[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 702 Introduced in Senate (IS)]







104th CONGRESS
  1st Session
                                 S. 702

  To amend the Internal Revenue Code of 1986 to treat certain private 
foundations in the same manner as educational institutions and pension 
    trusts for purposes of the unrelated debt-financed income rules.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                April 6 (legislative day, April 5), 1995

   Mr. Simon introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to treat certain private 
foundations in the same manner as educational institutions and pension 
    trusts for purposes of the unrelated debt-financed income rules.

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

SECTION 1. APPLICATION OF SECTION 514(c)(9) TO CERTAIN PRIVATE 
              FOUNDATIONS.

    (a) Qualified Organization To Include Private Foundations.--
Subparagraph (C) of section 514(c)(9) of the Internal Revenue Code of 
1986 (defining qualified organization) is amended by striking ``or'' at 
the end of clause (ii), by striking the period at the end of clause 
(iii) and inserting ``, or'', and by adding at the end the following 
new clause:
                            ``(iv) an eligible private foundation (as 
                        defined in subparagraph (I)).''
    (b) Eligible Private Foundation.--Section 514(c)(9) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
                    ``(I) Eligible private foundation.--For purposes of 
                subparagraph (C)(iv), the term `eligible private 
                foundation' means, with respect to any indebtedness, a 
                private foundation (as defined in section 509(a)) if--
                            ``(i) at all times during its existence, at 
                        least one-half (on the basis of value) of its 
                        assets, other than exempt assets, consisted of 
                        real property acquired directly or indirectly 
                        by gift or devise,
                            ``(ii) the fair market value of any such 
                        real property was, immediately before the 
                        indebtedness was incurred (or in the case of 1 
                        or more refinancings, immediately before the 
                        original indebtedness was incurred), greater 
                        than 10 percent of the aggregate fair market 
                        value of all assets of the foundation other 
                        than exempt assets, and
                            ``(iii) no member of the foundation's 
                        governing body was a disqualified person (as 
                        defined in section 4946(a)(1) without regard to 
                        subparagraph (B) thereof) at any time during 
                        any taxable year in which the indebtedness was 
                        outstanding.
                For purposes of this subparagraph, exempt assets are 
                assets which are used (or held for use) directly in 
                carrying out the foundation's exempt purpose.''.
    (c) Conforming Amendment.--Clause (iii) of section 514(c)(9)(F) of 
the Internal Revenue Code of 1986 is amended by striking all that 
follows ``described in'' and inserting ``clause (i), (ii), or (iv) of 
subparagraph (C).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act with respect to indebtedness incurred before, on, or after such 
date.
                                 <all>