[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2846 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 2846

   To amend the Internal Revenue Code of 1986 to provide comparable 
unrelated business taxable income treatment to tax exempt organizations 
which hold interests in S corporations to the treatment as is provided 
       to such organizations for interests held in partnerships.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 6, 2001

   Mr. Baird (for himself and Mr. Ryan of Wisconsin) 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 provide comparable 
unrelated business taxable income treatment to tax exempt organizations 
which hold interests in S corporations to the treatment as is provided 
       to such organizations for interests held in partnerships.

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

SECTION 1. COMPARABLE TREATMENT OF TAX EXEMPT ORGANIZATION'S OWNERSHIP 
              INTERESTS IN S CORPORATIONS AND IN PARTNERSHIPS FOR 
              PURPOSES OF UNRELATED BUSINESS TAXABLE INCOME.

    (a) In General.--Subsection (c) of section 512 of the Internal 
Revenue Code of 1986 (relating to special rule for partnerships) is 
amended--
            (1) by inserting ``or S corporation'' after ``partnership'' 
        each place it appears in paragraphs (1) and (2),
            (2) by inserting ``or shareholder'' after ``member'' in 
        paragraph (1), and
            (3) by inserting ``and S Corporations'' after 
        ``Partnerships'' in the heading.
    (b) Reporting Requirement.--Section 6037 of such Code (relating to 
return of S corporation) is amended by adding at the end the following 
new subsection:
    ``(d) Separate Statement of Items of Unrelated Business Taxable 
Income.--In the case of any S corporation regularly carrying on a trade 
or business (within the meaning of section 512(c)(1)), the information 
required under subsection (b) to be furnished to any shareholder 
described in section 1631(c)(6) shall include such information as is 
necessary to enable the shareholder to compute its pro rata share of 
the corporation's income or loss from the trade or business in 
accordance with section 512(a)(1), but without regard to the 
modifications described in paragraphs (8) through (15) of section 
512(b).''.
    (c) Conforming Amendments.--
            (1) Section 512 of such Code is amended by striking 
        subsection (e).
            (2) Section 512(c) of such Code is amended by adding at the 
        end the following new paragraph:
            ``(3) Exception for esops.--This subsection shall not apply 
        to employer securities (within the meaning of section 409(l) 
        held by an employee stock ownership plan described in section 
        4975(e)(7).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.
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