II

106TH CONGRESS

1ST SESSION S. 811

To amend the Internal Revenue Code of 1986 to expand alternatives for

families with children, to establish incentives to improve the quality

and supply of child care, and for other purposes.

IN THE SENATE OF THE UNITED STATES

APRIL 15, 1999

Mr. JEFFORDS (for himself, Ms. LANDRIEU, Mr. DODD, and Mr. KOHL) 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 expand

alternatives for families with children, to establish incentives to improve the quality and supply of child care,

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; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Tax Relief for Families With Children Act’’.

6 (b) TABLE OF CONTENTS.—The table of contents of

7 this Act is as follows:

Sec. 1. Short title; table of contents.
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Sec. 2. Definitions.

TITLE I—TAX BENEFITS FOR FAMILIES WITH CHILDREN

Sec. 101. Expansion of dependent care tax credit.

Sec. 102. Increase in child tax credit.

Sec. 103. Expansion of dependent care assistance program.

Sec. 104. Mutually exclusive use of dependent care tax credit, child tax credit,

and dependent care assistance program for each dependent.

Sec. 105. Expansion of home office deduction to include use of office for dependent care.

Sec. 106. Inclusion of child care costs in child support orders.

TITLE II—ACTIVITIES TO IMPROVE THE QUALITY OF CHILD

CARE

Sec. 201. Allowance of credit for employer expenses for child care assistance.

Sec. 202. Charitable contributions of scientific equipment, computer technology

and equipment, and other services to child care providers and

to elementary and secondary schools.

1 SEC. 2. DEFINITIONS.

2 In this Act:

3 (1) CHILD CARE CREDENTIALING OR ACCREDI4 TATION ENTITY.—The term ‘‘child care credentialing

5 or accreditation entity’’ means a nonprofit private

6 organization or public agency that—

7 (A) is recognized by a State agency, a trib8 al organization, or a national organization that

9 serves as a peer review panel on the standards

10 and procedures of public and private child care

11 or school accrediting bodies; and

12 (B) accredits a facility or credentials an in13 dividual to provide child care on the basis of—

14 (i) an accreditation or credentialing

15 instrument based on peer-validated re16 search;
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1 (ii) compliance with applicable State

2 and local licensing requirements, or stand3 ards described in section 658E(c)(2)(E)(ii)

4 of the Child Care and Development Block

5 Grant Act (42 U.S.C. 9858c(c)(2)(E)(ii)),

6 as appropriate, for the facility or indi7 vidual;

8 (iii) outside monitoring of the facility

9 or individual; and

10 (iv) criteria that provide assurances

11 of—

12 (I) compliance with age-appro13 priate health and safety standards at

14 the facility or by the individual;

15 (II) use of developmentally ap16 propriate educational activities, as an

17 integral part of the child care pro18 gram carried out at the facility or by

19 the individual; and

20 (III) use of ongoing staff devel21 opment or training activities for the

22 staff of the facility or the individual,

23 including related skills-based testing.

24 (2) STATE; TRIBAL ORGANIZATION.—The terms

25 ‘‘State’’ and ‘‘tribal organization’’ have the meaning
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1 given the term in section 658P of the Child Care

2 and Development Block Grant Act (42 U.S.C.

3 9858n).

4 TITLE I—TAX BENEFITS FOR

5 FAMILIES WITH CHILDREN

6 SEC. 101. EXPANSION OF DEPENDENT CARE TAX CREDIT.

7 (a) DOLLAR LIMIT ON CREDITABLE EMPLOYMENT8 RELATED EXPENSES INCREASED.—Section 21(c) of the

9 Internal Revenue Code of 1986 (relating to dollar limit

10 on amount creditable) is amended—

11 (1) by striking ‘‘$2,400’’ in paragraph (1) and

12 inserting ‘‘$3,600’’, and

13 (2) by striking ‘‘$4,800’’ in paragraph (2) and

14 inserting ‘‘$6,000’’.

15 (b) PERCENTAGE OF EMPLOYMENT-RELATED EX16 PENSES INCREASED.—Section 21(a)(2) of the Internal

17 Revenue Code of 1986 (defining applicable percentage) is

18 amended to read as follows:

19 ‘‘(2) APPLICABLE PERCENTAGE DEFINED.—For

20 purposes of paragraph (1), the term ‘applicable per21 centage’ means 40 percent reduced (but not below

22 10 percent) by 1 percentage point for each $2,000

23 (or fraction thereof) by which the taxpayers’s ad24 justed gross income for the taxable year exceeds

25 $50,000.’’.
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1 (c) EMPLOYMENT-RELATED EXPENSES EXPANDED

2 TO INCLUDE TRANSPORTATION COSTS AND COSTS OF

3 EDUCATIONAL PROGRAMS.—Section 21(b)(2)(A) of the

4 Internal Revenue Code of 1986 (defining employment-re5 lated expenses) is amended—

6 (1) by striking ‘‘and’’ at the end of clause (i),

7 (2) by striking the period at the end of clause

8 (ii) and inserting ‘‘(including expenses for edu9 cational activities provided during such care), and’’,

10 and

11 (3) by adding at the end the following:

12 ‘‘(iii) expenses for transportation—

13 ‘‘(I) related to such services or

14 care, and

15 ‘‘(II) provided by a person not

16 described in subsection (e)(6).’’.

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

18 this section shall apply to taxable years beginning after

19 December 31, 2000.

20 SEC. 102. INCREASE IN CHILD TAX CREDIT.

21 (a) IN GENERAL.—Section 24(a) of the Internal Rev22 enue Code of 1986 (relating to allowance of credit) is

23 amended by striking ‘‘$500 ($400 in the case of taxable

24 years beginning in 1998)’’ and inserting ‘‘$900’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to taxable years beginning after

3 December 31, 2000.

4 SEC. 103. EXPANSION OF DEPENDENT CARE ASSISTANCE

5 PROGRAM.

6 (a) DOLLAR LIMIT INCREASED.—Section

7 129(a)(2)(A) of the Internal Revenue Code of 1986 (relat8 ing to limitation of exclusion) is amended to read as fol9 lows:

10 ‘‘(A) DOLLAR LIMITATION.—

11 ‘‘(i) IN GENERAL.—The amount which

12 may be excluded under paragraph (1) for

13 dependent care assistance with respect to

14 dependent care services provided during a

15 taxable year shall not exceed—

16 ‘‘(I) in the case of dependent

17 care services provided for 1 qualifying

18 individual described in section

19 21(b)(1), $5,000, and

20 ‘‘(II) in the case of dependent

21 care services provided for 2 or more

22 qualifying individuals so described,

23 $7,000.

24 ‘‘(ii) AMOUNTS FOR MARRIED INDI25 VIDUALS FILING SEPARATE RETURNS.—In
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1 the case of a separate return by a married

2 individual, the amount applicable under

3 clause (i) shall be one-half of the amount

4 specified.’’.

5 (b) PAYMENTS FOR INFANT CARE, INCLUDING STAY6 AT-HOME CARE, ALLOWED.—

7 (1) IN GENERAL.—Section 129(e)(1) of the In8 ternal Revenue Code of 1986 (relating to definitions

9 and special rules) is amended to read as follows:

10 ‘‘(1) DEPENDENT CARE ASSISTANCE.—The

11 term ‘dependent care assistance’ means—

12 ‘‘(A) the payment of, or provision of, those

13 services which if paid for by the employee would

14 be considered employment-related expenses

15 under section 21(b)(2) (relating to expenses for

16 household and dependent care services nec17 essary for gainful employment), and

18 ‘‘(B) any payment to the employee or any

19 individual described in subsection (c)(2) from

20 amounts contributed to the employee’s account

21 during the 9-month period ending with the

22 birth of a qualifying individual described in sec23 tion 21(b)(1)(A), if paid during a period ending

24 1 year after such birth.’’.
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1 (2) CONFORMING AMENDMENT.—Section 125

2 of such Code (relating to cafeteria plans) is amended

3 by redesignating subsections (h) and (i) as sub4 sections (i) and (j) and by inserting after subsection

5 (g) the following:

6 ‘‘(h) ALLOWANCE OF CARRYOVERS OF CERTAIN UN7 USED DEPENDENT CARE ASSISTANCE TO LATER TAX8 ABLE YEARS.—For purposes of this title—

9 ‘‘(1) a plan or other arrangement shall not fail

10 to be treated as a cafeteria plan or flexible spending

11 or similar arrangement, and

12 ‘‘(2) no amount shall be required to be included

13 in gross income by reason of this section or any

14 other provision of this chapter,

15 solely because under such plan or other arrangement any

16 dependent care assistance described in section

17 129(e)(1)(B) which is unused as of the close of a taxable

18 year may be carried forward to the succeeding taxable

19 year.’’.

20 (c) PAYMENTS TO CERTAIN RELATED INDIVIDUALS

21 FOR ROUTINE CARE ALLOWED.—Section 129(c) of the

22 Internal Revenue Code of 1986 (relating to payments to

23 related individuals) is amended by adding at the end the

24 following flush sentence:
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1 ‘‘The preceding sentence shall not apply to any amount

2 paid or incurred to any individual otherwise described in

3 paragraph (1) if such amount is paid or incurred for care

4 of a qualifying individual during the period ending with

5 the first day of State mandatory schooling of such quali6 fying individual.’’.

7 (d) DEPENDENT CARE ASSISTANCE PROGRAM FOR

8 FEDERAL EMPLOYEES.—Subpart G of part III of title 5,

9 United States Code, is amended by inserting after chapter

10 87 the following:

11 ‘‘CHAPTER 88—DEPENDENT CARE

12 ASSISTANCE PROGRAM

13 ‘‘§ 8801. Definitions

14 ‘‘(a) For the purpose of this chapter, ‘employee’

15 means—

16 ‘‘(1) an employee as defined by section 2105 of

17 this title;

18 ‘‘(2) a Member of Congress as defined by sec19 tion 2106 of this title;

20 ‘‘(3) a Congressional employee as defined by

21 section 2107 of this title;

22 ‘‘(4) the President;

23 ‘‘(5) a justice or judge of the United States ap24 pointed to hold office during good behavior (i) who

25 is in regular active judicial service, or (ii) who is re-
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1 tired from regular active service under section

2 371(b) or 372(a) of title 28, United States Code, or

3 (iii) who has resigned the judicial office under sec4 tion 371(a) of title 28 with the continued right dur5 ing the remainder of his lifetime to receive the sal6 ary of the office at the time of his resignation;

7 ‘‘(6) an individual first employed by the govern8 ment of the District of Columbia before October 1,

9 1987;

10 ‘‘(7) an individual employed by Gallaudet Col11 lege;

12 ‘‘(8) an individual employed by a county com13 mittee established under section 590h(b) of title 16;

14 ‘‘(9) an individual appointed to a position on

15 the office staff of a former President under section

16 1(b) of the Act of August 25, 1958 (72 Stat. 838);

17 and

18 ‘‘(10) an individual appointed to a position on

19 the office staff of a former President, or a former

20 Vice President under section 4 of the Presidential

21 Transition Act of 1963, as amended (78 Stat. 153),

22 who immediately before the date of such appoint23 ment was an employee as defined under any other

24 paragraph of this subsection;

25 but does not include—
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1 ‘‘(A) an employee of a corporation supervised

2 by the Farm Credit Administration if private inter3 ests elect or appoint a member of the board of direc4 tors;

5 ‘‘(B) an individual who is not a citizen or na6 tional of the United States and whose permanent

7 duty station is outside the United States, unless the

8 individual was an employee for the purpose of this

9 chapter on September 30, 1979, by reason of service

10 in an Executive agency, the United States Postal

11 Service, or the Smithsonian Institution in the area

12 which was then known as the Canal Zone; or

13 ‘‘(C) an employee excluded by regulation of the

14 Office of Personnel Management under section

15 8716(b) of this title.

16 ‘‘(b) For the purpose of this chapter, ‘dependent care

17 assistance program’ has the meaning given such term by

18 section 129(d) of the Internal Revenue Code of 1986.

19 ‘‘§ 8802. Dependent care assistance program

20 ‘‘The Office of Personnel Management shall establish

21 and maintain a dependent care assistance program for the

22 benefit of employees.’’.

23 (e) EFFECTIVE DATE.—The amendments made by

24 this section apply to taxable years beginning after Decem25 ber 31, 2000.
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1 SEC. 104. MUTUALLY EXCLUSIVE USE OF DEPENDENT CARE

2 TAX CREDIT, CHILD TAX CREDIT, AND DE3 PENDENT CARE ASSISTANCE PROGRAM FOR

4 EACH DEPENDENT.

5 (a) ELECTION TO APPLY DEPENDENT CARE TAX

6 CREDIT.—

7 (1) IN GENERAL.—Section 21 of the Internal

8 Revenue Code of 1986 (relating to expenses for

9 household and dependent care services necessary for

10 gainful employment) is amended by redesignating

11 subsection (f) as subsection (g) and by inserting

12 after subsection (e) the following:

13 ‘‘(f) ELECTION TO HAVE SECTION APPLY.—

14 ‘‘(1) IN GENERAL.—No credit shall be allowed

15 under subsection (a) for a taxable year with respect

16 to any qualifying individual unless the taxpayer

17 elects to have this section apply with respect to such

18 individual for such year.

19 ‘‘(2) COORDINATION WITH CHILD TAX CREDIT

20 AND DEPENDENT CARE ASSISTANCE EXCLUSION.—If

21 the taxpayer elects to apply this section with respect

22 to a qualifying individual for the taxable year, such

23 individual may not be considered—

24 ‘‘(A) a qualifying child for purposes of sec25 tion 24 for such year, or
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1 ‘‘(B) a qualifying individual for purposes

2 of section 129 for such year.’’.

3 (2) CONFORMING AMENDMENT.—Section 21(c)

4 of such Code, as amended by section 101(a), is

5 amended by striking the last sentence.

6 (b) ELECTION TO APPLY CHILD TAX CREDIT.—Sec7 tion 24 of the Internal Revenue Code of 1986 (relating

8 to child tax credit) is amended by adding at the end the

9 following:

10 ‘‘(g) ELECTION TO HAVE SECTION APPLY.—

11 ‘‘(1) IN GENERAL.—No credit shall be allowed

12 under subsection (a) for a taxable year with respect

13 to any qualifying child unless the taxpayer elects to

14 have this section apply with respect to such child for

15 such year.

16 ‘‘(2) COORDINATION WITH DEPENDENT CARE

17 TAX CREDIT AND DEPENDENT CARE ASSISTANCE

18 EXCLUSION.—If the taxpayer elects to apply this

19 section with respect to a qualifying child for the tax20 able year, such child may not be considered a quali21 fying individual for purposes of section 21 or 129

22 for such year.’’.

23 (c) ELECTION TO APPLY DEPENDENT CARE ASSIST24 ANCE EXCLUSION.—Section 129 of the Internal Revenue
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1 Code of 1986 (dependent care assistance programs) is

2 amended by adding at the end the following:

3 ‘‘(f) ELECTION TO HAVE SECTION APPLY.—

4 ‘‘(1) IN GENERAL.—No exclusion shall be al5 lowed under subsection (a) for a taxable year with

6 respect to any qualifying individual unless the tax7 payer elects to have this section apply with respect

8 to such individual for such year.

9 ‘‘(2) COORDINATION WITH DEPENDENT CARE

10 TAX CREDIT AND CHILD TAX CREDIT.—If the tax11 payer elects to apply this section with respect to a

12 qualifying individual for the taxable year, such indi13 vidual may not be considered—

14 ‘‘(A) a qualifying individual for purposes of

15 section 21 for such year, or

16 ‘‘(B) a qualifying child for purposes of sec17 tion 24 for such year.’’.

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

19 this section apply to taxable years beginning after Decem20 ber 31, 2000.

21 SEC. 105. EXPANSION OF HOME OFFICE DEDUCTION TO IN22 CLUDE USE OF OFFICE FOR DEPENDENT

23 CARE.

24 (a) IN GENERAL.—Section 280A(c)(1) of the Inter25 nal Revenue Code of 1986 (relating to certain business
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1 use) is amended by adding at the end the following: ‘‘A

2 portion of a dwelling unit and the exclusive use of such

3 portion otherwise described in this paragraph shall not fail

4 to be so described if such portion is also used by the tax5 payer during such exclusive use to care for a dependent

6 of the taxpayer.’’.

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

8 this section shall apply to taxable years beginning after

9 December 31, 1999.

10 SEC. 106. INCLUSION OF CHILD CARE COSTS IN CHILD SUP11 PORT ORDERS.

12 (a) IN GENERAL.—Section 466(a) of the Social Secu13 rity Act (42 U.S.C. 666(a)) is amended by inserting after

14 paragraph (19) the following:

15 ‘‘(20) CHILD CARE COSTS.—Procedures under

16 which any child support order enforced under this

17 part shall include an equitable division between the

18 custodial and noncustodial parents of any costs of

19 providing child care services in any case where the

20 custodial parent is employed or is actively seeking

21 employment.’’.

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

23 subsection (a) shall apply to child support orders enforced

24 or otherwise modified by a court on and after the date

25 of enactment of this Act.
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1 TITLE II—ACTIVITIES TO IM2 PROVE THE QUALITY OF

3 CHILD CARE

4 SEC. 201. ALLOWANCE OF CREDIT FOR EMPLOYER EX5 PENSES FOR CHILD CARE ASSISTANCE.

6 (a) IN GENERAL.—Subpart D of part IV of sub7 chapter A of chapter 1 of the Internal Revenue Code of

8 1986 (relating to business related credits) is amended by

9 adding at the end the following new section:

10 ‘‘SEC. 45D. EMPLOYER-PROVIDED CHILD CARE CREDIT.

11 ‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec12 tion 38, the employer-provided child care credit deter13 mined under this section for the taxable year is an amount

14 equal to 40 percent of the qualified child care expenditures

15 of the taxpayer for such taxable year.

16 ‘‘(b) DOLLAR LIMITATION.—The credit allowable

17 under subsection (a) for any taxable year shall not exceed

18 $150,000 ($250,000 in the case of qualified child care ex19 penditures with respect to 3 or more qualified child care

20 facilities each located in a different jurisdiction of State

21 or local government).

22 ‘‘(c) DEFINITIONS.—For purposes of this section—

23 ‘‘(1) QUALIFIED CHILD CARE EXPENDITURE.—

24 The term ‘qualified child care expenditure’ means

25 any amount paid or incurred—
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1 ‘‘(A) to acquire, construct, rehabilitate, or

2 expand property—

3 ‘‘(i) which is to be used as part of a

4 qualified child care facility of the taxpayer,

5 ‘‘(ii) with respect to which a deduction

6 for depreciation (or amortization in lieu of

7 depreciation) is allowable, and

8 ‘‘(iii) which does not constitute part of

9 the principal residence (within the meaning

10 of section 121) of the taxpayer or any em11 ployee of the taxpayer,

12 ‘‘(B) for the operating costs of a qualified

13 child care facility of the taxpayer, including

14 costs related to the training of employees, to

15 scholarship programs, and to the providing of

16 increased compensation to employees with high17 er levels of child care training,

18 ‘‘(C) under a contract with a qualified

19 child care facility to provide child care services

20 to employees of the taxpayer,

21 ‘‘(D) under a contract to provide child care

22 resource and referral services to employees of

23 the taxpayer, or

24 ‘‘(E) for the costs of seeking accreditation

25 from a child care credentialing or accreditation
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1 entity (as defined in section 2 of the Tax Relief

2 for Families With Children Act) with respect to

3 a qualified child care facility.

4 ‘‘(2) QUALIFIED CHILD CARE FACILITY.—

5 ‘‘(A) IN GENERAL.—The term ‘qualified

6 child care facility’ means a facility—

7 ‘‘(i) the principal use of which is to

8 provide child care assistance, and

9 ‘‘(ii) which meets the requirements of

10 all applicable laws and regulations of the

11 State or local government in which it is lo12 cated, including, but not limited to, the li13 censing of the facility as a child care facil14 ity.

15 Clause (i) shall not apply to a facility which is

16 the principal residence (within the meaning of

17 section 121) of the operator of the facility.

18 ‘‘(B) SPECIAL RULES WITH RESPECT TO A

19 TAXPAYER.—A facility shall not be treated as a

20 qualified child care facility with respect to a

21 taxpayer unless—

22 ‘‘(i) enrollment in the facility is open

23 to employees of the taxpayer during the

24 taxable year,
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1 ‘‘(ii) the facility is not the principal

2 trade or business of the taxpayer unless at

3 least 30 percent of the enrollees of such fa4 cility are dependents of employees of the

5 taxpayer, and

6 ‘‘(iii) the use of such facility (or the

7 eligibility to use such facility) does not dis8 criminate in favor of employees of the tax9 payer who are highly compensated employ10 ees (within the meaning of section 414(q)).

11 ‘‘(d) RECAPTURE OF ACQUISITION AND CONSTRUC12 TION CREDIT.—

13 ‘‘(1) IN GENERAL.—If, as of the close of any

14 taxable year, there is a recapture event with respect

15 to any qualified child care facility of the taxpayer,

16 then the tax of the taxpayer under this chapter for

17 such taxable year shall be increased by an amount

18 equal to the product of—

19 ‘‘(A) the applicable recapture percentage,

20 and

21 ‘‘(B) the aggregate decrease in the credits

22 allowed under section 38 for all prior taxable

23 years which would have resulted if the qualified

24 child care expenditures of the taxpayer de-
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1 scribed in subsection (c)(1)(A) with respect to

2 such facility had been zero.

3 ‘‘(2) APPLICABLE RECAPTURE PERCENTAGE.—

4 ‘‘(A) IN GENERAL.—For purposes of this

5 subsection, the applicable recapture percentage

6 shall be determined from the following table:

The applicable

recapture

‘‘If the recapture event occurs in: percentage is:

Years 1–3 .................................................................. 100

Year 4 ........................................................................ 85

Year 5 ........................................................................ 70

Year 6 ........................................................................ 55

Year 7 ........................................................................ 40

Year 8 ........................................................................ 25

Years 9 and 10 .......................................................... 10

Years 11 and thereafter ............................................ 0.

7 ‘‘(B) YEARS.—For purposes of subpara8 graph (A), year 1 shall begin on the first day

9 of the taxable year in which the qualified child

10 care facility is placed in service by the taxpayer.

11 ‘‘(3) RECAPTURE EVENT DEFINED.—For pur12 poses of this subsection, the term ‘recapture event’

13 means—

14 ‘‘(A) CESSATION OF OPERATION.—The

15 cessation of the operation of the facility as a

16 qualified child care facility.

17 ‘‘(B) CHANGE IN OWNERSHIP.—

18 ‘‘(i) IN GENERAL.—Except as pro19 vided in clause (ii), the disposition of a

20 taxpayer’s interest in a qualified child care
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1 facility with respect to which the credit de2 scribed in subsection (a) was allowable.

3 ‘‘(ii) AGREEMENT TO ASSUME RECAP4 TURE LIABILITY.—Clause (i) shall not

5 apply if the person acquiring such interest

6 in the facility agrees in writing to assume

7 the recapture liability of the person dis8 posing of such interest in effect imme9 diately before such disposition. In the

10 event of such an assumption, the person

11 acquiring the interest in the facility shall

12 be treated as the taxpayer for purposes of

13 assessing any recapture liability (computed

14 as if there had been no change in owner15 ship).

16 ‘‘(4) SPECIAL RULES.—

17 ‘‘(A) TAX BENEFIT RULE.—The tax for

18 the taxable year shall be increased under para19 graph (1) only with respect to credits allowed

20 by reason of this section which were used to re21 duce tax liability. In the case of credits not so

22 used to reduce tax liability, the carryforwards

23 and carrybacks under section 39 shall be appro24 priately adjusted.
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1 ‘‘(B) NO CREDITS AGAINST TAX.—Any in2 crease in tax under this subsection shall not be

3 treated as a tax imposed by this chapter for

4 purposes of determining the amount of any

5 credit under subpart A, B, or D of this part.

6 ‘‘(C) NO RECAPTURE BY REASON OF CAS7 UALTY LOSS.—The increase in tax under this

8 subsection shall not apply to a cessation of op9 eration of the facility as a qualified child care

10 facility by reason of a casualty loss to the ex11 tent such loss is restored by reconstruction or

12 replacement within a reasonable period estab13 lished by the Secretary.

14 ‘‘(e) SPECIAL RULES.—For purposes of this

15 section—

16 ‘‘(1) AGGREGATION RULES.—All persons which

17 are treated as a single employer under subsections

18 (a) and (b) of section 52 shall be treated as a single

19 taxpayer.

20 ‘‘(2) PASS-THRU IN THE CASE OF ESTATES AND

21 TRUSTS.—Under regulations prescribed by the Sec22 retary, rules similar to the rules of subsection (d) of

23 section 52 shall apply.

24 ‘‘(3) ALLOCATION IN THE CASE OF PARTNER25 SHIPS OR JOINT VENTURES.—In the case of partner-
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1 ships or joint ventures, the credit shall be allocated

2 among partners or members of the joint venture

3 under regulations prescribed by the Secretary.

4 ‘‘(f) NO DOUBLE BENEFIT.—

5 ‘‘(1) REDUCTION IN BASIS.—For purposes of

6 this subtitle—

7 ‘‘(A) IN GENERAL.—If a credit is deter8 mined under this section with respect to any

9 property by reason of expenditures described in

10 subsection (c)(1)(A), the basis of such property

11 shall be reduced by the amount of the credit so

12 determined.

13 ‘‘(B) CERTAIN DISPOSITIONS.—If during

14 any taxable year there is a recapture amount

15 determined with respect to any property the

16 basis of which was reduced under subparagraph

17 (A), the basis of such property (immediately be18 fore the event resulting in such recapture) shall

19 be increased by an amount equal to such recap20 ture amount. For purposes of the preceding

21 sentence, the term ‘recapture amount’ means

22 any increase in tax (or adjustment in

23 carrybacks or carryovers) determined under

24 subsection (d).
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1 ‘‘(2) OTHER DEDUCTIONS AND CREDITS.—No

2 deduction or credit shall be allowed under any other

3 provision of this chapter with respect to the amount

4 of the credit determined under this section.

5 ‘‘(g) TERMINATION.—This section shall not apply to

6 taxable years beginning after December 31, 2002.’’

7 (b) CONFORMING AMENDMENTS.—

8 (1) Section 38(b) of the Internal Revenue Code

9 of 1986 is amended—

10 (A) by striking out ‘‘plus’’ at the end of

11 paragraph (11),

12 (B) by striking out the period at the end

13 of paragraph (12), and inserting a comma and

14 ‘‘plus’’, and

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

16 paragraph:

17 ‘‘(13) the employer-provided child care credit

18 determined under section 45D.’’

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

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

21 amended by adding at the end the following new

22 item:

‘‘Sec. 45D. Employer-provided child care credit.’’

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

24 this section shall apply to taxable years beginning after

25 December 31, 1999.
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1 SEC. 202. CHARITABLE CONTRIBUTIONS OF SCIENTIFIC

2 EQUIPMENT, COMPUTER TECHNOLOGY AND

3 EQUIPMENT, AND OTHER SERVICES TO

4 CHILD CARE PROVIDERS AND TO ELEMEN5 TARY AND SECONDARY SCHOOLS.

6 (a) SCIENTIFIC EQUIPMENT.—

7 (1) IN GENERAL.—Subparagraph (B) of section

8 170(e)(4) of the Internal Revenue Code of 1986 (re9 lating to special rule for contributions of scientific

10 property used for research) is amended to read as

11 follows:

12 ‘‘(B) QUALIFIED RESEARCH, CHILD CARE,

13 OR EDUCATION CONTRIBUTION.—For purposes

14 of this paragraph, the term ‘qualified research,

15 child care, or education contribution’ means a

16 charitable contribution by a corporation of tan17 gible personal property described in paragraph

18 (1) of section 1221, but only if—

19 ‘‘(i) the contribution is to—

20 ‘‘(I) an organization described in

21 section 501(c)(3) and exempt from

22 taxation under section 501(a) which is

23 a child care facility in compliance with

24 all applicable laws and regulations of

25 the State or unit of local government
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•S 811 IS

1 in which such facility is located on the

2 date of such contribution,

3 ‘‘(II) an organization described

4 in section 501(c)(3) and exempt from

5 taxation under section 501(a) which is

6 a professional or educational support

7 entity for such a child care facility,

8 ‘‘(III) an educational organiza9 tion described in subsection

10 (b)(1)(A)(ii),

11 ‘‘(IV) a governmental unit de12 scribed in subsection (c)(1), or

13 ‘‘(V) an organization described in

14 section 41(e)(6)(B),

15 ‘‘(ii) the contribution is made not

16 later than 3 years after the date the tax17 payer acquired the property (or in the case

18 of property constructed by the taxpayer,

19 the date the construction of the property is

20 substantially completed),

21 ‘‘(iii) the property is scientific equip22 ment or apparatus substantially all of the

23 use of which by the donee is for—

24 ‘‘(I) research or experimentation

25 (within the meaning of section 174),
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1 or for research training, in the United

2 States in physical or biological

3 sciences,

4 ‘‘(II) activities designed to en5 hance or support the educational or

6 developmental achievement of children

7 or youth, or

8 ‘‘(III) in the case of an organiza9 tion described in subclause (I), (II),

10 (III), or (IV) of clause (i), use within

11 the United States for educational pur12 poses or support activities related to

13 the purpose or function of the organi14 zation,

15 ‘‘(iv) the original use of the property

16 is by donor or the donee,

17 ‘‘(v) the property is not transferred by

18 the donee in exchange for money, other

19 property, or services, except for shipping,

20 installation, and transfer costs, and

21 ‘‘(vi) the taxpayer receives from the

22 donee a written statement representing

23 that its use and disposition of the property

24 will be in accordance with the provisions of

25 clauses (iv) and (v).’’.
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1 (2) CONFORMING AMENDMENTS.—

2 (A) Paragraph (4)(A) of section 170(e) of

3 such Code is amended by striking ‘‘qualified re4 search contribution’’ each place it appears and

5 inserting ‘‘qualified research, child care, or edu6 cation contribution’’.

7 (B) The heading for section 170(e)(4) of

8 such Code is amended by inserting ‘‘, CHILD

9 CARE, OR EDUCATION’’ after ‘‘RESEARCH’’.

10 (b) EXPANSION OF RULES RELATING TO CONTRIBU11 TIONS OF COMPUTER TECHNOLOGY AND EQUIPMENT TO

12 CERTAIN CHILD CARE PROVIDERS.—

13 (1) IN GENERAL.—Section 170(e)(6)(B)(i) of

14 the Internal Revenue Code of 1986 (defining quali15 fied elementary or secondary educational contribu16 tion) is amended by striking ‘‘or’’ at the end of sub17 clause (I), by adding ‘‘or’’ at the end of subclause

18 (II), and by inserting after subclause (II) the fol19 lowing:

20 ‘‘(III) an entity described in sub21 clause (I) or (II) of paragraph

22 (4)(B)(i).’’.

23 (2) CONFORMING AMENDMENTS.—
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1 (A) Section 170(e)(6)(B)(ii) of such Code

2 is amended by striking ‘‘2 years’’ and inserting

3 ‘‘3 years’’.

4 (B) Section 170(e)(6)(B)(iv) of such Code

5 is amended by striking ‘‘grades K–12’’ and in6 serting ‘‘grades preschool–12’’.

7 (C) Section 170(e)(6) of such Code is

8 amended by striking ‘‘qualified elementary or

9 secondary’’ each place it appears and inserting

10 ‘‘qualified child care, elementary, or sec11 ondary’’.

12 (D) The heading for section 170(e)(6)(B)

13 of such Code is amended by striking ‘‘QUALI14 FIED ELEMENTARY OR SECONDARY’’ and insert15 ing ‘‘QUALIFIED CHILD CARE, ELEMENTARY, OR

16 SECONDARY’’.

17 (E) The heading for section 170(e)(6) of

18 such Code is amended by striking ‘‘ELEMEN19 TARY OR SECONDARY’’ and inserting ‘‘CHILD

20 CARE OR ELEMENTARY OR SECONDARY’’.

21 (c) DONATIONS TO CHARITY FOR REFURBISHING.—

22 (1) SCIENTIFIC EQUIPMENT.—Section

23 170(e)(4) of the Internal Revenue Code of 1986 is

24 amended by adding at the end the following:
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•S 811 IS

1 ‘‘(E) DONATIONS TO CHARITY FOR REFUR2 BISHING.—For purposes of this paragraph, a

3 charitable contribution by a corporation shall be

4 treated as a qualified research, child care, or

5 education contribution if—

6 ‘‘(i) such contribution is a contribu7 tion of property described in subparagraph

8 (B)(iii) to an organization described in sec9 tion 501(c)(3) and exempt from taxation

10 under section 501(a),

11 ‘‘(ii) such organization repairs and re12 furbishes the property and donates the

13 property to an organization described in

14 subparagraph (B)(i), and

15 ‘‘(iii) the taxpayer receives from the

16 organization to whom the taxpayer contrib17 uted the property a written statement rep18 resenting that its use of the property (and

19 any use by the organization to which it do20 nates the property) meets the requirements

21 of this paragraph.’’.

22 (2) COMPUTER TECHNOLOGY AND EQUIP23 MENT.—Section 170(e)(6) of the Internal Revenue

24 Code of 1986 is amended by redesignating subpara25 graphs (E) and (F) as subparagraphs (F) and (G),
31

•S 811 IS

1 respectively, and by inserting after subparagraph

2 (D) the following:

3 ‘‘(E) DONATIONS TO CHARITY FOR REFUR4 BISHING.—For purposes of this paragraph, a

5 charitable contribution by a corporation shall be

6 treated as a qualified child care, elementary, or

7 secondary educational contribution if—

8 ‘‘(i) such contribution is a contribu9 tion of computer technology or equipment

10 to an organization described in section

11 501(c)(3) and exempt from taxation under

12 section 501(a),

13 ‘‘(ii) such organization repairs and re14 furbishes the property and donates the

15 property to an organization described in

16 subparagraph (B)(i), and

17 ‘‘(iii) the taxpayer receives from the

18 organization to whom the taxpayer contrib19 uted the property a written statement rep20 resenting that its use of the property (and

21 any use by the organization to which it do22 nates the property) meets the requirements

23 of this paragraph.’’.

24 (d) CORPORATE DONATIONS OF SERVICES.—Section

25 170 of the Internal Revenue Code of 1986 is amended by
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•S 811 IS

1 redesignating subsection (m) as subsection (n) and by in2 serting after subsection (l) the following:

3 ‘‘(m) TREATMENT OF THE DONATION OF CERTAIN

4 SERVICES.—

5 ‘‘(1) IN GENERAL.—For purposes of this sec6 tion, 50 percent of the fair market value of chari7 table services contributed by a corporation shall be

8 treated as a charitable contribution.

9 ‘‘(2) CHARITABLE SERVICES.—

10 ‘‘(A) IN GENERAL.—For purposes of para11 graph (1), the term ‘charitable services’ means

12 transportation services, qualified employee vol13 unteer time, and the use of facilities and

14 equipment—

15 ‘‘(i) provided by the taxpayer to a

16 donee described in subsection (e)(6)(B)(i),

17 and

18 ‘‘(ii) for which the taxpayer receives

19 from the donee a written statement rep20 resenting that the charitable services are

21 not in exchange for money, other property,

22 or services.

23 ‘‘(B) QUALIFIED EMPLOYEE VOLUNTEER

24 TIME.—For the purpose of this subsection, the
33

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1 term ‘qualified employee volunteer time’ means

2 time—

3 ‘‘(i) volunteered to the donee by an

4 employee of the taxpayer during the em5 ployee’s normal working hours, and

6 ‘‘(ii) the value of which is based on

7 the usual wage rate of the employee.’’.

8 (e) EFFECTIVE DATE.—The amendments made by

9 this section shall apply to taxable years beginning after

10 December 31, 1999.

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