[Congressional Record Volume 142, Number 73 (Wednesday, May 22, 1996)]
[Senate]
[Pages S5496-S5497]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. BOXER (for herself and Mr. Chafee):
  S. 1792. A bill to amend the Internal Revenue Code of 1986 to allow 
companies to donate scientific equipment to elementary and secondary 
schools for use in their educational programs, and for other purposes; 
to the Committee on Finance.


              THE COMPUTER DONATION INCENTIVE ACT OF 1996

 Mrs. BOXER. Mr. President, 10 weeks ago, thousands of 
volunteers throughout California helped make NetDay 96 one of the most 
successful 1-day public projects in history. At the time, we all noted 
that this electronic barn-raising could be a turning point in 
educational history--but only if we followed through with other steps 
to help our children travel the information superhighway.
  I would like to take one such step by announcing the Computer 
Donation Incentive Act of 1996.
  This important piece of legislation--which my colleague Senate Chafee 
and I are introducing in the Senate, and my friend Ann Eshoo is 
introducing in the House--will change the Federal Tax Code in order to 
promote gifts of computer hardware, software, and expertise to our 
Nation's schools.
  The Computer Donation Incentive Act will provide a greater tax 
deduction than is currently available for donations of nearly new 
computers to elementary and secondary schools for educational purposes.
  The amount of the deduction for computer manufacturers is equal to 
their manufacturing costs plus half the difference between those costs 
and the selling price. So, if the manufacturing cost is $400 and the 
selling price is $700, then the manufacturer would receive a tax 
deduction of $550.
  For nonmanufacturers, the deduction is based on the computer's 
purchase price minus depreciation. For example: if a company buys a 
computer for $2,000, take a depreciation of $400 1 year and gives the 
computer to a school the next year, then the company can take a 
deduction of $1,600.
  The Boxer-Chafee-Eshoo bill will also provide the same deduction for 
businesses who give computers to libraries, recreational centers and 
other public institutions, or to nonprofit organizations that refurbish 
computers and then give them to schools.
  The successful education of America's children is now closely linked 
to the use of innovative educational technologies, particularly 
computer-aided research and instruction. Unfortunately, far too many 
classrooms lack the computers they need to take advantage of these new 
educational tools.
  NetDay 96 was an important step forward in meeting this challenge. By 
all accounts, it was tremendous success. Taking inexpensive cooper wire 
and priceless expertise, computer technicians worked with parents, 
students, faculty, and staff at each school to connect classrooms, 
libraries, and computer labs to the Internet. By the end of the day, 
hundreds of public and private schools were wired into the Net.
  But the very success of NetDay brought up another problem for most of 
our schools: If young students are to have access to the Information 
Superhighway, what are they going to drive?
  In Sylvandale, CA, for example, NetDay volunteers installed three 
Internet connections in each of a school's 40 classrooms. Counting the 
library and computer lab, this particular school now has 190 potential 
Internet connections. However, only four of the school's computers are 
powerful enough to access the Internet; so there are only four active 
connections out of 190.

  If schools cannot get computers into the classrooms, and if they 
can't get expert help to get up and running, then they will not really 
have access to the Internet. At a time when public schools in 
California and around the country are struggling to buy up-to-date 
textbooks and maintain school buildings, classroom computers may seem 
hopelessly out of reach. As a result, public schools lag far behind 
private schools in computer use.
  Current tax laws provide no incentives for businesses to donate 
computers to public schools. As a matter of fact, the Federal Tax Code 
actually discourages companies from giving to public schools.
  Section 170(e)(4) of the Federal Tax Code allows computer 
manufacturers to take a reasonable deduction when they donate computers 
to universities for scientific or research purposes. Following a recent 
IRS ruling, manufacturers can also take this deduction for gifts to 
private elementary and secondary schools--but not for gifts to public 
elementary and secondary schools. Moreover, a manufacturer who donates 
a computer to a public college can now take the deduction if the 
computer is

[[Page S5497]]

used only for advanced research but not if it is used for other 
teaching purposes.
  To make matters worse, only computer manufacturers are eligible for 
the higher education. Computer dealers and distributors, along with 
many other businesses, get no tax incentive to do this.
  Section 170(e)(4) was written in 1981--before the explosion of 
computer-based technology made computer literacy a must for every 
American student. I know that the authors of this provision did not 
mean to exclude public schools from the computer revolution; they just 
could not foresee the day when every school would need computers.
  The Boxer-Chafee bill will revise this archaic section of the Tax 
Code. Our Computer Donation Incentive Act is designed to give donations 
for educational purposes the same tax break as those for scientific 
research purposes. It will allow businesses to give to public and 
private elementary and secondary schools as well as institutions of 
higher learning and still receive the tax break. And it will encourage 
donations from software producers, computer distributors, and other 
companies as well as hardware manufacturers.
  Along with computers and software, businesses should also donate 
their expertise, providing the training required to bring our schools 
fully on-line--and we challenge them to do so. Teachers and students 
both need such training in order to integrate computer-based lessons 
into their basic curriculum.
  The Computer Donation Incentive Act will provide a reasonable 
incentive for businesses to donate computers to the schools. Again, I 
would like to emphasize that these must be nearly new computers; those 
donated by manufacturers must be no more than 2 years old, and those 
donated by nonmanufacturers must be 3 years old or less.

  It is my hope that computer manufacturers and other companies will 
take advantage of this incentive to make computer literacy a reality 
for elementary and secondary school students.
  Neither a day of electronic barn-building nor an adjustment to the 
Tax Code can solve all our educational problems or even make every 
student computer-literate for the next century. But together, each 
initiative we take will help provide our students with the tools they 
need to drive on the information Superhighway and compete in a global 
information-based economy.
  Mr. President, I ask unanimous consent that this bill be inserted in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1792

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

     SECTION 1. CHARITABLE CONTRIBUTIONS OF SCIENTIFIC EQUIPMENT 
                   TO ELEMENTARY AND SECONDARY SCHOOLS.

  (a) In General.--Subparagraph (B) of section 170(e)(4) of the 
Internal Revenue Code of 1986 is amended to read as follows:
       ``(B) Qualified research or education contribution.--For 
     purposes of this paragraph, the term `qualified research or 
     education contribution' means a charitable contribution by a 
     corporation of tangible personal property (including computer 
     software), but only if--
       ``(i) the contribution is to--
       ``(I) an educational organization described in subsection 
     (b)(1)(A)(ii),
       ``(II) a governmental unit described in subsection (c)(1), 
     or
       ``(III) an organization described in section 41(e)(6)(B),
       ``(ii) the contribution is made not later than 3 years 
     after the date the taxpayer acquired the property (or in the 
     case of property constructed by the taxpayer, the date the 
     construction of the property is substantially completed),
       ``(iii) the property is scientific equipment or apparatus 
     substantially all of the use of which by the donee is for--
       ``(I) research or experimentation (within the meaning of 
     section 174), or for research training, in the United States 
     in physical or biological sciences, or
       ``(II) in the case of an organization described in clause 
     (i) (I) or (II), use within the United States for educational 
     purposes related to the purposes or function of the 
     organization,
       ``(iv) the original use of the property began with the 
     taxpayer (or in the case of property constructed by the 
     taxpayer, with the donee),
       ``(v) the property is not transferred by the donee in 
     exchange for money, other property, or services, and
       ``(vi) the taxpayer receives from the donee a written 
     statement representing that its use and disposition of the 
     property will be in accordance with the provisions of clauses 
     (iv) and (v).''
       (b) Donations to Charity for Refurbishing.--Section 
     170(e)(4) of the Internal Revenue Code of 1986 is amended by 
     adding at the end the following new subparagraph:
       ``D) Donations to Charity for Refurbishing.--For purposes 
     of this paragraph, a charitable contribution by a corporation 
     shall be treated as a qualified research or education 
     contribution if--
       ``(i) such contribution is a contribution of property 
     described in subparagraph (B)(iii) to an organization 
     described in section 501(c)(3) and exempt from Taxation under 
     section 501(a),
       ``(ii) such organization repairs and refurbishes the 
     property and donates the property to an organization 
     described in subparagraph (B)(i), and
       ``(iii) the taxpayer receives from the organization to whom 
     the taxpayer contributed the property a written statement 
     representing that its use of the property (and any use by the 
     organization to which it donates the property) meets the 
     requirements of this paragraph.''
       (c) Conforming Amendments.--
       (1) Paragraph (4)(A) of section 170(e) of the Internal 
     Revenue Code of 1986 is amended by striking ``qualified 
     research contribution'' each place it appears and inserting 
     ``qualified research or education contribution''.
       (2) The heading for section 170(e)(4) of such Code is 
     amended by inserting ``or education'' after ``research''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
                                 ______