S 931 ISCommentsClose CommentsPermalink

112th CONGRESSCommentsClose CommentsPermalink

1st SessionCommentsClose CommentsPermalink

S. 931CommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to reform the rules relating to fractional charitable donations of tangible personal property.CommentsClose CommentsPermalink

IN THE SENATE OF THE UNITED STATESCommentsClose CommentsPermalink

May 10, 2011CommentsClose CommentsPermalink

Mr. SCHUMER (for himself, Mr. ISAKSON, Mr. BINGAMAN, and Ms. CANTWELL) introduced the following bill; which was read twice and referred to the Committee on FinanceCommentsClose CommentsPermalink

A BILLCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to reform the rules relating to fractional charitable donations of tangible personal property.CommentsClose CommentsPermalink

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

SECTION 1. MODIFICATIONS TO RULES FOR FRACTIONAL GIFTS.

(a) Income Tax-CommentsClose CommentsPermalink





(1) ADDITIONAL REQUIREMENTS FOR DEDUCTION- Paragraph (1) of section 170(o) of the Internal Revenue Code of 1986 is amended to read as follows:CommentsClose CommentsPermalink





‘(1) DENIAL OF DEDUCTION IN CERTAIN CASES-CommentsClose CommentsPermalink





‘(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--CommentsClose CommentsPermalink





‘(i) all interests in the property are held immediately before such contribution by--CommentsClose CommentsPermalink





‘(I) the taxpayer, orCommentsClose CommentsPermalink





‘(II) the taxpayer and the donee,CommentsClose CommentsPermalink





‘(ii) in the case of an initial fractional contribution, such contribution is an undivided portion of not less than 10 percent of all interests in the property,CommentsClose CommentsPermalink





‘(iii) in the case of an initial fractional contribution, the contribution is made pursuant to a written binding contract which requires the donor--CommentsClose CommentsPermalink





‘(I) to contribute not less than 20 percent of all interests in the property on or before the date that is 11 years after the date of the initial fractional contribution, andCommentsClose CommentsPermalink





‘(II) to contribute all of the interests in such property to the donee (or if such donee is no longer in existence, to any person described in subsection (c)) on or before the earlier of the date of the death of the donor or the date which is 20 years after the date of the initial fractional contribution, andCommentsClose CommentsPermalink





‘(iv) if the value of the tangible personal property with respect to which the undivided portion of the taxpayer’s entire interest relates is greater than $1,000,000 (or such greater amount as determined by the Secretary), the taxpayer attaches to the return for the taxable year in which such contribution is made a statement of value obtained from the Internal Revenue Service.CommentsClose CommentsPermalink





‘(B) EXCEPTIONS- The Secretary may, by regulation, provide for exceptions to subparagraph (A)(i) 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. Such regulations may modify the requirements of clauses (ii) and (iii) of subparagraph (A) to the extent necessary to carry out the purposes of this subparagraph.’.CommentsClose CommentsPermalink





(2) VALUATION OF SUBSEQUENT GIFTS- Paragraph (2) of section 170(o) of such Code is amended to read as follows:CommentsClose CommentsPermalink





‘(2) VALUATION OF SUBSEQUENT GIFTS- In the case of any additional contribution, the fair market value of such contribution shall be determined by multiplying--CommentsClose CommentsPermalink





‘(A) the fair market value of all of the donor’s interest in the property immediately before the additional contribution, andCommentsClose CommentsPermalink





‘(B) the interest in the property (expressed as a percentage) contributed in such additional contribution.’.CommentsClose CommentsPermalink





(3) RECAPTURE OF DEDUCTION- Paragraph (3) of section 170(o) of such Code is amended--CommentsClose CommentsPermalink





(A) by redesignating subparagraph (B) as subparagraph (C), andCommentsClose CommentsPermalink





(B) by striking subparagraph (A) and inserting the following:CommentsClose CommentsPermalink





‘(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--CommentsClose CommentsPermalink





‘(i) in any case in which the donor fails to meet the requirements described in paragraph (1)(A)(iii), andCommentsClose CommentsPermalink





‘(ii) in any case where such property is not in the physical possession of the donee and used in a use which is related to a purpose or function constituting the basis for the donee organization’s exemption under section 501 during any applicable period for a period of time which bears substantially the same ratio to 5 years as--CommentsClose CommentsPermalink





‘(I) the percentage of the undivided interest of the donee in the property (determined on the day after such contribution was made), bears toCommentsClose CommentsPermalink





‘(II) 100 percent.CommentsClose CommentsPermalink





‘(B) APPLICABLE PERIOD- For purposes of subparagraph (A), the applicable period means--CommentsClose CommentsPermalink





‘(i) the 5-year period beginning on the date of the later of the initial fractional contribution, andCommentsClose CommentsPermalink





‘(ii) each subsequent 5-year period occurring during the 20-year period described in paragraph (1)(A)(iii)(II).’.CommentsClose CommentsPermalink





(b) Estate Tax- Paragraph (1) of section 2055(g) of the Internal Revenue Code of 1986 is amended to read as follows:CommentsClose CommentsPermalink





‘(1) VALUATION OF SUBSEQUENT GIFTS- In the case of any additional contribution, the fair market value of such contribution shall be determined by multiplying--CommentsClose CommentsPermalink





‘(A) the fair market value of all of the donor’s interest in the property immediately before the additional contribution, andCommentsClose CommentsPermalink





‘(B) the interest in the property (expressed as a percentage) contributed in such additional contribution.’.CommentsClose CommentsPermalink





(c) Gift Tax-CommentsClose CommentsPermalink





(1) ADDITIONAL REQUIREMENTS FOR DEDUCTION- Paragraph (1) of section 2522(e) of the Internal Revenue Code of 1986 is amended to read as follows:CommentsClose CommentsPermalink





‘(1) DENIAL OF DEDUCTION IN CERTAIN CASES-CommentsClose CommentsPermalink





‘(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--CommentsClose CommentsPermalink





‘(i) all interests in the property are held immediately before such contribution by--CommentsClose CommentsPermalink





‘(I) the taxpayer, orCommentsClose CommentsPermalink





‘(II) the taxpayer and the donee,CommentsClose CommentsPermalink





‘(ii) in the case of an initial fractional contribution, such contribution is an undivided portion of not less than 10 percent of all interests in the property,CommentsClose CommentsPermalink





‘(iii) in the case of an initial fractional contribution, the contribution is made pursuant to a written binding contract which requires the donor--CommentsClose CommentsPermalink





‘(I) to contribute not less than 20 percent of all interests in the property on or before the date that is 11 years after the date of the initial fractional contribution, andCommentsClose CommentsPermalink





‘(II) to contribute all of the 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 the date of the death of the donor or the date which is 20 years after the date of the initial fractional contribution, andCommentsClose CommentsPermalink





‘(iv) if the value of the tangible personal property with respect to which the undivided portion of the taxpayer’s entire interest relates is greater than $1,000,000 (or such greater amount as determined by the Secretary), the taxpayer attaches to the return for the taxable year in which such contribution is made a statement of value obtained from the Internal Revenue Service.CommentsClose CommentsPermalink





‘(B) EXCEPTIONS- The Secretary may, by regulation, provide for exceptions to subparagraph (A)(i) 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. Such regulations may modify the requirements of clauses (ii) and (iii) of subparagraph (A) to the extent necessary to carry out the purposes of this subparagraph.’.CommentsClose CommentsPermalink





(2) VALUATION OF SUBSEQUENT GIFTS- Paragraph (2) of section 2522(e) of such Code is amended to read as follows:CommentsClose CommentsPermalink





‘(2) VALUATION OF SUBSEQUENT GIFTS- In the case of any additional contribution, the fair market value of such contribution shall be determined by multiplying--CommentsClose CommentsPermalink





‘(A) the fair market value of all of the donor’s interest in the property immediately before the additional contribution, andCommentsClose CommentsPermalink





‘(B) the interest in the property (expressed as a percentage) contributed in such additional contribution.’.CommentsClose CommentsPermalink





(3) RECAPTURE OF DEDUCTION- Paragraph (3) of section 2522(e) of such Code is amended--CommentsClose CommentsPermalink





(A) by redesignating subparagraph (B) as subparagraph (C), andCommentsClose CommentsPermalink





(B) by striking subparagraph (A) and inserting the following:CommentsClose CommentsPermalink





‘(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--CommentsClose CommentsPermalink





‘(i) in any case in which the donor fails to meet the requirements described in paragraph (1)(A)(iii), andCommentsClose CommentsPermalink





‘(ii) in any case where such property is not in the physical possession of the donee and used in a use which is related to a purpose or function constituting the basis for the donee organization’s exemption under section 501 during any applicable period for a period of time which bears substantially the same ratio to 5 years as--CommentsClose CommentsPermalink





‘(I) the percentage of the undivided interest of the donee in the property (determined on the day after such contribution was made), bears toCommentsClose CommentsPermalink





‘(II) 100 percent.CommentsClose CommentsPermalink





‘(B) APPLICABLE PERIOD- For purposes of subparagraph (A), the applicable period means--CommentsClose CommentsPermalink





‘(i) the 5-year period beginning on the date of the later of the initial fractional contribution, andCommentsClose CommentsPermalink





‘(ii) each subsequent 5-year period occurring during the 20-year period described in paragraph (1)(A)(iii)(II).’.CommentsClose CommentsPermalink





(d) Return Requirement- Section 6033 of the Internal Revenue Code of 1986 is amended by redesignating subsection (m) as subsection (n) and by inserting after subsection (l) the following new subsection:CommentsClose CommentsPermalink





‘(m) Additional Provisions Relating to Organizations Described in Section 170(c)- Every organization described in section 170(c) shall, on any return required under subsection (a), list each charitable contribution received by the organization during the period covered by the return which represents a contribution of an undivided portion of a taxpayer’s entire interest in tangible personal property and provide such other information with respect to such contribution as required by the Secretary.’.CommentsClose CommentsPermalink





(e) Effective Date-CommentsClose CommentsPermalink





(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply to contributions, bequests, and gifts made after the date of the enactment of this Act.CommentsClose CommentsPermalink





(2) RETURN REQUIREMENT- The amendments made by subsection (d) shall apply to returns for taxable years ending after the date of the enactment of this Act.CommentsClose CommentsPermalink





(f) Transition Rule- In the case of any additional contribution (as defined in section 170(o)(4) of the Internal Revenue Code of 1986) with respect to an initial fractional contribution (as defined in such section) made after August 17, 2006, and before the date of the enactment of this Act--CommentsClose CommentsPermalink





(1) except for purposes of determining the fair market value of such contribution under sections 170(o)(2), 2055(g)(1), and 2522(e)(2) of the Internal Revenue Code of 1986 (as such sections were amended by this Act), such contribution shall be treated as an initial fractional contribution (as so defined) subject to the amendments made by this section, andCommentsClose CommentsPermalink





(2) sections 170(o)(3)(A)(i) and 2522(e)(3)(A)(i) of such Code (as in effect before the date of the enactment of this Act) shall not apply with respect to any prior contribution of an undivided portion of the taxpayer’s interest in the property.CommentsClose CommentsPermalink