[House Report 113-498]
[From the U.S. Government Publishing Office]


113th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     113-498

======================================================================



 
                 FIGHTING HUNGER INCENTIVE ACT OF 2014

                                _______
                                

 June 26, 2014.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Camp, from the Committee on Ways and Means, submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 4719]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 4719) to amend the Internal Revenue Code of 1986 to 
permanently extend and expand the charitable deduction for 
contributions of food inventory, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. SUMMARY AND BACKGROUND...........................................3
          A. Purpose and Summary.................................     3
          B. Background and Need for Legislation.................     3
          C. Legislative History.................................     4
 II. EXPLANATION OF THE BILL..........................................4
          A. Extension and Expansion of Charitable Deduction for 
              Contributions of Food Inventory (sec. 170 of the 
              Code)..............................................     4
III. VOTES OF THE COMMITTEE...........................................7
 IV. BUDGET EFFECTS OF THE BILL.......................................7
          A. Committee Estimate of Budgetary Effects.............     7
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures Budget Authority......................     8
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................     8
          D. Macroeconomic Impact Analysis.......................     9
  V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.......9
          A. Committee Oversight Findings and Recommendations....     9
          B. Statement of General Performance Goals and 
              Objectives.........................................     9
          C. Information Relating to Unfunded Mandates...........    10
          D. Applicability of House Rule XXI 5(b)................    10
          E. Tax Complexity Analysis.............................    10
          F. Congressional Earmarks, Limited Tax Benefits, and 
              Limited Tariff Benefits............................    10
          G. Duplication of Federal Programs.....................    10
          H. Disclosure of Directed Rule Makings.................    11
 VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........11
VII. DISSENTING VIEWS................................................14

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Fighting Hunger Incentive Act of 
2014''.

SEC. 2. EXTENSION AND EXPANSION OF CHARITABLE DEDUCTION FOR 
                    CONTRIBUTIONS OF FOOD INVENTORY.

  (a) Permanent Extension.--Section 170(e)(3)(C) of the Internal 
Revenue Code of 1986 is amended by striking clause (iv).
  (b) Increase in Limitation.--Section 170(e)(3)(C) of such Code, as 
amended by subsection (a), is amended by striking clause (ii), by 
redesignating clause (iii) as clause (iv), and by inserting after 
clause (i) the following new clauses:
                          ``(ii) Limitation.--The aggregate amount of 
                        such contributions for any taxable year which 
                        may be taken into account under this section 
                        shall not exceed--
                                  ``(I) in the case of any taxpayer 
                                other than a C corporation, 15 percent 
                                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, and
                                  ``(II) in the case of a C 
                                corporation, 15 percent of taxable 
                                income (as defined in subsection 
                                (b)(2)(C)).
                          ``(iii) Rules related to limitation.--
                                  ``(I) Carryover.--If such aggregate 
                                amount exceeds the limitation imposed 
                                under clause (ii), such excess shall be 
                                treated (in a manner consistent with 
                                the rules of subsection (d)) as a 
                                charitable contribution described in 
                                clause (i) in each of the 5 succeeding 
                                years in order of time.
                                  ``(II) Coordination with overall 
                                corporate limitation.--In the case of 
                                any charitable contribution allowable 
                                under clause (ii)(II), subsection 
                                (b)(2)(A) shall not apply to such 
                                contribution, but the limitation 
                                imposed by such subsection shall be 
                                reduced (but not below zero) by the 
                                aggregate amount of such contributions. 
                                For purposes of subsection (b)(2)(B), 
                                such contributions shall be treated as 
                                allowable under subsection 
                                (b)(2)(A).''.
  (c) Determination of Basis for Certain Taxpayers.--Section 
170(e)(3)(C) of such Code, as amended by subsections (a) and (b), is 
amended by adding at the end the following new clause:
                          ``(v) Determination of basis for certain 
                        taxpayers.--If a taxpayer--
                                  ``(I) does not account for 
                                inventories under section 471, and
                                  ``(II) is not required to capitalize 
                                indirect costs under section 263A,
                        the taxpayer may elect, solely for purposes of 
                        subparagraph (B), to treat the basis of any 
                        apparently wholesome food as being equal to 25 
                        percent of the fair market value of such 
                        food.''.
  (d) Determination of Fair Market Value.--Section 170(e)(3)(C) of such 
Code, as amended by subsections (a), (b), and (c), is amended by adding 
at the end the following new clause:
                          ``(vi) Determination of fair market value.--
                        In the case of any such contribution of 
                        apparently wholesome food which cannot or will 
                        not be sold solely by reason of internal 
                        standards of the taxpayer, lack of market, or 
                        similar circumstances, or by reason of being 
                        produced by the taxpayer exclusively for the 
                        purposes of transferring the food to an 
                        organization described in subparagraph (A), the 
                        fair market value of such contribution shall be 
                        determined--
                                  ``(I) without regard to such internal 
                                standards, such lack of market, such 
                                circumstances, or such exclusive 
                                purpose, and
                                  ``(II) 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).''.
  (e) Effective Date.--
          (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        contributions made after December 31, 2013, in taxable years 
        ending after such date.
          (2) Limitation; applicability to c corporations.--The 
        amendments made by subsection (b) shall apply to contributions 
        made in taxable years beginning after December 31, 2013.

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    H.R. 4719, reported by the Committee on Ways and Means, 
provides that contributions of food inventory by pass-through 
businesses may qualify for an enhanced deduction, which is 
currently available to C corporations. A similar temporary 
provision expired for taxable years beginning after December 
31, 2013. H.R. 4719 increases the limitation on deductible 
contributions of food inventory to 15 percent of the taxpayer's 
adjusted gross income (15 percent of taxable income in the case 
of a C corporation) per year.
    In addition, H.R. 4719 provides a special basis rule for 
pass-through businesses that do not maintain inventories, under 
which such businesses could treat their basis in the 
contributed food as equal to 25 percent of the fair market 
value of such food. H.R. 4719 establishes a rule to determine 
the fair market value of contributed food inventory that cannot 
or will not be sold by the business because of internal 
standards, lack of market or similar circumstances or because 
it was produced exclusively for the purpose of transferring it 
to a charitable organization.

                 B. Background and Need for Legislation

    While the Committee continues actively to pursue 
comprehensive tax reform as a critical means of promoting 
economic growth and job creation, the Committee also believes 
that it is important to provide individuals and small 
businesses permanent, immediate tax relief to encourage faster 
economic growth and job creation, while fostering charitable 
giving. By restoring and making permanent the enhanced 
deduction for donations of food inventory by pass-through 
businesses, like S corporations, H.R. 4719 makes the enhanced 
deduction available to all types of businesses, not just C 
corporations. Accordingly, H.R. 4719 provides an important 
incentive for food-service companies like restaurants to 
donate, rather than discard, surplus wholesome food inventory 
to charitable organizations that help children and families in 
need. Recognizing that donated food inventory must be properly 
saved, packaged, labeled and kept refrigerated or frozen until 
it is delivered to the charitable organization, H.R. 4719 
encourages food-service companies to incur and offset these 
costs through the enhanced deduction. According to testimony 
received by the Committee, the enhanced deduction for food 
inventory has been a vital incentive to support community food 
pantries and other tax-exempt organizations that work to fight 
hunger in local communities across the nation.

                         C. Legislative History


Background

    H.R. 4719 was introduced on May 22, 2014, and was referred 
to the Committee on Ways and Means.

Committee action

    The Committee on Ways and Means marked up H.R. 4719, the 
Fighting Hunger Incentive Act of 2014, on May 29, 2014, and 
ordered the bill, as amended, favorably reported (with a quorum 
being present).

Committee hearings

    The need for permanent rules regarding the charitable 
deduction for contributions of food inventory was discussed at 
no fewer than two hearings during the 112th and 113th 
Congresses:
            Select Revenue Measures Subcommittee 
        Hearing on Certain Expiring Tax Provisions (April 26, 
        2012); and
            Full Committee Hearing on Tax Reform and 
        Charitable Contributions (February 14, 2013).

                      II. EXPLANATION OF THE BILL


A. Extension and Expansion of Charitable Deduction for Contributions of 
                 Food Inventory (sec. 170 of the Code)


                              PRESENT LAW

Charitable contributions in general

    In general, an income tax deduction is permitted for 
charitable contributions, subject to certain limitations that 
depend on the type of taxpayer, the property contributed, and 
the donee organization.\1\ In the case of an individual, the 
deduction is limited to various percentages of the contribution 
base, depending on the donee and the property contributed. In 
the case of a corporation,\2\ the deduction generally is 
limited to ten percent of the taxable income (with 
modifications).\3\ Contributions in excess of these limitations 
may be carried forward for up to five taxable years.
---------------------------------------------------------------------------
    \1\Sec. 170.
    \2\Sec. 170(b)(1). The contribution base is the adjusted gross 
income determined without regard net operating loss carrybacks.
    \3\Sec. 170(b)(2).
---------------------------------------------------------------------------
    Charitable contributions of cash are deductible in the 
amount contributed. Subject to several exceptions, 
contributions of property are deductible at the fair market 
value of the property. One exception provides that the amount 
of the charitable contribution is reduced by the amount of any 
gain which would not have been long-term capital gain if the 
property contributed had been sold by the taxpayer at its fair 
market value at the time of the contribution.\4\
---------------------------------------------------------------------------
    \4\Sec. 170(e)(1)(A).
---------------------------------------------------------------------------

General rules regarding contributions of inventory

    As a result of the exception described above, a taxpayer's 
deduction for charitable contributions of inventory generally 
is limited to the taxpayer's basis (typically, cost) in the 
inventory, or, if less, the fair market value of the inventory.
    However, for certain contributions of inventory, a C 
corporation may claim an enhanced deduction equal to the lesser 
of (1) basis plus one-half of the item's appreciation (i.e., 
basis plus one-half of fair market value in excess of basis) or 
(2) two times basis.\5\ To be eligible for the enhanced 
deduction, the contributed property generally must be inventory 
of the taxpayer and must be contributed to a charitable 
organization described in section 501(c)(3) (except for private 
nonoperating foundations), and the donee must (1) use the 
property consistent with the donee's exempt purpose solely for 
the care of the ill, the needy, or infants; (2) not transfer 
the property in exchange for money, other property, or 
services; and (3) provide the taxpayer a written statement that 
the donee's use of the property will be consistent with such 
requirements. In the case of contributed property subject to 
the Federal Food, Drug, and Cosmetic Act, as amended, the 
property must satisfy the applicable requirements of such Act 
on the date of transfer and for 180 days prior to the 
transfer.\6\
---------------------------------------------------------------------------
    \5\Sec. 170(e)(3).
    \6\Sec. 170(e)(3)(A)(iv).
---------------------------------------------------------------------------
    To claim the enhanced deduction, the taxpayer must 
establish that the fair market value of the donated item 
exceeds basis. The valuation of food inventory has been the 
subject of disputes between taxpayers and the IRS.\7\
---------------------------------------------------------------------------
    \7\Lucky Stores Inc. v. Commissioner, 105 T.C. 420 (1995) (holding 
that the value of surplus bread inventory donated to charity was the 
full retail price of the bread rather than half the retail price, as 
the IRS asserted).
---------------------------------------------------------------------------

Temporary rule expanding and modifying the enhanced deduction for 
        contributions of food inventory

    Under a temporary provision, any taxpayer engaged in a 
trade or business, whether or not a C corporation, is eligible 
to claim the enhanced deduction for donations of food 
inventory.\8\ For taxpayers other than C corporations, the 
total deduction for donations of food inventory in a taxable 
year generally may not exceed ten percent of the taxpayer's net 
income for such taxable year from all sole proprietorships, S 
corporations, or partnerships (or other non C corporations) 
from which contributions of apparently wholesome food are made. 
For example, if a taxpayer is a sole proprietor, a shareholder 
in an S corporation, and a partner in a partnership, and each 
business makes charitable contributions of food inventory, the 
taxpayer's deduction for donations of food inventory is limited 
to ten percent of the taxpayer's net income from the sole 
proprietorship and the taxpayer's interests in the S 
corporation and partnership. However, if only the sole 
proprietorship and the S corporation made charitable 
contributions of food inventory, the taxpayer's deduction would 
be limited to ten percent of the net income from the trade or 
business of the sole proprietorship and the taxpayer's interest 
in the S corporation, but not the taxpayer's interest in the 
partnership.\9\
---------------------------------------------------------------------------
    \8\Sec. 170(e)(3)(C).
    \9\The ten-percent limitation does not affect the application of 
the generally applicable percentage limitations. For example, if ten 
percent of a sole proprietor's net income from the proprietor's trade 
or business is greater than 50 percent of the proprietor's contribution 
base which otherwise limits the deduction, the available deduction for 
the taxable year (with respect to contributions to public charities) is 
50 percent of the proprietor's contribution base. Consistent with 
present law, these contributions may be carried forward because they 
exceed the 50 percent limitation. Contributions of food inventory by a 
taxpayer that is not a C corporation that exceed the ten-percent 
limitation but do not exceed the 50 percent limitation may not be 
carried forward.
---------------------------------------------------------------------------
    Under the temporary provision, the enhanced deduction for 
food is available only for food that qualifies as ``apparently 
wholesome food.'' Apparently wholesome food is defined as food 
intended for human consumption that meets all quality and 
labeling standards imposed by Federal, State, and local laws 
and regulations even though the food may not be readily 
marketable due to appearance, age, freshness, grade, size, 
surplus, or other conditions.
    The provision does not apply to contributions made after 
December 31, 2013.

                           REASONS FOR CHANGE

    The Committee believes that charitable organizations 
benefit from charitable contributions of food inventory by non 
C corporations and that the enhanced deduction is a useful 
incentive for the making of such contributions. Accordingly, 
the Committee believes it is appropriate to make permanent the 
special rule for charitable contributions of food inventory by 
all taxpayers engaged in a trade or business.

                        EXPLANATION OF PROVISION

    The provision reinstates and makes permanent the enhanced 
deduction for contributions of food inventory.
    The provision also modifies the enhanced deduction for food 
inventory contributions by: (1) increasing the charitable 
percentage limitation for food inventory contributions and 
clarifying the carryover and coordination rules for these 
contributions; (2) including a presumption concerning the tax 
basis of food inventory donated by certain businesses; and (3) 
including presumptions that may be used when valuing donated 
food inventory.
    First, the ten-percent limitation described above 
applicable to taxpayers other than C corporations is increased 
to 15 percent. For C corporations, these contributions are made 
subject to a limitation of 15 percent of taxable income (as 
modified). The general ten-percent limitation for a C 
corporation does not apply to these contributions, but the ten-
percent limitation applicable to other contributions is reduced 
by the amount of these contributions. Qualifying food inventory 
contributions in excess of these 15-percent limitations may be 
carried forward and treated as qualifying food inventory 
contributions in each of the five succeeding years in order of 
time.
    Second, if the taxpayer does not account for inventory 
under section 471 and is not required to capitalize indirect 
costs under section 263A, the taxpayer may elect, solely for 
computing the enhanced deduction for food inventory, to treat 
the basis of any apparently wholesome food as being equal to 25 
percent of the fair market value of such food.
    Third, in the case of any contribution of apparently 
wholesome food which cannot or will not be sold solely by 
reason of internal standards of the taxpayer, lack of market, 
or similar circumstances, or by reason of being produced by the 
taxpayer exclusively for the purposes of transferring the food 
to an organization described in section 501(c)(3), the fair 
market value of such contribution shall be determined (1) 
without regard to such internal standards, such lack of market 
or similar circumstances, or such exclusive purpose, and (2) 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 contributions (or, 
if not so sold at such time, in the recent past).

                             EFFECTIVE DATE

    The provision is generally effective for contributions made 
after December 31, 2013, in taxable years ending after that 
date. The increase in the percentage limit and the related 
carryover and coordination rules are effective for 
contributions made in taxable years beginning after December 
31, 2013.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the vote of the Committee on Ways and Means in its 
consideration of H.R. 4719, the Fighting Hunger Incentive Act 
of 2014, on May 29, 2014.
    The bill, H.R. 4719, was ordered favorably reported as 
amended by a roll call vote of 23 yeas to 13 nays (with a 
quorum being present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
         Representative             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Camp.......................        X   ........  .........  Mr. Levin........  ........        X   .........
Mr. Johnson....................        X   ........  .........  Mr. Rangel.......  ........        X   .........
Mr. Brady......................        X   ........  .........  Mr. McDermott....  ........        X   .........
Mr. Ryan.......................        X   ........  .........  Mr. Lewis........  ........  ........  .........
Mr. Nunes......................        X   ........  .........  Mr. Neal.........  ........        X   .........
Mr. Tiberi.....................        X   ........  .........  Mr. Becerra......  ........  ........  .........
Mr. Reichert...................        X   ........  .........  Mr. Doggett......  ........        X   .........
Mr. Boustany...................        X   ........  .........  Mr. Thompson.....  ........        X   .........
Mr. Roskam.....................        X   ........  .........  Mr. Larson.......  ........        X   .........
Mr. Gerlach....................        X   ........  .........  Mr. Blumenauer...  ........        X   .........
Mr. Price......................        X   ........  .........  Mr. Kind.........  ........        X   .........
Mr. Buchanan...................        X   ........  .........  Mr. Pascrell.....  ........        X   .........
Mr. Smith......................        X   ........  .........  Mr. Crowley......  ........  ........  .........
Mr. Schock.....................        X   ........  .........  Ms. Schwartz.....  ........        X   .........
Ms. Jenkins....................        X   ........  .........  Mr. Davis........  ........        X   .........
Mr. Paulsen....................        X   ........  .........  Ms. Sanchez......  ........        X   .........
Mr. Marchant...................        X
Ms. Black......................        X
Mr. Reed.......................        X
Mr. Young......................        X
Mr. Kelly......................        X
Mr. Griffin....................        X
Mr. Renacci....................        X
----------------------------------------------------------------------------------------------------------------

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the effects on the budget of the bill, H.R. 4719, as 
reported.
    The bill, as reported, is estimated to have the following 
effect on Federal budget receipts for fiscal years 2014-2024:

                                                  FISCAL YEARS
                                              [Millions of dollars]
----------------------------------------------------------------------------------------------------------------
  2014     2015     2016     2017     2018     2019     2020    2021    2022    2023    2024   2014-19   2014-24
----------------------------------------------------------------------------------------------------------------
    -16     -205     -163     -169     -175     -181     -188    -194    -201    -208    -215     -909    -1,915
----------------------------------------------------------------------------------------------------------------

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves no new or increased budget authority. The 
Committee further states that the revenue-reducing tax 
provisions involve increased tax expenditures. (See amounts in 
table in Part IV.A., above.)

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the CBO, the following statement by CBO is 
provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, June 5, 2014.
Hon. Dave Camp,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4719, the Fighting 
Hunger Incentive Act of 2014.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Logan 
Timmerhoff.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 4719--Fighting Hunger Incentive Act of 2014

    H.R. 4719 would amend the Internal Revenue Code to 
permanently extend and expand certain expired provisions that 
provided an enhanced tax deduction for businesses that donated 
their food inventory to charitable organizations. The enhanced 
deduction for food inventory contributions expired after 
December 31, 2013, and applied to sole proprietors, 
partnerships, and other businesses not organized as C 
corporations (which are already permanently allowed an enhanced 
deduction under more general provisions of current law). H.R. 
4719 would also expand the maximum deduction for all businesses 
by allowing deductions of food inventory donations up to 15 
percent of the net income of the donating organization, an 
increase from the 10 percent allowed permanently under current 
law for C corporations and allowed previously for other 
businesses. In addition, the bill would allow certain 
businesses to make alternative assumptions about the cost basis 
and fair market value of donated food inventory.
    The staff of the Joint Committee on Taxation (JCT) 
estimates that enacting H.R. 4719 would reduce revenues, thus 
increasing federal budget deficits, by about $1.9 billion over 
the 2014-2024 period.
    The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting 
direct spending and revenues. Enacting H.R. 4719 would result 
in revenue losses in each year beginning in 2014. The estimated 
increases in the deficit are shown in the following table.
    JCT has determined that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Logan 
Timmerhoff. The estimate was approved by David Weiner, 
Assistant Director for Tax Analysis.

            CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 4719, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON MAY 29, 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    By fiscal year, in millions of dollars--
                                                      --------------------------------------------------------------------------------------------------
                                                        2014   2015   2016   2017   2018   2019   2020   2021   2022   2023   2024  2014-2019  2014-2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               NET INCREASE IN THE DEFICIT

Statutory Pay-As-You-Go Effects......................     16    205    163    169    175    181    188    194    201    208    215       909     1,915
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Staff of the Joint Committee on Taxation.

                    D. Macroeconomic Impact Analysis

    In compliance with clause 3(h)(2) of rule XIII of the Rules 
of the House of Representatives, the following statement is 
made by the Joint Committee on Taxation with respect to the 
provisions of the bill amending the Internal Revenue Code of 
1986: the effects of the bill on economic activity are so small 
as to be incalculable within the context of a model of the 
aggregate economy.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee advises that it was as a result of the 
Committee's review of the provisions of H.R. 4719 that the 
Committee concluded that it is appropriate to report the bill, 
as amended, favorably to the House of Representatives with the 
recommendation that the bill do pass.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                D. Applicability of House Rule XXI 5(b)

    Rule XXI 5(b) of the Rules of the House of Representatives 
provides, in part, that ``A bill or joint resolution, 
amendment, or conference report carrying a Federal income tax 
rate increase may not be considered as passed or agreed to 
unless so determined by a vote of not less than three-fifths of 
the Members voting, a quorum being present.'' The Committee has 
carefully reviewed the bill, and states that the bill does not 
involve any Federal income tax rate increases within the 
meaning of the rule.

                       E. Tax Complexity Analysis

    Section 4022(b) of the Internal Revenue Service 
Restructuring and Reform Act of 1998 (the ``IRS Reform Act'') 
requires the staff of the Joint Committee on Taxation (in 
consultation with the Internal Revenue Service and the Treasury 
Department) to provide a tax complexity analysis. The 
complexity analysis is required for all legislation reported by 
the Senate Committee on Finance, the House Committee on Ways 
and Means, or any committee of conference if the legislation 
includes a provision that directly or indirectly amends the 
Internal Revenue Code and has widespread applicability to 
individuals or small businesses.
    Pursuant to clause 3(h)(1) of rule XIII of the Rules of the 
House of Representatives, the staff of the Joint Committee on 
Taxation has determined that a complexity analysis is not 
required under section 4022(b) of the IRS Reform Act because 
the bill contains no provisions that amend the Code and that 
have ``widespread applicability'' to individuals or small 
businesses, within the meaning of the rule.

  F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill, and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                   G. Duplication of Federal Programs

    In compliance with Sec. 3(j)(2) of H. Res. 5 (113th 
Congress), the Committee states that no provision of the bill 
establishes or reauthorizes: (1) a program of the Federal 
Government known to be duplicative of another Federal program, 
(2) a program included in any report from the Government 
Accountability Office to Congress pursuant to section 21 of 
Public Law 111-139, or (3) a program related to a program 
identified in the most recent Catalog of Federal Domestic 
Assistance, published pursuant to the Federal Program 
Information Act (Public Law 95-220, as amended by Public Law 
98-169).

                 H. Disclosure of Directed Rule Makings

    In compliance with Sec. 3(k) of H. Res. 5 (113th Congress), 
the following statement is made concerning directed rule 
makings: The Committee estimates that the bill requires no 
directed rule makings within the meaning of such section.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

INTERNAL REVENUE CODE OF 1986

           *       *       *       *       *       *       *



Subtitle A--Income Taxes

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CHAPTER 1--NORMAL TAXES AND SURTAXES

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Subchapter B--Computation of Taxable Income

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PART VI--ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS

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SEC. 170. CHARITABLE, ETC., CONTRIBUTIONS AND GIFTS.

  (a) * * *

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  (e) Certain Contributions of Ordinary Income and Capital Gain 
Property.--
          (1) * * *

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          (3) Special rule for certain contributions of 
        inventory and other property.--
                  (A) * * *

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                  (C) Special rule for contributions of food 
                inventory.--
                          (i) * * *
                          [(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 10 
                        percent 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.]
                          (ii) Limitation.--The aggregate 
                        amount of such contributions for any 
                        taxable year which may be taken into 
                        account under this section shall not 
                        exceed--
                                  (I) in the case of any 
                                taxpayer other than a C 
                                corporation, 15 percent 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, and
                                  (II) in the case of a C 
                                corporation, 15 percent of 
                                taxable income (as defined in 
                                subsection (b)(2)(C)).
                          (iii) Rules related to limitation.--
                                  (I) Carryover.--If such 
                                aggregate amount exceeds the 
                                limitation imposed under clause 
                                (ii), such excess shall be 
                                treated (in a manner consistent 
                                with the rules of subsection 
                                (d)) as a charitable 
                                contribution described in 
                                clause (i) in each of the 5 
                                succeeding years in order of 
                                time.
                                  (II) Coordination with 
                                overall corporate limitation.--
                                In the case of any charitable 
                                contribution allowable under 
                                clause (ii)(II), subsection 
                                (b)(2)(A) shall not apply to 
                                such contribution, but the 
                                limitation imposed by such 
                                subsection shall be reduced 
                                (but not below zero) by the 
                                aggregate amount of such 
                                contributions. For purposes of 
                                subsection (b)(2)(B), such 
                                contributions shall be treated 
                                as allowable under subsection 
                                (b)(2)(A).
                          [(iii)] (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.
                          [(iv) Termination.--This subparagraph 
                        shall not apply to contributions made 
                        after December 31, 2013.]
                          (v) Determination of basis for 
                        certain taxpayers.--If a taxpayer--
                                  (I) does not account for 
                                inventories under section 471, 
                                and
                                  (II) is not required to 
                                capitalize indirect costs under 
                                section 263A,
                        the taxpayer may elect, solely for 
                        purposes of subparagraph (B), to treat 
                        the basis of any apparently wholesome 
                        food as being equal to 25 percent of 
                        the fair market value of such food.
                          (vi) Determination of fair market 
                        value.--In the case of any such 
                        contribution of apparently wholesome 
                        food which cannot or will not be sold 
                        solely by reason of internal standards 
                        of the taxpayer, lack of market, or 
                        similar circumstances, or by reason of 
                        being produced by the taxpayer 
                        exclusively for the purposes of 
                        transferring the food to an 
                        organization described in subparagraph 
                        (A), the fair market value of such 
                        contribution shall be determined--
                                  (I) without regard to such 
                                internal standards, such lack 
                                of market, such circumstances, 
                                or such exclusive purpose, and
                                  (II) 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).

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                         VII. DISSENTING VIEWS

    The six bills approved by the Republicans at the markup 
would add $304 billion to the deficit. Combined with the $310 
billion that the six bills approved by Republicans on the 
Committee in April added to the deficit, Republicans have added 
$614 billion to the deficit in two short months--and there does 
not appear to be an end in sight. Even though some of these 
bills were introduced individually with some bipartisan 
support, the opposition to these bills was based on the 
position that these tax provisions should not be made permanent 
by adding to the deficit without any revenue offset.
    To put the combined cost ($614 billion) into context, it is 
25 percent more than the entire projected federal deficit this 
year and $86 billion more than total non-defense domestic 
discretionary spending (e.g., medical research, education, 
veterans' pensions and health care, transportation, etc.) will 
be in 2014. It is almost seven times what we spend annually on 
education, job training, and social services. It is ten times 
more than we spend on veterans. And, it is eleven times more 
than we spend on medical research and public health.
    Public charities and private foundations serve an important 
role in our society. We all support the good works of the 
charitable community and strive to provide charities with the 
resources they need to carry out their charitable mission. The 
markup was not to debate the good works of charities across 
this country, or the merits of H.R. 4719 which makes permanent 
the enhanced charitable deduction for contributions of food 
inventory for non-C corporations.
    We found it hypocritical that the Republicans would make 
permanent a provision that was repealed in Chairman Camp's Tax 
Reform Act of 2014 discussion draft (the ``Republican tax 
reform plan''). Section 1403 of the Republican tax reform plan 
repealed the enhanced deduction for charitable contributions of 
food inventory.
    We also found it hypocritical that, four months ago, 
Republicans let emergency unemployment insurance expire for 
more than 1.3 million Americans by arguing that an adequate 
offset had yet to be proposed. In early April, the Senate came 
to a bipartisan agreement on an offset after months of 
painstaking negotiations. Yet House Republicans still refuse to 
act.
    Finally, we also opposed the manner in which Republicans 
were proceeding--selecting 10 to make permanent without any 
offset from the approximately 60 tax provisions that expired 
last year. This approach was both fiscally irresponsible and 
fundamentally hypocritical.
    The consideration of this bill should have been part of the 
consideration of all the expired tax provisions commonly 
referred to as ``tax extenders.'' The Republicans did not take 
up other tax extenders that also are important to Democratic 
Committee Members. Left to an uncertain fate are provisions 
like the Work Opportunity Tax Credit, the New Markets Tax 
Credit, and the renewable energy tax credits, as well as the 
long-term status of the Earned Income Tax Credit, the Child Tax 
Credit, and the American Opportunity Tax Credit.

                                           Sander M. Levin,
                                                    Ranking Member.

                                  
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