[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1359 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 1359

  To amend the Internal Revenue Code of 1986 to expand and extend the 
ability of certain exempt organizations to avoid recognizing a gain on 
  the sale of property used directly in the performance of an exempt 
                               function.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 3, 2001

 Mr. McNulty introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to expand and extend the 
ability of certain exempt organizations to avoid recognizing a gain on 
  the sale of property used directly in the performance of an exempt 
                               function.

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

SECTION 1. NONRECOGNITION OF GAIN ON THE SALE OF PROPERTY USED IN 
              PERFORMANCE OF AN EXEMPT FUNCTION.

    (a) In General.--Subparagraph (D) of section 512(a)(3) of the 
Internal Revenue Code of 1986 is amended to read as follows:
                    ``(D) Nonrecognition of gain.--
                            ``(i) In general.--If property used 
                        directly in the performance of the exempt 
                        function of an organization described in 
                        paragraph (7), (9), (17), or (20) of section 
                        501(c) is sold by such organization, gain (if 
                        any) from such sale shall be recognized only to 
                        the extent that such organization's sales price 
                        of such property exceeds the sum of--
                                    ``(I) such organization's cost of 
                                purchasing, during a period beginning 1 
                                year before the date of such sale and 
                                ending 10 years after such date, other 
                                property that is used directly in the 
                                performance of the exempt function of 
                                the organization, and
                                    ``(II) any amount paid by such 
                                organization during such period to 
                                accomplish one or more purposes 
                                described in section 170(c)(2)(B).
                            ``(ii) Statute of limitations.--If an 
                        organization sells property on which gain is 
                        not recognized, in whole or in part, by reason 
                        of clause (i), then the statutory period for 
                        the assessment of any deficiency attributable 
                        to such gain shall not expire until the end of 
                        the 3-year period beginning on the date that 
                        the Secretary is notified by such organization 
                        (in such manner as the Secretary may prescribe) 
                        that--
                                    ``(I) the organization has met the 
                                requirements of clause (i) with respect 
                                to gain which was not recognized,
                                    ``(II) the organization does not 
                                intend to meet such requirements, or
                                    ``(III) the organization failed to 
                                meet such requirements within the 
                                prescribed period.
                        For the purposes of this clause, any deficiency 
                        may be assessed before the expiration of such 
                        3-year period notwithstanding the provisions of 
                        any other law or rule of law which would 
                        otherwise prevent such assessment.
                            ``(iii) Destruction and loss.--For purposes 
                        of this subparagraph, the destruction in whole 
                        or in part, theft, seizure, requisition, or 
                        condemnation of property, shall be treated as 
                        the sale of such property, and rules similar to 
                        the rules provided by subsections (b), (c), 
                        (e), and (j) of section 1034 (as in effect on 
                        the day before the date of the enactment of the 
                        Taxpayer Relief Act of 1997) shall apply.''.
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to the sale of any property for which the 3-year period 
for offsetting gain by purchasing other property under subparagraph (D) 
of section 512(a)(3) of the Internal Revenue Code (as in effect on the 
day before the date of the enactment of this Act) had not expired as of 
January 1, 2001.
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