To amend the Internal Revenue Code of 1986 to allow a credit against the income tax for an owner of a radio broadcasting station which donates the license and other assets of such station to a nonprofit corporation for purposes of supporting nonprofit fine arts and performing arts organizations, and for other purposes.

Summary: Cultural Radio Tax Credit Act of 2005 - Amends the Internal Revenue Code to allow a business tax credit for 125 percent of the fair market value of a radio broadcasting commercial license and 100 percent of the fair market value of radio station assets donated to a tax-exempt organization which agrees to operate the station on a for-profit basis and to donate operational profits to support nonprofit fine arts and performing arts organizations in its service area.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Cultural Radio Tax Credit Act of 
2005''.

SEC. 2. CREDIT FOR DONATION OF LICENSE AND OTHER ASSETS OF COMMERCIAL 
              RADIO BROADCASTING STATIONS TO NONPROFIT CORPORATIONS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to general business 
credits) is amended by adding at the end the following new section:

``SEC. 45J. CREDIT FOR DONATION OF LICENSE AND OTHER ASSETS OF 
              COMMERCIAL RADIO BROADCASTING STATION TO CERTAIN 
              NONPROFIT CORPORATIONS.

    ``(a) Radio Broadcasting Station Donation Credit.--For purposes of 
section 38, the radio broadcasting station donation credit is an amount 
equal to the sum of--
            ``(1) 125 percent of the fair market value of a radio 
        broadcasting commercial license which is donated to a qualified 
        recipient,
            ``(2) 100 percent of the fair market value of any radio 
        broadcasting station assets, including equipment and other real 
        property owned by the station, which are donated to the same 
        qualified recipient, and
            ``(3) the total amount deposited into an operations escrow 
        fund established by the donor of the license and assets during 
        the taxable year.
    ``(b) Qualified Recipient.--For purposes of this section, a 
qualified recipient is an entity which--
            ``(1) is a corporation described in section 501(c)(3) which 
        is exempt from taxation under section 501(a),
            ``(2) agrees to operate the radio broadcasting station 
        being donated to it as a for-profit venture, with profits 
        dedicated to the support of non-profit fine arts and performing 
        arts organizations in its service area,
            ``(3) has at least 3 arts organizations from its service 
        area on its board of trustees, or on a board of trustees of a 
        subsidiary established to oversee operation of the radio 
        broadcasting station,
            ``(4) agrees that, in the event that it ceases operation of 
        the radio broadcasting station--
                    ``(A) it will not sell the station to a for-profit 
                broadcaster under any circumstances, and
                    ``(B) it will either--
                            ``(i) transfer the license to another 
                        corporation described in section 501(c)(3) 
                        which is exempt from taxation under section 
                        501(a) and which agrees to continue operation 
                        of the station for the support of nonprofit 
                        fine arts and performing arts organizations in 
                        its service area, or
                            ``(ii) surrender the license to the Federal 
                        Communications Commission.
    ``(c) Operations Escrow Fund.--
            ``(1) In general.--For purposes of this section, an 
        operations escrow fund is a fund established by a taxpayer who 
        has donated a radio broadcasting commercial license or radio 
        broadcasting station assets to a qualified recipient for the 
        purpose of covering operating expenses during the recipient's 
        first year of operation of the radio broadcasting station if 
        the station's revenues are not adequate to cover such expenses. 
        An operations escrow fund may be established only if the 
        qualified recipient is not able to meet the financial 
        responsibility requirement of the Federal Communications 
        Commission.
            ``(2) Recapture of credit for amounts remaining in escrow 
        fund.--In any case in which there is an amount remaining in an 
        operations escrow fund after the first year of operation of the 
        radio broadcasting station for which the fund was established, 
        such amount (not including any interest that accrued on the 
        amount in the fund) shall be added to the tax imposed by this 
        chapter on the taxpayer for the taxpayer's taxable year which 
        includes the end of such first year of operation.
    ``(d) Special Rules in Case of Surrender of License to FCC.--If a 
qualified recipient surrenders its donated radio broadcasting license 
to the Federal Communications Commission, the Commission shall notify 
the donor of the license that the donor may, within 6 months after such 
notification, post a bond equal to the amount of the tax credit under 
subsection (a) that it received for donating the station, plus 
interest. After such a bond is posted, the donor may apply for the 
license. If the Commission approves the donor's application for the 
license, the bond shall be used in lieu of an auction fee. If the donor 
does not exercise its option within such six months, or waives its 
option earlier, the license shall be auctioned in the same manner as a 
new license.
    ``(e) Denial of Double Benefit.--A donation or deposit for which a 
credit is allowed under subsection (a) shall not be treated as a 
charitable contribution under section 170.
    ``(f) Election.--This section shall apply to any taxpayer for any 
taxable year only if such taxpayer elects (at such time and in such 
manner as the Secretary may by regulations prescribe) to have this 
section apply for such taxable year.''.
    (b) Conforming Amendments.--
            (1) Subsection (b) of section 38 of such Code is amended by 
        striking ``plus'' at the end of paragraph (18), by striking the 
        period at the end of paragraph (19) and inserting ``, plus'', 
        and by adding at the end the following new paragraph:
            ``(20) the radio broadcasting station donation credit 
        determined under section 45J(a).''.
            (2) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 of such Code is amended by adding at 
        the end the following new item:

``Sec. 45J. Credit for donation of license and other assets of 
                            commercial radio broadcasting stations to 
                            certain nonprofit corporations.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.