807 
(b) PENALTIES.— 
(1) IN GENERAL.—Subparagraph (B) of section 
6724(d)(1), as amended by this Act, is amended by 
redesignating clauses (xiv) through (xix) as clauses 
(xv) through (xx) and by inserting after clause (xiii) 
the following new clause: 
‘‘(xiv) section 6050V (relating to re-
turns relating to applicable insurance con-
tracts in which certain exempt organiza-
tions hold interests),’’. 
(2) 
INTENTIONAL
DISREGARD.—Section 
6721(e)(2) is amended by striking ‘‘or’’ at the end 
of subparagraph (B), by striking ‘‘and’’ at the end 
of subparagraph (C) and inserting ‘‘or’’, and by add-
ing at the end the following new subparagraph: 
‘‘(D) in the case of a return required to be 
filed under section 6050V, 10 percent of the 
value of the benefit of any contract with respect 
to which information is required to be included 
on the return, and’’. 
(c) STUDY.— 
(1) IN GENERAL.—The Secretary of the Treas-
ury shall undertake a study on— 
(A) the use by tax exempt organizations of 
applicable insurance contracts (as defined under 
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ccoleman on PROD1PC71 with BILLS
808 
section 6050V(d)(2) of the Internal Revenue 
Code of 1986, as added by subsection (a)) for 
the purpose of sharing the benefits of the orga-
nization’s insurable interest in individuals in-
sured under such contracts with investors, and 
(B) whether such activities are consistent 
with the tax exempt status of such organiza-
tions. 
(2) REPORT.—Not later than 30 months after 
the date of the enactment of this Act, the Secretary 
of the Treasury shall report on the study conducted 
under paragraph (1) to the Committee on Finance 
of the Senate and the Committee on Ways and 
Means of the House of Representatives. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to acquisitions of contracts after 
the date of enactment of this Act. 
SEC. 1212. INCREASE IN PENALTY EXCISE TAXES RELATING 
TO PUBLIC CHARITIES, SOCIAL WELFARE OR-
GANIZATIONS, AND PRIVATE FOUNDATIONS. 
(a) TAXES ON SELF-DEALING AND EXCESS BENEFIT 
TRANSACTIONS.— 
(1) IN GENERAL.—Section 4941(a) (relating to 
initial taxes) is amended— 
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ccoleman on PROD1PC71 with BILLS
809 
(A) in paragraph (1), by striking ‘‘5 per-
cent’’ and inserting ‘‘10 percent’’, and 
(B) in paragraph (2), by striking ‘‘21⁄2 
percent’’ and inserting ‘‘5 percent’’. 
(2) INCREASED LIMITATION FOR MANAGERS ON 
SELF-DEALING.—Section 4941(c)(2) is amended by 
striking ‘‘$10,000’’ each place it appears in the text 
and heading thereof and inserting ‘‘$20,000’’. 
(3) INCREASED LIMITATION FOR MANAGERS ON 
EXCESS
BENEFIT
TRANSACTIONS.—Section 
4958(d)(2) is amended by striking ‘‘$10,000’’ and 
inserting ‘‘$20,000’’. 
(b) TAXES ON FAILURE TO DISTRIBUTE INCOME.— 
Section 4942(a) (relating to initial tax) is amended by 
striking ‘‘15 percent’’ and inserting ‘‘30 percent’’. 
(c) TAXES ON EXCESS BUSINESS HOLDINGS.—Sec-
tion 4943(a)(1) (relating to imposition) is amended by 
striking ‘‘5 percent’’ and inserting ‘‘10 percent’’. 
(d) TAXES ON INVESTMENTS WHICH JEOPARDIZE 
CHARITABLE PURPOSE.— 
(1) IN GENERAL.—Section 4944(a) (relating to 
initial taxes) is amended by striking ‘‘5 percent’’ 
both places it appears and inserting ‘‘10 percent’’. 
(2) INCREASED LIMITATION FOR MANAGERS.— 
Section 4944(d)(2) is amended— 
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ccoleman on PROD1PC71 with BILLS
810 
(A) by striking ‘‘$5,000,’’ and inserting 
‘‘$10,000,’’, and 
(B) by striking ‘‘$10,000.’’ and inserting 
‘‘$20,000.’’. 
(e) TAXES ON TAXABLE EXPENDITURES.— 
(1) IN GENERAL.—Section 4945(a) (relating to 
initial taxes) is amended— 
(A) in paragraph (1), by striking ‘‘10 per-
cent’’ and inserting ‘‘20 percent’’, and 
(B) in paragraph (2), by striking ‘‘21⁄2 
percent’’ and inserting ‘‘5 percent’’. 
(2) INCREASED LIMITATION FOR MANAGERS.— 
Section 4945(c)(2) is amended— 
(A) by striking ‘‘$5,000,’’ and inserting 
‘‘$10,000,’’, and 
(B) by striking ‘‘$10,000.’’ and inserting 
‘‘$20,000.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
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ccoleman on PROD1PC71 with BILLS
811 
SEC. 1213. REFORM OF CHARITABLE CONTRIBUTIONS OF 
CERTAIN EASEMENTS IN REGISTERED HIS-
TORIC DISTRICTS AND REDUCED DEDUCTION 
FOR PORTION OF QUALIFIED CONSERVATION 
CONTRIBUTION ATTRIBUTABLE TO REHA-
BILITATION CREDIT. 
(a) SPECIAL RULES WITH RESPECT TO BUILDINGS 
IN REGISTERED HISTORIC DISTRICTS.— 
(1) IN
GENERAL.—Paragraph (4) of section 
170(h) (relating to definition of conservation pur-
pose) is amended by redesignating subparagraph (B) 
as subparagraph (C) and by inserting after subpara-
graph (A) the following new subparagraph: 
‘‘(B) SPECIAL RULES WITH RESPECT TO 
BUILDINGS
IN
REGISTERED
HISTORIC
DIS-
TRICTS.—In the case of any contribution of a 
qualified real property interest which is a re-
striction with respect to the exterior of a build-
ing described in subparagraph (C)(ii), such con-
tribution shall not be considered to be exclu-
sively for conservation purposes unless— 
‘‘(i) such interest— 
‘‘(I) includes a restriction which 
preserves the entire exterior of the 
building (including the front, sides, 
rear, and height of the building), and 
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‘‘(II) prohibits any change in the 
exterior of the building which is incon-
sistent with the historical character of 
such exterior, 
‘‘(ii) the donor and donee enter into a 
written agreement certifying, under pen-
alty of perjury, that the donee— 
‘‘(I) is a qualified organization 
(as defined in paragraph (3)) with a 
purpose of environmental protection, 
land conservation, open space preser-
vation, or historic preservation, and 
‘‘(II) has the resources to man-
age and enforce the restriction and a 
commitment to do so, and 
‘‘(iii) in the case of any contribution 
made in a taxable year beginning after the 
date of the enactment of this subpara-
graph, the taxpayer includes with the tax-
payer’s return for the taxable year of the 
contribution— 
‘‘(I) a qualified appraisal (within 
the meaning of subsection (f)(11)(E)) 
of the qualified property interest, 
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ccoleman on PROD1PC71 with BILLS
813 
‘‘(II) photographs of the entire 
exterior of the building, and 
‘‘(III) a description of all restric-
tions on the development of the build-
ing.’’. 
(b) DISALLOWANCE
OF DEDUCTION
FOR STRUC-
TURES
AND
LAND
IN
REGISTERED
HISTORIC
DIS-
TRICTS.—Subparagraph (C) of section 170(h)(4), as re-
designated by subsection (a), is amended— 
(1) by striking ‘‘any building, structure, or land 
area which’’, 
(2) by inserting ‘‘any building, structure, or 
land area which’’ before ‘‘is listed’’ in clause (i), and 
(3) by inserting ‘‘any building which’’ before ‘‘is 
located’’ in clause (ii). 
(c) FILING FEE FOR CERTAIN CONTRIBUTIONS.— 
Subsection (f) of section 170 (relating to disallowance of 
deduction in certain cases and special rules) is amended 
by adding at the end the following new paragraph: 
‘‘(13) CONTRIBUTIONS OF CERTAIN INTERESTS 
IN BUILDINGS LOCATED IN REGISTERED HISTORIC 
DISTRICTS.— 
‘‘(A) IN GENERAL.—No deduction shall be 
allowed with respect to any contribution de-
scribed in subparagraph (B) unless the tax-
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814 
payer includes with the return for the taxable 
year of the contribution a $500 filing fee. 
‘‘(B) CONTRIBUTION DESCRIBED.—A con-
tribution is described in this subparagraph if 
such contribution is a qualified conservation 
contribution (as defined in subsection (h)) 
which is a restriction with respect to the exte-
rior of a building described in subsection 
(h)(4)(C)(ii) and for which a deduction is 
claimed in excess of $10,000. 
‘‘(C) DEDICATION OF FEE.—Any fee col-
lected under this paragraph shall be used for 
the enforcement of the provisions of subsection 
(h).’’. 
(d) REDUCED DEDUCTION FOR PORTION OF QUALI-
FIED CONSERVATION CONTRIBUTION ATTRIBUTABLE TO 
THE REHABILITATION CREDIT.—Subsection (f) of section 
170, as amended by subsection (c), is amended by adding 
at the end the following new paragraph: 
‘‘(14) REDUCTION
FOR
AMOUNTS
ATTRIB-
UTABLE TO REHABILITATION CREDIT.—In the case 
of any qualified conservation contribution (as de-
fined in subsection (h)), the amount of the deduction 
allowed under this section shall be reduced by an 
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amount which bears the same ratio to the fair mar-
ket value of the contribution as— 
‘‘(A) the sum of the credits allowed to the 
taxpayer under section 47 for the 5 preceding 
taxable years with respect to any building which 
is a part of such contribution, bears to 
‘‘(B) the fair market value of the building 
on the date of the contribution.’’. 
(e) EFFECTIVE DATES.— 
(1) SPECIAL RULES FOR BUILDINGS IN REG-
ISTERED
HISTORIC
DISTRICTS.—The amendments 
made by subsection (a) shall apply to contributions 
made after July 25, 2006. 
(2) DISALLOWANCE OF DEDUCTION FOR STRUC-
TURES
AND
LAND; REDUCTION
FOR
REHABILITA-
TION
CREDIT.—The amendments made by sub-
sections (b) and (d) shall apply to contributions 
made after the date of the enactment of this Act. 
(3) FILING
FEE.—The amendment made by 
subsection (c) shall apply to contributions made 180 
days after the date of the enactment of this Act. 
SEC. 1214. CHARITABLE CONTRIBUTIONS OF TAXIDERMY 
PROPERTY. 
(a) DENIAL OF LONG-TERM CAPITAL GAIN.—Sub-
paragraph (B) of section 170(e)(1) is amended by striking 
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ccoleman on PROD1PC71 with BILLS
816 
‘‘or’’ at the end of clause (ii), by inserting ‘‘or’’ at the 
end of clause (iii), and by inserting after clause (iii) the 
following new clause: 
‘‘(iv) of any taxidermy property which 
is contributed by the person who prepared, 
stuffed, or mounted the property or by any 
person who paid or incurred the cost of 
such preparation, stuffing, or mounting,’’. 
(b) TREATMENT OF BASIS.—Subsection (f) of section 
170, as amended by this Act, is amended by adding at 
the end the following new paragraph: 
‘‘(15) SPECIAL RULE FOR TAXIDERMY PROP-
ERTY.— 
‘‘(A) BASIS.—For purposes of this section 
and notwithstanding section 1012, in the case 
of a charitable contribution of taxidermy prop-
erty which is made by the person who prepared, 
stuffed, or mounted the property or by any per-
son who paid or incurred the cost of such prep-
aration, stuffing, or mounting, only the cost of 
the preparing, stuffing, or mounting shall be in-
cluded in the basis of such property. 
‘‘(B) TAXIDERMY
PROPERTY.—For pur-
poses of this section, the term ‘taxidermy prop-
erty’ means any work of art which— 
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ccoleman on PROD1PC71 with BILLS
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‘‘(i) is the reproduction or preserva-
tion of an animal, in whole or in part, 
‘‘(ii) is prepared, stuffed, or mounted 
for purposes of recreating one or more 
characteristics of such animal, and 
‘‘(iii) contains a part of the body of 
the dead animal.’’. 
(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply to contributions made after July 
25, 2006. 
SEC. 1215. RECAPTURE OF TAX BENEFIT FOR CHARITABLE 
CONTRIBUTIONS OF EXEMPT USE PROPERTY 
NOT USED FOR AN EXEMPT USE. 
(a) RECAPTURE OF DEDUCTION ON CERTAIN SALES 
OF EXEMPT USE PROPERTY.— 
(1) 
IN
GENERAL.—Clause 
(i) 
of 
section 
170(e)(1)(B) (related to certain contributions of or-
dinary income and capital gain property) is amended 
to read as follows: 
‘‘(i) of tangible personal property— 
‘‘(I) if the use by the donee is 
unrelated to the purpose or function 
constituting the basis for its exemp-
tion under section 501 (or, in the case 
of a governmental unit, to any pur-
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ccoleman on PROD1PC71 with BILLS
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pose or function described in sub-
section (c)), or 
‘‘(II) which is applicable property 
(as defined in paragraph (7)(C)) 
which is sold, exchanged, or otherwise 
disposed of by the donee before the 
last day of the taxable year in which 
the contribution was made and with 
respect to which the donee has not 
made a certification in accordance 
with paragraph (7)(D),’’. 
(2) DISPOSITIONS AFTER CLOSE OF TAXABLE 
YEAR.—Section 170(e) is amended by adding at the 
end the following new paragraph: 
‘‘(7) RECAPTURE OF DEDUCTION ON CERTAIN 
DISPOSITIONS OF EXEMPT USE PROPERTY.— 
‘‘(A) IN GENERAL.—In the case of an ap-
plicable disposition of applicable property, there 
shall be included in the income of the donor of 
such property for the taxable year of such 
donor in which the applicable disposition occurs 
an amount equal to the excess (if any) of— 
‘‘(i) the amount of the deduction al-
lowed to the donor under this section with 
respect to such property, over 
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