subparagraph shall be appropriately reduced (in the manner provided in regulations prescribed by the Secretary) for any period (during such periods) in which-- ``(i) the taxpayer has an option to sell, is under a contractual obligation to sell, or has made (and not closed) a short sale of, substantially identical stock or securities, ``(ii) the taxpayer is the grantor of an option to buy substantially identical stock or securities, or ``(iii) under regulations prescribed by the Secretary, a taxpayer has diminished his risk of loss by holding 1 or more other positions with respect to substantially similar or related property. The preceding sentence shall not apply in the case of any qualified covered call (as defined in section 1092(c)(4) but without regard to the requirement that gain or loss with respect to the option not be ordinary income or loss). ``(f) Cross Reference.-- ``For special rule relating to mutual savings banks, etc., to which section 593 applies, see section 596.'' (2) Net operating loss deduction.--Paragraph (6) of section 172(d) of such Code is amended to read as follows: ``(6) Computation of deduction for dividends received from certain foreign corporations.--The deduction allowed by section 245 (relating to dividends received from certain foreign corporations) shall be computed without regard to section 245(e)(1).'' (3) Dividends received deduction reduced where portfolio stock is debt financed.-- (A) Subsections (a) and (e) of section 246A of such Code (relating to dividends received deduction reduced where portfolio stock is debt financed) are each amended by striking ``243, 244, or''. (B) Subsection (b) of section 246A of such Code is amended to read as follows: ``(b) Section Not to Apply to Dividends for Which 100 Percent Dividends Received Deduction Allowable.--Subsection (a) shall not apply to dividends received by a small business investment company operating under the Small Business Investment Act of 1958.'' (4) Limitation on dividends received deduction for mutual savings banks, etc.--Section 596 of such Code (relating to limitation on dividends received deduction) is amended by striking ``sections 243, 244, and 245'' and inserting in lieu thereof ``section 245''. (d) Clerical Amendments.--The table of sections for part VIII of subchapter B of chapter 1 is amended by striking the items relating to sections 243, 244, 246, and 247 and inserting after the item relating to section 241 the following: ``Sec. 243. Dividends paid by domestic corporations.'' (e) Effective Date.--The amendments made by this section shall apply to distributions made after December 31, 1993.
summary: Saving and Investment Act of 1993 - Amends the Internal Revenue Code to permit an income tax deduction in the amount of dividends paid by domestic corporations, except S corporations, regulated investment companies, real estate investment trusts, and personal holding companies. Repeals the income tax deductions currently permitted in connection with: (1) dividends received by a corporation; (2) dividends received by a corporation on the preferred stock of a public utility; and (3) dividends paid by a public utility on its preferred stock. Increases from 80 percent to 85 percent the deductible percentage of amounts received by a corporation from a qualified ten-percent owned foreign corporation.