[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1597 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                S. 1597

  To amend the Internal Revenue Code of 1986 to provide enhanced tax 
       incentives for charitable giving, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 16, 1999

  Mr. Kerrey 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 provide enhanced tax 
       incentives for charitable giving, and for other purposes.

    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 ``Enhanced Incentives for Charitable 
Giving Act of 1999''.

SEC. 2. CHARITABLE CONTRIBUTIONS TO CERTAIN LOW INCOME SCHOOLS MAY BE 
              MADE IN NEXT TAXABLE YEAR.

    (a) In General.--Section 170(f) of the Internal Revenue Code of 
1986 (relating to disallowance of deduction in certain cases and 
special rules) is amended by adding at the end the following new 
paragraph:
            ``(10) Time when certain contributions deemed made.--
                    ``(A) In general.--At the election of the taxpayer, 
                a qualified low-income school contribution shall be 
                deemed to be made on the last day of the preceding 
                taxable year if the contribution is made on account of 
                such taxable year and is made not later than the time 
                prescribed by law for filing the return for such 
                taxable year (not including extensions thereof). The 
                election may be made at the time of the filing of the 
                return for such table year, and shall be made and 
                substantiated in such manner as the Secretary shall by 
                regulations prescribe.
                    ``(B) Qualified low-income school contribution.--
                For purposes of subparagraph (A), the term `qualified 
                low-income school contribution' means a charitable 
                contribution to an educational organization described 
                in subsection (b)(1)(A)(ii)--
                            ``(i) which is a public, private, or 
                        sectarian school which provides elementary or 
                        secondary education (through grade 12), as 
                        determined under State law, and
                            ``(ii) with respect to which at least 50 
                        percent of the students attending such school 
                        are eligible for free or reduced-cost lunches 
                        under the school lunch program established 
                        under the National School Lunch Act.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1999.

SEC. 3. DEDUCTION FOR PORTION OF CHARITABLE CONTRIBUTIONS TO BE ALLOWED 
              TO INDIVIDUALS WHO DO NOT ITEMIZE DEDUCTIONS.

    (a) In General.--Section 170 of the Internal Revenue Code of 1986 
(relating to charitable, etc., contributions and gifts) is amended by 
redesignating subsection (m) as subsection (n) and by inserting after 
subsection (l) the following new subsection:
    ``(m) Deduction for Individuals Not Itemizing Deductions.--In the 
case of an individual who does not itemize his deductions for the 
taxable year, there shall be taken into account as a direct charitable 
deduction under section 63 an amount equal to the lesser of--
            ``(1) the amount allowable as a deduction under subsection 
        (a) for the taxable year, or
            ``(2) $50 ($100 in the case of a joint return).''.
    (b) Direct Charitable Deduction.--
            (1) In general.--Subsection (b) of section 63 of the 
        Internal Revenue Code of 1986 is amended by striking ``and'' at 
        the end of paragraph (1), by striking the period at the end of 
        paragraph (2) and inserting ``, and'', and by adding at the end 
        the following new paragraph:
            ``(3) the direct charitable deduction.''.
            (2) Definition.--Section 63 of such Code is amended by 
        redesignating subsection (g) as subsection (h) and by inserting 
        after subsection (f) the following new subsection:
    ``(g) Direct Charitable Deduction.--For purposes of this section, 
the term `direct charitable deduction' means that portion of the amount 
allowable under section 170(a) which is taken as a direct charitable 
deduction for the taxable year under section 170(m).''.
            (3) Conforming amendment.--Subsection (d) of section 63 of 
        such Code is amended by striking ``and'' at the end of 
        paragraph (1), by striking the period at the end of paragraph 
        (2) and inserting ``, and'', and by adding at the end the 
        following new paragraph:
            ``(3) the direct charitable deduction.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 4. INCREASE IN LIMIT ON CHARITABLE CONTRIBUTIONS AS PERCENTAGE OF 
              AGI.

    (a) In General.--
            (1) Individual limit.--Section 170(b)(1) of the Internal 
        Revenue Code of 1986 (relating to percentage limitations) is 
        amended--
                    (A) by striking ``50 percent'' in subparagraph (A) 
                and inserting ``the 75 percent'', and
                    (B) by striking ``30 percent'' each place it 
                appears in subparagraph (C) and inserting ``50 
                percent''.
            (2) Corporate limit.--Section 170(b)(2) of such Code is 
        amended by striking ``10 percent'' and inserting ``20 
        percent''.
    (b) Conforming Amendments.--Section 170(d)(1)(A) of the Internal 
Revenue Code of 1986 is amended by striking ``50 percent'' each place 
it appears and inserting ``75 percent''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 5. LIMITED EXCEPTION TO EXCESS BUSINESS HOLDINGS RULE.

    (a) In General.--Section 4943(c)(2) of the Internal Revenue Code of 
1986 (relating to permitted holdings in a corporation) is amended by 
adding at the end the following new subparagraph:
                    ``(D) Rule where voting stock is publicly traded.--
                            ``(i) In general.--If--
                                    ``(I) the private foundation and 
                                all disqualified persons together do 
                                not own more than the 49 percent of the 
                                voting stock and not more than the 49 
                                percent in value of all outstanding 
                                shares of all classes of stock of an 
                                incorporated business enterprise,
                                    ``(II) the voting stock owned by 
                                the private foundation and all 
                                disqualified persons together is stock 
                                for which market quotations are readily 
                                available on an established securities 
                                market, and
                                    ``(III) the requirements of clause 
                                (ii) are met,
                        then subparagraph (A) shall be applied by 
                        substituting `49 percent' for `20 percent'.
                            ``(ii) Requirements to be met.--The 
                        requirements of this clause are met during any 
                        taxable year--
                                    ``(I) in which disqualified persons 
                                with respect to the private foundation 
                                do not receive compensation (as an 
                                employee or otherwise) from the 
                                corporation or engage in any act with 
                                such corporation which would constitute 
                                self-dealing within the meaning of 
                                section 4941(d) if such corporation 
                                were a private foundation and if each 
                                such disqualified person were a 
                                disqualified person with respect to 
                                such corporation,
                                    ``(II) in which disqualified 
                                persons with respect to such private 
                                foundation do not own in the aggregate 
                                more than 2 percent of the voting stock 
                                and not more than 2 percent in value of 
                                all outstanding shares of all classes 
                                of stock in such corporation, and
                                    ``(III) for which there is 
                                submitted with the annual return of the 
                                private foundation for such year (filed 
                                within the time prescribed by law, 
                                including extensions, for filing such 
                                return) a certification which is signed 
                                by all the members of an audit 
                                committee of the Board of Directors of 
                                such corporation consisting of a 
                                majority of persons who are not 
                                disqualified persons with respect to 
                                such private foundation and which 
                                certifies that such members, after due 
                                inquiry, are not aware that any 
                                disqualified person has received 
                                compensation from such corporation or 
                                has engaged in any act with such 
                                corporation that would constitute self-
                                dealing within the meaning of section 
                                4941(d) if such corporation were a 
                                private foundation and if each such 
                                disqualified person were a disqualified 
                                person with respect to such 
                                corporation.
                        For purposes of this clause, the fact that a 
                        disqualified person has received compensation 
                        from such corporation or has engaged in any act 
                        with such corporation which would constitute 
                        self-dealing within the meaning of section 
                        4941(d) shall be disregarded if such receipt or 
                        act is corrected not later than the due date 
                        (not including extensions thereof) for the 
                        filing of the private foundation's annual 
                        return for the year in which the receipt or act 
                        occurs and on the terms that would be necessary 
                        to correct such receipt or act and thereby 
                        avoid imposition of tax under section 
                        4941(b).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to foundations established by bequest of decedents dying after December 
31, 1999.
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