IB 
Union Calendar No. 157
108TH CONGRESS 
1ST SESSION 
H. R. 7
[Report No. 108–270, Part I] 
To amend the Internal Revenue Code of 1986 to provide incentives for 
charitable contributions by individuals and businesses, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 7, 2003
Mr. BLUNT (for himself, Mr. FORD, Mr. HULSHOF, Mr. WYNN, Mr. 
HASTERT, Mr. GORDON, Mr. DELAY, Ms. NORTON, Ms. PRYCE of Ohio, 
Mr. MEEKS of New York, Mr. CANTOR, Mr. CRANE, Mr. RAMSTAD, Mr. 
ENGLISH, Mr. FOLEY, Mr. SHAYS, Mr. SMITH of Texas, Mr. UPTON, Mr. 
WOLF, Mr. GILLMOR, Mr. STEARNS, Mr. CAMP, Mr. KINGSTON, Mr. 
MCHUGH, Mr. BACHUS, Mr. BARTLETT of Maryland, Mr. BARTON of 
Texas, Mrs. MYRICK, Mr. NORWOOD, Mr. SOUDER, Mr. TIAHRT, Mr. 
WAMP, Mr. WICKER, Mr. DOOLITTLE, Mrs. NORTHUP, Mr. PETERSON of 
Pennsylvania, Mr. PICKERING, Mr. PITTS, Mr. REYNOLDS, Mr. SES-
SIONS, Mr. SHIMKUS, Mr. GREEN of Wisconsin, Mr. HAYES, Mr. 
ISAKSON, Mr. TERRY, Mr. AKIN, Mr. BOOZMAN, Mr. FORBES, Mr. 
GRAVES, Ms. HART, Mr. KELLER, Mr. PENCE, Mr. SCHROCK, Mr. SIM-
MONS, Mr. BARRETT of South Carolina, Mrs. BLACKBURN, Ms. GINNY 
BROWN-WAITE of Florida, Mr. BURGESS, Mr. CHOCOLA, Mr. GARRETT 
of New Jersey, Ms. HARRIS, Mr. JANKLOW, Mrs. MUSGRAVE, Mr. RENZI, 
and Mr. FOSSELLA) introduced the following bill; which was referred to 
the Committee on Ways and Means, and in addition to the Committee 
on Education and the Workforce, for a period to be subsequently deter-
mined by the Speaker, in each case for consideration of such provisions 
as fall within the jurisdiction of the committee concerned 
SEPTEMBER 16, 2003
Additional sponsors: Mr. MORAN of Kansas, Mr. BROWN of South Carolina, 
Mr. FEENEY, Mr. EMANUEL, Mr. MOLLOHAN, Mr. DOOLEY of California, 
Mr. FRANKS of Arizona, Mr. MCCOTTER, Mr. MURPHY, Mr. LEACH, Mr. 
HOSTETTLER, Mr. TURNER of Ohio, Mr. CRENSHAW, Mr. REGULA, Ms. 
HOOLEY of Oregon, Mr. CULBERSON, Mr. WILSON of South Carolina,
Mr. OTTER, Mr. BISHOP of Georgia, Mr. BURNS, Mr. CASE, Mr. DAVIS 
of Illinois, and Mr. HYDE 
SEPTEMBER 16, 2003
Reported from the Committee on Ways and Means with an amendment 
[Strike out all after the enacting clause and insert the part printed in italic] 
SEPTEMBER 16, 2003
Referral to the Committee on Education and the Workforce extended for a 
period ending not later than September 16, 2003
SEPTEMBER 16, 2003
Committee on Education and the Workforce discharged; committed to the 
Committee of the Whole House on the State of the Union and ordered 
to be printed 
[For text of introduced bill, see copy of bill as introduced on May 7, 2003] 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
incentives for charitable contributions by individuals and 
businesses, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Charitable Giving Act of 2003’’. 
(b) AMENDMENT OF 1986 CODE.—Except as otherwise 
expressly provided, whenever in this Act an amendment or 
repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be consid-
ered to be made to a section or other provision of the Inter-
nal Revenue Code of 1986.
(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 indi-
viduals 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 con-
tributions. 
Sec. 109. Charitable organizations permitted to make collegiate housing and in-
frastructure 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. 
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 faith-based 
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.
TITLE I—CHARITABLE GIVING 
INCENTIVES 
SEC. 101. DEDUCTION FOR PORTION OF CHARITABLE CON-
TRIBUTIONS TO BE ALLOWED TO INDIVID-
UALS WHO DO NOT ITEMIZE DEDUCTIONS. 
(a) IN GENERAL.—Section 170 (relating to charitable, 
etc., contributions and gifts) is amended by redesignating 
subsection (m) as subsection (n) and by inserting after sub-
section (l) the following new subsection:
‘‘(m) DEDUCTION FOR INDIVIDUALS NOT ITEMIZING 
DEDUCTIONS.—
‘‘(1) IN GENERAL.—In the case of an individual 
who does not itemize deductions for a taxable year, 
there shall be taken into account as a direct charitable 
deduction under section 63 an amount equal to the 
amount allowable under subsection (a) for the taxable 
year for cash contributions (determined without re-
gard to any carryover), to the extent that such con-
tributions exceed $250 ($500 in the case of a joint re-
turn) but do not exceed $500 ($1,000 in the case of 
a joint return). 
‘‘(2) TERMINATION.—Paragraph (1) shall not 
apply to any taxable year beginning after December 
31, 2005.’’. 
(b) DIRECT CHARITABLE DEDUCTION.—
(1) IN GENERAL.—Subsection (b) of section 63 
(defining taxable income) is amended by striking 
‘‘and’’ at the end of paragraph (1), by striking the pe-
riod at the end of paragraph (2) and inserting ‘‘, 
and’’, and by adding at the end the following new 
paragraph: 
‘‘(3) the direct charitable deduction.’’. 
(2) DEFINITION.—Section 63 is amended by re-
designating subsection (g) as subsection (h) and by 
inserting after subsection (f) the following new sub-
section: 
‘‘(g) DIRECT CHARITABLE DEDUCTION.—For purposes 
of this section, the term ‘direct charitable deduction’ means 
that portion of the amount allowable under section 170(a) 
which is taken as a direct charitable deduction for the tax-
able year under section 170(m).’’. 
(3) CONFORMING AMENDMENT.—Subsection (d) 
of section 63 is amended by striking ‘‘and’’ at the end 
of paragraph (1), by striking the period at the end of 
paragraph (2) and inserting ‘‘, and’’, and by adding 
at the end the following new paragraph: 
‘‘(3) the direct charitable deduction.’’. 
(c) STUDY.—
(1) IN GENERAL.—The Secretary of the Treasury 
shall study the effect of the amendments made by this
section on increased charitable giving and taxpayer 
compliance, including a comparison of taxpayer com-
pliance between taxpayers who itemize their chari-
table contributions and taxpayers who claim a direct 
charitable deduction. 
(2) REPORT.—Not later than December 31, 2006, 
the Secretary of the Treasury shall report on the 
study required 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 taxable years beginning after Decem-
ber 31, 2003. 
SEC. 102. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RE-
TIREMENT PLANS FOR CHARITABLE PUR-
POSES. 
(a) IN GENERAL.—Subsection (d) of section 408 (relat-
ing to individual retirement accounts) is amended by add-
ing at the end the following new paragraph: 
‘‘(8) DISTRIBUTIONS
FOR
CHARITABLE
PUR-
POSES.—
‘‘(A) IN GENERAL.—No amount shall be in-
cludible in gross income by reason of a qualified 
charitable distribution.
‘‘(B) QUALIFIED
CHARITABLE
DISTRIBU-
TION.—For purposes of this paragraph, the term 
‘qualified charitable distribution’ means any dis-
tribution from an individual retirement plan 
other than a plan described in subsection (k) or 
(p) of section 408—
‘‘(i) which is made on or after the date 
that the individual for whose benefit the 
plan is maintained has attained age 701⁄2, 
and 
‘‘(ii) which is made directly by the 
trustee—
‘‘(I) to an organization described 
in section 170(c), or 
‘‘(II) to a split-interest entity. 
A distribution shall be treated as a qualified 
charitable distribution only to the extent that the 
distribution would be includible in gross income 
without regard to subparagraph (A) and, in the 
case of a distribution to a split-interest entity, 
only if no person holds an income interest in the 
amounts in the split-interest entity attributable 
to such distribution other than one or more of 
the following: the individual for whose benefit 
such plan is maintained, the spouse of such indi-
vidual, or any organization described in section 
170(c). 
‘‘(C) CONTRIBUTIONS MUST BE OTHERWISE 
DEDUCTIBLE.—For 
purposes 
of 
this 
para-
graph—
‘‘(i) DIRECT CONTRIBUTIONS.—A dis-
tribution to an organization described in 
section 170(c) shall be treated as a qualified
charitable distribution only if a deduction 
for the entire distribution would be allow-
able under section 170 (determined without 
regard to subsection (b) thereof and this 
paragraph). 
‘‘(ii) SPLIT-INTEREST GIFTS.—A dis-
tribution to a split-interest entity shall be 
treated as a qualified charitable distribu-
tion only if a deduction for the entire value 
of the interest in the distribution for the use 
of an organization described in section 
170(c) would be allowable under section 170 
(determined without regard to subsection (b) 
thereof and this paragraph). 
‘‘(D) APPLICATION
OF
SECTION
72.—Not-
withstanding section 72, in determining the ex-
tent to which a distribution is a qualified chari-
table distribution, the entire amount of the dis-
tribution shall be treated as includible in gross 
income without regard to subparagraph (A) to 
the extent that such amount does not exceed the 
aggregate amount which would have been so in-
cludible if all amounts distributed from all indi-
vidual retirement plans were treated as 1 con-
tract under paragraph (2)(A) for purposes of de-
termining the inclusion of such distribution 
under section 72. Proper adjustments shall be 
made in applying section 72 to other distribu-
tions in such taxable year and subsequent tax-
able years. 
‘‘(E) SPECIAL RULES FOR SPLIT-INTEREST 
ENTITIES.—
‘‘(i) 
CHARITABLE
REMAINDER 
TRUSTS.—Notwithstanding section 664(b), 
distributions made from a trust described in 
subparagraph (G)(i) shall be treated as or-
dinary income in the hands of the bene-
ficiary to whom is paid the annuity de-
scribed in section 664(d)(1)(A) or the pay-
ment described in section 664(d)(2)(A). 
‘‘(ii) POOLED
INCOME
FUNDS.—No 
amount shall be includible in the gross in-
come of a pooled income fund (as defined in 
subparagraph (G)(ii)) by reason of a quali-
fied charitable distribution to such fund, 
and all distributions from the fund which 
are attributable to qualified charitable dis-
tributions shall be treated as ordinary in-
come to the beneficiary. 
‘‘(iii) CHARITABLE GIFT ANNUITIES.—
Qualified charitable distributions made for 
a charitable gift annuity shall not be treat-
ed as an investment in the contract. 
‘‘(F) DENIAL
OF
DEDUCTION.—Qualified 
charitable distributions shall not be taken into 
account in determining the deduction under sec-
tion 170. 
‘‘(G) SPLIT-INTEREST ENTITY DEFINED.—
For purposes of this paragraph, the term ‘split-
interest entity’ means—
‘‘(i) a charitable remainder annuity 
trust or a charitable remainder unitrust (as 
such terms are defined in section 664(d)) 
which must be funded exclusively by quali-
fied charitable distributions,
‘‘(ii) a pooled income fund (as defined 
in section 642(c)(5)), but only if the fund
accounts separately for amounts attrib-
utable to qualified charitable distributions, 
and 
‘‘(iii) a charitable gift annuity (as de-
fined in section 501(m)(5)).’’. 
(b) MODIFICATIONS RELATING TO INFORMATION RE-
TURNS BY CERTAIN TRUSTS.—
(1) RETURNS.—Section 6034 (relating to returns 
by trusts described in section 4947(a)(2) or claiming 
charitable deductions under section 642(c)) is amend-
ed to read as follows: 
‘‘SEC. 6034. RETURNS BY TRUSTS DESCRIBED IN SECTION 
4947(a)(2) OR CLAIMING CHARITABLE DEDUC-
TIONS UNDER SECTION 642(c). 
‘‘(a) TRUSTS DESCRIBED IN SECTION 4947(a)(2).—
Every trust described in section 4947(a)(2) shall furnish 
such information with respect to the taxable year as the 
Secretary may by forms or regulations require. 
‘‘(b) TRUSTS CLAIMING A CHARITABLE DEDUCTION 
UNDER SECTION 642(c).—
‘‘(1) IN GENERAL.—Every trust not required to 
file a return under subsection (a) but claiming a de-
duction under section 642(c) for the taxable year shall 
furnish such information with respect to such taxable
year as the Secretary may by forms or regulations 
prescribe, including—
‘‘(A) the amount of the deduction taken 
under section 642(c) within such year, 
‘‘(B) the amount paid out within such year 
which represents amounts for which deductions 
under section 642(c) have been taken in prior 
years,
‘‘(C) the amount for which such deductions 
have been taken in prior years but which has not 
been paid out at the beginning of such year, 
‘‘(D) the amount paid out of principal in 
the current and prior years for the purposes de-
scribed in section 642(c), 
‘‘(E) the total income of the trust within 
such year and the expenses attributable thereto, 
and 
‘‘(F) a balance sheet showing the assets, li-
abilities, and net worth of the trust as of the be-
ginning of such year. 
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not 
apply to a trust for any taxable year if—
‘‘(A) all the net income for such year, deter-
mined under the applicable principles of the law
of trusts, is required to be distributed currently 
to the beneficiaries, or 
‘‘(B) the trust is described in section 
4947(a)(1).’’. 
(2) INCREASE IN PENALTY RELATING TO FILING 
OF
INFORMATION
RETURN
BY
SPLIT-INTEREST 
TRUSTS.—Paragraph (2) of section 6652(c) (relating 
to returns by exempt organizations and by certain
trusts) is amended by adding at the end the following 
new subparagraph: 
‘‘(C) SPLIT-INTEREST TRUSTS.—In the case 
of a trust which is required to file a return 
under section 6034(a), subparagraphs (A) and 
(B) of this paragraph shall not apply and para-
graph (1) shall apply in the same manner as if 
such return were required under section 6033, 
except that—
‘‘(i) the 5 percent limitation in the sec-
ond sentence of paragraph (1)(A) shall not 
apply, 
‘‘(ii) in the case of any trust with gross 
income in excess of $250,000, the first sen-
tence of paragraph (1)(A) shall be applied 
by substituting ‘$100’ for ‘$20’, and the sec-
ond sentence thereof shall be applied by sub-
stituting ‘$50,000’ for ‘$10,000’, and 
‘‘(iii) the third sentence of paragraph 
(1)(A) shall be disregarded. 
In addition to any penalty imposed on the trust 
pursuant to this subparagraph, if the person re-
quired to file such return knowingly fails to file 
the return, such penalty shall also be imposed on 
such person who shall be personally liable for 
such penalty.’’. 
(3) CONFIDENTIALITY OF NONCHARITABLE BENE-
FICIARIES.—Subsection (b) of section 6104 (relating 
to inspection of annual information returns) is 
amended by adding at the end the following new sen-
tence: ‘‘In the case of a trust which is required to file 
a return under section 6034(a), this subsection shall 
not apply to information regarding beneficiaries 
which are not organizations described in section 
170(c).’’. 
(c) EFFECTIVE DATES.—
(1) SUBSECTION (a).—The amendment made by 
subsection (a) shall apply to distributions made after 
December 31, 2003.
(2) SUBSECTION (b).—The amendments made by 
subsection (b) shall apply to returns for taxable years 
beginning after December 31, 2003. 
SEC. 103. INCREASE IN CAP ON CORPORATE CHARITABLE 
CONTRIBUTIONS. 
(a) IN GENERAL.—Paragraph (2) of section 170(b) 
(relating to corporations) is amended by striking ‘‘10 per-
cent’’ and inserting ‘‘the applicable percentage’’. 
(b) APPLICABLE PERCENTAGE.—Subsection (b) of sec-
tion 170 is amended by adding at the end the following 
new paragraph: 
‘‘(3) APPLICABLE PERCENTAGE DEFINED.—For 
purposes of paragraph (2), the applicable percentage 
shall be determined in accordance with the following 
table:
‘‘For taxable years beginning 
The applicable 
in calendar year—
percentage is—
2004 ....................................................................................
2005 ....................................................................................
2006 ....................................................................................
2007 ....................................................................................
2008 through 2011 ............................................................
2012 and thereafter ...........................................................
20.’’.
(c) CONFORMING AMENDMENTS.—
(1) Sections 512(b)(10) and 805(b)(2)(A) are 
each amended by striking ‘‘10 percent’’ each place it 
occurs and inserting ‘‘the applicable percentage (de-
termined under section 170(b)(3))’’.
(2) Sections 545(b)(2) and 556(b)(2) are each 
amended by striking ‘‘10-percent limitation’’ and in-
serting ‘‘applicable percentage limitation’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2003. 
SEC. 104. CHARITABLE DEDUCTION FOR CONTRIBUTIONS 
OF FOOD INVENTORY. 
(a) IN GENERAL.—Paragraph (3) of section 170(e) (re-
lating to special rule for certain contributions of inventory 
and other property) is amended by redesignating subpara-
graph (C) as subparagraph (D) and by inserting after sub-
paragraph (B) the following new subparagraph: 
‘‘(C) SPECIAL
RULE
FOR
CONTRIBUTIONS 
OF FOOD INVENTORY.—
‘‘(i) GENERAL RULE.—In the case of a 
charitable contribution of food from any 
trade or business (or interest therein) of the 
taxpayer, this paragraph shall be applied—
‘‘(I) without regard to whether the 
contribution is made by a C corpora-
tion, and 
‘‘(II) only to food that is appar-
ently wholesome food.
‘‘(ii) LIMITATION.—In the case of a 
taxpayer other than a C corporation, the 
aggregate amount of such contributions for 
any taxable year which may be taken into 
account under this section shall not exceed 
the applicable percentage (within the mean-
ing of subsection (b)(3)) of the taxpayer’s 
aggregate net income for such taxable year 
from all trades or businesses from which 
such contributions were made for such year, 
computed without regard to this section. 
‘‘(iii) DETERMINATION OF FAIR MAR-
KET VALUE.—In the case of a qualified con-
tribution of apparently wholesome food to 
which this paragraph applies and which, 
solely by reason of internal standards of the 
taxpayer or lack of market, cannot or will 
not be sold, the fair market value of such 
food shall be determined by taking into ac-
count the price at which the same or sub-
stantially the same food items (as to both 
type and quality) are sold by the taxpayer 
at the time of the contribution (or, if not so 
sold at such time, in the recent past).
‘‘(iv) 
APPARENTLY
WHOLESOME 
FOOD.—For purposes of this subparagraph, 
the term ‘apparently wholesome food’ has 
the meaning given to such term by section 
22(b)(2) of the Bill Emerson Good Samari-
tan 
Food 
Donation 
Act 
(42 
U.S.C. 
1791(b)(2)), as in effect on the date of the 
enactment of this subparagraph.’’.
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2003. 
SEC. 105. REFORM OF CERTAIN EXCISE TAXES RELATED TO 
PRIVATE FOUNDATIONS. 
(a) REDUCTION OF TAX ON NET INVESTMENT IN-
COME.—Section 4940(a) (relating to tax-exempt founda-
tions) is amended by striking ‘‘2 percent’’ and inserting ‘‘1 
percent’’. 
(b) REPEAL OF REDUCTION IN TAX WHERE PRIVATE 
FOUNDATION MEETS CERTAIN DISTRIBUTION REQUIRE-
MENTS.—Section 4940 (relating to excise tax based on in-
vestment income) is amended by striking subsection (e). 
(c) MODIFICATION OF EXCISE TAX ON SELF-DEAL-
ING.—The second sentence of section 4941(a)(1) (relating 
to initial excise tax imposed on self-dealer) is amended by 
striking ‘‘5 percent’’ and inserting ‘‘25 percent’’.
(d) MODIFICATION OF EXCISE TAX ON FAILURE TO 
DISTRIBUTE INCOME.—
(1) CERTAIN
ADMINISTRATIVE
EXPENSES
NOT 
TREATED
AS
DISTRIBUTIONS.—Section 4942(g) is 
amended by striking paragraph (4) and inserting the 
following new paragraphs: 
‘‘(4) LIMITATION ON ADMINISTRATIVE EXPENSES 
TREATED AS DISTRIBUTIONS.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1)(A), the following administrative ex-
penses shall not be treated as qualifying distribu-
tions: 
‘‘(i) Any administrative expense which 
is not directly attributable to direct chari-
table activities, grant selection activities, 
grant monitoring and administration ac-
tivities, compliance with applicable Federal, 
State, or local law, or furthering public ac-
countability of the private foundation. 
‘‘(ii) Any compensation paid to a dis-
qualified person to the extent that such com-
pensation exceeds an annual rate of 
$100,000. 
‘‘(iii) Any expense incurred for trans-
portation by air unless such transportation
is regularly-scheduled commercial air trans-
portation. 
‘‘(iv) Any expense incurred for regu-
larly-scheduled commercial air transpor-
tation to the extent that such expense ex-
ceeds the cost of such transportation in 
coach-class accommodations. 
‘‘(B) ADJUSTMENT FOR INFLATION.—In the 
case of a taxable year beginning after December 
31, 2004, the $100,000 amount in subparagraph 
(A)(ii) shall be increased by an amount equal 
to—
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar 
year 2003’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof. 
If any amount as increased under the preceding 
sentence is not a multiple of $50, such amount 
shall be rounded to the next lowest multiple of 
$50. 
‘‘(5) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary to carry
out the purposes of paragraph (4). Such regulations 
shall provide that administrative expenses which are 
excluded from qualifying distributions solely by rea-
son of the limitations in paragraph (4) shall not for 
such reason subject a private foundation to any other 
excise taxes imposed by this subchapter.’’. 
(2) DISALLOWANCE NOT TO APPLY TO CERTAIN 
PRIVATE FOUNDATIONS.—
(A) IN GENERAL.—Section 4942(j)(3) (de-
fining operating foundation) is amended—
(i) by striking ‘‘(within the meaning of 
paragraph (1) or (2) of subsection (g))’’ 
each place it appears, and 
(ii) by adding at the end the following 
new sentence: ‘‘For purposes of this para-
graph, the term ‘qualifying distributions’ 
means qualifying distributions within the 
meaning of paragraph (1) or (2) of sub-
section (g) (determined without regard to 
subsection (g)(4)).’’. 
(B) 
CONFORMING
AMENDMENT.—Section 
4942(f)(2)(C)(i) is amended by inserting ‘‘(deter-
mined without regard to subsection (g)(4))’’ after 
‘‘within the meaning of subsection (g)(1)(A)’’.
(e) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2003. 
SEC. 106. EXCISE TAX ON UNRELATED BUSINESS TAXABLE 
INCOME 
OF 
CHARITABLE 
REMAINDER 
TRUSTS. 
(a) IN GENERAL.—Subsection (c) of section 664 (relat-
ing to exemption from income taxes) is amended to read 
as follows: 
‘‘(c) TAXATION OF TRUSTS.—
‘‘(1) INCOME TAX.—A charitable remainder an-
nuity trust and a charitable remainder unitrust shall, 
for any taxable year, not be subject to any tax im-
posed by this subtitle. 
‘‘(2) EXCISE TAX.—
‘‘(A) IN GENERAL.—In the case of a chari-
table remainder annuity trust or a charitable re-
mainder unitrust that has unrelated business 
taxable income (within the meaning of section 
512, determined as if part III of subchapter F 
applied to such trust) for a taxable year, there 
is hereby imposed on such trust or unitrust an 
excise tax equal to the amount of such unrelated 
business taxable income.
‘‘(B) CERTAIN RULES TO APPLY.—The tax 
imposed by subparagraph (A) shall be treated as 
imposed by chapter 42 for purposes of this title 
other than subchapter E of chapter 42.
‘‘(C) CHARACTER
OF
DISTRIBUTIONS
AND 
COORDINATION
WITH
DISTRIBUTION
REQUIRE-
MENTS.—The amounts taken into account in de-
termining unrelated business taxable income (as 
defined in subparagraph (A)) shall not be taken 
into account for purposes of—
‘‘(i) subsection (b), 
‘‘(ii) determining the value of trust as-
sets under subsection (d)(2), and 
‘‘(iii) determining income under sub-
section (d)(3). 
‘‘(D) TAX COURT PROCEEDINGS.—For pur-
poses of this paragraph, the references in section 
6212(c)(1) to section 4940 shall be deemed to in-
clude references to this paragraph.’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2003.
SEC. 107. EXPANSION OF CHARITABLE CONTRIBUTION AL-
LOWED FOR SCIENTIFIC PROPERTY USED 
FOR RESEARCH AND FOR COMPUTER TECH-
NOLOGY AND EQUIPMENT USED FOR EDU-
CATIONAL PURPOSES. 
(a) SCIENTIFIC PROPERTY USED FOR RESEARCH.—
(1) 
IN
GENERAL.—Clause 
(ii) 
of 
section 
170(e)(4)(B) (defining qualified research contribu-
tions) is amended by inserting ‘‘or assembled’’ after 
‘‘constructed’’. 
(2) CONFORMING AMENDMENT.—Clause (iii) of 
section 170(e)(4)(B) is amended by inserting ‘‘or as-
sembling’’ after ‘‘construction’’. 
(b) COMPUTER TECHNOLOGY AND EQUIPMENT FOR 
EDUCATIONAL PURPOSES.—
(1) 
IN
GENERAL.—Clause 
(ii) 
of 
section 
170(e)(6)(B) is amended by inserting ‘‘or assembled’’ 
after ‘‘constructed’’ and ‘‘or assembling’’ after ‘‘con-
struction’’.
(2) SPECIAL RULE MADE PERMANENT.—Section 
170(e)(6) is amended by striking subparagraph (G). 
(3) CONFORMING AMENDMENTS.—Subparagraph 
(D) of section 170(e)(6) is amended by inserting ‘‘or 
assembled’’ after ‘‘constructed’’ and ‘‘or assembling’’ 
after ‘‘construction’’.
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2003. 
SEC. 108. ADJUSTMENT TO BASIS OF S CORPORATION 
STOCK 
FOR 
CERTAIN 
CHARITABLE 
CON-
TRIBUTIONS. 
(a) IN GENERAL.—Paragraph (2) of section 1367(a) 
(relating to adjustments to basis of stock of shareholders, 
etc.) is amended by adding at the end the following new 
flush sentence: 
‘‘The decrease under subparagraph (B) by reason of 
a charitable contribution (as defined in section 
170(c)) of property shall be the amount equal to the 
shareholder’s pro rata share of the adjusted basis of 
such property.’’.
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2003. 
SEC. 109. CHARITABLE ORGANIZATIONS PERMITTED TO 
MAKE COLLEGIATE HOUSING AND INFRA-
STRUCTURE GRANTS. 
(a) IN GENERAL.—Section 501 (relating to exemption 
from tax on corporations, certain trusts, etc.), as amended 
by section 201, is further amended by redesignating sub-
section (q) as subsection (r) and by inserting after sub-
section (p) the following new subsection: 
‘‘(q) TREATMENT OF ORGANIZATIONS MAKING COLLE-
GIATE HOUSING
AND INFRASTRUCTURE IMPROVEMENT 
GRANTS.—
‘‘(1) IN GENERAL.—For purposes of subsection 
(c)(3) and sections 170(c)(2)(B), 2055(a), and 
2522(a)(2), an organization shall not fail to be treat-
ed as organized and operated exclusively for chari-
table or educational purposes solely because such or-
ganization makes collegiate housing and infrastruc-
ture grants to an organization described in subsection 
(c)(7), so long as, at the time of the grant, substan-
tially all of the active members of the recipient orga-
nization are full-time students at the college or uni-
versity with which such recipient organization is as-
sociated. 
‘‘(2) HOUSING AND INFRASTRUCTURE GRANTS.—
For purposes of paragraph (1), collegiate housing and 
infrastructure grants are grants to provide, improve, 
operate, or maintain collegiate housing that may in-
volve more than incidental social, recreational, or pri-
vate purposes, so long as such grants are for purposes 
that would be permissible for a dormitory of the col-
lege or university referred to in paragraph (1). A
an organization described in subsection (c) 
(other than paragraph (3)) or (d) of section 501 
which is exempt from tax under section 501(a), 
or’’. 
(b) COURT JURISDICTION.—Subsection (a) of section 
7428 is amended in the material following paragraph (2) 
by striking ‘‘United States Tax Court, the United States 
Claims Court, or the district court of the United States for 
the District of Columbia’’ and inserting the following: 
‘‘United States Tax Court (in the case of any such deter-
mination or failure) or the United States Claims Court or 
the district court of the United States for the District of 
Columbia (in the case of a determination or failure with 
respect to an issue referred to in subparagraph (A) or (B) 
of paragraph (1)),’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to pleadings filed with respect to deter-
minations (or requests for determinations) made after the 
date of the enactment of this Act. 
SEC. 204. LANDOWNER INCENTIVES PROGRAMS. 
(a) IN GENERAL.—Subsection (a) of section 126 is 
amended by redesignating paragraph (10) as paragraph 
(11) and by inserting after paragraph (9) the following new 
paragraph:
‘‘(E) PARAGRAPH TO APPLY ONLY TO EX-
CESS PAYMENTS.—
‘‘(i) IN GENERAL.—Subparagraph (A) 
shall apply only to the portion of a speci-
fied payment received or accrued by the 
controlling organization that exceeds the 
amount which would have been paid or ac-
crued if such payment met the requirements 
prescribed under section 482. 
‘‘(ii) ADDITION TO TAX FOR VALUATION 
MISSTATEMENTS.—The tax imposed by this 
chapter on the controlling organization 
shall be increased by an amount equal to 20 
percent of the larger of—
‘‘(I) such excess determined with-
out regard to any amendment or sup-
plement to a return of tax, or 
‘‘(II) such excess determined with 
regard to all such amendments and 
supplements.’’. 
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendment made by this 
section shall apply to payments received or accrued 
after December 31, 2003.