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PROBLEM: SECTION 1. SHORT TITLE.

This Act may be referred to as the ''Gallatin Range Consolidation
and Protection Act of 1993''.

SEC. 2. FINDINGS.

Congress finds that--
(1) the lands north of Yellowstone National Park possess
outstanding natural characteristics and wildlife habitats that give
the lands high value as lands added to the National Forest System;
and
(2) it is in the interest of the United States for the
Secretary, acting through the Forest Service, to enter into an
option agreement with Big Sky Lumber Company and Louisiana Pacific
Corporation to fulfill the purposes of this Act.

SEC. 3. BIG SKY LUMBER LAND EXCHANGE--GALLATIN AREA.

(a) In General.--Notwithstanding any other provision of law, the
Secretary of Agriculture (referred to in this Act as the ''Secretary'',
unless the context otherwise requires) shall acquire by exchange certain
lands and interests in lands of the Big Sky Lumber Company (referred to
in this Act as the ''Company''), in and adjacent to the Hyalite-
Porcupine-Buffalo Horn Wilderness Study Area, the Scapegoat Wilderness
Area, and other lands in the Gallatin National Forest in accordance with
this section.
(b) Description of Lands.--
(1) Offer and acceptance of land.--If the Company offers to the
United States acceptable fee title, including mineral interests, to
approximately 37,752 acres of land owned by the Company and
available for exchange, as depicted on two maps entitled ''Proposed
BSL Land Acquisitions'', East Half and West Half Gallatin National
Forest, dated February 1993 the Secretary shall accept a warranty
deed to the land.
(2) Exchange.--In exchange for the lands described in paragraph
(1) and subject to valid existing rights, the Secretary of the
Interior shall convey, by patent, the fee title to approximately
16,278 acres of National Forest System lands available for exchange
as depicted on the maps referred to in paragraph (1), and the five
maps entitled ''H.R. 873, the Gallatin Range Consolidation and
Protection Act of 1993'', Lolo and Flathead National Forest, subject
to--
(A) the reservation of ditches and canals required by the
first section of the Act entitled ''An Act making appropriations
for sundry civil expenses of the Government for the fiscal year
ending June thirtieth, eighteen hundred and ninety-one, and for
other purposes'', approved August 30, 1890 (26 Stat. 371,
chapter 837; 43 U.S.C. 945);
(B) the reservation of rights under Federal Oil and Gas
Lease numbers 49739, 55610, 40389, 53670, 40215, 33385, 53736,
and 38684; and
(C) such other terms, conditions, reservations, and
exceptions as may be agreed upon by the Secretary and the
Company.
(3) Termination of leases.--
(A) Vesting of rights and interests.--Upon termination or
relinquishment of the leases referred to in paragraph (2)(B),
all the rights and interests in such leases reserved under
paragraph (2)(B) shall immediately vest in the Company and its
successors and assigns.
(B) Notice.--The Secretary shall provide notice of the
termination or relinquishment of the leases referred to in
paragraph (2)(B) by a document suitable for recording in the
county in which the leased lands are located.
(c) Easements.--
(1) In general.--Reciprocal easements in accordance with this
subsection shall be conveyed at the time of the exchange authorized
by this section.
(2) Conveyance by the secretary.--The Secretary shall, in
consideration of the easements conveyed by the Company under
paragraph (3), and under the authority of section 2 of Public Law
88-257 (commonly known as the ''National Forest Roads and Trails
Act'') (16 U.S.C. 533), or the Federal Lands Policy and Management
Act of 1976 (43 U.S.C. 1701 et seq.), execute and deliver to the
Company such easements or other rights-of-way over federally owned
lands as may be agreed to by the Secretary and the Company.
(3) Conveyance by the company.--The Company shall, in
consideration of the easements conveyed by the Secretary under
paragraph (2), execute and deliver to the United States such
easements or other rights-of-way across Company-owned lands included
in this exchange as may be agreed to by the Secretary and the
Company.
(d) North Bridger Range.--
(1) Covenants and other restrictions.--As a condition of the
exchange, with respect to such lands depicted on the map entitled
''North Bridger Range'', dated May 1993, the Company shall agree
that--
(A) the holders, or their successors or assigns, of grazing
leases on such lands on the date of enactment of this Act shall
be permitted to continue to use such lands for grazing under
terms acceptable to the Company and the permittees for so long
as the Company owns such lands and for two years after the
Company has sold or disposed of such lands; and
(B) the timber harvest practices used on such lands shall be
conducted in accordance with Montana Forestry Best Management
Practices, the Montana Streamside Zone Management Law (Mont.
Code Ann. sec. 77-5-301 et seq.), and all other applicable laws
of the State of Montana.
(2) Future acquisition.--The Secretary shall consider the
desirability of possible acquisition, through exchange under
existing law, of any of the lands described in paragraph (1), and
shall, not later than one year after the date of enactment of this
Act, report to the Committee on Energy and Natural Resources of the
Senate and the Committee on Natural Resources of the House of
Representatives concerning the desirability of an exchange.
(e) Timing of Transaction.--
(1) Determination.--The Secretary shall review the title for the
non-Federal lands described in subsection (b), and the appraisal and
titles for the non-Federal lands described in sections 4 and 5, and,
within sixty days after receipt of all applicable appraisal and
title documents from the Company, determine whether--
(A) the applicable title standards for Federal land
acquisition have been satisfied or the quality of title is
otherwise acceptable to the Secretary;
(B) all draft conveyances and closing documents have been
received and approved;
(C) a current title commitment verifying compliance with
applicable title standards has been issued to the Secretary;
(D) the appraisals comply with applicable Forest Service
standards; and
(E) except as provided in section (8)(b), the title includes
both the surface and subsurface estates without reservation or
exception (except by the United States or the State of Montana,
by patent), including--
(i) minerals or mineral rights;
(ii) timber or timber rights; and
(iii) any other interest in the property.
(2) Conveyance of title.--In the event the appraisal and/or
quality of title do not meet Federal standards or are otherwise
determined unacceptable to the Secretary, the Secretary shall advise
the Company regarding corrective actions necessary to make an
affirmative determination under paragraph (1). The Secretary, acting
through the Chief of the Forest Service, shall effect the conveyance
of lands described in subsection (b)(2) not later than sixty days
after the Secretary has made an affirmative determination under
paragraph (1).
(f) Compliance With Option.--Notwithstanding section (3)(e)(2), the
Secretary shall not consummate the conveyance of lands described in
subsection (b)(2) until the Secretary has determined that title to the
lands described in sections 4 and 5 have been escrowed as required by
the document entitled ''Option Agreement for the Exchange and/or
Purchase of Real Property Pursuant to the Gallatin Range Consolidation
and Protection Act of 1993'' (referred to in this Act as ''the
Option''), executed by the Company, as seller.
(g) References.--References in this Act to the Company shall include
references to the successors and assigns of the Company.

SEC. 4. LAND CONSOLIDATION--PORCUPINE AREA.

(a) Acquisition of Porcupine Property.--The Secretary is authorized
and directed to acquire, by purchase or exchange, lands and interests in
lands listed as ''Exhibit A, Porcupine Area'', in the Option, in
accordance with the terms and conditions of the Option for the fair
market value of such lands and interests, determined at the time of
acquisition, in accordance with the appraisal standards specified in the
Option.
(b) Reports to Congress.--The Secretary shall report annually to the
Committee on Energy and Natural Resources of the Senate and the
Committee on Natural Resources of the House of Representatives, on the
status of the acquisition authorized by this section.

SEC. 5. LAND CONSOLIDATION--TAYLOR FORK AREA.

(a) Acquisition of Taylor Fork Property.--The Secretary is
authorized and directed to acquire, by purchase or exchange, lands and
interests in lands as listed as ''Exhibit A, Taylor Fork Area'', in the
Option, in accordance with the terms and conditions of the Option for
the fair market value of such lands and interests, determined at the
time of acquisition, in accordance with the appraisal standards
specified in the Option.
(b) Reports to Congress.--The Secretary shall report annually to the
Committee on Energy and Natural Resources of the Senate and the
Committee on Natural Resources of the House of Representatives, on the
status of the pending acquisition authorized by this section.

SEC. 6. LAND CONSOLIDATION--GALLATIN ROADED AREA.

(a) Acquisition of Gallatin Roaded Property.--The Secretary is
authorized and directed to acquire, by purchase or exchange, lands and
interests in lands as listed as ''Exhibit A, Gallatin Roaded'', in the
Option, in accordance with the terms and conditions of the Option not
otherwise acquired, purchased, or exchanged under section 3, 4, or 5.
(b) Reports to Congress.--The Secretary shall report annually to the
Committee on Energy and Natural Resources of the Senate and the
Committee on Natural Resources of the House of Representatives, on the
status of the acquisition authorized by this section.

SEC. 7. SEVERED MINERAL EXCHANGE.

(a) Findings.--Congress finds that--
(1) underlying certain areas in Montana described in subsection
(b) are mineral rights owned by subsidiaries of Burlington
Resources, Incorporated and its successors and assigns (referred to
in this Act as ''Burlington'');
(2) there are federally owned minerals underlying lands of
Burlington lying outside those areas;
(3) Burlington has agreed in principle with the Secretary to an
exchange of mineral rights to consolidate surface and subsurface
ownerships and to avoid potential conflicts with the surface
management of the areas; and
(4) it is desirable that an exchange of lands be completed not
later than two years after the date of enactment of this Act.
(b) Mineral Interests.--
(1) Acquisition.--Pursuant to an exchange agreement between the
Secretary and Burlington, the Secretary may acquire mineral
interests owned by Burlington or an affiliate of Burlington
underlying surface lands owned by the United States located in the
areas depicted on the maps entitled ''Severed Minerals Exchange,
Clearwater-Monture Area'', dated September 1988, and ''Severed
Mineral Exchanges, Gallatin Area'', dated September 1988, or in
fractional sections adjacent to the areas depicted on the maps.
(2) Exchange.--In exchange for the mineral interests conveyed to
the Secretary pursuant to paragraph (1), the Secretary of the
Interior shall convey, subject to valid existing rights, such
federally owned mineral interests as the Secretary and Burlington
may agree upon.
(c) Equal Value.--
(1) In general.--The value of the mineral interests exchanged
under subsection (b) shall be approximately equal in value based
upon available information.
(2) Appraisal.--To ensure that the wilderness or other natural
values of the area are not affected by the exchange, a formal
appraisal based upon drilling or other surface disturbing activities
shall not be required for any mineral interest proposed for
exchange, except that the Secretary and Burlington shall fully share
all available information on the quality and quantity of mineral
interests proposed for exchange.
(3) Inadequate information.--In the absence of adequate
information regarding values of minerals proposed for exchange, the
Secretary and Burlington may agree to an exchange on the basis of
mineral interests of similar development potential, geologic
character, and similar factors.
(d) Identification of Federally Owned Mineral Interests.--
(1) In general.--Subject to paragraph (2), mineral interests
conveyed by the United States pursuant to this section shall
underlie lands the surface of which are owned by Burlington.
(2) Other interests.--If there are not sufficient federally
owned mineral interests of approximately equal value underlying
lands owned by Burlington, the Secretary and the Secretary of the
Interior may identify for exchange other federally owned mineral
interests in lands in the State of Montana of which the surface
estate is in private ownership.
(e) Consultation With the Department of the Interior.--
(1) In general.--The Secretary shall consult with the Secretary
of the Interior in the negotiation of the exchange agreement
authorized by subsection (b), particularly with respect to the
inclusion in the agreement of a provision authorizing the exchange
of federally owned mineral interests lying outside the boundaries of
units of the National Forest System.
(2) Conveyance.--Notwithstanding any other law, the Secretary of
the Interior shall convey the federally owned mineral interests
identified in a final exchange agreement between the Secretary of
Agriculture and Burlington and affiliates of Burlington.
(f) Mineral Interest Defined.--For purposes of this section, the
term ''mineral interests'' includes all locatable and leasable minerals,
including oil and gas, geothermal resources, and other subsurface
rights.

SEC. 8. GENERAL PROVISIONS.

(a) Maps.--The maps referred to in sections 3, 4, 5, 6, and 7 are
subject to such minor corrections as may be agreed upon by the Secretary
and the Company. The Secretary shall notify the Committee on Energy and
Natural Resources of the United States Senate and the Committee on
Natural Resources of the United States House of Representatives of any
corrections made pursuant to the subsection. The maps shall be on file
and available for public inspection in the office of Chief, Forest
Service, USDA.
(b) Title of Lands Conveyed to the United States.--
(1) Quality of title and rights.--Subject to paragraph (2), the
rights, title, and interests to lands conveyed to the United States
under sections 4, 5, and 6 shall, at a minimum, consist of the
surface estate and the subsurface rights owned by the Company or
Burlington where applicable.
(2) Exception.--The Secretary may accept title subject to
outstanding or reserved oil and gas and geothermal rights, except
that there shall be no surface occupancy permitted on the lands
acquired by the United States under sections 4, 5, and 6 for access
to reserved or outstanding rights or exploration or development of
such lands.
(3) Access.--No portion of lands acquired by the United States
under this Act shall be available for access to, or exploration or
development of, any reserved or outstanding oil, gas, geothermal, or
other non-Federal property interest.
(c) National Forest Lands.--
(1) In general.--All lands conveyed to the United States under
this Act shall be added to and administered as part of the Gallatin
National Forest of the National Forest System by the Secretary in
accordance with the laws and regulations pertaining to the National
Forest System.
(2) Hyalite-porcupine-buffalo horn wilderness study area.--Lands
acquired within the Hyalite-Porcupine-Buffalo Horn Wilderness Study
Area shall be managed to maintain their presently existing
wilderness character and potential for inclusion in the National
Wilderness Preservation System in accordance with the Montana
Wilderness Study Act of 1977 (16 U.S.C. 1132 note).

SEC. 9. AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated such sums as are necessary
to carry out this Act.

Speaker of the House of Representatives.

Vice President of the United States and
President of the Senate.

SOLUTION: Gallatin Range Consolidation and Protection Act of 1993 - Directs the Secretary of Agriculture to acquire: (1) by exchange from the Big Sky Lumber Company, specified lands and interests north of Yellowstone National Park, including land in and adjacent to the Hyalite-Porcupine-Buffalo Horn Wilderness Study Area, the Scapegoat Wilderness Area, and other lands in the Gallatin National Forest; and (2) by purchase or exchange from the Company, lands and interests in the Porcupine Area, the Taylor Fork Area, and the Gallatin Area. Requires the Secretary of the Interior to convey National Forest System lands as part of such exchange. Sets forth conditions for such exchange with respect to leases and easements. Provides for the continuation of grazing on the North Bridger Range lands and requires timber harvest practices on such lands to be in accordance with the laws of the State of Montana. Authorizes the Secretary of Agriculture, pursuant to an agreement with Burlington Resources, Incorporated, to acquire mineral interests owned by Burlington underlying surface lands owned by the United States and located within the Clearwater-Monture Area and the Gallatin Area. Requires such acquisition to be made through exchange to Burlington of other federally owned mining interests that the parties may agree to. Requires consultation with the Secretary of the Interior in the negotiation of such exchange. Requires all lands conveyed to the United States under this Act to be added to and administered as part of the Gallatin National Forest. Authorizes appropriations.

PROBLEM: SECTION 1. SHORT TITLE.

This Act may be cited as the ''Zero Gravity, Zero Tax Act of
2003''.

SEC. 2. EXCLUSION OF SPACE-RELATED INCOME FROM GROSS INCOME.

(a) In General.--Part III of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to items specifically excluded
from gross income) is amended by redesignating section 140 as section
140A and inserting after section 139 the following new section:

''SEC. 140. SPACE-RELATED INCOME.

''(a) General Rule.--Gross income shall not include space-related
income.
''(b) Space-Related Income.--
''(1) In general.--For purposes of this section, the term
'space-related income' means--
''(A) income derived from the sale by the taxpayer
to an unrelated person of--
''(i) any product or article which is
produced by the taxpayer in outer space, and
''(ii) any service provided by the taxpayer
in or from outer space,
''(B) income of an individual attributable to
services performed in or from outer space by such
individual in a trade or business, and
''(C) any amount not described in subparagraph (A)
or (B) which is interest, rent, royalty, or similar
amount received with respect to production or service
described in subparagraph (A) or (B).
''(2) Exception for telecommunications services, etc.--
Paragraph (1)(A)(ii) shall not apply to--
''(A) any telecommunications service provided from
earth orbit,
''(B) any service provided by a weather or other
earth observation satellite, and
''(C) any other service provided on or before the
date of the enactment of this section of transporting
property to or from outer space.
''(3) Exception for wages.--Paragraph (1) shall not apply
to wages (as defined in section 3401) received by any employee
of an employer.
''(4) Proportional allocation between space-based and
earth-based activities.--In the case of any product or article
which is produced partly in space, space-related income shall
be an amount which bears the same ratio to the amount of gross
income attributable to the sale of such product or article as
the expenses attributable to producing such product or article
in space bears to the total expenses incurred in producing such
product or article.
''(5) Produced.--For purposes of this section, the term
'produced' includes created, fabricated, developed, grown,
manufactured, extracted, processed, cured, and aged.
''(c) Exclusion From Tariffs, Etc.--Any product--
''(1) which is manufactured in outer space, and
''(2) which was--
''(A) launched from, and returned to Earth, within
the United States, or
''(B) Manufactured at a facility in outer space
which is owned by 1 or more United States persons,
shall be exempt from all Federal excises, imposts, and
duties and any other Federal tariffs.
''(d) Phaseout of Benefits.--In the case of a taxable year
beginning after December 31, 2012, the amount excluded under subsection
(a) shall be reduced (but not below zero) by x/10th's of the amount
excludable without regard to this subsection, where 'x' is the number
of years such taxable year is after the last taxable year beginning
before January 1, 2013. A similar rule shall apply to the benefits
under subsection (c).''.
(b) Clerical Amendment.--The table of sections for part III of
subchapter B of chapter 1 of such Code is amended by striking the last
item and inserting the following new items:

''Sec. 140. Space-related income.
''Sec. 140A. Cross references to other
Acts.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2003.

SEC. 3. CREDIT FOR PURCHASE OF QUALIFIED SPACE COMPANY STOCK.

(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to business related
credits) is amended by adding at the end the following new section:

''SEC. 45G. SPACE COMPANY INVESTMENT CREDIT.

''(a) General Rule.--For purposes of section 38, the space company
investment credit determined under this section for any taxable year is
the amount paid in the taxable year for the purchase of qualified stock
in a qualified space company.
''(b) Qualified Space Company.--For purposes of this section--
''(1) In general.--The term 'qualified space company' means
a domestic C corporation if for the 3-taxable-year period
ending with the taxable year immediately preceding the taxable
year in which qualified stock is purchased--
''(A) the average annual gross receipts of such
entity does not exceed $100,000,000, and
''(B) more than 70 percent of such gross receipts
are derived from space-based business.
''(2) Space-based business.--The term 'space-based
business' means a business whose gross receipts are
substantially space-related income, as defined in section
140(b).
''(3) Aggregation rules.--Rules similar to the rules of
section 1202(d)(3) shall apply.
''(c) Qualified Stock.--For purposes of this section--
''(1) In general.--Except as otherwise provided in this
section, the term 'qualified stock' means any stock in a
domestic C corporation if--
''(A) as of the date of issuance of such stock,
such corporation is a qualified space company, and
''(B) except as provided in subsections (f) and
(h), such stock is acquired by the taxpayer at its
original issue (directly or through an underwriter)--
''(i) in exchange for money or other
property (not including stock), or
''(ii) as compensation for services
provided to such corporation (other than
services performed as an underwriter of such
stock).
''(2) Active business requirement.--Stock in a corporation
shall not be treated as qualified stock unless, during
substantially all of the taxpayer's holding period for such
stock--
''(A) such corporation meets active business
requirements substantially similar to the requirements
of section 1202(e), determined on the basis that the
qualified trade or business is a space-based business,
and
''(B) such corporation is a C corporation.
''(3) Certain purchase by corporation of its own stock.--
Rules similar to the rules of section 1202(c)(3) shall apply.
''(e) Recapture.--If, during any taxable year ending with or within
the 10-year period beginning on the date qualified stock was purchased
by the taxpayer, the issuer of such stock ceases to a qualified space
company, the tax under this chapter for such taxable year shall be
increased by the aggregate decrease in the credits allowed under
section 38 for all prior taxable years which would have resulted solely
from reducing to zero any credit determined under subsection (a) with
respect to such stock.
''(f) Termination.--This section shall not apply to stock acquired
after December 31, 2011.''.
(b) Credit Allowed as Part of General Business Credit.--Section
38(b) of such Code (defining current year business credit) is amended
by striking ''plus'' at the end of paragraph (14), by striking the
period at the end of paragraph (15) and inserting '', plus'', and by
adding at the end the following new paragraph:
''(16) space company investment credit determined under
section 45G(a).''.
(c) Conforming Amendments.--
(1) Section 39(d) of such Code is amended by adding at the
end the following new paragraph:
''(11) No carryback of space company investment credit
before january 1, 2004.--No portion of the unused business
credit for any taxable year which is attributable to the space
company investment credit determined under section 45G may be
carried back to a taxable year beginning before January 1,
2004.''.
(2) Subsection (c) of section 196 of such Code is amended
by striking ''and'' at the end of paragraph (9), by striking
the period at the end of paragraph (10) and inserting '',
and'', and by adding at the end the following new paragraph:
''(11) the space company investment credit determined under
section 45G(a).''.
(3) The table of sections for subpart D of part IV of
subchapter A of chapter 1 of such Code is amended by adding at
the end the following new item:

''Sec. 45G. Space Company Investment
Credit.''.
(d) Effective Date.--The amendments made by this section shall
apply to costs paid or incurred in taxable years beginning after
December 31, 2003.

SEC. 4. CAPITAL GAINS EXCLUSION.

(a) In General.--(1) Part I of subchapter P of the Internal Revenue
Code of 1986 (relating to treatment of capital gains) is amended by
adding at the end the following new section:

''SEC. 1203. EXCLUSION FOR GAINS FROM SALE OR EXCHANGE OF STOCK OF
QUALIFIED SPACE CORPORATIONS.

''(a) In General.--Gross income shall not include gain on the sale
or exchange of any stock of a qualified space corporation.
''(b) Qualified Space Corporation.--For purposes of subsection (a),
the term 'qualified space corporation' means, with respect to any
taxable year, a domestic corporation which is a C corporation if--
''(1) such corporation is organized exclusively for
providing to unrelated persons--
''(A) any product or article which is produced
(within the meaning of section 140(b)(5)) by the
corporation in outer space, or
''(B) any service provided by the corporation in or
from outer space, and
''(2) At least 90 percent of the expenses of such
corporation are attributable to the active conduct of a trade
or business of providing a product, article, or service
described in paragraph (1).
Such term shall not include a corporation providing a service, product,
or article described in section 140(b)(2).''.
(2) Clerical Amendment.--The table of sections for part I of
subchapter P of such Code is amended by adding at the end the following
new item:

''Sec. 1203. Exclusion for gains from
sale or exchange of stock of
qualified space
corporations.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2003.

SOLUTION: Zero Gravity, Zero Tax Act of 2003 - Amends the Internal Revenue Code to exclude from gross income: (1) space-related income; and (2) gain on the sale or exchange of any stock of a qualified space corporation.Establishes a space company investment credit for the purchase of qualified stock in a qualified space company.

PROBLEM: SECTION 1. SHORT TITLE.

This Act may be cited as the ''Personal Philanthropy Account Act of
2005''.

SEC. 2. PERSONAL PHILANTHROPY ACCOUNTS.

(a) In General.--Part VII of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to additional itemized
deductions for individuals) is amended by redesignating section 224 as
section 225 and by inserting after section 223 the following new
section:

''SEC. 224. PERSONAL PHILANTHROPY ACCOUNTS.

''(a) Allowance of Deduction.--In the case of an individual, there
shall be allowed as a deduction for the taxable year an amount equal to
the aggregate amount paid in cash during such taxable year by or on
behalf of such individual to a personal philanthropy account of such
individual.
''(b) Personal Philanthropy Account.--For purposes of this section,
the term 'personal philanthropy account' means a trust created or
organized in the United States exclusively for the purpose of making
distributions for the charitable purposes designated by an individual
who is the account holder of the trust (and designated as an personal
philanthropy account at the time created or organized), but only if the
written governing instrument creating the trust meets the following
requirements:
''(1) No contribution will be accepted unless it is in
cash.
''(2) The trustee is a bank (as defined in section 408(n)),
community foundation, or another person who demonstrates to the
satisfaction of the Secretary that the manner in which that
person will administer the trust will be consistent with the
requirements of this section or who has so demonstrated with
respect to any personal philanthropy account and who is not
disqualified under subsection (f).
''(3) No part of the trust assets will be invested in life
insurance contracts.
''(4) The assets of the trust shall not be commingled with
other property except in a common trust fund or common
investment fund.
''(c) Definitions and Special Rules.--For purposes of this
section--
''(1) Default distribution rules.--
''(A) In general.--No account shall be treated as a
personal philanthropy account unless at all times there
are in effect qualified default charitable organization
designations under subparagraphs (B) and (C).
''(B) Qualified default charitable organization
designation.--For purposes of subparagraph (A), a
qualified default charitable organization designation
in effect under this subparagraph is the designation by
the account holder of an organization to which the
remainder of such account may be made in the form of a
qualified philanthropy payment upon the death of the
account holder in any case in which the account holder
fails to provide by will or other suitable estate
document for the distribution of the assets of such
account.
''(C) Trustee designation.--For purposes of
subparagraph (A), a qualified default charitable
organization designation in effect under this
subparagraph is the designation by the trustee of the
personal philanthropy account of an organization to
which a payment under subparagraph (B) will be made if
the organization designated under subparagraph (B) is
not qualified to receive a qualified philanthropy
payment at the time of such payment.
''(2) Minimum distribution requirements.--
''(A) In general.--No account shall be treated as a
personal philanthropy account for a taxable year unless
such account meets the minimum distribution
requirements for such taxable year.
''(B) Minimum distribution requirement.--An account
meets the minimum distribution requirements for a
taxable year if the aggregate distributions from the
account for the taxable year are not less than 5
percent of the balance of such account as of the last
day of the preceding taxable year.
''(C) Exception for accounts with a balance of less
than $10,000.--Subparagraph (A) shall not apply to any
account for a taxable year if the balance of such
account as of the last day of the preceding taxable
year is less than $10,000.
''(3) Denial of deduction to dependents.--No deduction
shall be allowed under this section to any individual with
respect to whom a deduction under section 151 is allowable to
another taxpayer for a taxable year beginning in the calendar
year in which such individual's taxable year begins.
''(4) Community foundation.--For purposes of this section,
the term 'community foundation' means a non-sectarian
organization--
''(A) whose long-term goal is to build permanent,
named component funds established by many separate
donors for the broad-based charitable benefit of the
residents of a defined geographic area, and
''(B) which--
''(i) is described in section 501(c)(3) and
exempt from tax under section 501(a),
''(ii) is not a private foundation, and
''(iii) is not controlled directly or
indirectly by one or more disqualified persons
(as defined in section 4946, determined without
regard to subsection (a)(1)(B) thereof).
''(d) Tax Treatment of Distributions.--
''(1) In general.--Any distribution from a personal
philanthropy account shall be includible in the gross income of
the account holder in the manner as provided in section 72.
''(2) Qualified philanthropy payments.--
''(A) In general.--No amount shall be includible in
gross income under paragraph (1) to the extent that
such distribution is a qualified philanthropy payment.
''(B) Qualified philanthropy payment defined.--For
purposes of this section, the term 'qualified
philanthropy payment' means a distribution from a
personal philanthropy account--
''(i) which is made, pursuant to a request
by the account holder, by the trustee of the
account within 30 days after receipt by the
trustee of a certification under subparagraph
(C), and
''(ii) which is paid for a purpose
specified in section 170(c).
A trustee who fails to meet the 30-day requirement of
clause (i) shall be subject to disqualification as a
trustee.
''(C) Organization certification.--For purposes of
subparagraph (B)(i), a certification under this
subparagraph is a certification by an organization
pursuant to a written request by the trustee of a
personal philanthropy account that the organization is
an organization which--
''(i) is described in section 501(c)(3) and
exempt from tax under section 501(a), and
''(ii) is not a personal philanthropy
account.
''(D) Coordination with charitable contributions.--
''(i) No deduction shall be allowed under
sections 170, 642(c), 2055, 2106(a)(2), or 2522
for any amount excluded from gross income under
subparagraph (A),
''(ii) under regulations, the amount
allowable as a deduction under sections 170,
642(c), 2055, 2106(a)(2), or 2522 (as
appropriate) for the taxable year (without
regard to this clause) shall be reduced by the
amount excluded from gross income for the
taxable year under subparagraph (A), and
''(iii) section 170(d) shall not apply to
any amount excluded from gross income under
subparagraph (A).
''(3) Rollover contributions.--
''(A) In general.--Paragraph (1) shall not apply to
any amount paid or distributed from a personal
philanthropy account to the extent that the amount
received is paid, not later than the 60th day after the
date of such payment or distribution, into another
personal philanthropy account of the same account
holder. The preceding sentence shall not apply to any
payment or distribution if it applied to any prior
payment or distribution during the 12-month period
ending on the date of the payment or distribution.
''(B) Heir.--Paragraph (1) shall not apply to any
amount paid or distributed from a personal philanthropy
account of a decedent to the extent that the amount
received is paid, not later than the 60th day after the
date of such payment or distribution, into the personal
philanthropy account of an heir of the decedent, as
designated by the will of the decedent.
''(e) Tax Treatment of Account.--
''(1) In general.--A personal philanthropy account shall be
exempt from taxation under this subtitle. Notwithstanding the
preceding sentence, the personal philanthropy account shall be
subject to the taxes imposed by section 511 (relating to
imposition of tax on unrelated business income of charitable
organizations).
''(2) Account terminations.--Rules similar to the rules of
paragraphs (2) and (4) of section 408(e) shall apply to any
personal philanthropy account.
''(f) Disqualification of Trustee.--The trustee of a personal
philanthropy account shall not be qualified to be a trustee of such
account after a final determination by the Secretary that the trustee
has disbursed more than 10 percent of its payments from personal
philanthropy accounts to non-qualifying organizations in a calendar
year.
''(g) Reports.--The trustee of a personal philanthropy account
shall make such reports regarding such account to the Secretary and to
the holder the account with respect to contributions, distributions,
and such other matters as the Secretary may require. The reports
required by this subsection shall be filed at such time and in such
manner and furnished to such individuals at such time and in such
manner as may be required.''.
(b) Deduction Allowed Whether or not Individual Itemizes Other
Deductions.--Subsection (a) of section 62 of such Code is amended by
inserting before the flush sentence at the end the following new
paragraph:
''(21) Personal philanthropy accounts.--The deduction
allowed under section 224.''.
(c) Exclusion for Employer Contributions to Personal Philanthropy
Accounts.--
(1) In general.--Part III of subchapter B of chapter 1 of
such Code is amended by inserting after section 139A the
following new section:

''SEC. 139B. CONTRIBUTIONS BY EMPLOYER TO PERSONAL PHILANTHROPY
ACCOUNTS.

''(a) In General.--Gross income of an employee does not include
contributions by the employer to the personal philanthropy account of
the employee.
''(b) Personal Philanthropy Account.--For purposes of this section,
the term 'personal philanthropy account' shall have the meaning given
to such term by section 224.
''(c) Exclusion not to Exceed Compensation.--
''(1) Employees.--The amount excluded from gross income by
subsection (a) with respect to an employee shall not exceed
such employee's wages, salaries, tips, and other employee
compensation which are attributable to such employee's
employment by the employer referred to in such subsection.
''(2) Self-employed individuals.--The amount excluded from
gross income by subsection (a) for contributions with respect
to an individual who is self employed shall not exceed such
individual's earned income (as defined in section 401(c)(2))
derived by the taxpayer from the trade or business with respect
to which the individual is self-employed.
''(3) Community property laws not to apply.--The
limitations under this subsection shall be determined without
regard to community property laws.''.
(2) Conforming amendments.--
(A) Section 3121(a) of such Code is amended by
striking ''or'' at the end of paragraph (21), by
striking the period at the end of paragraph (22) and
inserting ''; or '', and by inserting after paragraph
(22) the following new paragraph:
''(23) any payment made to a personal philanthropy account
(as defined in section 224) of an employee.''.
(B) Section 3231(e) of such Code is amended by
adding at the end the following new paragraph:
''(13) Personal philanthropy account contributions.--The
term 'compensation' shall not include any payment made to a
personal philanthropy account (as defined in section 224) of an
employee.''.
(C) Section 3306(b) of such Code is amended by
striking ''or'' at the end of paragraph (18), by
striking the period at the end of paragraph (19) and
inserting ''; or'', and by inserting after paragraph
(19) the following new paragraph:
''(20) any payment made to a personal philanthropy account
(as defined in section 224) of an employee.''.
(D) Section 3401(a) of such Code is amended by
striking ''or'' at the end of paragraph (21), by
striking the period at the end of paragraph (22) and
inserting ''; or'', and by inserting after paragraph
(22) the following new paragraph:
''(23) any payment made to a personal philanthropy account
(as defined in section 224) of an employee.''.
(E) Section 6051(a) of such Code is amended by
striking ''and'' at the end of paragraph (12), by
striking the period at the end of paragraph (13) and
inserting '', and'', and by inserting after paragraph
(13) the following new paragraph:
''(14) the amount contributed to any personal philanthropy
account (as defined in section 224) of such employee or such
employee's spouse.''.
(d) Prohibited Transactions.--
(1) Exception for taxable distributions from personal
philanthropy accounts.--Subsection (c) of section 4975 of such
Code (defining to prohibited transaction) is amended by adding
at the end the following new paragraph:
''(7) Special rule for personal philanthropy accounts.--An
individual for whose benefit a personal philanthropy account is
established and any contributor to such account shall be exempt
from the tax imposed by this section with respect to any
transaction concerning such account (which would otherwise be
taxable under this section) if section 224(d) applies with
respect to such transaction.''.
(2) Plan defined.--Paragraph (1) of section 4975(e) of such
Code is amended by striking ''or'' at the end of subparagraph
(F), by striking the period at the end of subparagraph (G) and
inserting '', or'', and by inserting after subparagraph (G) the
following new subparagraph:
''(H) a personal philanthropy account described in
section 224.''.
(e) Penalty on Failure to Report.--Paragraph (2) of section 6693(a)
of such Code (relating to provisions) is amended by striking ''and'' at
the end of subparagraph (D), by striking the period at the end of
subparagraph (E) and inserting '', and'', and by inserting after
subparagraph (E) the following new subparagraph:
''(F) section 224(f) (relating to personal
philanthropy accounts).''.
(f) Conforming Amendment.--Paragraph (2) of section 26(b) of such
Code is amended by striking ''and'' at the end of subparagraph (R), by
striking the period at the end of subparagraph (S) and inserting '',
and'', and by adding at the end the following new subparagraph:
''(T) section 224(d)(3) relating to (relating to
additional tax with respect to distributions not used
for charitable contribution purposes).''.
(g) Clerical Amendments.--
(1) The table of sections for part VII of subchapter B of
chapter 1 of such Code is amended by redesignating the item
relating to section 224 as an item relating to section 225 and
by inserting after the item relating to section 223 the
following new item:

''Sec. 224. Personal philanthropy accounts.''.
(2) The table of sections for part III of subchapter B of
chapter 1 of such Code is amended by inserting after the item
relating to section 139A the following new item:

''Sec. 139B. Contributions by employer to personal philanthropy
accounts.''.
(h) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2004.

SOLUTION:
Personal Philanthropy Account Act of 2005 - Amends the Internal Revenue Code to allow a tax deduction (whether or not the taxpayer itemizes deductions) for cash contributions to a personal philanthropy account. Defines "personal philanthropy account" as a tax-exempt trust created to make distributions for charitable purposes. Sets forth rules providing for default charitable distributions in the event of an account holder's death and minimum annual distribution requirements.

Allows an exclusion from the gross income of an employee for contributions made by an employer to the employee's personal philanthropy account.