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 other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provi-
sion of the Internal 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 in-
dividuals 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 remain-
der 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 Fed-
eral 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 organiza-
tions.
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 chari-
table, etc., contributions and gifts) is amended by redesig-
nating subsection (m) as subsection (n) and by inserting
after subsection (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 chari-
table deduction under section 63 an amount equal to
the amount allowable under subsection (a) for the
taxable year for cash contributions (determined
without regard to any carryover), to the extent that
such contributions exceed $250 ($500 in the case of
a joint return) 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
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.’’.
(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 pur-
poses 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 taxable 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 Treas-
ury shall study the effect of the amendments made
by this section on increased charitable giving and
taxpayer compliance, including a comparison of tax-
payer compliance between taxpayers who itemize
their charitable 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 Com-
mittee on Finance of the Senate and the Committee
on Ways and Means of the House of Representa-
tives.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2003.
SEC. 102. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RE-
TIREMENT PLANS FOR CHARITABLE PUR-
POSES.
(a) IN GENERAL.—Subsection (d) of section 408 (re-
lating to individual retirement accounts) is amended by
adding at the end the following new paragraph:
‘‘(8) DISTRIBUTIONS
FOR
CHARITABLE
PUR-
POSES.—
‘‘(A) IN GENERAL.—No amount shall be
includible in gross income by reason of a quali-
fied charitable distribution.
‘‘(B) QUALIFIED
CHARITABLE
DISTRIBU-
TION.—For purposes of this paragraph, the
term ‘qualified charitable distribution’ means
any distribution 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 in-
come without regard to subparagraph (A) and,
in the case of a distribution to a split-interest
entity, only if no person holds an income inter-
est 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 individual, or any organization
described in section 170(c).
‘‘(C) CONTRIBUTIONS
MUST
BE
OTHER-
WISE
DEDUCTIBLE.—For purposes of this
paragraph—
‘‘(i) DIRECT CONTRIBUTIONS.—A dis-
tribution to an organization described in
section 170(c) shall be treated as a quali-
fied charitable distribution only if a deduc-
tion for the entire distribution would be al-
lowable 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
‘‘(i) 
CHARITABLE
REMAINDER
TRUSTS.—Notwithstanding section 664(b),
distributions made from a trust described
in subparagraph (G)(i) shall be treated as
ordinary 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
qualified charitable distribution to such
fund, and all distributions from the fund
which are attributable to qualified chari-
table distributions shall be treated as ordi-
nary income to the beneficiary.
‘‘(iii) 
CHARITABLE
GIFT
ANNU-
ITIES.—Qualified charitable distributions
made for a charitable gift annuity shall not
be treated as an investment in the con-
tract.
‘‘(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 qualified 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 re-
turns by trusts described in section 4947(a)(2) or
claiming charitable deductions under section 642(c))
is amended 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 regu-
lations 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
beginning 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, de-
termined under the applicable principles of the
law of trusts, is required to be distributed cur-
rently to the beneficiaries, or
‘‘(B) the trust is described in section
4947(a)(1).’’.
(2) INCREASE IN PENALTY RELATING TO FIL-
ING 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 fol-
lowing 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
second 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 sentence of paragraph (1)(A) shall be
applied by substituting ‘$100’ for ‘$20’,
and the second sentence thereof shall be
applied by substituting ‘$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
BENEFICIARIES.—Subsection (b) of section 6104
‘‘(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 cor-
poration, 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
meaning of subsection (b)(3)) of the tax-
payer’s aggregate net income for such tax-
able 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
contribution 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 account the price at which the same
or substantially the same food items (as to
both type and quality) are sold by the tax-
payer 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 subpara-
graph, the term ‘apparently wholesome
food’ has the meaning given to such term
by section 22(b)(2) of the Bill Emerson
Good Samaritan Food Donation Act (42
U.S.C. 1791(b)(2)), as in effect on the
date of the enactment of this subpara-
graph.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 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 PRI-
VATE FOUNDATION MEETS CERTAIN DISTRIBUTION RE-
QUIREMENTS.—Section 4940 (relating to excise tax based
on investment 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
EX-
PENSES TREATED AS DISTRIBUTIONS.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1)(A), the following administrative ex-
penses shall not be treated as qualifying dis-
tributions:
‘‘(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 Fed-
eral, State, or local law, or furthering pub-
lic accountability of the private foundation.
‘‘(ii) Any compensation paid to a dis-
qualified person to the extent that such
compensation exceeds an annual rate of
$100,000.
‘‘(iii) Any expense incurred for trans-
portation by air unless such transportation
is 
regularly-scheduled 
commercial 
air
transportation.
‘‘(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 De-
cember 31, 2004, the $100,000 amount in sub-
paragraph (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 ‘‘(de-
termined 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
December 31, 2003.
‘‘(C) CHARACTER OF DISTRIBUTIONS AND
COORDINATION WITH DISTRIBUTION REQUIRE-
MENTS.—The amounts taken into account in
determining 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
assets under subsection (d)(2), and
‘‘(iii) determining income under sub-
section (d)(3).
‘‘(D) TAX
COURT
PROCEEDINGS.—For
purposes of this paragraph, the references in
section 6212(c)(1) to section 4940 shall be
deemed to include references to this para-
graph.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 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 assem-
bled’’ after ‘‘constructed’’ and ‘‘or assembling’’ after
‘‘construction’’.
(2) SPECIAL
RULE
MADE
PERMANENT.—Sec-
tion 170(e)(6) is amended by striking subparagraph
(G).
(3) 
CONFORMING
AMENDMENTS.—Subpara-
graph (D) of section 170(e)(6) is amended by insert-
ing ‘‘or assembled’’ after ‘‘constructed’’ and ‘‘or as-
sembling’’ after ‘‘construction’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 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
December 31, 2003.
SEC. 109. CHARITABLE ORGANIZATIONS PERMITTED TO
MAKE COLLEGIATE HOUSING AND INFRA-
STRUCTURE GRANTS.
(a) IN GENERAL.—Section 501 (relating to exemp-
tion from tax on corporations, certain trusts, etc.), as
amended by section 201, is further amended by redesig-
nating subsection (q) as subsection (r) and by inserting
after subsection (p) the following new subsection:
‘‘(q) TREATMENT OF ORGANIZATIONS MAKING COL-
LEGIATE 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
treated as organized and operated exclusively for
charitable or educational purposes solely because
such organization makes collegiate housing and in-
frastructure grants to an organization described in
subsection (c)(7), so long as, at the time of the
grant, substantially all of the active members of the
recipient organization are full-time students at the
college or university with which such recipient orga-
nization is associated.
‘‘(2) 
HOUSING
AND
INFRASTRUCTURE
GRANTS.—For purposes of paragraph (1), collegiate
housing and infrastructure grants are grants to pro-
vide, improve, operate, or maintain collegiate hous-
ing that may involve more than incidental social,
recreational, or private purposes, so long as such
grants are for purposes that would be permissible
for a dormitory of the college or university referred
to in paragraph (1). A grant shall not be treated as
a collegiate housing and infrastructure grant for
purposes of paragraph (1) to the extent that such
grant is used to provide physical fitness equipment.
‘‘(3) GRANTS
TO
CERTAIN
ORGANIZATIONS
HOLDING TITLE TO PROPERTY, ETC.—For purposes
of this subsection, a collegiate housing and infra-
structure grant to an organization described in sub-
section (c)(2) or (c)(7) holding title to property ex-
clusively for the benefit of an organization described
in subsection (c)(7) shall be considered a grant to
the organization described in subsection (c)(7) for
whose benefit such property is held.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to grants made after December
31, 2003.
SEC. 110. CONDUCT OF CERTAIN GAMES OF CHANCE NOT
TREATED AS UNRELATED TRADE OR BUSI-
NESS.
(a) IN GENERAL.—Paragraph (1) of section 513(f)
(relating to certain bingo games) is amended to read as
follows:
‘‘(1) IN GENERAL.—The term ‘unrelated trade
or business’ does not include—
‘‘(A) any trade or business which consists
of conducting bingo games, and
‘‘(B) any trade or business which consists
of conducting qualified games of chance if the
net proceeds from such trade or business are
paid or set aside for payment for purposes de-
scribed in section 170(c)(2)(B), for the pro-
motion of social welfare (within the meaning of
section 501(c)(4)), or for a purpose for which
State law specifically authorizes the expenditure
of such proceeds.’’.
(b) QUALIFIED GAMES OF CHANCE.—Subsection (f)
of section 513 is amended by adding at the end the fol-
lowing new paragraph:
‘‘(3) QUALIFIED GAMES OF CHANCE.—For pur-
poses of paragraph (1), the term ‘qualified game of
chance’ means any game of chance (other than
bingo) conducted by an organization if—
‘‘(A) such organization is licensed pursu-
ant to State law to conduct such game,
‘‘(B) only organizations which are orga-
nized as nonprofit corporations or are exempt
from tax under section 501(a) may be so li-
censed to conduct such game within the State,
and
‘‘(C) the conduct of such game does not
violate State or local law.’’
(c) CLERICAL AMENDMENT.—The subsection head-
ing of section 513(f) is amended by striking ‘‘BINGO
GAMES’’ and inserting ‘‘GAMES OF CHANCE’’.
‘‘(6) to a qualified blood collector organization
(as defined in section 7701(a)(48)) for such organi-
zation’s exclusive use,’’.
(2) CONFORMING AMENDMENTS.—
(A) The second sentence of section
4221(a) is amended by striking ‘‘Paragraphs
(4) and (5)’’ and inserting ‘‘Paragraphs (4),
(5), and (6)’’.
(B) Section 6421(c) is amended by strik-
ing ‘‘or (5)’’ and inserting ‘‘(5), or (6)’’.
(c) EXEMPTION
FROM
COMMUNICATION
EXCISE
TAX.—
(1) IN GENERAL.—Section 4253 (relating to ex-
emptions) is amended by redesignating subsection
(k) as subsection (l) and inserting after subsection
(j) the following new subsection:
‘‘(k) EXEMPTION
FOR
QUALIFIED
BLOOD
COL-
LECTOR ORGANIZATIONS.—Under regulations provided by
the Secretary, no tax shall be imposed under section 4251
on any amount paid by a qualified blood collector organi-
zation (as defined in section 7701(a)(48)) for services or
facilities furnished to such organization.’’.
(2) 
CONFORMING
AMENDMENT.—Section
4253(l), as redesignated by paragraph (1), is
amended by striking ‘‘or (j)’’ and inserting ‘‘(j), or
(k)’’.
(d) CREDIT FOR REFUND FOR CERTAIN TAXES ON
SALES AND SERVICES.—
(1) DEEMED OVERPAYMENT.—
(A) IN GENERAL.—Section 6416(b)(2) is
amended by redesignating subparagraphs (E)
and (F) as subparagraphs (F) and (G), respec-
tively, and by inserting after subparagraph (D)
the following new subparagraph:
‘‘(E) sold to a qualified blood collector or-
ganization (as defined in section 7701(a)(48))
for such organization’s exclusive use;’’.
(B) CONFORMING AMENDMENTS.—Section
6416(b)(2) is amended—
(i) by striking ‘‘Subparagraphs (C)
and (D)’’ and inserting ‘‘Subparagraphs
(C), (D), and (E)’’, and
(ii) by striking ‘‘(C), and (D)’’ and in-
serting ‘‘(C), (D), and (E)’’.
(2) SALES
OF
TIRES.—Clause (ii) of section
6416(b)(4)(B) is amended by inserting ‘‘sold to a
qualified blood collector organization (as defined in
section 7701(a)(48)) for its exclusive use,’’ after
‘‘for its exclusive use,’’.
(e) DEFINITION OF QUALIFIED BLOOD COLLECTOR
ORGANIZATION.—Section 7701(a) is amended by inserting
at the end the following new paragraph:
‘‘(48) QUALIFIED BLOOD COLLECTOR ORGANI-
ZATION.—The term ‘qualified blood collector organi-
zation’ means an organization which is—
‘‘(A) described in section 501(c)(3) and ex-
empt from tax under section 501(a),
‘‘(B) registered by the Food and Drug Ad-
ministration to collect blood, and
‘‘(C) primarily engaged in the activity of
the collection of blood.’’.
(f) EFFECTIVE DATE.—The amendments made by
this section shall take effect on January 1, 2004.
SEC. 112. NONRECOGNITION OF GAIN ON THE SALE OF
PROPERTY USED IN PERFORMANCE OF AN
EXEMPT FUNCTION.
(a) IN GENERAL.—Subparagraph (D) of section
512(a)(3) is amended to read as follows:
‘‘(D) NONRECOGNITION OF GAIN.—
‘‘(i) IN GENERAL.—If property used
directly in the performance of the exempt
function of an organization described in
paragraph (7), (9), (17), or (20) of section
501(c) is sold by such organization, and
within a period beginning 1 year before the
date of such sale, and ending 3 years (10
years, in the case of an organization de-
scribed in section 501(c)(7)) after such
date, other property is purchased and used
by such organization directly in the per-
formance of its exempt function, gain (if
any) from such sale shall be recognized
only to the extent that such organization’s
sales price of the old property exceeds the
organization’s cost of purchasing the other
property.
‘‘(ii) STATUTE
OF
LIMITATIONS.—If
an 
organization 
described 
in 
section
501(c)(7) sells property on which gain is
not recognized, in whole or in part, by rea-
son of clause (i), then the statutory period
for the assessment of any deficiency attrib-
utable to such gain shall not expire until
the end of the 3-year period beginning on
the date that the Secretary is notified by
such organization (in such manner as the
Secretary may prescribe) that—
‘‘(I) the organization has met the
requirements of clause (i) with respect
to gain which was not recognized,
‘‘(II) the organization does not
intend to meet such requirements, or
‘‘(III) the organization failed to
meet such requirements within the
prescribed period.
For the purposes of this clause, any defi-
ciency may be assessed before the expira-
tion of such 3-year period notwithstanding
the provisions of any other law or rule of
law which would otherwise prevent such as-
sessment.
‘‘(iii) DESTRUCTION AND LOSS.—For
purposes of this subparagraph, the de-
struction in whole or in part, theft, seizure,
requisition, or condemnation of property,
shall be treated as the sale of such prop-
erty, and rules similar to the rules pro-
vided by subsections (b), (c), (e), and (j) of
section 1034 (as in effect on the day be-
fore the date of the enactment of the Tax-
payer Relief Act of 1997) shall apply.’’.