[Congressional Record Volume 147, Number 24 (Tuesday, February 27, 2001)]
[Senate]
[Pages S1619-S1620]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. FRIST (for himself and Mr. Torricelli):
  S. 393. A bill to amend the Internal Revenue Code of 1986 to 
encourage charitable contributions to public charities for use in 
medical research, to the Committee on Finance.
  Mr. FRIST. Mr. President, I rise today to introduce bipartisan 
legislation, the Paul Coverdell Medical Research Investment Act.
  Under the current tax code, deductible charitable cash gifts to 
support medical research are limited to 50% of an individual's adjusted 
gross income. This bill would simply increase the deductibility of cash 
gifts for medical research to 80 percent of an individual's adjusted 
gross income. For those individuals who are willing and able to give 
more than 80 percent of their income, the bill also extends the period 
an individual can carry the deduction forward for excess charitable 
gifts from five years to ten years.
  In what is perhaps the most important change for today's economy, the 
bill allows taxpayers to donate stock without being penalized for it. 
Americans regularly donate stock acquired through a stock option plan 
to their favorite charity. And often they make the donation within a 
year of exercising their stock options. But current law penalizes these 
donations by taxing them as ordinary income or as capital gain. These 
taxes can run as high as 40 percent, which acts as a disincentive to 
contribute to charities. How absurd that someone who donates $1,000 to 
a charity has to sell $1,400 of stock to pay for it. The person could 
wait a year and give the stock then, but why delay the contribution 
when that money can be put to work curing disease today. The Paul 
Coverdell MRI Act is premised on a simple truth: people should not be 
penalized for helping others.
  PriceWaterhouseCoopers, relying on IRS data and studies of charitable 
giving, conducted a study on the effects of the Paul Coverdell MRI Act. 
It concluded that if the proposal were in effect last year there would 
have been a 4.0 percent to 4.5 percent increase in individual giving in 
2000. This amounts to $180.4 million additional dollars in charitable 
donations for medical research dollars that would result in tangible 
health benefits to all Americans. If the additional giving grew every 
year over five years at the same rate as national income, a billion 
dollars more would be put to work to cure disease. Over the course of 
ten years, the number jumps to $2.3 billion in new money for medical 
research. For many research efforts, that money could mean the 
difference between finding a cure or not finding a cure.
  The returns from increased funding of medical research not only in 
economic sayings to the country, but in terms of curing disease and 
finding new treatments could be enormous. The amount and impact of 
disease in this country is staggering. Each day more than 1,500 
Americans die of cancer. Sixteen million people have diabetes, their 
lives are shortened by an average of fifteen years. Cardiovascular 
diseases take approximately one million American lives a year. One and 
a half million people have Parkinson's Disease. Countless families 
suffer with the pain of a loved one who has Alzheimer's. And yet these 
diseases go without a cure. We must work towards the day when they are 
cured, prevented, or eliminated--just like polio and smallpox were 
years ago.
  Increased funding of medical research by the private sector is needed 
to save and improve American lives. New discoveries in science and 
technology are creating even greater opportunities than in the past for 
large returns from money invested in medical research. The mapping of 
the human genome is but one example. Dr. Abraham Lieberman, a 
neurologist at the National Parkinson's Foundation, was quoted in 
Newsweek as saying that the medical research community today is 
``standing at the same threshold that we reached with infectious 
disease 100 years ago.''
  The Paul Coverdell MRI Act encourages the financial gifts that will 
enable that threshold to be overcome. I hope you will join me in 
supporting it.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record. 
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 393

       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 ``Paul Coverdell Medical 
     Research Investment Act of 2001''.

     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

[[Page S1620]]

       ``(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.
       (5) Section 545(b)(2) of such Code is amended by striking 
     ``and (D)'' and inserting ``(D), and (G)''.
       (6) Section 556(b)(2) of such Code is amended by striking 
     ``and (D)'' and inserting ``(D), and (G)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply--
       (1) to contributions made in taxable years beginning after 
     December 31, 2001, and
       (2) to contributions made on or before December 31, 2001, 
     but only to the extent that a deduction would be allowed 
     under section 170 of the Internal Revenue Code of 1986 for 
     taxable years beginning after December 31, 2000, 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.
                                 ______