[Congressional Record Volume 146, Number 80 (Thursday, June 22, 2000)]
[Senate]
[Pages S5679-S5680]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. COVERDELL (for himself and Mr. Torricelli):
  S. 2776. A bill to amend the Internal Revenue Code of 1986 to 
encourage charitable contributions to public charities for the use in 
medical research; to the Committee on Finance.


              the medical research investment act of 2000

  Mr. COVERDELL. Mr. President, today I rise to introduce bipartisan 
legislation, the Medical Research Investment Act, or MRI Act, and 
privileged to be joined today by Senator Torricelli. The American 
people are unique in the world in their spirit of volunterism and 
charitable efforts. Unfortunately, the Federal Tax Code quite often 
gets in the way.
  Congress has made impressive strides to increase resources for 
medical research. Last year we passed and enacted an increase of $2.7 
billion in funding for the National Institutes of Health. This fourteen 
percent increase means this Congress is well on its way to doubling the 
Federal support for medical research, as we promised. At the same time, 
however, we should not diminish the critical role of private donations. 
This is why the MRI Act is so necessary.
  While researchers have indeed made impressive breakthroughs in 
finding cures. The fight is far from over. For instance, 16 million 
Americans live with diabetes mellitus. In fact, I met today a 
courageous child, Caity Rigg, who suffers from Juvenile diabetes and 
requires four shots of insulin a day just to survive. Diabetes is the 
leading cause of kidney failure, blindness, and amputations, and is a 
major factor for heart disease, stroke, and birth defects. It shortens 
average life expectancy by 15 years and costs the nation in excess of 
$100 billion annually.
  Cardiovascular diseases, heart attacks and strokes, claimed nearly 1 
million lives in the United States in 1997. A third of these deaths 
were premature. In 1996, a third of all hospitalization expenditures 
were made to Medicare beneficiaries for hospital expenses due to 
cardiovascular problems.
  This year approximately half a million Americans will die of cancer--
more than 1,500 people per day. It is the second leading cause of death 
in the United States, and since 1990, approximately 13 million new 
cases have been diagnosed. In 2000, over 1 million new patients will be 
stricken.
  The MRI Act makes very simple, but very significant changes. First, 
it encourages charitable gifts of cash or property for medical research 
by increasing the limitations on deductibility from the current 50 
percent cap to 80 percent of adjusted gross income. Individuals could 
give 30 percent for medical research and 50 percent of income for other 
purposes. Or they could give as much as 80 percent of income for 
medical research alone. Not only would this benefit medical research, 
but it presents the opportunity for other charities to similarly 
receive greater support. Further, those who can give more than 80 
percent in a year

[[Page S5680]]

may extent the carry-forward for excess charitable gifts for medical 
research from five years to ten years.
  Second, the MRI Act allows medical research to benefit from incentive 
stock option, or ISO's, giving by ending disincentives for taxpayers 
who contribute stock from ISO's to medical research. Current law taxes 
such transactions at a rate of almost forty percent if stocks are not 
held for more than a year. Because of the tax on their gifts, many 
taxpayers find they must sell $140 in stock for every $100 they wish to 
donate because of the taxes on their gifts. In addition to this change, 
no ordinary income, capital gains or alternative minimum tax would be 
imposed on medical research gifts.
  Accordingly to an estimate by Price Waterhouse Coopers, the MRI Act 
would release more than 1 billion in new donations to medical research 
over the next 5 years. For many research efforts, it could mean the 
difference between finding cures or not. Our proposal enjoys broad 
support from the medical research community.
  Alliance for Aging Research, American Association for Cancer 
Research, ALS Association (Lou Gehrigs's Disease), American Society of 
Cell Biologists, Cancer Treatment Research Foundation, Coalition of 
National Cancer Cooperative Groups, Cure for Lymphoma, Friends of 
Cancer Research, International Foundation for Anticancer Drug 
Discovery, Juvenile Diabetes Foundation for Parkinson's Research, 
Oncology Nursing Society, Prevent Blindness America, Research to 
Prevent Blindness, and Society for Women's Health Research.
  In closing, I encourage my colleagues to join us in supporting the 
MRI Act and look forward to its consideration. I ask unanimous consent 
that a copy of my proposed legislation appear in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2776

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medical Research Investment 
     Act of 2000''.

     SEC. 2. INCREASE IN LIMITATION ON CHARITABLE DEDUCTION FOR 
                   CONTRIBUTIONS FOR MEDICAL RESEARCH.

       (a) In General.--Paragraph (1) of section 170(b) of the 
     Internal Revenue Code of 1986 (relating to percentage 
     limitations) is amended by adding at the end the following 
     new subparagraph:
       ``(G) Special limitation with respect to certain 
     contributions for medical research.--
       ``(i) In general.--Any medical research contribution shall 
     be allowed to the extent that the aggregate of such 
     contributions does not exceed the lesser of--

       ``(I) 80 percent of the taxpayer's contribution base for 
     any taxable year, or
       ``(II) the excess of 80 percent of the taxpayer's 
     contribution base for the taxable year over the amount of 
     charitable contributions allowable under subparagraphs (A) 
     and (B) (determined without regard to subparagraph (C)).

       ``(ii) Carryover.--If the aggregate amount of contributions 
     described in clause (i) exceeds the limitation of such 
     clause, such excess shall be treated (in a manner consistent 
     with the rules of subsection (d)(1)) as a medical research 
     contribution in each of the 10 succeeding taxable years in 
     order of time.
       ``(iii) Treatment of capital gain property.--In the case of 
     any medical research contribution of capital gain property 
     (as defined in subparagraph (C)(iv)), subsection (e)(1) shall 
     apply to such contribution.
       ``(iv) Medical research contribution.--For purposes of this 
     subparagraph, the term `medical research contribution' means 
     a charitable contribution--

       ``(I) to an organization described in clauses (ii), (iii), 
     (v), or (vi) of subparagraph (A), and
       ``(II) which is designated for the use of conducting 
     medical research.

       ``(v) Medical research.--For purposes of this subparagraph, 
     the term `medical research' has the meaning given such term 
     under the regulations promulgated under subparagraph (A)(ii), 
     as in effect on the date of the enactment of this 
     subparagraph.''.
       (b) Conforming Amendments.--
       (1) Section 170(b)(1)(A) of the Internal Revenue Code of 
     1986 is amended in the matter preceding clause (i) by 
     inserting ``(other than a medical research contribution)'' 
     after ``contribution''.
       (2) Section 170(b)(1)(B) of such Code is amended by 
     inserting ``or a medical research contribution'' after 
     ``applies''.
       (3) Section 170(b)(1)(C)(i) of such Code is amended by 
     striking ``subparagraph (D)'' and inserting ``subparagraph 
     (D) or (G)''.
       (4) Section 170(b)(1)(D)(i) of such Code is amended--
       (A) in the matter preceding subclause (I), by inserting 
     ``or a medical research contribution'' after ``applies'', and
       (B) in the second sentence, by inserting ``(other than 
     medical research contributions)'' before the period.
       (c) Effective Date.--The amendments made by this section 
     shall apply--
       (1) to contributions made in taxable years beginning after 
     December 31, 2000, and
       (2) to contributions made on or before December 31, 2000, 
     but only to the extent that a deduction would be allowed 
     under section 170 of the Internal Revenue Code of 1986 for 
     the taxable years beginning after December 31, 1999, had 
     section 170(b)(1)(G) of such Code (as added by this section) 
     applied to such contributions when made.

     SEC. 3. TREATMENT OF CERTAIN INCENTIVE STOCK OPTIONS.

       (a) Amt Adjustments.--Section 56(b)(3) of the Internal 
     Revenue Code of 1986 (relating to treatment of incentive 
     stock options) is amended--
       (1) by striking ``Section 421'' and inserting the 
     following:
       ``(A) In general.--Except as provided in subparagraph (B), 
     section 421'', and
       (2) by adding at the end the following new subparagraph:
       ``(B) Exception for certain medical research stock.--

       ``(i) In general.--This paragraph shall not apply in the 
     case of a medical research stock transfer.
       ``(ii) Medical research stock transfer.--For purposes of 
     clause (i), the term `medical research stock transfer' means 
     a transfer--

       ``(I) of stock which is traded on an established securities 
     market,
       (II) of stock which is acquired pursuant to the exercise of 
     an incentive stock option within the same taxable year as 
     such transfer occurs, and
       ``(III) which is a medical research contribution (as 
     defined in section 170(b)(1)(G)(iv)).''.
       (b) Nonrecognition of Certain Incentive Stock Options.--
     Section 422(c) of the Internal Revenue Code of 1986 (relating 
     to special rules) is amended by adding at the end the 
     following new paragraph:
       ``(8) Medical research contributions.--For purposes of this 
     section and section 421, the transfer of a share of stock 
     which is a medical research stock transfer (as defined in 
     section 56(b)(3)(B)) shall be treated as meeting the 
     requirements of subsection (a)(1).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to transfers of stock made after the date of the 
     enactment of this Act.
                                 ______