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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 5234 Introduced in Senate (IS)]

<DOC>

118th CONGRESS
  2d Session
                                S. 5234

 To amend the Internal Revenue Code of 1986 to impose an excise tax on 
       certain investments of private colleges and universities.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                           September 25, 2024

Mr. Ricketts (for himself, Mr. Cotton, and Mrs. Fischer) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL

 
 To amend the Internal Revenue Code of 1986 to impose an excise tax on 
       certain investments of private colleges and universities.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Protecting Endowments from Our 
Adversaries Act''.

SEC. 2. EXCISE TAX ON CERTAIN INVESTMENTS OF PRIVATE COLLEGES AND 
              UNIVERSITIES.

    (a) In General.--Subchapter H of chapter 42 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new section:

``SEC. 4969. EXCISE TAX ON CERTAIN INVESTMENTS OF PRIVATE COLLEGES AND 
              UNIVERSITIES.

    ``(a) Tax on Acquisition of Listed Investments.--In the case of any 
specified educational institution which acquires (directly or 
indirectly through any chain of ownership) one or more listed 
investments during any taxable year, there is hereby imposed for such 
taxable year a tax equal to 50 percent of the fair market values of 
such investments determined as of the dates of such acquisitions.
    ``(b) Tax on Net Income From 1-Year Listed Investments.--
            ``(1) In general.--There is hereby imposed on each 
        specified educational institution for the taxable year a tax 
        equal to 100 percent of the excess (if any) of--
                    ``(A) the sum of--
                            ``(i) all income received with respect to 
                        any 1-year listed investment during such 
                        taxable year, plus
                            ``(ii) all gains recognized with respect to 
                        the sale or other disposition of any 1-year 
                        listed investments during such taxable year, 
                        over
                    ``(B) the sum of--
                            ``(i) all deductions properly allocable to 
                        income described in subparagraph (A)(i), plus
                            ``(ii) all losses recognized with respect 
                        to the sale or other disposition of any 1-year 
                        listed investments during such taxable year.
            ``(2) 1-year listed investment.--For purposes of this 
        section, with respect to any income received or gain or loss 
        recognized, the term `1-year listed investment' means any 
        listed investment which was such a listed investment at all 
        times during the 1-year period ending on the date such income 
        was received or such gain or loss was recognized.
    ``(c) Listed Investment.--For purposes of this section--
            ``(1) In general.--The term `listed investment' means any 
        specified interest with respect to any person listed on one or 
        more of--
                    ``(A) the Entity List maintained by the Secretary 
                of Commerce,
                    ``(B) the Military End User (MEU) List maintained 
                by the Secretary of Commerce,
                    ``(C) the Unverified List maintained by the 
                Secretary of Commerce, or
                    ``(D) the list maintained by the Federal 
                Communications Commission of equipment and services 
                covered by section 2 of the Secure and Trusted 
                Communications Networks Act of 2019 (commonly referred 
                to as the FCC Covered List).
            ``(2) Listed persons list.--The Secretary shall establish 
        (not later than 60 days after the date of the enactment of this 
        section), update, and maintain a list of the persons which are 
        listed on one or more of the lists described in paragraph (1).
            ``(3) Specified interest.--The term `specified interest' 
        means, with respect to any person--
                    ``(A) stock or any other equity or profits interest 
                of such person,
                    ``(B) debt issued by such person, or
                    ``(C) any contract or derivative with respect to 
                any interest described in subparagraph (A) or (B).
            ``(4) Inclusion of certain pooled funds.--
                    ``(A) In general.--Any specified interest acquired 
                through a regulated investment company, exchange traded 
                fund, or any other pooled investment shall not fail to 
                be treated as acquired through a chain of ownership 
                described in subsection (a).
                    ``(B) Certifications of pooled funds.--The 
                Secretary shall establish procedures under which 
                regulated investment companies, exchange traded funds, 
                and other pooled investments may be certified by the 
                Secretary as not holding any listed investments.
    ``(d) Specified Educational Institution.--For purposes of this 
section--
            ``(1) In general.--The term `specified educational 
        institution' means, with respect to any taxable year, any 
        eligible educational institution (as defined in section 
        25A(f)(2))--
                    ``(A) which is not described in the first sentence 
                of section 511(a)(2)(B) (relating to State colleges and 
                universities), and
                    ``(B) the aggregate fair market value of the assets 
                of which at the end of the preceding taxable year 
                (other than those assets which are used directly in 
                carrying out the institution's exempt purpose) is in 
                excess of $1,000,000,000.
            ``(2) Treatment of related organizations.--For purposes of 
        subsections (a) and (b), assets held by any related 
        organization (as defined in section 4968(d)(2)) with respect to 
        an educational institution shall be treated as held by such 
        educational institution, except that--
                    ``(A) such assets shall not be taken into account 
                with respect to more than 1 educational institution, 
                and
                    ``(B) unless such organization is controlled by 
                such institution or is described in section 509(a)(3) 
                with respect to such institution, assets which are not 
                intended or available for the use or benefit of such 
                educational institution shall not be taken into 
                account.
    ``(e) Valuation of Debt.--For purposes of subsection (a), the fair 
market value of any debt shall be treated as being the principal amount 
of such debt.
    ``(f) Regulations.--The Secretary may issue such regulations or 
other guidance as may be necessary or appropriate to carry out the 
purposes of this section, including regulations or other guidance 
providing for the proper application of this section with respect to 
institutionally related foundations and pooled investments.''.
    (b) Clerical Amendments.--
            (1) The table of sections for subchapter H of chapter 42 of 
        such Code is amended by adding at the end the following new 
        item:

``Sec. 4969. Excise tax on certain investments of private colleges and 
                            universities.''.
            (2) The heading of subchapter H of chapter 42 of such Code 
        (and the item relating to such subchapter in the table of 
        subchapters for such chapter) are each amended by striking 
        ``Tax Based on Investment Income'' and inserting ``Taxes Based 
        on Investments''.
    (c) Effective Dates.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        taxable years ending after the earlier of--
                    (A) the end of the first calendar year beginning 
                after the date of the enactment of this Act, or
                    (B) the end of the 1-year period beginning on the 
                date on which the Secretary of the Treasury (or the 
                Secretary's delegate) establishes the listed persons 
                list under section 4969(c)(2) of the Internal Revenue 
                Code of 1986 (as added by this section).
            (2) Certain prior acquisitions.--Section 4969(a) of the 
        Internal Revenue Code of 1986 (as added by this section) shall 
        not apply to investments acquired before the end of the 
        calendar year referred to in paragraph (1)(A).
            (3) Certain prior income and gains.--Section 4969(b) of the 
        Internal Revenue Code of 1986 (as added by this section) shall 
        not apply to income received, or gains or losses recognized, 
        before the end of the 1-year period referred to in paragraph 
        (1)(B).
                                 <all>
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