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104TH CONGRESS

1ST SESSION H. R. 1161

To amend the Internal Revenue Code of 1986 to provide an exclusion from

unrelated business taxable income for certain sponsorship payments.

IN THE HOUSE OF REPRESENTATIVES

MARCH 8, 1995

Mr. CAMP (for himself and Mr. MCDERMOTT) 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 provide

an exclusion from unrelated business taxable income for

certain sponsorship payments.

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

3 SECTION 1. EXCLUSION FROM UNRELATED BUSINESS TAX4 ABLE INCOME FOR CERTAIN SPONSORSHIP

5 PAYMENTS.

6 (a) IN GENERAL.—Section 513 of the Internal Reve7 nue Code of 1986 (relating to unrelated business taxable

8 income) is amended by adding at the end thereof the

9 following new subsection:
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1 ‘‘(i) TREATMENT OF CERTAIN SPONSORSHIP PAY2 MENTS.—

3 ‘‘(1) IN GENERAL.—The term ‘unrelated trade

4 or business’ does not include the activity of soliciting

5 and receiving qualified sponsorship payments with

6 respect to any qualified public event.

7 ‘‘(2) QUALIFIED SPONSORSHIP PAYMENTS.—

8 For purposes of this subsection, the term ‘qualified

9 sponsorship payment’ means any payment by any

10 person engaged in a trade or business with respect

11 to which there is no arrangement or expectation that

12 such person will receive any substantial return bene13 fit other than—

14 ‘‘(A) the use of the name or logo of such

15 person’s trade or business in connection with

16 any qualified public event under arrangements

17 (including advertising) in connection with such

18 event which acknowledge such person’s sponsor19 ship or promote such person’s products or serv20 ices, or

21 ‘‘(B) the furnishing of facilities, services,

22 or other privileges in connection with such event

23 to individuals designated by such person.

24 ‘‘(3) QUALIFIED PUBLIC EVENT.—
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1 ‘‘(A) IN GENERAL.—For purposes of this

2 subsection, the term ‘qualified public event’

3 means any event conducted by an organization

4 described in paragraph (3), (4), (5), or (6) of

5 section 501(c) or by an organization described

6 in section 511(a)(2)(B) if such event is—

7 ‘‘(i) a public event the conduct of

8 which is substantially related (aside from

9 the need of the organization for income or

10 funds or the use it makes of the profits de11 rived) to the exempt purposes of the orga12 nization conducting such event, or

13 ‘‘(ii) any public event not described in

14 clause (i) but only if such event is the only

15 event of that type conducted by such orga16 nization during a calendar year and such

17 event does not exceed 30 consecutive days.

18 An event shall be treated as a qualified public

19 event with respect to all organizations referred

20 to in the preceding sentence which receive spon21 sorship payments with respect to such event if

22 such event is a qualified public event with re23 spect to 1 of such organizations; except that a

24 payment shall be treated as not being from an

25 unrelated trade or business by reason of this
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1 sentence only to the extent that such payment

2 is used to meet the expenses of such event or

3 for the benefit of the organization with respect

4 to which such event is a qualified public event

5 (determined without regard to this sentence).

6 ‘‘(B) EXEMPT PURPOSE.—For purposes of

7 subparagraph (A), the term ‘exempt purpose’

8 means any purpose or function constituting the

9 basis for the organization’s exemption under

10 section 501 (or, in the case of an organization

11 described in section 511(a)(2)(B), the exercise

12 or performance of any purpose or function de13 scribed in section 501(c)(3)).

14 ‘‘(4) REGULATIONS.—The Secretary shall pre15 scribe such regulations as may be necessary to pre16 vent the avoidance of the purposes of this subsection

17 through the use of entities under common control.’’

18 (b) EFFECTIVE DATE.—The amendment made by

19 subsection (a) shall apply to events conducted after

20 December 31, 1994.

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