II

106TH CONGRESS

2D SESSION S. 2776

To amend the Internal Revenue Code of 1986 to encourage charitable

contributions to public charities for use in medical research.

IN THE SENATE OF THE UNITED STATES

JUNE 22, 2000

Mr. COVERDELL (for himself and Mr. TORRICELLI) 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 encourage

charitable contributions to public charities for use in

medical research.

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 ‘‘Medical Research In5 vestment Act of 2000’’.

6 SEC. 2. INCREASE IN LIMITATION ON CHARITABLE DEDUC7 TION FOR CONTRIBUTIONS FOR MEDICAL RE8 SEARCH.

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

10 of the Internal Revenue Code of 1986 (relating to percent-
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1 age limitations) is amended by adding at the end the fol2 lowing new subparagraph:

3 ‘‘(G) SPECIAL LIMITATION WITH RESPECT

4 TO CERTAIN CONTRIBUTIONS FOR MEDICAL RE5 SEARCH.—

6 ‘‘(i) IN GENERAL.—Any medical re7 search contribution shall be allowed to the

8 extent that the aggregate of such contribu9 tions does not exceed the lesser of—

10 ‘‘(I) 80 percent of the taxpayer’s

11 contribution base for any taxable year,

12 or

13 ‘‘(II) the excess of 80 percent of

14 the taxpayer’s contribution base for

15 the taxable year over the amount of

16 charitable contributions allowable

17 under subparagraphs (A) and (B) (de18 termined without regard to subpara19 graph (C)).

20 ‘‘(ii) CARRYOVER.—If the aggregate

21 amount of contributions described in clause

22 (i) exceeds the limitation of such clause,

23 such excess shall be treated (in a manner

24 consistent with the rules of subsection

25 (d)(1)) as a medical research contribution
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1 in each of the 10 succeeding taxable years

2 in order of time.

3 ‘‘(iii) TREATMENT OF CAPITAL GAIN

4 PROPERTY.—In the case of any medical re5 search contribution of capital gain property

6 (as defined in subparagraph (C)(iv)), sub7 section (e)(1) shall apply to such contribu8 tion.

9 ‘‘(iv) MEDICAL RESEARCH CONTRIBU10 TION.—For purposes of this subparagraph,

11 the term ‘medical research contribution’

12 means a charitable contribution—

13 ‘‘(I) to an organization described

14 in clauses (ii), (iii), (v), or (vi) of sub15 paragraph (A), and

16 ‘‘(II) which is designated for the

17 use of conducting medical research.

18 ‘‘(v) MEDICAL RESEARCH.—For pur19 poses of this subparagraph, the term ‘med20 ical research’ has the meaning given such

21 term under the regulations promulgated

22 under subparagraph (A)(ii), as in effect on

23 the date of the enactment of this subpara24 graph.’’.

25 (b) CONFORMING AMENDMENTS.—
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1 (1) Section 170(b)(1)(A) of the Internal Rev2 enue Code of 1986 is amended in the matter pre3 ceding clause (i) by inserting ‘‘(other than a medical

4 research contribution)’’ after ‘‘contribution’’.

5 (2) Section 170(b)(1)(B) of such Code is

6 amended by inserting ‘‘or a medical research con7 tribution’’ after ‘‘applies’’.

8 (3) Section 170(b)(1)(C)(i) of such Code is

9 amended by striking ‘‘subparagraph (D)’’ and in10 serting ‘‘subparagraph (D) or (G)’’.

11 (4) Section 170(b)(1)(D)(i) of such Code is

12 amended—

13 (A) in the matter preceding subclause (I),

14 by inserting ‘‘or a medical research contribu15 tion’’ after ‘‘applies’’, and

16 (B) in the second sentence, by inserting

17 ‘‘(other than medical research contributions)’’

18 before the period.

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

20 this section shall apply—

21 (1) to contributions made in taxable years be22 ginning after December 31, 2000, and

23 (2) to contributions made on or before Decem24 ber 31, 2000, but only to the extent that a deduction

25 would be allowed under section 170 of the Internal
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1 Revenue Code of 1986 for taxable years beginning

2 after December 31, 1999, had section 170(b)(1)(G)

3 of such Code (as added by this section) applied to

4 such contributions when made.

5 SEC. 3. TREATMENT OF CERTAIN INCENTIVE STOCK OP6 TIONS.

7 (a) AMT ADJUSTMENTS.—Section 56(b)(3) of the

8 Internal Revenue Code of 1986 (relating to treatment of

9 incentive stock options) is amended—

10 (1) by striking ‘‘Section 421’’ and inserting the

11 following:

12 ‘‘(A) IN GENERAL.—Except as pro13 vided in subparagraph (B), section 421’’,

14 and

15 (2) by adding at the end the following new sub16 paragraph:

17 ‘‘(B) EXCEPTION FOR CERTAIN MED18 ICAL RESEARCH STOCK.—

19 ‘‘(i) IN GENERAL.—This para20 graph shall not apply in the case of a

21 medical research stock transfer.

22 ‘‘(ii) MEDICAL RESEARCH STOCK

23 TRANSFER.—For purposes of clause

24 (i), the term ‘medical research stock

25 transfer’ means a transfer—
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1 ‘‘(I) of stock which is traded

2 on an established securities mar3 ket,

4 (II) of stock which is ac5 quired pursuant to the exercise of

6 an incentive stock option within

7 the same taxable year as such

8 transfer occurs, and

9 ‘‘(III) which is a medical re10 search contribution (as defined in

11 section 170(b)(1)(G)(iv)).’’.

12 (b) NONRECOGNITION OF CERTAIN INCENTIVE

13 STOCK OPTIONS.—Section 422(c) of the Internal Revenue

14 Code of 1986 (relating to special rules) is amended by

15 adding at the end the following new paragraph:

16 ‘‘(8) MEDICAL RESEARCH CONTRIBUTIONS.—

17 For purposes of this section and section 421, the

18 transfer of a share of stock which is a medical re19 search stock transfer (as defined in section

20 56(b)(3)(B)) shall be treated as meeting the require21 ments of subsection (a)(1).’’.

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

23 this section shall apply to transfers of stock made after

24 the date of the enactment of this Act.

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