II 

Calendar No. 43 

114TH CONGRESS 

1ST SESSION S. 909 

[Report No. 114–20] 

To amend the Internal Revenue Code of 1986 to exempt private foundations 

from the tax on excess business holdings in the case of certain philanthropic enterprises which are independently supervised, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

APRIL 14, 2015 

Mr. HATCH, from the Committee on Finance, reported the following original 

bill; which was read twice and placed on the calendar 

A BILL 

To amend the Internal Revenue Code of 1986 to exempt 

private foundations from the tax on excess business holdings in the case of certain philanthropic enterprises 

which are independently supervised, and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Philanthropic Enter5 prise Act of 2015’’. 


smartinez on DSK4TPTVN1PROD with BILLS
2 

•S 909 PCS

1 SEC. 2. EXCEPTION FROM PRIVATE FOUNDATION EXCESS 

2 BUSINESS HOLDING TAX FOR CERTAIN PHIL3 ANTHROPIC BUSINESS HOLDINGS. 

4 (a) IN GENERAL.—Section 4943 of the Internal Rev5 enue Code of 1986 is amended by adding at the end the 

6 following new subsection: 

7 ‘‘(g) EXCEPTION FOR CERTAIN PHILANTHROPIC

8 BUSINESS HOLDINGS.— 

9 ‘‘(1) IN GENERAL.—Subsection (a) shall not 

10 apply with respect to the holdings of a private foun11 dation in any business enterprise which for the tax12 able year meets— 

13 ‘‘(A) the exclusive ownership requirements 

14 of paragraph (2), 

15 ‘‘(B) the all profits to charity requirement 

16 of paragraph (3), and 

17 ‘‘(C) the independent operation require18 ments of paragraph (4). 

19 ‘‘(2) EXCLUSIVE OWNERSHIP.—The exclusive 

20 ownership requirements of this paragraph are met 

21 if— 

22 ‘‘(A) all ownership interests in the business 

23 enterprise are held by the private foundation at 

24 all times during the taxable year, and 

25 ‘‘(B) all the private foundation’s ownership 

26 interests in the business enterprise were acVerDate Sep 11 2014 02:05 Apr 15, 2015 Jkt 049200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S909.PCS S909

smartinez on DSK4TPTVN1PROD with BILLS
3 

•S 909 PCS

1 quired under the terms of a will or trust upon 

2 the death of the testator or settlor, as the case 

3 may be. 

4 ‘‘(3) ALL PROFITS TO CHARITY.— 

5 ‘‘(A) IN GENERAL.—The all profits to 

6 charity requirement of this paragraph is met if 

7 the business enterprise, not later than 120 days 

8 after the close of the taxable year, distributes 

9 an amount equal to its net operating income for 

10 such taxable year to the private foundation. 

11 ‘‘(B) NET OPERATING INCOME.—For pur12 poses of this paragraph, the net operating in13 come of any business enterprise for any taxable 

14 year is an amount equal to the gross income of 

15 the business enterprise for the taxable year, re16 duced by the sum of— 

17 ‘‘(i) the deductions allowed by chapter 

18 1 for the taxable year which are directly 

19 connected with the production of such in20 come, 

21 ‘‘(ii) the tax imposed by chapter 1 on 

22 the business enterprise for the taxable 

23 year, and 


smartinez on DSK4TPTVN1PROD with BILLS
4 

•S 909 PCS

1 ‘‘(iii) an amount for a reasonable re2 serve for working capital and other busi3 ness needs of the business enterprise. 

4 ‘‘(4) INDEPENDENT OPERATION.—The inde5 pendent operation requirements of this paragraph 

6 are met if, at all times during the taxable year— 

7 ‘‘(A) no substantial contributor (as defined 

8 in section 4958(c)(3)(C)) to the private founda9 tion, or family member of such a contributor 

10 (determined under section 4958(f)(4)), is a di11 rector, officer, trustee, manager, employee, or 

12 contractor of the business enterprise (or an in13 dividual having powers or responsibilities simi14 lar to any of the foregoing), 

15 ‘‘(B) at least a majority of the board of di16 rectors of the private foundation are individuals 

17 other than individuals who are either— 

18 ‘‘(i) directors or officers of the busi19 ness enterprise, or 

20 ‘‘(ii) members of the family (deter21 mined under section 4958(f)(4)) of a sub22 stantial contributor (as defined in section 

23 4958(c)(3)(C)) to the private foundation, 

24 and 


smartinez on DSK4TPTVN1PROD with BILLS
5 

•S 909 PCS

1 ‘‘(C) there is no loan outstanding from the 

2 business enterprise to a substantial contributor 

3 (as so defined) to the private foundation or a 

4 family member of such contributor (as so deter5 mined). 

6 ‘‘(5) CERTAIN DEEMED PRIVATE FOUNDATIONS

7 EXCLUDED.—This subsection shall not apply to— 

8 ‘‘(A) any fund or organization treated as a 

9 private foundation for purposes of this section 

10 by reason of subsection (e) or (f), 

11 ‘‘(B) any trust described in section 

12 4947(a)(1) (relating to charitable trusts), and 

13 ‘‘(C) any trust described in section 

14 4947(a)(2) (relating to split-interest trusts).’’. 

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

16 this section shall apply to taxable years beginning after 

17 December 31, 2014. 


smartinez on DSK4TPTVN1PROD with BILLS
Calendar No. 43 

114TH CONGRESS 

1ST SESSION S. 909 

[Report No. 114–20] 

A BILL 

To amend the Internal Revenue Code of 1986 to 

pervised, and for other purposes. anthropic enterprises which are independently sucess business holdings in the case of certain philexempt private foundations from the tax on exAPRIL 14, 2015 

Read twice and placed on the calendar 


smartinez on DSK4TPTVN1PROD with BILLS