II

106TH CONGRESS

2D SESSION S. 2424

To amend the Internal Revenue Code of 1986 to extend and expand the

enhanced deduction for charitable contributions of computers to provide

greater public access to computers, including access by the poor.

IN THE SENATE OF THE UNITED STATES

APRIL 13, 2000

Mr. BREAUX 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 extend

and expand the enhanced deduction for charitable contributions of computers to provide greater public access

to computers, including access by the poor.

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 ‘‘Digital Divide Elimi5 nation Act of 2000’’.
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1 SEC. 2. CREDIT FOR PURCHASE OF COMPUTERS BY LOW2 INCOME INDIVIDUALS.

3 (a) IN GENERAL.—Subpart C of part IV of sub4 chapter A of chapter 1 of the Internal Revenue Code of

5 1986 (relating to refundable credits) is amended by redes6 ignating section 35 as section 36 and by inserting after

7 section 34 the following new section:

8 ‘‘SEC. 35. PURCHASE OF COMPUTERS BY LOW-INCOME INDI9 VIDUALS.

10 ‘‘(a) IN GENERAL.—In the case of an eligible indi11 vidual, there shall be allowed as a credit against the tax

12 imposed by this subtitle for the taxable year an amount

13 equal to 50 percent of the amount paid by the taxpayer

14 for qualified computer technology or equipment.

15 ‘‘(b) DOLLAR LIMITATION.—The credit allowed by

16 subsection (a) for any taxable year shall not exceed $500.

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

18 ‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible

19 individual’ means any taxpayer who is allowed a

20 credit under section 32 (relating to earned income

21 credit) for the taxable year.

22 ‘‘(2) QUALIFIED COMPUTER TECHNOLOGY OR

23 EQUIPMENT.—

24 ‘‘(A) IN GENERAL.—Except as provided in

25 subparagraph (B), the term ‘qualified computer

26 technology or equipment’ means any computer
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1 technology or equipment (as defined in section

2 170(e)(6)) acquired by purchase (as defined in

3 section 170(d)(2)).

4 ‘‘(B) EXCEPTIONS.—

5 ‘‘(i) CERTAIN SOFTWARE EX6 CLUDED.—Such term shall not include

7 game software or any other software which

8 is not necessary for—

9 ‘‘(I) use of the computer for ac10 cess and use of the Internet (including

11 email), or

12 ‘‘(II) business or educational use.

13 ‘‘(ii) COMPUTER MUST BE CAPABLE

14 OF INTERNET ACCESS.—Such term shall

15 not include any computer which does not

16 have a modem or other equipment capable

17 of supporting Internet access.’’

18 (b) CONFORMING AMENDMENTS.—

19 (1) Paragraph (2) of section 1324(b) of title

20 31, United States Code, is amended by inserting be21 fore the period ‘‘, or from section 35 of such Code’’.

22 (2) The table of sections for subpart C of part

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

24 amended by striking the last item and inserting the

25 following new items:
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‘‘Sec. 35. Purchase of computers by low-income individuals.

‘‘Sec. 36. Overpayments of tax.’’

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

2 this section shall apply to taxable years beginning after

3 the date of the enactment of this Act.

4 SEC. 3. EXTENSION AND EXPANSION OF ENHANCED DEDUC5 TION FOR CHARITABLE CONTRIBUTIONS OF

6 COMPUTERS.

7 (a) EXTENSION.—Subparagraph (F) of section

8 170(e)(6) of the Internal Revenue Code of 1986 (relating

9 to special rule for contributions of computer technology

10 and equipment for elementary or secondary school pur11 poses) is amended by striking ‘‘December 31, 2000’’ and

12 inserting ‘‘June 30, 2004’’.

13 (b) EXPANSION.—

14 (1) IN GENERAL.—Paragraph (6) of section

15 170(e) of such Code is amended by redesignating

16 subparagraphs (C), (D), (E), and (F) as subpara17 graphs (D), (E), (F), and (G), respectively, and by

18 striking all that precedes subparagraph (D) (as so

19 redesignated) and inserting the following:

20 ‘‘(6) SPECIAL RULE FOR CONTRIBUTIONS OF

21 COMPUTER TECHNOLOGY AND EQUIPMENT.—

22 ‘‘(A) IN GENERAL.—The amount of any

23 qualified computer contribution which is taken
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1 into account under this section shall be the

2 greater of—

3 ‘‘(i) the amount determined without

4 regard to paragraph (1), or

5 ‘‘(ii) the amount determined with re6 gard to paragraph (1).

7 ‘‘(B) QUALIFIED COMPUTER CONTRIBU8 TION.—For purposes of this paragraph, the

9 term ‘qualified computer contribution’ means a

10 charitable contribution by a corporation of any

11 computer technology or equipment, but only

12 if—

13 ‘‘(i) the contribution is to a qualified

14 organization,

15 ‘‘(ii) the contribution is made not

16 later than 2 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 original use of the property

22 is by the donor or the donee,

23 ‘‘(iv) substantially all of the use of the

24 property by the donee is for use within the

25 United States and, in the case of a quali-
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1 fied educational organization, for edu2 cational purposes in any of the grades K3 12 that are related to the purpose or func4 tion of the organization,

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

6 the donee in exchange for money, other

7 property, or services, except for shipping,

8 installation and transfer costs,

9 ‘‘(vi) in the case of a qualified edu10 cational organization, the property will fit

11 productively into the entity’s education

12 plan, and

13 ‘‘(vii) the entity’s use and disposition

14 of the property will be in accordance with

15 the provisions of clauses (iv) and (v).

16 ‘‘(C) QUALIFIED ORGANIZATION.—For

17 purposes of this paragraph—

18 ‘‘(i) IN GENERAL.—The term ‘quali19 fied organization’ means—

20 ‘‘(I) any qualified educational or21 ganization,

22 ‘‘(II) any public library located in

23 an area which is an empowerment

24 zone, enterprise community, or a
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1 high-poverty area (as determined by

2 the Secretary),

3 ‘‘(III) any technology center lo4 cated in such an area, and

5 ‘‘(IV) any entity described in sec6 tion 501(c)(3) and exempt from tax

7 under section 501(a) that is organized

8 primarily for purposes of providing

9 computers without charge to lower in10 come families.

11 ‘‘(ii) QUALIFIED EDUCATIONAL ORGA12 NIZATION.—For purposes of clause (i), the

13 term ‘qualified educational organization’

14 means—

15 ‘‘(I) an educational organization

16 described in subsection (b)(1)(A)(ii),

17 and

18 ‘‘(II) an entity described in sec19 tion 501(c)(3) and exempt from tax

20 under section 501(a) (other than an

21 entity described in subclause (I)) that

22 is organized primarily for purposes of

23 supporting elementary and secondary

24 education.’’
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1 (2) CONFORMING AMENDMENT.—Subparagraph

2 (D) of section 170(e)(6) of such Code, as redesig3 nated by paragraph (1), is amended by striking

4 ‘‘qualified elementary or secondary educational con5 tribution’’ and inserting ‘‘qualified computer con6 tribution’’.

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

8 this section shall apply to taxable years beginning after

9 the date of the enactment of this Act.

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