I

107TH CONGRESS

1ST SESSION H. R. 824

To amend the Internal Revenue Code of 1986 to allow individuals who

do not itemize their deductions a deduction for a portion of their charitable contributions, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 1, 2001

Ms. DUNN (for herself, Mr. DUNCAN, Mr. SIMPSON, Mr. WHITFIELD, Mr.

DEAL of Georgia, Ms. HART, Mr. PETERSON of Pennsylvania, Mr.

CRENSHAW, Mr. ENGLISH, Mr. PASCRELL, Mr. WATTS of Oklahoma, Mr.

GREENWOOD, Mr. BAIRD, Mr. OTTER, Mr. TAYLOR of North Carolina,

Mr. SCHAFFER, and Mr. SOUDER) 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 individuals who do not itemize their deductions a deduction

for a portion of their charitable contributions, 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 ‘‘Neighbor to Neighbor

5 Act’’.
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1 SEC. 2. DEDUCTION FOR PORTION OF CHARITABLE CON2 TRIBUTIONS TO BE ALLOWED TO INDIVID3 UALS WHO DO NOT ITEMIZE DEDUCTIONS.

4 (a) IN GENERAL.—Section 170 of the Internal Rev5 enue Code of 1986 (relating to charitable, etc., contribu6 tions and gifts) is amended by redesignating subsection

7 (m) as subsection (n) and by inserting after subsection

8 (l) the following new subsection:

9 ‘‘(m) DEDUCTION FOR INDIVIDUALS NOT ITEMIZING

10 DEDUCTIONS.—

11 ‘‘(1) IN GENERAL.—In the case of an individual

12 who does not itemize the individual’s deductions for

13 the taxable year, the amount allowable under sub14 section (a) shall be taken into account as a direct

15 charitable deduction under section 63.

16 ‘‘(2) LIMITATION.—The portion of the amount

17 allowable under subsection (a) to which paragraph

18 (1) applies for the taxable year shall not exceed the

19 amount in effect for such taxable year under section

20 63(c)(2)(C) (section 63(c)(2)(A) in the case of a

21 joint return under section 6013).’’.

22 (b) DIRECT CHARITABLE DEDUCTION.—

23 (1) IN GENERAL.—Section 63(b) of such Code

24 (relating to individuals who do not itemize their de25 ductions) is amended by striking ‘‘and’’ at the end

26 of paragraph (1), by striking the period at the end
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1 of paragraph (2) and inserting ‘‘, and’’, and by add2 ing at the end the following new paragraph:

3 ‘‘(3) the direct charitable deduction.’’.

4 (2) DEFINITION.—Section 63 of such Code (re5 lating to taxable income defined) is amended by re6 designating subsection (g) as subsection (h) and by

7 inserting after subsection (f) the following new sub8 section:

9 ‘‘(g) DIRECT CHARITABLE DEDUCTION.—For pur10 poses of this section, the term ‘direct charitable deduction’

11 means that portion of the amount allowable under section

12 170(a) which is taken as a direct charitable deduction for

13 the taxable year under section 170(m).’’.

14 (3) CONFORMING AMENDMENT.—Section 63(d)

15 of such Code (defining itemized deductions) is

16 amended by striking ‘‘and’’ at the end of paragraph

17 (1), by striking the period at the end of paragraph

18 (2) and inserting ‘‘, and’’, and by adding at the end

19 the following new paragraph:

20 ‘‘(3) the direct charitable deduction.’’.

21 (c) TIME WHEN CONTRIBUTIONS DEEMED MADE.—

22 Section 170(f) of such Code (relating to disallowance of

23 deduction in certain cases and special rules) is amended

24 by adding at the end the following new paragraph:
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1 ‘‘(10) TIME WHEN CONTRIBUTIONS DEEMED

2 PAID.—For purposes of this section, in the case of

3 an individual, a taxpayer shall be deemed to have

4 paid a charitable contribution on the last day of the

5 preceding taxable year if the contribution is paid on

6 account of such taxable year and is paid not later

7 than the time prescribed by law for filing the return

8 for such taxable year (not including extensions

9 thereof).’’.

10 (d) EFFECTIVE DATE.—The amendments made by

11 this section shall apply to taxable years beginning after

12 December 31, 2000.

13 SEC. 3. CHARITABLE DEDUCTION EXCEPTION TO OVERALL

14 LIMITATION ON ITEMIZED DEDUCTIONS.

15 (a) IN GENERAL.—Subsection (c) of section 68 of the

16 Internal Revenue Code of 1986 (relating to exception for

17 certain itemized deductions) is amended by striking ‘‘and’’

18 at the end of paragraph (2), by striking the period at the

19 end of paragraph (3) and inserting ‘‘, and’’, and by adding

20 at the end the following:

21 ‘‘(4) the deduction under section 170 (relating

22 to charitable, etc., contributions and gifts).’’.

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

24 this section shall apply to taxable years beginning after

25 December 31, 2000.
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1 SEC. 4. REPEAL OF SPECIAL LIMITATION ON CONTRIBU2 TIONS OF CAPITAL GAIN PROPERTY.

3 (a) IN GENERAL.—Paragraph (1) of section 170(b)

4 of the Internal Revenue Code of 1986 (relating to percent5 age limitations on charitable contributions by individuals)

6 is amended—

7 (1) by striking subparagraphs (C) and (D), and

8 (2) by redesignating subparagraphs (E) and

9 (F) as subparagraphs (C) and (D), respectively.

10 (b) CONFORMING AMENDMENTS.—

11 (1) Subparagraph (B) of section 170(e)(5) of

12 such Code is amended—

13 (A) in clause (ii) by striking ‘‘(as defined

14 in subsection (b)(1)(C)(iv))’’, and

15 (B) by adding at the end the following new

16 flush sentence:

17 ‘‘For purposes of clause (ii), the term ‘capital

18 gain property’ means with respect to any con19 tribution, any capital asset the sale of which at

20 its fair market value at the time of the con21 tribution would have resulted in gain which

22 would have been long-term capital gain. For

23 purposes of the preceding sentence, any prop24 erty which is property used in the trade or busi25 ness (as defined in section 1231(b)) shall be

26 treated as a capital asset.’’.
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1 (2) Section 545(b)(2) of such Code is amended

2 by striking ‘‘section 170(b)(1)(A), (B), and (D)’’

3 and inserting ‘‘section 170(b)(1)(A) and (B)’’.

4 (3) Section 556(b)(2) of such Code is amended

5 by striking ‘‘section 170(b)(1)(A), (B), and (D)’’

6 and inserting ‘‘section 170(b)(1)(A) and (B)’’.

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

8 this section shall apply to taxable years beginning after

9 December 31, 2000.

10 SEC. 5. EXTENSION OF CARRYOVER PERIOD FOR EXCESS

11 CONTRIBUTIONS.

12 (a) IN GENERAL.—The following provisions of sec13 tion 170 of the Internal Revenue Code of 1986 are each

14 amended by striking ‘‘5’’ and inserting ‘‘10’’:

15 (1) Subsection (d)(1)(A) (general rule for

16 carryovers of excess contributions by individuals).

17 (2) Subsection (d)(2)(A) (general rule for

18 carryovers of excess contributions by corporations).

19 (3) Subsection (b)(1)(B) (relating to percent

20 limitation on other contributions by individuals).

21 (b) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to taxable years beginning after

23 December 31, 2000.
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1 SEC. 6. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RE2 TIREMENT ACCOUNTS FOR CHARITABLE

3 PURPOSES.

4 (a) IN GENERAL.—Subsection (d) of section 408 of

5 the Internal Revenue Code of 1986 (relating to individual

6 retirement accounts) is amended by adding at the end the

7 following new paragraph:

8 ‘‘(8) DISTRIBUTIONS FOR CHARITABLE PUR9 POSES.—

10 ‘‘(A) IN GENERAL.—No amount shall be

11 includible in gross income by reason of a quali12 fied charitable distribution from an individual

13 retirement account to an organization described

14 in section 170(c).

15 ‘‘(B) SPECIAL RULES RELATING TO CHARI16 TABLE REMAINDER TRUSTS, POOLED INCOME

17 FUNDS, AND CHARITABLE GIFT ANNUITIES.—

18 ‘‘(i) IN GENERAL.—No amount shall

19 be includible in gross income by reason of

20 a qualified charitable distribution from an

21 individual retirement account—

22 ‘‘(I) to a charitable remainder

23 annuity trust or a charitable remain24 der unitrust (as such terms are de25 fined in section 664(d)),
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1 ‘‘(II) to a pooled income fund (as

2 defined in section 642(c)(5)), or

3 ‘‘(III) for the issuance of a chari4 table gift annuity (as defined in sec5 tion 501(m)(5)).

6 The preceding sentence shall apply only if

7 no person holds an income interest in the

8 amounts in the trust, fund, or annuity at9 tributable to such distribution other than

10 one or more of the following: the individual

11 for whose benefit such account is main12 tained, the spouse of such individual, or

13 any organization described in section

14 170(c).

15 ‘‘(ii) DETERMINATION OF INCLUSION

16 OF AMOUNTS DISTRIBUTED.—In deter17 mining the amount includible in the gross

18 income of any person by reason of a pay19 ment or distribution from a trust referred

20 to in clause (i)(I) or a charitable gift annu21 ity (as so defined), the portion of any

22 qualified charitable distribution to such

23 trust or for such annuity which would (but

24 for this subparagraph) have been includible

25 in gross income—
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1 ‘‘(I) shall be treated as income

2 described in section 664(b)(1), and

3 ‘‘(II) shall not be treated as an

4 investment in the contract.

5 ‘‘(iii) NO INCLUSION FOR DISTRIBU6 TION TO POOLED INCOME FUND.—No

7 amount shall be includible in the gross in8 come of a pooled income fund (as so de9 fined) by reason of a qualified charitable

10 distribution to such fund.

11 ‘‘(C) QUALIFIED CHARITABLE DISTRIBU12 TION.—For purposes of this paragraph, the

13 term ‘qualified charitable distribution’ means

14 any distribution from an individual retirement

15 account—

16 ‘‘(i) which is made on or after the

17 date that the individual for whose benefit

18 the account is maintained has attained age

591 19 ⁄2, and

20 ‘‘(ii) which is made directly from the

21 account to—

22 ‘‘(I) an organization described in

23 section 170(c), or

24 ‘‘(II) a trust, fund, or annuity re25 ferred to in subparagraph (B).
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1 ‘‘(D) DENIAL OF DEDUCTION.—The

2 amount allowable as a deduction under section

3 170 to the taxpayer for the taxable year shall

4 be reduced (but not below zero) by the sum of

5 the amounts of the qualified charitable distribu6 tions during such year which would be includ7 ible in the gross income of the taxpayer for

8 such year but for this paragraph.’’.

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

10 subsection (a) shall apply to taxable years beginning after

11 December 31, 2000.

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