SEC. 2. ELIMINATION OF SCHOOL VOUCHER STATE TAX 
CREDIT LOOPHOLE BY LIMITING THE DOU-
BLE BENEFIT OF CHARITABLE CONTRIBU-
TIONS. 
(a) IN GENERAL.—Section 170(f) of the Internal 
Revenue Code of 1986 is amended by adding at the end 
the following new paragraph: 
‘‘(19) LIMITATION
ON
DOUBLE
BENEFIT
IN 
THE CASE OF STATE SCHOOL VOUCHER TAX BENE-
FITS.— 
‘‘(A) IN GENERAL.—The amount of any 
charitable contribution otherwise taken into ac-
count under this section shall be reduced by any 
State school voucher tax benefit with respect to 
such contribution. 
‘‘(B) STATE SCHOOL VOUCHER TAX BEN-
EFIT.—For purposes of this paragraph, the 
term ‘State school voucher tax benefit’ means 
the aggregate amount of any State income tax 
credits, and excess State income tax deductions, 
provided to the taxpayer by a State for any con-
tribution to a specified school voucher organiza-
tion. 
‘‘(C) EXCESS STATE INCOME TAX DEDUC-
TIONS.—For purposes of this paragraph, the 
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term ‘excess State income tax deduction’ means 
the product of— 
‘‘(i) the highest rate of State income 
tax applicable to the taxpayer for the tax-
able year, multiplied by 
‘‘(ii) the excess (if any) of— 
‘‘(I) the State income tax deduc-
tion provided to the taxpayer with re-
spect to contributions by the taxpayer 
to specified school voucher organiza-
tions, over 
‘‘(II) the amount of such con-
tributions. 
‘‘(D) SPECIFIED SCHOOL VOUCHER ORGA-
NIZATION.—For purposes of this paragraph, 
the term ‘specified school voucher organization’ 
means any organization the primary purpose of 
which is the provision of vouchers, scholarships, 
or other funds, for the expenses of students to 
attend elementary or secondary schools. 
‘‘(E) TREATMENT OF SIMILAR STATE BEN-
EFITS.—For purposes of this paragraph, any 
State benefit which is economically equivalent 
to a tax credit (including any payment) shall be 
treated as a State income tax credit for pur-
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poses of this paragraph and any State benefit 
which is economically equivalent to a State in-
come tax deduction (including any exclusion 
from gross income) shall be treated as a State 
income tax deduction for purposes of this para-
graph. 
‘‘(20) SPECIAL RULE FOR CONTRIBUTIONS OF 
BUILT-IN
GAIN
PROPERTY
TO
SPECIFIED
SCHOOL 
VOUCHER ORGANIZATIONS.— 
‘‘(A) IN
GENERAL.—In the case of any 
contribution by the taxpayer of built-in gain 
property to a specified school voucher organiza-
tion, such contribution shall be treated for pur-
poses of this title as though such property were 
sold by the taxpayer at its fair market value im-
mediately before such contribution and the 
amount of such fair market value were contrib-
uted by the taxpayer as a cash contribution to 
the specified school voucher organization. 
‘‘(B) DEFINITIONS.—For purposes of this 
paragraph— 
‘‘(i) BUILT-IN GAIN PROPERTY.—The 
term ‘built-in gain property’ means any 
property if, immediately before the con-
tribution of such property, the fair market 
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value of such property exceeds the adjusted 
basis of such property. 
‘‘(ii) SPECIFIED
SCHOOL
VOUCHER 
ORGANIZATION.—The 
term 
‘specified 
school voucher organization’ has the mean-
ing given such term in paragraph (19).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to charitable contributions made 
in taxable years beginning after the date of the enactment 
of this Act. 
Æ 
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