424 
Subtitle F—Other International 
Reforms 
SEC. 4501. RESTRICTION ON INSURANCE BUSINESS EXCEP-
TION TO PASSIVE FOREIGN INVESTMENT 
COMPANY RULES. 
(a) IN GENERAL.—Section 1297(b)(2)(B) is amended 
to read as follows: 
‘‘(B) derived in the active conduct of an in-
surance business by a qualifying insurance cor-
poration (as defined in subsection (f)),’’. 
(b) QUALIFYING
INSURANCE
CORPORATION
DE-
FINED.—Section 1297 is amended by adding at the end the 
following new subsection: 
‘‘(f) QUALIFYING
INSURANCE
CORPORATION.—For 
purposes of subsection (b)(2)(B)— 
‘‘(1) IN GENERAL.—The term ‘qualifying insur-
ance corporation’ means, with respect to any taxable 
year, a foreign corporation— 
‘‘(A) which would be subject to tax under 
subchapter L if such corporation were a domestic 
corporation, and 
‘‘(B) the applicable insurance liabilities of 
which constitute more than 25 percent of its 
total assets, determined on the basis of such li-
abilities and assets as reported on the corpora-
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tion’s applicable financial statement for the last 
year ending with or within the taxable year. 
‘‘(2) ALTERNATIVE FACTS AND CIRCUMSTANCES 
TEST FOR CERTAIN CORPORATIONS.—If a corporation 
fails to qualify as a qualified insurance corporation 
under paragraph (1) solely because the percentage de-
termined under paragraph (1)(B) is 25 percent or 
less, a United States person that owns stock in such 
corporation may elect to treat such stock as stock of 
a qualifying insurance corporation if— 
‘‘(A) the percentage so determined for the 
corporation is at least 10 percent, and 
‘‘(B) under regulations provided by the Sec-
retary, based on the applicable facts and cir-
cumstances— 
‘‘(i) the corporation is predominantly 
engaged in an insurance business, and 
‘‘(ii) such failure is due solely to run-
off-related or rating-related circumstances 
involving such insurance business. 
‘‘(3) APPLICABLE INSURANCE LIABILITIES.—For 
purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘applicable 
insurance liabilities’ means, with respect to any 
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life or property and casualty insurance busi-
ness— 
‘‘(i) loss and loss adjustment expenses, 
and 
‘‘(ii) reserves (other than deficiency, 
contingency, or unearned premium reserves) 
for life and health insurance risks and life 
and health insurance claims with respect to 
contracts providing coverage for mortality 
or morbidity risks. 
‘‘(B) LIMITATIONS ON AMOUNT OF LIABIL-
ITIES.—Any amount determined under clause (i) 
or (ii) of subparagraph (A) shall not exceed the 
lesser of such amount— 
‘‘(i) as reported to the applicable in-
surance regulatory body in the applicable 
financial statement described in paragraph 
(4)(A) (or, if less, the amount required by 
applicable law or regulation), or 
‘‘(ii) as determined under regulations 
prescribed by the Secretary. 
‘‘(4) OTHER
DEFINITIONS
AND
RULES.—For 
purposes of this subsection— 
‘‘(A) APPLICABLE FINANCIAL STATEMENT.— 
The term ‘applicable financial statement’ means 
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a statement for financial reporting purposes 
which— 
‘‘(i) is made on the basis of generally 
accepted accounting principles, 
‘‘(ii) is made on the basis of inter-
national financial reporting standards, but 
only if there is no statement that meets the 
requirement of clause (i), or 
‘‘(iii) except as otherwise provided by 
the Secretary in regulations, is the annual 
statement which is required to be filed with 
the applicable insurance regulatory body, 
but only if there is no statement which 
meets the requirements of clause (i) or (ii). 
‘‘(B) APPLICABLE INSURANCE REGULATORY 
BODY.—The term ‘applicable insurance regu-
latory body’ means, with respect to any insur-
ance business, the entity established by law to li-
cense, authorize, or regulate such business and to 
which the statement described in subparagraph 
(A) is provided.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
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TITLE V—EXEMPT 
ORGANIZATIONS 
Subtitle A—Unrelated Business 
Income Tax 
SEC. 5001. CLARIFICATION OF UNRELATED BUSINESS IN-
COME TAX TREATMENT OF ENTITIES TREAT-
ED AS EXEMPT FROM TAXATION UNDER SEC-
TION 501(a). 
(a) IN GENERAL.—Section 511 is amended by adding 
at the end the following new subsection: 
‘‘(d) ORGANIZATIONS
AND TRUSTS EXEMPT FROM 
TAXATION NOT SOLELY BY REASON OF SECTION 501(a).— 
For purposes of subsections (a)(2) and (b)(2), an organiza-
tion or trust shall not fail to be treated as exempt from 
taxation under this subtitle by reason of section 501(a) sole-
ly because such organization is also so exempt, or excludes 
amounts from gross income, by reason of any other provi-
sion of this title.’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
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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 Decem-
ber 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 striking 
subsection (e). 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 5102. PRIVATE OPERATING FOUNDATION REQUIRE-
MENTS RELATING TO OPERATION OF ART MU-
SEUM. 
(a) IN GENERAL.—Section 4942(j) is amended by add-
ing at the end the following new paragraph: 
‘‘(6) ORGANIZATION OPERATING ART MUSEUM.— 
For purposes of this section, the term ‘operating foun-
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430 
dation’ shall not include an organization which oper-
ates an art museum as a substantial activity unless 
such museum is open during normal business hours 
to the public for at least 1,000 hours during the tax-
able year.’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 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 univer-
sities. 
‘‘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— 
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‘‘(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 during 
the preceding taxable year, 
‘‘(B) which is not described in the first sen-
tence of section 511(a)(2)(B), and 
‘‘(C) the aggregate fair market value of the 
assets of which at the end of the preceding tax-
able year (other than those assets which are used 
directly in carrying out the institution’s exempt 
purpose) is at least $250,000 per student 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 stu-
dents attending such institution (with part-time stu-
dents taken into account on a full-time student equiv-
alent 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.— 
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‘‘(1) IN GENERAL.—For purposes of subsections 
(b)(1)(C) and (c), the assets and net investment in-
come 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 institution, 
any organization which— 
‘‘(A) controls, or is controlled by, such insti-
tution, 
‘‘(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 taxable 
year with respect to such institution.’’. 
(b) CLERICAL AMENDMENT.—The table of subchapters 
for chapter 42 is amended by adding at the end the fol-
lowing 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 Decem-
ber 31, 2017. 
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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 adding 
at the end the following new subsection: 
‘‘(g) EXCEPTION FOR CERTAIN HOLDINGS LIMITED TO 
INDEPENDENTLY-OPERATED PHILANTHROPIC BUSINESS.— 
‘‘(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 
‘‘(C) the independent operation require-
ments of paragraph (4). 
‘‘(2) OWNERSHIP.—The ownership requirements 
of this paragraph are met if— 
‘‘(A) 100 percent of the voting stock in the 
business enterprise is held by the private founda-
tion at all times during the taxable year, and 
‘‘(B) all the private foundation’s ownership 
interests in the business enterprise were acquired 
not by purchase. 
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‘‘(3) ALL PROFITS TO CHARITY.— 
‘‘(A) IN GENERAL.—The all profits to char-
ity distribution requirement of this paragraph is 
met if the business enterprise, not later than 120 
days after the close of the taxable year, distrib-
utes 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— 
‘‘(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 business 
needs of the business enterprise. 
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‘‘(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 (de-
termined under section 4958(f)(4)) is a director, 
officer, trustee, manager, employee, or contractor 
of the business enterprise (or an individual hav-
ing powers or responsibilities similar 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 
‘‘(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). 
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‘‘(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 Decem-
ber 31, 2017. 
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 treated as 
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organized and operated exclusively for a purpose de-
scribed 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 can-
didate 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. 
‘‘(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 Decem-
ber 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: 
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‘‘(4) indicate the average amount of grants made 
from such funds during such taxable year (expressed 
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 pol-
icy 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).’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply for returns filed for taxable years begin-
ning after December 31, 2017. 
Amend the title so as to read: ‘‘A bill to provide for 
reconciliation pursuant to titles II and V of the concur-
rent resolution on the budget for fiscal year 2018.’’. 
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Union Calendar No. 302 
115TH CONGRESS 
1ST SESSION 
H. R. 1 
[Report No. 115–409] 
A BILL 
To provide for reconciliation pursuant to title II of 
the concurrent resolution on the budget for fiscal 
year 2018. 
NOVEMBER 13, 2017 
Reported with amendments, committed to the Committee 
of the Whole House on the State of the Union, and or-
dered to be printed 
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