108TH CONGRESS

1ST SESSION H. R. 7

AN ACT

To amend the Internal Revenue Code of 1986 to provide

incentives for charitable contributions by individuals and

businesses, 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,
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1 SECTION 1. SHORT TITLE; ETC.

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

3 ‘‘Charitable Giving Act of 2003’’.

4 (b) AMENDMENT OF 1986 CODE.—Except as other5 wise expressly provided, whenever in this Act an amend6 ment or repeal is expressed in terms of an amendment

7 to, or repeal of, a section or other provision, the reference

8 shall be considered to be made to a section or other provi9 sion of the Internal Revenue Code of 1986.

10 (c) TABLE OF CONTENTS.—

Sec. 1. Short title; etc.

TITLE I—CHARITABLE GIVING INCENTIVES

Sec. 101. Deduction for portion of charitable contributions to be allowed to individuals who do not itemize deductions.

Sec. 102. Tax-free distributions from individual retirement plans for charitable

purposes.

Sec. 103. Increase in cap on corporate charitable contributions.

Sec. 104. Charitable deduction for contributions of food inventory.

Sec. 105. Reform of certain excise taxes related to private foundations.

Sec. 106. Excise tax on unrelated business taxable income of charitable remainder trusts.

Sec. 107. Expansion of charitable contribution allowed for scientific property

used for research and for computer technology and equipment

used for educational purposes.

Sec. 108. Adjustment to basis of S corporation stock for certain charitable contributions.

Sec. 109. Charitable organizations permitted to make collegiate housing and infrastructure grants.

Sec. 110. Conduct of certain games of chance not treated as unrelated trade

or business.

Sec. 111. Excise taxes exemption for blood collector organizations.

Sec. 112. Nonrecognition of gain on the sale of property used in performance

of an exempt function.

Sec. 113. Exemption of qualified 501(c)(3) bonds for nursing homes from Federal guarantee prohibitions.

TITLE II—TAX REFORM AND IMPROVEMENTS RELATING TO

CHARITABLE ORGANIZATIONS AND PROGRAMS

Sec. 201. Suspension of tax-exempt status of terrorist organizations.

Sec. 202. Clarification of definition of church tax inquiry.

Sec. 203. Extension of declaratory judgment remedy to tax-exempt organizations.
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Sec. 204. Landowner incentives programs.

Sec. 205. Modifications to section 512(b)(13).

Sec. 206. Simplification of lobbying expenditure limitation.

Sec. 207. Pilot project for forest conservation activities.

TITLE III—OTHER PROVISIONS

Sec. 301. Compassion capital fund.

Sec. 302. Reauthorization of assets for independence demonstration.

Sec. 303. Sense of the Congress regarding corporate contributions to faithbased organizations, etc.

Sec. 304. Maternity group homes.

Sec. 305. Authority of States to use 10 percent of their TANF funds to carry

out social services block grant programs.

1 TITLE I—CHARITABLE GIVING

2 INCENTIVES

3 SEC. 101. DEDUCTION FOR PORTION OF CHARITABLE CON4 TRIBUTIONS TO BE ALLOWED TO INDIVID5 UALS WHO DO NOT ITEMIZE DEDUCTIONS.

6 (a) IN GENERAL.—Section 170 (relating to chari7 table, etc., contributions and gifts) is amended by redesig8 nating subsection (m) as subsection (n) and by inserting

9 after subsection (l) the following new subsection:

10 ‘‘(m) DEDUCTION FOR INDIVIDUALS NOT ITEMIZING

11 DEDUCTIONS.—

12 ‘‘(1) IN GENERAL.—In the case of an individual

13 who does not itemize deductions for a taxable year,

14 there shall be taken into account as a direct chari15 table deduction under section 63 an amount equal to

16 the amount allowable under subsection (a) for the

17 taxable year for cash contributions (determined

18 without regard to any carryover), to the extent that

19 such contributions exceed $250 ($500 in the case of
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1 a joint return) but do not exceed $500 ($1,000 in

2 the case of a joint return).

3 ‘‘(2) TERMINATION.—Paragraph (1) shall not

4 apply to any taxable year beginning after December

5 31, 2005.’’.

6 (b) DIRECT CHARITABLE DEDUCTION.—

7 (1) IN GENERAL.—Subsection (b) of section 63

8 (defining taxable income) is amended by striking

9 ‘‘and’’ at the end of paragraph (1), by striking the

10 period at the end of paragraph (2) and inserting ‘‘,

11 and’’, and by adding at the end the following new

12 paragraph:

13 ‘‘(3) the direct charitable deduction.’’.

14 (2) DEFINITION.—Section 63 is amended by re15 designating subsection (g) as subsection (h) and by

16 inserting after subsection (f) the following new sub17 section:

18 ‘‘(g) DIRECT CHARITABLE DEDUCTION.—For pur19 poses of this section, the term ‘direct charitable deduction’

20 means that portion of the amount allowable under section

21 170(a) which is taken as a direct charitable deduction for

22 the taxable year under section 170(m).’’.

23 (3) CONFORMING AMENDMENT.—Subsection (d)

24 of section 63 is amended by striking ‘‘and’’ at the

25 end of paragraph (1), by striking the period at the
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1 end of paragraph (2) and inserting ‘‘, and’’, and by

2 adding at the end the following new paragraph:

3 ‘‘(3) the direct charitable deduction.’’.

4 (c) STUDY.—

5 (1) IN GENERAL.—The Secretary of the Treas6 ury shall study the effect of the amendments made

7 by this section on increased charitable giving and

8 taxpayer compliance, including a comparison of tax9 payer compliance between taxpayers who itemize

10 their charitable contributions and taxpayers who

11 claim a direct charitable deduction.

12 (2) REPORT.—Not later than December 31,

13 2006, the Secretary of the Treasury shall report on

14 the study required under paragraph (1) to the Com15 mittee on Finance of the Senate and the Committee

16 on Ways and Means of the House of Representa17 tives.

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

19 this section shall apply to taxable years beginning after

20 December 31, 2003.
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1 SEC. 102. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RE2 TIREMENT PLANS FOR CHARITABLE PUR3 POSES.

4 (a) IN GENERAL.—Subsection (d) of section 408 (re5 lating to individual retirement accounts) is amended by

6 adding at the end the following new paragraph:

7 ‘‘(8) DISTRIBUTIONS FOR CHARITABLE PUR8 POSES.—

9 ‘‘(A) IN GENERAL.—No amount shall be

10 includible in gross income by reason of a quali11 fied charitable distribution.

12 ‘‘(B) QUALIFIED CHARITABLE DISTRIBU13 TION.—For purposes of this paragraph, the

14 term ‘qualified charitable distribution’ means

15 any distribution from an individual retirement

16 plan other than a plan described in subsection

17 (k) or (p) of section 408—

18 ‘‘(i) which is made on or after the

19 date that the individual for whose benefit

20 the plan is maintained has attained age

701 21 ⁄2, and

22 ‘‘(ii) which is made directly by the

23 trustee—

24 ‘‘(I) to an organization described

25 in section 170(c), or

26 ‘‘(II) to a split-interest entity.
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1 A distribution shall be treated as a qualified

2 charitable distribution only to the extent that

3 the distribution would be includible in gross in4 come without regard to subparagraph (A) and,

5 in the case of a distribution to a split-interest

6 entity, only if no person holds an income inter7 est in the amounts in the split-interest entity

8 attributable to such distribution other than one

9 or more of the following: the individual for

10 whose benefit such plan is maintained, the

11 spouse of such individual, or any organization

12 described in section 170(c).

13 ‘‘(C) CONTRIBUTIONS MUST BE OTHER14 WISE DEDUCTIBLE.—For purposes of this

15 paragraph—

16 ‘‘(i) DIRECT CONTRIBUTIONS.—A dis17 tribution to an organization described in

18 section 170(c) shall be treated as a quali19 fied charitable distribution only if a deduc20 tion for the entire distribution would be al21 lowable under section 170 (determined

22 without regard to subsection (b) thereof

23 and this paragraph).

24 ‘‘(ii) SPLIT-INTEREST GIFTS.—A dis25 tribution to a split-interest entity shall be
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1 treated as a qualified charitable distribu2 tion only if a deduction for the entire value

3 of the interest in the distribution for the

4 use of an organization described in section

5 170(c) would be allowable under section

6 170 (determined without regard to sub7 section (b) thereof and this paragraph).

8 ‘‘(D) APPLICATION OF SECTION 72.—Not9 withstanding section 72, in determining the ex10 tent to which a distribution is a qualified chari11 table distribution, the entire amount of the dis12 tribution shall be treated as includible in gross

13 income without regard to subparagraph (A) to

14 the extent that such amount does not exceed

15 the aggregate amount which would have been so

16 includible if all amounts distributed from all in17 dividual retirement plans were treated as 1 con18 tract under paragraph (2)(A) for purposes of

19 determining the inclusion of such distribution

20 under section 72. Proper adjustments shall be

21 made in applying section 72 to other distribu22 tions in such taxable year and subsequent tax23 able years.

24 ‘‘(E) SPECIAL RULES FOR SPLIT-INTEREST

25 ENTITIES.—
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1 ‘‘(i) CHARITABLE REMAINDER

2 TRUSTS.—Notwithstanding section 664(b),

3 distributions made from a trust described

4 in subparagraph (G)(i) shall be treated as

5 ordinary income in the hands of the bene6 ficiary to whom is paid the annuity de7 scribed in section 664(d)(1)(A) or the pay8 ment described in section 664(d)(2)(A).

9 ‘‘(ii) POOLED INCOME FUNDS.—No

10 amount shall be includible in the gross in11 come of a pooled income fund (as defined

12 in subparagraph (G)(ii)) by reason of a

13 qualified charitable distribution to such

14 fund, and all distributions from the fund

15 which are attributable to qualified chari16 table distributions shall be treated as ordi17 nary income to the beneficiary.

18 ‘‘(iii) CHARITABLE GIFT ANNU19 ITIES.—Qualified charitable distributions

20 made for a charitable gift annuity shall not

21 be treated as an investment in the con22 tract.

23 ‘‘(F) DENIAL OF DEDUCTION.—Qualified

24 charitable distributions shall not be taken into
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1 account in determining the deduction under sec2 tion 170.

3 ‘‘(G) SPLIT-INTEREST ENTITY DEFINED.—

4 For purposes of this paragraph, the term ‘split5 interest entity’ means—

6 ‘‘(i) a charitable remainder annuity

7 trust or a charitable remainder unitrust

8 (as such terms are defined in section

9 664(d)) which must be funded exclusively

10 by qualified charitable distributions,

11 ‘‘(ii) a pooled income fund (as defined

12 in section 642(c)(5)), but only if the fund

13 accounts separately for amounts attrib14 utable to qualified charitable distributions,

15 and

16 ‘‘(iii) a charitable gift annuity (as de17 fined in section 501(m)(5)).’’.

18 (b) MODIFICATIONS RELATING TO INFORMATION RE19 TURNS BY CERTAIN TRUSTS.—

20 (1) RETURNS.—Section 6034 (relating to re21 turns by trusts described in section 4947(a)(2) or

22 claiming charitable deductions under section 642(c))

23 is amended to read as follows:
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1 ‘‘SEC. 6034. RETURNS BY TRUSTS DESCRIBED IN SECTION

2 4947(a)(2) OR CLAIMING CHARITABLE DEDUC3 TIONS UNDER SECTION 642(c).

4 ‘‘(a) TRUSTS DESCRIBED IN SECTION 4947(a)(2).—

5 Every trust described in section 4947(a)(2) shall furnish

6 such information with respect to the taxable year as the

7 Secretary may by forms or regulations require.

8 ‘‘(b) TRUSTS CLAIMING A CHARITABLE DEDUCTION

9 UNDER SECTION 642(c).—

10 ‘‘(1) IN GENERAL.—Every trust not required to

11 file a return under subsection (a) but claiming a de12 duction under section 642(c) for the taxable year

13 shall furnish such information with respect to such

14 taxable year as the Secretary may by forms or regu15 lations prescribe, including—

16 ‘‘(A) the amount of the deduction taken

17 under section 642(c) within such year,

18 ‘‘(B) the amount paid out within such year

19 which represents amounts for which deductions

20 under section 642(c) have been taken in prior

21 years,

22 ‘‘(C) the amount for which such deductions

23 have been taken in prior years but which has

24 not been paid out at the beginning of such year,
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1 ‘‘(D) the amount paid out of principal in

2 the current and prior years for the purposes de3 scribed in section 642(c),

4 ‘‘(E) the total income of the trust within

5 such year and the expenses attributable thereto,

6 and

7 ‘‘(F) a balance sheet showing the assets, li8 abilities, and net worth of the trust as of the

9 beginning of such year.

10 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not

11 apply to a trust for any taxable year if—

12 ‘‘(A) all the net income for such year, de13 termined under the applicable principles of the

14 law of trusts, is required to be distributed cur15 rently to the beneficiaries, or

16 ‘‘(B) the trust is described in section

17 4947(a)(1).’’.

18 (2) INCREASE IN PENALTY RELATING TO FIL19 ING OF INFORMATION RETURN BY SPLIT-INTEREST

20 TRUSTS.—Paragraph (2) of section 6652(c) (relating

21 to returns by exempt organizations and by certain

22 trusts) is amended by adding at the end the fol23 lowing new subparagraph:

24 ‘‘(C) SPLIT-INTEREST TRUSTS.—In the

25 case of a trust which is required to file a return
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1 under section 6034(a), subparagraphs (A) and

2 (B) of this paragraph shall not apply and para3 graph (1) shall apply in the same manner as if

4 such return were required under section 6033,

5 except that—

6 ‘‘(i) the 5 percent limitation in the

7 second sentence of paragraph (1)(A) shall

8 not apply,

9 ‘‘(ii) in the case of any trust with

10 gross income in excess of $250,000, the

11 first sentence of paragraph (1)(A) shall be

12 applied by substituting ‘$100’ for ‘$20’,

13 and the second sentence thereof shall be

14 applied by substituting ‘$50,000’ for

15 ‘$10,000’, and

16 ‘‘(iii) the third sentence of paragraph

17 (1)(A) shall be disregarded.

18 In addition to any penalty imposed on the trust

19 pursuant to this subparagraph, if the person re20 quired to file such return knowingly fails to file

21 the return, such penalty shall also be imposed

22 on such person who shall be personally liable

23 for such penalty.’’.

24 (3) CONFIDENTIALITY OF NONCHARITABLE

25 BENEFICIARIES.—Subsection (b) of section 6104
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1 (relating to inspection of annual information re2 turns) is amended by adding at the end the fol3 lowing new sentence: ‘‘In the case of a trust which

4 is required to file a return under section 6034(a),

5 this subsection shall not apply to information re6 garding beneficiaries which are not organizations de7 scribed in section 170(c).’’.

8 (c) EFFECTIVE DATES.—

9 (1) SUBSECTION (a).—The amendment made

10 by subsection (a) shall apply to distributions made

11 after December 31, 2003.

12 (2) SUBSECTION (b).—The amendments made

13 by subsection (b) shall apply to returns for taxable

14 years beginning after December 31, 2003.

15 SEC. 103. INCREASE IN CAP ON CORPORATE CHARITABLE

16 CONTRIBUTIONS.

17 (a) IN GENERAL.—Paragraph (2) of section 170(b)

18 (relating to corporations) is amended by striking ‘‘10 per19 cent’’ and inserting ‘‘the applicable percentage’’.

20 (b) APPLICABLE PERCENTAGE.—Subsection (b) of

21 section 170 is amended by adding at the end the following

22 new paragraph:

23 ‘‘(3) APPLICABLE PERCENTAGE DEFINED.—For

24 purposes of paragraph (2), the applicable percentage
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1 shall be determined in accordance with the following

2 table:

‘‘For taxable years beginning The applicable

in calendar year— percentage is—

2004 ............................................................................. 11

2005 ............................................................................. 12

2006 ............................................................................. 13

2007 ............................................................................. 14

2008 through 2011 ...................................................... 15

2012 and thereafter ..................................................... 20.’’.

3 (c) CONFORMING AMENDMENTS.—

4 (1) Sections 512(b)(10) and 805(b)(2)(A) are

5 each amended by striking ‘‘10 percent’’ each place

6 it occurs and inserting ‘‘the applicable percentage

7 (determined under section 170(b)(3))’’.

8 (2) Sections 545(b)(2) and 556(b)(2) are each

9 amended by striking ‘‘10-percent limitation’’ and in10 serting ‘‘applicable percentage limitation’’.

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

12 this section shall apply to taxable years beginning after

13 December 31, 2003.

14 SEC. 104. CHARITABLE DEDUCTION FOR CONTRIBUTIONS

15 OF FOOD INVENTORY.

16 (a) IN GENERAL.—Paragraph (3) of section 170(e)

17 (relating to special rule for certain contributions of inven18 tory and other property) is amended by redesignating sub19 paragraph (C) as subparagraph (D) and by inserting after

20 subparagraph (B) the following new subparagraph:
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1 ‘‘(C) SPECIAL RULE FOR CONTRIBUTIONS

2 OF FOOD INVENTORY.—

3 ‘‘(i) GENERAL RULE.—In the case of

4 a charitable contribution of food from any

5 trade or business (or interest therein) of

6 the taxpayer, this paragraph shall be

7 applied—

8 ‘‘(I) without regard to whether

9 the contribution is made by a C cor10 poration, and

11 ‘‘(II) only to food that is appar12 ently wholesome food.

13 ‘‘(ii) LIMITATION.—In the case of a

14 taxpayer other than a C corporation, the

15 aggregate amount of such contributions for

16 any taxable year which may be taken into

17 account under this section shall not exceed

18 the applicable percentage (within the

19 meaning of subsection (b)(3)) of the tax20 payer’s aggregate net income for such tax21 able year from all trades or businesses

22 from which such contributions were made

23 for such year, computed without regard to

24 this section.
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1 ‘‘(iii) DETERMINATION OF FAIR MAR2 KET VALUE.—In the case of a qualified

3 contribution of apparently wholesome food

4 to which this paragraph applies and which,

5 solely by reason of internal standards of

6 the taxpayer or lack of market, cannot or

7 will not be sold, the fair market value of

8 such food shall be determined by taking

9 into account the price at which the same

10 or substantially the same food items (as to

11 both type and quality) are sold by the tax12 payer at the time of the contribution (or,

13 if not so sold at such time, in the recent

14 past).

15 ‘‘(iv) APPARENTLY WHOLESOME

16 FOOD.—For purposes of this subpara17 graph, the term ‘apparently wholesome

18 food’ has the meaning given to such term

19 by section 22(b)(2) of the Bill Emerson

20 Good Samaritan Food Donation Act (42

21 U.S.C. 1791(b)(2)), as in effect on the

22 date of the enactment of this subpara23 graph.’’.
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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, 2003.

4 SEC. 105. REFORM OF CERTAIN EXCISE TAXES RELATED TO

5 PRIVATE FOUNDATIONS.

6 (a) REDUCTION OF TAX ON NET INVESTMENT IN7 COME.—Section 4940(a) (relating to tax-exempt founda8 tions) is amended by striking ‘‘2 percent’’ and inserting

9 ‘‘1 percent’’.

10 (b) REPEAL OF REDUCTION IN TAX WHERE PRI11 VATE FOUNDATION MEETS CERTAIN DISTRIBUTION RE12 QUIREMENTS.—Section 4940 (relating to excise tax based

13 on investment income) is amended by striking subsection

14 (e).

15 (c) MODIFICATION OF EXCISE TAX ON SELF-DEAL16 ING.—The second sentence of section 4941(a)(1) (relating

17 to initial excise tax imposed on self-dealer) is amended by

18 striking ‘‘5 percent’’ and inserting ‘‘25 percent’’.

19 (d) MODIFICATION OF EXCISE TAX ON FAILURE TO

20 DISTRIBUTE INCOME.—

21 (1) CERTAIN ADMINISTRATIVE EXPENSES NOT

22 TREATED AS DISTRIBUTIONS.—Section 4942(g) is

23 amended by striking paragraph (4) and inserting the

24 following new paragraphs:
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1 ‘‘(4) LIMITATION ON ADMINISTRATIVE EX2 PENSES TREATED AS DISTRIBUTIONS.—

3 ‘‘(A) IN GENERAL.—For purposes of para4 graph (1)(A), the following administrative ex5 penses shall not be treated as qualifying dis6 tributions:

7 ‘‘(i) Any administrative expense which

8 is not directly attributable to direct chari9 table activities, grant selection activities,

10 grant monitoring and administration ac11 tivities, compliance with applicable Fed12 eral, State, or local law, or furthering pub13 lic accountability of the private foundation.

14 ‘‘(ii) Any compensation paid to a dis15 qualified person to the extent that such

16 compensation exceeds an annual rate of

17 $100,000.

18 ‘‘(iii) Any expense incurred for trans19 portation by air unless such transportation

20 is regularly-scheduled commercial air

21 transportation.

22 ‘‘(iv) Any expense incurred for regu23 larly-scheduled commercial air transpor24 tation to the extent that such expense ex-
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1 ceeds the cost of such transportation in

2 coach-class accommodations.

3 ‘‘(B) ADJUSTMENT FOR INFLATION.—In

4 the case of a taxable year beginning after De5 cember 31, 2004, the $100,000 amount in sub6 paragraph (A)(ii) shall be increased by an

7 amount equal to—

8 ‘‘(i) such dollar amount, multiplied by

9 ‘‘(ii) the cost-of-living adjustment de10 termined under section 1(f)(3) for the cal11 endar year in which the taxable year be12 gins, determined by substituting ‘calendar

13 year 2003’ for ‘calendar year 1992’ in sub14 paragraph (B) thereof.

15 If any amount as increased under the preceding

16 sentence is not a multiple of $50, such amount

17 shall be rounded to the next lowest multiple of

18 $50.

19 ‘‘(5) REGULATIONS.—The Secretary shall pre20 scribe such regulations as may be necessary to carry

21 out the purposes of paragraph (4). Such regulations

22 shall provide that administrative expenses which are

23 excluded from qualifying distributions solely by rea24 son of the limitations in paragraph (4) shall not for
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1 such reason subject a private foundation to any

2 other excise taxes imposed by this subchapter.’’.

3 (2) DISALLOWANCE NOT TO APPLY TO CERTAIN

4 PRIVATE FOUNDATIONS.—

5 (A) IN GENERAL.—Section 4942(j)(3) (de6 fining operating foundation) is amended—

7 (i) by striking ‘‘(within the meaning

8 of paragraph (1) or (2) of subsection (g))’’

9 each place it appears, and

10 (ii) by adding at the end the following

11 new sentence: ‘‘For purposes of this para12 graph, the term ‘qualifying distributions’

13 means qualifying distributions within the

14 meaning of paragraph (1) or (2) of sub15 section (g) (determined without regard to

16 subsection (g)(4)).’’.

17 (B) CONFORMING AMENDMENT.—Section

18 4942(f)(2)(C)(i) is amended by inserting ‘‘(de19 termined without regard to subsection (g)(4))’’

20 after ‘‘within the meaning of subsection

21 (g)(1)(A)’’.

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

23 this section shall apply to taxable years beginning after

24 December 31, 2003.
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1 SEC. 106. EXCISE TAX ON UNRELATED BUSINESS TAXABLE

2 INCOME OF CHARITABLE REMAINDER

3 TRUSTS.

4 (a) IN GENERAL.—Subsection (c) of section 664 (re5 lating to exemption from income taxes) is amended to read

6 as follows:

7 ‘‘(c) TAXATION OF TRUSTS.—

8 ‘‘(1) INCOME TAX.—A charitable remainder an9 nuity trust and a charitable remainder unitrust

10 shall, for any taxable year, not be subject to any tax

11 imposed by this subtitle.

12 ‘‘(2) EXCISE TAX.—

13 ‘‘(A) IN GENERAL.—In the case of a chari14 table remainder annuity trust or a charitable

15 remainder unitrust that has unrelated business

16 taxable income (within the meaning of section

17 512, determined as if part III of subchapter F

18 applied to such trust) for a taxable year, there

19 is hereby imposed on such trust or unitrust an

20 excise tax equal to the amount of such unre21 lated business taxable income.

22 ‘‘(B) CERTAIN RULES TO APPLY.—The tax

23 imposed by subparagraph (A) shall be treated

24 as imposed by chapter 42 for purposes of this

25 title other than subchapter E of chapter 42.
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1 ‘‘(C) CHARACTER OF DISTRIBUTIONS AND

2 COORDINATION WITH DISTRIBUTION REQUIRE3 MENTS.—The amounts taken into account in

4 determining unrelated business taxable income

5 (as defined in subparagraph (A)) shall not be

6 taken into account for purposes of—

7 ‘‘(i) subsection (b),

8 ‘‘(ii) determining the value of trust

9 assets under subsection (d)(2), and

10 ‘‘(iii) determining income under sub11 section (d)(3).

12 ‘‘(D) TAX COURT PROCEEDINGS.—For

13 purposes of this paragraph, the references in

14 section 6212(c)(1) to section 4940 shall be

15 deemed to include references to this para16 graph.’’.

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

18 this section shall apply to taxable years beginning after

19 December 31, 2003.

20 SEC. 107. EXPANSION OF CHARITABLE CONTRIBUTION AL21 LOWED FOR SCIENTIFIC PROPERTY USED

22 FOR RESEARCH AND FOR COMPUTER TECH23 NOLOGY AND EQUIPMENT USED FOR EDU24 CATIONAL PURPOSES.

25 (a) SCIENTIFIC PROPERTY USED FOR RESEARCH.—
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1 (1) IN GENERAL.—Clause (ii) of section

2 170(e)(4)(B) (defining qualified research contribu3 tions) is amended by inserting ‘‘or assembled’’ after

4 ‘‘constructed’’.

5 (2) CONFORMING AMENDMENT.—Clause (iii) of

6 section 170(e)(4)(B) is amended by inserting ‘‘or as7 sembling’’ after ‘‘construction’’.

8 (b) COMPUTER TECHNOLOGY AND EQUIPMENT FOR

9 EDUCATIONAL PURPOSES.—

10 (1) IN GENERAL.—Clause (ii) of section

11 170(e)(6)(B) is amended by inserting ‘‘or assem12 bled’’ after ‘‘constructed’’ and ‘‘or assembling’’ after

13 ‘‘construction’’.

14 (2) SPECIAL RULE MADE PERMANENT.—Sec15 tion 170(e)(6) is amended by striking subparagraph

16 (G).

17 (3) CONFORMING AMENDMENTS.—Subpara18 graph (D) of section 170(e)(6) is amended by insert19 ing ‘‘or assembled’’ after ‘‘constructed’’ and ‘‘or as20 sembling’’ after ‘‘construction’’.

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

22 this section shall apply to taxable years beginning after

23 December 31, 2003.
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1 SEC. 108. ADJUSTMENT TO BASIS OF S CORPORATION

2 STOCK FOR CERTAIN CHARITABLE CON3 TRIBUTIONS.

4 (a) IN GENERAL.—Paragraph (2) of section 1367(a)

5 (relating to adjustments to basis of stock of shareholders,

6 etc.) is amended by adding at the end the following new

7 flush sentence:

8 ‘‘The decrease under subparagraph (B) by reason of

9 a charitable contribution (as defined in section

10 170(c)) of property shall be the amount equal to the

11 shareholder’s pro rata share of the adjusted basis of

12 such property.’’.

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

14 this section shall apply to taxable years beginning after

15 December 31, 2003.

16 SEC. 109. CHARITABLE ORGANIZATIONS PERMITTED TO

17 MAKE COLLEGIATE HOUSING AND INFRA18 STRUCTURE GRANTS.

19 (a) IN GENERAL.—Section 501 (relating to exemp20 tion from tax on corporations, certain trusts, etc.), as

21 amended by section 201, is further amended by redesig22 nating subsection (q) as subsection (r) and by inserting

23 after subsection (p) the following new subsection:

24 ‘‘(q) TREATMENT OF ORGANIZATIONS MAKING COL25 LEGIATE HOUSING AND INFRASTRUCTURE IMPROVEMENT

26 GRANTS.—
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1 ‘‘(1) IN GENERAL.—For purposes of subsection

2 (c)(3) and sections 170(c)(2)(B), 2055(a), and

3 2522(a)(2), an organization shall not fail to be

4 treated as organized and operated exclusively for

5 charitable or educational purposes solely because

6 such organization makes collegiate housing and in7 frastructure grants to an organization described in

8 subsection (c)(7), so long as, at the time of the

9 grant, substantially all of the active members of the

10 recipient organization are full-time students at the

11 college or university with which such recipient orga12 nization is associated.

13 ‘‘(2) HOUSING AND INFRASTRUCTURE

14 GRANTS.—For purposes of paragraph (1), collegiate

15 housing and infrastructure grants are grants to pro16 vide, improve, operate, or maintain collegiate hous17 ing that may involve more than incidental social,

18 recreational, or private purposes, so long as such

19 grants are for purposes that would be permissible

20 for a dormitory of the college or university referred

21 to in paragraph (1). A grant shall not be treated as

22 a collegiate housing and infrastructure grant for

23 purposes of paragraph (1) to the extent that such

24 grant is used to provide physical fitness equipment.
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1 ‘‘(3) GRANTS TO CERTAIN ORGANIZATIONS

2 HOLDING TITLE TO PROPERTY, ETC.—For purposes

3 of this subsection, a collegiate housing and infra4 structure grant to an organization described in sub5 section (c)(2) or (c)(7) holding title to property ex6 clusively for the benefit of an organization described

7 in subsection (c)(7) shall be considered a grant to

8 the organization described in subsection (c)(7) for

9 whose benefit such property is held.’’.

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

11 this section shall apply to grants made after December

12 31, 2003.

13 SEC. 110. CONDUCT OF CERTAIN GAMES OF CHANCE NOT

14 TREATED AS UNRELATED TRADE OR BUSI15 NESS.

16 (a) IN GENERAL.—Paragraph (1) of section 513(f)

17 (relating to certain bingo games) is amended to read as

18 follows:

19 ‘‘(1) IN GENERAL.—The term ‘unrelated trade

20 or business’ does not include—

21 ‘‘(A) any trade or business which consists

22 of conducting bingo games, and

23 ‘‘(B) any trade or business which consists

24 of conducting qualified games of chance if the

25 net proceeds from such trade or business are
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1 paid or set aside for payment for purposes de2 scribed in section 170(c)(2)(B), for the pro3 motion of social welfare (within the meaning of

4 section 501(c)(4)), or for a purpose for which

5 State law specifically authorizes the expenditure

6 of such proceeds.’’.

7 (b) QUALIFIED GAMES OF CHANCE.—Subsection (f)

8 of section 513 is amended by adding at the end the fol9 lowing new paragraph:

10 ‘‘(3) QUALIFIED GAMES OF CHANCE.—For pur11 poses of paragraph (1), the term ‘qualified game of

12 chance’ means any game of chance (other than

13 bingo) conducted by an organization if—

14 ‘‘(A) such organization is licensed pursu15 ant to State law to conduct such game,

16 ‘‘(B) only organizations which are orga17 nized as nonprofit corporations or are exempt

18 from tax under section 501(a) may be so li19 censed to conduct such game within the State,

20 and

21 ‘‘(C) the conduct of such game does not

22 violate State or local law.’’

23 (c) CLERICAL AMENDMENT.—The subsection head24 ing of section 513(f) is amended by striking ‘‘BINGO

25 GAMES’’ and inserting ‘‘GAMES OF CHANCE’’.
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1 (d) EFFECTIVE DATE.— The amendments made by

2 this section shall apply to games conducted after Decem3 ber 31, 2003.

4 SEC. 111. EXCISE TAXES EXEMPTION FOR BLOOD COL5 LECTOR ORGANIZATIONS.

6 (a) EXEMPTION FROM IMPOSITION OF SPECIAL

7 FUELS TAX.—Section 4041(g) (relating to other exemp8 tions) is amended by striking ‘‘and’’ at the end of para9 graph (3), by striking the period in paragraph (4) and

10 inserting ‘‘; and’’, and by inserting after paragraph (4)

11 the following new paragraph:

12 ‘‘(5) with respect to the sale of any liquid to a

13 qualified blood collector organization (as defined in

14 section 7701(a)(48)) for such organization’s exclu15 sive use, or with respect to the use by a qualified

16 blood collector organization of any liquid as a fuel.’’.

17 (b) EXEMPTION FROM MANUFACTURERS EXCISE

18 TAX.—

19 (1) IN GENERAL.—Section 4221(a) (relating to

20 certain tax-free sales) is amended by striking ‘‘or’’

21 at the end of paragraph (4), by adding ‘‘or’’ at the

22 end of paragraph (5), and by inserting after para23 graph (5) the following new paragraph:
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1 ‘‘(6) to a qualified blood collector organization

2 (as defined in section 7701(a)(48)) for such organi3 zation’s exclusive use,’’.

4 (2) CONFORMING AMENDMENTS.—

5 (A) The second sentence of section

6 4221(a) is amended by striking ‘‘Paragraphs

7 (4) and (5)’’ and inserting ‘‘Paragraphs (4),

8 (5), and (6)’’.

9 (B) Section 6421(c) is amended by strik10 ing ‘‘or (5)’’ and inserting ‘‘(5), or (6)’’.

11 (c) EXEMPTION FROM COMMUNICATION EXCISE

12 TAX.—

13 (1) IN GENERAL.—Section 4253 (relating to ex14 emptions) is amended by redesignating subsection

15 (k) as subsection (l) and inserting after subsection

16 (j) the following new subsection:

17 ‘‘(k) EXEMPTION FOR QUALIFIED BLOOD COL18 LECTOR ORGANIZATIONS.—Under regulations provided by

19 the Secretary, no tax shall be imposed under section 4251

20 on any amount paid by a qualified blood collector organi21 zation (as defined in section 7701(a)(48)) for services or

22 facilities furnished to such organization.’’.

23 (2) CONFORMING AMENDMENT.—Section

24 4253(l), as redesignated by paragraph (1), is
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1 amended by striking ‘‘or (j)’’ and inserting ‘‘(j), or

2 (k)’’.

3 (d) CREDIT FOR REFUND FOR CERTAIN TAXES ON

4 SALES AND SERVICES.—

5 (1) DEEMED OVERPAYMENT.—

6 (A) IN GENERAL.—Section 6416(b)(2) is

7 amended by redesignating subparagraphs (E)

8 and (F) as subparagraphs (F) and (G), respec9 tively, and by inserting after subparagraph (D)

10 the following new subparagraph:

11 ‘‘(E) sold to a qualified blood collector or12 ganization (as defined in section 7701(a)(48))

13 for such organization’s exclusive use;’’.

14 (B) CONFORMING AMENDMENTS.—Section

15 6416(b)(2) is amended—

16 (i) by striking ‘‘Subparagraphs (C)

17 and (D)’’ and inserting ‘‘Subparagraphs

18 (C), (D), and (E)’’, and

19 (ii) by striking ‘‘(C), and (D)’’ and in20 serting ‘‘(C), (D), and (E)’’.

21 (2) SALES OF TIRES.—Clause (ii) of section

22 6416(b)(4)(B) is amended by inserting ‘‘sold to a

23 qualified blood collector organization (as defined in

24 section 7701(a)(48)) for its exclusive use,’’ after

25 ‘‘for its exclusive use,’’.
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1 (e) DEFINITION OF QUALIFIED BLOOD COLLECTOR

2 ORGANIZATION.—Section 7701(a) is amended by inserting

3 at the end the following new paragraph:

4 ‘‘(48) QUALIFIED BLOOD COLLECTOR ORGANI5 ZATION.—The term ‘qualified blood collector organi6 zation’ means an organization which is—

7 ‘‘(A) described in section 501(c)(3) and ex8 empt from tax under section 501(a),

9 ‘‘(B) registered by the Food and Drug Ad10 ministration to collect blood, and

11 ‘‘(C) primarily engaged in the activity of

12 the collection of blood.’’.

13 (f) EFFECTIVE DATE.—The amendments made by

14 this section shall take effect on January 1, 2004.

15 SEC. 112. NONRECOGNITION OF GAIN ON THE SALE OF

16 PROPERTY USED IN PERFORMANCE OF AN

17 EXEMPT FUNCTION.

18 (a) IN GENERAL.—Subparagraph (D) of section

19 512(a)(3) is amended to read as follows:

20 ‘‘(D) NONRECOGNITION OF GAIN.—

21 ‘‘(i) IN GENERAL.—If property used

22 directly in the performance of the exempt

23 function of an organization described in

24 paragraph (7), (9), (17), or (20) of section

25 501(c) is sold by such organization, and
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1 within a period beginning 1 year before the

2 date of such sale, and ending 3 years (10

3 years, in the case of an organization de4 scribed in section 501(c)(7)) after such

5 date, other property is purchased and used

6 by such organization directly in the per7 formance of its exempt function, gain (if

8 any) from such sale shall be recognized

9 only to the extent that such organization’s

10 sales price of the old property exceeds the

11 organization’s cost of purchasing the other

12 property.

13 ‘‘(ii) STATUTE OF LIMITATIONS.—If

14 an organization described in section

15 501(c)(7) sells property on which gain is

16 not recognized, in whole or in part, by rea17 son of clause (i), then the statutory period

18 for the assessment of any deficiency attrib19 utable to such gain shall not expire until

20 the end of the 3-year period beginning on

21 the date that the Secretary is notified by

22 such organization (in such manner as the

23 Secretary may prescribe) that—
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1 ‘‘(I) the organization has met the

2 requirements of clause (i) with respect

3 to gain which was not recognized,

4 ‘‘(II) the organization does not

5 intend to meet such requirements, or

6 ‘‘(III) the organization failed to

7 meet such requirements within the

8 prescribed period.

9 For the purposes of this clause, any defi10 ciency may be assessed before the expira11 tion of such 3-year period notwithstanding

12 the provisions of any other law or rule of

13 law which would otherwise prevent such as14 sessment.

15 ‘‘(iii) DESTRUCTION AND LOSS.—For

16 purposes of this subparagraph, the de17 struction in whole or in part, theft, seizure,

18 requisition, or condemnation of property,

19 shall be treated as the sale of such prop20 erty, and rules similar to the rules pro21 vided by subsections (b), (c), (e), and (j) of

22 section 1034 (as in effect on the day be23 fore the date of the enactment of the Tax24 payer Relief Act of 1997) shall apply.’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall apply with respect to the sale of any

3 property for which the 3-year period for offsetting gain

4 by purchasing other property under subparagraph (D) of

5 section 512(a)(3) of the Internal Revenue Code (as in ef6 fect on the day before the date of the enactment of this

7 Act) had not expired as of January 1, 2001.

8 SEC. 113. EXEMPTION OF QUALIFIED 501(c)(3) BONDS FOR

9 NURSING HOMES FROM FEDERAL GUAR10 ANTEE PROHIBITIONS.

11 (a) IN GENERAL.—For purposes of section 149(b)(1)

12 of the Internal Revenue Code of 1986, any qualified

13 501(c)(3) bond (as defined in section 145 of such Code)

14 shall not be treated as federally guaranteed solely because

15 such bond is part of an issue supported by a letter of cred16 it, if such bond—

17 (1) is issued after December 31, 2003, and be18 fore the date which is 1 year after the date of the

19 enactment of this Act, and

20 (2) is part of an issue 95 percent or more of

21 the net proceeds of which are to be used to finance

22 1 or more of the following facilities primarily for the

23 benefit of the elderly:

24 (A) Licensed nursing home facility.
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1 (B) Licensed or certified assisted living fa2 cility.

3 (C) Licensed personal care facility.

4 (D) Continuing care retirement commu5 nity.

6 (b) LIMITATION ON ISSUER.—Subsection (a) shall

7 not apply to any bond described in such subsection if the

8 aggregate authorized face amount of the issue of which

9 such bond is a part, when increased by the outstanding

10 amount of such bonds issued by the issuer during the pe11 riod described in subsection (a)(1) exceeds $15,000,000.

12 (c) LIMITATION ON BENEFICIARY.—Rules similar to

13 the rules of section 144(a)(10) of the Internal Revenue

14 Code of 1986 shall apply for purposes of this section, ex15 cept that—

16 (1) ‘‘$15,000,000’’ shall be substituted for

17 ‘‘$40,000,000’’ in subparagraph (A) thereof, and

18 (2) such rules shall be applied—

19 (A) only with respect to bonds described in

20 this section, and

21 (B) with respect to the aggregate author22 ized face amount of all issues of such bonds

23 which are allocable to the beneficiary.

24 (d) CONTINUING CARE RETIREMENT COMMUNITY.—

25 For purposes of this section, the term ‘‘continuing care
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1 retirement community’’ means a community which pro2 vides, on the same campus, a consortium of residential liv3 ing options and support services to persons at least 60

4 years of age under a written agreement. For purposes of

5 the preceding sentence, the residential living options shall

6 include independent living units, nursing home beds, and

7 either assisted living units or personal care beds.

8 TITLE II—TAX REFORM AND IM9 PROVEMENTS RELATING TO

10 CHARITABLE ORGANIZA11 TIONS AND PROGRAMS

12 SEC. 201. SUSPENSION OF TAX-EXEMPT STATUS OF TER13 RORIST ORGANIZATIONS.

14 (a) IN GENERAL.—Section 501 (relating to exemp15 tion from tax on corporations, certain trusts, etc.) is

16 amended by redesignating subsection (p) as subsection (q)

17 and by inserting after subsection (o) the following new

18 subsection:

19 ‘‘(p) SUSPENSION OF TAX-EXEMPT STATUS OF TER20 RORIST ORGANIZATIONS.—

21 ‘‘(1) IN GENERAL.—The exemption from tax

22 under subsection (a) with respect to any organiza23 tion described in paragraph (2), and the eligibility of

24 any organization described in paragraph (2) to apply

25 for recognition of exemption under subsection (a),
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1 shall be suspended during the period described in

2 paragraph (3).

3 ‘‘(2) TERRORIST ORGANIZATIONS.—An organi4 zation is described in this paragraph if such organi5 zation is designated or otherwise individually

6 identified—

7 ‘‘(A) under section 212(a)(3)(B)(vi)(II) or

8 219 of the Immigration and Nationality Act as

9 a terrorist organization or foreign terrorist or10 ganization,

11 ‘‘(B) in or pursuant to an Executive order

12 which is related to terrorism and issued under

13 the authority of the International Emergency

14 Economic Powers Act or section 5 of the

15 United Nations Participation Act of 1945 for

16 the purpose of imposing on such organization

17 an economic or other sanction, or

18 ‘‘(C) in or pursuant to an Executive order

19 issued under the authority of any Federal law

20 if—

21 ‘‘(i) the organization is designated or

22 otherwise individually identified in or pur23 suant to such Executive order as sup24 porting or engaging in terrorist activity (as

25 defined in section 212(a)(3)(B) of the Im-
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1 migration and Nationality Act) or sup2 porting terrorism (as defined in section

3 140(d)(2) of the Foreign Relations Author4 ization Act, Fiscal Years 1988 and 1989);

5 and

6 ‘‘(ii) such Executive order refers to

7 this subsection.

8 ‘‘(3) PERIOD OF SUSPENSION.—With respect to

9 any organization described in paragraph (2), the pe10 riod of suspension—

11 ‘‘(A) begins on the later of—

12 ‘‘(i) the date of the first publication of

13 a designation or identification described in

14 paragraph (2) with respect to such organi15 zation, or

16 ‘‘(ii) the date of the enactment of this

17 subsection, and

18 ‘‘(B) ends on the first date that all des19 ignations and identifications described in para20 graph (2) with respect to such organization are

21 rescinded pursuant to the law or Executive

22 order under which such designation or identi23 fication was made.

24 ‘‘(4) DENIAL OF DEDUCTION.—No deduction

25 shall be allowed under section 170, 545(b)(2),
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1 556(b)(2), 642(c), 2055, 2106(a)(2), or 2522 for

2 any contribution to an organization described in

3 paragraph (2) during the period described in para4 graph (3).

5 ‘‘(5) DENIAL OF ADMINISTRATIVE OR JUDICIAL

6 CHALLENGE OF SUSPENSION OR DENIAL OF DEDUC7 TION.—Notwithstanding section 7428 or any other

8 provision of law, no organization or other person

9 may challenge a suspension under paragraph (1), a

10 designation or identification described in paragraph

11 (2), the period of suspension described in paragraph

12 (3), or a denial of a deduction under paragraph (4)

13 in any administrative or judicial proceeding relating

14 to the Federal tax liability of such organization or

15 other person.

16 ‘‘(6) ERRONEOUS DESIGNATION.—

17 ‘‘(A) IN GENERAL.—If—

18 ‘‘(i) the tax exemption of any organi19 zation described in paragraph (2) is sus20 pended under paragraph (1),

21 ‘‘(ii) each designation and identifica22 tion described in paragraph (2) which has

23 been made with respect to such organiza24 tion is determined to be erroneous pursu25 ant to the law or Executive order under
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1 which such designation or identification

2 was made, and

3 ‘‘(iii) the erroneous designations and

4 identifications result in an overpayment of

5 income tax for any taxable year by such

6 organization,

7 credit or refund (with interest) with respect to

8 such overpayment shall be made.

9 ‘‘(B) WAIVER OF LIMITATIONS.—If the

10 credit or refund of any overpayment of tax de11 scribed in subparagraph (A)(iii) is prevented at

12 any time by the operation of any law or rule of

13 law (including res judicata), such credit or re14 fund may nevertheless be allowed or made if the

15 claim therefor is filed before the close of the 1-

16 year period beginning on the date of the last

17 determination described in subparagraph

18 (A)(ii).

19 ‘‘(7) NOTICE OF SUSPENSIONS.—If the tax ex20 emption of any organization is suspended under this

21 subsection, the Internal Revenue Service shall up22 date the listings of tax-exempt organizations and

23 shall publish appropriate notice to taxpayers of such

24 suspension and of the fact that contributions to such
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1 organization are not deductible during the period of

2 such suspension.’’.

3 (b) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to designations made before, on,

5 or after the date of the enactment of this Act.

6 SEC. 202. CLARIFICATION OF DEFINITION OF CHURCH TAX

7 INQUIRY.

8 Subsection (i) of section 7611 (relating to section not

9 to apply to criminal investigations, etc.) is amended by

10 striking ‘‘or’’ at the end of paragraph (4), by striking the

11 period at the end of paragraph (5) and inserting ‘‘, or’’,

12 and by inserting after paragraph (5) the following:

13 ‘‘(6) information provided by the Secretary re14 lated to the standards for exemption from tax under

15 this title and the requirements under this title relat16 ing to unrelated business taxable income.’’.

17 SEC. 203. EXTENSION OF DECLARATORY JUDGMENT REM18 EDY TO TAX-EXEMPT ORGANIZATIONS.

19 (a) IN GENERAL.—Paragraph (1) of section 7428(a)

20 (relating to creation of remedy) is amended—

21 (1) in subparagraph (B) by inserting after

22 ‘‘509(a))’’ the following: ‘‘or as a private operating

23 foundation (as defined in section 4942(j)(3))’’; and

24 (2) by amending subparagraph (C) to read as

25 follows:
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1 ‘‘(C) with respect to the initial qualifica2 tion or continuing qualification of an organiza3 tion as an organization described in subsection

4 (c) (other than paragraph (3)) or (d) of section

5 501 which is exempt from tax under section

6 501(a), or’’.

7 (b) COURT JURISDICTION.—Subsection (a) of section

8 7428 is amended in the material following paragraph (2)

9 by striking ‘‘United States Tax Court, the United States

10 Claims Court, or the district court of the United States

11 for the District of Columbia’’ and inserting the following:

12 ‘‘United States Tax Court (in the case of any such deter13 mination or failure) or the United States Claims Court

14 or the district court of the United States for the District

15 of Columbia (in the case of a determination or failure with

16 respect to an issue referred to in subparagraph (A) or (B)

17 of paragraph (1)),’’.

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

19 this section shall apply to pleadings filed with respect to

20 determinations (or requests for determinations) made

21 after the date of the enactment of this Act.

22 SEC. 204. LANDOWNER INCENTIVES PROGRAMS.

23 (a) IN GENERAL.—Subsection (a) of section 126 is

24 amended by redesignating paragraph (10) as paragraph
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1 (11) and by inserting after paragraph (9) the following

2 new paragraph:

3 ‘‘(10) Landowner initiatives programs to con4 serve threatened, endangered, or imperiled species,

5 or protect or restore habitat carried out under—

6 ‘‘(A) the Fish and Wildlife Coordination

7 Act (16 U.S.C. 661 et seq.),

8 ‘‘(B) the Fish and Wildlife Act of 1956

9 (16 U.S.C. 742f), or

10 ‘‘(C) section 6 of the Endangered Species

11 Act (16 U.S.C. 11531 et seq.).’’.

12 (b) EXCLUDABLE PORTION.—Subparagraph (A) of

13 section 126(b)(1) is amended by inserting after ‘‘Secretary

14 of Agriculture’’ the following: ‘‘(the Secretary of the Inte15 rior, in the case of the landowner incentives programs de16 scribed in subsection (a)(10) and the programs described

17 in subsection (a)(11) that are implemented by the Depart18 ment of the Interior)’’.

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

20 this section shall apply to amounts received after Decem21 ber 31, 2003, in taxable years ending after such date.

22 SEC. 205. MODIFICATIONS TO SECTION 512(b)(13).

23 (a) IN GENERAL.—Paragraph (13) of section 512(b)

24 (relating to special rules for certain amounts received from

25 controlled entities) is amended by redesignating subpara-
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1 graph (E) as subparagraph (F) and by inserting after sub2 paragraph (D) the following new subparagraph:

3 ‘‘(E) PARAGRAPH TO APPLY ONLY TO EX4 CESS PAYMENTS.—

5 ‘‘(i) IN GENERAL.—Subparagraph (A)

6 shall apply only to the portion of a speci7 fied payment received or accrued by the

8 controlling organization that exceeds the

9 amount which would have been paid or ac10 crued if such payment met the require11 ments prescribed under section 482.

12 ‘‘(ii) ADDITION TO TAX FOR VALU13 ATION MISSTATEMENTS.—The tax imposed

14 by this chapter on the controlling organiza15 tion shall be increased by an amount equal

16 to 20 percent of the larger of—

17 ‘‘(I) such excess determined with18 out regard to any amendment or sup19 plement to a return of tax, or

20 ‘‘(II) such excess determined

21 with regard to all such amendments

22 and supplements.’’.

23 (b) EFFECTIVE DATE.—
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1 (1) IN GENERAL.—The amendment made by

2 this section shall apply to payments received or ac3 crued after December 31, 2003.

4 (2) PAYMENTS SUBJECT TO BINDING CONTRACT

5 TRANSITION RULE.—If the amendments made by

6 section 1041 of the Taxpayer Relief Act of 1997 did

7 not apply to any amount received or accrued in the

8 first 2 taxable years beginning on or after the date

9 of the enactment of the Taxpayer Relief Act of 1997

10 under any contract described in subsection (b)(2) of

11 such section, such amendments also shall not apply

12 to amounts received or accrued under such contract

13 before January 1, 2001.

14 SEC. 206. SIMPLIFICATION OF LOBBYING EXPENDITURE

15 LIMITATION.

16 (a) REPEAL OF GRASSROOTS EXPENDITURE

17 LIMIT.—Paragraph (1) of section 501(h) (relating to ex18 penditures by public charities to influence legislation) is

19 amended to read as follows:

20 ‘‘(1) GENERAL RULE.—In the case of an orga21 nization to which this subsection applies, exemption

22 from taxation under subsection (a) shall be denied

23 because a substantial part of the activities of such

24 organization consists of carrying on propaganda, or

25 otherwise attempting, to influence legislation, but
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1 only if such organization normally makes lobbying

2 expenditures in excess of the lobbying ceiling amount

3 for such organization for each taxable year.’’.

4 (b) EXCESS LOBBYING EXPENDITURES.—Section

5 4911(b) is amended to read as follows:

6 ‘‘(b) EXCESS LOBBYING EXPENDITURES.—For pur7 poses of this section, the term ‘excess lobbying expendi8 tures’ means, for a taxable year, the amount by which the

9 lobbying expenditures made by the organization during the

10 taxable year exceed the lobbying nontaxable amount for

11 such organization for such taxable year.’’.

12 (c) CONFORMING AMENDMENTS.—

13 (1) Section 501(h)(2) is amended by striking

14 subparagraphs (C) and (D).

15 (2) Section 4911(c) is amended by striking

16 paragraphs (3) and (4).

17 (3) Paragraph (1)(A) of section 4911(f) is

18 amended by striking ‘‘limits of section 501(h)(1)

19 have’’ and inserting ‘‘limit of section 501(h)(1)

20 has’’.

21 (4) Paragraph (1)(C) of section 4911(f) is

22 amended by striking ‘‘limits of section 501(h)(1)

23 are’’ and inserting ‘‘limit of section 501(h)(1) is’’.

24 (5) Paragraphs (4)(A) and (4)(B) of section

25 4911(f) are each amended by striking ‘‘limits of sec-
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1 tion 501(h)(1)’’ and inserting ‘‘limit of section

2 501(h)(1)’’.

3 (6) Paragraph (8) of section 6033(b) (relating

4 to certain organizations described in section

5 501(c)(3)) is amended by inserting ‘‘and’’ at the end

6 of subparagraph (A) and by striking subparagraphs

7 (C) and (D).

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

9 this section shall apply to taxable years beginning after

10 December 31, 2003.

11 SEC. 207. PILOT PROJECT FOR FOREST CONSERVATION AC12 TIVITIES.

13 (a) TAX-EXEMPT BOND FINANCING.—

14 (1) IN GENERAL.—For purposes of the Internal

15 Revenue Code of 1986, any qualified forest con16 servation bond shall be treated as an exempt facility

17 bond under section 142 of such Code.

18 (2) QUALIFIED FOREST CONSERVATION

19 BOND.—For purposes of this section, the term

20 ‘‘qualified forest conservation bond’’ means any bond

21 issued as part of an issue if—

22 (A) 95 percent or more of the net proceeds

23 (as defined in section 150(a)(3) of such Code)

24 of such issue are to be used for qualified project

25 costs,
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1 (B) such bond is an obligation of the State

2 of Washington or any political subdivision

3 thereof, and

4 (C) such bond is issued for a qualified or5 ganization before December 31, 2006.

6 (3) LIMITATION ON AGGREGATE AMOUNT

7 ISSUED.—The maximum aggregate face amount of

8 bonds which may be issued under this subsection

9 shall not exceed $250,000,000.

10 (4) QUALIFIED PROJECT COSTS.—For purposes

11 of this subsection, the term ‘‘qualified project costs’’

12 means the sum of—

13 (A) the cost of acquisition by the qualified

14 organization from an unrelated person of for15 ests and forest land located in the State of

16 Washington which at the time of acquisition or

17 immediately thereafter are subject to a con18 servation restriction described in subsection

19 (c)(2),

20 (B) interest on the qualified forest con21 servation bonds for the 3-year period beginning

22 on the date of issuance of such bonds, and

23 (C) credit enhancement fees which con24 stitute qualified guarantee fees (within the

25 meaning of section 148 of such Code).
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1 (5) SPECIAL RULES.—In applying the Internal

2 Revenue Code of 1986 to any qualified forest con3 servation bond, the following modifications shall

4 apply:

5 (A) Section 146 of such Code (relating to

6 volume cap) shall not apply.

7 (B) For purposes of section 147(b) of such

8 Code (relating to maturity may not exceed 120

9 percent of economic life), the land and standing

10 timber acquired with proceeds of qualified for11 est conservation bonds shall have an economic

12 life of 35 years.

13 (C) Subsections (c) and (d) of section 147

14 of such Code (relating to limitations on acquisi15 tion of land and existing property) shall not

16 apply.

17 (D) Section 57(a)(5) of such Code (relat18 ing to tax-exempt interest) shall not apply to

19 interest on qualified forest conservation bonds.

20 (6) TREATMENT OF CURRENT REFUNDING

21 BONDS.—Paragraphs (2)(C) and (3) shall not apply

22 to any bond (or series of bonds) issued to refund a

23 qualified forest conservation bond issued before De24 cember 31, 2006, if—
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1 (A) the average maturity date of the issue

2 of which the refunding bond is a part is not

3 later than the average maturity date of the

4 bonds to be refunded by such issue,

5 (B) the amount of the refunding bond does

6 not exceed the outstanding amount of the re7 funded bond, and

8 (C) the net proceeds of the refunding bond

9 are used to redeem the refunded bond not later

10 than 90 days after the date of the issuance of

11 the refunding bond.

12 For purposes of subparagraph (A), average maturity

13 shall be determined in accordance with section

14 147(b)(2)(A) of such Code.

15 (7) EFFECTIVE DATE.—This subsection shall

16 apply to obligations issued on or after the date of

17 enactment of this Act.

18 (b) ITEMS FROM QUALIFIED HARVESTING ACTIVI19 TIES NOT SUBJECT TO TAX OR TAKEN INTO ACCOUNT.—

20 (1) IN GENERAL.—Income, gains, deductions,

21 losses, or credits from a qualified harvesting activity

22 conducted by a qualified organization shall not be

23 subject to tax or taken into account under subtitle

24 A of the Internal Revenue Code of 1986.
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1 (2) LIMITATION.—The amount of income ex2 cluded from gross income under paragraph (1) for

3 any taxable year shall not exceed the amount used

4 by the qualified organization to make debt service

5 payments during such taxable year for qualified for6 est conservation bonds.

7 (3) QUALIFIED HARVESTING ACTIVITY.—For

8 purposes of paragraph (1)—

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

10 harvesting activity’’ means the sale, lease, or

11 harvesting, of standing timber—

12 (i) on land owned by a qualified orga13 nization which was acquired with proceeds

14 of qualified forest conservation bonds, and

15 (ii) pursuant to a qualified conserva16 tion plan adopted by the qualified organi17 zation.

18 (B) EXCEPTIONS.—

19 (i) CESSATION AS QUALIFIED ORGANI20 ZATION.—The term ‘‘qualified harvesting

21 activity’’ shall not include any sale, lease,

22 or harvesting for any period during which

23 the organization ceases to qualify as a

24 qualified organization.
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1 (ii) EXCEEDING LIMITS ON HAR2 VESTING.—The term ‘‘qualified harvesting

3 activity’’ shall not include any sale, lease,

4 or harvesting of standing timber on land

5 acquired with proceeds of qualified forest

6 conservation bonds to the extent that—

7 (I) the average annual area of

8 timber harvested from such land ex9 ceeds 2.5 percent of the total area of

10 such land, or

11 (II) the quantity of timber re12 moved from such land exceeds the

13 quantity which can be removed from

14 such land annually in perpetuity on a

15 sustained-yield basis with respect to

16 such land.

17 The limitations under subclauses (I) and

18 (II) shall not apply to post-fire restoration

19 and rehabilitation or sanitation harvesting

20 of timber stands which are substantially

21 damaged by fire, windthrow, or other ca22 tastrophes, or which are in imminent dan23 ger from insect or disease attack.

24 (4) TERMINATION.—This subsection shall not

25 apply to any qualified harvesting activity occurring
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1 after the date on which there is no outstanding

2 qualified forest conservation bond or any such bond

3 ceases to be a tax-exempt bond.

4 (5) PARTIAL RECAPTURE OF BENEFITS IF HAR5 VESTING LIMIT EXCEEDED.—If, as of the date that

6 this subsection ceases to apply under paragraph (4),

7 the average annual area of timber harvested from

8 the land exceeds the requirement of paragraph

9 (3)(B)(ii)(I), the tax imposed by chapter 1 of such

10 Code shall be increased, under rules prescribed by

11 the Secretary of the Treasury, by the sum of the tax

12 benefits attributable to such excess and interest at

13 the underpayment rate under section 6621 of such

14 Code for the period of the underpayment.

15 (c) DEFINITIONS.—For purposes of this section—

16 (1) QUALIFIED CONSERVATION PLAN.—The

17 term ‘‘qualified conservation plan’’ means a multiple

18 land use program or plan which—

19 (A) is designed and administered primarily

20 for the purposes of protecting and enhancing

21 wildlife and fish, timber, scenic attributes,

22 recreation, and soil and water quality of the

23 forest and forest land,
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1 (B) mandates that conservation of forest

2 and forest land is the single-most significant

3 use of the forest and forest land, and

4 (C) requires that timber harvesting be con5 sistent with—

6 (i) restoring and maintaining ref7 erence conditions for the region’s ecotype,

8 (ii) restoring and maintaining a rep9 resentative sample of young, mid, and late

10 successional forest age classes,

11 (iii) maintaining or restoring the re12 sources’ ecological health for purposes of

13 preventing damage from fire, insect, or dis14 ease,

15 (iv) maintaining or enhancing wildlife

16 or fish habitat, or

17 (v) enhancing research opportunities

18 in sustainable renewable resource uses.

19 (2) CONSERVATION RESTRICTION.—The con20 servation restriction described in this paragraph is a

21 restriction which—

22 (A) is granted in perpetuity to an unre23 lated person which is described in section

24 170(h)(3) of such Code and which, in the case
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1 of a nongovernmental unit, is organized and op2 erated for conservation purposes,

3 (B) meets the requirements of clause (ii)

4 or (iii)(II) of section 170(h)(4)(A) of such

5 Code,

6 (C) obligates the qualified organization to

7 pay the costs incurred by the holder of the con8 servation restriction in monitoring compliance

9 with such restriction, and

10 (D) requires an increasing level of con11 servation benefits to be provided whenever cir12 cumstances allow it.

13 (3) QUALIFIED ORGANIZATION.—The term

14 ‘‘qualified organization’’ means an organization—

15 (A) which is a nonprofit organization sub16 stantially all the activities of which are chari17 table, scientific, or educational, including ac18 quiring, protecting, restoring, managing, and

19 developing forest lands and other renewable re20 sources for the long-term charitable, edu21 cational, scientific and public benefit,

22 (B) more than half of the value of the

23 property of which consists of forests and forest

24 land acquired with the proceeds from qualified

25 forest conservation bonds,
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1 (C) which periodically conducts educational

2 programs designed to inform the public of envi3 ronmentally sensitive forestry management and

4 conservation techniques,

5 (D) which has at all times a board of

6 directors—

7 (i) at least 20 percent of the members

8 of which represent the holders of the con9 servation restriction described in para10 graph (2),

11 (ii) at least 20 percent of the mem12 bers of which are public officials, and

13 (iii) not more than one-third of the

14 members of which are individuals who are

15 or were at any time within 5 years before

16 the beginning of a term of membership on

17 the board, an employee of, independent

18 contractor with respect to, officer of, direc19 tor of, or held a material financial interest

20 in, a commercial forest products enterprise

21 with which the qualified organization has a

22 contractual or other financial arrangement,

23 (E) the bylaws of which require at least

24 two-thirds of the members of the board of direc25 tors to vote affirmatively to approve the quali-
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1 fied conservation plan and any change thereto,

2 and

3 (F) upon dissolution, is required to dedi4 cate its assets to—

5 (i) an organization described in sec6 tion 501(c)(3) of such Code which is orga7 nized and operated for conservation pur8 poses, or

9 (ii) a governmental unit described in

10 section 170(c)(1) of such Code.

11 (4) UNRELATED PERSON.—The term ‘‘unre12 lated person’’ means a person who is not a related

13 person.

14 (5) RELATED PERSON.—A person shall be

15 treated as related to another person if—

16 (A) such person bears a relationship to

17 such other person described in section 267(b)

18 (determined without regard to paragraph (9)

19 thereof), or 707(b)(1), of such Code, deter20 mined by substituting ‘‘25 percent’’ for ‘‘50

21 percent’’ each place it appears therein, and

22 (B) in the case such other person is a non23 profit organization, if such person controls di24 rectly or indirectly more than 25 percent of the

25 governing body of such organization.
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1 (d) REPORT.—

2 (1) IN GENERAL.—The Comptroller General of

3 the United States shall conduct a study on the pilot

4 project for forest conservation activities under this

5 section. Such study shall examine the extent to

6 which forests and forest lands were managed during

7 the 5-year period beginning on the date of the enact8 ment of this Act to achieve the goals of such project.

9 (2) SUBMISSION OF REPORT TO CONGRESS.—

10 Not later than six years after the date of the enact11 ment of this Act, the Comptroller General shall sub12 mit a report of such study to the Committee on

13 Ways and Means and the Committee on Resources

14 of the House of Representatives and the Committee

15 on Finance and the Committee on Energy and Nat16 ural Resources of the Senate.

17 TITLE III—OTHER PROVISIONS

18 SEC. 301. COMPASSION CAPITAL FUND.

19 Title IV of the Social Security Act (42 U.S.C. 601–

20 679b) is amended by adding at the end the following:

21 ‘‘PART F—COMPASSION CAPITAL FUND

22 ‘‘SEC. 481. SECRETARY’S FUND TO SUPPORT AND REP23 LICATE PROMISING SOCIAL SERVICE PRO24 GRAMS.

25 ‘‘(a) GRANT AUTHORITY.—
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1 ‘‘(1) IN GENERAL.—The Secretary may make

2 grants to support any private entity that operates a

3 promising social services program.

4 ‘‘(2) APPLICATIONS.—An entity desiring to re5 ceive a grant under paragraph (1) shall submit to

6 the Secretary an application for the grant, which

7 shall contain such information as the Secretary may

8 require.

9 ‘‘(b) CONTRACT AUTHORITY, ETC.—The Secretary

10 may enter into a grant, contract, or cooperative agreement

11 with any entity under which the entity would provide tech12 nical assistance to another entity to operate a social serv13 ice program that assists persons and families in need, in14 cluding by—

15 ‘‘(1) providing the other entity with—

16 ‘‘(A) technical assistance and information,

17 including legal assistance and other business as18 sistance;

19 ‘‘(B) information on capacity-building;

20 ‘‘(C) information and assistance in identi21 fying and using best practices for serving per22 sons and families in need; or

23 ‘‘(D) assistance in replicating programs

24 with demonstrated effectiveness in assisting

25 persons and families in need; or
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1 ‘‘(2) supporting research on the best practices

2 of social service organizations.

3 ‘‘(c) GUIDANCE AND TECHNICAL ASSISTANCE.—The

4 Secretary may use not more than 25 percent of the

5 amount appropriated under this section for a fiscal year

6 to provide guidance and technical assistance to States and

7 political subdivisions of States with respect to the imple8 mentation of any social service program.

9 ‘‘(d) SOCIAL SERVICES PROGRAM DEFINED.—In this

10 section, the term ‘social services program’ means a pro11 gram that provides benefits or services of any kind to per12 sons and families in need.

13 ‘‘(e) LIMITATIONS ON AUTHORIZATION OF APPRO14 PRIATIONS.—To carry out this section, there are author15 ized to be appropriated to the Secretary $150,000,000 for

16 fiscal year 2004, and such sums as may be necessary for

17 fiscal years 2005 through 2008.’’.

18 SEC. 302. REAUTHORIZATION OF ASSETS FOR INDEPEND19 ENCE DEMONSTRATION.

20 (a) IN GENERAL.—Section 416 of the Assets for

21 Independence Act (title IV of Public Law 105–285; 42

22 U.S.C. 604 note) is amended by striking ‘‘and 2003’’ and

23 inserting ‘‘2003, 2004, 2005, 2006, 2007, and 2008’’.

24 (b) REMOVAL OF ECONOMIC LITERACY ACTIVITIES

25 FROM LIMITATION ON USE OF AMOUNTS IN THE RE-
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1 SERVE FUND.—Section 407(c)(3) of such Act (title IV of

2 Public Law 105–285; 42 U.S.C. 604 note) is amended by

3 adding at the end the following: ‘‘The preceding sentences

4 of this paragraph shall not apply to amounts used by an

5 entity for any activity described in paragraph (1)(A).’’.

6 (c) ELIGIBILITY EXPANDED TO INCLUDE INDIVID7 UALS IN HOUSEHOLDS WITH INCOME NOT EXCEEDING

8 50 PERCENT OF AREA MEDIAN INCOME.—Section

9 408(a)(1) of such Act (title IV of Public Law 105–285;

10 42 U.S.C. 604 note) is amended to read as follows:

11 ‘‘(1) INCOME TEST.—The adjusted gross in12 come of the household—

13 ‘‘(A) does not exceed 200 percent of the

14 poverty line (as determined by the Office of

15 Management and Budget) or the earned income

16 amount described in section 32 of the Internal

17 Revenue Code of 1986 (taking into account the

18 size of the household); or

19 ‘‘(B) does not exceed 50 percent of the

20 area median income (as determined by the Sec21 retary of Housing and Urban Development) for

22 the area in which the household is located.’’.

23 (d) EXTENSION OF TIME FOR ACCOUNT HOLDERS

24 TO ACCESS FEDERAL FUNDS.—Section 407(d) of such
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1 Act (title IV of Public Law 105–285; 42 U.S.C. 604 note)

2 is amended—

3 (1) in the subsection heading, by striking

4 ‘‘WHEN PROJECT TERMINATES’’; and

5 (2) by striking ‘‘upon’’ and inserting ‘‘on the

6 date that is 6 months after’’.

7 (e) VERIFICATION OF POSTSECONDARY EDUCATION

8 EXPENSES.—Section 404(8)(A) of such Act (title IV of

9 Public Law 105–285; 42 U.S.C. 604 note) is amended in

10 the 1st sentence by inserting ‘‘or a vendor, but only to

11 the extent that the expenses are described in a document

12 which explains the educational items to be purchased, and

13 the document and the expenses are approved by the quali14 fied entity’’ before the period.

15 (f) AUTHORITY TO USE EXCESS INTEREST TO FUND

16 OTHER INDIVIDUAL DEVELOPMENT ACCOUNTS.—Section

17 410 of such Act (title IV of Public Law 105–285; 42

18 U.S.C. 604 note) is amended—

19 (1) in subsection (a)(3)—

20 (A) by striking ‘‘any interest that has ac21 crued’’ and inserting ‘‘interest that has accrued

22 during that period’’; and

23 (B) by striking the period and inserting ‘‘,

24 but only to the extent that the amount of the

25 interest does not exceed the amount of interest
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1 that has accrued during that period on amounts

2 deposited in the account by that individual.’’;

3 and

4 (2) by adding at the end the following:

5 ‘‘(f) USE OF EXCESS INTEREST TO FUND OTHER IN6 DIVIDUAL DEVELOPMENT ACCOUNTS.—To the extent that

7 a qualified entity has an amount that, but for the limita8 tion in subsection (a)(3), would be required by that sub9 section to be deposited into the individual development ac10 count of an individual or into a parallel account main11 tained by the qualified entity, the qualified entity may de12 posit the amount into the individual development account

13 of any individual or into any such parallel account main14 tained by the qualified entity.’’.

15 SEC. 303. SENSE OF THE CONGRESS REGARDING COR16 PORATE CONTRIBUTIONS TO FAITH-BASED

17 ORGANIZATIONS, ETC.

18 (a) FINDINGS.—The Congress finds as follows:

19 (1) America’s community of faith has long

20 played a leading role in dealing with difficult societal

21 problems that might otherwise have gone

22 unaddressed.

23 (2) President Bush has called upon Americans

24 ‘‘to revive the spirit of citizenship . . . to marshal
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1 the compassion of our people to meet the continuing

2 needs of our Nation’’.

3 (3) Although the work of faith-based organiza4 tions should not be used by government as an excuse

5 for backing away from its historic and rightful com6 mitment to help those who are disadvantaged and in

7 need, such organizations can and should be seen as

8 a valuable partner with government in meeting soci9 etal challenges.

10 (4) Every day faith-based organizations in the

11 United States help people recover from drug and al12 cohol addiction, provide food and shelter for the

13 homeless, rehabilitate prison inmates so that they

14 can break free from the cycle of recidivism, and

15 teach people job skills that will allow them to move

16 from poverty to productivity.

17 (5) Faith-based organizations are often more

18 successful in dealing with difficult societal problems

19 than government and non-sectarian organizations.

20 (6) As President Bush has stated, ‘‘It is not

21 sufficient to praise charities and community groups;

22 we must support them. And this is both a public ob23 ligation and a personal responsibility.’’.
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1 (7) Corporate foundations contribute billions of

2 dollars each year to a variety of philanthropic

3 causes.

4 (8) According to a study produced by the Cap5 ital Research Center, the 10 largest corporate foun6 dations in the United States contributed

7 $1,900,000,000 to such causes.

8 (9) According to the same study, faith-based or9 ganizations only receive a small fraction of the con10 tributions made by corporations in the United

11 States, and 6 of the 10 corporations that give the

12 most to philanthropic causes explicitly ban or re13 strict contributions to faith-based organizations.

14 (b) CORPORATIONS ENCOURAGED TO CONTRIBUTE

15 TO FAITH-BASED ORGANIZATIONS.—The Congress calls

16 on corporations in the United States, in the words of the

17 President, ‘‘to give more and to give better’’ by making

18 greater contributions to faith-based organizations that are

19 on the front lines battling some of the great societal chal20 lenges of our day.

21 (c) SENSE OF THE CONGRESS.—It is the sense of

22 Congress that—

23 (1) corporations in the United States are im24 portant partners with government in efforts to over25 come difficult societal problems; and
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1 (2) no corporation in the United States should

2 adopt policies that prohibit the corporation from

3 contributing to an organization that is successfully

4 advancing a philanthropic cause merely because such

5 organization is faith based.

6 SEC. 304. MATERNITY GROUP HOMES.

7 Section 322 of the Runaway and Homeless Youth Act

8 (42 U.S.C. 5714–2) is amended—

9 (1) in subsection (a)(1), by inserting ‘‘(includ10 ing maternity group homes)’’ after ‘‘group homes’’;

11 and

12 (2) by adding at the end the following:

13 ‘‘(c) MATERNITY GROUP HOME.—In this part, the

14 term ‘maternity group home’ means a community-based,

15 adult-supervised group home that provides—

16 ‘‘(1) young mothers and their children with a

17 supportive and supervised living arrangement in

18 which such mothers are required to learn parenting

19 skills, including child development, family budgeting,

20 health and nutrition, and other skills to promote

21 their long-term economic independence and the well22 being of their children; and

23 ‘‘(2) pregnant women with—
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1 ‘‘(A) information regarding the option of

2 placing children for adoption through licensed

3 adoption service providers;

4 ‘‘(B) assistance with prenatal care and

5 child birthing; and

6 ‘‘(C) pre- and post-placement adoption

7 counseling.’’.

8 SEC. 305. AUTHORITY OF STATES TO USE 10 PERCENT OF

9 THEIR TANF FUNDS TO CARRY OUT SOCIAL

10 SERVICES BLOCK GRANT PROGRAMS.

11 Section 404(d)(2) of the Social Security Act (42

12 U.S.C. 604(d)(2)) is amended to read as follows:

13 ‘‘(2) LIMITATION ON AMOUNT TRANSFERABLE

14 TO TITLE XX PROGRAMS.—A State may use not

15 more than 10 percent of the amount of any grant

16 made to the State under section 403(a) for a fiscal

17 year to carry out State programs pursuant to title

18 XX.’’.

Passed the House of Representatives September 17,

2003.

Attest:

Clerk.
108TH CONGRESS

1ST SESSION H. R. 7

AN ACT

To amend the Internal Revenue Code of 1986 to

provide incentives for charitable contributions byindividuals and businesses, and for other purposes.