CHARITABLE, ETC., CONTRIBUTIONS AND GIFTS.

SEC. 209. CHARITABLE, ETC., CONTRIBUTIONS AND GIFTS. (a) Certain Organizations Added to Additional 10-Percent Charitable Limitation.—Section 170(b) (1) (A) (relating to limitation on amount of deduction for charitable contributions by individuals) is amended by striking out “or” at the end of clause (iii), and by inserting after clause (iv) the following new clauses: “(v) a governmental unit referred to in subsection (c)(1), or “(vi) an organization referred to in subsection (c) (2) which normally receives a substantial part of its support (exclusive of income received in the exercise or performance by such organization of its charitable, educational, or other purpose or function constituting the basis for its exemption under section 501(a)) from a governmental unit referred to in subsection (e)(1) or from direct or indirect contributions from the general public,”. (b) Unlimited Charitable Contribution Deduction.—Section 170 (relating to charitable, etc., contributions and gifts) is amended by inserting after subsection (f) (added by subsection (e) of this section) the following new subsection: “(g) Application of Unlimited Charitable Contribution Deduction.— “(1) Allowance of deduction for taxable years beginning after December 31, 1963.—If the taxable year begins after December 31, 1963— “(A) subsection (b)(1)(C) shall apply only if the taxpayer so elects (at such time and in such manner as the Secretary or his delegate by regulations prescribes); and 78 Stat. 44 “(B) for purposes of subsection (b)(1) (C), the amount of the Charitable contributions for the taxable year (and for all prior taxable years beginning after December 31, 1963) shall be determined without the application of subsection (b)(5) and solely by reference to charitable contributions described in paragraph (2). If the taxpayer elects to have subsection (b)(1)(C) apply for the taxable year, then for such taxable year subsection (a) shall apply only with respect to charitable contributions described in paragraph (2), and no amount of charitable contributions made in the taxable year or any prior taxable year may be treated under subsection (b)(5) as having been made in the taxable year or in any succeeding taxable year. “(2) Qualified contributions.—The charitable contributions referred to in paragraph (1) are— “(A) any charitable contribution described in subsection (b)(1)(A); “(B) any charitable contribution, not described in subsection (b)(1) (A), to an organization described in subsection (c)(2) substantially more than half of the assets of which is devoted directly to, and substantially all of the income of which is expended directly for, the active conduct of the activities constituting the purpose or function for which it is organized and operated; “(C) any charitable contribution, not described in subsection (b) (1) (A), to an organization described in subsection (c) (2) which meets the requirements of paragraph (3) with respect, to such charitable contribution; and “(D) any charitable contribution payment of which is made on or before the date of the enactment of the Revenue Act of 1964. “(3) Organizations expending at least so percent of donor’s contributions.—An organization shall be an organization referred to in paragraph (2) (C), with inspect to any charitable contribution, only if— “(A) not later than the close of the third year after the organization’s taxable year in which the contribution is received (or before such later time as the Secretary or his delegate may allow upon good cause shown by such organization), such organization expends an amount equal to at least 50 percent of such contribution for— “(i) the active conduct of the activities constituting the purpose or function for which it is organized and operated, “(ii) assets which are directly devoted to such active conduct, “(iii) contributions to organizations which are described in subsection (b)(1)(A) or in paragraph (2) (B) of this subsection, or “(iv) any combination of the foregoing; and “(B) for the period beginning with the taxable year in which such contribution is received and ending with the taxable year in which subparagraph (A) is satisfied with respect to such contribution, such organization expends all of its net income (determined without regard to capital gains and losses) for the purposes described in clauses (i), (ii), (iii), and (iv) of subparagraph (A). If the taxpayer so elects (at such time and in such manner as the Secretary or his delegate by regulations prescribes) with respect 78 Stat. 45to contributions made by him to any organization, then, in applying subparagraph (B) with respect to contributions made by him to such organization during his taxable year for which such election is made and during all his subsequent taxable years, amounts expended by the organization after the close of any of its taxable years and on or before the 15th day of the third month following the close of such taxable year shall be treated as expended during such taxable year. “(4) Disqualifying transactions.—An organization shall be an organization referred to in subparagraph (B) or (C) of paragraph (2) only if at no time during the period consisting of the organization’s taxable year in which the contribution is received, its 3 preceding taxable years, and its 3 succeeding taxable years, such organization— “(A) lends any part of its income or corpus to, “(B) pays compensation (other than reasonable compensation for personal services actually rendered) to, “(C) makes any of its services available on a preferential basis to, “(D) purchases more than a minimal amount of securities, or other property from, or “(E) sells more than a minimal amount of securities or other property to, the donor of such contribution, any member of his family (as defined in section 267(c)(4)), any employee of the donor, any officer or employee of a corporation in which he owns (directly or indirectly) 50 percent or more in value of the outstanding stock, or any partner or employee of a partnership in which he owns (directly or indirectly) 50 percent or more of the capital interest or profits interest. This paragraph shall not apply to transactions occurring on or before the date of the enactment of the Revenue Act of 1964.” (c) 5-Year Carryover of Certain Charitable Contributions Made by Individuals.— (1) In general.—Section 170(b) (relating to limitations on amount of deduction for charitable contributions) is amended by adding at the end thereof the following new paragraph: “(5) Carryover of certain excess contributions by individuals.— “(A) In the case of an individual, if the amount of charitable contributions described in paragraph (1)(A) payment of which is made within a taxable year (hereinafter in this paragraph referred to as the ‘contribution year’) beginning after December 31, 1963, exceeds 30 percent of the taxpayer’s adjusted gross income for such year (computed without regard to any net operating loss carryback to such year under section 172), such excess shall be treated as a charitable contribution described in paragraph (1)(A) paid in each of the 5 succeeding taxable years in order of time, but with respect to any such succeeding taxable year, only to the extent of the lesser of the two following amounts: “(i) the amount by which 30 percent of the taxpayer’s adjusted gross income for such succeeding taxable year (computed without regard to any net operating loss carryback to such succeeding taxable year under section 172) exceeds the sum of the charitable contributions described in paragraph (I) (A) payment of which is made by the taxpayer within such succeeding taxable year (determined without regard to this subparagraph) 78 Stat. 46and the charitable contributions described in paragraph (1)(A) payment of which was made in taxable years (beginning after December 31, 1963) before the contribution year which are treated under this subparagraph as having been paid in such succeeding taxable year; or “(ii) in the case of the first succeeding taxable year, the amount of such excess, and in the case of the second, third, fourth, or fifth succeeding taxable year, the portion of such excess not treated under this subparagraph as a charitable contribution described in paragraph (1) (A) paid in any taxable year intervening between the contribution year and such succeeding taxable year. “(B) In applying subparagraph (A), the excess determined under subparagraph (A) for the contribution year shall be reduced to the extent that such excess reduces taxable income (as computed for purposes of the second sentence of section 172(b) (2)) and increases the net operating loss deduction for a taxable year succeeding the contribution year.” (2) Technical amendments.—Sections 545(b)(2) (relating to deductions for charitable contributions by personal holding companies) and 556(b) (2) (relating to deductions for charitable contributions by foreign personal holding companies) are each amended by striking out “section 170(b)(2)” and inserting in lieu thereof “section 170(b) (2) and (5)”. (d) 5-Year Carryover of Certain Charitable Contributions Made by Corporations.— (1) In general.—Section 170(b)(2) (relating to limitation on amount of deduction for charitable contributions by corporations) is amended by striking out the sentence following subparagraph (D) and inserting in lieu thereof the following: “Any contribution made by a corporation in a taxable year (hereinafter in this sentence referred to as the ‘contribution year’) in excess of the amount deductible for such year under the preceding sentence shall be deductible for each of the 5 succeeding taxable years in order of time, but only to the extent of the lesser of the two following amounts: (i) the excess of the maximum amount deductible for such succeeding taxable year under the preceding sentence over the sum of the contributions made in such year plus the aggregate of the excess contributions which were made in taxable years before the contribution year and which are deductible under this sentence for such succeeding taxable year; or (ii) in the case of the first succeeding taxable year, the amount of such excess contribution, and in the case of the second, third, fourth, or fifth succeeding taxable year, the portion of such excess contribution not deductible under this sentence for any taxable year intervening between the contribution year and such succeeding taxable year.” (2) Carryovers in certain corporate acquisitions.—Paragraph (19) of section 381(c) (relating to items of distributor or transferor corporation) is amended to read as follows: “(19) Charitable contributions in excess of prior years’ limitations.—Contributions made in the taxable year ending on the date of distribution or transfer and the 4 prior taxable years by the distributor or transferor corporation in excess of the amount deductible under section 170(b) (2) for such taxable years shall be deductible by the acquiring corporation for its taxable years which begin after the date of distribution or transfer, subject to the limitations imposed in section 170 (b)(2). In applying the preceding sentence, each taxable year 78 Stat. 47of the distributor or transferor corporation beginning on or before the date of distribution or transfer shall be treated as a prior taxable year with reference to the acquiring corporation’s taxable years beginning after such date.” (e) Future Interests in Tangible Personal Property.—Section 170 (relating to charitable, etc., contributions and gifts) is amended by redesignating subsections (f) and (g) as subsections (h) and (i), respectively, and by inserting after subsection (e) the following new subsection: “(f) Future Interests in Tangible Personal Property.—For purposes of this section, payment of a charitable contribution which consists of a future interest in tangible personal property shall be treated as made only when all intervening interests in, and rights to the actual possession or enjoyment of, the property have expired or are held by persons other than the taxpayer or those standing in a relationship to the taxpayer described in section 267(b). For purposes of the preceding sentence, a fixture which is intended to be severed from the real property shall be treated as tangible personal property.” (f) Effective Dates.— (1) The amendments made by subsections (a), (b), and (c), shall apply with respect to contributions which are paid’ in taxable years beginning after December 31, 1963. (2) The amendments made by subsection (d) shall apply to taxable years beginning after December 31, 1963, with respect to contributions which are paid (or treated as paid under section 170(a)(2) of the Internal Revenue Code of 1954) in taxable years beginning after December 31, 1961. (3) The amendments made by subsection (e) shall apply to transfers of future interests made after December 31, 1963, in taxable years ending after such date, except that such amendments shall not apply to any transfer of a future interest, made before July 1, 1964, where— (A) the sole intervening interest or right is a nontransferable life interest reserved by the donor, or (B) in the case of a joint gift by husband and wife, the sole intervening interest or right is a nontransferable life interest, reserved by the donors which expires not later than the death of whichever of such donors dies later. For purposes of the exception contained in the preceding sentence, a right to make a transfer of the reserved life interest, to the donee of the future interest shall not be treated as making a life interest transferable.