[Congressional Record Volume 162, Number 54 (Monday, April 11, 2016)]
[Senate]
[Page S1869]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

  SA 3619. Mr. HATCH (for himself, Mr. Thune, and Mr. Menendez) 
submitted an amendment intended to be proposed by him to the bill H.R. 
636, to amend the Internal Revenue Code of 1986 to permanently extend 
increased expensing limitations, and for other purposes; which was 
ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ____. EXCEPTION FROM PRIVATE FOUNDATION EXCESS BUSINESS 
                   HOLDING TAX FOR CERTAIN PHILANTHROPIC BUSINESS 
                   HOLDINGS.

       (a) In General.--Section 4943 of the Internal Revenue Code 
     of 1986 is amended by adding at the end the following new 
     subsection:
       ``(g) Exception for Certain Philanthropic Business 
     Holdings.--
       ``(1) In general.--Subsection (a) shall not apply with 
     respect to the holdings of a private foundation in any 
     business enterprise which for the taxable year meets--
       ``(A) the exclusive ownership requirements of paragraph 
     (2),
       ``(B) the all profits to charity requirement of paragraph 
     (3), and
       ``(C) the independent operation requirements of paragraph 
     (4).
       ``(2) Exclusive ownership.--The exclusive ownership 
     requirements of this paragraph are met if--
       ``(A) all ownership interests in the business enterprise 
     are held by the private foundation at all times during the 
     taxable year, and
       ``(B) all the private foundation's ownership interests in 
     the business enterprise were acquired under the terms of a 
     will or trust upon the death of the testator or settlor, as 
     the case may be.
       ``(3) All profits to charity.--
       ``(A) In general.--The all profits to charity requirement 
     of this paragraph is met if the business enterprise, not 
     later than 120 days after the close of the taxable year, 
     distributes an amount equal to its net operating income for 
     such taxable year to the private foundation.
       ``(B) Net operating income.--For purposes of this 
     paragraph, the net operating income of any business 
     enterprise for any taxable year is an amount equal to the 
     gross income of the business enterprise for the taxable year, 
     reduced by the sum of--
       ``(i) the deductions allowed by chapter 1 for the taxable 
     year which are directly connected with the production of such 
     income,
       ``(ii) the tax imposed by chapter 1 on the business 
     enterprise for the taxable year, and
       ``(iii) an amount for a reasonable reserve for working 
     capital and other business needs of the business enterprise.
       ``(4) Independent operation.--The independent operation 
     requirements of this paragraph are met if, at all times 
     during the taxable year--
       ``(A) no substantial contributor (as defined in section 
     4958(c)(3)(C)) to the private foundation, or family member of 
     such a contributor (determined under section 4958(f)(4)), is 
     a director, officer, trustee, manager, employee, or 
     contractor of the business enterprise (or an individual 
     having powers or responsibilities similar to any of the 
     foregoing),
       ``(B) at least a majority of the board of directors of the 
     private foundation are individuals other than individuals who 
     are either--
       ``(i) directors or officers of the business enterprise, or
       ``(ii) members of the family (determined under section 
     4958(f)(4)) of a substantial contributor (as defined in 
     section 4958(c)(3)(C)) to the private foundation, and
       ``(C) there is no loan outstanding from the business 
     enterprise to a substantial contributor (as so defined) to 
     the private foundation or a family member of such contributor 
     (as so determined).
       ``(5) Certain deemed private foundations excluded.--This 
     subsection shall not apply to--
       ``(A) any fund or organization treated as a private 
     foundation for purposes of this section by reason of 
     subsection (e) or (f),
       ``(B) any trust described in section 4947(a)(1) (relating 
     to charitable trusts), and
       ``(C) any trust described in section 4947(a)(2) (relating 
     to split-interest trusts).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2015.
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