[House Report 118-351]
[From the U.S. Government Publishing Office]
118th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 118-351
======================================================================
VSO EQUAL TAX TREATMENT ACT
_______
January 18, 2024.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Smith of Missouri, from the Committee on Ways and Means, submitted
the following
R E P O R T
[To accompany H.R. 1432]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 1432) to amend the Internal Revenue Code of 1986 to
provide for the deductibility of charitable contributions to
certain organizations for members of the Armed Forces, having
considered the same, reports favorably thereon with an
amendment and recommends that the bill as amended do pass.
CONTENTS
Page
I. SUMMARY AND BACKGROUND............................................2
A. Purpose and Summary................................... 2
B. Background and Need for Legislation................... 2
C. Legislative History................................... 2
D. Designated Hearing.................................... 3
II. EXPLANATION OF THE BILL...........................................3
A. Deductibility of Charitable Contributions to Certain
Organizations for Members of the Armed Forces (sec. 1
of the bill and sec. 170 of the Code)................ 3
III.VOTE OF THE COMMITTEE.............................................5
IV. BUDGET EFFECTS OF THE BILL........................................5
A. Committee Estimate of Budgetary Effects............... 5
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority........................ 6
C. Cost Estimate Prepared by the Congressional Budget
Office............................................... 6
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE........6
A. Committee Oversight Findings and Recommendations...... 6
B. Statement of General Performance Goals and Objectives. 6
C. Information Relating to Unfunded Mandates............. 6
D. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits.............................. 7
E. Duplication of Federal Programs....................... 7
F. Tax Complexity Analysis............................... 7
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED.............7
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 ``VSO Equal Tax Treatment Act'' or as
the ``VETT Act''.
SEC. 2. DEDUCTIBILITY OF CHARITABLE CONTRIBUTIONS TO CERTAIN
ORGANIZATIONS FOR MEMBERS OF THE ARMED FORCES.
(a) In General.--Section 170(c) of the Internal Revenue Code of 1986
is amended by inserting after paragraph (5) the following new
paragraph:
``(6) An organization described in section 501(c)(19) that is
a federally chartered corporation.''.
(b) Percentage Limitation.--Section 170(b)(1)(A) of the Internal
Revenue Code of 1986 is amended by striking ``or'' at the end of clause
(viii), by adding ``or'' at the end of clause (ix), and by inserting
after clause (ix) the following new clause:
``(x) an organization described in section
501(c)(19) that is a federally chartered
corporation,''.
(c) Effective Date.--The amendments made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
The bill, H.R. 1432, the ``VSO Equal Tax Treatment Act,''
or the ``VETT Act,'' as ordered reported by the Committee on
Ways and Means on November 30, 2023.
Section 2 of the bill provides that charitable
contributions made to a veteran service organization exempt
from tax under section 501(c)(19) of the Internal Revenue Code
are deductible for Federal income tax purposes, provided that
the organization is congressionally chartered. This section
also includes rules relating to the amount of such a
contribution that may be deducted by an individual taxpayer
relative to the taxpayer's income.
B. Background and Need for Legislation
Under current law, Veteran Service Organizations (VSOs) are
eligible to accept tax-deductible donations only if 90 percent
of their membership are considered ``wartime veterans.''
However, given the aging veteran population and our nation's
past wartime periods, it is becoming increasingly common that
VSO memberships are not meeting the outdated definition.
There are 2.4 million veterans who do not meet the
definition of ``wartime veterans.'' These men and women are
mainly those who honorably served following the end of the
Vietnam War in 1975 and prior to the Persian Gulf War in 1991.
The legislation would allow for all federally chartered
tax-exempt organizations that serve current and former members
of the Armed Forces to be eligible to receive deductible
charitable contributions.
C. Legislative History
Background
H.R. 1432 was introduced on March 7, 2023, and was referred
to the Committee on Ways and Means.
Committee Hearings
On February 8, 2023, the Committee held a ``Field Hearing
on the State of the American Economy: Appalachia.''
On March 7, 2023, the Committee held a ``Field Hearing on
the State of the American Economy: The Heartland.''
Committee Action
The Committee on Ways and Means marked up H.R. 1432, the
``VSO Equal Tax Treatment Act,'' or ``VETT Act,'' on November
30, 2023, and ordered the bill, as amended, favorably reported
(with a quorum being present).
D. Designated Hearing
Pursuant to clause 3(c)(6) of rule XIII, the following
hearings were used to develop and consider H.R. 1432:
On February 8, 2023, the Committee held a ``Field Hearing
on the State of the American Economy: Appalachia.''
On March 7, 2023, the Committee held a ``Field Hearing on
the State of the American Economy: The Heartland.''
II. EXPLANATION OF THE BILL
A. Deductibility of Charitable Contributions to Certain Organizations
for Members of the Armed Forces (Sec. 1 of the Bill and Sec. 170 of the
Code)
PRESENT LAW
Charitable contribution deduction
In computing taxable income, an individual taxpayer who
itemizes deductions or a corporate taxpayer generally is
allowed to deduct the amount of cash and the fair market value
of property contributed to an organization described in section
501(c)(3) or to a Federal, State, or local governmental entity,
including to most educational organizations.\1\
---------------------------------------------------------------------------
\1\Within certain limitations, donors also are entitled to deduct
such contributions for estate and gift tax purposes. See secs. 2055 and
2522.
---------------------------------------------------------------------------
The amount of the deduction allowable for a taxable year
with respect to a charitable contribution of property may be
reduced or limited depending on the type of property
contributed, the type of charitable organization to which the
property is contributed, and the income of the taxpayer.\2\ For
individual taxpayers, more generous charitable contribution
deduction rules (under section 170(b)(1)(A)) apply to gifts
made to public charities than to gifts made to private
foundations. Contributions of cash to a public charity
generally are deductible up to 60 percent\3\ of the donor's
adjusted gross income (``AGI'')\4\ (30 percent for capital gain
property, and 50 percent for non-capital gain property other
than cash), whereas contributions to most private foundations
generally are deductible up to 30 percent of the donor's AGI
(20 percent for capital gain property).\5\ For corporate
taxpayers, the deductible amount of charitable contributions
generally is limited to 10 percent of taxable income.\6\ For
all taxpayers, gifts of capital gain property to a public
charity generally are deductible at the property's fair market
value,\7\ whereas gifts of capital gain property (other than
publicly traded stock) to most private foundations are
deductible at the taxpayer's basis (cost) in the property.\8\
---------------------------------------------------------------------------
\2\Sec. 170(b) and (e).
\3\For contributions made in taxable years beginning after December
31, 2025, the 60-percent limit is reduced to 50 percent. Sec.
170(b)(1)(G)(i).
\4\The charitable percentage limits are applied to the donor's
``contribution base,'' which is the donor's AGI computed without regard
to any net operating loss carryback to the taxable year under section
172. Sec. 170(b)(1)(H).
\5\Sec. 170(b)(1).
\6\Sec. 170(b)(2).
\7\Sec. 170(e)(1). However, contributions of tangible personal
property not for an exempt purpose of the donee organization are
deductible at the taxpayer's basis in the property. Sec.
170(e)(1)(B)(i). A special rule determines the aggregate deduction for
contributions of certain intellectual property. Secs. 170(e)(1)(B)(iii)
and 170(m).
\8\Sec. 170(e)(1)(B)(ii) and 170(e)(5).
---------------------------------------------------------------------------
Certain veterans' organizations (section 501(c)(19))
Under present law, a veterans' organization described in
section 501(c)(19) is exempt from Federal income tax under
section 501(a). Section 501(c)(19) generally describes a post
or organization of past or present members of the Armed Forces
of the United States that is organized in the United States,
provided that at least 75 percent of its members are past or
present members of the Armed Forces and substantially all of
its other members are individuals who are cadets or are
spouses, widows, widowers, ancestors, or lineal descendants of
past or present members of the Armed Forces or of cadets.
Certain posts or organizations of war veterans that are
exempt from income taxation under section 501(c)(19) may also
be eligible to receive contributions that are deductible as
charitable contributions for income tax purposes under section
170(c)(3). To qualify, however, the organization must satisfy a
membership requirement that is more restrictive than the 75
percent test under section 501(c)(19), as well as a purposes
requirement.\9\ An organization satisfies the membership
requirement under section 170(c)(3) if at least 90 percent of
its members are war veterans and substantially all other
members are either veterans (other than war veterans), or are
cadets, or are spouses, widows, or widowers of war veterans,
other veterans, or cadets. An organization satisfies the
purposes requirement if it is organized and operated primarily
for purposes that are consistent with its status as a war
veterans' organization.\10\
---------------------------------------------------------------------------
\9\See Rev. Rul. 84-140, 1984-2C.B. 56.
\10\The gift tax charitable deduction similarly applies to
contributions to organizations of war veterans. See sec. 2522(a)(4).
The estate tax charitable deduction, however, generally applies to
bequests to veterans' organizations (not limited to war veterans'
organizations) that are incorporated by Act of Congress. See sec.
2055(a)(4).
---------------------------------------------------------------------------
REASONS FOR CHANGE
The Committee believes the tax Code should better support
veterans and veteran service organizations, or VSOs. VSOs help
veterans file service-connected claims with the United States
Department of Veterans Affairs, provide support to their
families, and help them navigate a confusing web of government
programs on which veterans rely. The provision seeks to achieve
this goal by better aligning the rules for tax-exempt status
for VSOs under section 501(c)(19) and the rules for
deductibility of charitable contributions to those
organizations under section 170, which are unnecessarily
restrictive.
EXPLANATION OF PROVISION
Under the provision, an organization described in section
501(c)(19) of the Code is eligible to receive contributions
that are deductible as charitable contributions for income tax
purposes, provided that the organization is a Federally
chartered corporation. In addition, such a charitable
contribution, when made by an individual, qualifies for the
more generous charitable contribution percentage limitations
that generally apply to contributions to public charities
described in section 170(b)(1)(A) of the Code.
EFFECTIVE DATE
The provision is effective for taxable years beginning
after the date of enactment.
III. VOTE OF THE COMMITTEE
Pursuant to 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. 1432, the ``VSO Equal Tax Treatment
Act,'' on November 30, 2023.
The bill, H.R. 1432, the ``VSO Equal Tax Treatment Act,''
as amended, was ordered favorably reported to the House of
Representatives by a roll call vote of 42 yeas to 0 nays (with
a quorum being present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith (MO)..................... X ...... ......... Mr. Neal............. X ...... .........
Mr. Buchanan....................... X ...... ......... Mr. Doggett.......... X ...... .........
Mr. Smith (NE)..................... X ...... ......... Mr. Thompson......... X ...... .........
Mr. Kelly.......................... ...... ...... ......... Mr. Larson........... X ...... .........
Mr. Schweikert..................... X ...... ......... Mr. Blumenauer....... X ...... .........
Mr. LaHood......................... X ...... ......... Mr. Pascrell......... X ...... .........
Dr. Wenstrup....................... X ...... ......... Mr. Davis............ X ...... .........
Mr. Arrington...................... X ...... ......... Ms. Sanchez.......... X ...... .........
Dr. Ferguson....................... X ...... ......... Mr. Higgins.......... X ...... .........
Mr. Estes.......................... X ...... ......... Ms. Sewell........... X ...... .........
Mr. Smucker........................ X ...... ......... Ms. DelBene.......... X ...... .........
Mr. Hern........................... X ...... ......... Ms. Chu.............. X ...... .........
Ms. Miller......................... X ...... ......... Ms. Moore............ X ...... .........
Dr. Murphy......................... X ...... ......... Mr. Kildee........... X ...... .........
Mr. Kustoff........................ X ...... ......... Mr. Beyer............ X ...... .........
Mr. Fitzpatrick.................... X ...... ......... Mr. Evans............ X ...... .........
Mr. Steube......................... X ...... ......... Mr. Schneider........ X ...... .........
Ms. Tenney......................... X ...... ......... Mr. Panetta.......... X ...... .........
Mrs. Fischbach..................... X ...... .........
Mr. Moore.......................... X ...... .........
Mrs. Steel......................... X ...... .........
Ms. Van Duyne...................... X ...... .........
Mr. Feenstra....................... X ...... .........
Ms. Malliotakis.................... X ...... .........
Mr. Carey.......................... 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. 1432, as
reported. The estimate prepared by the Joint Committee on
Taxation (JCT) is included below.
The following table shows the estimated effect of the
proposal on Federal fiscal year budget receipts.
Fiscal Years
[Millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2024-28 2024-33
--------------------------------------------------------------------------------------------------------------------------------------------------------
.......................................................... [1] [1] [1] [1] [1] [1] [1] [1] [1] [1] -1 -1
--------------------------------------------------------------------------------------------------------------------------------------------------------
[1] Loss of less than $500,000.
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 increases an existing tax expenditure and involves no new
or increased budget authority.
C. Cost Estimate Prepared by the Congressional Budget Office
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause (3)(c)(3) of rule XIII of the Rules
of the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the Committee has requested
but not received a cost estimate for this bill from the
Director of Congressional Budget Office. The Chairman of the
Committee shall cause such estimate and statement to be printed
in the Congressional Record upon its receipt by the Committee.
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, the Committee made findings and
recommendations that are reflected in this report.
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 does not authorize funding, so no statement of general
performance goals and objectives 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. 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.
E. Duplication of Federal Programs
In compliance with clause 3(c)(5) of rule XIII of the Rules
of the House of Representatives, 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 (Pub. L. No. 95-220, as amended by Pub. L. No.
98-169).
F. Tax Complexity Analysis
Section 4022(b) of the Internal Revenue Service Reform and
Restructuring Act of 1998 (``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. The staff of the Joint Committee on Taxation has
determined that there are no provisions that are of widespread
applicability to individuals or small businesses.
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 aw made by
the bill, as reported, are shown as follows.
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 italics, and existing law in which no
change is proposed is shown in roman):
INTERNAL REVENUE CODE OF 1986
TITLE 26--INTERNAL REVENUE CODE
* * * * * * *
Subtitle A--Income Taxes
* * * * * * *
CHAPTER 1--NORMAL TAXES AND SURTAXES
* * * * * * *
Subchapter B--COMPUTATION OF TAXABLE INCOME
* * * * * * *
PART VI--ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS
* * * * * * *
SEC. 170. CHARITABLE, ETC., CONTRIBUTIONS AND GIFTS.
(a) Allowance of deduction.--
(1) General rule.--There shall be allowed as a
deduction any charitable contribution (as defined in
subsection (c)) payment of which is made within the
taxable year. A charitable contribution shall be
allowable as a deduction only if verified under
regulations prescribed by the Secretary.
(2) Corporations on accrual basis.--In the case of a
corporation reporting its taxable income on the accrual
basis, if--
(A) the board of directors authorizes a
charitable contribution during any taxable
year, and
(B) payment of such contribution is made
after the close of such taxable year and on or
before the 15th day of the fourth month
following the close of such taxable year,
then the taxpayer may elect to treat such contribution
as paid during such taxable year. The election may be
made only at the time of the filing of the return for
such taxable year, and shall be signified in such
manner as the Secretary shall by regulations prescribe.
(3) Future interests in tangible personal property.--
For purposes of this section, payment of a charitable
contribution which consists of a future interest in
tangible personal property shall be treated as made
only when all intervening interests in, and rights to
the actual possession or enjoyment of, the property
have expired or are held by persons other than the
taxpayer or those standing in a relationship to the
taxpayer described in section 267(b) or 707(b). For
purposes of the preceding sentence, a fixture which is
intended to be severed from the real property shall be
treated as tangible personal property.
(b) Percentage limitations.--
(1) Individuals.--In the case of an individual, the
deduction provided in subsection (a) shall be limited
as provided in the succeeding subparagraphs.
(A) General rule.--Any charitable
contribution to--
(i) a church or a convention or
association of churches,
(ii) an educational organization
which normally maintains a regular
faculty and curriculum and normally has
a regularly enrolled body of pupils or
students in attendance at the place
where its educational activities are
regularly carried on,
(iii) an organization the principal
purpose or functions of which are the
providing of medical or hospital care
or medical education or medical
research, if the organization is a
hospital, or if the organization is a
medical research organization directly
engaged in the continuous active
conduct of medical research in
conjunction with a hospital, and during
the calendar year in which the
contribution is made such organization
is committed to spend such
contributions for such research before
January 1 of the fifth calendar year
which begins after the date such
contribution is made,
(iv) an organization which normally
receives a substantial part of its
support (exclusive of income received
in the exercise or performance by such
organization of its charitable,
educational, or other purpose or
function constituting the basis for its
exemption under section 501(a)) from
the United States or any State or
political subdivision thereof or from
direct or indirect contributions from
the general public, and which is
organized and operated exclusively to
receive, hold, invest, and administer
property and to make expenditures to or
for the benefit of a college or
university which is an organization
referred to in clause (ii) of this
subparagraph and which is an agency or
instrumentality of a State or political
subdivision thereof, or which is owned
or operated by a State or political
subdivision thereof or by an agency or
instrumentality of one or more States
or political subdivisions,
(v) a governmental unit referred to
in subsection (c)(1),
(vi) an organization referred to in
subsection (c)(2) which normally
receives a substantial part of its
support (exclusive of income received
in the exercise or performance by such
organization of its charitable,
educational, or other purpose or
function constituting the basis for its
exemption under section 501(a)) from a
governmental unit referred to in
subsection (c)(1) or from direct or
indirect contributions from the general
public,
(vii) a private foundation described
in subparagraph (F),
(viii) an organization described in
section 509(a)(2) or (3), [or]
(ix) an agricultural research
organization directly engaged in the
continuous active conduct of
agricultural research (as defined in
section 1404 of the National
Agricultural Research, Extension, and
Teaching Policy Act of 1977) in
conjunction with a land-grant college
or university (as defined in such
section) or a non-land grant college of
agriculture (as defined in such
section), and during the calendar year
in which the contribution is made such
organization is committed to spend such
contribution for such research before
January 1 of the fifth calendar year
which begins after the date such
contribution is made, or
(x) an organization described in
section 501(c)(19) that is a federally
chartered corporation,
shall be allowed to the extent that the
aggregate of such contributions does not exceed
50 percent of the taxpayer's contribution base
for the taxable year.
(B) Other contributions.--Any charitable
contribution other than a charitable
contribution to which subparagraph (A) applies
shall be allowed to the extent that the
aggregate of such contributions does not exceed
the lesser of--
(i) 30 percent of the taxpayer's
contribution base for the taxable year,
or
(ii) the excess of 50 percent of the
taxpayer's contribution base for the
taxable year over the amount of
charitable contributions allowable
under subparagraph (A) (determined
without regard to subparagraph (C)).
If the aggregate of such contributions exceeds
the limitation of the preceding sentence, such
excess shall be treated (in a manner consistent
with the rules of subsection (d)(1)) as a
charitable contribution (to which subparagraph
(A) does not apply) in each of the 5 succeeding
taxable years in order of time.
(C) Special limitation with respect to
contributions described in subparagraph (A) of
certain capital gain property.--
(i) In the case of charitable
contributions described in subparagraph
(A) of capital gain property to which
subsection (e)(1)(B) does not apply,
the total amount of contributions of
such property which may be taken into
account under subsection (a) for any
taxable year shall not exceed 30
percent of the taxpayer's contribution
base for such year. For purposes of
this subsection, contributions of
capital gain property to which this
subparagraph applies shall be taken
into account after all other charitable
contributions (other than charitable
contributions to which subparagraph (D)
applies).
(ii) If charitable contributions
described in subparagraph (A) of
capital gain property to which clause
(i) applies exceeds 30 percent of the
taxpayer's contribution base for any
taxable year, such excess shall be
treated, in a manner consistent with
the rules of subsection (d)(1), as a
charitable contribution of capital gain
property to which clause (i) applies in
each of the 5 succeeding taxable years
in order of time.
(iii) At the election of the taxpayer
(made at such time and in such manner
as the Secretary prescribes by
regulations), subsection (e)(1) shall
apply to all contributions of capital
gain property (to which subsection
(e)(1)(B) does not otherwise apply)
made by the taxpayer during the taxable
year. If such an election is made,
clauses (i) and (ii) shall not apply to
contributions of capital gain property
made during the taxable year, and, in
applying subsection (d)(1) for such
taxable year with respect to
contributions of capital gain property
made in any prior contribution year for
which an election was not made under
this clause, such contributions shall
be reduced as if subsection (e)(1) had
applied to such contributions in the
year in which made.
(iv) For purposes of this paragraph,
the term ``capital gain property''
means, with respect to any
contribution, any capital asset the
sale of which at its fair market value
at the time of the contribution would
have resulted in gain which would have
been long-term capital gain. For
purposes of the preceding sentence, any
property which is property used in the
trade or business (as defined in
section 1231(b)) shall be treated as a
capital asset.
(D) Special limitation with respect to
contributions of capital gain property to
organizations not described in subparagraph
(A).--
(i) In general.--In the case of
charitable contributions (other than
charitable contributions to which
subparagraph (A) applies) of capital
gain property, the total amount of such
contributions of such property taken
into account under subsection (a) for
any taxable year shall not exceed the
lesser of--
(I) 20 percent of the
taxpayer's contribution base
for the taxable year, or
(II) the excess of 30 percent
of the taxpayer's contribution
base for the taxable year over
the amount of the contributions
of capital gain property to
which subparagraph (C) applies.
For purposes of this subsection, contributions
of capital gain property to which this
subparagraph applies shall be taken into
account after all other charitable
contributions.
(ii) Carryover.--If the aggregate
amount of contributions described in
clause (i) exceeds the limitation of
clause (i), such excess shall be
treated (in a manner consistent with
the rules of subsection (d)(1)) as a
charitable contribution of capital gain
property to which clause (i) applies in
each of the 5 succeeding taxable years
in order of time.
(E) Contributions of qualified conservation
contributions.--
(i) In general.--Any qualified
conservation contribution (as defined
in subsection (h)(1)) shall be allowed
to the extent the aggregate of such
contributions does not exceed the
excess of 50 percent of the taxpayer's
contribution base over the amount of
all other charitable contributions
allowable under this paragraph.
(ii) Carryover.--If the aggregate
amount of contributions described in
clause (i) exceeds the limitation of
clause (i), such excess shall be
treated (in a manner consistent with
the rules of subsection (d)(1)) as a
charitable contribution to which clause
(i) applies in each of the 15
succeeding years in order of time.
(iii) Coordination with other
subparagraphs.--For purposes of
applying this subsection and subsection
(d)(1), contributions described in
clause (i) shall not be treated as
described in subparagraph (A), (B),
(C), or (D) and such subparagraphs
shall apply without regard to such
contributions.
(iv) Special rule for contribution of
property used in agriculture or
livestock production.--
(I) In general.--If the
individual is a qualified
farmer or rancher for the
taxable year for which the
contribution is made, clause
(i) shall be applied by
substituting ``100 percent''
for ``50 percent''.
(II) Exception.--Subclause
(I) shall not apply to any
contribution of property made
after the date of the enactment
of this subparagraph which is
used in agriculture or
livestock production (or
available for such production)
unless such contribution is
subject to a restriction that
such property remain available
for such production. This
subparagraph shall be applied
separately with respect to
property to which subclause (I)
does not apply by reason of the
preceding sentence prior to its
application to property to
which subclause (I) does apply.
(v) Definition.--For purposes of
clause (iv), the term ``qualified
farmer or rancher'' means a taxpayer
whose gross income from the trade or
business of farming (within the meaning
of section 2032A(e)(5)) is greater than
50 percent of the taxpayer's gross
income for the taxable year.
(F) Certain private foundations.--The private
foundations referred to in subparagraph
(A)(vii) and subsection (e)(1)(B) are--
(i) a private operating foundation
(as defined in section 4942(j)(3)),
(ii) any other private foundation (as
defined in section 509(a)) which, not
later than the 15th day of the third
month after the close of the
foundation's taxable year in which
contributions are received, makes
qualifying distributions (as defined in
section 4942(g), without regard to
paragraph (3) thereof), which are
treated, after the application of
section 4942(g)(3), as distributions
out of corpus (in accordance with
section 4942(h)) in an amount equal to
100 percent of such contributions, and
with respect to which the taxpayer
obtains adequate records or other
sufficient evidence from the foundation
showing that the foundation made such
qualifying distributions, and
(iii) a private foundation all of the
contributions to which are pooled in a
common fund and which would be
described in section 509(a)(3) but for
the right of any substantial
contributor (hereafter in this clause
called ``donor'') or his spouse to
designate annually the recipients, from
among organizations described in
paragraph (1) of section 509(a), of the
income attributable to the donor's
contribution to the fund and to direct
(by deed or by will) the payment, to an
organization described in such
paragraph (1), of the corpus in the
common fund attributable to the donor's
contribution; but this clause shall
apply only if all of the income of the
common fund is required to be (and is)
distributed to one or more
organizations described in such
paragraph (1) not later than the 15th
day of the third month after the close
of the taxable year in which the income
is realized by the fund and only if all
of the corpus attributable to any
donor's contribution to the fund is
required to be (and is) distributed to
one or more of such organizations not
later than one year after his death or
after the death of his surviving spouse
if she has the right to designate the
recipients of such corpus.
(G) Increased limitation for cash
contributions.--
(i) In general.--In the case of any
contribution of cash to an organization
described in subparagraph (A), the
total amount of such contributions
which may be taken into account under
subsection (a) for any taxable year
beginning after December 31, 2017, and
before January 1, 2026, shall not
exceed 60 percent of the taxpayer's
contribution base for such year.
(ii) Carryover.--If the aggregate
amount of contributions described in
clause (i) exceeds the applicable
limitation under clause (i) for any
taxable year described in such clause,
such excess shall be treated (in a
manner consistent with the rules of
subsection (d)(1)) as a charitable
contribution to which clause (i)
applies in each of the 5 succeeding
years in order of time.
(iii) Coordination with subparagraphs
(A) and (B).--
(I) In general.--
Contributions taken into
account under this subparagraph
shall not be taken into account
under subparagraph (A).
(II) Limitation reduction.--
For each taxable year described
in clause (i), and each taxable
year to which any contribution
under this subparagraph is
carried over under clause (ii),
subparagraph (A) shall be
applied by reducing (but not
below zero) the contribution
limitation allowed for the
taxable year under such
subparagraph by the aggregate
contributions allowed under
this subparagraph for such
taxable year, and subparagraph
(B) shall be applied by
treating any reference to
subparagraph (A) as a reference
to both subparagraph (A) and
this subparagraph.
(H) Contribution base defined.--For purposes
of this section, the term ``contribution base''
means adjusted gross income (computed without
regard to any net operating loss carryback to
the taxable year under section 172).
(2) Corporations.--In the case of a corporation--
(A) In general.--The total deductions under
subsection (a) for any taxable year (other than
for contributions to which subparagraph (B) or
(C) applies) shall not exceed 10 percent of the
taxpayer's taxable income.
(B) Qualified conservation contributions by
certain corporate farmers and ranchers.--
(i) In general.--Any qualified
conservation contribution (as defined
in subsection (h)(1))--
(I) which is made by a
corporation which, for the
taxable year during which the
contribution is made, is a
qualified farmer or rancher (as
defined in paragraph (1)(E)(v))
and the stock of which is not
readily tradable on an
established securities market
at any time during such year,
and
(II) which, in the case of
contributions made after the
date of the enactment of this
subparagraph, is a contribution
of property which is used in
agriculture or livestock
production (or available for
such production) and which is
subject to a restriction that
such property remain available
for such production,
shall be allowed to the extent the aggregate
of such contributions does not exceed the
excess of the taxpayer's taxable income over
the amount of charitable contributions
allowable under subparagraph (A).
(ii) Carryover.--If the aggregate
amount of contributions described in
clause (i) exceeds the limitation of
clause (i), such excess shall be
treated (in a manner consistent with
the rules of subsection (d)(2)) as a
charitable contribution to which clause
(i) applies in each of the 15
succeeding taxable years in order of
time.
(C) Qualified conservation contributions by
certain Native Corporations.--
(i) In general.--Any qualified
conservation contribution (as defined
in subsection (h)(1)) which--
(I) is made by a Native
Corporation, and
(II) is a contribution of
property which was land
conveyed under the Alaska
Native Claims Settlement Act,
shall be allowed to the extent that the
aggregate amount of such contributions does not
exceed the excess of the taxpayer's taxable
income over the amount of charitable
contributions allowable under subparagraph (A).
(ii) Carryover.--If the aggregate
amount of contributions described in
clause (i) exceeds the limitation of
clause (i), such excess shall be
treated (in a manner consistent with
the rules of subsection (d)(2)) as a
charitable contribution to which clause
(i) applies in each of the 15
succeeding taxable years in order of
time.
(iii) Native Corporation.--For
purposes of this subparagraph, the term
``Native Corporation'' has the meaning
given such term by section 3(m) of the
Alaska Native Claims Settlement Act.
(D) Taxable income.--For purposes of this
paragraph, taxable income shall be computed
without regard to--
(i) this section,
(ii) part VIII (except section 248),
(iii) any net operating loss
carryback to the taxable year under
section 172,
(iv) any capital loss carryback to
the taxable year under section
1212(a)(1)
(v) section 199A(g).
(c) Charitable contribution defined.--For purposes of this
section, the term ``charitable contribution'' means a
contribution or gift to or for the use of--
(1) A State, a possession of the United States, or
any political subdivision of any of the foregoing, or
the United States or the District of Columbia, but only
if the contribution or gift is made for exclusively
public purposes.
(2) A corporation, trust, or community chest, fund,
or foundation--
(A) created or organized in the United States
or in any possession thereof, or under the law
of the United States, any State, the District
of Columbia, or any possession of the United
States;
(B) organized and operated exclusively for
religious, charitable, scientific, literary, or
educational purposes, or to foster national or
international amateur sports competition (but
only if no part of its activities involve the
provision of athletic facilities or equipment),
or for the prevention of cruelty to children or
animals;
(C) no part of the net earnings of which
inures to the benefit of any private
shareholder or individual; and
(D) which is not disqualified for tax
exemption under section 501(c)(3) by reason of
attempting to influence legislation, and which
does not participate in, or intervene in
(including the publishing or distributing of
statements), any political campaign on behalf
of (or in opposition to) any candidate for
public office.
A contribution or gift by a corporation to a trust,
chest, fund, or foundation shall be deductible by
reason of this paragraph only if it is to be used
within the United States or any of its possessions
exclusively for purposes specified in subparagraph (B).
Rules similar to the rules of section 501(j) shall
apply for purposes of this paragraph.
(3) A post or organization of war veterans, or an
auxiliary unit or society of, or trust or foundation
for, any such post or organization--
(A) organized in the United States or any of
its possessions, and
(B) no part of the net earnings of which
inures to the benefit of any private
shareholder or individual.
(4) In the case of a contribution or gift by an
individual, a domestic fraternal society, order, or
association, operating under the lodge system, but only
if such contribution or gift is to be used exclusively
for religious, charitable, scientific, literary, or
educational purposes, or for the prevention of cruelty
to children or animals.
(5) A cemetery company owned and operated exclusively
for the benefit of its members, or any corporation
chartered solely for burial purposes as a cemetery
corporation and not permitted by its charter to engage
in any business not necessarily incident to that
purpose, if such company or corporation is not operated
for profit and no part of the net earnings of such
company or corporation inures to the benefit of any
private shareholder or individual.
(6) An organization described in section 501(c)(19)
that is a federally chartered corporation.
For purposes of this section, the term ``charitable
contribution'' also means an amount treated under subsection
(g) as paid for the use of an organization described in
paragraph (2), (3), or (4).
(d) Carryovers of excess contributions.--
(1) Individuals.--
(A) In general.--In the case of an
individual, if the amount of charitable
contributions described in subsection (b)(1)(A)
payment of which is made within a taxable year
(hereinafter in this paragraph referred to as
the ``contribution year'') exceeds 50 percent
of the taxpayer's contribution base for such
year, such excess shall be treated as a
charitable contribution described in subsection
(b)(1)(A) paid in each of the 5 succeeding
taxable years in order of time, but, with
respect to any such succeeding taxable year,
only to the extent of the lesser of the two
following amounts:
(i) the amount by which 50 percent of
the taxpayer's contribution base for
such succeeding taxable year exceeds
the sum of the charitable contributions
described in subsection (b)(1)(A)
payment of which is made by the
taxpayer within such succeeding taxable
year (determined without regard to this
subparagraph) and the charitable
contributions described in subsection
(b)(1)(A) payment of which was made in
taxable years before the contribution
year which are treated under this
subparagraph as having been paid in
such succeeding taxable year; or
(ii) in the case of the first
succeeding taxable year, the amount of
such excess, and in the case of the
second, third, fourth, or fifth
succeeding taxable year, the portion of
such excess not treated under this
subparagraph as a charitable
contribution described in subsection
(b)(1)(A) paid in any taxable year
intervening between the contribution
year and such succeeding taxable year.
(B) Special rule for net operating loss
carryovers.--In applying subparagraph (A), the
excess determined under subparagraph (A) for
the contribution year shall be reduced to the
extent that such excess reduces taxable income
(as computed for purposes of the second
sentence of section 172(b)(2)) and increases
the net operating loss deduction for a taxable
year succeeding the contribution year.
(2) Corporations.--
(A) In general.--Any contribution made by a
corporation in a taxable year (hereinafter in
this paragraph referred to as the
``contribution year'') in excess of the amount
deductible for such year under subsection
(b)(2)(A) shall be deductible for each of the 5
succeeding taxable years in order of time, but
only to the extent of the lesser of the two
following amounts: (i) the excess of the
maximum amount deductible for such succeeding
taxable year under subsection (b)(2)(A) over
the sum of the contributions made in such year
plus the aggregate of the excess contributions
which were made in taxable years before the
contribution year and which are deductible
under this subparagraph for such succeeding
taxable year; or (ii) in the case of the first
succeeding taxable year, the amount of such
excess contribution, and in the case of the
second, third, fourth, or fifth succeeding
taxable year, the portion of such excess
contribution not deductible under this
subparagraph for any taxable year intervening
between the contribution year and such
succeeding taxable year.
(B) Special rule for net operating loss
carryovers.--For purposes of subparagraph (A),
the excess of--
(i) the contributions made by a
corporation in a taxable year to which
this section applies, over
(ii) the amount deductible in such
year under the limitation in subsection
(b)(2)(A),
shall be reduced to the extent that such excess
reduces taxable income (as computed for
purposes of the second sentence of section
172(b)(2)) and increases a net operating loss
carryover under section 172 to a succeeding
taxable year.
(e) Certain contributions of ordinary income and capital gain
property.--
(1) General rule.--The amount of any charitable
contribution of property otherwise taken into account
under this section shall be reduced by the sum of--
(A) the amount of gain which would not have
been long-term capital gain (determined without
regard to section 1221(b)(3)) if the property
contributed had been sold by the taxpayer at
its fair market value (determined at the time
of such contribution), and
(B) in the case of a charitable
contribution--
(i) of tangible personal property--
(I) if the use by the donee
is unrelated to the purpose or
function constituting the basis
for its exemption under section
501 (or, in the case of a
governmental unit, to any
purpose or function described
in subsection (c)), or
(II) which is applicable
property (as defined in
paragraph (7)(C), but without
regard to clause (ii) thereof)
which is sold, exchanged, or
otherwise disposed of by the
donee before the last day of
the taxable year in which the
contribution was made and with
respect to which the donee has
not made a certification in
accordance with paragraph
(7)(D),
(ii) to or for the use of a private
foundation (as defined in section
509(a)), other than a private
foundation described in subsection
(b)(1)(F),
(iii) of any patent, copyright (other
than a copyright described in section
1221(a)(3) or 1231(b)(1)(C)),
trademark, trade name, trade secret,
know-how, software (other than software
described in section 197(e)(3)(A)(i)),
or similar property, or applications or
registrations of such property, or
(iv) of any taxidermy property which
is contributed by the person who
prepared, stuffed, or mounted the
property or by any person who paid or
incurred the cost of such preparation,
stuffing, or mounting,
the amount of gain which would have been long-
term capital gain if the property contributed
had been sold by the taxpayer at its fair
market value (determined at the time of such
contribution).
For purposes of applying this paragraph (other than in
the case of gain to which section 617(d)(1), 1245(a),
1250(a), 1252(a), or 1254(a) applies), property which
is property used in the trade or business (as defined
in section 1231(b)) shall be treated as a capital
asset. For purposes of applying this paragraph in the
case of a charitable contribution of stock in an S
corporation, rules similar to the rules of section 751
shall apply in determining whether gain on such stock
would have been long-term capital gain if such stock
were sold by the taxpayer.
(2) Allocation of basis.--For purposes of paragraph
(1), in the case of a charitable contribution of less
than the taxpayer's entire interest in the property
contributed, the taxpayer's adjusted basis in such
property shall be allocated between the interest
contributed and any interest not contributed in
accordance with regulations prescribed by the
Secretary.
(3) Special rule for certain contributions of
inventory and other property.--
(A) Qualified contributions.--For purposes of
this paragraph, a qualified contribution shall
mean a charitable contribution of property
described in paragraph (1) or (2) of section
1221(a), by a corporation (other than a
corporation which is an S corporation) to an
organization which is described in section
501(c)(3) and is exempt under section 501(a)
(other than a private foundation, as defined in
section 509(a), which is not an operating
foundation, as defined in section 4942(j)(3)),
but only if--
(i) the use of the property by the
donee is related to the purpose or
function constituting the basis for its
exemption under section 501 and the
property is to be used by the donee
solely for the care of the ill, the
needy, or infants;
(ii) the property is not transferred
by the donee in exchange for money,
other property, or services;
(iii) 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 (i) and (ii); and
(iv) in the case where the property
is subject to regulation under the
Federal Food, Drug, and Cosmetic Act,
as amended, such property must fully
satisfy the applicable requirements of
such Act and regulations promulgated
thereunder on the date of transfer and
for one hundred and eighty days prior
thereto.
(B) Amount of reduction.--The reduction under
paragraph (1)(A) for any qualified contribution
(as defined in subparagraph (A)) shall be no
greater than the sum of--
(i) one-half of the amount computed
under paragraph (1)(A) (computed
without regard to this paragraph), and
(ii) the amount (if any) by which the
charitable contribution deduction under
this section for any qualified
contribution (computed by taking into
account the amount determined in clause
(i), but without regard to this clause)
exceeds twice the basis of such
property.
(C) Special rule for contributions of food
inventory.--
(i) General rule.--In the case of a
charitable contribution of food from
any trade or business of the taxpayer,
this paragraph shall be applied--
(I) without regard to whether
the contribution is made by a C
corporation, and
(II) only to food that is
apparently wholesome food.
(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)(D)).
(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 taxable years in
order of time.
(II) Coordination with
overall corporate limitation.--
In the case of any charitable
contribution which is allowable
after the application of 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).
(iv) 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.
(v) 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).
(vi) 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.
(D) This paragraph shall not apply to so much
of the amount of the gain described in
paragraph (1)(A) which would be long-term
capital gain but for the application of
sections 617, 1245, 1250, or 1252.
(4) Special rule for contributions of scientific
property used for research.--
(A) Limit on reduction.--In the case of a
qualified research contribution, the reduction
under paragraph (1)(A) shall be no greater than
the amount determined under paragraph (3)(B).
(B) Qualified research contributions.--For
purposes of this paragraph, the term
``qualified research contribution'' means a
charitable contribution by a corporation of
tangible personal property described in
paragraph (1) of section 1221(a), but only if--
(i) the contribution is to an
organization described in subparagraph
(A) or subparagraph (B) of section
41(e)(6),
(ii) the property is constructed or
assembled by the taxpayer,
(iii) the contribution is made not
later than 2 years after the date the
construction or assembly of the
property is substantially completed,
(iv) the original use of the property
is by the donee,
(v) the property is scientific
equipment or apparatus substantially
all of the use of which by the donee is
for research or experimentation (within
the meaning of section 174), or for
research training, in the United States
in physical or biological sciences,
(vi) the property is not transferred
by the donee in exchange for money,
other property, or services, and
(vii) 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 (v) and (vi).
(C) Construction of property by taxpayer.--
For purposes of this paragraph, property shall
be treated as constructed by the taxpayer only
if the cost of the parts used in the
construction of such property (other than parts
manufactured by the taxpayer or a related
person) do not exceed 50 percent of the
taxpayer's basis in such property.
(D) Corporation.--For purposes of this
paragraph, the term ``corporation'' shall not
include--
(i) an S corporation,
(ii) a personal holding company (as
defined in section 542), and
(iii) a service organization (as
defined in section 414(m)(3)).
(5) Special rule for contributions of stock for which
market quotations are readily available.--
(A) In general.--Subparagraph (B)(ii) of
paragraph (1) shall not apply to any
contribution of qualified appreciated stock.
(B) Qualified appreciated stock.--Except as
provided in subparagraph (C), for purposes of
this paragraph, the term ``qualified
appreciated stock'' means any stock of a
corporation--
(i) for which (as of the date of the
contribution) market quotations are
readily available on an established
securities market, and
(ii) which is capital gain property
(as defined in subsection
(b)(1)(C)(iv)).
(C) Donor may not contribute more than 10
percent of stock of corporation.--
(i) In general.--In the case of any
donor, the term ``qualified appreciated
stock'' shall not include any stock of
a corporation contributed by the donor
in a contribution to which paragraph
(1)(B)(ii) applies (determined without
regard to this paragraph) to the extent
that the amount of the stock so
contributed (when increased by the
aggregate amount of all prior such
contributions by the donor of stock in
such corporation) exceeds 10 percent
(in value) of all of the outstanding
stock of such corporation.
(ii) Special rule.--For purposes of
clause (i), an individual shall be
treated as making all contributions
made by any member of his family (as
defined in section 267(c)(4)).
[(6) Repealed. Pub. L. 113-295, div. A, title II,
Sec. 221(a)(28)(B), Dec. 19, 2014, 128 Stat. 4041].--
(7) Recapture of deduction on certain dispositions of
exempt use property.--
(A) In general.--In the case of an applicable
disposition of applicable property, there shall
be included in the income of the donor of such
property for the taxable year of such donor in
which the applicable disposition occurs an
amount equal to the excess (if any) of--
(i) the amount of the deduction
allowed to the donor under this section
with respect to such property, over
(ii) the donor's basis in such
property at the time such property was
contributed.
(B) Applicable disposition.--For purposes of
this paragraph, the term ``applicable
disposition'' means any sale, exchange, or
other disposition by the donee of applicable
property--
(i) after the last day of the taxable
year of the donor in which such
property was contributed, and
(ii) before the last day of the 3-
year period beginning on the date of
the contribution of such property,
unless the donee makes a certification in
accordance with subparagraph (D).
(C) Applicable property.--For purposes of
this paragraph, the term ``applicable
property'' means charitable deduction property
(as defined in section 6050L(a)(2)(A))--
(i) which is tangible personal
property the use of which is identified
by the donee as related to the purpose
or function constituting the basis of
the donee's exemption under section
501, and
(ii) for which a deduction in excess
of the donor's basis is allowed.
(D) Certification.--A certification meets the
requirements of this subparagraph if it is a
written statement which is signed under penalty
of perjury by an officer of the donee
organization and--
(i) which--
(I) certifies that the use of
the property by the donee was
substantial and related to the
purpose or function
constituting the basis for the
donee's exemption under section
501, and
(II) describes how the
property was used and how such
use furthered such purpose or
function, or
(ii) which--
(I) states the intended use
of the property by the donee at
the time of the contribution,
and
(II) certifies that such
intended use has become
impossible or infeasible to
implement.
(f) Disallowance of deduction in certain cases and special
rules.--
(1) In general.--No deduction shall be allowed under
this section for a contribution to or for the use of an
organization or trust described in section 508(d) or
4948(c)(4) subject to the conditions specified in such
sections.
(2) Contributions of property placed in trust.--
(A) Remainder interest.--In the case of
property transferred in trust, no deduction
shall be allowed under this section for the
value of a contribution of a remainder interest
unless the trust is a charitable remainder
annuity trust or a charitable remainder
unitrust (described in section 664), or a
pooled income fund (described in section
642(c)(5)).
(B) Income interests, etc..--No deduction
shall be allowed under this section for the
value of any interest in property (other than a
remainder interest) transferred in trust unless
the interest is in the form of a guaranteed
annuity or the trust instrument specifies that
the interest is a fixed percentage distributed
yearly of the fair market value of the trust
property (to be determined yearly) and the
grantor is treated as the owner of such
interest for purposes of applying section 671.
If the donor ceases to be treated as the owner
of such an interest for purposes of applying
section 671, at the time the donor ceases to be
so treated, the donor shall for purposes of
this chapter be considered as having received
an amount of income equal to the amount of any
deduction he received under this section for
the contribution reduced by the discounted
value of all amounts of income earned by the
trust and taxable to him before the time at
which he ceases to be treated as the owner of
the interest. Such amounts of income shall be
discounted to the date of the contribution. The
Secretary shall prescribe such regulations as
may be necessary to carry out the purposes of
this subparagraph.
(C) Denial of deduction in case of payments
by certain trusts.--In any case in which a
deduction is allowed under this section for the
value of an interest in property described in
subparagraph (B), transferred in trust, no
deduction shall be allowed under this section
to the grantor or any other person for the
amount of any contribution made by the trust
with respect to such interest.
(D) Exception.--This paragraph shall not
apply in a case in which the value of all
interests in property transferred in trust are
deductible under subsection (a).
(3) Denial of deduction in case of certain
contributions of partial interests in property.--
(A) In general.--In the case of a
contribution (not made by a transfer in trust)
of an interest in property which consists of
less than the taxpayer's entire interest in
such property, a deduction shall be allowed
under this section only to the extent that the
value of the interest contributed would be
allowable as a deduction under this section if
such interest had been transferred in trust.
For purposes of this subparagraph, a
contribution by a taxpayer of the right to use
property shall be treated as a contribution of
less than the taxpayer's entire interest in
such property.
(B) Exceptions.--Subparagraph (A) shall not
apply to--
(i) a contribution of a remainder
interest in a personal residence or
farm,
(ii) a contribution of an undivided
portion of the taxpayer's entire
interest in property, and
(iii) a qualified conservation
contribution.
(4) Valuation of remainder interest in real
property.--For purposes of this section, in determining
the value of a remainder interest in real property,
depreciation (computed on the straight line method) and
depletion of such property shall be taken into account,
and such value shall be discounted at a rate of 6
percent per annum, except that the Secretary may
prescribe a different rate.
(5) Reduction for certain interest.--If, in
connection with any charitable contribution, a
liability is assumed by the recipient or by any other
person, or if a charitable contribution is of property
which is subject to a liability, then, to the extent
necessary to avoid the duplication of amounts, the
amount taken into account for purposes of this section
as the amount of the charitable contribution--
(A) shall be reduced for interest (i) which
has been paid (or is to be paid) by the
taxpayer, (ii) which is attributable to the
liability, and (iii) which is attributable to
any period after the making of the
contribution, and
(B) in the case of a bond, shall be further
reduced for interest (i) which has been paid
(or is to be paid) by the taxpayer on
indebtedness incurred or continued to purchase
or carry such bond, and (ii) which is
attributable to any period before the making of
the contribution.
The reduction pursuant to subparagraph (B) shall not
exceed the interest (including interest equivalent) on
the bond which is attributable to any period before the
making of the contribution and which is not (under the
taxpayer's method of accounting) includible in the
gross income of the taxpayer for any taxable year. For
purposes of this paragraph, the term ``bond'' means any
bond, debenture, note, or certificate or other evidence
of indebtedness.
(6) Deductions for out-of-pocket expenditures.--No
deduction shall be allowed under this section for an
out-of-pocket expenditure made by any person on behalf
of an organization described in subsection (c) (other
than an organization described in section 501(h)(5)
(relating to churches, etc.)) if the expenditure is
made for the purpose of influencing legislation (within
the meaning of section 501(c)(3)).
(7) Reformations to comply with paragraph (2).--
(A) In general.--A deduction shall be allowed
under subsection (a) in respect of any
qualified reformation (within the meaning of
section 2055(e)(3)(B)).
(B) Rules similar to section 2055(e)(3) to
apply.--For purposes of this paragraph, rules
similar to the rules of section 2055(e)(3)
shall apply.
(8) Substantiation requirement for certain
contributions.--
(A) General rule.--No deduction shall be
allowed under subsection (a) for any
contribution of $250 or more unless the
taxpayer substantiates the contribution by a
contemporaneous written acknowledgment of the
contribution by the donee organization that
meets the requirements of subparagraph (B).
(B) Content of acknowledgement.--An
acknowledgement meets the requirements of this
subparagraph if it includes the following
information:
(i) The amount of cash and a
description (but not value) of any
property other than cash contributed.
(ii) Whether the donee organization
provided any goods or services in
consideration, in whole or in part, for
any property described in clause (i).
(iii) A description and good faith
estimate of the value of any goods or
services referred to in clause (ii) or,
if such goods or services consist
solely of intangible religious
benefits, a statement to that effect.
For purposes of this subparagraph, the term
``intangible religious benefit'' means any
intangible religious benefit which is provided
by an organization organized exclusively for
religious purposes and which generally is not
sold in a commercial transaction outside the
donative context.
(C) Contemporaneous.--For purposes of
subparagraph (A), an acknowledgment shall be
considered to be contemporaneous if the
taxpayer obtains the acknowledgment on or
before the earlier of--
(i) the date on which the taxpayer
files a return for the taxable year in
which the contribution was made, or
(ii) the due date (including
extensions) for filing such return.
(D) Regulations.--The Secretary shall
prescribe such regulations as may be necessary
or appropriate to carry out the purposes of
this paragraph, including regulations that may
provide that some or all of the requirements of
this paragraph do not apply in appropriate
cases.
(9) Denial of deduction where contribution for
lobbying activities.--No deduction shall be allowed
under this section for a contribution to an
organization which conducts activities to which section
162(e)(1) applies on matters of direct financial
interest to the donor's trade or business, if a
principal purpose of the contribution was to avoid
Federal income tax by securing a deduction for such
activities under this section which would be disallowed
by reason of section 162(e) if the donor had conducted
such activities directly. No deduction shall be allowed
under section 162(a) for any amount for which a
deduction is disallowed under the preceding sentence.
(10) Split-dollar life insurance, annuity, and
endowment contracts.--
(A) In general.--Nothing in this section or
in section 545(b)(2), 642(c), 2055, 2106(a)(2),
or 2522 shall be construed to allow a
deduction, and no deduction shall be allowed,
for any transfer to or for the use of an
organization described in subsection (c) if in
connection with such transfer--
(i) the organization directly or
indirectly pays, or has previously
paid, any premium on any personal
benefit contract with respect to the
transferor, or
(ii) there is an understanding or
expectation that any person will
directly or indirectly pay any premium
on any personal benefit contract with
respect to the transferor.
(B) Personal benefit contract.--For purposes
of subparagraph (A), the term ``personal
benefit contract'' means, with respect to the
transferor, any life insurance, annuity, or
endowment contract if any direct or indirect
beneficiary under such contract is the
transferor, any member of the transferor's
family, or any other person (other than an
organization described in subsection (c))
designated by the transferor.
(C) Application to charitable remainder
trusts.--In the case of a transfer to a trust
referred to in subparagraph (E), references in
subparagraphs (A) and (F) to an organization
described in subsection (c) shall be treated as
a reference to such trust.
(D) Exception for certain annuity
contracts.--If, in connection with a transfer
to or for the use of an organization described
in subsection (c), such organization incurs an
obligation to pay a charitable gift annuity (as
defined in section 501(m)) and such
organization purchases any annuity contract to
fund such obligation, persons receiving
payments under the charitable gift annuity
shall not be treated for purposes of
subparagraph (B) as indirect beneficiaries
under such contract if--
(i) such organization possesses all
of the incidents of ownership under
such contract,
(ii) such organization is entitled to
all the payments under such contract,
and
(iii) the timing and amount of
payments under such contract are
substantially the same as the timing
and amount of payments to each such
person under such obligation (as such
obligation is in effect at the time of
such transfer).
(E) Exception for certain contracts held by
charitable remainder trusts.--A person shall
not be treated for purposes of subparagraph (B)
as an indirect beneficiary under any life
insurance, annuity, or endowment contract held
by a charitable remainder annuity trust or a
charitable remainder unitrust (as defined in
section 664(d)) solely by reason of being
entitled to any payment referred to in
paragraph (1)(A) or (2)(A) of section 664(d)
if--
(i) such trust possesses all of the
incidents of ownership under such
contract, and
(ii) such trust is entitled to all
the payments under such contract.
(F) Excise tax on premiums paid.--
(i) In general.--There is hereby
imposed on any organization described
in subsection (c) an excise tax equal
to the premiums paid by such
organization on any life insurance,
annuity, or endowment contract if the
payment of premiums on such contract is
in connection with a transfer for which
a deduction is not allowable under
subparagraph (A), determined without
regard to when such transfer is made.
(ii) Payments by other persons.--For
purposes of clause (i), payments made
by any other person pursuant to an
understanding or expectation referred
to in subparagraph (A) shall be treated
as made by the organization.
(iii) Reporting.--Any organization on
which tax is imposed by clause (i) with
respect to any premium shall file an
annual return which includes--
(I) the amount of such
premiums paid during the year
and the name and TIN of each
beneficiary under the contract
to which the premium relates,
and
(II) such other information
as the Secretary may require.
The penalties applicable to returns required
under section 6033 shall apply to returns
required under this clause. Returns required
under this clause shall be furnished at such
time and in such manner as the Secretary shall
by forms or regulations require.
(iv) Certain rules to apply.--The tax
imposed by this subparagraph shall be
treated as imposed by chapter 42 for
purposes of this title other than
subchapter B of chapter 42.
(G) Special rule where State requires
specification of charitable gift annuitant in
contract.--In the case of an obligation to pay
a charitable gift annuity referred to in
subparagraph (D) which is entered into under
the laws of a State which requires, in order
for the charitable gift annuity to be exempt
from insurance regulation by such State, that
each beneficiary under the charitable gift
annuity be named as a beneficiary under an
annuity contract issued by an insurance company
authorized to transact business in such State,
the requirements of clauses (i) and (ii) of
subparagraph (D) shall be treated as met if--
(i) such State law requirement was in
effect on February 8, 1999,
(ii) each such beneficiary under the
charitable gift annuity is a bona fide
resident of such State at the time the
obligation to pay a charitable gift
annuity is entered into, and
(iii) the only persons entitled to
payments under such contract are
persons entitled to payments as
beneficiaries under such obligation on
the date such obligation is entered
into.
(H) Member of family.--For purposes of this
paragraph, an individual's family consists of
the individual's grandparents, the grandparents
of such individual's spouse, the lineal
descendants of such grandparents, and any
spouse of such a lineal descendant.
(I) Regulations.--The Secretary shall
prescribe such regulations as may be necessary
or appropriate to carry out the purposes of
this paragraph, including regulations to
prevent the avoidance of such purposes.
(11) Qualified appraisal and other documentation for
certain contributions.--
(A) In general.--
(i) Denial of deduction.--In the case
of an individual, partnership, or
corporation, no deduction shall be
allowed under subsection (a) for any
contribution of property for which a
deduction of more than $500 is claimed
unless such person meets the
requirements of subparagraphs (B), (C),
and (D), as the case may be, with
respect to such contribution.
(ii) Exceptions.--
(I) Readily valued
property.--Subparagraphs (C)
and (D) shall not apply to
cash, property described in
subsection (e)(1)(B)(iii) or
section 1221(a)(1), publicly
traded securities (as defined
in section 6050L(a)(2)(B)), and
any qualified vehicle described
in paragraph (12)(A)(ii) for
which an acknowledgement under
paragraph (12)(B)(iii) is
provided.
(II) Reasonable cause.--
Clause (i) shall not apply if
it is shown that the failure to
meet such requirements is due
to reasonable cause and not to
willful neglect.
(B) Property description for contributions of
more than $500.--In the case of contributions
of property for which a deduction of more than
$500 is claimed, the requirements of this
subparagraph are met if the individual,
partnership or corporation includes with the
return for the taxable year in which the
contribution is made a description of such
property and such other information as the
Secretary may require. The requirements of this
subparagraph shall not apply to a C corporation
which is not a personal service corporation or
a closely held C corporation.
(C) Qualified appraisal for contributions of
more than $5,000.--In the case of contributions
of property for which a deduction of more than
$5,000 is claimed, the requirements of this
subparagraph are met if the individual,
partnership, or corporation obtains a qualified
appraisal of such property and attaches to the
return for the taxable year in which such
contribution is made such information regarding
such property and such appraisal as the
Secretary may require.
(D) Substantiation for contributions of more
than $500,000.--In the case of contributions of
property for which a deduction of more than
$500,000 is claimed, the requirements of this
subparagraph are met if the individual,
partnership, or corporation attaches to the
return for the taxable year a qualified
appraisal of such property.
(E) Qualified appraisal and appraiser.--For
purposes of this paragraph--
(i) Qualified appraisal.--The term
``qualified appraisal'' means, with
respect to any property, an appraisal
of such property which--
(I) is treated for purposes
of this paragraph as a
qualified appraisal under
regulations or other guidance
prescribed by the Secretary,
and
(II) is conducted by a
qualified appraiser in
accordance with generally
accepted appraisal standards
and any regulations or other
guidance prescribed under
subclause (I).
(ii) Qualified appraiser.--Except as
provided in clause (iii), the term
``qualified appraiser'' means an
individual who--
(I) has earned an appraisal
designation from a recognized
professional appraiser
organization or has otherwise
met minimum education and
experience requirements set
forth in regulations prescribed
by the Secretary,
(II) regularly performs
appraisals for which the
individual receives
compensation, and
(III) meets such other
requirements as may be
prescribed by the Secretary in
regulations or other guidance.
(iii) Specific appraisals.--An
individual shall not be treated as a
qualified appraiser with respect to any
specific appraisal unless--
(I) the individual
demonstrates verifiable
education and experience in
valuing the type of property
subject to the appraisal, and
(II) the individual has not
been prohibited from practicing
before the Internal Revenue
Service by the Secretary under
section 330(c) of title 31,
United States Code, at any time
during the 3-year period ending
on the date of the appraisal.
(F) Aggregation of similar items of
property.--For purposes of determining
thresholds under this paragraph, property and
all similar items of property donated to 1 or
more donees shall be treated as 1 property.
(G) Special rule for pass-thru entities.--In
the case of a partnership or S corporation,
this paragraph shall be applied at the entity
level, except that the deduction shall be
denied at the partner or shareholder level.
(H) Regulations.--The Secretary may prescribe
such regulations as may be necessary or
appropriate to carry out the purposes of this
paragraph, including regulations that may
provide that some or all of the requirements of
this paragraph do not apply in appropriate
cases.
(12) Contributions of used motor vehicles, boats, and
airplanes.--
(A) In general.--In the case of a
contribution of a qualified vehicle the claimed
value of which exceeds $500--
(i) paragraph (8) shall not apply and
no deduction shall be allowed under
subsection (a) for such contribution
unless the taxpayer substantiates the
contribution by a contemporaneous
written acknowledgement of the
contribution by the donee organization
that meets the requirements of
subparagraph (B) and includes the
acknowledgement with the taxpayer's
return of tax which includes the
deduction, and
(ii) if the organization sells the
vehicle without any significant
intervening use or material improvement
of such vehicle by the organization,
the amount of the deduction allowed
under subsection (a) shall not exceed
the gross proceeds received from such
sale.
(B) Content of acknowledgement.--An
acknowledgement meets the requirements of this
subparagraph if it includes the following
information:
(i) The name and taxpayer
identification number of the donor.
(ii) The vehicle identification
number or similar number.
(iii) In the case of a qualified
vehicle to which subparagraph (A)(ii)
applies--
(I) a certification that the
vehicle was sold in an arm's
length transaction between
unrelated parties,
(II) the gross proceeds from
the sale, and
(III) a statement that the
deductible amount may not
exceed the amount of such gross
proceeds.
(iv) In the case of a qualified
vehicle to which subparagraph (A)(ii)
does not apply--
(I) a certification of the
intended use or material
improvement of the vehicle and
the intended duration of such
use, and
(II) a certification that the
vehicle would not be
transferred in exchange for
money, other property, or
services before completion of
such use or improvement.
(v) Whether the donee organization
provided any goods or services in
consideration, in whole or in part, for
the qualified vehicle.
(vi) A description and good faith
estimate of the value of any goods or
services referred to in clause (v) or,
if such goods or services consist
solely of intangible religious benefits
(as defined in paragraph (8)(B)), a
statement to that effect.
(C) Contemporaneous.--For purposes of
subparagraph (A), an acknowledgement shall be
considered to be contemporaneous if the donee
organization provides it within 30 days of--
(i) the sale of the qualified
vehicle, or
(ii) in the case of an
acknowledgement including a
certification described in subparagraph
(B)(iv), the contribution of the
qualified vehicle.
(D) Information to Secretary.--A donee
organization required to provide an
acknowledgement under this paragraph shall
provide to the Secretary the information
contained in the acknowledgement. Such
information shall be provided at such time and
in such manner as the Secretary may prescribe.
(E) Qualified vehicle.--For purposes of this
paragraph, the term ``qualified vehicle'' means
any--
(i) motor vehicle manufactured
primarily for use on public streets,
roads, and highways,
(ii) boat, or
(iii) airplane.
Such term shall not include any property which
is described in section 1221(a)(1).
(F) Regulations or other guidance.--The
Secretary shall prescribe such regulations or
other guidance as may be necessary to carry out
the purposes of this paragraph. The Secretary
may prescribe regulations or other guidance
which exempts sales by the donee organization
which are in direct furtherance of such
organization's charitable purpose from the
requirements of subparagraphs (A)(ii) and
(B)(iv)(II).
(13) Contributions of certain interests in buildings
located in registered historic districts.--
(A) In general.--No deduction shall be
allowed with respect to any contribution
described in subparagraph (B) unless the
taxpayer includes with the return for the
taxable year of the contribution a $500 filing
fee.
(B) Contribution described.--A contribution
is described in this subparagraph if such
contribution is a qualified conservation
contribution (as defined in subsection (h))
which is a restriction with respect to the
exterior of a building described in subsection
(h)(4)(C)(ii) and for which a deduction is
claimed in excess of $10,000.
(C) Dedication of fee.--Any fee collected
under this paragraph shall be used for the
enforcement of the provisions of subsection
(h).
(14) Reduction for amounts attributable to
rehabilitation credit.--In the case of any qualified
conservation contribution (as defined in subsection
(h)), the amount of the deduction allowed under this
section shall be reduced by an amount which bears the
same ratio to the fair market value of the contribution
as--
(A) the sum of the credits allowed to the
taxpayer under section 47 for the 5 preceding
taxable years with respect to any building
which is a part of such contribution, bears to
(B) the fair market value of the building on
the date of the contribution.
(15) Special rule for taxidermy property.--
(A) Basis.--For purposes of this section and
notwithstanding section 1012, in the case of a
charitable contribution of taxidermy property
which is made by the person who prepared,
stuffed, or mounted the property or by any
person who paid or incurred the cost of such
preparation, stuffing, or mounting, only the
cost of the preparing, stuffing, or mounting
shall be included in the basis of such
property.
(B) Taxidermy property.--For purposes of this
section, the term ``taxidermy property'' means
any work of art which--
(i) is the reproduction or
preservation of an animal, in whole or
in part,
(ii) is prepared, stuffed, or mounted
for purposes of recreating one or more
characteristics of such animal, and
(iii) contains a part of the body of
the dead animal.
(16) Contributions of clothing and household items.--
(A) In general.--In the case of an
individual, partnership, or corporation, no
deduction shall be allowed under subsection (a)
for any contribution of clothing or a household
item unless such clothing or household item is
in good used condition or better.
(B) Items of minimal value.--Notwithstanding
subparagraph (A), the Secretary may by
regulation deny a deduction under subsection
(a) for any contribution of clothing or a
household item which has minimal monetary
value.
(C) Exception for certain property.--
Subparagraphs (A) and (B) shall not apply to
any contribution of a single item of clothing
or a household item for which a deduction of
more than $500 is claimed if the taxpayer
includes with the taxpayer's return a qualified
appraisal with respect to the property.
(D) Household items.--For purposes of this
paragraph--
(i) In general.--The term ``household
items'' includes furniture,
furnishings, electronics, appliances,
linens, and other similar items.
(ii) Excluded items.--Such term does
not include--
(I) food,
(II) paintings, antiques, and
other objects of art,
(III) jewelry and gems, and
(IV) collections.
(E) Special rule for pass-thru entities.--In
the case of a partnership or S corporation,
this paragraph shall be applied at the entity
level, except that the deduction shall be
denied at the partner or shareholder level.
(17) Recordkeeping.--No deduction shall be allowed
under subsection (a) for any contribution of a cash,
check, or other monetary gift unless the donor
maintains as a record of such contribution a bank
record or a written communication from the donee
showing the name of the donee organization, the date of
the contribution, and the amount of the contribution.
(18) Contributions to donor advised funds.--A
deduction otherwise allowed under subsection (a) for
any contribution to a donor advised fund (as defined in
section 4966(d)(2)) shall only be allowed if--
(A) the sponsoring organization (as defined
in section 4966(d)(1)) with respect to such
donor advised fund is not--
(i) described in paragraph (3), (4),
or (5) of subsection (c), or
(ii) a type III supporting
organization (as defined in section
4943(f)(5)(A)) which is not a
functionally integrated type III
supporting organization (as defined in
section 4943(f)(5)(B)), and
(B) the taxpayer obtains a contemporaneous
written acknowledgment (determined under rules
similar to the rules of paragraph (8)(C)) from
the sponsoring organization (as so defined) of
such donor advised fund that such organization
has exclusive legal control over the assets
contributed.
(19) Certain qualified conservation contributions.--
(A) In general.--In the case of a qualified
conservation contribution to which this paragraph
applies, no deduction shall be allowed under subsection
(a) for such contribution unless the partnership making
such contribution--
(i) includes on its return for the taxable
year in which the contribution is made a
statement that the partnership made such a
contribution, and
(ii) provides such information about the
contribution as the Secretary may require.
(B) Contributions to which this paragraph applies.--
This paragraph shall apply to any qualified
conservation contribution--
(i) the conservation purpose of which is the
preservation of any building which is a
certified historic structure (as defined in
subsection (h)(4)(C)),
(ii) which is made by a partnership (whether
directly or as a distributive share of a
contribution of another partnership), and
(iii) the amount of which exceeds 2.5 times
the sum of each partner's relevant basis (as
defined in subsection (h)(7)) in the
partnership making the contribution.
(C) Application to other pass-through entities.--
Except as may be otherwise provided by the Secretary,
the rules of this paragraph shall apply to S
corporations and other pass-through entities in the
same manner as such rules apply to partnerships.
(g) Amounts paid to maintain certain students as members of
taxpayer's household.--
(1) In general.--Subject to the limitations provided
by paragraph (2), amounts paid by the taxpayer to
maintain an individual (other than a dependent, as
defined in section 152 (determined without regard to
subsections (b)(1), (b)(2), and (d)(1)(B) thereof), or
a relative of the taxpayer) as a member of his
household during the period that such individual is--
(A) a member of the taxpayer's household
under a written agreement between the taxpayer
and an organization described in paragraph (2),
(3), or (4) of subsection (c) to implement a
program of the organization to provide
educational opportunities for pupils or
students in private homes, and
(B) a full-time pupil or student in the
twelfth or any lower grade at an educational
organization described in section
170(b)(1)(A)(ii) located in the United States,
shall be treated as amounts paid for the use of the
organization.
(2) Limitations.--
(A) Amount.--Paragraph (1) shall apply to
amounts paid within the taxable year only to
the extent that such amounts do not exceed $50
multiplied by the number of full calendar
months during the taxable year which fall
within the period described in paragraph (1).
For purposes of the preceding sentence, if 15
or more days of a calendar month fall within
such period such month shall be considered as a
full calendar month.
(B) Compensation or reimbursement.--Paragraph
(1) shall not apply to any amount paid by the
taxpayer within the taxable year if the
taxpayer receives any money or other property
as compensation or reimbursement for
maintaining the individual in his household
during the period described in paragraph (1).
(3) Relative defined.--For purposes of paragraph (1),
the term ``relative of the taxpayer'' means an
individual who, with respect to the taxpayer, bears any
of the relationships described in subparagraphs (A)
through (G) of section 152(d)(2).
(4) No other amount allowed as deduction.--No
deduction shall be allowed under subsection (a) for any
amount paid by a taxpayer to maintain an individual as
a member of his household under a program described in
paragraph (1)(A) except as provided in this subsection.
(h) Qualified conservation contribution.--
(1) In general.--For purposes of subsection
(f)(3)(B)(iii), the term ``qualified conservation
contribution'' means a contribution--
(A) of a qualified real property interest,
(B) to a qualified organization,
(C) exclusively for conservation purposes.
(2) Qualified real property interest.--For purposes
of this subsection, the term ``qualified real property
interest'' means any of the following interests in real
property:
(A) the entire interest of the donor other
than a qualified mineral interest,
(B) a remainder interest, and
(C) a restriction (granted in perpetuity) on
the use which may be made of the real property.
(3) Qualified organization.--For purposes of
paragraph (1), the term ``qualified organization''
means an organization which--
(A) is described in clause (v) or (vi) of
subsection (b)(1)(A), or
(B) is described in section 501(c)(3) and--
(i) meets the requirements of section
509(a)(2), or
(ii) meets the requirements of
section 509(a)(3) and is controlled by
an organization described in
subparagraph (A) or in clause (i) of
this subparagraph.
(4) Conservation purpose defined.--
(A) In general.--For purposes of this
subsection, the term ``conservation purpose''
means--
(i) the preservation of land areas
for outdoor recreation by, or the
education of, the general public,
(ii) the protection of a relatively
natural habitat of fish, wildlife, or
plants, or similar ecosystem,
(iii) the preservation of open space
(including farmland and forest land)
where such preservation is--
(I) for the scenic enjoyment
of the general public, or
(II) pursuant to a clearly
delineated Federal, State, or
local governmental conservation
policy,
and will yield a significant public benefit,
or
(iv) the preservation of an
historically important land area or a
certified historic structure.
(B) Special rules with respect to buildings
in registered historic districts.--In the case
of any contribution of a qualified real
property interest which is a restriction with
respect to the exterior of a building described
in subparagraph (C)(ii), such contribution
shall not be considered to be exclusively for
conservation purposes unless--
(i) such interest--
(I) includes a restriction
which preserves the entire
exterior of the building
(including the front, sides,
rear, and height of the
building), and
(II) prohibits any change in
the exterior of the building
which is inconsistent with the
historical character of such
exterior,
(ii) the donor and donee enter into a
written agreement certifying, under
penalty of perjury, that the donee--
(I) is a qualified
organization (as defined in
paragraph (3)) with a purpose
of environmental protection,
land conservation, open space
preservation, or historic
preservation, and
(II) has the resources to
manage and enforce the
restriction and a commitment to
do so, and
(iii) in the case of any contribution
made in a taxable year beginning after
the date of the enactment of this
subparagraph, the taxpayer includes
with the taxpayer's return for the
taxable year of the contribution--
(I) a qualified appraisal
(within the meaning of
subsection (f)(11)(E)) of the
qualified property interest,
(II) photographs of the
entire exterior of the
building, and
(III) a description of all
restrictions on the development
of the building.
(C) Certified historic structure.--For
purposes of subparagraph (A)(iv), the term
``certified historic structure'' means--
(i) any building, structure, or land
area which is listed in the National
Register, or
(ii) any building which is located in
a registered historic district (as
defined in section 47(c)(3)(B)) and is
certified by the Secretary of the
Interior to the Secretary as being of
historic significance to the district.
A building, structure, or land area satisfies the
preceding sentence if it satisfies such sentence either
at the time of the transfer or on the due date
(including extensions) for filing the transferor's
return under this chapter for the taxable year in which
the transfer is made.
(5) Exclusively for conservation purposes.--For
purposes of this subsection--
(A) Conservation purpose must be protected.--
A contribution shall not be treated as
exclusively for conservation purposes unless
the conservation purpose is protected in
perpetuity.
(B) No surface mining permitted.--
(i) In general.--Except as provided
in clause (ii), in the case of a
contribution of any interest where
there is a retention of a qualified
mineral interest, subparagraph (A)
shall not be treated as met if at any
time there may be extraction or removal
of minerals by any surface mining
method.
(ii) Special rule.--With respect to
any contribution of property in which
the ownership of the surface estate and
mineral interests has been and remains
separated, subparagraph (A) shall be
treated as met if the probability of
surface mining occurring on such
property is so remote as to be
negligible.
(6) Qualified mineral interest.--For purposes of this
subsection, the term ``qualified mineral interest''
means--
(A) subsurface oil, gas, or other minerals,
and
(B) the right to access to such minerals.
(7) Limitation on deduction for qualified
conservation contributions made by pass-through
entities.--
(A) In general.--A contribution by a
partnership (whether directly or as a
distributive share of a contribution of another
partnership) shall not be treated as a
qualified conservation contribution for
purposes of this section if the amount of such
contribution exceeds 2.5 times the sum of each
partner's relevant basis in such partnership.
(B) Relevant basis.--For purposes of this
paragraph--
(i) In general.--The term ``relevant
basis'' means, with respect to any
partner, the portion of such partner's
modified basis in the partnership which
is allocable (under rules similar to
the rules of section 755) to the
portion of the real property with
respect to which the contribution
described in subparagraph (A) is made.
(ii) Modified basis.--The term
``modified basis'' means, with respect
to any partner, such partner's adjusted
basis in the partnership as
determined--
(I) immediately before the
contribution described in
subparagraph (A),
(II) without regard to
section 752, and
(III) by the partnership
after taking into account the
adjustments described in
subclauses (I) and (II) and
such other adjustments as the
Secretary may provide.
(C) Exception for contributions outside 3-
year holding period.--Subparagraph (A) shall
not apply to any contribution which is made at
least 3 years after the latest of--
(i) the last date on which the
partnership that made such contribution
acquired any portion of the real
property with respect to which such
contribution is made,
(ii) the last date on which any
partner in the partnership that made
such contribution acquired any interest
in such partnership, and
(iii) if the interest in the
partnership that made such contribution
is held through 1 or more
partnerships--
(I) the last date on which
any such partnership acquired
any interest in any other such
partnership, and
(II) the last date on which
any partner in any such
partnership acquired any
interest in such partnership.
(D) Exception for family partnerships.--
(i) In general.--Subparagraph (A)
shall not apply with respect to any
contribution made by any partnership if
substantially all of the partnership
interests in such partnership are held,
directly or indirectly, by an
individual and members of the family of
such individual.
(ii) Members of the family.--For
purposes of this subparagraph, the term
``members of the family'' means, with
respect to any individual--
(I) the spouse of such
individual, and
(II) any individual who bears
a relationship to such
individual which is described
in subparagraphs (A) through
(G) of section 152(d)(2).
(E) Exception for contributions to preserve
certified historic structures.--Subparagraph
(A) shall not apply to any qualified
conservation contribution the conservation
purpose of which is the preservation of any
building which is a certified historic
structure (as defined in paragraph (4)(C)).
(F) Application to other pass-through
entities.--Except as may be otherwise provided
by the Secretary, the rules of this paragraph
shall apply to S corporations and other pass-
through entities in the same manner as such
rules apply to partnerships.
(G) Regulations.--The Secretary shall
prescribe such regulations or other guidance as
may be necessary or appropriate to carry out
the purposes of this paragraph, including
regulations or other guidance--
(i) to require reporting, including
reporting related to tiered
partnerships and the modified basis of
partners, and
(ii) to prevent the avoidance of the
purposes of this paragraph.
(i) Standard mileage rate for use of passenger automobile.--
For purposes of computing the deduction under this section for
use of a passenger automobile, the standard mileage rate shall
be 14 cents per mile.
(j) Denial of deduction for certain travel expenses.--No
deduction shall be allowed under this section for traveling
expenses (including amounts expended for meals and lodging)
while away from home, whether paid directly or by
reimbursement, unless there is no significant element of
personal pleasure, recreation, or vacation in such travel.
[(k) Repealed. Pub. L. 113-295, div. A, title II, Sec.
221(a)(28)(C), Dec. 19, 2014, 128 Stat. 4041].--
(l) Treatment of certain amounts paid to or for the benefit
of institutions of higher education.--
(1) In general.--No deduction shall be allowed under
this section for any amount described in paragraph (2).
(2) Amount described.--For purposes of paragraph (1),
an amount is described in this paragraph if--
(A) the amount is paid by the taxpayer to or
for the benefit of an educational
organization--
(i) which is described in subsection
(b)(1)(A)(ii), and
(ii) which is an institution of
higher education (as defined in section
3304(f)), and
(B) the taxpayer receives (directly or
indirectly) as a result of paying such amount
the right to purchase tickets for seating at an
athletic event in an athletic stadium of such
institution.
If any portion of a payment is for the purchase of such
tickets, such portion and the remaining portion (if
any) of such payment shall be treated as separate
amounts for purposes of this subsection.
(m) Certain donee income from intellectual property treated
as an additional charitable contribution.--
(1) Treatment as additional contribution.--In the
case of a taxpayer who makes a qualified intellectual
property contribution, the deduction allowed under
subsection (a) for each taxable year of the taxpayer
ending on or after the date of such contribution shall
be increased (subject to the limitations under
subsection (b)) by the applicable percentage of
qualified donee income with respect to such
contribution which is properly allocable to such year
under this subsection.
(2) Reduction in additional deductions to extent of
initial deduction.--With respect to any qualified
intellectual property contribution, the deduction
allowed under subsection (a) shall be increased under
paragraph (1) only to the extent that the aggregate
amount of such increases with respect to such
contribution exceed the amount allowed as a deduction
under subsection (a) with respect to such contribution
determined without regard to this subsection.
(3) Qualified donee income.--For purposes of this
subsection, the term ``qualified donee income'' means
any net income received by or accrued to the donee
which is properly allocable to the qualified
intellectual property.
(4) Allocation of qualified donee income to taxable
years of donor.--For purposes of this subsection,
qualified donee income shall be treated as properly
allocable to a taxable year of the donor if such income
is received by or accrued to the donee for the taxable
year of the donee which ends within or with such
taxable year of the donor.
(5) 10-year limitation.--Income shall not be treated
as properly allocable to qualified intellectual
property for purposes of this subsection if such income
is received by or accrued to the donee after the 10-
year period beginning on the date of the contribution
of such property.
(6) Benefit limited to life of intellectual
property.--Income shall not be treated as properly
allocable to qualified intellectual property for
purposes of this subsection if such income is received
by or accrued to the donee after the expiration of the
legal life of such property.
(7) Applicable percentage.--For purposes of this
subsection, the term ``applicable percentage'' means
the percentage determined under the following table
which corresponds to a taxable year of the donor ending
on or after the date of the qualified intellectual
property contribution:
(8) Qualified intellectual property contribution.--
For purposes of this subsection, the term ``qualified
intellectual property contribution'' means any
charitable contribution of qualified intellectual
property--
(A) the amount of which taken into account
under this section is reduced by reason of
subsection (e)(1), and
(B) with respect to which the donor informs
the donee at the time of such contribution that
the donor intends to treat such contribution as
a qualified intellectual property contribution
for purposes of this subsection and section
6050L.
(9) Qualified intellectual property.--For purposes of
this subsection, the term ``qualified intellectual
property'' means property described in subsection
(e)(1)(B)(iii) (other than property contributed to or
for the use of an organization described in subsection
(e)(1)(B)(ii)).
(10) Other special rules.--
(A) Application of limitations on charitable
contributions.--Any increase under this
subsection of the deduction provided under
subsection (a) shall be treated for purposes of
subsection (b) as a deduction which is
attributable to a charitable contribution to
the donee to which such increase relates.
(B) Net income determined by donee.--The net
income taken into account under paragraph (3)
shall not exceed the amount of such income
reported under section 6050L(b)(1).
(C) Deduction limited to 12 taxable years.--
Except as may be provided under subparagraph
(D)(i), this subsection shall not apply with
respect to any qualified intellectual property
contribution for any taxable year of the donor
after the 12th taxable year of the donor which
ends on or after the date of such contribution.
(D) Regulations.--The Secretary may issue
regulations or other guidance to carry out the
purposes of this subsection, including
regulations or guidance--
(i) modifying the application of this
subsection in the case of a donor or
donee with a short taxable year, and
(ii) providing for the determination
of an amount to be treated as net
income of the donee which is properly
allocable to qualified intellectual
property in the case of a donee who
uses such property to further a purpose
or function constituting the basis of
the donee's exemption under section 501
(or, in the case of a governmental
unit, any purpose described in section
170(c)) and does not possess a right to
receive any payment from a third party
with respect to such property.
(n) Expenses paid by certain whaling captains in support of
Native Alaskan subsistence whaling.--
(1) In general.--In the case of an individual who is
recognized by the Alaska Eskimo Whaling Commission as a
whaling captain charged with the responsibility of
maintaining and carrying out sanctioned whaling
activities and who engages in such activities during
the taxable year, the amount described in paragraph (2)
(to the extent such amount does not exceed $10,000 for
the taxable year) shall be treated for purposes of this
section as a charitable contribution.
(2) Amount described.--
(A) In general.--The amount described in this
paragraph is the aggregate of the reasonable
and necessary whaling expenses paid by the
taxpayer during the taxable year in carrying
out sanctioned whaling activities.
(B) Whaling expenses.--For purposes of
subparagraph (A), the term ``whaling expenses''
includes expenses for--
(i) the acquisition and maintenance
of whaling boats, weapons, and gear
used in sanctioned whaling activities,
(ii) the supplying of food for the
crew and other provisions for carrying
out such activities, and
(iii) storage and distribution of the
catch from such activities.
(3) Sanctioned whaling activities.--For purposes of
this subsection, the term ``sanctioned whaling
activities'' means subsistence bowhead whale hunting
activities conducted pursuant to the management plan of
the Alaska Eskimo Whaling Commission.
(4) Substantiation of expenses.--The Secretary shall
issue guidance requiring that the taxpayer substantiate
the whaling expenses for which a deduction is claimed
under this subsection, including by maintaining
appropriate written records with respect to the time,
place, date, amount, and nature of the expense, as well
as the taxpayer's eligibility for such deduction, and
that (to the extent provided by the Secretary) such
substantiation be provided as part of the taxpayer's
return of tax.
(o) Special rules for fractional gifts.--
(1) Denial of deduction in certain cases.--
(A) In general.--No deduction shall be
allowed for a contribution of an undivided
portion of a taxpayer's entire interest in
tangible personal property unless all interests
in the property are held immediately before
such contribution by--
(i) the taxpayer, or
(ii) the taxpayer and the donee.
(B) Exceptions.--The Secretary may, by
regulation, provide for exceptions to
subparagraph (A) in cases where all persons who
hold an interest in the property make
proportional contributions of an undivided
portion of the entire interest held by such
persons.
(2) Valuation of subsequent gifts.--In the case of
any additional contribution, the fair market value of
such contribution shall be determined by using the
lesser of--
(A) the fair market value of the property at
the time of the initial fractional
contribution, or
(B) the fair market value of the property at
the time of the additional contribution.
(3) Recapture of deduction in certain cases; addition
to tax.--
(A) Recapture.--The Secretary shall provide
for the recapture of the amount of any
deduction allowed under this section (plus
interest) with respect to any contribution of
an undivided portion of a taxpayer's entire
interest in tangible personal property--
(i) in any case in which the donor
does not contribute all of the
remaining interests in such property to
the donee (or, if such donee is no
longer in existence, to any person
described in section 170(c)) on or
before the earlier of--
(I) the date that is 10 years
after the date of the initial
fractional contribution, or
(II) the date of the death of
the donor, and
(ii) in any case in which the donee
has not, during the period beginning on
the date of the initial fractional
contribution and ending on the date
described in clause (i)--
(I) had substantial physical
possession of the property, and
(II) used the property in a
use which is related to a
purpose or function
constituting the basis for the
organizations' exemption under
section 501.
(B) Addition to tax.--The tax imposed under
this chapter for any taxable year for which
there is a recapture under subparagraph (A)
shall be increased by 10 percent of the amount
so recaptured.
(4) Definitions.--For purposes of this subsection--
(A) Additional contribution.--The term
``additional contribution'' means any
charitable contribution by the taxpayer of any
interest in property with respect to which the
taxpayer has previously made an initial
fractional contribution.
(B) Initial fractional contribution.--The
term ``initial fractional contribution'' means,
with respect to any taxpayer, the first
charitable contribution of an undivided portion
of the taxpayer's entire interest in any
tangible personal property.
(p) Special rule for taxpayers who do not elect to itemize
deductions.--In the case of any taxable year beginning in 2021,
if the individual does not elect to itemize deductions for such
taxable year, the deduction under this section shall be equal
to the deduction, not in excess of $300 ($600 in the case of a
joint return), which would be determined under this section if
the only charitable contributions taken into account in
determining such deduction were contributions made in cash
during such taxable year (determined without regard to
subsections (b)(1)(G)(ii) and (d)(1)) to an organization
described in section 170(b)(1)(A) and not--
(1) to an organization described in section
509(a)(3), or
(2) for the establishment of a new, or maintenance of
an existing, donor advised fund (as defined in section
4966(d)(2)).
(q) Other cross references.--
(1) For treatment of certain organizations
providing child care, see section 501(k).
(2) For charitable contributions of estates
and trusts, see section 642(c).
(3) For nondeductibility of contributions by
common trust funds, see section 584.
(4) For charitable contributions of partners,
see section 702.
(5) For charitable contributions of
nonresident aliens, see section 873.
(6) For treatment of gifts for benefit of or
use in connection with the Naval Academy as
gifts to or for use of the United States, see
section 8473 of title 10, United States Code.
(7) For treatment of gifts accepted by the
Secretary of State, the Director of the
International Communication Agency, or the
Director of the United States International
Development Cooperation Agency, as gifts to or
for the use of the United States, see section
25 of the State Department Basic Authorities
Act of 1956.
(8) For treatment of gifts of money accepted
by the Attorney General for credit to the
``Commissary Funds Federal Prisons'' as gifts
to or for the use of the United States, see
section 4043 of title 18, United States Code.
(9) For charitable contributions to or for
the use of Indian tribal governments (or their
subdivisions), see section 7871.
* * * * * * *