[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7 Reported in House (RH)]






                                                 Union Calendar No. 157
108th CONGRESS
  1st Session
                                 H. R. 7

                      [Report No. 108-270, Part I]

 To amend the Internal Revenue Code of 1986 to provide incentives for 
 charitable contributions by individuals and businesses, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 7, 2003

 Mr. Blunt (for himself, Mr. Ford, Mr. Hulshof, Mr. Wynn, Mr. Hastert, 
Mr. Gordon, Mr. DeLay, Ms. Norton, Ms. Pryce of Ohio, Mr. Meeks of New 
 York, Mr. Cantor, Mr. Crane, Mr. Ramstad, Mr. English, Mr. Foley, Mr. 
   Shays, Mr. Smith of Texas, Mr. Upton, Mr. Wolf, Mr. Gillmor, Mr. 
 Stearns, Mr. Camp, Mr. Kingston, Mr. McHugh, Mr. Bachus, Mr. Bartlett 
of Maryland, Mr. Barton of Texas, Mrs. Myrick, Mr. Norwood, Mr. Souder, 
  Mr. Tiahrt, Mr. Wamp, Mr. Wicker, Mr. Doolittle, Mrs. Northup, Mr. 
 Peterson of Pennsylvania, Mr. Pickering, Mr. Pitts, Mr. Reynolds, Mr. 
Sessions, Mr. Shimkus, Mr. Green of Wisconsin, Mr. Hayes, Mr. Isakson, 
Mr. Terry, Mr. Akin, Mr. Boozman, Mr. Forbes, Mr. Graves, Ms. Hart, Mr. 
   Keller, Mr. Pence, Mr. Schrock, Mr. Simmons, Mr. Barrett of South 
    Carolina, Mrs. Blackburn, Ms. Ginny Brown-Waite of Florida, Mr. 
   Burgess, Mr. Chocola, Mr. Garrett of New Jersey, Ms. Harris, Mr. 
  Janklow, Mrs. Musgrave, Mr. Renzi, and Mr. Fossella) introduced the 
following bill; which was referred to the Committee on Ways and Means, 
and in addition to the Committee on Education and the Workforce, for a 
 period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

                           September 16, 2003

Additional sponsors: Mr. Moran of Kansas, Mr. Brown of South Carolina, 
 Mr. Feeney, Mr. Emanuel, Mr. Mollohan, Mr. Dooley of California, Mr. 
Franks of Arizona, Mr. McCotter, Mr. Murphy, Mr. Leach, Mr. Hostettler, 
Mr. Turner of Ohio, Mr. Crenshaw, Mr. Regula, Ms. Hooley of Oregon, Mr. 
   Culberson, Mr. Wilson of South Carolina, Mr. Otter, Mr. Bishop of 
   Georgia, Mr. Burns, Mr. Case, Mr. Davis of Illinois, and Mr. Hyde

                           September 16, 2003

    Reported from the Committee on Ways and Means with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

                           September 16, 2003

Referral to the Committee on Education and the Workforce extended for a 
            period ending not later than September 16, 2003

                           September 16, 2003

 Committee on Education and the Workforce discharged; committed to the 
 Committee of the Whole House on the State of the Union and ordered to 
                               be printed
[For text of introduced bill, see copy of bill as introduced on May 7, 
                                 2003]

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide incentives for 
 charitable contributions by individuals and businesses, 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; ETC.

    (a) Short Title.--This Act may be cited as the ``Charitable Giving 
Act of 2003''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--

Sec. 1. Short title; etc.

                 TITLE I--CHARITABLE GIVING INCENTIVES

Sec. 101. Deduction for portion of charitable contributions to be 
                            allowed to individuals who do not itemize 
                            deductions.
Sec. 102. Tax-free distributions from individual retirement plans for 
                            charitable purposes.
Sec. 103. Increase in cap on corporate charitable contributions.
Sec. 104. Charitable deduction for contributions of food inventory.
Sec. 105. Reform of certain excise taxes related to private 
                            foundations.
Sec. 106. Excise tax on unrelated business taxable income of charitable 
                            remainder trusts.
Sec. 107. Expansion of charitable contribution allowed for scientific 
                            property used for research and for computer 
                            technology and equipment used for 
                            educational purposes.
Sec. 108. Adjustment to basis of S corporation stock for certain 
                            charitable contributions.
Sec. 109. Charitable organizations permitted to make collegiate housing 
                            and infrastructure grants.
Sec. 110. Conduct of certain games of chance not treated as unrelated 
                            trade or business.
Sec. 111. Excise taxes exemption for blood collector organizations.
Sec. 112. Nonrecognition of gain on the sale of property used in 
                            performance of an exempt function.
Sec. 113. Exemption of qualified 501(c)(3) bonds for nursing homes from 
                            Federal guarantee prohibitions.

     TITLE II--TAX REFORM AND IMPROVEMENTS RELATING TO CHARITABLE 
                       ORGANIZATIONS AND PROGRAMS

Sec. 201. Suspension of tax-exempt status of terrorist organizations.
Sec. 202. Clarification of definition of church tax inquiry.
Sec. 203. Extension of declaratory judgment remedy to tax-exempt 
                            organizations.
Sec. 204. Landowner incentives programs.
Sec. 205. Modifications to section 512(b)(13).
Sec. 206. Simplification of lobbying expenditure limitation.
Sec. 207. Pilot project for forest conservation activities.

                      TITLE III--OTHER PROVISIONS

Sec. 301. Compassion capital fund.
Sec. 302. Reauthorization of assets for independence demonstration.
Sec. 303. Sense of the Congress regarding corporate contributions to 
                            faith-based organizations, etc.
Sec. 304. Maternity group homes.
Sec. 305. Authority of States to use 10 percent of their TANF funds to 
                            carry out social services block grant 
                            programs.

                 TITLE I--CHARITABLE GIVING INCENTIVES

SEC. 101. DEDUCTION FOR PORTION OF CHARITABLE CONTRIBUTIONS TO BE 
              ALLOWED TO INDIVIDUALS WHO DO NOT ITEMIZE DEDUCTIONS.

    (a) In General.--Section 170 (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 deductions for a taxable year, there shall be taken 
        into account as a direct charitable deduction under section 63 
        an amount equal to the amount allowable under subsection (a) 
        for the taxable year for cash contributions (determined without 
        regard to any carryover), to the extent that such contributions 
        exceed $250 ($500 in the case of a joint return) but do not 
        exceed $500 ($1,000 in the case of a joint return).
            ``(2) Termination.--Paragraph (1) shall not apply to any 
        taxable year beginning after December 31, 2005.''.
    (b) Direct Charitable Deduction.--
            (1) In general.--Subsection (b) of section 63 (defining 
        taxable income) 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 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 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) Study.--
            (1) In general.--The Secretary of the Treasury shall study 
        the effect of the amendments made by this section on increased 
        charitable giving and taxpayer compliance, including a 
        comparison of taxpayer compliance between taxpayers who itemize 
        their charitable contributions and taxpayers who claim a direct 
        charitable deduction.
            (2) Report.--Not later than December 31, 2006, the 
        Secretary of the Treasury shall report on the study required 
        under paragraph (1) to the Committee on Finance of the Senate 
        and the Committee on Ways and Means of the House of 
        Representatives.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.

SEC. 102. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT PLANS FOR 
              CHARITABLE PURPOSES.

    (a) In General.--Subsection (d) of section 408 (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.
                    ``(B) Qualified charitable distribution.--For 
                purposes of this paragraph, the term `qualified 
                charitable distribution' means any distribution from an 
                individual retirement plan other than a plan described 
                in subsection (k) or (p) of section 408--
                            ``(i) which is made on or after the date 
                        that the individual for whose benefit the plan 
                        is maintained has attained age 70\1/2\, and
                            ``(ii) which is made directly by the 
                        trustee--
                                    ``(I) to an organization described 
                                in section 170(c), or
                                    ``(II) to a split-interest entity.
                A distribution shall be treated as a qualified 
                charitable distribution only to the extent that the 
                distribution would be includible in gross income 
                without regard to subparagraph (A) and, in the case of 
                a distribution to a split-interest entity, only if no 
                person holds an income interest in the amounts in the 
                split-interest entity attributable to such distribution 
                other than one or more of the following: the individual 
                for whose benefit such plan is maintained, the spouse 
                of such individual, or any organization described in 
                section 170(c).
                    ``(C) Contributions must be otherwise deductible.--
                For purposes of this paragraph--
                            ``(i) Direct contributions.--A distribution 
                        to an organization described in section 170(c) 
                        shall be treated as a qualified charitable 
distribution only if a deduction for the entire distribution would be 
allowable under section 170 (determined without regard to subsection 
(b) thereof and this paragraph).
                            ``(ii) Split-interest gifts.--A 
                        distribution to a split-interest entity shall 
                        be treated as a qualified charitable 
                        distribution only if a deduction for the entire 
                        value of the interest in the distribution for 
                        the use of an organization described in section 
                        170(c) would be allowable under section 170 
                        (determined without regard to subsection (b) 
                        thereof and this paragraph).
                    ``(D) Application of section 72.--Notwithstanding 
                section 72, in determining the extent to which a 
                distribution is a qualified charitable distribution, 
                the entire amount of the distribution shall be treated 
                as includible in gross income without regard to 
                subparagraph (A) to the extent that such amount does 
                not exceed the aggregate amount which would have been 
                so includible if all amounts distributed from all 
                individual retirement plans were treated as 1 contract 
                under paragraph (2)(A) for purposes of determining the 
                inclusion of such distribution under section 72. Proper 
                adjustments shall be made in applying section 72 to 
                other distributions in such taxable year and subsequent 
                taxable years.
                    ``(E) Special rules for split-interest entities.--
                            ``(i) Charitable remainder trusts.--
                        Notwithstanding section 664(b), distributions 
                        made from a trust described in subparagraph 
                        (G)(i) shall be treated as ordinary income in 
                        the hands of the beneficiary to whom is paid 
                        the annuity described in section 664(d)(1)(A) 
                        or the payment described in section 
                        664(d)(2)(A).
                            ``(ii) Pooled income funds.--No amount 
                        shall be includible in the gross income of a 
                        pooled income fund (as defined in subparagraph 
                        (G)(ii)) by reason of a qualified charitable 
                        distribution to such fund, and all 
                        distributions from the fund which are 
                        attributable to qualified charitable 
                        distributions shall be treated as ordinary 
                        income to the beneficiary.
                            ``(iii) Charitable gift annuities.--
                        Qualified charitable distributions made for a 
                        charitable gift annuity shall not be treated as 
                        an investment in the contract.
                    ``(F) Denial of deduction.--Qualified charitable 
                distributions shall not be taken into account in 
                determining the deduction under section 170.
                    ``(G) Split-interest entity defined.--For purposes 
                of this paragraph, the term `split-interest entity' 
                means--
                            ``(i) a charitable remainder annuity trust 
                        or a charitable remainder unitrust (as such 
                        terms are defined in section 664(d)) which must 
                        be funded exclusively by qualified charitable 
                        distributions,
                            ``(ii) a pooled income fund (as defined in 
                        section 642(c)(5)), but only if the fund 
                        accounts separately for amounts attributable to 
                        qualified charitable distributions, and
                            ``(iii) a charitable gift annuity (as 
                        defined in section 501(m)(5)).''.
    (b) Modifications Relating to Information Returns by Certain 
Trusts.--
            (1) Returns.--Section 6034 (relating to returns by trusts 
        described in section 4947(a)(2) or claiming charitable 
        deductions under section 642(c)) is amended to read as follows:

``SEC. 6034. RETURNS BY TRUSTS DESCRIBED IN SECTION 4947(A)(2) OR 
              CLAIMING CHARITABLE DEDUCTIONS UNDER SECTION 642(C).

    ``(a) Trusts Described in Section 4947(a)(2).--Every trust 
described in section 4947(a)(2) shall furnish such information with 
respect to the taxable year as the Secretary may by forms or 
regulations require.
    ``(b) Trusts Claiming a Charitable Deduction Under Section 
642(c).--
            ``(1) In general.--Every trust not required to file a 
        return under subsection (a) but claiming a deduction under 
        section 642(c) for the taxable year shall furnish such 
        information with respect to such taxable year as the Secretary 
        may by forms or regulations prescribe, including--
                    ``(A) the amount of the deduction taken under 
                section 642(c) within such year,
                    ``(B) the amount paid out within such year which 
                represents amounts for which deductions under section 
                642(c) have been taken in prior years,
                    ``(C) the amount for which such deductions have 
                been taken in prior years but which has not been paid 
                out at the beginning of such year,
                    ``(D) the amount paid out of principal in the 
                current and prior years for the purposes described in 
                section 642(c),
                    ``(E) the total income of the trust within such 
                year and the expenses attributable thereto, and
                    ``(F) a balance sheet showing the assets, 
                liabilities, and net worth of the trust as of the 
                beginning of such year.
            ``(2) Exceptions.--Paragraph (1) shall not apply to a trust 
        for any taxable year if--
                    ``(A) all the net income for such year, determined 
                under the applicable principles of the law of trusts, 
                is required to be distributed currently to the 
                beneficiaries, or
                    ``(B) the trust is described in section 
                4947(a)(1).''.
            (2) Increase in penalty relating to filing of information 
        return by split-interest trusts.--Paragraph (2) of section 
        6652(c) (relating to returns by exempt organizations and by 
        certain trusts) is amended by adding at the end the following 
new subparagraph:
                    ``(C) Split-interest trusts.--In the case of a 
                trust which is required to file a return under section 
                6034(a), subparagraphs (A) and (B) of this paragraph 
                shall not apply and paragraph (1) shall apply in the 
                same manner as if such return were required under 
                section 6033, except that--
                            ``(i) the 5 percent limitation in the 
                        second sentence of paragraph (1)(A) shall not 
                        apply,
                            ``(ii) in the case of any trust with gross 
                        income in excess of $250,000, the first 
                        sentence of paragraph (1)(A) shall be applied 
                        by substituting `$100' for `$20', and the 
                        second sentence thereof shall be applied by 
                        substituting `$50,000' for `$10,000', and
                            ``(iii) the third sentence of paragraph 
                        (1)(A) shall be disregarded.
                In addition to any penalty imposed on the trust 
                pursuant to this subparagraph, if the person required 
                to file such return knowingly fails to file the return, 
                such penalty shall also be imposed on such person who 
                shall be personally liable for such penalty.''.
            (3) Confidentiality of noncharitable beneficiaries.--
        Subsection (b) of section 6104 (relating to inspection of 
        annual information returns) is amended by adding at the end the 
        following new sentence: ``In the case of a trust which is 
        required to file a return under section 6034(a), this 
        subsection shall not apply to information regarding 
        beneficiaries which are not organizations described in section 
        170(c).''.
    (c) Effective Dates.--
            (1) Subsection (a).--The amendment made by subsection (a) 
        shall apply to distributions made after December 31, 2003.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply to returns for taxable years beginning after 
        December 31, 2003.

SEC. 103. INCREASE IN CAP ON CORPORATE CHARITABLE CONTRIBUTIONS.

    (a) In General.--Paragraph (2) of section 170(b) (relating to 
corporations) is amended by striking ``10 percent'' and inserting ``the 
applicable percentage''.
    (b) Applicable Percentage.--Subsection (b) of section 170 is 
amended by adding at the end the following new paragraph:
            ``(3) Applicable percentage defined.--For purposes of 
        paragraph (2), the applicable percentage shall be determined in 
        accordance with the following table:

                ``For taxable years beginning
                                                         The applicable
                  in calendar year--
                                                        percentage is--
                    2004...................................         11 
                    2005...................................         12 
                    2006...................................         13 
                    2007...................................         14 
                    2008 through 2011......................         15 
                    2012 and thereafter....................      20.''.
    (c) Conforming Amendments.--
            (1) Sections 512(b)(10) and 805(b)(2)(A) are each amended 
        by striking ``10 percent'' each place it occurs and inserting 
        ``the applicable percentage (determined under section 
        170(b)(3))''.
            (2) Sections 545(b)(2) and 556(b)(2) are each amended by 
        striking ``10-percent limitation'' and inserting ``applicable 
        percentage limitation''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.

SEC. 104. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD INVENTORY.

    (a) In General.--Paragraph (3) of section 170(e) (relating to 
special rule for certain contributions of inventory and other property) 
is amended by redesignating subparagraph (C) as subparagraph (D) and by 
inserting after subparagraph (B) the following new subparagraph:
                    ``(C) Special rule for contributions of food 
                inventory.--
                            ``(i) General rule.--In the case of a 
                        charitable contribution of food from any trade 
                        or business (or interest therein) of the 
                        taxpayer, this paragraph shall be applied--
                                    ``(I) without regard to whether the 
                                contribution is made by a C 
                                corporation, and
                                    ``(II) only to food that is 
                                apparently wholesome food.
                            ``(ii) Limitation.--In the case of a 
                        taxpayer other than a C corporation, the 
                        aggregate amount of such contributions for any 
                        taxable year which may be taken into account 
                        under this section shall not exceed the 
                        applicable percentage (within the meaning of 
                        subsection (b)(3)) of the taxpayer's aggregate 
                        net income for such taxable year from all 
                        trades or businesses from which such 
                        contributions were made for such year, computed 
                        without regard to this section.
                            ``(iii) Determination of fair market 
                        value.--In the case of a qualified contribution 
                        of apparently wholesome food to which this 
                        paragraph applies and which, solely by reason 
                        of internal standards of the taxpayer or lack 
                        of market, cannot or will not be sold, the fair 
                        market value of such food shall be determined 
                        by taking into account the price at which the 
                        same or substantially the same food items (as 
                        to both type and quality) are sold by the 
                        taxpayer at the time of the contribution (or, 
                        if not so sold at such time, in the recent 
                        past).
                            ``(iv) Apparently wholesome food.--For 
                        purposes of this subparagraph, the term 
                        `apparently wholesome food' has the meaning 
                        given to such term by section 22(b)(2) of the 
                        Bill Emerson Good Samaritan Food Donation Act 
                        (42 U.S.C. 1791(b)(2)), as in effect on the 
                        date of the enactment of this subparagraph.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2003.

SEC. 105. REFORM OF CERTAIN EXCISE TAXES RELATED TO PRIVATE 
              FOUNDATIONS.

    (a) Reduction of Tax on Net Investment Income.--Section 4940(a) 
(relating to tax-exempt foundations) is amended by striking ``2 
percent'' and inserting ``1 percent''.
    (b) Repeal of Reduction in Tax Where Private Foundation Meets 
Certain Distribution Requirements.--Section 4940 (relating to excise 
tax based on investment income) is amended by striking subsection (e).
    (c) Modification of Excise Tax on Self-Dealing.--The second 
sentence of section 4941(a)(1) (relating to initial excise tax imposed 
on self-dealer) is amended by striking ``5 percent'' and inserting ``25 
percent''.
    (d) Modification of Excise Tax on Failure To Distribute Income.--
            (1) Certain administrative expenses not treated as 
        distributions.--Section 4942(g) is amended by striking 
        paragraph (4) and inserting the following new paragraphs:
            ``(4) Limitation on administrative expenses treated as 
        distributions.--
                    ``(A) In general.--For purposes of paragraph 
                (1)(A), the following administrative expenses shall not 
                be treated as qualifying distributions:
                            ``(i) Any administrative expense which is 
                        not directly attributable to direct charitable 
                        activities, grant selection activities, grant 
                        monitoring and administration activities, 
                        compliance with applicable Federal, State, or 
                        local law, or furthering public accountability 
                        of the private foundation.
                            ``(ii) Any compensation paid to a 
                        disqualified person to the extent that such 
                        compensation exceeds an annual rate of 
                        $100,000.
                            ``(iii) Any expense incurred for 
                        transportation by air unless such 
                        transportation is regularly-scheduled 
                        commercial air transportation.
                            ``(iv) Any expense incurred for regularly-
                        scheduled commercial air transportation to the 
                        extent that such expense exceeds the cost of 
                        such transportation in coach-class 
                        accommodations.
                    ``(B) Adjustment for inflation.--In the case of a 
                taxable year beginning after December 31, 2004, the 
                $100,000 amount in subparagraph (A)(ii) shall be 
                increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        determined by substituting `calendar year 2003' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.
                If any amount as increased under the preceding sentence 
                is not a multiple of $50, such amount shall be rounded 
                to the next lowest multiple of $50.
            ``(5) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary to carry out the purposes of 
        paragraph (4). Such regulations shall provide that 
        administrative expenses which are excluded from qualifying 
        distributions solely by reason of the limitations in paragraph 
        (4) shall not for such reason subject a private foundation to 
        any other excise taxes imposed by this subchapter.''.
            (2) Disallowance not to apply to certain private 
        foundations.--
                    (A) In general.--Section 4942(j)(3) (defining 
                operating foundation) is amended--
                            (i) by striking ``(within the meaning of 
                        paragraph (1) or (2) of subsection (g))'' each 
                        place it appears, and
                            (ii) by adding at the end the following new 
                        sentence: ``For purposes of this paragraph, the 
                        term `qualifying distributions' means 
                        qualifying distributions within the meaning of 
                        paragraph (1) or (2) of subsection (g) 
                        (determined without regard to subsection 
                        (g)(4)).''.
                    (B) Conforming amendment.--Section 4942(f)(2)(C)(i) 
                is amended by inserting ``(determined without regard to 
                subsection (g)(4))'' after ``within the meaning of 
                subsection (g)(1)(A)''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.

SEC. 106. EXCISE TAX ON UNRELATED BUSINESS TAXABLE INCOME OF CHARITABLE 
              REMAINDER TRUSTS.

    (a) In General.--Subsection (c) of section 664 (relating to 
exemption from income taxes) is amended to read as follows:
    ``(c) Taxation of Trusts.--
            ``(1) Income tax.--A charitable remainder annuity trust and 
        a charitable remainder unitrust shall, for any taxable year, 
        not be subject to any tax imposed by this subtitle.
            ``(2) Excise tax.--
                    ``(A) In general.--In the case of a charitable 
                remainder annuity trust or a charitable remainder 
                unitrust that has unrelated business taxable income 
                (within the meaning of section 512, determined as if 
                part III of subchapter F applied to such trust) for a 
                taxable year, there is hereby imposed on such trust or 
                unitrust an excise tax equal to the amount of such 
                unrelated business taxable income.
                    ``(B) Certain rules to apply.--The tax imposed by 
                subparagraph (A) shall be treated as imposed by chapter 
                42 for purposes of this title other than subchapter E 
                of chapter 42.
                    ``(C) Character of distributions and coordination 
                with distribution requirements.--The amounts taken into 
                account in determining unrelated business taxable 
                income (as defined in subparagraph (A)) shall not be 
                taken into account for purposes of--
                            ``(i) subsection (b),
                            ``(ii) determining the value of trust 
                        assets under subsection (d)(2), and
                            ``(iii) determining income under subsection 
                        (d)(3).
                    ``(D) Tax court proceedings.--For purposes of this 
                paragraph, the references in section 6212(c)(1) to 
                section 4940 shall be deemed to include references to 
                this paragraph.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2003.

SEC. 107. EXPANSION OF CHARITABLE CONTRIBUTION ALLOWED FOR SCIENTIFIC 
              PROPERTY USED FOR RESEARCH AND FOR COMPUTER TECHNOLOGY 
              AND EQUIPMENT USED FOR EDUCATIONAL PURPOSES.

    (a) Scientific Property Used for Research.--
            (1) In general.--Clause (ii) of section 170(e)(4)(B) 
        (defining qualified research contributions) is amended by 
        inserting ``or assembled'' after ``constructed''.
            (2) Conforming amendment.--Clause (iii) of section 
        170(e)(4)(B) is amended by inserting ``or assembling'' after 
        ``construction''.
    (b) Computer Technology and Equipment for Educational Purposes.--
            (1) In general.--Clause (ii) of section 170(e)(6)(B) is 
        amended by inserting ``or assembled'' after ``constructed'' and 
        ``or assembling'' after ``construction''.
            (2) Special rule made permanent.--Section 170(e)(6) is 
        amended by striking subparagraph (G).
            (3) Conforming amendments.--Subparagraph (D) of section 
        170(e)(6) is amended by inserting ``or assembled'' after 
        ``constructed'' and ``or assembling'' after ``construction''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.

SEC. 108. ADJUSTMENT TO BASIS OF S CORPORATION STOCK FOR CERTAIN 
              CHARITABLE CONTRIBUTIONS.

    (a) In General.--Paragraph (2) of section 1367(a) (relating to 
adjustments to basis of stock of shareholders, etc.) is amended by 
adding at the end the following new flush sentence:
        ``The decrease under subparagraph (B) by reason of a charitable 
        contribution (as defined in section 170(c)) of property shall 
        be the amount equal to the shareholder's pro rata share of the 
        adjusted basis of such property.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2003.

SEC. 109. CHARITABLE ORGANIZATIONS PERMITTED TO MAKE COLLEGIATE HOUSING 
              AND INFRASTRUCTURE GRANTS.

    (a) In General.--Section 501 (relating to exemption from tax on 
corporations, certain trusts, etc.), as amended by section 201, is 
further amended by redesignating subsection (q) as subsection (r) and 
by inserting after subsection (p) the following new subsection:
    ``(q) Treatment of Organizations Making Collegiate Housing and 
Infrastructure Improvement Grants.--
            ``(1) In general.--For purposes of subsection (c)(3) and 
        sections 170(c)(2)(B), 2055(a), and 2522(a)(2), an organization 
        shall not fail to be treated as organized and operated 
        exclusively for charitable or educational purposes solely 
        because such organization makes collegiate housing and 
        infrastructure grants to an organization described in 
        subsection (c)(7), so long as, at the time of the grant, 
        substantially all of the active members of the recipient 
        organization are full-time students at the college or 
        university with which such recipient organization is 
        associated.
            ``(2) Housing and infrastructure grants.--For purposes of 
        paragraph (1), collegiate housing and infrastructure grants are 
        grants to provide, improve, operate, or maintain collegiate 
        housing that may involve more than incidental social, 
        recreational, or private purposes, so long as such grants are 
        for purposes that would be permissible for a dormitory of the 
        college or university referred to in paragraph (1). A grant 
        shall not be treated as a collegiate housing and infrastructure 
        grant for purposes of paragraph (1) to the extent that such 
        grant is used to provide physical fitness equipment.
            ``(3) Grants to certain organizations holding title to 
        property, etc.--For purposes of this subsection, a collegiate 
        housing and infrastructure grant to an organization described 
        in subsection (c)(2) or (c)(7) holding title to property 
        exclusively for the benefit of an organization described in 
        subsection (c)(7) shall be considered a grant to the 
        organization described in subsection (c)(7) for whose benefit 
        such property is held.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to grants made after December 31, 2003.

SEC. 110. CONDUCT OF CERTAIN GAMES OF CHANCE NOT TREATED AS UNRELATED 
              TRADE OR BUSINESS.

    (a) In General.--Paragraph (1) of section 513(f) (relating to 
certain bingo games) is amended to read as follows:
            ``(1) In general.--The term `unrelated trade or business' 
        does not include--
                    ``(A) any trade or business which consists of 
                conducting bingo games, and
                    ``(B) any trade or business which consists of 
                conducting qualified games of chance if the net 
                proceeds from such trade or business are paid or set 
                aside for payment for purposes described in section 
170(c)(2)(B), for the promotion of social welfare (within the meaning 
of section 501(c)(4)), or for a purpose for which State law 
specifically authorizes the expenditure of such proceeds.''.
    (b) Qualified Games of Chance.--Subsection (f) of section 513 is 
amended by adding at the end the following new paragraph:
            ``(3) Qualified games of chance.--For purposes of paragraph 
        (1), the term `qualified game of chance' means any game of 
        chance (other than bingo) conducted by an organization if--
                    ``(A) such organization is licensed pursuant to 
                State law to conduct such game,
                    ``(B) only organizations which are organized as 
                nonprofit corporations or are exempt from tax under 
                section 501(a) may be so licensed to conduct such game 
                within the State, and
                    ``(C) the conduct of such game does not violate 
                State or local law.''
    (c) Clerical Amendment.--The subsection heading of section 513(f) 
is amended by striking ``Bingo Games'' and inserting ``Games of 
Chance''.
    (d) Effective Date.-- The amendments made by this section shall 
apply to games conducted after December 31, 2003.

SEC. 111. EXCISE TAXES EXEMPTION FOR BLOOD COLLECTOR ORGANIZATIONS.

    (a) Exemption From Imposition of Special Fuels Tax.--Section 
4041(g) (relating to other exemptions) is amended by striking ``and'' 
at the end of paragraph (3), by striking the period in paragraph (4) 
and inserting ``; and'', and by inserting after paragraph (4) the 
following new paragraph:
            ``(5) with respect to the sale of any liquid to a qualified 
        blood collector organization (as defined in section 
        7701(a)(48)) for such organization's exclusive use, or with 
        respect to the use by a qualified blood collector organization 
        of any liquid as a fuel.''.
    (b) Exemption From Manufacturers Excise Tax.--
            (1) In general.--Section 4221(a) (relating to certain tax-
        free sales) is amended by striking ``or'' at the end of 
        paragraph (4), by adding ``or'' at the end of paragraph (5), 
        and by inserting after paragraph (5) the following new 
        paragraph:
            ``(6) to a qualified blood collector organization (as 
        defined in section 7701(a)(48)) for such organization's 
        exclusive use,''.
            (2) Conforming amendments.--
                    (A) The second sentence of section 4221(a) is 
                amended by striking ``Paragraphs (4) and (5)'' and 
                inserting ``Paragraphs (4), (5), and (6)''.
                    (B) Section 6421(c) is amended by striking ``or 
                (5)'' and inserting ``(5), or (6)''.
    (c) Exemption From Communication Excise Tax.--
            (1) In general.--Section 4253 (relating to exemptions) is 
        amended by redesignating subsection (k) as subsection (l) and 
        inserting after subsection (j) the following new subsection:
    ``(k) Exemption for Qualified Blood Collector Organizations.--Under 
regulations provided by the Secretary, no tax shall be imposed under 
section 4251 on any amount paid by a qualified blood collector 
organization (as defined in section 7701(a)(48)) for services or 
facilities furnished to such organization.''.
            (2) Conforming amendment.--Section 4253(l), as redesignated 
        by paragraph (1), is amended by striking ``or (j)'' and 
        inserting ``(j), or (k)''.
    (d) Credit for Refund for Certain Taxes on Sales and Services.--
            (1) Deemed overpayment.--
                    (A) In general.--Section 6416(b)(2) is amended by 
                redesignating subparagraphs (E) and (F) as 
                subparagraphs (F) and (G), respectively, and by 
                inserting after subparagraph (D) the following new 
                subparagraph:
                    ``(E) sold to a qualified blood collector 
                organization (as defined in section 7701(a)(48)) for 
                such organization's exclusive use;''.
                    (B) Conforming amendments.--Section 6416(b)(2) is 
                amended--
                            (i) by striking ``Subparagraphs (C) and 
                        (D)'' and inserting ``Subparagraphs (C), (D), 
                        and (E)'', and
                            (ii) by striking ``(C), and (D)'' and 
                        inserting ``(C), (D), and (E)''.
            (2) Sales of tires.--Clause (ii) of section 6416(b)(4)(B) 
        is amended by inserting ``sold to a qualified blood collector 
        organization (as defined in section 7701(a)(48)) for its 
        exclusive use,'' after ``for its exclusive use,''.
    (e) Definition of Qualified Blood Collector Organization.--Section 
7701(a) is amended by inserting at the end the following new paragraph:
            ``(48) Qualified blood collector organization.--The term 
        `qualified blood collector organization' means an organization 
        which is--
                    ``(A) described in section 501(c)(3) and exempt 
                from tax under section 501(a),
                    ``(B) registered by the Food and Drug 
                Administration to collect blood, and
                    ``(C) primarily engaged in the activity of the 
                collection of blood.''.
    (f) Effective Date.--The amendments made by this section shall take 
effect on January 1, 2004.

SEC. 112. 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) 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, and within 
a period beginning 1 year before the date of such sale, and ending 3 
years (10 years, in the case of an organization described in section 
501(c)(7)) after such date, other property is purchased and used by 
such organization directly in the performance of its exempt function, 
gain (if any) from such sale shall be recognized only to the extent 
that such organization's sales price of the old property exceeds the 
organization's cost of purchasing the other property.
                            ``(ii) Statute of limitations.--If an 
                        organization described in section 501(c)(7) 
                        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.

SEC. 113. EXEMPTION OF QUALIFIED 501(C)(3) BONDS FOR NURSING HOMES FROM 
              FEDERAL GUARANTEE PROHIBITIONS.

    (a) In General.--For purposes of section 149(b)(1) of the Internal 
Revenue Code of 1986, any qualified 501(c)(3) bond (as defined in 
section 145 of such Code) shall not be treated as federally guaranteed 
solely because such bond is part of an issue supported by a letter of 
credit, if such bond--
            (1) is issued after December 31, 2003, and before the date 
        which is 1 year after the date of the enactment of this Act, 
        and
            (2) is part of an issue 95 percent or more of the net 
        proceeds of which are to be used to finance 1 or more of the 
        following facilities primarily for the benefit of the elderly:
                    (A) Licensed nursing home facility.
                    (B) Licensed or certified assisted living facility.
                    (C) Licensed personal care facility.
                    (D) Continuing care retirement community.
    (b) Limitation on Issuer.--Subsection (a) shall not apply to any 
bond described in such subsection if the aggregate authorized face 
amount of the issue of which such bond is a part, when increased by the 
outstanding amount of such bonds issued by the issuer during the period 
described in subsection (a)(1) exceeds $15,000,000.
    (c) Limitation on Beneficiary.--Rules similar to the rules of 
section 144(a)(10) of the Internal Revenue Code of 1986 shall apply for 
purposes of this section, except that--
            (1) ``$15,000,000'' shall be substituted for 
        ``$40,000,000'' in subparagraph (A) thereof, and
            (2) such rules shall be applied--
                    (A) only with respect to bonds described in this 
                section, and
                    (B) with respect to the aggregate authorized face 
                amount of all issues of such bonds which are allocable 
                to the beneficiary.
    (d) Continuing Care Retirement Community.--For purposes of this 
section, the term ``continuing care retirement community'' means a 
community which provides, on the same campus, a consortium of 
residential living options and support services to persons at least 60 
years of age under a written agreement. For purposes of the preceding 
sentence, the residential living options shall include independent 
living units, nursing home beds, and either assisted living units or 
personal care beds.

     TITLE II--TAX REFORM AND IMPROVEMENTS RELATING TO CHARITABLE 
                       ORGANIZATIONS AND PROGRAMS

SEC. 201. SUSPENSION OF TAX-EXEMPT STATUS OF TERRORIST ORGANIZATIONS.

    (a) In General.--Section 501 (relating to exemption from tax on 
corporations, certain trusts, etc.) is amended by redesignating 
subsection (p) as subsection (q) and by inserting after subsection (o) 
the following new subsection:
    ``(p) Suspension of Tax-Exempt Status of Terrorist Organizations.--
            ``(1) In general.--The exemption from tax under subsection 
        (a) with respect to any organization described in paragraph 
        (2), and the eligibility of any organization described in 
        paragraph (2) to apply for recognition of exemption under 
        subsection (a), shall be suspended during the period described 
        in paragraph (3).
            ``(2) Terrorist organizations.--An organization is 
        described in this paragraph if such organization is designated 
        or otherwise individually identified--
                    ``(A) under section 212(a)(3)(B)(vi)(II) or 219 of 
                the Immigration and Nationality Act as a terrorist 
                organization or foreign terrorist organization,
                    ``(B) in or pursuant to an Executive order which is 
                related to terrorism and issued under the authority of 
                the International Emergency Economic Powers Act or 
                section 5 of the United Nations Participation Act of 
                1945 for the purpose of imposing on such organization 
                an economic or other sanction, or
                    ``(C) in or pursuant to an Executive order issued 
                under the authority of any Federal law if--
                            ``(i) the organization is designated or 
                        otherwise individually identified in or 
                        pursuant to such Executive order as supporting 
                        or engaging in terrorist activity (as defined 
                        in section 212(a)(3)(B) of the Immigration and 
                        Nationality Act) or supporting terrorism (as 
                        defined in section 140(d)(2) of the Foreign 
                        Relations Authorization Act, Fiscal Years 1988 
                        and 1989); and
                            ``(ii) such Executive order refers to this 
                        subsection.
            ``(3) Period of suspension.--With respect to any 
        organization described in paragraph (2), the period of 
        suspension--
                    ``(A) begins on the later of--
                            ``(i) the date of the first publication of 
                        a designation or identification described in 
                        paragraph (2) with respect to such 
                        organization, or
                            ``(ii) the date of the enactment of this 
                        subsection, and
                    ``(B) ends on the first date that all designations 
                and identifications described in paragraph (2) with 
                respect to such organization are rescinded pursuant to 
                the law or Executive order under which such designation 
                or identification was made.
            ``(4) Denial of deduction.--No deduction shall be allowed 
        under section 170, 545(b)(2), 556(b)(2), 642(c), 2055, 
        2106(a)(2), or 2522 for any contribution to an organization 
        described in paragraph (2) during the period described in 
        paragraph (3).
            ``(5) Denial of administrative or judicial challenge of 
        suspension or denial of deduction.--Notwithstanding section 
        7428 or any other provision of law, no organization or other 
        person may challenge a suspension under paragraph (1), a 
        designation or identification described in paragraph (2), the 
        period of suspension described in paragraph (3), or a denial of 
        a deduction under paragraph (4) in any administrative or 
        judicial proceeding relating to the Federal tax liability of 
        such organization or other person.
            ``(6) Erroneous designation.--
                    ``(A) In general.--If--
                            ``(i) the tax exemption of any organization 
                        described in paragraph (2) is suspended under 
                        paragraph (1),
                            ``(ii) each designation and identification 
                        described in paragraph (2) which has been made 
                        with respect to such organization is determined 
                        to be erroneous pursuant to the law or 
                        Executive order under which such designation or 
                        identification was made, and
                            ``(iii) the erroneous designations and 
                        identifications result in an overpayment of 
                        income tax for any taxable year by such 
                        organization,
                credit or refund (with interest) with respect to such 
                overpayment shall be made.
                    ``(B) Waiver of limitations.--If the credit or 
                refund of any overpayment of tax described in 
                subparagraph (A)(iii) is prevented at any time by the 
                operation of any law or rule of law (including res 
                judicata), such credit or refund may nevertheless be 
                allowed or made if the claim therefor is filed before 
                the close of the 1-year period beginning on the date of 
                the last determination described in subparagraph 
                (A)(ii).
            ``(7) Notice of suspensions.--If the tax exemption of any 
        organization is suspended under this subsection, the Internal 
        Revenue Service shall update the listings of tax-exempt 
        organizations and shall publish appropriate notice to taxpayers 
        of such suspension and of the fact that contributions to such 
        organization are not deductible during the period of such 
        suspension.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to designations made before, on, or after the date of the 
enactment of this Act.

SEC. 202. CLARIFICATION OF DEFINITION OF CHURCH TAX INQUIRY.

    Subsection (i) of section 7611 (relating to section not to apply to 
criminal investigations, etc.) is amended by striking ``or'' at the end 
of paragraph (4), by striking the period at the end of paragraph (5) 
and inserting ``, or'', and by inserting after paragraph (5) the 
following:
            ``(6) information provided by the Secretary related to the 
        standards for exemption from tax under this title and the 
        requirements under this title relating to unrelated business 
        taxable income.''.

SEC. 203. EXTENSION OF DECLARATORY JUDGMENT REMEDY TO TAX-EXEMPT 
              ORGANIZATIONS.

    (a) In General.--Paragraph (1) of section 7428(a) (relating to 
creation of remedy) is amended--
            (1) in subparagraph (B) by inserting after ``509(a))'' the 
        following: ``or as a private operating foundation (as defined 
        in section 4942(j)(3))''; and
            (2) by amending subparagraph (C) to read as follows:
                    ``(C) with respect to the initial qualification or 
                continuing qualification of an organization as an 
organization described in subsection (c) (other than paragraph (3)) or 
(d) of section 501 which is exempt from tax under section 501(a), or''.
    (b) Court Jurisdiction.--Subsection (a) of section 7428 is amended 
in the material following paragraph (2) by striking ``United States Tax 
Court, the United States Claims Court, or the district court of the 
United States for the District of Columbia'' and inserting the 
following: ``United States Tax Court (in the case of any such 
determination or failure) or the United States Claims Court or the 
district court of the United States for the District of Columbia (in 
the case of a determination or failure with respect to an issue 
referred to in subparagraph (A) or (B) of paragraph (1)),''.
    (c) Effective Date.--The amendments made by this section shall 
apply to pleadings filed with respect to determinations (or requests 
for determinations) made after the date of the enactment of this Act.

SEC. 204. LANDOWNER INCENTIVES PROGRAMS.

    (a) In General.--Subsection (a) of section 126 is amended by 
redesignating paragraph (10) as paragraph (11) and by inserting after 
paragraph (9) the following new paragraph:
            ``(10) Landowner initiatives programs to conserve 
        threatened, endangered, or imperiled species, or protect or 
        restore habitat carried out under--
                    ``(A) the Fish and Wildlife Coordination Act (16 
                U.S.C. 661 et seq.),
                    ``(B) the Fish and Wildlife Act of 1956 (16 U.S.C. 
                742f), or
                    ``(C) section 6 of the Endangered Species Act (16 
                U.S.C. 11531 et seq.).''.
    (b) Excludable Portion.--Subparagraph (A) of section 126(b)(1) is 
amended by inserting after ``Secretary of Agriculture'' the following: 
``(the Secretary of the Interior, in the case of the landowner 
incentives programs described in subsection (a)(10) and the programs 
described in subsection (a)(11) that are implemented by the Department 
of the Interior)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts received after December 31, 2003, in taxable years 
ending after such date.

SEC. 205. MODIFICATIONS TO SECTION 512(B)(13).

    (a) In General.--Paragraph (13) of section 512(b) (relating to 
special rules for certain amounts received from controlled entities) is 
amended by redesignating subparagraph (E) as subparagraph (F) and by 
inserting after subparagraph (D) the following new subparagraph:
                    ``(E) Paragraph to apply only to excess payments.--
                            ``(i) In general.--Subparagraph (A) shall 
                        apply only to the portion of a specified 
                        payment received or accrued by the controlling 
                        organization that exceeds the amount which 
                        would have been paid or accrued if such payment 
                        met the requirements prescribed under section 
                        482.
                            ``(ii) Addition to tax for valuation 
                        misstatements.--The tax imposed by this chapter 
                        on the controlling organization shall be 
                        increased by an amount equal to 20 percent of 
                        the larger of--
                                    ``(I) such excess determined 
                                without regard to any amendment or 
                                supplement to a return of tax, or
                                    ``(II) such excess determined with 
                                regard to all such amendments and 
                                supplements.''.
    (b) Effective Date.--
            (1) In general.--The amendment made by this section shall 
        apply to payments received or accrued after December 31, 2003.
            (2) Payments subject to binding contract transition rule.--
        If the amendments made by section 1041 of the Taxpayer Relief 
        Act of 1997 did not apply to any amount received or accrued in 
        the first 2 taxable years beginning on or after the date of the 
        enactment of the Taxpayer Relief Act of 1997 under any contract 
        described in subsection (b)(2) of such section, such amendments 
        also shall not apply to amounts received or accrued under such 
        contract before January 1, 2001.

SEC. 206. SIMPLIFICATION OF LOBBYING EXPENDITURE LIMITATION.

    (a) Repeal of Grassroots Expenditure Limit.--Paragraph (1) of 
section 501(h) (relating to expenditures by public charities to 
influence legislation) is amended to read as follows:
            ``(1) General rule.--In the case of an organization to 
        which this subsection applies, exemption from taxation under 
        subsection (a) shall be denied because a substantial part of 
        the activities of such organization consists of carrying on 
        propaganda, or otherwise attempting, to influence legislation, 
        but only if such organization normally makes lobbying 
        expenditures in excess of the lobbying ceiling amount for such 
        organization for each taxable year.''.
    (b) Excess Lobbying Expenditures.--Section 4911(b) is amended to 
read as follows:
    ``(b) Excess Lobbying Expenditures.--For purposes of this section, 
the term `excess lobbying expenditures' means, for a taxable year, the 
amount by which the lobbying expenditures made by the organization 
during the taxable year exceed the lobbying nontaxable amount for such 
organization for such taxable year.''.
    (c) Conforming Amendments.--
            (1) Section 501(h)(2) is amended by striking subparagraphs 
        (C) and (D).
            (2) Section 4911(c) is amended by striking paragraphs (3) 
        and (4).
            (3) Paragraph (1)(A) of section 4911(f) is amended by 
        striking ``limits of section 501(h)(1) have'' and inserting 
        ``limit of section 501(h)(1) has''.
            (4) Paragraph (1)(C) of section 4911(f) is amended by 
        striking ``limits of section 501(h)(1) are'' and inserting 
        ``limit of section 501(h)(1) is''.
            (5) Paragraphs (4)(A) and (4)(B) of section 4911(f) are 
        each amended by striking ``limits of section 501(h)(1)'' and 
        inserting ``limit of section 501(h)(1)''.
            (6) Paragraph (8) of section 6033(b) (relating to certain 
        organizations described in section 501(c)(3)) is amended by 
inserting ``and'' at the end of subparagraph (A) and by striking 
subparagraphs (C) and (D).
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.

SEC. 207. PILOT PROJECT FOR FOREST CONSERVATION ACTIVITIES.

    (a) Tax-Exempt Bond Financing.--
            (1) In general.--For purposes of the Internal Revenue Code 
        of 1986, any qualified forest conservation bond shall be 
        treated as an exempt facility bond under section 142 of such 
        Code.
            (2) Qualified forest conservation bond.--For purposes of 
        this section, the term ``qualified forest conservation bond'' 
        means any bond issued as part of an issue if--
                    (A) 95 percent or more of the net proceeds (as 
                defined in section 150(a)(3) of such Code) of such 
                issue are to be used for qualified project costs,
                    (B) such bond is an obligation of the State of 
                Washington or any political subdivision thereof, and
                    (C) such bond is issued for a qualified 
                organization before December 31, 2006.
            (3) Limitation on aggregate amount issued.--The maximum 
        aggregate face amount of bonds which may be issued under this 
        subsection shall not exceed $250,000,000.
            (4) Qualified project costs.--For purposes of this 
        subsection, the term ``qualified project costs'' means the sum 
        of--
                    (A) the cost of acquisition by the qualified 
                organization from an unrelated person of forests and 
                forest land located in the State of Washington which at 
                the time of acquisition or immediately thereafter are 
                subject to a conservation restriction described in 
                subsection (c)(2),
                    (B) interest on the qualified forest conservation 
                bonds for the 3-year period beginning on the date of 
                issuance of such bonds, and
                    (C) credit enhancement fees which constitute 
                qualified guarantee fees (within the meaning of section 
                148 of such Code).
            (5) Special rules.--In applying the Internal Revenue Code 
        of 1986 to any qualified forest conservation bond, the 
        following modifications shall apply:
                    (A) Section 146 of such Code (relating to volume 
                cap) shall not apply.
                    (B) For purposes of section 147(b) of such Code 
                (relating to maturity may not exceed 120 percent of 
                economic life), the land and standing timber acquired 
                with proceeds of qualified forest conservation bonds 
                shall have an economic life of 35 years.
                    (C) Subsections (c) and (d) of section 147 of such 
                Code (relating to limitations on acquisition of land 
                and existing property) shall not apply.
                    (D) Section 57(a)(5) of such Code (relating to tax-
                exempt interest) shall not apply to interest on 
                qualified forest conservation bonds.
            (6) Treatment of current refunding bonds.--Paragraphs 
        (2)(C) and (3) shall not apply to any bond (or series of bonds) 
        issued to refund a qualified forest conservation bond issued 
        before December 31, 2006, if--
                    (A) the average maturity date of the issue of which 
                the refunding bond is a part is not later than the 
                average maturity date of the bonds to be refunded by 
                such issue,
                    (B) the amount of the refunding bond does not 
                exceed the outstanding amount of the refunded bond, and
                    (C) the net proceeds of the refunding bond are used 
                to redeem the refunded bond not later than 90 days 
                after the date of the issuance of the refunding bond.
        For purposes of subparagraph (A), average maturity shall be 
        determined in accordance with section 147(b)(2)(A) of such 
        Code.
            (7) Effective date.--This subsection shall apply to 
        obligations issued on or after the date of enactment of this 
        Act.
    (b) Items From Qualified Harvesting Activities Not Subject to Tax 
or Taken Into Account.--
            (1) In general.--Income, gains, deductions, losses, or 
        credits from a qualified harvesting activity conducted by a 
        qualified organization shall not be subject to tax or taken 
        into account under subtitle A of the Internal Revenue Code of 
        1986.
            (2) Limitation.--The amount of income excluded from gross 
        income under paragraph (1) for any taxable year shall not 
        exceed the amount used by the qualified organization to make 
        debt service payments during such taxable year for qualified 
        forest conservation bonds.
            (3) Qualified harvesting activity.--For purposes of 
        paragraph (1)--
                    (A) In general.--The term ``qualified harvesting 
                activity'' means the sale, lease, or harvesting, of 
                standing timber--
                            (i) on land owned by a qualified 
                        organization which was acquired with proceeds 
                        of qualified forest conservation bonds, and
                            (ii) pursuant to a qualified conservation 
                        plan adopted by the qualified organization.
                    (B) Exceptions.--
                            (i) Cessation as qualified organization.--
                        The term ``qualified harvesting activity'' 
                        shall not include any sale, lease, or 
                        harvesting for any period during which the 
                        organization ceases to qualify as a qualified 
                        organization.
                            (ii) Exceeding limits on harvesting.--The 
                        term ``qualified harvesting activity'' shall 
                        not include any sale, lease, or harvesting of 
                        standing timber on land acquired with proceeds 
of qualified forest conservation bonds to the extent that--
                                    (I) the average annual area of 
                                timber harvested from such land exceeds 
                                2.5 percent of the total area of such 
                                land, or
                                    (II) the quantity of timber removed 
                                from such land exceeds the quantity 
                                which can be removed from such land 
                                annually in perpetuity on a sustained-
                                yield basis with respect to such land.
                        The limitations under subclauses (I) and (II) 
                        shall not apply to post-fire restoration and 
                        rehabilitation or sanitation harvesting of 
                        timber stands which are substantially damaged 
                        by fire, windthrow, or other catastrophes, or 
                        which are in imminent danger from insect or 
                        disease attack.
            (4) Termination.--This subsection shall not apply to any 
        qualified harvesting activity occurring after the date on which 
        there is no outstanding qualified forest conservation bond or 
        any such bond ceases to be a tax-exempt bond.
            (5) Partial recapture of benefits if harvesting limit 
        exceeded.--If, as of the date that this subsection ceases to 
        apply under paragraph (4), the average annual area of timber 
        harvested from the land exceeds the requirement of paragraph 
        (3)(B)(ii)(I), the tax imposed by chapter 1 of such Code shall 
        be increased, under rules prescribed by the Secretary of the 
        Treasury, by the sum of the tax benefits attributable to such 
        excess and interest at the underpayment rate under section 6621 
        of such Code for the period of the underpayment.
    (c) Definitions.--For purposes of this section--
            (1) Qualified conservation plan.--The term ``qualified 
        conservation plan'' means a multiple land use program or plan 
        which--
                    (A) is designed and administered primarily for the 
                purposes of protecting and enhancing wildlife and fish, 
                timber, scenic attributes, recreation, and soil and 
                water quality of the forest and forest land,
                    (B) mandates that conservation of forest and forest 
                land is the single-most significant use of the forest 
                and forest land, and
                    (C) requires that timber harvesting be consistent 
                with--
                            (i) restoring and maintaining reference 
                        conditions for the region's ecotype,
                            (ii) restoring and maintaining a 
                        representative sample of young, mid, and late 
                        successional forest age classes,
                            (iii) maintaining or restoring the 
                        resources' ecological health for purposes of 
                        preventing damage from fire, insect, or 
                        disease,
                            (iv) maintaining or enhancing wildlife or 
                        fish habitat, or
                            (v) enhancing research opportunities in 
                        sustainable renewable resource uses.
            (2) Conservation restriction.--The conservation restriction 
        described in this paragraph is a restriction which--
                    (A) is granted in perpetuity to an unrelated person 
                which is described in section 170(h)(3) of such Code 
                and which, in the case of a nongovernmental unit, is 
                organized and operated for conservation purposes,
                    (B) meets the requirements of clause (ii) or 
                (iii)(II) of section 170(h)(4)(A) of such Code,
                    (C) obligates the qualified organization to pay the 
                costs incurred by the holder of the conservation 
                restriction in monitoring compliance with such 
                restriction, and
                    (D) requires an increasing level of conservation 
                benefits to be provided whenever circumstances allow 
                it.
            (3) Qualified organization.--The term ``qualified 
        organization'' means an organization--
                    (A) which is a nonprofit organization substantially 
                all the activities of which are charitable, scientific, 
                or educational, including acquiring, protecting, 
                restoring, managing, and developing forest lands and 
                other renewable resources for the long-term charitable, 
                educational, scientific and public benefit,
                    (B) more than half of the value of the property of 
                which consists of forests and forest land acquired with 
                the proceeds from qualified forest conservation bonds,
                    (C) which periodically conducts educational 
                programs designed to inform the public of 
                environmentally sensitive forestry management and 
                conservation techniques,
                    (D) which has at all times a board of directors--
                            (i) at least 20 percent of the members of 
                        which represent the holders of the conservation 
                        restriction described in paragraph (2),
                            (ii) at least 20 percent of the members of 
                        which are public officials, and
                            (iii) not more than one-third of the 
                        members of which are individuals who are or 
                        were at any time within 5 years before the 
                        beginning of a term of membership on the board, 
                        an employee of, independent contractor with 
                        respect to, officer of, director of, or held a 
                        material financial interest in, a commercial 
                        forest products enterprise with which the 
                        qualified organization has a contractual or 
                        other financial arrangement,
                    (E) the bylaws of which require at least two-thirds 
                of the members of the board of directors to vote 
                affirmatively to approve the qualified conservation 
                plan and any change thereto, and
                    (F) upon dissolution, is required to dedicate its 
                assets to--
                            (i) an organization described in section 
                        501(c)(3) of such Code which is organized and 
                        operated for conservation purposes, or
                            (ii) a governmental unit described in 
                        section 170(c)(1) of such Code.
            (4) Unrelated person.--The term ``unrelated person'' means 
        a person who is not a related person.
            (5) Related person.--A person shall be treated as related 
        to another person if--
                    (A) such person bears a relationship to such other 
                person described in section 267(b) (determined without 
                regard to paragraph (9) thereof), or 707(b)(1), of such 
                Code, determined by substituting ``25 percent'' for 
                ``50 percent'' each place it appears therein, and
                    (B) in the case such other person is a nonprofit 
                organization, if such person controls directly or 
                indirectly more than 25 percent of the governing body 
                of such organization.
    (d) Report.--
            (1) In general.--The Comptroller General of the United 
        States shall conduct a study on the pilot project for forest 
        conservation activities under this section. Such study shall 
        examine the extent to which forests and forest lands were 
        managed during the 5-year period beginning on the date of the 
        enactment of this Act to achieve the goals of such project.
            (2) Submission of report to congress.--Not later than six 
        years after the date of the enactment of this Act, the 
        Comptroller General shall submit a report of such study to the 
        Committee on Ways and Means and the Committee on Resources of 
        the House of Representatives and the Committee on Finance and 
        the Committee on Energy and Natural Resources of the Senate.

                      TITLE III--OTHER PROVISIONS

SEC. 301. COMPASSION CAPITAL FUND.

    Title IV of the Social Security Act (42 U.S.C. 601-679b) is amended 
by adding at the end the following:

                   ``PART F--COMPASSION CAPITAL FUND

``SEC. 481. SECRETARY'S FUND TO SUPPORT AND REPLICATE PROMISING SOCIAL 
              SERVICE PROGRAMS.

    ``(a) Grant Authority.--
            ``(1) In general.--The Secretary may make grants to support 
        any private entity that operates a promising social services 
        program.
            ``(2) Applications.--An entity desiring to receive a grant 
        under paragraph (1) shall submit to the Secretary an 
        application for the grant, which shall contain such information 
        as the Secretary may require.
    ``(b) Contract Authority, etc.--The Secretary may enter into a 
grant, contract, or cooperative agreement with any entity under which 
the entity would provide technical assistance to another entity to 
operate a social service program that assists persons and families in 
need, including by--
            ``(1) providing the other entity with--
                    ``(A) technical assistance and information, 
                including legal assistance and other business 
                assistance;
                    ``(B) information on capacity-building;
                    ``(C) information and assistance in identifying and 
                using best practices for serving persons and families 
                in need; or
                    ``(D) assistance in replicating programs with 
                demonstrated effectiveness in assisting persons and 
                families in need; or
            ``(2) supporting research on the best practices of social 
        service organizations.
    ``(c) Guidance and Technical Assistance.--The Secretary may use not 
more than 25 percent of the amount appropriated under this section for 
a fiscal year to provide guidance and technical assistance to States 
and political subdivisions of States with respect to the implementation 
of any social service program.
    ``(d) Social Services Program Defined.--In this section, the term 
`social services program' means a program that provides benefits or 
services of any kind to persons and families in need.
    ``(e) Limitations on Authorization of Appropriations.--To carry out 
this section, there are authorized to be appropriated to the Secretary 
$150,000,000 for fiscal year 2004, and such sums as may be necessary 
for fiscal years 2005 through 2008.''.

SEC. 302. REAUTHORIZATION OF ASSETS FOR INDEPENDENCE DEMONSTRATION.

    (a) In General.--Section 416 of the Assets for Independence Act 
(title IV of Public Law 105-285; 42 U.S.C. 604 note) is amended by 
striking ``and 2003'' and inserting ``2003, 2004, 2005, 2006, 2007, and 
2008''.
    (b) Removal of Economic Literacy Activities From Limitation on Use 
of Amounts in the Reserve Fund.--Section 407(c)(3) of such Act (title 
IV of Public Law 105-285; 42 U.S.C. 604 note) is amended by adding at 
the end the following: ``The preceding sentences of this paragraph 
shall not apply to amounts used by an entity for any activity described 
in paragraph (1)(A).''.
    (c) Eligibility Expanded To Include Individuals in Households With 
Income Not Exceeding 50 Percent of Area Median Income.--Section 
408(a)(1) of such Act (title IV of Public Law 105-285; 42 U.S.C. 604 
note) is amended to read as follows:
            ``(1) Income test.--The adjusted gross income of the 
        household--
                    ``(A) does not exceed 200 percent of the poverty 
                line (as determined by the Office of Management and 
                Budget) or the earned income amount described in 
                section 32 of the Internal Revenue Code of 1986 (taking 
                into account the size of the household); or
                    ``(B) does not exceed 50 percent of the area median 
                income (as determined by the Secretary of Housing and 
                Urban Development) for the area in which the household 
                is located.''.
    (d) Extension of Time for Account Holders To Access Federal 
Funds.--Section 407(d) of such Act (title IV of Public Law 105-285; 42 
U.S.C. 604 note) is amended--
            (1) in the subsection heading, by striking ``When Project 
        Terminates''; and
            (2) by striking ``upon'' and inserting ``on the date that 
        is 6 months after''.
    (e) Verification of Postsecondary Education Expenses.--Section 
404(8)(A) of such Act (title IV of Public Law 105-285; 42 U.S.C. 604 
note) is amended in the 1st sentence by inserting ``or a vendor, but 
only to the extent that the expenses are described in a document which 
explains the educational items to be purchased, and the document and 
the expenses are approved by the qualified entity'' before the period.
    (f) Authority To Use Excess Interest To Fund Other Individual 
Development Accounts.--Section 410 of such Act (title IV of Public Law 
105-285; 42 U.S.C. 604 note) is amended--
            (1) in subsection (a)(3)--
                    (A) by striking ``any interest that has accrued'' 
                and inserting ``interest that has accrued during that 
                period''; and
                    (B) by striking the period and inserting ``, but 
                only to the extent that the amount of the interest does 
                not exceed the amount of interest that has accrued 
                during that period on amounts deposited in the account 
                by that individual.''; and
            (2) by adding at the end the following:
    ``(f) Use of Excess Interest To Fund Other Individual Development 
Accounts.--To the extent that a qualified entity has an amount that, 
but for the limitation in subsection (a)(3), would be required by that 
subsection to be deposited into the individual development account of 
an individual or into a parallel account maintained by the qualified 
entity, the qualified entity may deposit the amount into the individual 
development account of any individual or into any such parallel account 
maintained by the qualified entity.''.

SEC. 303. SENSE OF THE CONGRESS REGARDING CORPORATE CONTRIBUTIONS TO 
              FAITH-BASED ORGANIZATIONS, ETC.

    (a) Findings.--The Congress finds as follows:
            (1) America's community of faith has long played a leading 
        role in dealing with difficult societal problems that might 
        otherwise have gone unaddressed.
            (2) President Bush has called upon Americans ``to revive 
        the spirit of citizenship . . . to marshal the compassion of 
        our people to meet the continuing needs of our Nation''.
            (3) Although the work of faith-based organizations should 
        not be used by government as an excuse for backing away from 
        its historic and rightful commitment to help those who are 
        disadvantaged and in need, such organizations can and should be 
        seen as a valuable partner with government in meeting societal 
        challenges.
            (4) Every day faith-based organizations in the United 
        States help people recover from drug and alcohol addiction, 
        provide food and shelter for the homeless, rehabilitate prison 
        inmates so that they can break free from the cycle of 
        recidivism, and teach people job skills that will allow them to 
        move from poverty to productivity.
            (5) Faith-based organizations are often more successful in 
        dealing with difficult societal problems than government and 
        non-sectarian organizations.
            (6) As President Bush has stated, ``It is not sufficient to 
        praise charities and community groups; we must support them. 
        And this is both a public obligation and a personal 
        responsibility.''.
            (7) Corporate foundations contribute billions of dollars 
        each year to a variety of philanthropic causes.
            (8) According to a study produced by the Capital Research 
        Center, the 10 largest corporate foundations in the United 
        States contributed $1,900,000,000 to such causes.
            (9) According to the same study, faith-based organizations 
        only receive a small fraction of the contributions made by 
        corporations in the United States, and 6 of the 10 corporations 
        that give the most to philanthropic causes explicitly ban or 
        restrict contributions to faith-based organizations.
    (b) Corporations Encouraged To Contribute to Faith-Based 
Organizations.--The Congress calls on corporations in the United 
States, in the words of the President, ``to give more and to give 
better'' by making greater contributions to faith-based organizations 
that are on the front lines battling some of the great societal 
challenges of our day.
    (c) Sense of the Congress.--It is the sense of Congress that--
            (1) corporations in the United States are important 
        partners with government in efforts to overcome difficult 
        societal problems; and
            (2) no corporation in the United States should adopt 
        policies that prohibit the corporation from contributing to an 
        organization that is successfully advancing a philanthropic 
        cause merely because such organization is faith based.

SEC. 304. MATERNITY GROUP HOMES.

    (a) Permissible Use of Funds.--Section 322 of the Runaway and 
Homeless Youth Act (42 U.S.C. 5714-2) is amended--
            (1) in subsection (a)(1), by inserting ``(including 
        maternity group homes)'' after ``group homes''; and
            (2) by adding at the end the following:
    ``(c) Maternity Group Home.--In this part, the term `maternity 
group home' means a community-based, adult-supervised group home that 
provides--
            ``(1) young mothers and their children with a supportive 
        and supervised living arrangement in which such mothers are 
        required to learn parenting skills, including child 
        development, family budgeting, health and nutrition, and other 
        skills to promote their long-term economic independence and the 
        well-being of their children; and
            ``(2) pregnant women with--
                    ``(A) information regarding the option of placing 
                children for adoption through licensed adoption service 
                providers;
                    ``(B) assistance with prenatal care and child 
                birthing; and
                    ``(C) pre- and post-placement adoption 
                counseling.''.
    (b) Contract for Evaluation.--Part B of the Runaway and Homeless 
Youth Act (42 U.S.C. 5701 et seq.) is amended by adding at the end the 
following:

``SEC. 323. CONTRACT FOR EVALUATION.

    ``(a) In General.--The Secretary shall enter into a contract with a 
public or private entity for an evaluation of the maternity group homes 
that are supported by grant funds under this Act.
    ``(b) Information.--The evaluation described in subsection (a) 
shall include the collection of information about the relevant 
characteristics of individuals who benefit from maternity group homes 
such as those that are supported by grant funds under this Act and what 
services provided by those maternity group homes are most beneficial to 
such individuals.
    ``(c) Report.--Not later than 2 years after the date on which the 
Secretary enters into a contract for an evaluation under subsection 
(a), and biennially thereafter, the entity conducting the evaluation 
under this section shall submit to Congress a report on the status, 
activities, and accomplishments of maternity group homes that are 
supported by grant funds under this Act.''.
    (c) Authorization of Appropriations.--Section 388 of the Runaway 
and Homeless Youth Act (42 U.S.C. 5751) is amended--
            (1) in subsection (a)(1)--
                    (A) by striking ``There'' and inserting the 
                following:
                    ``(A) In general.--There'';
                    (B) in subparagraph (A), as redesignated, by 
                inserting ``and the purpose described in subparagraph 
                (B)'' after ``other than part E''; and
                    (C) by adding at the end the following:
                    ``(B) Maternity group homes.--There is authorized 
                to be appropriated, for maternity group homes eligible 
                for assistance under section 322(a)(1)--
                            ``(i) $33,000,000 for fiscal year 2003; and
                            ``(ii) such sums as may be necessary for 
                        fiscal year 2004.''; and
            (2) in subsection (a)(2)(A), by striking ``paragraph (1)'' 
        and inserting ``paragraph (1)(A)''.

SEC. 305. AUTHORITY OF STATES TO USE 10 PERCENT OF THEIR TANF FUNDS TO 
              CARRY OUT SOCIAL SERVICES BLOCK GRANT PROGRAMS.

    Section 404(d)(2) of the Social Security Act (42 U.S.C. 604(d)(2)) 
is amended to read as follows:
            ``(2) Limitation on amount transferable to title xx 
        programs.--A State may use not more than 10 percent of the 
        amount of any grant made to the State under section 403(a) for 
        a fiscal year to carry out State programs pursuant to title 
        XX.''.




                                                 Union Calendar No. 157

108th CONGRESS

  1st Session

                                H. R. 7

                      [Report No. 108-270, Part I]

_______________________________________________________________________

                                 A BILL

 To amend the Internal Revenue Code of 1986 to provide incentives for 
 charitable contributions by individuals and businesses, and for other 
                               purposes.

_______________________________________________________________________

                           September 16, 2003

    Reported from the Committee on Ways and Means with an amendment

Referral to the Committee on Education and the Workforce extended for a 
            period ending not later than September 16, 2003

 Committee on Education and the Workforce discharged; committed to the 
 Committee of the Whole House on the State of the Union and ordered to 
                               be printed