I
107TH CONGRESS
1ST SESSION
H. R. 1359
To amend the Internal Revenue Code of 1986 to expand and extend the
ability of certain exempt organizations to avoid recognizing a gain on
the sale of property used directly in the performance of an exempt
function.
IN THE HOUSE OF REPRESENTATIVES
APRIL 3, 2001
Mr. MCNULTY 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 expand
and extend the ability of certain exempt organizations
to avoid recognizing a gain on the sale of property used
directly in the performance of an exempt function.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. NONRECOGNITION OF GAIN ON THE SALE OF
PROPERTY USED IN PERFORMANCE OF AN
EXEMPT FUNCTION.
(a) IN GENERAL.—Subparagraph (D) of section
512(a)(3) of the Internal Revenue Code of 1986 is amend-
ed to read as follows:
‘‘(D) NONRECOGNITION OF GAIN.—
‘‘(i) IN GENERAL.—If property used
directly in the performance of the exempt
function of an organization described in
paragraph (7), (9), (17), or (20) of section
501(c) is sold by such organization, gain
(if any) from such sale shall be recognized
only to the extent that such organization’s
sales price of such property exceeds the
sum of—
‘‘(I) such organization’s cost of
purchasing, during a period beginning
1 year before the date of such sale
and ending 10 years after such date,
other property that is used directly in
the performance of the exempt func-
tion of the organization, and
‘‘(II) any amount paid by such
organization during such period to ac-
complish one or more purposes de-
scribed in section 170(c)(2)(B).
‘‘(ii) STATUTE
OF
LIMITATIONS.—If
an organization sells property on which
gain is not recognized, in whole or in part,
by reason of clause (i), then the statutory
period for the assessment of any deficiency
attributable to such gain shall not expire
until the end of the 3-year period begin-
ning on the date that the Secretary is noti-
fied by such organization (in such manner
as the Secretary may prescribe) that—
‘‘(I) the organization has met the
requirements of clause (i) with respect
to gain which was not recognized,
‘‘(II) the organization does not
intend to meet such requirements, or
‘‘(III) the organization failed to
meet such requirements within the
prescribed period.
For the purposes of this clause, any defi-
ciency may be assessed before the expira-
tion of such 3-year period notwithstanding
the provisions of any other law or rule of
law which would otherwise prevent such as-
sessment.
‘‘(iii) DESTRUCTION AND LOSS.—For
purposes of this subparagraph, the de-
struction in whole or in part, theft, seizure,
requisition, or condemnation of property,
shall be treated as the sale of such prop-
erty, and rules similar to the rules pro-
vided by subsections (b), (c), (e), and (j) of
section 1034 (as in effect on the day be-
fore the date of the enactment of the Tax-
payer Relief Act of 1997) shall apply.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply with respect to the sale of any
property for which the 3-year period for offsetting gain
by purchasing other property under subparagraph (D) of
section 512(a)(3) of the Internal Revenue Code (as in ef-
fect on the day before the date of the enactment of this
Act) had not expired as of January 1, 2001.
Æ