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103D CONGRESS
1ST SESSION
H. R. 1551
To amend the Internal Revenue Code of 1986 to provide an exclusion from
unrelated business taxable income for certain sponsorship payments.
IN THE HOUSE OF REPRESENTATIVES
MARCH 31, 1993
Mr. BREWSTER (for himself and Mr. CAMP) 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 provide
an exclusion from unrelated business taxable income for
certain sponsorship payments.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. EXCLUSION FROM UNRELATED BUSINESS TAX-
ABLE INCOME FOR CERTAIN SPONSORSHIP
PAYMENTS.
(a) IN GENERAL.—Section 513 of the Internal Reve-
nue Code of 1986 (relating to unrelated business taxable
income) is amended by adding at the end thereof the
following new subsection:
‘‘(i) TREATMENT OF CERTAIN SPONSORSHIP PAY-
MENTS.—
‘‘(1) IN GENERAL.—The term ‘unrelated trade
or business’ does not include the activity of soliciting
and receiving qualified sponsorship payments with
respect to any qualified public event.
‘‘(2) QUALIFIED
SPONSORSHIP
PAYMENTS.—
For purposes of this subsection, the term ‘qualified
sponsorship payment’ means any payment by any
person engaged in a trade or business with respect
to which there is no arrangement or expectation that
such person will receive any substantial return bene-
fit other than—
‘‘(A) the use of the name or logo of such
person’s trade or business in connection with
any qualified public event under arrangements
(including advertising) in connection with such
event which acknowledge such person’s sponsor-
ship or promote such person’s products or serv-
ices, or
‘‘(B) the furnishing of facilities, services,
or other privileges in connection with such event
to individuals designated by such person.
‘‘(3) QUALIFIED PUBLIC EVENT.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, the term ‘qualified public event’
means any event conducted by an organization
described in paragraph (3), (4), (5), or (6) of
section 501(c) or by an organization described
in section 511(a)(2)(B) if such event is—
‘‘(i) a public event the conduct of
which is substantially related (aside from
the need of the organization for income or
funds or the use it makes of the profits de-
rived) to the exempt purposes of the orga-
nization conducting such event, or
‘‘(ii) any public event not described in
clause (i) but only if such event is the only
event of that type conducted by such orga-
nization during a calendar year and such
event does not exceed 30 consecutive days.
An event shall be treated as a qualified public
event with respect to all organizations referred
to in the preceding sentence which receive spon-
sorship payments with respect to such event if
such event is a qualified public event with re-
spect to 1 of such organizations; except that a
payment shall be treated as not being from an
unrelated trade or business by reason of this
sentence only to the extent that such payment
is used to meet the expenses of such event or
for the benefit of the organization with respect
to which such event is a qualified public event
(determined without regard to this sentence).
‘‘(B) EXEMPT PURPOSE.—For purposes of
subparagraph (A), the term ‘exempt purpose’
means any purpose or function constituting the
basis for the organization’s exemption under
section 501 (or, in the case of an organization
described in section 511(a)(2)(B), the exercise
or performance of any purpose or function de-
scribed in section 501(c)(3)).
‘‘(4) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary to pre-
vent the avoidance of the purposes of this subsection
through the use of entities under common control.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to events conducted after De-
cember 31, 1992.
SEC. 2. TREATMENT OF CERTAIN AMOUNTS RECEIVED BY
OLYMPIC ORGANIZATIONS.
In the case of a qualified amateur sports organization
described in section 501(j)(2) of the Internal Revenue
Code of 1986 or an organization which would be so de-
scribed but for the cultural events it organizes in connec-
tion with national or international amateur sports com-
petitions—
(1) for purposes of section 512(b) of such Code,
the term ‘‘royalty’’ includes any income received (di-
rectly or indirectly) by such organization if a sub-
stantial part of the consideration for such income is
the right to use trademarks, designations, or similar
properties indicating a connection with the Olympic
Games to be conducted in 1996 or related events or
the participation of the United States Olympic Team
at such Games or events, and
(2) nothing in section 514 or 512(b) of such
Code shall be construed as treating any amount
treated as royalty under paragraph (1) as an item
of income from an unrelated trade or business.
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