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[House Report 114-17]
[From the U.S. Government Publishing Office]

114th Congress        }                              {   Report
                        HOUSE OF REPRESENTATIVES
 1st Session          }                              {    114-17
======================================================================
 
            CONSERVATION EASEMENT INCENTIVE ACT OF 2015

                                _______
                                

February 9, 2015.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Ryan of Wisconsin, from the Committee on Ways and Means, submitted 
                             the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 641]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 641) to amend the Internal Revenue Code of 1986 to 
make permanent the special rule for contributions of qualified 
conservation contributions, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.

                                CONTENTS

                                                                   Page
  I. SUMMARY AND BACKGROUND...........................................2
          A. Purpose and Summary.................................     2
          B. Background and Need for Legislation.................     3
          C. Legislative History.................................     3
 II. EXPLANATION OF THE BILL..........................................4
          A. Special Rule for Qualified Conservation 
              Contributions Made Permanent (sec. 170(b) of the 
              Code)..............................................     4
III. VOTES OF THE COMMITTEE...........................................7
 IV. BUDGET EFFECTS OF THE BILL.......................................8
          A. Committee Estimate of Budgetary Effects.............     8
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures Budget Authority......................     8
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................     8
  V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......10
          A. Committee Oversight Findings and Recommendations....    10
          B. Statement of General Performance Goals and 
              Objectives.........................................    10
          C. Information Relating to Unfunded Mandates...........    10
          D. Applicability of House Rule XXI 5(b)................    10
          E. Tax Complexity Analysis.............................    10
          F. Congressional Earmarks, Limited Tax Benefits, and 
              Limited Tariff Benefits............................    11
          G. Duplication of Federal Programs.....................    11
          H. Disclosure of Directed Rule Makings.................    11
 VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........11
VII. DISSENTING VIEWS................................................44
    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 ``Conservation Easement Incentive Act of 
2015''.

SEC. 2. SPECIAL RULE FOR QUALIFIED CONSERVATION CONTRIBUTIONS MADE 
                    PERMANENT.

  (a) In General.--
          (1) Individuals.--Subparagraph (E) of section 170(b)(1) of 
        the Internal Revenue Code of 1986 (relating to contributions of 
        qualified conservation contributions) is amended by striking 
        clause (vi).
          (2) Corporations.--Subparagraph (B) of section 170(b)(2) of 
        such Code (relating to qualified conservation contributions) is 
        amended by striking clause (iii).
  (b) Contributions of Capital Gain Real Property Made for Conservation 
Purposes by Native Corporations.--
          (1) In general.--Section 170(b)(2) of such Code is amended by 
        redesignating subparagraph (C) as subparagraph (D), and by 
        inserting after subparagraph (B) the following new 
        subparagraph:
                  ``(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.''.
          (2) Conforming amendments.--
                  (A) Section 170(b)(2)(A) of such Code is amended by 
                striking ``subparagraph (B) applies'' and inserting 
                ``subparagraph (B) or (C) applies''.
                  (B) Section 170(b)(2)(B)(ii) of such Code is amended 
                by striking ``15 succeeding years'' and inserting ``15 
                succeeding taxable years''.
          (3) Valid existing rights preserved.--Nothing in this 
        subsection (or any amendment made by this subsection) shall be 
        construed to modify the existing property rights validly 
        conveyed to Native Corporations (within the meaning of section 
        3(m) of the Alaska Native Claims Settlement Act) under such 
        Act.
  (c) Effective Date.--The amendments made by this section shall apply 
to contributions made in taxable years beginning after December 31, 
2014.

                       I. SUMMARY AND BACKGROUND

                         A. Purpose and Summary

    H.R. 641, reported by the Committee on Ways and Means, 
provides that individuals may deduct the fair market value of 
qualified conservation contributions up to 50 percent of the 
individual's adjusted gross income (AGI). H.R. 641 provides 
that farmers and ranchers may deduct the fair market value of 
qualified conservation contributions up to 100 percent of AGI 
(or 100 percent of taxable income in the case of a corporate 
farmer or rancher), provided the property used in agricultural 
or livestock production remains available for such production. 
An identical, temporary provision expired for taxable years 
beginning after December 31, 2014. The bill also permits Alaska 
Native Corporations to deduct donations of conservation 
easements up to 100 percent of taxable income, effective for 
qualified conservation contributions made after 2014.

                 B. Background and Need for Legislation

    While the Committee continues actively to pursue 
comprehensive tax reform as a critical means of promoting 
economic growth and job creation, the Committee also believes 
that it is important to provide individuals and small 
businesses permanent, immediate tax relief to encourage faster 
economic growth and job creation, while fostering charitable 
giving. By reinstating and making permanent the increased 
deduction limits for qualified conservation contributions, H.R. 
641 restores an important incentive for contributions of 
conservation easements for the benefit of the nation's 
communities and the environment. The deduction for qualified 
conservation contributions was intended to spur new donations 
of conservation easements. According to testimony received by 
the Committee, in the first two years following its original 
enactment, the temporary rule doubled the number of 
conservation easement donations in comparison to the two prior 
years, and increased the acreage conserved by about 32 percent. 
H.R. 641, will continue these results by providing certainty 
and stability to individuals and businesses seeking to 
contribute conservation easements.

                         C. Legislative History

Background

    H.R. 641 was introduced on February 2, 2015, and was 
referred to the Committee on Ways and Means.

Committee action

    The Committee on Ways and Means marked up H.R. 641, the 
Conservation Easement Incentive Act of 2015, on February 4, 
2015, and ordered the bill, as amended, favorably reported 
(with a quorum being present).

Committee hearings

    The need for permanent rules regarding qualified 
conservation contributions was discussed at no fewer than three 
hearings during the 112th and 113th Congresses:
           Select Revenue Measures Subcommittee Hearing 
        on Certain Expiring Tax Provisions (April 26, 2012);
           Select Revenue Measures Subcommittee Hearing 
        on Framework for Evaluating Certain Expiring Tax 
        Provisions (June 8, 2012); and
           Full Committee Hearing on Tax Reform and 
        Charitable Contributions (February 14, 2013).

                      II. EXPLANATION OF THE BILL

A. Special Rule for Qualified Conservation Contributions Made Permanent 
                       (sec. 170(b) of the Code)

                              PRESENT LAW

Charitable contributions generally

    In general, a deduction is permitted for charitable 
contributions, subject to certain limitations that depend on 
the type of taxpayer, the property contributed, and the donee 
organization. The amount of deduction generally equals the fair 
market value of the contributed property on the date of the 
contribution. Charitable deductions are provided for income, 
estate, and gift tax purposes.\1\
---------------------------------------------------------------------------
    \1\Secs. 170, 2055, and 2522, respectively.
---------------------------------------------------------------------------
    In general, in any taxable year, charitable contributions 
by a corporation are not deductible to the extent the aggregate 
contributions exceed ten percent of the corporation's taxable 
income computed without regard to net operating or capital loss 
carrybacks. Total deductible contributions of an individual 
taxpayer to public charities, private operating foundations, 
and certain types of private nonoperating foundations generally 
may not exceed 50 percent of the taxpayer's contribution base, 
which is the taxpayer's adjusted gross income for a taxable 
year (disregarding any net operating loss carryback). To the 
extent a taxpayer has not exceeded the 50-percent limitation, 
(1) contributions of capital gain property to public charities 
generally may be deducted up to 30 percent of the taxpayer's 
contribution base, (2) contributions of cash to most private 
nonoperating foundations and certain other charitable 
organizations generally may be deducted up to 30 percent of the 
taxpayer's contribution base, and (3) contributions of capital 
gain property to private foundations and certain other 
charitable organizations generally may be deducted up to 20 
percent of the taxpayer's contribution base.
    Contributions in excess of the applicable percentage limits 
generally may be carried over and deducted over the next five 
taxable years, subject to the relevant percentage limitations 
on the deduction in each of those years.

Capital gain property

    Capital gain property means any capital asset or property 
used in the taxpayer's trade or business the sale of which at 
its fair market value, at the time of contribution, would have 
resulted in gain that would have been long-term capital gain. 
Contributions of capital gain property to a qualified charity 
are deductible at fair market value within certain limitations. 
Contributions of capital gain property to charitable 
organizations described in section 170(b)(1)(A) (e.g., public 
charities, private foundations other than private non-operating 
foundations, and certain governmental units) generally are 
deductible up to 30 percent of the taxpayer's contribution 
base. An individual may elect, however, to bring all these 
contributions of capital gain property for a taxable year 
within the 50-percent limitation category by reducing the 
amount of the contribution deduction by the amount of the 
appreciation in the capital gain property. Contributions of 
capital gain property to charitable organizations described in 
section 170(b)(1)(B) (e.g., private non-operating foundations) 
are deductible up to 20 percent of the taxpayer's contribution 
base.
    For purposes of determining whether a taxpayer's aggregate 
charitable contributions in a taxable year exceed the 
applicable percentage limitation, contributions of capital gain 
property are taken into account after other charitable 
contributions.

Qualified conservation contributions

    Qualified conservation contributions are one exception to 
the ``partial interest'' rule, which generally bars deductions 
for charitable contributions of partial interests in 
property.\2\ A qualified conservation contribution is a 
contribution of a qualified real property interest to a 
qualified organization exclusively for conservation purposes. A 
qualified real property interest is defined as: (1) the entire 
interest of the donor other than a qualified mineral interest; 
(2) a remainder interest; or (3) a restriction (granted in 
perpetuity) on the use that may be made of the real property. 
Qualified organizations include certain governmental units, 
public charities that meet certain public support tests, and 
certain supporting organizations. Conservation purposes 
include: (1) the preservation of land areas for outdoor 
recreation by, or for the education of, the general public; (2) 
the protection of a relatively natural habitat of fish, 
wildlife, or plants, or similar ecosystem; (3) the preservation 
of open space (including farmland and forest land) where such 
preservation will yield a significant public benefit and is 
either for the scenic enjoyment of the general public or 
pursuant to a clearly delineated Federal, State, or local 
governmental conservation policy; and (4) the preservation of 
an historically important land area or a certified historic 
structure.
---------------------------------------------------------------------------
    \2\Secs. 170(f)(3)(B)(iii) and 170(h).
---------------------------------------------------------------------------
    Qualified conservation contributions of capital gain 
property are subject to the same limitations and carryover 
rules as other charitable contributions of capital gain 
property.

Temporary rules regarding contributions of capital gain real property 
        for conservation purposes

            In general
    Under a temporary provision\3\ the 30-percent contribution 
base limitation on deductions for contributions of capital gain 
property by individuals does not apply to qualified 
conservation contributions (as defined under present law). 
Instead, individuals may deduct the fair market value of any 
qualified conservation contribution to the extent of the excess 
of 50 percent of the contribution base over the amount of all 
other allowable charitable contributions. These contributions 
are not taken into account in determining the amount of other 
allowable charitable contributions.
---------------------------------------------------------------------------
    \3\Sec. 170(b)(1)(E).
---------------------------------------------------------------------------
    Individuals are allowed to carry over any qualified 
conservation contributions that exceed the 50-percent 
limitation for up to 15 years.
    For example, assume an individual with a contribution base 
of $100 makes a qualified conservation contribution of property 
with a fair market value of $80 and makes other charitable 
contributions subject to the 50-percent limitation of $60. The 
individual is allowed a deduction of $50 in the current taxable 
year for the non-conservation contributions (50 percent of the 
$100 contribution base) and is allowed to carry over the excess 
$10 for up to 5 years. No current deduction is allowed for the 
qualified conservation contribution, but the entire $80 
qualified conservation contribution may be carried forward for 
up to 15 years.
            Farmers and ranchers
    In the case of an individual who is a qualified farmer or 
rancher for the taxable year in which the contribution is made, 
a qualified conservation contribution is deductible up to 100 
percent of the excess of the taxpayer's contribution base over 
the amount of all other allowable charitable contributions.
    In the above example, if the individual is a qualified 
farmer or rancher, in addition to the $50 deduction for non-
conservation contributions, an additional $50 for the qualified 
conservation contribution is allowed and $30 may be carried 
forward for up to 15 years as a contribution subject to the 
100-percent limitation.
    In the case of a corporation (other than a publicly traded 
corporation) that is a qualified farmer or rancher for the 
taxable year in which the contribution is made, any qualified 
conservation contribution is deductible up to 100 percent of 
the excess of the corporation's taxable income (as computed 
under section 170(b)(2)) over the amount of all other allowable 
charitable contributions. Any excess may be carried forward for 
up to 15 years as a contribution subject to the 100-percent 
limitation.\4\
---------------------------------------------------------------------------
    \4\Sec. 170(b)(2)(B).
---------------------------------------------------------------------------
    As an additional condition of eligibility for the 100-
percent limitation, with respect to any contribution of 
property in agriculture or livestock production, or that is 
available for such production, by a qualified farmer or 
rancher, the qualified real property interest must include a 
restriction that the property remain generally available for 
such production. (There is no requirement as to any specific 
use in agriculture or farming, or necessarily that the property 
be used for such purposes, merely that the property remain 
available for such purposes.)
    A 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.
            Termination
    The temporary rules regarding contributions of capital gain 
real property for conservation purposes do not apply to 
contributions made in taxable years beginning after December 
31, 2014.\5\
---------------------------------------------------------------------------
    \5\Secs. 170(b)(1)(E)(vi) and 170(b)(2)(B)(iii).
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee believes that the special rule that provides 
an increased incentive to make charitable contributions of 
partial interests in real property for conservation purposes is 
an important way of encouraging conservation and preservation, 
and therefore should be permanently extended.

                        EXPLANATION OF PROVISION

    The provision reinstates and makes permanent the increased 
percentage limits and extended carryforward period for 
qualified conservation contributions.
    The provision also includes special rules for qualified 
conservation contributions by certain Native Corporations. For 
this purpose, the term Native Corporation has the meaning given 
such term by section 3(m) of the Alaska Native Claims 
Settlement Act.\6\ In the case of any qualified conservation 
contribution which is made by a Native Corporation and is a 
contribution of property that was land conveyed under the 
Alaska Native Claims Settlement Act, a deduction for the 
contribution is allowed to the extent that the aggregate amount 
of such contributions does not exceed the excess of 100 percent 
of the taxpayer's taxable income over the amount of all other 
allowable charitable contributions. Any excess may be carried 
forward for up to 15 years as a contribution subject to the 
100-percent limitation. The provision shall not be construed to 
modify the existing property rights validly conveyed to Native 
Corporations under the Alaska Native Claims Settlement Act.
---------------------------------------------------------------------------
    \6\43 U.S.C. sec. 1602(m) (providing that the term Native 
Corporation includes ``any Regional Corporation, any Village 
Corporation, any Urban Corporation, and any Group Corporation,'' as 
those terms are defined under the Alaska Native Claims Settlement Act).
---------------------------------------------------------------------------

                             EFFECTIVE DATE

    The provision applies to contributions made in taxable 
years beginning after December 31, 2014.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statements are made 
concerning the votes of the Committee on Ways and Means in its 
consideration of H.R. 641, the Conservation Easement Incentive 
Act of 2015, on February 4, 2015.
    The bill H.R. 641 was ordered favorably reported as amended 
by a roll call vote of 24 yeas to 14 nays (with a quorum being 
present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
         Representative             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Ryan.......................        X   ........  .........  Mr. Levin........  ........        X   .........
Mr. Johnson....................        X   ........  .........  Mr. Rangel.......  ........        X   .........
Mr. Brady......................        X   ........  .........  Mr. McDermott....  ........        X   .........
Mr. Nunes......................        X   ........  .........  Mr. Lewis........  ........        X   .........
Mr. Tiberi.....................        X   ........  .........  Mr. Neal.........  ........        X   .........
Mr. Reichert...................        X   ........  .........  Mr. Becerra......  ........        X   .........
Mr. Boustany...................        X   ........  .........  Mr. Doggett......  ........        X   .........
Mr. Roskam.....................        X   ........  .........  Mr. Thompson.....  ........        X   .........
Mr. Price......................        X   ........  .........  Mr. Larson.......  ........        X   .........
Mr. Buchanan...................        X   ........  .........  Mr. Blumenauer...  ........  ........  .........
Mr. Smith (NE).................        X   ........  .........  Mr. Kind.........  ........        X   .........
Mr. Schock.....................        X   ........  .........  Mr. Pascrell.....  ........        X   .........
Ms. Jenkins....................        X   ........  .........  Mr. Crowley......  ........        X   .........
Mr. Paulsen....................        X   ........  .........  Mr. Davis........  ........        X   .........
Mr. Marchant...................        X   ........  .........  Ms. Sanchez......  ........        X   .........
Ms. Black......................        X   ........  .........
Mr. Reed.......................        X   ........  .........
Mr. Young......................        X   ........  .........
Mr. Kelly......................        X   ........  .........
Mr. Renacci....................        X   ........  .........
Mr. Meehan.....................        X   ........  .........
Ms. Noem.......................        X   ........  .........
Mr. Holding....................        X   ........  .........
Mr. Smith (MO).................        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. 641, as 
reported.
    The bill, as reported, is estimated to have the following 
effect on Federal budget receipts for fiscal years 2015-2025:

                                                                      FISCAL YEARS
                                                                  [Millions of Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
   2015       2016       2017       2018       2019        2020         2021         2022        2023        2024        2025      2015- 20    2015- 25
--------------------------------------------------------------------------------------------------------------------------------------------------------
     -25        -73        -86        -90        -94         -103         -120         -136        -150        -164        -178        -470      -1,220
--------------------------------------------------------------------------------------------------------------------------------------------------------
NOTE: Details do not add to totals due to rounding.

    Pursuant to clause 8 of rule XIII of the Rules of the House 
of Representatives, the following statement is made by the 
Joint Committee on Taxation with respect to the provisions of 
the bill amending the Internal Revenue Code of 1986: the gross 
budgetary effect (before incorporating macroeconomic effects) 
in any fiscal year is less than 0.25 percent of the current 
projected gross domestic product of the United States for that 
fiscal year; therefore, the bill is not ``major legislation'' 
for purposes of requiring that the estimate include the 
budgetary effects of changes in economic output, employment, 
capital stock and other macroeconomic variables.

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

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

      C. Cost Estimate Prepared by the Congressional Budget Office

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

                                Congressional Budget Office
                                      U.S. Congress
                                  Washington, DC, February 5, 2015.
Hon. Paul Ryan,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 641, the 
Conservation Easement Incentive Act of 2015.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Nate Frentz.
            Sincerely,
                                      Douglas W. Elmendorf.
    Enclosure.

H.R. 641--Conservation Easement Incentive Act of 2015

    H.R. 641 would amend the Internal Revenue Code to reinstate 
and make permanent specified rules that increased the amount of 
income tax deductions allowed for taxpayers making certain 
charitable contributions of real property for conservation 
purposes. The rules, which expired on December 31, 2014, 
increased certain income-based limits on the amount of such 
conservation contributions that an individual or qualified 
corporate farmer or rancher could deduct in a year, and 
extended the number of years over which such contributions 
above the limits could be carried forward and deducted. H.R. 
641 also includes special rules for qualified conservation 
contributions made by Alaska Native Corporations.
    The staff of the Joint Committee on Taxation (JCT) 
estimates that enacting H.R. 641 would reduce revenues, thus 
increasing federal budget deficits, by about $1.2 billion over 
the 2015-2025 period.
    The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting 
direct spending and revenues. Enacting H.R. 641 would result in 
revenue losses in each year beginning in 2015. The estimated 
increases in the deficit are shown in the following table.
    JCT has determined that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Nathaniel 
Frentz. The estimate was approved by David Weiner, Assistant 
Director for Tax Analysis.

          CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 641, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON FEBRUARY 4, 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                             2015    2016    2017    2018    2019    2020    2021    2022    2023    2024    2025   2015-2020  2015-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               NET INCREASE IN THE DEFICIT
Statutory Pay-As-You-Go Impact............      25      73      86      90      94     103     120     136     150     164     178       470       1,220
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Staff of the Joint Committee on Taxation.
Note: Components may not sum to totals because of rounding.

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

          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee advises that it was as a result of the 
Committee's review of the provisions of H.R. 641 that the 
Committee concluded that it is appropriate to report the bill, 
as amended, favorably to the House of Representatives with the 
recommendation that the bill do pass.

        B. Statement of General Performance Goals and Objectives

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

              C. Information Relating to Unfunded Mandates

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

                D. Applicability of House Rule XXI 5(b)

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

                       E. Tax Complexity Analysis

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

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

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

                   G. Duplication of Federal Programs

    In compliance with Sec. 3(g)(2) of H. Res. 5 (114th 
Congress), the Committee states that no provision of the bill 
establishes or reauthorizes a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139. The Committee 
also states that 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), identified program related to conservation easement 
contributions.

                 H. Disclosure of Directed Rule Makings

    In compliance with Sec. 3(i) of H. Res. 5 (114th Congress), 
the following statement is made concerning directed rule 
makings: The Committee estimates that the bill requires no 
directed rule makings within the meaning of such section.

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

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

INTERNAL REVENUE CODE OF 1986

           *       *       *       *       *       *       *

Subtitle A--Income Taxes

           *       *       *       *       *       *       *

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 third 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), or
                          (viii) an organization described in 
                        section 509(a)(2) or (3),
                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.
                          [(vi) Termination.--This subparagraph 
                        shall not apply to any contribution 
                        made in taxable years beginning after 
                        December 31, 2014.]
                  (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) 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) 
                applies] 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 years] 15 succeeding taxable 
                        years in order of time.
                          [(iii) Termination.--This 
                        subparagraph shall not apply to any 
                        contribution made in taxable years 
                        beginning after December 31, 2014.]
                  (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.
                  [(C)] (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) section 199, and
                          (v) any capital loss carryback to the 
                        taxable year under section 1212(a)(1).
  (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.
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.--In the case of a 
                        taxpayer other than a C corporation, 
                        the aggregate amount of such 
                        contributions for any taxable year 
                        which may be taken into account under 
                        this section shall not exceed 10 
                        percent of the taxpayer's aggregate net 
                        income for such taxable year from all 
                        trades or businesses from which such 
                        contributions were made for such year, 
                        computed without regard to this 
                        section.
                          (iii) Apparently wholesome food.--For 
                        purposes of this subparagraph, the term 
                        ``apparently wholesome food'' has the 
                        meaning given to such term by section 
                        22(b)(2) of the Bill Emerson Good 
                        Samaritan Food Donation Act (42 U.S.C. 
                        1791(b)(2)), as in effect on the date 
                        of the enactment of this subparagraph.
                          (iv) Termination.--This subparagraph 
                        shall not apply to contributions made 
                        after December 31, 2014.
                  (D) Special rule for contributions of book 
                inventory to public schools.--
                          (i) Contributions of book 
                        inventory.--In determining whether a 
                        qualified book contribution is a 
                        qualified contribution, subparagraph 
                        (A) shall be applied without regard to 
                        whether the donee is an organization 
                        described in the matter preceding 
                        clause (i) of subparagraph (A).
                          (ii) Qualified book contribution.--
                        For purposes of this paragraph, the 
                        term ``qualified book contribution'' 
                        means a charitable contribution of 
                        books to a public school which is an 
                        educational organization described in 
                        subsection (b)(1)(A)(ii) and which 
                        provides elementary education or 
                        secondary education (kindergarten 
                        through grade 12).
                          (iii) Certification by donee.--
                        Subparagraph (A) shall not apply to any 
                        contribution of books unless (in 
                        addition to the certifications required 
                        by subparagraph (A) (as modified by 
                        this subparagraph)), the donee 
                        certifies in writing that--
                                  (I) the books are suitable, 
                                in terms of currency, content, 
                                and quantity, for use in the 
                                donee's educational programs, 
                                and
                                  (II) the donee will use the 
                                books in its educational 
                                programs.
                          (iv) Termination.--This subparagraph 
                        shall not apply to contributions made 
                        after December 31, 2011.
                  (E) 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)).
          (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) Substantiation not required for 
                contributions reported by the donee 
                organization.--Subparagraph (A) shall not apply 
                to a contribution if the donee organization 
                files a return, on such form and in accordance 
                with such regulations as the Secretary may 
                prescribe, which includes the information 
                described in subparagraph (B) with respect to 
                the contribution.
                  (E) 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.
  (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.
  (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.
  (l) Treatment of Certain Amounts Paid to or for the Benefit 
of Institutions of Higher Education.--
          (1) In general.--For purposes of this section, 80 
        percent of any amount described in paragraph (2) shall 
        be treated as a charitable contribution.
          (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) such amount would be allowable as a 
                deduction under this section but for the fact 
                that 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:

 
------------------------------------------------------------------------
 Taxable Year of Donor Ending on or
     After Date of Contribution:            Applicable Percentage:
------------------------------------------------------------------------
1st.................................  100
 ..
2nd.................................  100
 ..
3rd.................................  90
 ..
4th.................................  80
 ..
5th.................................  70
 ..
6th.................................  60
 ..
7th.................................  50
 ..
8th.................................  40
 ..
9th.................................  30
 ..
10th................................  20
 ..
11th................................  10
 ..
12th................................  10
 ..
------------------------------------------------------------------------

          (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) 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 6973 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.

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