168 
‘‘(ii) only if the employee is required 
to make the payment whether he accepts 
or declines the meals. 
‘‘(c) EMPLOYEES LIVING IN CERTAIN CAMPS.— 
‘‘(1) IN GENERAL.—In the case of an individual 
who is furnished lodging in a camp located in a for-
eign country by or on behalf of his employer, such 
camp shall be considered to be part of the business 
premises of the employer. 
‘‘(2) CAMP.—For purposes of this section, a 
camp constitutes lodging which is— 
‘‘(A) provided by or on behalf of the em-
ployer for the convenience of the employer be-
cause the place at which such individual renders 
services is in a remote area where satisfactory 
housing is not available on the open market, 
‘‘(B) located, as near as practicable, in the 
vicinity of the place at which such individual 
renders services, and 
‘‘(C) furnished in a common area (or en-
clave) which is not available to the public and 
which normally accommodates 10 or more em-
ployees. 
‘‘(d) LODGING
FURNISHED
BY
CERTAIN
EDU-
CATIONAL INSTITUTIONS TO EMPLOYEES.—
169 
‘‘(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. 
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
170 
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 8(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. 
‘‘(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
171 
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 ex-
ceed— 
‘‘(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. 
‘‘(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
172 
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 
‘‘(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
173 
(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 
‘‘(B) revenue derived from such facility 
normally equals or exceeds the direct operating 
costs of such facility. 
The preceding sentence shall apply with respect to 
any highly compensated employee only if access to 
the facility is available on substantially the same 
terms to each member of a group of employees
174 
which is defined under a reasonable classification set 
up by the employer which does not discriminate in 
favor of highly compensated employees. 
‘‘(3) ON-PREMISES GYMS AND OTHER ATHLETIC 
FACILITIES.— 
‘‘(A) IN
GENERAL.—De minimis fringe 
benefits include the provision of on-premises 
athletic facility by an employer to its employees. 
‘‘(B) ON-PREMISES ATHLETIC FACILITY.— 
For purposes of this paragraph, ‘on-premises 
athletic facility’ means any gym or other ath-
letic facility— 
‘‘(i) which is located on the premises 
of the employer, 
‘‘(ii) which is operated by the em-
ployer, and 
‘‘(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
175 
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.— 
‘‘(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
176 
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 
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
177 
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 
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).
178 
‘‘(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)), 
‘‘(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-
179 
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 
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
180 
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 
an organization described in the same clause of sec-
tion 101(b)(1)(A). 
‘‘(c) CHARITY.—For purposes of determining the de-
ductibility of a philanthropic transfer, ‘charitable contribu-
tion’ means a contribution or gift for the use of— 
‘‘(1) A State, a possession of the United States, 
or any political subdivision of any of the foregoing, 
or the United States or the District of Columbia,
181 
but only if the contribution or gift is made for exclu-
sively public purposes. 
‘‘(2) A corporation, trust, or community chest, 
fund, or foundation— 
‘‘(A) created or organized in the United 
States or in any possession thereof, or under 
the law of the United States, any State, the 
District of Columbia, or any possession of the 
United States, 
‘‘(B) organized and operated exclusively 
for religious, charitable, scientific, literary, or 
educational purposes (but only if no part of its 
activities involve the provision of athletic facili-
ties or equipment) or for the prevention of cru-
elty to children or animals, 
‘‘(C) no part of the net earnings of which 
inures to the benefit of any private shareholder 
or individual, and 
‘‘(D) which qualifies for exemption from 
the business tax under section 253(c) and is not 
disqualified for tax exemption by reason of at-
tempting to influence legislation, and which 
does not participate in, or intervene in (includ-
ing the publishing or distributing of state-
182 
ments), any political campaign on behalf of (or 
in opposition to) any candidate for public office. 
‘‘(3) [intentionally deleted] 
‘‘(4) In the case of a contribution or gift by an 
individual, a domestic fraternal society, order, or as-
sociation, operating under the lodge system, but only 
if such contribution or gift is to be used exclusively 
for religious, charitable, scientific, literary, or edu-
cational purposes, or for the prevention of cruelty to 
children or animals. 
‘‘(5) A cemetery company owned and operated 
exclusively for the benefit of its members, or any 
corporation chartered solely for burial purposes as a 
cemetery corporation and not permitted by its char-
ter to engage in any business not necessarily inci-
dent to that purpose, if such company or corporation 
is not operated for profit and no part of the net 
earnings of such company or corporation inures to 
the benefit of any private shareholder or individual. 
‘‘(d) RULES FOR SUBSECTION (c).— 
‘‘(1) LIMITATIONS.—A contribution or gift by a 
corporation to a trust, chest, fund, or foundation 
shall be deductible by reason of subsection (c)(2)(B) 
only if it is to be used within the United States or
183 
any of its possessions exclusively for purposes speci-
fied in subparagraph (B). 
‘‘(2) REFERENCES.—Any reference in other law 
or in legal documents to an organization described 
in a paragraph of section 170(c) of the Internal Rev-
enue Code of 1986 shall constitute a reference to an 
organization described in the same paragraph num-
ber of section 101(c) if an organization is described 
in such paragraph. 
‘‘(e) QUALIFIED CONSERVATION CONTRIBUTION.— 
‘‘(1) IN GENERAL.—‘Qualified conservation con-
tribution’ means a contribution— 
‘‘(A) of a qualified real property interest, 
‘‘(B) to a qualified organization, 
‘‘(C) exclusively for conservation purposes. 
‘‘(2) QUALIFIED REAL PROPERTY INTEREST.— 
‘Qualified real property interest’ means any of the 
following interests in real property: 
‘‘(A) the entire interest of the donor other 
than a qualified mineral interest, 
‘‘(B) a remainder interest, and 
‘‘(C) a restriction (granted in perpetuity) 
on the use which may be made of the real prop-
erty.