I

106TH CONGRESS

1ST SESSION H. R. 1955

To amend the Internal Revenue Code of 1986 to exempt certain transactions

at fair market value between partnerships and private foundations from

the tax on self-dealing and to require the Secretary of the Treasury

to establish an exemption procedure from such taxes.

IN THE HOUSE OF REPRESENTATIVES

MAY 26, 1999

Mr. CAMPBELL 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 exempt

certain transactions at fair market value between partnerships and private foundations from the tax on selfdealing and to require the Secretary of the Treasury

to establish an exemption procedure from such taxes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. TAX ON SELF-DEALING NOT TO APPLY TO CER4 TAIN TRANSACTIONS.

5 (a) CERTAIN PARTNERSHIP TRANSACTIONS.—Para6 graph (2) of section 4941(d) of the Internal Revenue Code

7 of 1986 (relating to special rule in respect of self-dealing)
2

•HR 1955 IH

1 is amended by striking ‘‘and’’ at the end of subparagraph

2 (G), by striking the period at the end of subparagraph

3 (H) and inserting ‘‘; and’’, and by inserting after subpara4 graph (H) the following new subparagraph:

5 ‘‘(I) any transaction between a private

6 foundation and a partnership which is a dis7 qualified person (as defined in section 4946(a))

8 pursuant to any liquidation, merger, redemp9 tion, recapitalization, or other partnership ad10 justment, formation, or reorganization shall not

11 be an act of self-dealing if all of the partnership

12 interests of the same class as that held by the

13 foundation are subject to the same terms and

14 such terms provide for the receipt by the foun15 dation of no less than fair market value for its

16 partnership interests.’’.

17 (b) EXEMPTION PROCEDURE FROM TAXES ON SELF18 DEALING.—Subsection (d) of section 4941 of such Code

19 (relating to taxes on self-dealing) is amended by adding

20 at the end the following new paragraph:

21 ‘‘(3) SPECIAL EXEMPTION.—The Secretary

22 shall establish an exemption procedure for purposes

23 of this subsection. Pursuant to such procedure, the

24 Secretary may grant a conditional or unconditional

25 exemption of any disqualified person or transaction
3

•HR 1955 IH

1 or class of disqualified persons or transactions, from

2 all or part of the restrictions imposed by paragraph

3 (1). The Secretary may not grant an exemption

4 under this paragraph unless he finds that such ex5 emption is—

6 ‘‘(A) administratively feasible,

7 ‘‘(B) in the interests of the private founda8 tion, and

9 ‘‘(C) protective of the rights of the private

10 foundation.

11 Before granting an exemption under this paragraph,

12 the Secretary shall require adequate notice to be

13 given to interested persons and shall publish notice

14 in the Federal Register of the pendency of such ex15 emption and shall afford interested persons an op16 portunity to present views.’’.

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

18 this section shall apply to transactions occurring after the

19 date of the enactment of this Act.

Æ