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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 931 Introduced in Senate (IS)]

112th CONGRESS
  1st Session
                                 S. 931

To amend the Internal Revenue Code of 1986 to reform the rules relating 
   to fractional charitable donations of tangible personal property.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                              May 10, 2011

Mr. Schumer (for himself, Mr. Isakson, Mr. Bingaman, and Ms. Cantwell) 
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 reform the rules relating 
   to fractional charitable donations of tangible personal property.

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

SECTION 1. MODIFICATIONS TO RULES FOR FRACTIONAL GIFTS.

    (a) Income Tax.--
            (1) Additional requirements for deduction.--Paragraph (1) 
        of section 170(o) of the Internal Revenue Code of 1986 is 
        amended to read as follows:
            ``(1) Denial of deduction in certain cases.--
                    ``(A) In general.--No deduction shall be allowed 
                for a contribution of an undivided portion of a 
                taxpayer's entire interest in tangible personal 
                property unless--
                            ``(i) all interests in the property are 
                        held immediately before such contribution by--
                                    ``(I) the taxpayer, or
                                    ``(II) the taxpayer and the donee,
                            ``(ii) in the case of an initial fractional 
                        contribution, such contribution is an undivided 
                        portion of not less than 10 percent of all 
                        interests in the property,
                            ``(iii) in the case of an initial 
                        fractional contribution, the contribution is 
                        made pursuant to a written binding contract 
                        which requires the donor--
                                    ``(I) to contribute not less than 
                                20 percent of all interests in the 
                                property on or before the date that is 
                                11 years after the date of the initial 
                                fractional contribution, and
                                    ``(II) to contribute all of the 
                                interests in such property to the donee 
                                (or if such donee is no longer in 
                                existence, to any person described in 
                                subsection (c)) on or before the 
                                earlier of the date of the death of the 
                                donor or the date which is 20 years 
                                after the date of the initial 
                                fractional contribution, and
                            ``(iv) if the value of the tangible 
                        personal property with respect to which the 
                        undivided portion of the taxpayer's entire 
                        interest relates is greater than $1,000,000 (or 
                        such greater amount as determined by the 
                        Secretary), the taxpayer attaches to the return 
                        for the taxable year in which such contribution 
                        is made a statement of value obtained from the 
                        Internal Revenue Service.
                    ``(B) Exceptions.--The Secretary may, by 
                regulation, provide for exceptions to subparagraph 
                (A)(i) in cases where all persons who hold an interest 
                in the property make proportional contributions of an 
                undivided portion of the entire interest held by such 
                persons. Such regulations may modify the requirements 
                of clauses (ii) and (iii) of subparagraph (A) to the 
                extent necessary to carry out the purposes of this 
                subparagraph.''.
            (2) Valuation of subsequent gifts.--Paragraph (2) of 
        section 170(o) of such Code is amended to read as follows:
            ``(2) Valuation of subsequent gifts.--In the case of any 
        additional contribution, the fair market value of such 
        contribution shall be determined by multiplying--
                    ``(A) the fair market value of all of the donor's 
                interest in the property immediately before the 
                additional contribution, and
                    ``(B) the interest in the property (expressed as a 
                percentage) contributed in such additional 
                contribution.''.
            (3) Recapture of deduction.--Paragraph (3) of section 
        170(o) of such Code is amended--
                    (A) by redesignating subparagraph (B) as 
                subparagraph (C), and
                    (B) by striking subparagraph (A) and inserting the 
                following:
                    ``(A) Recapture.--The Secretary shall provide for 
                the recapture of the amount of any deduction allowed 
                under this section (plus interest) with respect to any 
                contribution of an undivided portion of a taxpayer's 
                entire interest in tangible personal property--
                            ``(i) in any case in which the donor fails 
                        to meet the requirements described in paragraph 
                        (1)(A)(iii), and
                            ``(ii) in any case where such property is 
                        not in the physical possession of the donee and 
                        used in a use which is related to a purpose or 
                        function constituting the basis for the donee 
                        organization's exemption under section 501 
                        during any applicable period for a period of 
                        time which bears substantially the same ratio 
                        to 5 years as--
                                    ``(I) the percentage of the 
                                undivided interest of the donee in the 
                                property (determined on the day after 
                                such contribution was made), bears to
                                    ``(II) 100 percent.
                    ``(B) Applicable period.--For purposes of 
                subparagraph (A), the applicable period means--
                            ``(i) the 5-year period beginning on the 
                        date of the later of the initial fractional 
                        contribution, and
                            ``(ii) each subsequent 5-year period 
                        occurring during the 20-year period described 
                        in paragraph (1)(A)(iii)(II).''.
    (b) Estate Tax.--Paragraph (1) of section 2055(g) of the Internal 
Revenue Code of 1986 is amended to read as follows:
            ``(1) Valuation of subsequent gifts.--In the case of any 
        additional contribution, the fair market value of such 
        contribution shall be determined by multiplying--
                    ``(A) the fair market value of all of the donor's 
                interest in the property immediately before the 
                additional contribution, and
                    ``(B) the interest in the property (expressed as a 
                percentage) contributed in such additional 
                contribution.''.
    (c) Gift Tax.--
            (1) Additional requirements for deduction.--Paragraph (1) 
        of section 2522(e) of the Internal Revenue Code of 1986 is 
        amended to read as follows:
            ``(1) Denial of deduction in certain cases.--
                    ``(A) In general.--No deduction shall be allowed 
                for a contribution of an undivided portion of a 
                taxpayer's entire interest in tangible personal 
                property unless--
                            ``(i) all interests in the property are 
                        held immediately before such contribution by--
                                    ``(I) the taxpayer, or
                                    ``(II) the taxpayer and the donee,
                            ``(ii) in the case of an initial fractional 
                        contribution, such contribution is an undivided 
                        portion of not less than 10 percent of all 
                        interests in the property,
                            ``(iii) in the case of an initial 
                        fractional contribution, the contribution is 
                        made pursuant to a written binding contract 
                        which requires the donor--
                                    ``(I) to contribute not less than 
                                20 percent of all interests in the 
                                property on or before the date that is 
                                11 years after the date of the initial 
                                fractional contribution, and
                                    ``(II) to contribute all of the 
                                interests in such property to the donee 
                                (or if such donee is no longer in 
                                existence, to any person described in 
                                section 170(c)) on or before the 
                                earlier of the date of the death of the 
                                donor or the date which is 20 years 
                                after the date of the initial 
                                fractional contribution, and
                            ``(iv) if the value of the tangible 
                        personal property with respect to which the 
                        undivided portion of the taxpayer's entire 
                        interest relates is greater than $1,000,000 (or 
                        such greater amount as determined by the 
                        Secretary), the taxpayer attaches to the return 
                        for the taxable year in which such contribution 
                        is made a statement of value obtained from the 
                        Internal Revenue Service.
                    ``(B) Exceptions.--The Secretary may, by 
                regulation, provide for exceptions to subparagraph 
                (A)(i) in cases where all persons who hold an interest 
                in the property make proportional contributions of an 
                undivided portion of the entire interest held by such 
                persons. Such regulations may modify the requirements 
                of clauses (ii) and (iii) of subparagraph (A) to the 
                extent necessary to carry out the purposes of this 
                subparagraph.''.
            (2) Valuation of subsequent gifts.--Paragraph (2) of 
        section 2522(e) of such Code is amended to read as follows:
            ``(2) Valuation of subsequent gifts.--In the case of any 
        additional contribution, the fair market value of such 
        contribution shall be determined by multiplying--
                    ``(A) the fair market value of all of the donor's 
                interest in the property immediately before the 
                additional contribution, and
                    ``(B) the interest in the property (expressed as a 
                percentage) contributed in such additional 
                contribution.''.
            (3) Recapture of deduction.--Paragraph (3) of section 
        2522(e) of such Code is amended--
                    (A) by redesignating subparagraph (B) as 
                subparagraph (C), and
                    (B) by striking subparagraph (A) and inserting the 
                following:
                    ``(A) Recapture.--The Secretary shall provide for 
                the recapture of the amount of any deduction allowed 
                under this section (plus interest) with respect to any 
                contribution of an undivided portion of a taxpayer's 
                entire interest in tangible personal property--
                            ``(i) in any case in which the donor fails 
                        to meet the requirements described in paragraph 
                        (1)(A)(iii), and
                            ``(ii) in any case where such property is 
                        not in the physical possession of the donee and 
                        used in a use which is related to a purpose or 
                        function constituting the basis for the donee 
                        organization's exemption under section 501 
                        during any applicable period for a period of 
                        time which bears substantially the same ratio 
                        to 5 years as--
                                    ``(I) the percentage of the 
                                undivided interest of the donee in the 
                                property (determined on the day after 
                                such contribution was made), bears to
                                    ``(II) 100 percent.
                    ``(B) Applicable period.--For purposes of 
                subparagraph (A), the applicable period means--
                            ``(i) the 5-year period beginning on the 
                        date of the later of the initial fractional 
                        contribution, and
                            ``(ii) each subsequent 5-year period 
                        occurring during the 20-year period described 
                        in paragraph (1)(A)(iii)(II).''.
    (d) Return Requirement.--Section 6033 of the Internal Revenue Code 
of 1986 is amended by redesignating subsection (m) as subsection (n) 
and by inserting after subsection (l) the following new subsection:
    ``(m) Additional Provisions Relating to Organizations Described in 
Section 170(c).--Every organization described in section 170(c) shall, 
on any return required under subsection (a), list each charitable 
contribution received by the organization during the period covered by 
the return which represents a contribution of an undivided portion of a 
taxpayer's entire interest in tangible personal property and provide 
such other information with respect to such contribution as required by 
the Secretary.''.
    (e) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to contributions, 
        bequests, and gifts made after the date of the enactment of 
        this Act.
            (2) Return requirement.--The amendments made by subsection 
        (d) shall apply to returns for taxable years ending after the 
        date of the enactment of this Act.
    (f) Transition Rule.--In the case of any additional contribution 
(as defined in section 170(o)(4) of the Internal Revenue Code of 1986) 
with respect to an initial fractional contribution (as defined in such 
section) made after August 17, 2006, and before the date of the 
enactment of this Act--
            (1) except for purposes of determining the fair market 
        value of such contribution under sections 170(o)(2), 
        2055(g)(1), and 2522(e)(2) of the Internal Revenue Code of 1986 
        (as such sections were amended by this Act), such contribution 
        shall be treated as an initial fractional contribution (as so 
        defined) subject to the amendments made by this section, and
            (2) sections 170(o)(3)(A)(i) and 2522(e)(3)(A)(i) of such 
        Code (as in effect before the date of the enactment of this 
        Act) shall not apply with respect to any prior contribution of 
        an undivided portion of the taxpayer's interest in the 
        property.
                                 <all>
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