[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 793 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                 S. 793

To amend the Internal Revenue Code of 1986 to allow individuals who do 
    not itemize their deductions a deduction for a portion of their 
           charitable contributions, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 26, 2001

  Mr. Inhofe 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 allow individuals who do 
    not itemize their deductions a deduction for a portion of their 
           charitable contributions, 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 ``Neighbor to Neighbor Act''.

SEC. 2. 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.--
            ``(1) In general.--In the case of an individual who does 
        not itemize the individual's deductions for the taxable year, 
        the amount allowable under subsection (a) shall be taken into 
        account as a direct charitable deduction under section 63.
            ``(2) Limitation.--The portion of the amount allowable 
        under subsection (a) to which paragraph (1) applies for the 
        taxable year shall not exceed the amount in effect for such 
        taxable year under section 63(c)(2)(C) (section 63(c)(2)(A) in 
        the case of a joint return under section 6013).''.
    (b) Direct Charitable Deduction.--
            (1) In general.--Section 63(b) of such Code (relating to 
        individuals who do not itemize their deductions) 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 (relating to 
        taxable income defined) 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.--Section 63(d) of such Code 
        (defining itemized deductions) 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) Time When Contributions Deemed Made.--Section 170(f) of such 
Code (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 contributions deemed paid.--For purposes 
        of this section, in the case of an individual, a taxpayer shall 
        be deemed to have paid a charitable contribution on the last 
        day of the preceding taxable year if the contribution is paid 
        on account of such taxable year and is paid not later than the 
        time prescribed by law for filing the return for such taxable 
        year (not including extensions thereof).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 3. CHARITABLE DEDUCTION EXCEPTION TO OVERALL LIMITATION ON 
              ITEMIZED DEDUCTIONS.

    (a) In General.--Subsection (c) of section 68 of the Internal 
Revenue Code of 1986 (relating to exception for certain itemized 
deductions) is amended by striking ``and'' at the end of paragraph (2), 
by striking the period at the end of paragraph (3) and inserting ``, 
and'', and by adding at the end the following:
            ``(4) the deduction under section 170 (relating to 
        charitable, etc., contributions and gifts).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2000.

SEC. 4. REPEAL OF SPECIAL LIMITATION ON CONTRIBUTIONS OF CAPITAL GAIN 
              PROPERTY.

    (a) In General.--Paragraph (1) of section 170(b) of the Internal 
Revenue Code of 1986 (relating to percentage limitations on charitable 
contributions by individuals) is amended--
            (1) by striking subparagraphs (C) and (D), and
            (2) by redesignating subparagraphs (E) and (F) as 
        subparagraphs (C) and (D), respectively.
    (b) Conforming Amendments.--
            (1) Subparagraph (B) of section 170(e)(5) of such Code is 
        amended--
                    (A) in clause (ii) by striking ``(as defined in 
                subsection (b)(1)(C)(iv))'', and
                    (B) by adding at the end the following new flush 
                sentence:
                ``For purposes of clause (ii), the term `capital gain 
                property' means with respect to any contribution, any 
                capital asset the sale of which at its fair market 
                value at the time of the contribution would have 
                resulted in gain which would have been long-term 
                capital gain. For purposes of the preceding sentence, 
                any property which is property used in the trade or 
                business (as defined in section 1231(b)) shall be 
                treated as a capital asset.''.
            (2) Section 545(b)(2) of such Code is amended by striking 
        ``section 170(b)(1)(A), (B), and (D)'' and inserting ``section 
        170(b)(1)(A) and (B)''.
            (3) Section 556(b)(2) of such Code is amended by striking 
        ``section 170(b)(1)(A), (B), and (D)'' and inserting ``section 
        170(b)(1)(A) and (B)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 5. EXTENSION OF CARRYOVER PERIOD FOR EXCESS CONTRIBUTIONS.

    (a) In General.--The following provisions of section 170 of the 
Internal Revenue Code of 1986 are each amended by striking ``5'' and 
inserting ``10'':
            (1) Subsection (d)(1)(A) (general rule for carryovers of 
        excess contributions by individuals).
            (2) Subsection (d)(2)(A) (general rule for carryovers of 
        excess contributions by corporations).
            (3) Subsection (b)(1)(B) (relating to percent limitation on 
        other contributions by individuals).
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 6. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS FOR 
              CHARITABLE PURPOSES.

    (a) In General.--Subsection (d) of section 408 of the Internal 
Revenue Code of 1986 (relating to individual retirement accounts) is 
amended by adding at the end the following new paragraph:
            ``(8) Distributions for charitable purposes.--
                    ``(A) In general.--No amount shall be includible in 
                gross income by reason of a qualified charitable 
                distribution from an individual retirement account to 
                an organization described in section 170(c).
                    ``(B) Special rules relating to charitable 
                remainder trusts, pooled income funds, and charitable 
                gift annuities.--
                            ``(i) In general.--No amount shall be 
                        includible in gross income by reason of a 
                        qualified charitable distribution from an 
                        individual retirement account--
                                    ``(I) to a charitable remainder 
                                annuity trust or a charitable remainder 
                                unitrust (as such terms are defined in 
                                section 664(d)),
                                    ``(II) to a pooled income fund (as 
                                defined in section 642(c)(5)), or
                                    ``(III) for the issuance of a 
                                charitable gift annuity (as defined in 
                                section 501(m)(5)).
                        The preceding sentence shall apply only if no 
                        person holds an income interest in the amounts 
                        in the trust, fund, or annuity attributable to 
                        such distribution other than one or more of 
the following: the individual for whose benefit such account is 
maintained, the spouse of such individual, or any organization 
described in section 170(c).
                            ``(ii) Determination of inclusion of 
                        amounts distributed.--In determining the amount 
                        includible in the gross income of any person by 
                        reason of a payment or distribution from a 
                        trust referred to in clause (i)(I) or a 
                        charitable gift annuity (as so defined), the 
                        portion of any qualified charitable 
                        distribution to such trust or for such annuity 
                        which would (but for this subparagraph) have 
                        been includible in gross income--
                                    ``(I) shall be treated as income 
                                described in section 664(b)(1), and
                                    ``(II) shall not be treated as an 
                                investment in the contract.
                            ``(iii) No inclusion for distribution to 
                        pooled income fund.--No amount shall be 
                        includible in the gross income of a pooled 
                        income fund (as so defined) by reason of a 
                        qualified charitable distribution to such fund.
                    ``(C) Qualified charitable distribution.--For 
                purposes of this paragraph, the term `qualified 
                charitable distribution' means any distribution from an 
                individual retirement account--
                            ``(i) which is made on or after the date 
                        that the individual for whose benefit the 
                        account is maintained has attained age 59\1/2\, 
                        and
                            ``(ii) which is made directly from the 
                        account to--
                                    ``(I) an organization described in 
                                section 170(c), or
                                    ``(II) a trust, fund, or annuity 
                                referred to in subparagraph (B).
                    ``(D) Denial of deduction.--The amount allowable as 
                a deduction under section 170 to the taxpayer for the 
                taxable year shall be reduced (but not below zero) by 
                the sum of the amounts of the qualified charitable 
                distributions during such year which would be 
                includible in the gross income of the taxpayer for such 
                year but for this paragraph.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2000.

SEC. 7. REPEAL OF EXCISE TAX ON NET INVESTMENT INCOME OF TAX-EXEMPT 
              FOUNDATIONS.

    (a) Repeal.--Subsection (a) of section 4940 of the Internal Revenue 
Code of 1986 (relating to excise tax based on investment income) is 
repealed.
    (b) Conforming Amendments.--
            (1) Section 4940 of such Code is amended--
                    (A) by redesignating subsections (b), (c), and (d) 
                as subsections (a), (b), and (c), respectively,
                    (B) by striking subsection (e), and
                    (C) in subsection (a), as redesignated by paragraph 
                (1), by striking ``(A) the tax imposed under subsection 
                (a) (computed as if such subsection applied to such 
                private foundation for the taxable year),'' and 
                inserting ``(A) an amount equal to 2 percent of the net 
                investment income of such foundation for the taxable 
                year,''.
            (2) Section 4942(f)(3)(A) of such Code is amended by 
        striking ``section 4940(c)(3)(B)'' and inserting ``section 
        4940(b)(3)(B)''.
            (3) Section 4945(d)(4)(A) of such Code is amended by 
        striking ``section 4940(d)(2)'' and inserting ``section 
        4940(c)(2)''.
            (4) Section 4948(a) of such Code is amended by striking 
        ``section 4940(c)(2)'' and inserting ``section 4940(b)(2)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.
                                 <all>