text: 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  stock of public utilities) of such Code are hereby repealed.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.
target: 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.
feat_title: Saving and Investment Act of 1993