To amend the Internal Revenue Code of 1986 to provide incentives for charitable contributions by individuals and businesses, and for other purposes.

September 27, 2005

Mr. BLUNT (for himself, Mr. AKIN, Mr. BACHUS, Mr. BARTLETT of Maryland, Mr. BISHOP of Georgia, Mr. BOOZMAN, Mr. CANTOR, Mr. CULBERSON, Mr. DOOLITTLE, Mr. DUNCAN, Mr. EMANUEL, Mr. FOLEY, Mr. FORD, Mr. FOSSELLA, Mr. FRANKS of Arizona, Mr. GARRETT of New Jersey, Mr. GILLMOR, Mr. GRAVES, Mr. GREEN of Wisconsin, Ms. HARRIS, Ms. HART, Mr. HASTERT, Mr. HAYES, Ms. HOOLEY, Mr. HOSTETTLER, Mr. HULSHOF, Mr. KENNEDY of Minnesota, Mr. KING of Iowa, Mr. KINGSTON, Mr. MCCOTTER, Mr. MILLER of Florida, Mr. MORAN of Kansas, Ms. NORTON, Mr. OTTER, Mr. PAUL, Mr. PENCE, Mr. PITTS, Mr. RAMSTAD, Mr. REGULA, Mr. RENZI, Mr. ROGERS of Michigan, Mr. SESSIONS, Mr. SHAYS, Mr. SMITH of Texas, Mr. SOUDER, Mr. STEARNS, Mr. TIAHRT, Mr. WAMP, Mr. WELDON of Florida, Mr. WILSON of South Carolina, Mr. REICHERT, Mr. SHAW, Mr. GORDON, Mr. RUPPERSBERGER, Mr. REYNOLDS, Mr. SWEENEY, Ms. GINNY BROWN-WAITE of Florida, Mr. FERGUSON, Mr. PICKERING, Mr. MCCAUL of Texas, Mr. BROWN of South Carolina, Mr. ROGERS of Alabama, Mr. CRENSHAW, Mr. DELAY, Mr. ISSA, Mr. HERGER, Mrs. BIGGERT, and Mr. WICKER) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To amend the Internal Revenue Code of 1986 to provide incentives for charitable contributions by individuals and businesses, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; ETC.

(a) Short Title- This Act may be cited as the `Charitable Giving Act of 2005'.

(b) Amendment of 1986 Code- Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

(c) Table of Contents- The table of contents of this Act is as follows:

Sec. 1. Short title; etc.

Sec. 2. Encouraging all Americans to increase their charitable giving.

TITLE I--CHARITABLE GIVING INCENTIVES

Sec. 101. Deduction for portion of charitable contributions to be allowed to individuals who do not itemize deductions.

Sec. 102. Tax-free distributions from individual retirement plans for charitable purposes.

Sec. 103. Increase in cap on corporate charitable contributions.

Sec. 104. Charitable deduction for contributions of food inventory.

Sec. 105. Reform of certain excise taxes related to private foundations.

Sec. 106. Excise tax on unrelated business taxable income of charitable remainder trusts.

Sec. 107. Expansion of charitable contribution allowed for scientific property used for research and for computer technology and equipment used for educational purposes.

Sec. 108. Adjustment to basis of S corporation stock for certain charitable contributions.

Sec. 109. Charitable organizations permitted to make collegiate housing and infrastructure grants.

Sec. 110. Conduct of certain games of chance not treated as unrelated trade or business.

Sec. 111. Excise taxes exemption for blood collector organizations.

Sec. 112. Nonrecognition of gain on the sale of property used in performance of an exempt function.

Sec. 113. Exemption of qualified 501(c)(3) bonds for nursing homes from Federal guarantee prohibitions.

TITLE II--TAX REFORM AND IMPROVEMENTS RELATING TO CHARITABLE ORGANIZATIONS AND PROGRAMS

Sec. 201. Clarification of definition of church tax inquiry.

Sec. 202. Extension of declaratory judgment remedy to tax-exempt organizations.

Sec. 203. Landowner incentives programs.

Sec. 204. Modifications to section 512(b)(13).

Sec. 205. Simplification of lobbying expenditure limitation.

Sec. 206. Pilot project for forest conservation activities.

TITLE III--OTHER PROVISIONS

Sec. 301. Compassion capital fund.

Sec. 302. Reauthorization of Assets for Independence demonstration.

Sec. 303. Sense of the Congress regarding corporate contributions to faith-based organizations, etc.

Sec. 304. Maternity group homes.

Sec. 305. Authority of States to use 10 percent of their TANF funds to carry out social services block grant programs.

SEC. 2. ENCOURAGING ALL AMERICANS TO INCREASE THEIR CHARITABLE GIVING.

(a) Findings- The Congress finds that--

(1) individual charitable giving rates among Americans have stagnated at 1.5 to 2.2 percent of aggregate individual income for the past 50 years;

(2) a one percent increase (from two to three percent) in charitable giving will generate over $90,000,000,000 to charity;

(3) charitable giving is a significant source of funding for health, education, and welfare programs; and

(4) a one percent increase in charitable giving may reduce the Federal deficit, reduce the call for tax increases, and provide funds to benefit our national health, education, and welfare goals.

(b) Policy- The Congress encourages all Americans to increase their charitable giving, with the goal of increasing the annual amount of charitable giving in the United States by one percent.

TITLE I--CHARITABLE GIVING INCENTIVES

SEC. 101. DEDUCTION FOR PORTION OF CHARITABLE CONTRIBUTIONS TO BE ALLOWED TO INDIVIDUALS WHO DO NOT ITEMIZE DEDUCTIONS.

(a) In General- Section 170 (relating to charitable, etc., contributions and gifts) is amended by redesignating subsection (o) as subsection (p) and by inserting after subsection (n) the following new subsection:

`(o) Deduction for Individuals not Itemizing Deductions-

`(1) IN GENERAL- In the case of an individual who does not itemize deductions for a taxable year, there shall be taken into account as a direct charitable deduction under section 63 an amount equal to the amount allowable under subsection (a) for the taxable year for cash contributions (determined without regard to any carryover), to the extent that such contributions exceed $250 ($500 in the case of a joint return) but do not exceed $500 ($1,000 in the case of a joint return).

`(2) TERMINATION- Paragraph (1) shall not apply to any taxable year beginning after December 31, 2006.'.

(b) Direct Charitable Deduction-

(1) IN GENERAL- Subsection (b) of section 63 (defining taxable income) is amended by striking `and' at the end of paragraph (1), by striking the period at the end of paragraph (2) and inserting `, and', and by adding at the end the following new paragraph:

`(3) the direct charitable deduction.'.

(2) DEFINITION- Section 63 is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection:

`(g) Direct Charitable Deduction- For purposes of this section, the term `direct charitable deduction' means that portion of the amount allowable under section 170(a) which is taken as a direct charitable deduction for the taxable year under section 170(o).'.

(3) CONFORMING AMENDMENT- Subsection (d) of section 63 is amended by striking `and' at the end of paragraph (1), by striking the period at the end of paragraph (2) and inserting `, and', and by adding at the end the following new paragraph:

`(3) the direct charitable deduction.'.

(c) Study-

(1) IN GENERAL- The Secretary of the Treasury shall study the effect of the amendments made by this section on increased charitable giving and taxpayer compliance, including a comparison of taxpayer compliance between taxpayers who itemize their charitable contributions and taxpayers who claim a direct charitable deduction.

(2) REPORT- Not later than December 31, 2007, the Secretary of the Treasury shall report on the study required under paragraph (1) to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives.

(d) Effective Date- The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

SEC. 102. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT PLANS FOR CHARITABLE PURPOSES.

(a) In General- Subsection (d) of section 408 (relating to individual retirement accounts) is amended by adding at the end the following new paragraph:

`(8) DISTRIBUTIONS FOR CHARITABLE PURPOSES-

`(A) IN GENERAL- No amount shall be includible in gross income by reason of a qualified charitable distribution.

`(B) QUALIFIED CHARITABLE DISTRIBUTION- For purposes of this paragraph, the term `qualified charitable distribution' means any distribution from an individual retirement plan other than a plan described in subsection (k) or (p) of section 408--

`(i) which is made on or after the date that the individual for whose benefit the plan is maintained has attained age 70 1/2 , and

`(ii) which is made directly by the trustee--

`(I) to an organization described in section 170(c), or

`(II) to a split-interest entity.

A distribution shall be treated as a qualified charitable distribution only to the extent that the distribution would be includible in gross income without regard to subparagraph (A) and, in the case of a distribution to a split-interest entity, only if no person holds an income interest in the amounts in the split-interest entity attributable to such distribution other than one or more of the following: the individual for whose benefit such plan is maintained, the spouse of such individual, or any organization described in section 170(c).

`(C) CONTRIBUTIONS MUST BE OTHERWISE DEDUCTIBLE- For purposes of this paragraph--

`(i) DIRECT CONTRIBUTIONS- A distribution to an organization described in section 170(c) shall be treated as a qualified charitable distribution only if a deduction for the entire distribution would be allowable under section 170 (determined without regard to subsection (b) thereof and this paragraph).

`(ii) SPLIT-INTEREST GIFTS- A distribution to a split-interest entity shall be treated as a qualified charitable distribution only if a deduction for the entire value of the interest in the distribution for the use of an organization described in section 170(c) would be allowable under section 170 (determined without regard to subsection (b) thereof and this paragraph).

`(D) APPLICATION OF SECTION 72- Notwithstanding section 72, in determining the extent to which a distribution is a qualified charitable distribution, the entire amount of the distribution shall be treated as includible in gross income without regard to subparagraph (A) to the extent that such amount does not exceed the aggregate amount which would have been so includible if all amounts distributed from all individual retirement plans were treated as 1 contract under paragraph (2)(A) for purposes of determining the inclusion of such distribution under section 72. Proper adjustments shall be made in applying section 72 to other distributions in such taxable year and subsequent taxable years.

`(E) SPECIAL RULES FOR SPLIT-INTEREST ENTITIES-

`(i) CHARITABLE REMAINDER TRUSTS- Notwithstanding section 664(b), distributions made from a trust described in subparagraph (G)(i) shall be treated as ordinary income in the hands of the beneficiary to whom is paid the annuity described in section 664(d)(1)(A) or the payment described in section 664(d)(2)(A).

`(ii) POOLED INCOME FUNDS- No amount shall be includible in the gross income of a pooled income fund (as defined in subparagraph (G)(ii)) by reason of a qualified charitable distribution to such fund, and all distributions from the fund which are attributable to qualified charitable distributions shall be treated as ordinary income to the beneficiary.

`(iii) CHARITABLE GIFT ANNUITIES- Qualified charitable distributions made for a charitable gift annuity shall not be treated as an investment in the contract.

`(F) DENIAL OF DEDUCTION- Qualified charitable distributions shall not be taken into account in determining the deduction under section 170.

`(G) SPLIT-INTEREST ENTITY DEFINED- For purposes of this paragraph, the term `split-interest entity' means--

`(i) a charitable remainder annuity trust or a charitable remainder unitrust (as such terms are defined in section 664(d)) which must be funded exclusively by qualified charitable distributions,

`(ii) a pooled income fund (as defined in section 642(c)(5)), but only if the fund accounts separately for amounts attributable to qualified charitable distributions, and

`(iii) a charitable gift annuity (as defined in section 501(m)(5)).'.

(b) Modifications Relating to Information Returns by Certain Trusts-

(1) RETURNS- Section 6034 (relating to returns by trusts described in section 4947(a)(2) or claiming charitable deductions under section 642(c)) is amended to read as follows:

`SEC. 6034. RETURNS BY TRUSTS DESCRIBED IN SECTION 4947(a)(2) OR CLAIMING CHARITABLE DEDUCTIONS UNDER SECTION 642(c).

`(a) Trusts Described in Section 4947(a)(2)- Every trust described in section 4947(a)(2) shall furnish such information with respect to the taxable year as the Secretary may by forms or regulations require.

`(b) Trusts Claiming a Charitable Deduction Under Section 642(c)-

`(1) IN GENERAL- Every trust not required to file a return under subsection (a) but claiming a deduction under section 642(c) for the taxable year shall furnish such information with respect to such taxable year as the Secretary may by forms or regulations prescribe, including--

`(A) the amount of the deduction taken under section 642(c) within such year,

`(B) the amount paid out within such year which represents amounts for which deductions under section 642(c) have been taken in prior years,

`(C) the amount for which such deductions have been taken in prior years but which has not been paid out at the beginning of such year,

`(D) the amount paid out of principal in the current and prior years for the purposes described in section 642(c),

`(E) the total income of the trust within such year and the expenses attributable thereto, and

`(F) a balance sheet showing the assets, liabilities, and net worth of the trust as of the beginning of such year.

`(2) EXCEPTIONS- Paragraph (1) shall not apply to a trust for any taxable year if--

`(A) all the net income for such year, determined under the applicable principles of the law of trusts, is required to be distributed currently to the beneficiaries, or

`(B) the trust is described in section 4947(a)(1).'.

(2) INCREASE IN PENALTY RELATING TO FILING OF INFORMATION RETURN BY SPLIT-INTEREST TRUSTS- Paragraph (2) of section 6652(c) (relating to returns by exempt organizations and by certain trusts) is amended by adding at the end the following new subparagraph:

`(C) SPLIT-INTEREST TRUSTS- In the case of a trust which is required to file a return under section 6034(a), subparagraphs (A) and (B) of this paragraph shall not apply and paragraph (1) shall apply in the same manner as if such return were required under section 6033, except that--

`(i) the 5 percent limitation in the second sentence of paragraph (1)(A) shall not apply,

`(ii) in the case of any trust with gross income in excess of $250,000, the first sentence of paragraph (1)(A) shall be applied by substituting `$100' for `$20', and the second sentence thereof shall be applied by substituting `$50,000' for `$10,000', and

`(iii) the third sentence of paragraph (1)(A) shall be disregarded.

In addition to any penalty imposed on the trust pursuant to this subparagraph, if the person required to file such return knowingly fails to file the return, such penalty shall also be imposed on such person who shall be personally liable for such penalty.'.

(3) CONFIDENTIALITY OF NONCHARITABLE BENEFICIARIES- Subsection (b) of section 6104 (relating to inspection of annual information returns) is amended by adding at the end the following new sentence: `In the case of a trust which is required to file a return under section 6034(a), this subsection shall not apply to information regarding beneficiaries which are not organizations described in section 170(c).'.

(c) Effective Dates-

(1) SUBSECTION (a)- The amendment made by subsection (a) shall apply to distributions made after the date of the enactment of this Act.

(2) SUBSECTION (b)- The amendments made by subsection (b) shall apply to returns for taxable years beginning after the date of the enactment of this Act.

SEC. 103. INCREASE IN CAP ON CORPORATE CHARITABLE CONTRIBUTIONS.

(a) In General- Paragraph (2) of section 170(b) (relating to corporations) is amended by striking `10 percent' and inserting `the applicable percentage'.

(b) Applicable Percentage- Subsection (b) of section 170 is amended by adding at the end the following new paragraph:

`(3) APPLICABLE PERCENTAGE DEFINED- For purposes of paragraph (2), the applicable percentage shall be determined in accordance with the following table:

`For taxable years beginning

--The applicable

in calendar year--

--percentage is--

2005

--11

2006

--12

2007

--13

2008

--14

2009, 2010, 2011, and 2012

--15

2013 and thereafter

--20.'.

(c) Conforming Amendments-

(1) Sections 512(b)(10) and 805(b)(2)(A) are each amended by striking `10 percent' each place it occurs and inserting `the applicable percentage (determined under section 170(b)(3))'.

(2) Section 545(b)(2) is amended by striking `10-percent limitation' and inserting `applicable percentage limitation'.

(d) Effective Date- The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

SEC. 104. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD INVENTORY.

(a) In General- Paragraph (3) of section 170(e) (relating to special rule for certain contributions of inventory and other property) is amended by redesignating subparagraph (C) as subparagraph (D) and by inserting after subparagraph (B) the following new subparagraph:

`(C) SPECIAL RULE FOR CONTRIBUTIONS OF FOOD INVENTORY-

`(i) GENERAL RULE- In the case of a charitable contribution of food from any trade or business (or interest therein) of the taxpayer, this paragraph shall be applied--

`(I) without regard to whether the contribution is made by a C corporation, and

`(II) only to food that is apparently wholesome food.

`(ii) LIMITATION- In the case of a taxpayer other than a C corporation, the aggregate amount of such contributions for any taxable year which may be taken into account under this section shall not exceed the applicable percentage (within the meaning of subsection (b)(3)) of the taxpayer's aggregate net income for such taxable year from all trades or businesses from which such contributions were made for such year, computed without regard to this section.

`(iii) DETERMINATION OF FAIR MARKET VALUE- In the case of a qualified contribution of apparently wholesome food to which this paragraph applies and which, solely by reason of internal standards of the taxpayer or lack of market, cannot or will not be sold, the fair market value of such food shall be determined by taking into account the price at which the same or substantially the same food items (as to both type and quality) are sold by the taxpayer at the time of the contribution (or, if not so sold at such time, in the recent past).

`(iv) APPARENTLY WHOLESOME FOOD- For purposes of this subparagraph, the term `apparently wholesome food' has the meaning given to such term by section 22(b)(2) of the Bill Emerson Good Samaritan Food Donation Act (42 U.S.C. 1791(b)(2)), as in effect on the date of the enactment of this subparagraph.'.

(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

SEC. 105. REFORM OF CERTAIN EXCISE TAXES RELATED TO PRIVATE FOUNDATIONS.

(a) Repeal of Reduction in Tax Where Private Foundation Meets Certain Distribution Requirements- Section 4940 (relating to excise tax based on investment income) is amended by striking subsection (e).

(b) Modification of Excise Tax on Self-Dealing- The second sentence of section 4941(a)(1) (relating to initial excise tax imposed on self-dealer) is amended by striking `5 percent' and inserting `25 percent'.

(c) Modification of Excise Tax on Failure to Distribute Income-

(1) CERTAIN ADMINISTRATIVE EXPENSES NOT TREATED AS DISTRIBUTIONS- Section 4942(g) is amended by striking paragraph (4) and inserting the following new paragraphs:

`(4) LIMITATION ON ADMINISTRATIVE EXPENSES TREATED AS DISTRIBUTIONS-

`(A) IN GENERAL- For purposes of paragraph (1)(A), the following administrative expenses shall not be treated as qualifying distributions:

`(i) Any administrative expense which is not directly attributable to direct charitable activities, grant selection activities, grant monitoring and administration activities, compliance with applicable Federal, State, or local law, or furthering public accountability of the private foundation.

`(ii) Any compensation paid to a disqualified person to the extent that such compensation exceeds an annual rate of $100,000.

`(iii) Any expense incurred for transportation by air unless such transportation is regularly-scheduled commercial air transportation.

`(iv) Any expense incurred for regularly-scheduled commercial air transportation to the extent that such expense exceeds the cost of such transportation in coach-class accommodations.

`(B) ADJUSTMENT FOR INFLATION- In the case of a taxable year beginning after December 31, 2006, the $100,000 amount in subparagraph (A)(ii) shall be increased by an amount equal to--

`(i) such dollar amount, multiplied by

`(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting `calendar year 2005' for `calendar year 1992' in subparagraph (B) thereof.

If any amount as increased under the preceding sentence is not a multiple of $50, such amount shall be rounded to the next lowest multiple of $50.

`(5) REGULATIONS- The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of paragraph (4). Such regulations shall provide that administrative expenses which are excluded from qualifying distributions solely by reason of the limitations in paragraph (4) shall not for such reason subject a private foundation to any other excise taxes imposed by this subchapter.'.

(2) DISALLOWANCE NOT TO APPLY TO CERTAIN PRIVATE FOUNDATIONS-

(A) IN GENERAL- Section 4942(j)(3) (defining operating foundation) is amended--

(i) by striking `(within the meaning of paragraph (1) or (2) of subsection (g))' each place it appears, and

(ii) by adding at the end the following new sentence: `For purposes of this paragraph, the term `qualifying distributions' means qualifying distributions within the meaning of paragraph (1) or (2) of subsection (g) (determined without regard to subsection (g)(4)).'.

(B) CONFORMING AMENDMENT- Section 4942(f)(2)(C)(i) is amended by inserting `(determined without regard to subsection (g)(4))' after `within the meaning of subsection (g)(1)(A)'.

(d) Effective Date- The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

SEC. 106. EXCISE TAX ON UNRELATED BUSINESS TAXABLE INCOME OF CHARITABLE REMAINDER TRUSTS.

(a) In General- Subsection (c) of section 664 (relating to exemption from income taxes) is amended to read as follows:

`(c) Taxation of Trusts-

`(1) INCOME TAX- A charitable remainder annuity trust and a charitable remainder unitrust shall, for any taxable year, not be subject to any tax imposed by this subtitle.

`(2) EXCISE TAX-

`(A) IN GENERAL- In the case of a charitable remainder annuity trust or a charitable remainder unitrust that has unrelated business taxable income (within the meaning of section 512, determined as if part III of subchapter F applied to such trust) for a taxable year, there is hereby imposed on such trust or unitrust an excise tax equal to the amount of such unrelated business taxable income.

`(B) CERTAIN RULES TO APPLY- The tax imposed by subparagraph (A) shall be treated as imposed by chapter 42 for purposes of this title other than subchapter E of chapter 42.

`(C) CHARACTER OF DISTRIBUTIONS AND COORDINATION WITH DISTRIBUTION REQUIREMENTS- The amounts taken into account in determining unrelated business taxable income (as defined in subparagraph (A)) shall not be taken into account for purposes of--

`(i) subsection (b),

`(ii) determining the value of trust assets under subsection (d)(2), and

`(iii) determining income under subsection (d)(3).

`(D) TAX COURT PROCEEDINGS- For purposes of this paragraph, the references in section 6212(c)(1) to section 4940 shall be deemed to include references to this paragraph.'.

(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

SEC. 107. EXPANSION OF CHARITABLE CONTRIBUTION ALLOWED FOR SCIENTIFIC PROPERTY USED FOR RESEARCH AND FOR COMPUTER TECHNOLOGY AND EQUIPMENT USED FOR EDUCATIONAL PURPOSES.

(a) Scientific Property Used for Research-

(1) IN GENERAL- Clause (ii) of section 170(e)(4)(B) (defining qualified research contributions) is amended by inserting `or assembled' after `constructed'.

(2) CONFORMING AMENDMENT- Clause (iii) of section 170(e)(4)(B) is amended by inserting `or assembling' after `construction'.

(b) Computer Technology and Equipment for Educational Purposes-

(1) IN GENERAL- Clause (ii) of section 170(e)(6)(B) is amended by inserting `or assembled' after `constructed' and `or assembling' after `construction'.

(2) 2-YEAR EXTENSION- Subparagraph (G) of section 170(e)(6) is amended by striking `2005' and inserting `2007'.

(3) CONFORMING AMENDMENTS- Subparagraph (D) of section 170(e)(6) is amended by inserting `or assembled' after `constructed' and `or assembling' after `construction'.

(c) Effective Date- The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

SEC. 108. ADJUSTMENT TO BASIS OF S CORPORATION STOCK FOR CERTAIN CHARITABLE CONTRIBUTIONS.

(a) In General- Paragraph (2) of section 1367(a) (relating to adjustments to basis of stock of shareholders, etc.) is amended by adding at the end the following new flush sentence:

`The decrease under subparagraph (B) by reason of a charitable contribution (as defined in section 170(c)) of property shall be the amount equal to the shareholder's pro rata share of the adjusted basis of such property.'.

(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

SEC. 109. CHARITABLE ORGANIZATIONS PERMITTED TO MAKE COLLEGIATE HOUSING AND INFRASTRUCTURE GRANTS.

(a) In General- Section 501 (relating to exemption from tax on corporations, certain trusts, etc.) is amended by redesignating subsection (q) as subsection (r) and by inserting after subsection (p) the following new subsection:

`(q) Treatment of Organizations Making Collegiate Housing and Infrastructure Improvement Grants-

`(1) IN GENERAL- For purposes of subsection (c)(3) and sections 170(c)(2)(B), 2055(a), and 2522(a)(2), an organization shall not fail to be treated as organized and operated exclusively for charitable or educational purposes solely because such organization makes collegiate housing and infrastructure grants to an organization described in subsection (c)(7), so long as, at the time of the grant, substantially all of the active members of the recipient organization are full-time students at the college or university with which such recipient organization is associated.

`(2) HOUSING AND INFRASTRUCTURE GRANTS- For purposes of paragraph (1), collegiate housing and infrastructure grants are grants to provide, improve, operate, or maintain collegiate housing that may involve more than incidental social, recreational, or private purposes, so long as such grants are for purposes that would be permissible for a dormitory of the college or university referred to in paragraph (1). A grant shall not be treated as a collegiate housing and infrastructure grant for purposes of paragraph (1) to the extent that such grant is used to provide physical fitness equipment.

`(3) GRANTS TO CERTAIN ORGANIZATIONS HOLDING TITLE TO PROPERTY, ETC- For purposes of this subsection, a collegiate housing and infrastructure grant to an organization described in subsection (c)(2) or (c)(7) holding title to property exclusively for the benefit of an organization described in subsection (c)(7) shall be considered a grant to the organization described in subsection (c)(7) for whose benefit such property is held.'.

(b) Effective Date- The amendment made by this section shall apply to grants made after the date of the enactment of this Act.

SEC. 110. CONDUCT OF CERTAIN GAMES OF CHANCE NOT TREATED AS UNRELATED TRADE OR BUSINESS.

(a) In General- Paragraph (1) of section 513(f) (relating to certain bingo games) is amended to read as follows:

`(1) IN GENERAL- The term `unrelated trade or business' does not include--

`(A) any trade or business which consists of conducting bingo games, and

`(B) any trade or business which consists of conducting qualified games of chance if the net proceeds from such trade or business are paid or set aside for payment for purposes described in section 170(c)(2)(B), for the promotion of social welfare (within the meaning of section 501(c)(4)), or for a purpose for which State law specifically authorizes the expenditure of such proceeds.'.

(b) Qualified Games of Chance- Subsection (f) of section 513 is amended by adding at the end the following new paragraph:

`(3) QUALIFIED GAMES OF CHANCE- For purposes of paragraph (1), the term `qualified game of chance' means any game of chance (other than bingo) conducted by an organization if--

`(A) such organization is licensed pursuant to State law to conduct such game,

`(B) only organizations which are organized as nonprofit corporations or are exempt from tax under section 501(a) may be so licensed to conduct such game within the State, and

`(C) the conduct of such game does not violate State or local law.'.

(c) Clerical Amendment- The subsection heading of section 513(f) is amended by striking `Bingo Games' and inserting `Games of Chance'.

(d) Effective Date- The amendments made by this section shall apply to games conducted after the date of the enactment of this Act.

SEC. 111. EXCISE TAXES EXEMPTION FOR BLOOD COLLECTOR ORGANIZATIONS.

(a) Exemption From Imposition of Special Fuels Tax- Section 4041(g) (relating to other exemptions) is amended by striking `and' at the end of paragraph (3), by striking the period in paragraph (4) and inserting `; and', and by inserting after paragraph (4) the following new paragraph:

`(5) with respect to the sale of any liquid to a qualified blood collector organization (as defined in section 7701(a)(49)) for such organization's exclusive use, or with respect to the use by a qualified blood collector organization of any liquid as a fuel.'.

(b) Exemption From Manufacturers Excise Tax-

(1) IN GENERAL- Section 4221(a) (relating to certain tax-free sales) is amended by striking `or' at the end of paragraph (4), by adding `or' at the end of paragraph (5), and by inserting after paragraph (5) the following new paragraph:

`(6) to a qualified blood collector organization (as defined in section 7701(a)(49)) for such organization's exclusive use,'.

(2) CONFORMING AMENDMENTS-

(A) The second sentence of section 4221(a) is amended by striking `Paragraphs (4) and (5)' and inserting `Paragraphs (4), (5), and (6)'.

(B) Section 6421(c) is amended by striking `or (5)' and inserting `(5), or (6)'.

(c) Exemption From Communication Excise Tax-

(1) IN GENERAL- Section 4253 (relating to exemptions) is amended by redesignating subsection (k) as subsection (l) and inserting after subsection (j) the following new subsection:

`(k) Exemption for Qualified Blood Collector Organizations- Under regulations provided by the Secretary, no tax shall be imposed under section 4251 on any amount paid by a qualified blood collector organization (as defined in section 7701(a)(49)) for services or facilities furnished to such organization.'.

(2) CONFORMING AMENDMENT- Section 4253(l), as redesignated by paragraph (1), is amended by striking `or (j)' and inserting `(j), or (k)'.

(d) Credit for Refund for Certain Taxes on Sales and Services-

(1) DEEMED OVERPAYMENT-

(A) IN GENERAL- Section 6416(b)(2) is amended by redesignating subparagraphs (E) and (F) as subparagraphs (F) and (G), respectively, and by inserting after subparagraph (D) the following new subparagraph:

`(E) sold to a qualified blood collector organization (as defined in section 7701(a)(49)) for such organization's exclusive use;'.

(B) CONFORMING AMENDMENTS- Section 6416(b)(2) is amended--

(i) by striking `Subparagraphs (C) and (D)' and inserting `Subparagraphs (C), (D), and (E)', and

(ii) by striking `(C), and (D)' and inserting `(C), (D), and (E)'.

(2) SALES OF TIRES- Clause (ii) of section 6416(b)(4)(B) is amended by inserting `sold to a qualified blood collector organization (as defined in section 7701(a)(49)) for its exclusive use,' after `for its exclusive use,'.

(e) Definition of Qualified Blood Collector Organization- Section 7701(a) is amended by inserting at the end the following new paragraph:

`(49) QUALIFIED BLOOD COLLECTOR ORGANIZATION- The term `qualified blood collector organization' means an organization which is--

`(A) described in section 501(c)(3) and exempt from tax under section 501(a),

`(B) registered by the Food and Drug Administration to collect blood, and

`(C) primarily engaged in the activity of the collection of blood.'.

(f) Effective Date- The amendments made by this section shall take effect on the date of the enactment of this Act.

SEC. 112. 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) is amended 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, and within a period beginning 1 year before the date of such sale, and ending 3 years (10 years, in the case of an organization described in section 501(c)(7)) after such date, other property is purchased and used by such organization directly in the performance of its exempt function, gain (if any) from such sale shall be recognized only to the extent that such organization's sales price of the old property exceeds the organization's cost of purchasing the other property.

`(ii) STATUTE OF LIMITATIONS- If an organization described in section 501(c)(7) 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 beginning on the date that the Secretary is notified 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 deficiency may be assessed before the expiration of such 3-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment.

`(iii) DESTRUCTION AND LOSS- For purposes of this subparagraph, the destruction in whole or in part, theft, seizure, requisition, or condemnation of property, shall be treated as the sale of such property, and rules similar to the rules provided by subsections (b), (c), (e), and (j) of section 1034 (as in effect on the day before the date of the enactment of the Taxpayer 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 effect on the day before the date of the enactment of this Act) had not expired as of the date of the enactment of this Act.

SEC. 113. EXEMPTION OF QUALIFIED 501(C)(3) BONDS FOR NURSING HOMES FROM FEDERAL GUARANTEE PROHIBITIONS.

(a) In General- For purposes of section 149(b)(1) of the Internal Revenue Code of 1986, any qualified 501(c)(3) bond (as defined in section 145 of such Code) shall not be treated as federally guaranteed solely because such bond is part of an issue supported by a letter of credit, if such bond--

(1) is issued during the 1-year period beginning on the date of the enactment of this Act, and

(2) is part of an issue 95 percent or more of the net proceeds of which are to be used to finance 1 or more of the following facilities primarily for the benefit of the elderly:

(A) Licensed nursing home facility.

(B) Licensed or certified assisted living facility.

(C) Licensed personal care facility.

(D) Continuing care retirement community.

(b) Limitation on Issuer- Subsection (a) shall not apply to any bond described in such subsection if the aggregate authorized face amount of the issue of which such bond is a part, when increased by the outstanding amount of such bonds issued by the issuer during the period described in subsection (a)(1) exceeds $15,000,000.

(c) Limitation on Beneficiary- Rules similar to the rules of section 144(a)(10) of the Internal Revenue Code of 1986 shall apply for purposes of this section, except that--

(1) `$15,000,000' shall be substituted for `$40,000,000' in subparagraph (A) thereof, and

(2) such rules shall be applied--

(A) only with respect to bonds described in this section, and

(B) with respect to the aggregate authorized face amount of all issues of such bonds which are allocable to the beneficiary.

(d) Continuing Care Retirement Community- For purposes of this section, the term `continuing care retirement community' means a community which provides, on the same campus, a consortium of residential living options and support services to persons at least 60 years of age under a written agreement. For purposes of the preceding sentence, the residential living options shall include independent living units, nursing home beds, and either assisted living units or personal care beds.

TITLE II--TAX REFORM AND IMPROVEMENTS RELATING TO CHARITABLE ORGANIZATIONS AND PROGRAMS

SEC. 201. CLARIFICATION OF DEFINITION OF CHURCH TAX INQUIRY.

Subsection (i) of section 7611 (relating to section not to apply to criminal investigations, etc.) is amended by striking `or' at the end of paragraph (4), by striking the period at the end of paragraph (5) and inserting `, or', and by inserting after paragraph (5) the following:

`(6) information provided by the Secretary related to the standards for exemption from tax under this title and the requirements under this title relating to unrelated business taxable income.'.

SEC. 202. EXTENSION OF DECLARATORY JUDGMENT REMEDY TO TAX-EXEMPT ORGANIZATIONS.

(a) In General- Paragraph (1) of section 7428(a) (relating to creation of remedy) is amended--

(1) in subparagraph (B) by inserting after `509(a))' the following: `or as a private operating foundation (as defined in section 4942(j)(3))'; and

(2) by amending subparagraph (C) to read as follows:

`(C) with respect to the initial qualification or continuing qualification of an organization as an organization described in subsection (c) (other than paragraph (3)) or (d) of section 501 which is exempt from tax under section 501(a), or'.

(b) Court Jurisdiction- Subsection (a) of section 7428 is amended in the material following paragraph (2) by striking `United States Tax Court, the United States Claims Court, or the district court of the United States for the District of Columbia' and inserting the following: `United States Tax Court (in the case of any such determination or failure) or the United States Claims Court or the district court of the United States for the District of Columbia (in the case of a determination or failure with respect to an issue referred to in subparagraph (A) or (B) of paragraph (1)),'.

(c) Effective Date- The amendments made by this section shall apply to pleadings filed with respect to determinations (or requests for determinations) made after the date of the enactment of this Act.

SEC. 203. LANDOWNER INCENTIVES PROGRAMS.

(a) In General- Subsection (a) of section 126 is amended by redesignating paragraph (10) as paragraph (11) and by inserting after paragraph (9) the following new paragraph:

`(10) Landowner initiatives programs to conserve threatened, endangered, or imperiled species, or protect or restore habitat carried out under--

`(A) the Fish and Wildlife Coordination Act (16 U.S.C. 661 et seq.),

`(B) the Fish and Wildlife Act of 1956 (16 U.S.C. 742f), or

`(C) section 6 of the Endangered Species Act (16 U.S.C. 11531 et seq.).'.

(b) Excludable Portion- Subparagraph (A) of section 126(b)(1) is amended by inserting after `Secretary of Agriculture' the following: `(the Secretary of the Interior, in the case of the landowner incentives programs described in subsection (a)(10) and the programs described in subsection (a)(11) that are implemented by the Department of the Interior)'.

(c) Effective Date- The amendments made by this section shall apply to amounts received after the date of the enactment of this Act, in taxable years ending after such date.

SEC. 204. MODIFICATIONS TO SECTION 512(B)(13).

(a) In General- Paragraph (13) of section 512(b) (relating to special rules for certain amounts received from controlled entities) is amended by redesignating subparagraph (E) as subparagraph (F) and by inserting after subparagraph (D) the following new subparagraph:

`(E) PARAGRAPH TO APPLY ONLY TO EXCESS PAYMENTS-

`(i) IN GENERAL- Subparagraph (A) shall apply only to the portion of a specified payment received or accrued by the controlling organization that exceeds the amount which would have been paid or accrued if such payment met the requirements prescribed under section 482.

`(ii) ADDITION TO TAX FOR VALUATION MISSTATEMENTS- The tax imposed by this chapter on the controlling organization shall be increased by an amount equal to 20 percent of the larger of--

`(I) such excess determined without regard to any amendment or supplement to a return of tax, or

`(II) such excess determined with regard to all such amendments and supplements.'.

(b) Effective Date-

(1) IN GENERAL- The amendment made by this section shall apply to payments received or accrued after the date of the enactment of this Act.

(2) PAYMENTS SUBJECT TO BINDING CONTRACT TRANSITION RULE- If the amendments made by section 1041 of the Taxpayer Relief Act of 1997 did not apply to any amount received or accrued in the first 2 taxable years beginning on or after the date of the enactment of the Taxpayer Relief Act of 1997 under any contract described in subsection (b)(2) of such section, such amendments also shall not apply to amounts received or accrued under such contract before the date of the enactment of this Act.

SEC. 205. SIMPLIFICATION OF LOBBYING EXPENDITURE LIMITATION.

(a) Repeal of Grassroots Expenditure Limit- Paragraph (1) of section 501(h) (relating to expenditures by public charities to influence legislation) is amended to read as follows:

`(1) GENERAL RULE- In the case of an organization to which this subsection applies, exemption from taxation under subsection (a) shall be denied because a substantial part of the activities of such organization consists of carrying on propaganda, or otherwise attempting, to influence legislation, but only if such organization normally makes lobbying expenditures in excess of the lobbying ceiling amount for such organization for each taxable year.'.

(b) Excess Lobbying Expenditures- Section 4911(b) is amended to read as follows:

`(b) Excess Lobbying Expenditures- For purposes of this section, the term `excess lobbying expenditures' means, for a taxable year, the amount by which the lobbying expenditures made by the organization during the taxable year exceed the lobbying nontaxable amount for such organization for such taxable year.'.

(c) Conforming Amendments-

(1) Section 501(h)(2) is amended by striking subparagraphs (C) and (D).

(2) Section 4911(c) is amended by striking paragraphs (3) and (4).

(3) Paragraph (1)(A) of section 4911(f) is amended by striking `limits of section 501(h)(1) have' and inserting `limit of section 501(h)(1) has'.

(4) Paragraph (1)(C) of section 4911(f) is amended by striking `limits of section 501(h)(1) are' and inserting `limit of section 501(h)(1) is'.

(5) Paragraphs (4)(A) and (4)(B) of section 4911(f) are each amended by striking `limits of section 501(h)(1)' and inserting `limit of section 501(h)(1)'.

(6) Paragraph (8) of section 6033(b) (relating to certain organizations described in section 501(c)(3)) is amended by inserting `and' at the end of subparagraph (A) and by striking subparagraphs (C) and (D).

(d) Effective Date- The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

SEC. 206. PILOT PROJECT FOR FOREST CONSERVATION ACTIVITIES.

(a) Tax-Exempt Bond Financing-

(1) IN GENERAL- For purposes of the Internal Revenue Code of 1986, any qualified forest conservation bond shall be treated as an exempt facility bond under section 142 of such Code.

(2) QUALIFIED FOREST CONSERVATION BOND- For purposes of this section, the term `qualified forest conservation bond' means any bond issued as part of an issue if--

(A) 95 percent or more of the net proceeds (as defined in section 150(a)(3) of such Code) of such issue are to be used for qualified project costs,

(B) such bond is an obligation of the State of Washington or any political subdivision thereof, and

(C) such bond is issued for a qualified organization before December 31, 2006.

(3) LIMITATION ON AGGREGATE AMOUNT ISSUED- The maximum aggregate face amount of bonds which may be issued under this subsection shall not exceed $250,000,000.

(4) QUALIFIED PROJECT COSTS- For purposes of this subsection, the term `qualified project costs' means the sum of--

(A) the cost of acquisition by the qualified organization from an unrelated person of forests and forest land located in the State of Washington which at the time of acquisition or immediately thereafter are subject to a conservation restriction described in subsection (c)(2),

(B) interest on the qualified forest conservation bonds for the 3-year period beginning on the date of issuance of such bonds, and

(C) credit enhancement fees which constitute qualified guarantee fees (within the meaning of section 148 of such Code).

(5) SPECIAL RULES- In applying the Internal Revenue Code of 1986 to any qualified forest conservation bond, the following modifications shall apply:

(A) Section 146 of such Code (relating to volume cap) shall not apply.

(B) For purposes of section 147(b) of such Code (relating to maturity may not exceed 120 percent of economic life), the land and standing timber acquired with proceeds of qualified forest conservation bonds shall have an economic life of 35 years.

(C) Subsections (c) and (d) of section 147 of such Code (relating to limitations on acquisition of land and existing property) shall not apply.

(D) Section 57(a)(5) of such Code (relating to tax-exempt interest) shall not apply to interest on qualified forest conservation bonds.

(6) TREATMENT OF CURRENT REFUNDING BONDS- Paragraphs (2)(C) and (3) shall not apply to any bond (or series of bonds) issued to refund a qualified forest conservation bond issued before December 31, 2008, if--

(A) the average maturity date of the issue of which the refunding bond is a part is not later than the average maturity date of the bonds to be refunded by such issue,

(B) the amount of the refunding bond does not exceed the outstanding amount of the refunded bond, and

(C) the net proceeds of the refunding bond are used to redeem the refunded bond not later than 90 days after the date of the issuance of the refunding bond.

For purposes of subparagraph (A), average maturity shall be determined in accordance with section 147(b)(2)(A) of such Code.

(7) EFFECTIVE DATE- This subsection shall apply to obligations issued on or after the date of enactment of this Act.

(b) Items From Qualified Harvesting Activities not Subject to Tax or Taken Into Account-

(1) IN GENERAL- Income, gains, deductions, losses, or credits from a qualified harvesting activity conducted by a qualified organization shall not be subject to tax or taken into account under subtitle A of the Internal Revenue Code of 1986.

(2) LIMITATION- The amount of income excluded from gross income under paragraph (1) for any taxable year shall not exceed the amount used by the qualified organization to make debt service payments during such taxable year for qualified forest conservation bonds.

(3) QUALIFIED HARVESTING ACTIVITY- For purposes of paragraph (1)--

(A) IN GENERAL- The term `qualified harvesting activity' means the sale, lease, or harvesting, of standing timber--

(i) on land owned by a qualified organization which was acquired with proceeds of qualified forest conservation bonds, and

(ii) pursuant to a qualified conservation plan adopted by the qualified organization.

(B) EXCEPTIONS-

(i) CESSATION AS QUALIFIED ORGANIZATION- The term `qualified harvesting activity' shall not include any sale, lease, or harvesting for any period during which the organization ceases to qualify as a qualified organization.

(ii) EXCEEDING LIMITS ON HARVESTING- The term `qualified harvesting activity' shall not include any sale, lease, or harvesting of standing timber on land acquired with proceeds of qualified forest conservation bonds to the extent that--

(I) the average annual area of timber harvested from such land exceeds 2.5 percent of the total area of such land, or

(II) the quantity of timber removed from such land exceeds the quantity which can be removed from such land annually in perpetuity on a sustained-yield basis with respect to such land.

The limitations under subclauses (I) and (II) shall not apply to post-fire restoration and rehabilitation or sanitation harvesting of timber stands which are substantially damaged by fire, windthrow, or other catastrophes, or which are in imminent danger from insect or disease attack.

(4) TERMINATION- This subsection shall not apply to any qualified harvesting activity occurring after the date on which there is no outstanding qualified forest conservation bond or any such bond ceases to be a tax-exempt bond.

(5) PARTIAL RECAPTURE OF BENEFITS IF HARVESTING LIMIT EXCEEDED- If, as of the date that this subsection ceases to apply under paragraph (4), the average annual area of timber harvested from the land exceeds the requirement of paragraph (3)(B)(ii)(I), the tax imposed by chapter 1 of such Code shall be increased, under rules prescribed by the Secretary of the Treasury, by the sum of the tax benefits attributable to such excess and interest at the underpayment rate under section 6621 of such Code for the period of the underpayment.

(c) Definitions- For purposes of this section--

(1) QUALIFIED CONSERVATION PLAN- The term `qualified conservation plan' means a multiple land use program or plan which--

(A) is designed and administered primarily for the purposes of protecting and enhancing wildlife and fish, timber, scenic attributes, recreation, and soil and water quality of the forest and forest land,

(B) mandates that conservation of forest and forest land is the single-most significant use of the forest and forest land, and

(C) requires that timber harvesting be consistent with--

(i) restoring and maintaining reference conditions for the region's ecotype,

(ii) restoring and maintaining a representative sample of young, mid, and late successional forest age classes,

(iii) maintaining or restoring the resources' ecological health for purposes of preventing damage from fire, insect, or disease,

(iv) maintaining or enhancing wildlife or fish habitat, or

(v) enhancing research opportunities in sustainable renewable resource uses.

(2) CONSERVATION RESTRICTION- The conservation restriction described in this paragraph is a restriction which--

(A) is granted in perpetuity to an unrelated person which is described in section 170(h)(3) of such Code and which, in the case of a nongovernmental unit, is organized and operated for conservation purposes,

(B) meets the requirements of clause (ii) or (iii)(II) of section 170(h)(4)(A) of such Code,

(C) obligates the qualified organization to pay the costs incurred by the holder of the conservation restriction in monitoring compliance with such restriction, and

(D) requires an increasing level of conservation benefits to be provided whenever circumstances allow it.

(3) QUALIFIED ORGANIZATION- The term `qualified organization' means an organization--

(A) which is a nonprofit organization substantially all the activities of which are charitable, scientific, or educational, including acquiring, protecting, restoring, managing, and developing forest lands and other renewable resources for the long-term charitable, educational, scientific and public benefit,

(B) more than half of the value of the property of which consists of forests and forest land acquired with the proceeds from qualified forest conservation bonds,

(C) which periodically conducts educational programs designed to inform the public of environmentally sensitive forestry management and conservation techniques,

(D) which has at all times a board of directors--

(i) at least 20 percent of the members of which represent the holders of the conservation restriction described in paragraph (2),

(ii) at least 20 percent of the members of which are public officials, and

(iii) not more than one-third of the members of which are individuals who are or were at any time within 5 years before the beginning of a term of membership on the board, an employee of, independent contractor with respect to, officer of, director of, or held a material financial interest in, a commercial forest products enterprise with which the qualified organization has a contractual or other financial arrangement,

(E) the bylaws of which require at least two-thirds of the members of the board of directors to vote affirmatively to approve the qualified conservation plan and any change thereto, and

(F) upon dissolution, is required to dedicate its assets to--

(i) an organization described in section 501(c)(3) of such Code which is organized and operated for conservation purposes, or

(ii) a governmental unit described in section 170(c)(1) of such Code.

(4) UNRELATED PERSON- The term `unrelated person' means a person who is not a related person.

(5) RELATED PERSON- A person shall be treated as related to another person if--

(A) such person bears a relationship to such other person described in section 267(b) (determined without regard to paragraph (9) thereof), or 707(b)(1), of such Code, determined by substituting `25 percent' for `50 percent' each place it appears therein, and

(B) in the case such other person is a nonprofit organization, if such person controls directly or indirectly more than 25 percent of the governing body of such organization.

(d) Report-

(1) IN GENERAL- The Comptroller General of the United States shall conduct a study on the pilot project for forest conservation activities under this section. Such study shall examine the extent to which forests and forest lands were managed during the 5-year period beginning on the date of the enactment of this Act to achieve the goals of such project.

(2) SUBMISSION OF REPORT TO CONGRESS- Not later than six years after the date of the enactment of this Act, the Comptroller General shall submit a report of such study to the Committee on Ways and Means and the Committee on Resources of the House of Representatives and the Committee on Finance and the Committee on Energy and Natural Resources of the Senate.

TITLE III--OTHER PROVISIONS

SEC. 301. COMPASSION CAPITAL FUND.

Title IV of the Social Security Act (42 U.S.C. 601-679b) is amended by adding at the end the following:

`PART F--COMPASSION CAPITAL FUND

`SEC. 481. SECRETARY'S FUND TO SUPPORT AND REPLICATE PROMISING SOCIAL SERVICE PROGRAMS.

`(a) Grant Authority-

`(1) IN GENERAL- The Secretary may make grants to support any private entity that operates a promising social services program.

`(2) APPLICATIONS- An entity desiring to receive a grant under paragraph (1) shall submit to the Secretary an application for the grant, which shall contain such information as the Secretary may require.

`(b) Contract Authority, Etc- The Secretary may enter into a grant, contract, or cooperative agreement with any entity under which the entity would provide technical assistance to another entity to operate a social service program that assists persons and families in need, including by--

`(1) providing the other entity with--

`(A) technical assistance and information, including legal assistance and other business assistance;

`(B) information on capacity-building;

`(C) information and assistance in identifying and using best practices for serving persons and families in need; or

`(D) assistance in replicating programs with demonstrated effectiveness in assisting persons and families in need; or

`(2) supporting research on the best practices of social service organizations.

`(c) Guidance and Technical Assistance- The Secretary may use not more than 25 percent of the amount appropriated under this section for a fiscal year to provide guidance and technical assistance to States and political subdivisions of States with respect to the implementation of any social service program.

`(d) Social Services Program Defined- In this section, the term `social services program' means a program that provides benefits or services of any kind to persons and families in need.

`(e) Limitations on Authorization of Appropriations- To carry out this section, there are authorized to be appropriated to the Secretary $150,000,000 for fiscal year 2006, and such sums as may be necessary for fiscal years 2007 through 2010.'.

SEC. 302. REAUTHORIZATION OF ASSETS FOR INDEPENDENCE DEMONSTRATION.

(a) In General- Section 416 of the Assets for Independence Act (title IV of Public Law 105-285; 42 U.S.C. 604 note) is amended by striking `1999' and all that follows through `2003' and inserting `2005, 2006, 2007, and 2008'.

(b) Removal of Economic Literacy Activities From Limitation on Use of Amounts in the Reserve Fund- Section 407(c)(3) of such Act (title IV of Public Law 105-285; 42 U.S.C. 604 note) is amended by adding at the end the following: `The preceding sentences of this paragraph shall not apply to amounts used by an entity for any activity described in paragraph (1)(A).'.

(c) Eligibility Expanded to Include Individuals in Households With Income not Exceeding 50 Percent of Area Median Income- Section 408(a)(1) of such Act (title IV of Public Law 105-285; 42 U.S.C. 604 note) is amended to read as follows:

`(1) INCOME TEST- The adjusted gross income of the household--

`(A) does not exceed 200 percent of the poverty line (as determined by the Office of Management and Budget) or the earned income amount described in section 32 of the Internal Revenue Code of 1986 (taking into account the size of the household); or

`(B) does not exceed 50 percent of the area median income (as determined by the Secretary of Housing and Urban Development) for the area in which the household is located.'.

(d) Extension of Time for Account Holders to Access Federal Funds- Section 407(d) of such Act (title IV of Public Law 105-285; 42 U.S.C. 604 note) is amended--

(1) in the subsection heading, by striking `When Project Terminates'; and

(2) by striking `upon' and inserting `on the date that is 6 months after'.

(e) Verification of Postsecondary Education Expenses- Section 404(8)(A) of such Act (title IV of Public Law 105-285; 42 U.S.C. 604 note) is amended in the 1st sentence by inserting `or a vendor, but only to the extent that the expenses are described in a document which explains the educational items to be purchased, and the document and the expenses are approved by the qualified entity' before the period.

(f) Authority to Use Excess Interest to Fund Other Individual Development Accounts- Section 410 of such Act (title IV of Public Law 105-285; 42 U.S.C. 604 note) is amended--

(1) in subsection (a)(3)--

(A) by striking `any interest that has accrued' and inserting `interest that has accrued during that period'; and

(B) by striking the period and inserting `, but only to the extent that the amount of the interest does not exceed the amount of interest that has accrued during that period on amounts deposited in the account by that individual.'; and

(2) by adding at the end the following:

`(f) Use of Excess Interest to Fund Other Individual Development Accounts- To the extent that a qualified entity has an amount that, but for the limitation in subsection (a)(3), would be required by that subsection to be deposited into the individual development account of an individual or into a parallel account maintained by the qualified entity, the qualified entity may deposit the amount into the individual development account of any individual or into any such parallel account maintained by the qualified entity.'.

SEC. 303. SENSE OF THE CONGRESS REGARDING CORPORATE CONTRIBUTIONS TO FAITH-BASED ORGANIZATIONS, ETC.

(a) Findings- The Congress finds as follows:

(1) America's community of faith has long played a leading role in dealing with difficult societal problems that might otherwise have gone unaddressed.

(2) President Bush has called upon Americans `to revive the spirit of citizenship . . . to marshal the compassion of our people to meet the continuing needs of our Nation'.

(3) Although the work of faith-based organizations should not be used by government as an excuse for backing away from its historic and rightful commitment to help those who are disadvantaged and in need, such organizations can and should be seen as a valuable partner with government in meeting societal challenges.

(4) Every day faith-based organizations in the United States help people recover from drug and alcohol addiction, provide food and shelter for the homeless, rehabilitate prison inmates so that they can break free from the cycle of recidivism, and teach people job skills that will allow them to move from poverty to productivity.

(5) Faith-based organizations are often more successful in dealing with difficult societal problems than government and non-sectarian organizations.

(6) As President Bush has stated, `It is not sufficient to praise charities and community groups; we must support them. And this is both a public obligation and a personal responsibility.'.

(7) Corporate foundations contribute billions of dollars each year to a variety of philanthropic causes.

(8) According to a study produced by the Capital Research Center, the 10 largest corporate foundations in the United States contributed $1,900,000,000 to such causes.

(9) According to the same study, faith-based organizations only receive a small fraction of the contributions made by corporations in the United States, and 6 of the 10 corporations that give the most to philanthropic causes explicitly ban or restrict contributions to faith-based organizations.

(b) Corporations Encouraged to Contribute to Faith-Based Organizations- The Congress calls on corporations in the United States, in the words of the President, `to give more and to give better' by making greater contributions to faith-based organizations that are on the front lines battling some of the great societal challenges of our day.

(c) Sense of the Congress- It is the sense of Congress that--

(1) corporations in the United States are important partners with government in efforts to overcome difficult societal problems; and

(2) no corporation in the United States should adopt policies that prohibit the corporation from contributing to an organization that is successfully advancing a philanthropic cause merely because such organization is faith based.

SEC. 304. MATERNITY GROUP HOMES.

Section 322 of the Runaway and Homeless Youth Act (42 U.S.C. 5714-2) is amended--

(1) in subsection (a)(1), by inserting `(including maternity group homes)' after `group homes'; and

(2) by adding at the end the following:

`(c) Maternity Group Home- In this part, the term `maternity group home' means a community-based, adult-supervised group home that provides--

`(1) young mothers and their children with a supportive and supervised living arrangement in which such mothers are required to learn parenting skills, including child development, family budgeting, health and nutrition, and other skills to promote their long-term economic independence and the well-being of their children; and

`(2) pregnant women with--

`(A) information regarding the option of placing children for adoption through licensed adoption service providers;

`(B) assistance with prenatal care and child birthing; and

`(C) pre- and post-placement adoption counseling.'.

SEC. 305. AUTHORITY OF STATES TO USE 10 PERCENT OF THEIR TANF FUNDS TO CARRY OUT SOCIAL SERVICES BLOCK GRANT PROGRAMS.

Section 404(d)(2) of the Social Security Act (42 U.S.C. 604(d)(2)) is amended to read as follows:

`(2) LIMITATION ON AMOUNT TRANSFERABLE TO TITLE XX PROGRAMS- A State may use not more than 10 percent of the amount of any grant made to the State under section 403(a) for a fiscal year to carry out State programs pursuant to title XX.'.

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