To amend the Internal Revenue Code of 1986 to limit the deduction for charitable contributions of patents and similar property.

Summary: Amends the Internal Revenue Code to require a taxpayer seeking an income tax deduction for the charitable contribution of a patent, copyright, trademark, trade name, trade secret, know-how, software or similar technology property to: (1) contribute the entire right, title, and interest in such property to certain tax-exempt universities, teaching hospitals or reseach institutions; and (2) require that any cash or cash equivalents donated with such property be used for patent prosecution or maintenance and for the scientific and commercial development of such patents or other technology property.

Requires the Secretary of the Treasury to prescribe regulations for the appraisal of such patents or other technology property and for the prevention of taxpayer abuse of charitable deductions for such property.

SECTION 1. LIMITATION OF DEDUCTION FOR CHARITABLE CONTRIBUTIONS OF 
              PATENTS AND SIMILAR PROPERTY.

    (a) In General.--Subparagraph (B) of section 170(e)(1) of the 
Internal Revenue Code of 1986 (relating to certain contributions of 
capital gain property) is amended by striking ``or'' at the end of 
clause (i), by inserting ``or'' at the end of clause (ii), and by 
inserting after clause (ii) the following new clause:
                            ``(iii) except as provided in paragraph 
                        (7), of any patent, copyright, trademark, trade 
                        name, trade secret, know-how, software, or 
                        similar property,''.
    (b) Special Rule.--Section 170(e) of such Code is amended by adding 
at the end the following new paragraph:
            ``(7) Special rule for certain contributions of patents, 
        copyrights, etc.--
                    ``(A) Exception for contributions to qualified 
                research organizations.--Subparagraph (B) of paragraph 
                (1) shall not apply to any qualified contribution to a 
                qualified research organization.
                    ``(B) Qualified research organization defined.--For 
                purposes of this paragraph, the term `qualified 
                research organization' means an organization that 
                applies its expertise to the scientific and commercial 
                development of qualified contributions and is described 
                in clause (iii), (iv), or (vi) of subsection (b)(1)(A) 
                or subparagraph (A), (B), or (C) of section 41(e)(6) .
                    ``(C) Qualified contribution defined.--For purposes 
                of this paragraph, a contribution of property described 
                in paragraph (1)(B)(iii) shall be treated as a 
                qualified contribution only if--
                            ``(i) such contribution is a gift of all 
                        right, title, and interest in and to property 
                        described in clause (iii) of paragraph (1)(B),
                            ``(ii) the donor and donee of any cash or 
                        cash equivalent in connection with such 
                        contribution agree to limit the use of such 
                        cash or cash equivalent to costs of patent 
                        prosecution or maintenance and the scientific 
                        and commercial development of qualified 
                        donations in general, and
                            ``(iii) under regulations prescribed by the 
                        Secretary, the donor of the qualified 
                        contribution discloses both the contribution 
                        described in clause (i) and a complete 
                        description of the terms of any restricted cash 
                        or cash equivalents grant described in clause 
                        (ii) on its income tax return for the taxable 
                        year during which such contribution is made.''.
    (c) Qualified Appraisal Required.--
            (1) In general.--The Secretary of the Treasury shall 
        prescribe regulations or other guidance under section 170(a)(1) 
        of the Internal Revenue Code of 1986 requiring the donor of 
        property described in section 170(e)(1)(B)(iii) of such Code to 
        obtain one or more qualified appraisals of the fair market 
        value of such property by a qualified appraiser or appraisers.
            (2) Qualified appraiser.--For purposes of paragraph (1), 
        the term ``qualified appraiser'' means an appraiser who has 
        valuation credentials and experience in appraising such 
        property, who is not an employee of the donor or donee, and who 
        satisfies any professional valuation education and 
        qualification requirements that are prescribed by the 
        Secretary.
            (3) Qualified appraisal.--For purposes of paragraph (1), 
        the term ``qualified appraisal'' means an appraisal that 
        satisfies the requirements (without regard to any value 
        limitation) for a qualified appraisal under section 170(a)(1) 
        of such Code (as in effect on the date of the enactment of this 
        Act), with the following modifications:
                    (A) The valuation methodologies to be used shall be 
                those prescribed by the Secretary.
                    (B) The appraisal shall take into account the 
                competitive patent environment and remaining life of a 
                donated patent.
                    (C) The valuation of property described in section 
                170(e)(7) of such Code shall take into account the 
                potential use of such property by any qualified donee, 
                including the value to be generated through further 
                technology development and commercialization by the 
                donee and potential licensees of the property.
                    (D) If the value of the property exceeds 
                $5,000,000, a second appraisal prepared by a qualified 
                appraiser independently selected by a professional 
                organization designated by the Secretary shall be 
                required.
                    (E) The donee shall acknowledge receipt of the 
                appraisal summary required to be filed by the donor.
                    (F) The amount of any cash or cash equivalent grant 
                described in section 170(e)(7)(C)(ii) of such Code and 
                a complete description of the terms of any such grant 
                shall be fully described in the information returns of 
                the donee organization for the taxable year of receipt 
                and subsequent taxable years, as required by the 
                Secretary.
    (d) Anti-Abuse Rules.--The Secretary may prescribe such regulations 
or other guidance as may be necessary or appropriate to prevent the 
avoidance of the purposes of paragraphs (1)(B)(iii) and (7) of section 
170(e) of such Code (as added by this section), including preventing--
            (1) the circumvention of the reduction of the deduction 
        under such section by embedding or bundling the patent or 
        similar property as part of a charitable contribution of 
        property that includes the patent or similar property,
            (2) the manipulation of the basis of the property to 
        increase the amount of the charitable deduction through the use 
        of related persons, pass-thru entities, or other 
        intermediaries, or through the use of any provision of law or 
        regulation (including the consolidated return regulations), and
            (3) a donor from changing the form of the patent or similar 
        property to property of a form for which different deduction 
        rules would apply.
    (e) Effective Date.--
            (1) In general.--Except as provided by paragraph (2), the 
        amendments made by this section shall apply to contributions 
        made after the date of the enactment of this Act.
            (2) Appraisals.--Subsection (c) shall apply to 
        contributions made after the date of adoption of regulations, 
        or date of issuance of guidance, required by subsection (c), 
        whichever is earlier.