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‘‘(I) owned, maintained, and dis-
played by organizations described in
subsection (b)(1)(A), and
‘‘(II) sold to or exchanged by per-
sons other than the taxpayer, donee, or
any related person (as defined in sec-
tion 465(b)(3)(C)).
‘‘(C) MAXIMUM
DOLLAR
LIMITATION; NO
CARRYOVER OF INCREASED DEDUCTION.—
‘‘(i) IN GENERAL.—Subsections (b) and
(d) shall not apply to the amount by which
any charitable contribution is increased by
reason of this paragraph and such increased
contribution shall not be taken into account
for purposes of applying subparagraphs (A)
through (D) of subsection (b)(1) and sub-
section (d).
‘‘(ii) CONTRIBUTION
BASE
LIMITA-
TION.—The increased contributions shall be
allowed to the extent the aggregate of such
contributions do not exceed the excess of 50
percent of the contribution base (as defined
in subparagraph (F) of subsection (b)(1))
over the amount of all other charitable con-
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tributions allowable under subparagraphs
(A) through (D) of subsection (b)(1).
‘‘(iii) ARTISTIC ADJUSTED GROSS IN-
COME.—The aggregate increase in the chari-
table contributions by reason of this para-
graph for any taxable year shall not exceed
the artistic adjusted gross income of the tax-
payer for such taxable year.
‘‘(D) ARTISTIC ADJUSTED GROSS INCOME.—
For purposes of this paragraph, the term ‘artis-
tic adjusted gross income’ means that portion of
the adjusted gross income of the taxpayer for the
taxable year attributable to—
‘‘(i) income from the sale or use of
property created by the personal efforts of
the taxpayer which is of the same type as
the donated property, and
‘‘(ii) income from teaching, lecturing,
performing, or similar activity with respect
to property described in clause (i).
‘‘(E) PARAGRAPH NOT TO APPLY TO CER-
TAIN CONTRIBUTIONS.—Subparagraph (A) shall
not apply to any charitable contribution of any
letter, memorandum, or similar property which
was written, prepared, or produced by or for an
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individual while the individual is an officer or
employee of any person (including any govern-
ment agency or instrumentality) unless such let-
ter, memorandum, or similar property is en-
tirely personal.
‘‘(F) COPYRIGHT
TREATED
AS
SEPARATE
PROPERTY
FOR
PARTIAL
INTEREST
RULE.—In
the case of a qualified artistic charitable con-
tribution, the tangible literary, musical, artistic,
or scholarly composition, or similar property
and the copyright on such work shall be treated
as separate properties for purposes of this para-
graph and subsection (f)(3).
‘‘(G) TERMINATION.—This paragraph shall
not apply to contributions made after December
31, 2007.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to contributions made after December
31, 2005.
SEC. 209. MILEAGE REIMBURSEMENTS TO CHARITABLE
VOLUNTEERS EXCLUDED FROM GROSS IN-
COME.
(a) IN GENERAL.—Part III of subchapter B of chapter
1 is amended by inserting after section 139A the following
new section:
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‘‘SEC. 139B. MILEAGE REIMBURSEMENTS TO CHARITABLE
VOLUNTEERS.
‘‘(a) IN GENERAL.—Gross income of an individual
does not include amounts received, from an organization
described in section 170(c), as reimbursement of operating
expenses with respect to use of a passenger automobile for
the benefit of such organization. The preceding sentence
shall apply only to the extent that the expenses which are
reimbursed would be deductible under this chapter if section
274(d) were applied—
‘‘(1) by using the standard business mileage rate
established under such section, and
‘‘(2) as if the individual were an employee of an
organization not described in section 170(c).
‘‘(b) APPLICATION TO VOLUNTEER SERVICES ONLY.—
Subsection (a) shall not apply with respect to any expenses
relating to the performance of services for compensation.
‘‘(c) NO DOUBLE BENEFIT.—A taxpayer may not
claim a deduction or credit under any other provision of
this title with respect to the expenses under subsection (a).
‘‘(d) 
EXEMPTION
FROM
REPORTING
REQUIRE-
MENTS.—Section 6041 shall not apply with respect to reim-
bursements excluded from income under subsection (a).
‘‘(e) TERMINATION.—This section shall not apply to
taxable years beginning after December 31, 2007.’’.
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(b) CLERICAL AMENDMENT.—The table of sections for
part III of subchapter B of chapter 1 is amended by insert-
ing after the item relating to section 139A the following
new item:
‘‘Sec. 139B. Mileage reimbursements to charitable volunteers.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2005.
SEC. 210. ALTERNATIVE PERCENTAGE LIMITATION FOR
CORPORATE 
CHARITABLE 
CONTRIBUTIONS
TO THE MATHEMATICS AND SCIENCE PART-
NERSHIP PROGRAM.
(a) IN GENERAL.—Section 170(b) (related to percent-
age limitations) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(3) SPECIAL RULE FOR CORPORATE CONTRIBU-
TIONS TO THE MATHEMATICS AND SCIENCE PARTNER-
SHIP PROGRAM.—
‘‘(A) IN GENERAL.—In the case of a cor-
poration which makes an eligible mathematics
and science contribution—
‘‘(i) the limitation under paragraph
(2) shall apply separately with respect to
all such contributions and all other chari-
table contributions, and
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‘‘(ii) paragraph (2)(A) shall be applied
by substituting for ‘10 percent of the tax-
payer’s taxable income’ the following: ‘the
sum of (i) the lesser of all eligible mathe-
matics and science contributions or 15 per-
cent of the taxpayer’s taxable income, plus
(ii) the lesser of the contributions (other
than eligible mathematics and science con-
tributions and contributions to which sub-
paragraph (B) applies) or 10 percent of the
taxpayer’s taxable income reduced by all el-
igible mathematics and science contribu-
tions’.
‘‘(B) ELIGIBLE MATHEMATICS AND SCIENCE
CONTRIBUTION.—
‘‘(i) IN
GENERAL.—For purposes of
this paragraph, the term ‘eligible mathe-
matics and science contribution’ means a
charitable contribution (other than a con-
tribution of used equipment) to a qualified
partnership for the purpose of an activity
described in section 2202(c) of the Elemen-
tary and Secondary Education Act of 1965.
‘‘(ii) QUALIFIED
PARTNERSHIP.—The
term ‘qualified partnership’ means an eligi-
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ble partnership (within the meaning of sec-
tion 2201(b)(1) of the Elementary and Sec-
ondary Education Act of 1965), but only to
the extent that such partnership does not in-
clude a person other than a person described
in paragraph (1)(A).
‘‘(C) TERMINATION.—This paragraph shall
not apply to any contributions made in taxable
years beginning after December 31, 2006.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to contributions made in taxable years
beginning after December 31, 2005.
Subtitle B—Reforming Charitable
Organizations
PART I—GENERAL REFORMS
SEC. 211. TAX INVOLVEMENT BY EXEMPT ORGANIZATIONS
IN TAX SHELTER TRANSACTIONS.
(a) IMPOSITION OF EXCISE TAX.—
(1) IN GENERAL.—Chapter 42 (relating to pri-
vate foundations and certain other tax-exempt organi-
zations) is amended by adding at the end the fol-
lowing new subchapter:
‘‘Subchapter F—Tax Shelter Transactions
‘‘Sec. 4965. Excise tax on certain tax-exempt entities entering into prohibited tax
shelter transactions.
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‘‘SEC. 4965. EXCISE TAX ON CERTAIN TAX-EXEMPT ENTITIES
ENTERING INTO PROHIBITED TAX SHELTER
TRANSACTIONS.
‘‘(a) PARTICIPATION IN AND APPROVAL OF PROHIB-
ITED TRANSACTIONS.—
‘‘(1) TAX-EXEMPT ENTITY.—
‘‘(A) IN GENERAL.—If any tax-exempt enti-
ty (other than a tax-exempt entity described in
paragraph (4), (5), (6), or (7) of subsection (c))
is a party to a prohibited tax shelter transaction
at any time during the taxable year and knows
or has reason to know such transaction is a pro-
hibited tax shelter transaction, such entity shall
pay a tax for such taxable year in the amount
determined under subsection (b)(1)(A).
‘‘(B) 
POST-TRANSACTION
DETERMINA-
TION.—If any tax-exempt entity (other than a
tax-exempt entity described in paragraph (4),
(5), (6), or (7) of subsection (c)) is a party to
a subsequently listed transaction at any time
during the taxable year, such entity shall pay a
tax in the amount determined under subsection
(b)(1)(B).
‘‘(2) ENTITY MANAGER.—If any entity manager
of a tax-exempt entity approves such entity as (or
otherwise causes such entity to be) a party to a pro-
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hibited tax shelter transaction at any time during the
taxable year and knows or has reason to know that
the transaction is a prohibited tax shelter transaction,
such manager shall pay a tax for such taxable year
in the amount determined under subsection (b)(2).
‘‘(3) REASONABLE CAUSE EXCEPTION.—No tax
shall be imposed under paragraph (1)(A) or (2) if it
is shown that the participation of the tax-exempt en-
tity in the transaction was not willful and was due
to reasonable cause.
‘‘(b) AMOUNT OF TAX.—
‘‘(1) ENTITY.—In the case of a tax-exempt
entity—
‘‘(A) IN GENERAL.—The amount of the tax
imposed under subsection (a)(1)(A) on the entity
with respect to a taxable year shall be the greater
of—
‘‘(i) 100 percent of the entity’s net in-
come (after taking into account any tax im-
posed by this subtitle with respect to the
prohibited tax shelter transaction) for such
taxable year which is attributable to the
prohibited tax shelter transaction, or
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‘‘(ii) 75 percent of the proceeds received
by the entity which are attributable to the
prohibited tax shelter transaction.
‘‘(B) 
POST-TRANSACTION
DETERMINA-
TION.—The amount of the tax imposed under
subsection (a)(1)(B) on the entity with respect to
any taxable year shall be an amount equal to the
product of—
‘‘(i) the highest rate of tax under sec-
tion 11, and
‘‘(ii) the greater of—
‘‘(I) the entity’s net income (after
taking into account any tax imposed
by this subtitle with respect to the sub-
sequently listed transaction) for such
taxable year which is attributable to
the subsequently listed transaction and
which is properly allocable to the pe-
riod beginning on the later of the date
such transaction is identified by guid-
ance as a listed transaction by the Sec-
retary or the first day of the taxable
year, or
‘‘(II) 75 percent of the proceeds
received by the entity which are attrib-
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utable to the subsequently listed trans-
action and which are properly allo-
cable to the period beginning on the
later of the date such transaction is
identified by guidance as a listed
transaction by the Secretary or the
first day of the taxable year.
‘‘(2) ENTITY MANAGER.—In the case of each enti-
ty manager to whom subsection (a)(2) applies, the
amount of the tax under such subsection shall be
$20,000 for each approval.
‘‘(c) TAX-EXEMPT ENTITY.—For purposes of this sec-
tion, the term ‘tax-exempt entity’ means an entity which
is—
‘‘(1) described in section 501(c) or 501(d),
‘‘(2) described in section 170(c) (other than an
agency or instrumentality of the United States) to
which paragraph (1) of this subsection does not
apply,
‘‘(3) an Indian tribal government (within the
meaning of section 7701(a)(40)),
‘‘(4) described in paragraph (1), (2), or (3) of
section 4979(e),
‘‘(5) a program described in section 529,
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‘‘(6) an eligible deferred compensation plan de-
scribed in section 457(b) which is maintained by an
employer described in section 4457(e)(1)(A), or
‘‘(7) an arrangement described in section
4973(a).
‘‘(d) ENTITY MANAGER.—For purposes of this section,
the term ‘entity manager’ means—
‘‘(1) with respect to a tax-exempt entity de-
scribed in paragraph (3) or (4) of section 501(c)—
‘‘(A) in the case of an entity other than a
private foundation, an organization manager (as
defined in section 4958(f)(2)), and
‘‘(B) in the case of a private foundation, a
foundation manager (as defined in section
4946(b)), and
‘‘(2) in all other cases, the person with authority
or responsibility similar to that exercised by an offi-
cer, director, or trustee of an organization.
‘‘(e) PROHIBITED TAX SHELTER TRANSACTION; SUB-
SEQUENTLY LISTED TRANSACTION.—For purposes of this
section—
‘‘(1) PROHIBITED TAX SHELTER TRANSACTION.—
‘‘(A) IN
GENERAL.—The term ‘prohibited
tax shelter transaction’ means—
‘‘(i) any listed transaction, or
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‘‘(ii) any prohibited reportable trans-
action if the tax-exempt entity knows or has
reason to know that such transaction is a
reportable transaction.
‘‘(B) LISTED TRANSACTION.—The term ‘list-
ed transaction’ has the meaning given such term
by section 6707A(c)(2).
‘‘(C) PROHIBITED
REPORTABLE
TRANS-
ACTION.—The term ‘prohibited reportable trans-
action’ means any confidential transaction or
any transaction with contractual protection (as
defined under regulations prescribed by the Sec-
retary) which is a reportable transaction (as de-
fined in section 6707A(c)(1)).
‘‘(2) SUBSEQUENTLY
LISTED
TRANSACTION.—
The term ‘subsequently listed transaction’ means any
transaction to which a tax-exempt entity is a party
and which is determined by the Secretary to be a list-
ed transaction at any time after the entity has en-
tered into the transaction.
‘‘(f) REGULATORY AUTHORITY.—The Secretary is au-
thorized to promulgate regulations which provide guidance
regarding the determination of the allocation of net income
of a tax-exempt entity attributable to a transaction to var-
ious periods, including before and after the listing of the
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transaction or the date which is 90 days after the date of
the enactment of this section.
‘‘(g) COORDINATION WITH OTHER TAXES AND PEN-
ALTIES.—The tax imposed by this section is in addition
to any other tax, addition to tax, or penalty imposed under
this title.’’.
(2) CONFORMING
AMENDMENT.—The table of
subchapters for chapter 42 is amended by adding at
the end the following new item:
‘‘SUBCHAPTER F. TAX SHELTER TRANSACTIONS.’’.
(b) DISCLOSURE REQUIREMENTS.—
(1) DISCLOSURE BY ORGANIZATION TO THE IN-
TERNAL REVENUE SERVICE.—
(A) IN GENERAL.—Section 6033(a) (relat-
ing to organizations required to file) is amended
by redesignating paragraph (2) as paragraph
(3), and by inserting after paragraph (1) the fol-
lowing new paragraph:
‘‘(2) PARTICIPATION
IN
CERTAIN
REPORTABLE
TRANSACTIONS.—Every tax-exempt entity described
in section 4965(c) shall file (in such form and man-
ner and at such time as determined by the Secretary)
a disclosure of—
‘‘(A) such entity’s participation in any pro-
hibited tax shelter transaction (as defined in sec-
tion 4965(e)), and
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‘‘(B) the identity of any other party par-
ticipating in such transaction which is known
by such tax-exempt entity.’’.
(B) 
CONFORMING
AMENDMENT.—Section
6033(a)(1) is amended by striking ‘‘paragraph
(2)’’ and inserting ‘‘paragraph (3)’’.
(2) DISCLOSURE BY OTHER TAXPAYERS TO THE
TAX-EXEMPT ENTITY.—Section 6011 (relating to gen-
eral requirement of return, statement, or list), as
amended by this Act, is amended by redesignating
subsection (h) as subsection (i) and by inserting after
subsection (g) the following new subsection:
‘‘(h) DISCLOSURE OF REPORTABLE TRANSACTION TO
TAX-EXEMPT ENTITY.—Any taxable party to a prohibited
tax shelter transaction (as defined in section 4965(e)(1))
shall by statement disclose to any tax-exempt entity (as de-
fined in section 4965(c)) which is a party to such trans-
action that such transaction is such a prohibited tax shelter
transaction.’’.
(c) PENALTY FOR NONDISCLOSURE.—
(1) IN GENERAL.—Section 6652(c) (relating to
returns by exempt organizations and by certain
trusts), as amended by this Act, is amended by redes-
ignating paragraphs (2), (3), and (4) as paragraphs
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(3), (4), and (5), respectively, and by inserting after
paragraph (1) the following new paragraph:
‘‘(2) DISCLOSURE UNDER SECTION 6033.—
‘‘(A) PENALTY ON ORGANIZATIONS.—In the
case of a failure to file a disclosure required
under section 6033(a)(2), there shall be paid by
the tax-exempt entity (the entity manager in the
case of a tax-exempt entity described in para-
graph (4), (5), (6), or (7) of section 4965(c))
$100 for each day during which such failure con-
tinues. The maximum penalty under this sub-
paragraph on failures with respect to any 1 dis-
closure shall not exceed $50,000.
‘‘(B) PERSONS.—
‘‘(i) IN GENERAL.—The Secretary may
make a written demand on any tax-exempt
entity subject to penalty under subpara-
graph (A) specifying therein a reasonable
future date by which the disclosure shall be
filed for purposes of this subparagraph.
‘‘(ii) FAILURE TO COMPLY WITH DE-
MAND.—If any person fails to comply with
any demand under clause (i) on or before
the date specified in such demand, there
shall be paid by such person failing to so
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comply $100 for each day after the expira-
tion of the time specified in such demand
during which such failure continues. The
maximum penalty imposed under this sub-
paragraph on all tax-exempt entities for
failures with respect to any 1 disclosure
shall not exceed $10,000.
‘‘(C) DEFINITIONS.—Any term used in this
section which is also used in section 4965 shall
have the meaning given such term under section
4965.’’.
(2) CONFORMING
AMENDMENT.—Subparagraph
(A) of section 6652(c)(1) of such Code is amended by
striking ‘‘6033’’ each place it appears in the text and
heading thereof and inserting ‘‘6033(a)(1)’’.
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall
apply to transactions after the date of the enactment
of this Act, except that no tax under section 4965(a)
of the Internal Revenue Code of 1986 (as added by
this section) shall apply with respect to income that
is properly allocable to any period on or before the
date which is 90 days after such date of enactment.
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(2) DISCLOSURE.—The amendments made by
subsections (b) and (c) shall apply to disclosures the
due date for which are after the date of the enactment
of this Act.
SEC. 212. EXCISE TAX ON CERTAIN ACQUISITIONS OF IN-
TERESTS 
IN 
INSURANCE 
CONTRACTS 
IN
WHICH CERTAIN EXEMPT ORGANIZATIONS
HOLD AN INTEREST.
(a) IMPOSITION OF TAX.—
(1) IN GENERAL.—Subchapter F of chapter 42
(relating to tax shelter transactions), as added by this
Act, is amended by adding at the end the following
new section:
‘‘SEC. 4966. EXCISE TAX ON ACQUISITION OF INTERESTS IN
INSURANCE CONTRACTS IN WHICH CERTAIN
EXEMPT ORGANIZATIONS HOLD AN INTER-
EST.
‘‘(a) IMPOSITION OF TAX.—If there is a taxable acqui-
sition of any interest in an applicable insurance contract,
there is hereby imposed on the person acquiring the interest
a tax equal to 100 percent of the acquisition costs of the
interest.
‘‘(b) TAXABLE ACQUISITION.—For purposes of this
section—
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‘‘(1) IN GENERAL.—The term ‘taxable acquisi-
tion’ means the acquisition of any direct or indirect
interest in an applicable insurance contract by—
‘‘(A) an applicable exempt organization, or
‘‘(B) a person other than an applicable ex-
empt organization if such interest in the hands
of such person is not an interest described in
clause (i), (ii), (iii), or (iv) of paragraph (2)(B).
‘‘(2) APPLICABLE INSURANCE CONTRACT.—
‘‘(A) IN
GENERAL.—The term ‘applicable
insurance contract’ means any life insurance,
annuity, or endowment contract with respect to
which both an applicable exempt organization
and a person other than an applicable exempt
organization have directly or indirectly held an
interest in the contract (whether or not at the
same time).
‘‘(B) EXCEPTIONS.—Such term shall not in-
clude a life insurance, annuity, or endowment
contract if—
‘‘(i) all persons directly or indirectly
holding any interest in the contract (other
than applicable exempt organizations) have
an insurable interest in the insured under
the contract independent of any interest of
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an applicable exempt organization in the
contract,
‘‘(ii) the sole interest in the contract of
each person other than an applicable ex-
empt organization is as a named bene-
ficiary,
‘‘(iii) the sole interest in the contract of
each person other than an applicable ex-
empt organization is—
‘‘(I) as a beneficiary of a trust
holding an interest in the contract, but
only if the person’s designation as such
beneficiary was made without consid-
eration and solely on a purely gratu-
itous basis, or
‘‘(II) as a trustee who holds an
interest in the contract in a fiduciary
capacity solely for the benefit of appli-
cable exempt organizations or persons
otherwise described in clauses (i), (ii),
and (iv) or subclause (I) of this clause,
or
‘‘(iv) except as provided in subpara-
graph (C), the sole interest in the contract
of each person other than an applicable ex-
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empt organization is as a lender with re-
spect to the contract and the contract covers
only 1 individual and such individual is an
officer, director, or employee of the applica-
ble exempt organization with an interest in
the contract.
‘‘(C) RESTRICTIONS
ON
EXCEPTION
FOR
LENDERS.—
‘‘(i) NUMERICAL LIMIT.—The number
of contracts that may be taken into account
under subparagraph (B)(iv) with respect to
officers, directors, or employees of the appli-
cable exempt organization with interests in
the contracts shall not exceed the greater
of—
‘‘(I) the lesser of 5 percent of the
total officers, directors, and employees
of the organization or 20, or
‘‘(II) 5.
‘‘(ii) AGGREGATE
INDEBTEDNESS.—
The exception under subparagraph (B)(iv)
shall apply only to the extent that the ag-
gregate amount of the indebtedness with re-
spect to 1 or more contracts covering a sin-
gle individual does not exceed $50,000.
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‘‘(D) SECRETARIAL AUTHORITY.—The Sec-
retary may exempt a contract from treatment as
an applicable insurance contract based on spe-
cific factors, including factors such as whether
the transaction is at arms length, whether eco-
nomic benefits to the applicable exempt organi-
zation substantially exceed the economic benefits
to all other persons with an interest in the con-
tract (determined without regard to whether, or
the extent to which, such organization has paid
or contributed with respect to the contract), and
the likelihood of abuse.
‘‘(3) DEFINITION AND RULE RELATING TO ACQUI-
SITION COSTS.—
‘‘(A) ACQUISITION
COSTS
DEFINED.—The
term ‘acquisition costs’ means the direct or indi-
rect costs of acquiring an interest in an applica-
ble insurance contract. Such term shall include
any fees, commissions, charges, or other amounts
paid in connection with the acquisition, whether
or not paid to the issuer of the contract.
‘‘(B) TIMING
OF
PAYMENTS.—Except as
provided in regulations, if acquisition costs of
any acquisition are paid or incurred in more
than 1 calendar year, the tax imposed by sub-
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section (a) with respect to the acquisition shall
be imposed each time the costs are so paid or in-
curred.
‘‘(4) RULES RELATING TO INTERESTS.—
‘‘(A) IN GENERAL.—An interest in the con-
tract includes any right with respect to the con-
tract, whether as an owner, beneficiary, or other-
wise.
‘‘(B) INDIRECT INTERESTS.—
‘‘(i) IN GENERAL.—Except as provided
in clause (ii), an indirect interest in a con-
tract includes an interest in an entity
which directly or indirectly holds an inter-
est in the contract.
‘‘(ii) PORTFOLIO INVESTMENTS.—If an
applicable exempt organization holds an in-
terest in a contract solely because the orga-
nization holds, as part of a diversified in-
vestment strategy, a de minimis interest in
an entity which directly or indirectly holds
the interest in the contract, such indirect
interest in the contract shall not be taken
into account for purposes of this section.
‘‘(C) EXCHANGED CONTRACTS.—In the case
of an exchange of an applicable insurance con-
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tract on which no gain or loss is recognized
under section 1035, any interest in any of the
contracts involved in the exchange shall be treat-
ed as an interest in all such contracts.
‘‘(5) INCREASE IN INTEREST.—If a person in-
creases an interest in an applicable insurance con-
tract, the increase shall be treated as a separate ac-
quisition for purposes of this section.
‘‘(6) PRIOR ACQUISITIONS.—Except as provided
in regulations, if a person acquires an interest in a
contract before the contract is treated as an applicable
insurance contract, the acquisition shall be treated as
a taxable acquisition of an interest in an applicable
insurance contract as of the date the contract becomes
an applicable insurance contract.
‘‘(c) APPLICABLE EXEMPT ORGANIZATION.—For pur-
poses of this section, the term ‘applicable exempt organiza-
tion’ means—
‘‘(1) an organization described in section 170(c),
‘‘(2) an organization described in section
168(h)(2)(A)(iv), or
‘‘(3) an organization not described in paragraph
(1) or (2) which is described in section 2055(a) or sec-
tion 2522(a).
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‘‘(d) TAX NOT TREATED AS INVESTMENT IN THE CON-
TRACT.—For purposes of section 72, the tax imposed by this
section shall not be included in investment in the contract.
‘‘(e) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary to carry out the provi-
sions of this section. Such regulations may include regula-
tions which—
‘‘(1) provide, for purposes of subsection (b)(6),
appropriate rules for the application of this section in
any case where an interest is acquired before a con-
tract becomes an applicable insurance contract,
‘‘(2) prevent, in cases the Secretary determines
appropriate, the imposition of more than one tax
under this section if the same interest is acquired
more than once, and
‘‘(3) are designed to prevent avoidance of the
purposes of this section, including through the use of
intermediaries.’’.
(2) CONFORMING AMENDMENT.—The table of sec-
tions for subchapter F of chapter 42, as added by this
Act, is amended by adding at the end the following
new item:
‘‘Sec. 4966. Excise tax on acquisition of interests in insurance contracts in which
certain exempt organizations hold an interest.’’.
(b) REPORTING REQUIREMENTS.—
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(1) IN GENERAL.—Subpart B of part III of sub-
chapter A of chapter 61 (relating to information con-
cerning transactions with other persons) is amended
by adding at the end the following new section:
‘‘SEC. 6050U. RETURNS RELATING TO APPLICABLE INSUR-
ANCE CONTRACTS IN WHICH CERTAIN EX-
EMPT ORGANIZATIONS HOLD INTERESTS.
‘‘(a) REQUIREMENTS OF REPORTING.—
‘‘(1) EXEMPT ORGANIZATIONS.—Each—
‘‘(A) applicable exempt organization which
acquires (within the meaning of section 4966) an
interest in any applicable insurance contract,
and
‘‘(B) other person which makes an acquisi-
tion of such an interest if such acquisition is
taxable under section 4966,
shall make the return described in subsection (c).
‘‘(2) TRANSFERS.—If a person (including an ap-
plicable exempt organization) acquires an interest in
an applicable insurance contract in an acquisition
which is taxable under section 4966 and then trans-
fers such interest to 1 or more other persons, each per-
son acquiring all or a portion of such interest shall
make the return described in subsection (c).
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‘‘(b) TIME FOR MAKING RETURN.—Any organization
or person required to make a return under subsection (a)
shall file such return at such time as may be established
by the Secretary with respect to—
‘‘(1) in the case of a person described in sub-
section (a)(1), the calendar year in which the acquisi-
tion occurs, any calendar year in which acquisition
costs are paid or incurred, and any other calendar
years specified by the Secretary, and
‘‘(2) in the case of a person described in sub-
section (a)(2), the calendar year in which the transfer
occurs.
‘‘(c) FORM AND MANNER OF RETURNS.—A return is
described in this subsection if such return—
‘‘(1) is in such form as the Secretary prescribes,
‘‘(2) in the case of—
‘‘(A) a return required under subsection
(a)(1)(A), contains the name, address, and tax-
payer identification number of the applicable ex-
empt organization, the issuer of the applicable
insurance contract, and any person acquiring an
interest in the contract if the acquisition is tax-
able under section 4966,
‘‘(B) a return required under subsection
(a)(1)(B), contains the name, address, and tax-
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payer identification number of the person ac-
quiring an interest in the applicable insurance
contract if the acquisition is taxable under sec-
tion 4966, any applicable exempt organization
holding an interest in the contract, and the
issuer of the contract, and
‘‘(C) a return required under subsection
(a)(2), contains the name, address, and taxpayer
identification number of the transferor and
transferee, and
‘‘(3) contains such other information as the Sec-
retary may prescribe.
‘‘(d) STATEMENTS TO BE FURNISHED TO PERSONS
WITH RESPECT TO WHOM INFORMATION IS REQUIRED.—
Every person required to make a return under subsection
(a) shall furnish to each person whose taxpayer identifica-
tion information is required to be included in such return
under subsection (c) a written statement showing—
‘‘(1) the name and address of the person required
to make such return and the telephone number of the
information contact for such person, and
‘‘(2) the taxpayer identity and other information
required to be shown on the return with respect to
such person.
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The written statement required under the preceding sen-
tence shall be furnished on or before the date specified by
the Secretary.
‘‘(e) DEFINITIONS.—For purposes of this section, any
term used in this section which is also used in section 4966
shall have the meaning given such term by section 4966.’’.
(2) PENALTIES.—
(A) IN
GENERAL.—Section 6724(d) is
amended—
(i) in paragraph (1)(B), by redesig-
nating clauses (xiii) through (xviii) as
clauses (xiv) through (xix) and by inserting
after clause (xii) the following new clause:
‘‘(xiii) section 6050U (relating to re-
turns relating to applicable insurance con-
tracts in which certain exempt organiza-
tions hold interests),’’, and
(ii) in paragraph (3), by striking
‘‘and’’ at the end of subparagraph (C), by
striking the period at the end of subpara-
graph (D) and inserting ‘‘, and’’, and by
adding at the end the following new sub-
paragraph:
‘‘(E) the statement required by subsection
(d) of section 6050U (relating to returns relating
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to applicable insurance contracts in which cer-
tain exempt organizations hold interests).’’.
(B) 
INTENTIONAL
DISREGARD.—Section
6721(e)(2) is amended by striking ‘‘or’’ at the
end of subparagraph (B), by striking ‘‘and’’ at
the end of subparagraph (C) and inserting ‘‘or’’,
and by adding at the end the following new sub-
paragraph:
‘‘(D) in the case of a return required to be
filed under section 6050U, the amount of tax im-
posed under section 4966 which has not been
paid with respect to items required to be in-
cluded on the return, and’’.
(3) CONFORMING AMENDMENT.—The table of sec-
tions for subpart B of part III of subchapter A of
chapter 61is amended by adding at the end the fol-
lowing new item:
‘‘Sec. 6050U. Returns relating to applicable insurance contracts in which certain
exempt organizations hold interests.’’.
(c) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendments made by
this section shall apply to contracts issued after May
3, 2005.
(2) REPORTING
OF
EXISTING
CONTRACTS.—In
the case of any life insurance, annuity, or endowment
contract—
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(A) which was issued on or before May 3,
2005,
(B) with respect to which an applicable ex-
empt organization (as defined in section 4966 of
the Internal Revenue Code of 1986, as added by
this section) holds an interest on May 3, 2005,
and
(C) which would be treated as an applicable
insurance contract (as so defined) if issued after
May 3, 2005,
such organization shall, not later than the date which
is 1 year after the date of the enactment of this Act,
report to the Secretary of the Treasury with respect
to such contract. Such report shall be in such form
and manner, and contain such information, as the
Secretary may prescribe. The Secretary shall submit
such reports, along with any recommendations for leg-
islation as the Secretary considers appropriate, to the
Committee on Ways and Means of the House of Rep-
resentatives and to the Committee on Finance of the
Senate within 6 months of the date such reports are
required to be filed.
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SEC. 213. INCREASE IN PENALTY EXCISE TAXES ON PUBLIC
CHARITIES, 
SOCIAL 
WELFARE 
ORGANIZA-
TIONS, AND PRIVATE FOUNDATIONS.
(a) TAXES ON SELF-DEALING AND EXCESS BENEFIT
TRANSACTIONS.—
(1) IN GENERAL.—Section 4941(a) (relating to
initial taxes) is amended—
(A) in paragraph (1), by striking ‘‘5 per-
cent’’ and inserting ‘‘10 percent’’, and
(B) in paragraph (2), by striking ‘‘21⁄2 per-
cent’’ and inserting ‘‘5 percent’’.
(2) INCREASE
IN
TAX
IF
SELF-DEALING
IN-
CLUDES COMPENSATION TO DISQUALIFIED PERSON.—
Section 4941(a)(1) is amended by adding at the end
the following new sentence: ‘‘If the act of self-dealing
includes acts described in subsection (d)(1)(D), ‘25
percent’ shall be substituted for ‘10 percent’, except
that the Secretary may abate under section 4962 (de-
termined without regard to the exception under sub-
section (b) thereof) not more than 15 percentage
points of such tax.’’.
(3) INCREASED LIMITATION FOR MANAGERS ON
SELF-DEALING.—Section 4941(c)(2) is amended by
striking ‘‘$10,000’’ each place it appears in the text
and heading thereof and inserting ‘‘$20,000’’.
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(4) INCREASED LIMITATION FOR MANAGERS ON
EXCESS BENEFIT TRANSACTIONS.—Section 4958(d)(2)
is amended by striking ‘‘$10,000’’ and inserting
‘‘$20,000’’.
(b) TAXES ON FAILURE TO DISTRIBUTE INCOME.—
Section 4942(a) (relating to initial tax) is amended by
striking ‘‘15 percent’’ and inserting ‘‘30 percent’’.
(c) TAXES ON EXCESS BUSINESS HOLDINGS.—Section
4943(a)(1) (relating to imposition) is amended by striking
‘‘5 percent’’ and inserting ‘‘10 percent’’.
(d) TAXES
ON INVESTMENTS WHICH JEOPARDIZE
CHARITABLE PURPOSE.—
(1) IN GENERAL.—Section 4944(a) (relating to
initial taxes) is amended by striking ‘‘5 percent’’ both
places it appears and inserting ‘‘10 percent’’.
(2) INCREASED LIMITATION FOR MANAGERS.—
Section 4944(d)(2) is amended—
(A) by striking ‘‘$5,000,’’ and inserting
‘‘$10,000,’’, and
(B) by striking ‘‘$10,000.’’ and inserting
‘‘$20,000.’’.
(e) TAXES ON TAXABLE EXPENDITURES.—
(1) IN GENERAL.—Section 4945(a) (relating to
initial taxes) is amended—
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(A) in paragraph (1), by striking ‘‘10 per-
cent’’ and inserting ‘‘20 percent’’, and
(B) in paragraph (2), by striking ‘‘21⁄2 per-
cent’’ and inserting ‘‘5 percent’’.
(2) INCREASED LIMITATION FOR MANAGERS.—
Section 4945(c)(2) is amended—
(A) by striking ‘‘$5,000,’’ and inserting
‘‘$10,000,’’, and
(B) by striking ‘‘$10,000.’’ and inserting
‘‘$20,000.’’.
(f) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after the date
of the enactment of this Act.
SEC. 214. REFORM OF CHARITABLE CONTRIBUTIONS OF
CERTAIN EASEMENTS ON BUILDINGS IN REG-
ISTERED HISTORIC DISTRICTS.
(a) SPECIAL RULES WITH RESPECT TO BUILDINGS IN
REGISTERED HISTORIC DISTRICTS.—
(1) IN
GENERAL.—Paragraph (4) of section
170(h) (relating to definition of conservation purpose)
is amended by redesignating subparagraph (B) as
subparagraph (C) and by inserting after subpara-
graph (A) the following new subparagraph:
‘‘(B) SPECIAL
RULES
WITH
RESPECT
TO
BUILDINGS
IN
REGISTERED
HISTORIC
DIS-
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TRICTS.—In the case of any contribution of a
qualified real property interest which is a re-
striction with respect to the exterior of a build-
ing described in subparagraph (C)(ii), such con-
tribution shall not be considered to be exclusively
for conservation purposes unless—
‘‘(i) such interest—
‘‘(I) includes a restriction which
preserves the entire exterior of the
building (including the front, sides,
rear, and height of the building), and
‘‘(II) prohibits any change in the
exterior of the building which is incon-
sistent with the historical character of
such exterior,
‘‘(ii) the donor and donee enter into a
written agreement certifying, under penalty
of perjury, that the donee—
‘‘(I) is a qualified organization
(as defined in paragraph (3)) with a
purpose of environmental protection,
land conservation, open space preserva-
tion, or historic preservation, and
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‘‘(II) has the resources to manage
and enforce the restriction and a com-
mitment to do so, and
‘‘(iii) in the case of any contribution
made in a taxable year beginning after the
date of the enactment of this subparagraph,
the taxpayer includes with the taxpayer’s
return 
for 
the 
taxable 
year 
of 
the
contribution—
‘‘(I) a qualified appraisal (within
the meaning of subsection (f)(11)(E))
of the qualified property interest,
‘‘(II) photographs of the entire ex-
terior of the building, and
‘‘(III) a description of all restric-
tions on the development of the build-
ing.’’.
(b) DISALLOWANCE OF DEDUCTION FOR STRUCTURES
AND LAND IN REGISTERED HISTORIC DISTRICTS.—Sub-
paragraph (C) of section 170(h)(4), as redesignated by sub-
section (a), is amended—
(1) by striking ‘‘any building, structure, or land
area which’’,
(2) by inserting ‘‘any building, structure, or
land area which’’ before ‘‘is listed’’ in clause (i), and
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(3) by inserting ‘‘any building which’’ before ‘‘is
located’’ in clause (ii).
(c) FILING FEE FOR CERTAIN CONTRIBUTIONS.—Sub-
section (f) of section 170 (relating to disallowance of deduc-
tion in certain cases and special rules) is amended by in-
serting at the end the following new paragraph:
‘‘(13) CONTRIBUTIONS OF CERTAIN INTERESTS
IN
BUILDINGS
LOCATED
IN
REGISTERED
HISTORIC
DISTRICTS.—
‘‘(A) IN GENERAL.—No deduction shall be
allowed with respect to any contribution de-
scribed in subparagraph (B) unless the taxpayer
includes with the return for the taxable year of
the contribution a $500 filing fee.
‘‘(B) CONTRIBUTION
DESCRIBED.—A con-
tribution is described in this subparagraph if
such contribution is a qualified conservation
contribution (as defined in subsection (h)) which
is a restriction with respect to the exterior of a
building described in subsection (h)(4)(C)(ii)
and for which a deduction is claimed in excess
of the greater of—
‘‘(i) 3 percent of the fair market value
of the building (determined immediately be-
fore such contribution), or
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‘‘(ii) $10,000.
‘‘(C) DEDICATION
OF
FEE.—Any fee col-
lected under this paragraph shall be used for the
enforcement of the provisions of subsection (h).’’.
(d) EFFECTIVE DATE.—
(1) SPECIAL
RULES
FOR
BUILDINGS
IN
REG-
ISTERED
HISTORIC
DISTRICTS.—The amendments
made by subsection (a) shall apply to contributions
made after November 15, 2005.
(2) DISALLOWANCE OF DEDUCTION FOR STRUC-
TURES AND LAND.—The amendments made by sub-
section (b) shall apply to contributions made after the
date of the enactment of this Act.
(3) FILING FEE.—The amendment made by sub-
section (c) shall apply to contributions made 180
days after the date of the enactment of this Act.
SEC. 215. CHARITABLE CONTRIBUTIONS OF TAXIDERMY
PROPERTY.
(a) IN GENERAL.—Subsection (f) of section 170, as
amended by this Act, is amended by adding at the end the
following new paragraph:
‘‘(14) CONTRIBUTIONS
OF
TAXIDERMY
PROP-
ERTY.—
‘‘(A) 
CONTRIBUTIONS
OF
MORE
THAN
$500.—In the case of any contribution of taxi-
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dermy property for which a deduction of more
than $500 is claimed, no deduction shall be al-
lowed under subsection (a) unless the donor in-
cludes with the return for the taxable year in
which the contribution is made a photograph of
the taxidermy property and data with respect to
the sales prices of similar taxidermy property.
‘‘(B) 
CONTRIBUTIONS
OF
MORE
THAN
$5,000.—In the case of any contribution of taxi-
dermy property for which a deduction of more
than $5,000 is claimed, no deduction shall be al-
lowed under subsection (a) unless the donor—
‘‘(i) notifies the Internal Revenue Serv-
ice of such deduction, and
‘‘(ii) includes with the return for the
taxable year in which the contribution is
made—
‘‘(I) a statement of value from the
Internal Revenue Service, or
‘‘(II) a request for a statement of
value from the Internal Revenue Serv-
ice and a $500 fee.
‘‘(C) TAXIDERMY PROPERTY.—For purposes
of this section, the term ‘taxidermy property’