438 
or excludes amounts from gross income, by reason of any 
other provision of this title.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 5002. EXCLUSION OF RESEARCH INCOME LIMITED TO 
PUBLICLY AVAILABLE RESEARCH. 
(a) IN GENERAL.—Section 512(b)(9) is amended by 
striking ‘‘from research’’ and inserting ‘‘from such re-
search’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
Subtitle B—Excise Taxes 
SEC. 5101. SIMPLIFICATION OF EXCISE TAX ON PRIVATE 
FOUNDATION INVESTMENT INCOME. 
(a) RATE REDUCTION.—Section 4940(a) is amended 
by striking ‘‘2 percent’’ and inserting ‘‘1.4 percent’’. 
(b) REPEAL OF SPECIAL RULES FOR CERTAIN PRI-
VATE FOUNDATIONS.—Section 4940 is amended by strik-
ing subsection (e). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017.
439 
SEC. 5102. PRIVATE OPERATING FOUNDATION REQUIRE-
MENTS RELATING TO OPERATION OF ART 
MUSEUM. 
(a) IN GENERAL.—Section 4942(j) is amended by 
adding at the end the following new paragraph: 
‘‘(6) ORGANIZATION
OPERATING
ART
MU-
SEUM.—For purposes of this section, the term ‘oper-
ating foundation’ shall not include an organization 
which operates an art museum as a substantial ac-
tivity unless such museum is open during normal 
business hours to the public for at least 1,000 hours 
during the taxable year.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 5103. EXCISE TAX BASED ON INVESTMENT INCOME OF 
PRIVATE COLLEGES AND UNIVERSITIES. 
(a) IN GENERAL.—Chapter 42 is amended by adding 
at the end the following new subchapter: 
‘‘Subchapter H—Excise Tax Based on Invest-
ment Income of Private Colleges and Uni-
versities 
‘‘Sec. 4969. Excise tax based on investment income of private colleges and uni-
versities.
440 
‘‘SEC. 4969. EXCISE TAX BASED ON INVESTMENT INCOME 
OF PRIVATE COLLEGES AND UNIVERSITIES. 
‘‘(a) TAX IMPOSED.—There is hereby imposed on 
each applicable educational institution for the taxable year 
a tax equal to 1.4 percent of the net investment income 
of such institution for the taxable year. 
‘‘(b) APPLICABLE EDUCATIONAL INSTITUTION.—For 
purposes of this subchapter— 
‘‘(1) IN GENERAL.—The term ‘applicable edu-
cational institution’ means an eligible educational in-
stitution (as defined in section 25A(e)(3))— 
‘‘(A) which has at least 500 students dur-
ing the preceding taxable year, 
‘‘(B) which is not described in the first 
sentence of section 511(a)(2)(B), and 
‘‘(C) the aggregate fair market value of 
the assets of which at the end of the preceding 
taxable year (other than those assets which are 
used directly in carrying out the institution’s 
exempt purpose) is at least $250,000 per stu-
dent of the institution. 
‘‘(2) STUDENTS.—For purposes of paragraph 
(1), the number of students of an institution shall 
be based on the daily average number of full-time 
students attending such institution (with part-time
441 
students taken into account on a full-time student 
equivalent basis). 
‘‘(c) NET INVESTMENT INCOME.—For purposes of 
this section, net investment income shall be determined 
under rules similar to the rules of section 4940(c). 
‘‘(d) ASSETS AND NET INVESTMENT INCOME OF RE-
LATED ORGANIZATIONS.— 
‘‘(1) IN
GENERAL.—For purposes of sub-
sections (b)(1)(C) and (c), the assets and net invest-
ment income of any related organization shall be 
treated as the assets and net investment income of 
the eligible educational institution. 
‘‘(2) RELATED ORGANIZATION.—For purposes 
of this subsection, the term ‘related organization’ 
means, with respect to an eligible educational insti-
tution, any organization which— 
‘‘(A) controls, or is controlled by, such in-
stitution, 
‘‘(B) is controlled by one or more persons 
that control such institution, or 
‘‘(C) is a supported organization (as de-
fined in section 509(f)(3)), or an organization 
described in section 509(a)(3), during the tax-
able year with respect to such institution.’’.
442 
(b) CLERICAL AMENDMENT.—The table of sub-
chapters for chapter 42 is amended by adding at the end 
the following new item: 
‘‘SUBCHAPTER H—EXCISE TAX BASED ON INVESTMENT INCOME OF PRIVATE 
COLLEGES AND UNIVERSITIES’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 5104. EXCEPTION FROM PRIVATE FOUNDATION EX-
CESS BUSINESS HOLDING TAX FOR INDE-
PENDENTLY-OPERATED 
PHILANTHROPIC 
BUSINESS HOLDINGS. 
(a) IN GENERAL.—Section 4943 is amended by add-
ing at the end the following new subsection: 
‘‘(g) EXCEPTION FOR CERTAIN HOLDINGS LIMITED 
TO INDEPENDENTLY-OPERATED PHILANTHROPIC BUSI-
NESS.— 
‘‘(1) IN
GENERAL.—Subsection (a) shall not 
apply with respect to the holdings of a private foun-
dation in any business enterprise which for the tax-
able year meets— 
‘‘(A) the ownership requirements of para-
graph (2), 
‘‘(B) the all profits to charity distribution 
requirement of paragraph (3), and
443 
‘‘(C) the independent operation require-
ments of paragraph (4). 
‘‘(2) OWNERSHIP.—The ownership require-
ments of this paragraph are met if— 
‘‘(A) 100 percent of the voting stock in the 
business enterprise is held by the private foun-
dation at all times during the taxable year, and 
‘‘(B) all the private foundation’s ownership 
interests in the business enterprise were ac-
quired not by purchase. 
‘‘(3) ALL PROFITS TO CHARITY.— 
‘‘(A) IN
GENERAL.—The all profits to 
charity distribution requirement of this para-
graph is met if the business enterprise, not 
later than 120 days after the close of the tax-
able year, distributes an amount equal to its net 
operating income for such taxable year to the 
private foundation. 
‘‘(B) NET OPERATING INCOME.—For pur-
poses of this paragraph, the net operating in-
come of any business enterprise for any taxable 
year is an amount equal to the gross income of 
the business enterprise for the taxable year, re-
duced by the sum of—
444 
‘‘(i) the deductions allowed by chapter 
1 for the taxable year which are directly 
connected with the production of such in-
come, 
‘‘(ii) the tax imposed by chapter 1 on 
the business enterprise for the taxable 
year, and 
‘‘(iii) an amount for a reasonable re-
serve for working capital and other busi-
ness needs of the business enterprise. 
‘‘(4) INDEPENDENT
OPERATION.—The inde-
pendent operation requirements of this paragraph 
are met if, at all times during the taxable year— 
‘‘(A) no substantial contributor (as defined 
in section 4958(c)(3)(C)) to the private founda-
tion, or family member of such a contributor 
(determined under section 4958(f)(4)) is a di-
rector, officer, trustee, manager, employee, or 
contractor of the business enterprise (or an in-
dividual having powers or responsibilities simi-
lar to any of the foregoing), 
‘‘(B) at least a majority of the board of di-
rectors of the private foundation are not— 
‘‘(i) also directors or officers of the 
business enterprise, or
445 
‘‘(ii) members of the family (deter-
mined under section 4958(f)(4)) of a sub-
stantial contributor (as defined in section 
4958(c)(3)(C)) to the private foundation, 
and 
‘‘(C) there is no loan outstanding from the 
business enterprise to a substantial contributor 
(as so defined) to the private foundation or a 
family member of such contributor (as so deter-
mined). 
‘‘(5) CERTAIN DEEMED PRIVATE FOUNDATIONS 
EXCLUDED.—This subsection shall not apply to— 
‘‘(A) any fund or organization treated as a 
private foundation for purposes of this section 
by reason of subsection (e) or (f), 
‘‘(B) any trust described in section 
4947(a)(1) (relating to charitable trusts), and 
‘‘(C) any trust described in section 
4947(a)(2) (relating to split-interest trusts).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017.
446 
Subtitle C—Requirements for 
Organizations Exempt From Tax 
SEC. 5201. 501(c)(3) ORGANIZATIONS PERMITTED TO MAKE 
STATEMENTS RELATING TO POLITICAL CAM-
PAIGN IN ORDINARY COURSE OF ACTIVITIES. 
(a) IN GENERAL.—Section 501 is amended by adding 
at the end the following new subsection: 
‘‘(s) SPECIAL RULE RELATING TO POLITICAL CAM-
PAIGN STATEMENTS OF ORGANIZATIONS DESCRIBED IN 
SUBSECTION (c)(3).— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(c)(3) and sections 170(c)(2), 2055, 2106, 2522, 
and 4955, an organization shall not fail to be treat-
ed as organized and operated exclusively for a pur-
pose described in subsection (c)(3), nor shall it be 
deemed to have participated in, or intervened in any 
political campaign on behalf of (or in opposition to) 
any candidate for public office, solely because of the 
content of any statement which— 
‘‘(A) is made in the ordinary course of the 
organization’s regular and customary activities 
in carrying out its exempt purpose, and 
‘‘(B) results in the organization incurring 
not more than de minimis incremental expenses.
447 
‘‘(2) TERMINATION.—Paragraph (1) shall not 
apply to taxable years beginning after December 31, 
2023.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2018. 
SEC. 5202. ADDITIONAL REPORTING REQUIREMENTS FOR 
DONOR ADVISED FUND SPONSORING ORGA-
NIZATIONS. 
(a) IN GENERAL.—Section 6033(k) is amended by 
striking ‘‘and’’ at the end of paragraph (2), by striking 
the period at the end of paragraph (3), and by adding 
at the end the following new paragraphs: 
‘‘(4) indicate the average amount of grants 
made from such funds during such taxable year (ex-
pressed as a percentage of the value of assets held 
in such funds at the beginning of such taxable year), 
and 
‘‘(5) indicate whether the organization has a 
policy with respect to donor advised funds (as so de-
fined) for frequency and minimum level of distribu-
tions. 
Such organization shall include with such return a copy 
of any policy described in paragraph (5).’’.
448 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply for returns filed for taxable years 
beginning after December 31, 2017. 
Passed the House of Representatives November 16, 
2017. 
Attest: 
Clerk.