I 

109TH CONGRESS 

1ST SESSION H. R. 2904

To amend the Internal Revenue Code of 1986 to allow a credit against 

the income tax for an owner of a radio broadcasting station which 

donates the license and other assets of such station to a nonprofit 

corporation for purposes of supporting nonprofit fine arts and performing 

arts organizations, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 15, 2005

Mr. ANDREWS introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL

To amend the Internal Revenue Code of 1986 to allow a 

credit against the income tax for an owner of a radio 

broadcasting station which donates the license and other 

assets of such station to a nonprofit corporation for 

purposes of supporting nonprofit fine arts and performing arts organizations, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Cultural Radio Tax 

5 Credit Act of 2005’’. 
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1 SEC. 2. CREDIT FOR DONATION OF LICENSE AND OTHER 

2 ASSETS OF COMMERCIAL RADIO BROAD3 CASTING STATIONS TO NONPROFIT COR4 PORATIONS. 

5 (a) IN GENERAL.—Subpart D of part IV of sub6 chapter A of chapter 1 of the Internal Revenue Code of 

7 1986 (relating to general business credits) is amended by 

8 adding at the end the following new section: 

9 ‘‘SEC. 45J. CREDIT FOR DONATION OF LICENSE AND OTHER 

10 ASSETS OF COMMERCIAL RADIO BROAD11 CASTING STATION TO CERTAIN NONPROFIT 

12 CORPORATIONS. 

13 ‘‘(a) RADIO BROADCASTING STATION DONATION

14 CREDIT.—For purposes of section 38, the radio broad15 casting station donation credit is an amount equal to the 

16 sum of—

17 ‘‘(1) 125 percent of the fair market value of a 

18 radio broadcasting commercial license which is do19 nated to a qualified recipient, 

20 ‘‘(2) 100 percent of the fair market value of 

21 any radio broadcasting station assets, including 

22 equipment and other real property owned by the sta23 tion, which are donated to the same qualified recipi24 ent, and 
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1 ‘‘(3) the total amount deposited into an oper2 ations escrow fund established by the donor of the 

3 license and assets during the taxable year. 

4 ‘‘(b) QUALIFIED RECIPIENT.—For purposes of this 

5 section, a qualified recipient is an entity which—

6 ‘‘(1) is a corporation described in section 

7 501(c)(3) which is exempt from taxation under sec8 tion 501(a), 

9 ‘‘(2) agrees to operate the radio broadcasting 

10 station being donated to it as a for-profit venture, 

11 with profits dedicated to the support of non-profit 

12 fine arts and performing arts organizations in its 

13 service area, 

14 ‘‘(3) has at least 3 arts organizations from its 

15 service area on its board of trustees, or on a board 

16 of trustees of a subsidiary established to oversee op17 eration of the radio broadcasting station, 

18 ‘‘(4) agrees that, in the event that it ceases op19 eration of the radio broadcasting station—

20 ‘‘(A) it will not sell the station to a for21 profit broadcaster under any circumstances, 

22 and 

23 ‘‘(B) it will either—

24 ‘‘(i) transfer the license to another 

25 corporation described in section 501(c)(3) 
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1 which is exempt from taxation under sec2 tion 501(a) and which agrees to continue 

3 operation of the station for the support of 

4 nonprofit fine arts and performing arts or5 ganizations in its service area, or 

6 ‘‘(ii) surrender the license to the Fed7 eral Communications Commission. 

8 ‘‘(c) OPERATIONS ESCROW FUND.—

9 ‘‘(1) IN GENERAL.—For purposes of this sec10 tion, an operations escrow fund is a fund established 

11 by a taxpayer who has donated a radio broadcasting 

12 commercial license or radio broadcasting station as13 sets to a qualified recipient for the purpose of cov14 ering operating expenses during the recipient’s first 

15 year of operation of the radio broadcasting station 

16 if the station’s revenues are not adequate to cover 

17 such expenses. An operations escrow fund may be 

18 established only if the qualified recipient is not able 

19 to meet the financial responsibility requirement of 

20 the Federal Communications Commission. 

21 ‘‘(2) RECAPTURE OF CREDIT FOR AMOUNTS RE22 MAINING IN ESCROW FUND.—In any case in which 

23 there is an amount remaining in an operations es24 crow fund after the first year of operation of the 

25 radio broadcasting station for which the fund was 
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1 established, such amount (not including any interest 

2 that accrued on the amount in the fund) shall be 

3 added to the tax imposed by this chapter on the tax4 payer for the taxpayer’s taxable year which includes 

5 the end of such first year of operation. 

6 ‘‘(d) SPECIAL RULES IN CASE OF SURRENDER OF LI7 CENSE TO FCC.—If a qualified recipient surrenders its 

8 donated radio broadcasting license to the Federal Commu9 nications Commission, the Commission shall notify the 

10 donor of the license that the donor may, within 6 months 

11 after such notification, post a bond equal to the amount 

12 of the tax credit under subsection (a) that it received for 

13 donating the station, plus interest. After such a bond is 

14 posted, the donor may apply for the license. If the Com15 mission approves the donor’s application for the license, 

16 the bond shall be used in lieu of an auction fee. If the 

17 donor does not exercise its option within such six months, 

18 or waives its option earlier, the license shall be auctioned 

19 in the same manner as a new license. 

20 ‘‘(e) DENIAL OF DOUBLE BENEFIT.—A donation or 

21 deposit for which a credit is allowed under subsection (a) 

22 shall not be treated as a charitable contribution under sec23 tion 170. 

24 ‘‘(f) ELECTION.—This section shall apply to any tax25 payer for any taxable year only if such taxpayer elects (at 
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1 such time and in such manner as the Secretary may by 

2 regulations prescribe) to have this section apply for such 

3 taxable year.’’. 

4 (b) CONFORMING AMENDMENTS.—

5 (1) Subsection (b) of section 38 of such Code 

6 is amended by striking ‘‘plus’’ at the end of para7 graph (18), by striking the period at the end of 

8 paragraph (19) and inserting ‘‘, plus’’, and by add9 ing at the end the following new paragraph: 

10 ‘‘(20) the radio broadcasting station donation 

11 credit determined under section 45J(a).’’. 

12 (2) The table of sections for subpart D of part 

13 IV of subchapter A of chapter 1 of such Code is 

14 amended by adding at the end the following new 

15 item:

‘‘Sec. 45J. Credit for donation of license and other assets of commercial radio 

broadcasting stations to certain nonprofit corporations.’’.

16 (c) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to taxable years beginning after 

18 December 31, 2005.

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