Federal 
Islamic 
Republic 
of 
the
Comoros (Comoros)
Republic 
of 
Coˆte 
d’Ivoire 
(Coˆte
d’Ivoire)
Republic of Equatorial Guinea (Equa-
torial Guinea)
Ethiopia
Republic of the Gambia (Gambia)
Republic of Guinea (Guinea)
Republic of Kenya (Kenya)
Republic of Liberia (Liberia)
Republic of Malawi (Malawi)
Islamic Republic of Mauritania (Mau-
ritania)
Republic 
of 
Mozambique 
(Mozam-
bique)
Republic of Niger (Niger)
Republic of Rwanda (Rwanda)
Republic of Senegal (Senegal)
Republic of Seychelles (Seychelles)
Republic of South Africa (South Afri-
ca)
Republic of Sudan (Sudan)
United Republic of Tanzania (Tan-
zania)
Republic of Uganda (Uganda)
Republic of Zambia (Zambia)
SEC. 18. LIMITATION ON USE OF NON-ACCRUAL EXPERI-
ENCE METHOD OF ACCOUNTING.
(a) IN GENERAL.—Section 448(d)(5) of the
Internal Revenue Code of 1986 (relating to
special rule for services) is amended—
(1) by inserting ‘‘in fields described in
paragraph (2)(A)’’ after ‘‘services by such
person’’, and
(2) by inserting ‘‘CERTAIN
PERSONAL’’
before ‘‘SERVICES’’ in the heading.
(b) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendments
made by this section shall apply to tax-
able years ending after the date of the en-
actment of this Act.
(2) CHANGE
IN
METHOD
OF
ACCOUNT-
ING.—In the case of any taxpayer re-
quired by the amendments made by this
section to change its method of account-
ing for its first taxable year ending after
the date of the enactment of this Act—
(A) such change shall be treated
as initiated by the taxpayer,
(B) such change shall be treated
as made with the consent of the Sec-
retary of the Treasury, and
(C) the net amount of the adjust-
ments required to be taken into ac-
count by the taxpayer under section
481 of the Internal Revenue Code of
1986 shall be taken into account over
a period (not greater than 4 taxable
years) beginning with such first tax-
able year.
SEC. 19. CHARITABLE SPLIT-DOLLAR LIFE INSURANCE, AN-
NUITY, AND ENDOWMENT CONTRACTS.
(a) IN GENERAL.—Subsection (f) of section
170 of the Internal Revenue Code of 1986 (re-
lating to disallowance of deduction in certain
cases and special rules) is amended by adding
at the end the following new paragraph:
‘‘(10) SPLIT-DOLLAR LIFE INSURANCE, AN-
NUITY, AND ENDOWMENT CONTRACTS.—
‘‘(A) IN GENERAL.—Nothing in this
section 
or 
in 
section 
545(b)(2),
556(b)(2), 642(c), 2055, 2106(a)(2), or
2522 shall be construed to allow a de-
duction, and no deduction shall be al-
lowed, for any transfer to or for the
use of an organization described in
subsection (c) if in connection with
such transfer—
‘‘(i) the organization directly
or indirectly pays, or has pre-
viously paid, any premium on any
personal benefit contract with re-
spect to the transferor, or
‘‘(ii) there is an understanding
or expectation that any person
will directly or indirectly pay any
premium on any personal benefit
contract 
with 
respect 
to 
the
transferor.
‘‘(B) 
PERSONAL
BENEFIT
CON-
TRACT.—For 
purposes 
of 
subpara-
graph (A), the term ‘personal benefit
contract’ means, with respect to the
transferor, any life insurance, annu-
ity, or endowment contract if any di-
rect or indirect beneficiary under
such contract is the transferor, any
member of the transferor’s family, or
any other person (other than an orga-
nization described in subsection (c))
designated by the transferor.
‘‘(C) APPLICATION
TO
CHARITABLE
REMAINDER TRUSTS.—In the case of a
transfer to a trust referred to in sub-
paragraph (E), references in subpara-
graphs (A) and (F) to an organization
described in subsection (c) shall be
treated as a reference to such trust.
‘‘(D) EXCEPTION FOR CERTAIN ANNU-
ITY CONTRACTS.—If, in connection with
a transfer to or for the use of an orga-
nization described in subsection (c),
such organization incurs an obliga-
tion to pay a charitable gift annuity
(as defined in section 501(m)) and
such organization purchases any an-
nuity contract to fund such obliga-
tion, 
persons 
receiving 
payments
under the charitable gift annuity
shall not be treated for purposes of
subparagraph (B) as indirect bene-
ficiaries under such contract if—
‘‘(i) such organization pos-
sesses all of the incidents of own-
ership under such contract,
‘‘(ii) such organization is enti-
tled to all the payments under
such contract, and
‘‘(iii) the timing and amount
of payments under such contract
are substantially the same as the
timing and amount of payments
to each such person under such
obligation (as such obligation is
in effect at the time of such trans-
fer).
‘‘(E) EXCEPTION FOR CERTAIN CON-
TRACTS
HELD
BY
CHARITABLE
REMAIN-
DER
TRUSTS.—A person shall not be
treated for purposes of subparagraph
(B) as an indirect beneficiary under
any life insurance, annuity, or endow-
ment contract held by a charitable re-
mainder annuity trust or a charitable
remainder unitrust (as defined in sec-
tion 664(d)) solely by reason of being
entitled to any payment referred to in
paragraph (1)(A) or (2)(A) of section
664(d) if—
‘‘(i) such trust possesses all of
the incidents of ownership under
such contract, and
‘‘(ii) such trust is entitled to
all the payments under such con-
tract.
‘‘(F) 
EXCISE
TAX
ON
PREMIUMS
PAID.—
‘‘(i) 
IN
GENERAL.—There 
is
hereby imposed on any organiza-
tion described in subsection (c)
an excise tax equal to the pre-
miums paid by such organization
on any life insurance, annuity, or
endowment contract if the pay-
ment of premiums on such con-
tract is in connection with a
transfer for which a deduction is
not 
allowable 
under 
subpara-
graph (A), determined without re-
gard to when such transfer is
made.
‘‘(ii) PAYMENTS BY OTHER PER-
SONS.—For purposes of clause (i),
payments made by any other per-
son pursuant to an understanding
or expectation referred to in sub-
paragraph (A) shall be treated as
made by the organization.
‘‘(iii) REPORTING.—Any organi-
zation on which tax is imposed by
clause (i) with respect to any pre-
mium shall file an annual return
which includes—
‘‘(I) the amount of such
premiums paid during the
year and the name and TIN of
each beneficiary under the
contract to which the pre-
mium relates, and
‘‘(II) such other informa-
tion as the Secretary may re-
quire.
The penalties applicable to re-
turns required under section 6033
shall apply to returns required
under this clause. Returns re-
quired under this clause shall be
furnished at such time and in
such manner as the Secretary
shall by forms or regulations re-
quire.
‘‘(iv) 
CERTAIN
RULES
TO
APPLY.—The tax imposed by this
subparagraph shall be treated as
imposed by chapter 42 for pur-
poses of this title other than sub-
chapter B of chapter 42.
‘‘(G) SPECIAL
RULE
WHERE
STATE
REQUIRES
SPECIFICATION
OF
CHARI-
TABLE GIFT ANNUITANT IN CONTRACT.—
In the case of an obligation to pay a
charitable gift annuity referred to in
subparagraph (D) which is entered
into under the laws of a State which
requires, in order for the charitable
gift annuity to be exempt from insur-
ance regulation by such State, that
each beneficiary under the charitable
gift annuity be named as a bene-
ficiary under an annuity contract
issued by an insurance company au-
thorized to transact business in such
State, the requirements of clauses (i)
and (ii) of subparagraph (D) shall be
treated as met if—
‘‘(i) such State law require-
ment was in effect on February 8,
1999,
‘‘(ii) each such beneficiary
under the charitable gift annuity
is a bona fide resident of such
State at the time the obligation to
pay a charitable gift annuity is
entered into, and
‘‘(iii) the only persons entitled
to payments under such contract
are persons entitled to payments
as beneficiaries under such obli-
gation on the date such obligation
is entered into.
‘‘(H) REGULATIONS.—The Secretary
shall prescribe such regulations as
may be necessary or appropriate to
carry out the purposes of this para-
graph, including regulations to pre-
vent the avoidance of such purposes.’’