A bill to amend the Internal Revenue Code of 1986 to provide that amounts in gross income under section 78 of such Code shall not be taken into account in allocating deductions to source within and without the United States.

Amends the Internal Revenue Code with respect to certain amounts treated as taxable dividends received from foreign corporations when the recipient domestic corporation chooses to have the benefits of the foreign tax credit. Excludes amounts of taxes deemed to be paid (included in the dividend but not actually paid by the recipient corporation) from the apportionment of expenses, losses, and other deductions for the purpose of determining taxable income from sources within and outside the United States.