II 
108TH CONGRESS 
1ST SESSION 
H. R. 7
IN THE SENATE OF THE UNITED STATES 
SEPTEMBER 17, 2003
Received 
DECEMBER 9, 2003
Read twice and referred to the Committee on Finance 
AN ACT 
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,
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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.
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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
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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
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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.
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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.
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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 para-
graph—
‘‘(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
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‘‘(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
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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:
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‘‘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,
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‘‘(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
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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
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‘‘(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-
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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
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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.
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SEC. 106. EXCISE TAX ON UNRELATED BUSINESS TAXABLE 
INCOME 
OF 
CHARITABLE 
REMAINDER 
TRUSTS. 
(a) IN GENERAL.—Subsection (c) of section 664 (re-
lating 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 
imposed by this subtitle. 
‘‘(2) EXCISE TAX.—
‘‘(A) IN GENERAL.—In the case of a chari-
table remainder annuity trust or a charitable 
remainder 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 unre-
lated 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.
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‘‘(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.—
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(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.
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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.—
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‘‘(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.
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‘‘(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
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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’’.
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(d) EFFECTIVE DATE.— The amendments made by 
this section shall apply to games conducted after Decem-
ber 31, 2003.
SEC. 111. EXCISE TAXES EXEMPTION FOR BLOOD COL-
LECTOR ORGANIZATIONS. 
(a) EXEMPTION FROM IMPOSITION
OF SPECIAL 
FUELS TAX.—Section 4041(g) (relating to other exemp-
tions) is amended by striking ‘‘and’’ at the end of para-
graph (3), by striking the period in paragraph (4) and 
inserting ‘‘; and’’, and by inserting after paragraph (4) 
the following new paragraph: 
‘‘(5) with respect to the sale of any liquid to a 
qualified blood collector organization (as defined in 
section 7701(a)(48)) for such organization’s exclu-
sive use, or with respect to the use by a qualified 
blood collector organization of any liquid as a fuel.’’. 
(b) EXEMPTION FROM MANUFACTURERS EXCISE 
TAX.—
(1) IN GENERAL.—Section 4221(a) (relating to 
certain tax-free sales) is amended by striking ‘‘or’’ 
at the end of paragraph (4), by adding ‘‘or’’ at the 
end of paragraph (5), and by inserting after para-
graph (5) the following new paragraph:
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‘‘(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
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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,’’.
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(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
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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—
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‘‘(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.’’.
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply with respect to the sale of any 
property for which the 3-year period for offsetting gain 
by purchasing other property under subparagraph (D) of 
section 512(a)(3) of the Internal Revenue Code (as in ef-
fect on the day before the date of the enactment of this 
Act) had not expired as of January 1, 2001.
SEC. 113. EXEMPTION OF QUALIFIED 501(c)(3) BONDS FOR 
NURSING HOMES FROM FEDERAL GUAR-
ANTEE PROHIBITIONS. 
(a) IN GENERAL.—For purposes of section 149(b)(1) 
of the Internal Revenue Code of 1986, any qualified 
501(c)(3) bond (as defined in section 145 of such Code) 
shall not be treated as federally guaranteed solely because 
such bond is part of an issue supported by a letter of cred-
it, if such bond—
(1) is issued after December 31, 2003, and be-
fore the date which is 1 year after the date of the 
enactment of this Act, and 
(2) is part of an issue 95 percent or more of 
the net proceeds of which are to be used to finance 
1 or more of the following facilities primarily for the 
benefit of the elderly: 
(A) Licensed nursing home facility.
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(B) Licensed or certified assisted living fa-
cility. 
(C) Licensed personal care facility. 
(D) Continuing care retirement commu-
nity. 
(b) LIMITATION ON ISSUER.—Subsection (a) shall 
not apply to any bond described in such subsection if the 
aggregate authorized face amount of the issue of which 
such bond is a part, when increased by the outstanding 
amount of such bonds issued by the issuer during the pe-
riod described in subsection (a)(1) exceeds $15,000,000. 
(c) LIMITATION ON BENEFICIARY.—Rules similar to 
the rules of section 144(a)(10) of the Internal Revenue 
Code of 1986 shall apply for purposes of this section, ex-
cept that—
(1) ‘‘$15,000,000’’ shall be substituted for 
‘‘$40,000,000’’ in subparagraph (A) thereof, and 
(2) such rules shall be applied—
(A) only with respect to bonds described in 
this section, and 
(B) with respect to the aggregate author-
ized face amount of all issues of such bonds 
which are allocable to the beneficiary. 
(d) CONTINUING CARE RETIREMENT COMMUNITY.—
For purposes of this section, the term ‘‘continuing care
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retirement community’’ means a community which pro-
vides, on the same campus, a consortium of residential liv-
ing options and support services to persons at least 60 
years of age under a written agreement. For purposes of 
the preceding sentence, the residential living options shall 
include independent living units, nursing home beds, and 
either assisted living units or personal care beds. 
TITLE II—TAX REFORM AND IM-
PROVEMENTS RELATING TO 
CHARITABLE 
ORGANIZA-
TIONS AND PROGRAMS 
SEC. 201. SUSPENSION OF TAX-EXEMPT STATUS OF TER-
RORIST ORGANIZATIONS. 
(a) IN GENERAL.—Section 501 (relating to exemp-
tion from tax on corporations, certain trusts, etc.) is 
amended by redesignating subsection (p) as subsection (q) 
and by inserting after subsection (o) the following new 
subsection: 
‘‘(p) SUSPENSION OF TAX-EXEMPT STATUS OF TER-
RORIST ORGANIZATIONS.—
‘‘(1) IN
GENERAL.—The exemption from tax 
under subsection (a) with respect to any organiza-
tion described in paragraph (2), and the eligibility of 
any organization described in paragraph (2) to apply 
for recognition of exemption under subsection (a),
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shall be suspended during the period described in 
paragraph (3).
‘‘(2) TERRORIST ORGANIZATIONS.—An organi-
zation is described in this paragraph if such organi-
zation is designated or otherwise individually identi-
fied— 
‘‘(A) under section 212(a)(3)(B)(vi)(II) or 
219 of the Immigration and Nationality Act as 
a terrorist organization or foreign terrorist or-
ganization, 
‘‘(B) in or pursuant to an Executive order 
which is related to terrorism and issued under 
the authority of the International Emergency 
Economic Powers Act or section 5 of the 
United Nations Participation Act of 1945 for 
the purpose of imposing on such organization 
an economic or other sanction, or 
‘‘(C) in or pursuant to an Executive order 
issued under the authority of any Federal law 
if—
‘‘(i) the organization is designated or 
otherwise individually identified in or pur-
suant to such Executive order as sup-
porting or engaging in terrorist activity (as 
defined in section 212(a)(3)(B) of the Im-
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migration and Nationality Act) or sup-
porting terrorism (as defined in section 
140(d)(2) of the Foreign Relations Author-
ization Act, Fiscal Years 1988 and 1989); 
and 
‘‘(ii) such Executive order refers to 
this subsection. 
‘‘(3) PERIOD OF SUSPENSION.—With respect to 
any organization described in paragraph (2), the pe-
riod of suspension—
‘‘(A) begins on the later of—
‘‘(i) the date of the first publication of 
a designation or identification described in 
paragraph (2) with respect to such organi-
zation, or 
‘‘(ii) the date of the enactment of this 
subsection, and 
‘‘(B) ends on the first date that all des-
ignations and identifications described in para-
graph (2) with respect to such organization are 
rescinded pursuant to the law or Executive 
order under which such designation or identi-
fication was made. 
‘‘(4) DENIAL
OF
DEDUCTION.—No deduction 
shall be allowed under section 170, 545(b)(2),
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556(b)(2), 642(c), 2055, 2106(a)(2), or 2522 for 
any contribution to an organization described in 
paragraph (2) during the period described in para-
graph (3). 
‘‘(5) DENIAL OF ADMINISTRATIVE OR JUDICIAL 
CHALLENGE OF SUSPENSION OR DENIAL OF DEDUC-
TION.—Notwithstanding section 7428 or any other 
provision of law, no organization or other person 
may challenge a suspension under paragraph (1), a 
designation or identification described in paragraph 
(2), the period of suspension described in paragraph 
(3), or a denial of a deduction under paragraph (4) 
in any administrative or judicial proceeding relating 
to the Federal tax liability of such organization or 
other person. 
‘‘(6) ERRONEOUS DESIGNATION.—
‘‘(A) IN GENERAL.—If—
‘‘(i) the tax exemption of any organi-
zation described in paragraph (2) is sus-
pended under paragraph (1), 
‘‘(ii) each designation and identifica-
tion described in paragraph (2) which has 
been made with respect to such organiza-
tion is determined to be erroneous pursu-
ant to the law or Executive order under