I
105TH CONGRESS
1ST SESSION
H. R. 1112
To amend the Internal Revenue Code of 1986 to provide that the preferential
income tax treatment of political organizations shall apply only to prin-
cipal campaign committees, to provide that a cancellation of a loan
to such a committee shall be includible in such committee’s taxable
income, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 18, 1997
Mr. MORAN of Virginia (for himself and Mr. YATES) introduced the following
bill; which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide
that the preferential income tax treatment of political
organizations shall apply only to principal campaign com-
mittees, to provide that a cancellation of a loan to such
a committee shall be includible in such committee’s tax-
able income, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. PREFERENTIAL INCOME TAX TREATMENT FOR
POLITICAL 
ORGANIZATIONS 
LIMITED 
TO
PRINCIPAL CAMPAIGN COMMITTEES.
(a) IN GENERAL.—The text of section 527 of the In-
ternal Revenue Code of 1986 (relating to political organi-
zations) is amended by striking ‘‘political organization’’
each place it appears and inserting ‘‘principal campaign
committee’’.
(b) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) Subsection (b) of section 527 of such Code
is amended by striking ‘‘the highest rate’’ and in-
serting ‘‘the appropriate rates’’.
(2) Section 527 of such Code is amended by
striking paragraph (1) of subsection (e), by moving
paragraph (2) of subsection (h) and inserting it be-
fore paragraph (2) of subsection (e) and by redesig-
nating such paragraph as paragraph (1), and by
striking the remainder of subsection (h).
(3) Section 527 of such Code is amended by
striking subsection (g) (relating to newsletter funds).
(4) Paragraph (1) of section 527(f) of such
Code is amended by adding at the end the following
flush sentence:
‘‘In applying subsection (b) for purposes of this sub-
section, paragraph (1) of subsection (b) shall be ap-
plied by substituting ‘the highest rate’ for ‘the ap-
propriate rates’.’’
(5) The subsection heading for subsection (c) of
section 527 of such Code is amended by striking
‘‘POLITICAL ORGANIZATION’’ and inserting ‘‘PRIN-
CIPAL CAMPAIGN COMMITTEE’’.
(6)(A) The section heading for section 527 of
such Code is amended to read as follows:
‘‘SEC. 527. PRINCIPAL CAMPAIGN COMMITTEES.’’
(B) The table of sections for part VI of sub-
chapter F of chapter 1 of such Code is amended by
striking the item relating to section 527 and insert-
ing the following:
‘‘Sec. 527. Principal campaign committees.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
the date of the enactment of this Act.
SEC. 2. CANCELLATION OF LOAN TO A PRINCIPAL CAM-
PAIGN COMMITTEE INCLUDED IN SUCH COM-
MITTEE’S TAXABLE INCOME.
(a) IN GENERAL.—Subsection (c) of section 527 of
the Internal Revenue Code of 1986 (defining principal
campaign committee taxable income) is amended by add-
ing at the end the following new paragraph:
‘‘(4) TREATMENT OF CANCELED LOANS.—
‘‘(A) IN
GENERAL.—The term ‘exempt
function income’ shall not include—
‘‘(i) a contribution in the form of the
cancellation of any loan made to the prin-
cipal campaign committee, or
‘‘(ii) any other contribution made di-
rectly or indirectly from the lender of any
loan to the principal campaign committee
if such contribution is used directly or in-
directly to make payments on such loan.
‘‘(B) 
EXCEPTIONS.—Subparagraph 
(A)
shall not apply with respect to—
‘‘(i) any loan made by a bank (as de-
fined in section 581), or
‘‘(ii) any loan made by a candidate for
Congress to the extent that the amount of
contributions referred to in subparagraph
(A) with respect to such loan does not ex-
ceed $2,000.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
the date of the enactment of this Act.
SEC. 3. INCLUSION IN GROSS INCOME FOR CONTRIBU-
TIONS IN EXCESS OF $100 TO POLITICAL OR-
GANIZATIONS.
(a) IN GENERAL.—Part VI of subchapter F of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
political organizations) is amended by adding at the end
the following new section:
‘‘SEC. 528. INCLUSION IN GROSS INCOME FOR CONTRIBU-
TIONS IN EXCESS OF $100 TO POLITICAL OR-
GANIZATIONS.
‘‘(a) IN GENERAL.—Notwithstanding any other pro-
vision of law—
‘‘(1) the gross income of any political organiza-
tion shall include any amount contributed in cash to
such organization during a calendar year by any per-
son to the extent the amount contributed directly or
indirectly to such organization by such person dur-
ing such year exceeds $100, and
‘‘(2) the amount included in gross income under
paragraph (1) shall be subject to tax under this
chapter.
‘‘(b) POLITICAL ORGANIZATION.—The term ‘political
organization’ means a party, committee, association, fund,
or other organization (whether or not incorporated) orga-
nized and operated primarily for the purpose of directly
or indirectly accepting contributions or making expendi-
tures, or both, for an exempt function (as defined in sec-
tion 527(e)).’’
(b) CLERICAL AMENDMENT.—The table of sections
for such part VI is amended by adding at the end the
following new item:
‘‘Sec. 528. Inclusion in gross income for contributions in excess
of $100 to political organizations.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
the date of the enactment of this Act.
Æ