Neighbor to Neighbor Act

Neighbor to Neighbor Act

News story posted in Legislative on 5 March 2001| comments
audience: National Publication | last updated: 18 May 2011
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Summary

Rep. Jennifer Dunn (R-WA) introduced H.R. 824, the "Neighbor to Neighbor Act," which if enacted into law, will provide five new tax incentives to encourage charitable giving.

H.R. 824

PGDC SUMMARY:

On March 1, 2001, Representative Jennifer Dunn (R-WA) introduced H.R. 824, the "Neighbor to Neighbor Act." If enacted into law, this Act would amend the Internal Revenue Code to provide the following new tax incentives to promote charitable giving: (i) donors who make charitable contributions but do not itemize their federal income tax deductions would be entitled to a "direct" charitable contribution deduction; (ii) a taxpayer could deduct for the current year charitable contributions made at any time up to the time for filing the taxpayer's federal income tax return for that tax year (excluding extensions); (iii) the special income tax, charitable deduction reduction rules for charitable gifts of long term capital gain property would be repealed, subjecting such gifts to the higher 50% of contribution base limitation for gifts to most public charities and 30% of contribution base limitation for such gifts to private nonoperating foundations; (iv) the carryover period for charitable deductions that cannot be fully-used in a given tax year due to the applicable percentage limitation by either individual or corporate donors would be increased from 5 years to 10 years; and (v) IRA account owners who are at least age 59-1/2 will be permitted to make distributions from their IRAs directly to either: public charities (directly or in exchange for a charitable gift annuity), qualified charitable remainder trusts in which only the IRA account owner and/or such owner's spouse are the income recipients, and pooled income funds. All of the amendments would take effect for taxable years beginning after December 31, 2000.

FULL TEXT:

107th CONGRESS
1st Session
H. R. 824

To amend the Internal Revenue Code of 1986 to allow individuals who do not itemize their deductions a deduction for a portion of their charitable contributions, and for other purposes.


IN THE HOUSE OF REPRESENTATIVES

March 1, 2001

Ms. DUNN (for herself, Mr. DUNCAN, Mr. SIMPSON, Mr. WHITFIELD, Mr. DEAL of Georgia, Ms. HART, Mr. PETERSON of Pennsylvania, Mr. CRENSHAW, Mr. ENGLISH, Mr. PASCRELL, Mr. WATTS of Oklahoma, Mr. GREENWOOD, Mr. BAIRD, Mr. OTTER, Mr. TAYLOR of North Carolina, Mr. SCHAFFER, and Mr. SOUDER) introduced the following bill; which was referred to the Committee on Ways and Means


A BILL

To amend the Internal Revenue Code of 1986 to allow individuals who do not itemize their deductions a deduction for a portion of their charitable contributions, 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.

This Act may be cited as the "Neighbor to Neighbor Act."

SEC. 2. DEDUCTION FOR PORTION OF CHARITABLE CONTRIBUTIONS TO BE ALLOWED TO INDIVIDUALS WHO DO NOT ITEMIZE DEDUCTIONS.

(a) IN GENERAL.-Section 170 of the Internal Revenue Code of 1986 (relating to charitable, etc., contributions and gifts) is amended by redesignating subsection (m) as subsection (n) and by inserting after subsection (l) the following new subsection:

"(m) DEDUCTIONS FOR INDIVIDUALS NOT ITEMIZING DEDUCTIONS.-

"(1) IN GENERAL.-In the case of an individual who does not itemize the individual's deductions for the taxable year, the amount allowable under subsection (a) shall be taken into account as a direct charitable deduction under section 63.

"(2) LIMITATION.-The portion of the amount allowable under subsection (a) to which paragraph (1) applies for the taxable year shall not exceed the amount in effect for such taxable year under section 63(c)(2)(C) (section 63(c)(2)(A) in the case of a joint return under section 6013)."

(b) DIRECT CHARITABLE DEDUCTION.-

(1) IN GENERAL.-Section 63(b) of such Code (relating to individuals who do not itemize their deductions) 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 of such Code (relating to taxable income defined) 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(m)."

(3) CONFORMING AMENDMENT.-Section 63(d) of such Code (defining itemized deductions) 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) TIME WHEN CONTRIBUTIONS DEEMED MADE.-

Section 170(f) of such Code (relating to disallowance of deduction in certain cases and special rules) is amended by adding at the end the following new paragraph:

"(10) TIME WHEN CONTRIBUTIONS DEEMED PAID.-For purposes of this section, in the case of an individual, a taxpayer shall be deemed to have paid a charitable contribution on the last day of the preceding taxable year if the contribution is paid on account of such taxable year and is paid not later than the time prescribed by law for filing the return for such taxable year (not including extensions thereof)."

(d) EFFECTIVE DATE.-The amendments made by this section shall apply to taxable years beginning after December 31, 2000.

SEC. 3. CHARITABLE DEDUCTION EXCEPTION TO OVERALL LIMITATION ON ITEMIZED DEDUCTIONS.

(a) IN GENERAL.-Subsection (c) of section 68 of the Internal Revenue Code of 1986 (relating to exception for certain itemized deductions) is amended by striking ''and'' at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting ", and", and by adding at the end the following:

"(4) the deduction under section 170 (relating to charitable, etc., contributions and gifts)."

(b) EFFECTIVE DATE.-The amendment made by this section shall apply to taxable years beginning after December 31, 2000.

SEC. 4. REPEAL OF SPECIAL LIMITATION ON CONTRIBUTIONS OF CAPITAL GAIN PROPERTY.

(a) IN GENERAL.-Paragraph (1) of section 170(b) of the Internal Revenue Code of 1986 (relating to percentage limitations on charitable contributions by individuals) is amended-

(1) by striking subparagraphs (C) and (D), and

(2) by redesignating subparagraphs (E) and (F) as subparagraphs (C) and (D), respectively.

(b) CONFORMING AMENDMENTS.-

(1) Subparagraph (B) of section 170(e)(5) of such Code is amended-

(A) in clause (ii) by striking "(as defined in subsection (b)(1)(C)(iv))", and

(B) by adding at the end the following new flush sentence:

"For purposes of clause (ii), the term 'capital gain property' means with respect to any contribution, any capital asset the sale of which at its fair market value at the time of the contribution would have resulted in gain which would have been long-term capital gain. For purposes of the preceding sentence, any property which is property used in the trade or business (as defined in section 1231(b)) shall be treated as a capital asset.".

(2) Section 545(b)(2) of such Code is amended by striking "section 170(b)(1)(A), (B), and (D)" and inserting "section 170(b)(1)(A) and (B)".

(3) Section 556(b)(2) of such Code is amended by striking "section 70(b)(1)(A), (B), and (D)" and inserting "section 170(b)(1)(A) and (B)".

(c) EFFECTIVE DATE.-The amendments made by this section shall apply to taxable years beginning after December 31, 2000.

SEC. 5. EXTENSION OF CARRYOVER PERIOD FOR EXCESS CONTRIBUTIONS.

(a) IN GENERAL.-The following provisions of section 170 of the Internal Revenue Code of 1986 are each amended by striking "5" and inserting "10":

(1) Subsection (d)(1)(A) (general rule for carryovers of excess contributions by individuals).

(2) Subsection (d)(2)(A) (general rule for carryovers of excess contributions by corporations).

(3) Subsection (b)(1)(B) (relating to percent limitation on other contributions by individuals).

(b) EFFECTIVE DATE.-The amendments made by this section shall apply to taxable years beginning after December 31, 2000.

SEC. 6. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS FOR CHARITABLE PURPOSES.

(a) IN GENERAL.-Subsection (d) of section 408 of the Internal Revenue Code of 1986 (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 from an individual retirement account to an organization described in section 170(c).

"(B) SPECIAL RULES RELATING TO CHARITABLE REMAINDER TRUSTS, POOLED INCOME FUNDS, AND CHARITABLE GIFT ANNUITIES.-

"(i) IN GENERAL.-No amount shall be includible in gross income by reason of a qualified charitable distribution from an individual retirement account-

"(I) to a charitable remainder annuity trust or a charitable remainder unitrust (as such terms are defined in section 664(d)),

"(II) to a pooled income fund (as defined in section 642(c)(5)), or

"(III) for the issuance of a charitable gift annuity (as defined in section 501(m)(5)).

The preceding sentence shall apply only if no person holds an income interest in the amounts in the trust, fund, or annuity attributable to such distribution other than one or more of the following: the individual for whose benefit such account is maintained, the spouse of such individual, or any organization described in section 170(c).

"(ii) DETERMINATION OF INCLUSION OF AMOUNTS DISTRIBUTED.-In determining the amount includible in the gross income of any person by reason of a payment or distribution from a trust referred to in clause (i)(I) or a charitable gift annuity (as so defined), the portion of any qualified charitable distribution to such trust or for such annuity which would (but for this subparagraph) have been includible in gross income-

"(I) shall be treated as income described in section 664(b)(1), and

"(II) shall not be treated as an investment in the contract.

"(iii) NO INCLUSION FOR DISTRIBUTION TO POOLED INCOME FUND. -No amount shall be includible in the gross income of a pooled income fund (as so defined) by reason of a qualified charitable distribution to such fund.

"(C) QUALIFIED CHARITABLE DISTRIBUTION.-For purposes of this paragraph, the term 'qualified charitable distribution' means any distribution from an individual retirement account.-

"(i) which is made on or after the date that the individual for whose benefit the account is maintained has attained age 59½, and

"(ii) which is made directly from the account to.-

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

"(II) a trust, fund, or annuity re-referred to in subparagraph (B).

"(D) DENIAL OF DEDUCTION.-The amount allowable as a deduction under section 170 to the taxpayer for the taxable year shall be reduced (but not below zero) by the sum of the amounts of the qualified charitable distributions during such year which would be includible in the gross income of the taxpayer for such year but for this paragraph."

(b) EFFECTIVE DATE.-The amendment made by subsection (a) shall apply to taxable years ending after December 31, 2000.

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