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which normally accommodates 10 or more em-
ployees.
‘‘(d) LODGING
FURNISHED
BY
CERTAIN
EDU-
CATIONAL INSTITUTIONS TO EMPLOYEES.—
‘‘(1) IN GENERAL.—In the case of an employee
of an educational institution, gross income shall not
include the value of qualified campus lodging fur-
nished to such employee during the taxable year.
‘‘(2) EXCEPTION
IN
CASES
OF
INADEQUATE
RENT.—Paragraph (1) shall not apply to the extent
of the excess of—
‘‘(A) the lesser of—
‘‘(i) 5 percent of the appraised value
of the qualified campus lodging, or
‘‘(ii) the average of the rentals paid
by individuals (other than employees or
students of the educational institution)
during such calendar year for lodging pro-
vided by the educational institution which
is comparable to the qualified campus lodg-
ing provided to the employee, over
‘‘(B) the rent paid by the employee for the
qualified campus lodging during such calendar
year.
170
The appraised value under subparagraph (A)(i) shall
be determined as of the close of the calendar year
in which the taxable year begins, or, in the case of
a rental period not greater than 1 year, at any time
during the calendar year in which such period be-
gins.
‘‘(3) QUALIFIED CAMPUS LODGING.—For pur-
poses of this subsection, the term ‘qualified campus
lodging’ means lodging to which subsection (a) does
not apply and which is—
‘‘(A) located on, or in the proximity of, a
campus of the educational institution, and
‘‘(B) furnished to the employee, his spouse,
and any of his dependents by or on behalf of
such institution for use as a residence.
‘‘(4) EDUCATIONAL
INSTITUTION.—For pur-
poses of this paragraph, the term ‘educational insti-
tution’ means an eligible educational institution as
defined in section 10(b)(2)(B).
‘‘SEC. 97. CERTAIN FRINGE BENEFITS.
‘‘(a) PURPOSE.—This section includes definitions and
rules applicable to the exclusion from gross income for cer-
tain fringe benefits.
171
‘‘(b) NO-ADDITIONAL-COST SERVICE DEFINED.—
‘No-additional-cost service’ means any service provided by
an employer to an employee for use by such employee if—
‘‘(1) such service is offered for sale to cus-
tomers in the ordinary course of the line of business
of the employer in which the employee is performing
services, and
‘‘(2) the employer incurs no substantial addi-
tional cost (including forgone revenue) in providing
such service to the employee (determined without re-
gard to any amount paid by the employee for such
service).
‘‘(c) QUALIFIED EMPLOYEE DISCOUNT DEFINED.—
‘‘(1) QUALIFIED
EMPLOYEE
DISCOUNT.—The
term ‘qualified employee discount’ means any em-
ployee discount with respect to qualified property or
services to the extent such discount does not
exceed—
‘‘(A) in the case of property, the gross
profit percentage of the price at which the prop-
erty is being offered by the employer to cus-
tomers, or
‘‘(B) in the case of services, 20 percent of
the price at which the services are being offered
by the employer to customers.
172
‘‘(2) GROSS PROFIT PERCENTAGE.—
‘‘(A) IN GENERAL.—‘Gross profit percent-
age’ means the percent which—
‘‘(i) the excess of the aggregate sales
price of property sold by the employer to
customers over the aggregate cost of such
property to the employer, is of
‘‘(ii) the aggregate sales price of such
property.
‘‘(B) DETERMINATION OF GROSS PROFIT
PERCENTAGE.—Gross profit percentage shall be
determined on the basis of—
‘‘(i) all property offered to customers
in the ordinary course of the line of busi-
ness of the employer in which the employee
is performing services (or a reasonable
classification of property selected by the
employer), and
‘‘(ii) the employer’s experience during a
representative period.
‘‘(3) EMPLOYEE
DISCOUNT
DEFINED.—‘Em-
ployee discount’ means the amount by which—
‘‘(A) the price at which the property or
services are provided by the employer to an em-
ployee for use by such employee, is less than
173
‘‘(B) the price at which such property or
services are being offered by the employer to
customers.
‘‘(4) QUALIFIED
PROPERTY
OR
SERVICES.—
‘Qualified property or services’ means any property
(other than real property and other than personal
property of a kind held for investment) or services
which are offered for sale to customers in the ordi-
nary course of the line of business of the employer
in which the employee is performing services.
‘‘(c) DE MINIMIS FRINGE DEFINED.—
‘‘(1) IN GENERAL.—‘De minimis fringe’ means
any property or service the value of which is (after
taking into account the frequency with which similar
fringes are provided by the employer to the employ-
er’s employees) so small as to make accounting for
it unreasonable or administratively impracticable.
‘‘(2) TREATMENT OF CERTAIN EATING FACILI-
TIES.—The operation by an employer of any eating
facility for employees shall be treated as a de mini-
mis fringe if—
‘‘(A) such facility is located on or near the
business premises of the employer, and
175
‘‘(iii) substantially all the use of which
is by employees of the employer, their
spouses, and their dependent children.
‘‘(d) CERTAIN
EDUCATIONAL
TRAINING
BENE-
FITS.—Amounts paid or expenses incurred by the em-
ployer for education or training provided to the employee
shall be excluded from gross income under section 4 if
(and only if) such amounts or expenses are ordinary and
necessary business expenses and are not for an advanced
degree or to qualify an employee for a new line of work.
‘‘(e) REGULATIONS.—The Secretary shall prescribe
regulations under this section, including regulations that
continue certain rules contained in section 132 to the In-
ternal Revenue Code of 1986 related to the fringe benefits
described in this section.
‘‘Subchapter E—Rules Relating to Deductions
‘‘Sec. 101. Charitable, etc. organizations.
‘‘Sec. 102. Private foundations.
‘‘SEC. 101. CHARITABLE, ETC. ORGANIZATIONS.
‘‘(a) PURPOSE.—This section provides definitions for
purposes of determining the philanthropic transfer deduc-
tion and for other purposes of this chapter and chapter
2.
‘‘(b) REGULAR CHARITY.—
‘‘(1) IN GENERAL.—
176
‘‘(A) REGULAR CHARITY.—‘Regular char-
ity’ means—
‘‘(i) a church or a convention or asso-
ciation of churches,
‘‘(ii) 
an 
educational 
organization
which normally maintains a regular faculty
and curriculum and normally has a regu-
larly enrolled body of pupils or students in
attendance at the place where its edu-
cational activities are regularly carried on,
‘‘(iii) an organization the principal
purpose or functions of which are the pro-
viding of medical or hospital care or med-
ical education or medical research, if the
organization is a hospital, or if the organi-
zation is a medical research organization
directly engaged in the continuous active
conduct of medical research in conjunction
with a hospital,
‘‘(iv) an organization which normally
receives a substantial part of its support
(exclusive of income received in the exer-
cise or performance by such organization
of its charitable, educational, or other pur-
pose or function constituting the basis for
177
its exemption under section 253(a)) from
the United States or any State or political
subdivision thereof or from direct or indi-
rect contributions from the general public,
and which is organized and operated exclu-
sively to receive, hold, invest, and admin-
ister property and to make expenditures to
or for the benefit of a college or university
which is an organization referred to in
clause (ii) of this subparagraph and which
is an agency or instrumentality of a State
or political subdivision thereof, or which is
owned or operated by a State or political
subdivision thereof or by an agency or in-
strumentality of one or more States or po-
litical subdivisions,
‘‘(v) a governmental unit referred to
in subsection (c)(1),
‘‘(vi) an organization referred to in
subsection (c)(2) which normally receives a
substantial part of its support (exclusive of
income received in the exercise or perform-
ance by such organization of its charitable,
educational, or other purpose or function
constituting the basis for its exemption
178
under section 253(a)) from a governmental
unit referred to in subsection (c)(1) or
from direct or indirect contributions from
the general public,
‘‘(vii) a private foundation described
in subparagraph (C), or
‘‘(viii) an organization described in
section 102(a) (2) or (3).
‘‘(B) SPECIAL
RULE
FOR
MEDICAL
RE-
SEARCH ORGANIZATIONS.—For purposes of de-
termining whether a contribution is to a regular
charity, a medical research organization shall
not be treated as described in clause (iii) of
paragraph (2) unless during the calendar year
in which the contribution is made such organi-
zation is committed to spend such contributions
for such research before January 1 of the fifth
calendar year which begins after the date such
contribution is made,
‘‘(C) CERTAIN PRIVATE FOUNDATIONS.—
The private foundations referred to in subpara-
graph (A)(vii) and subsection (e)(1)(B) are—
‘‘(i) a private operating foundation (as
defined in section 4942(j)(3)),
179
‘‘(ii) any other private foundation (as
defined in section 102(a)) which, not later
than the 15th day of the third month after
the close of the foundation’s taxable year
in which contributions are received, makes
qualifying distributions (as defined in sec-
tion 4942(g), without regard to paragraph
(3) thereof), which are treated, after the
application of section 4942(g)(3), as dis-
tributions out of corpus (in accordance
with section 4942(h)) in an amount equal
to 100 percent of such contributions, and
with respect to which the taxpayer obtains
adequate records or other sufficient evi-
dence from the foundation showing that
the foundation made such qualifying dis-
tributions, and
‘‘(iii) a private foundation all of the
contributions to which are pooled in a com-
mon fund and which would be described in
section 102(a)(3) but for the right of any
substantial contributor (hereafter in this
clause called ‘donor’) or his spouse to des-
ignate annually the recipients, from among
organizations described in paragraph (1) of
180
section 102(a), of the income attributable
to the donor’s contribution to the fund and
to direct (by deed or by will) the payment,
to an organization described in such para-
graph (1), of the corpus in the common
fund attributable to the donor’s contribu-
tion; but this clause shall apply only if all
of the income of the common fund is re-
quired to be (and is) distributed to one or
more organizations described in such para-
graph (1) not later than the 15th day of
the third month after the close of the tax-
able year in which the income is realized
by the fund and only if all of the corpus
attributable to any donor’s contribution to
the fund is required to be (and is) distrib-
uted to one or more of such organizations
not later than one year after his death or
after the death of his surviving spouse if
she has the right to designate the recipi-
ents of such corpus.
‘‘(2) REFERENCES.—Any reference in other law
or in legal documents to an organization described
in a clause of section 170(b)(1)(A) of the Internal
Revenue Code of 1986 shall constitute a reference to