TREATMENT OF AMOUNTS PAID TO SUPPORTING ORGANIZATIONS BY PRIVATE FOUNDATIONS.

SEC. 1244. TREATMENT OF AMOUNTS PAID TO SUPPORTING ORGANIZATIONS BY PRIVATE FOUNDATIONS.(a) Qualifying Distributions.—Paragraph (4) of section 4942(g) is amended to read as follows:“(4) Limitation on distributions by nonoperating private foundations to supporting organizations.—“(A) In general.—For purposes of this section, the term ‘qualifying distribution’ shall not include any amount paid by a private foundation which is not an operating foundation to—“(i) any type III supporting organization (as defined in section 4943(f)(5)(A)) which is not a functionally integrated type III supporting organization (as defined in section 4943(f)(5)(B)), and“(ii) any organization which is described in subparagraph (B) or (C) if—“(I) a disqualified person of the private foundation directly or indirectly controls such organization or a supported organization (as defined in section 509(f)(3)) of such organization, or“(II) the Secretary determines by regulations that a distribution to such organization otherwise is inappropriate.“(B) Type i and type ii supporting organizations.—An organization is described in this subparagraph if the organization meets the requirements of subparagraphs (A) and (C) of section 509(a)(3) and is—“(i) operated, supervised, or controlled by one or more organizations described in paragraph (1) or (2) of section 509(a), or“(ii) supervised or controlled in connection with one or more such organizations.“(C) Functionally integrated type iii supporting organizations.—An organization is described in this subparagraph if the organization is a functionally integrated type III supporting organization (as defined under section 4943(f)(5)(B)).”.(b) Taxable Expenditures.—Subparagraph (A) of section 4945(d)(4) is amended to read as follows:“(A) such organization—“(i) is described in paragraph (1) or (2) of section 509(a),120 STAT. 1108“(ii) is an organization described in section 509(a)(3) (other than an organization described in clause (i) or (ii) of section 4942(g)(4)(A)), or“(iii) is an exempt operating foundation (as defined in section 4940(d)(2)), or”.(c) Effective Date.—The amendments made by this section shall apply to distributions and expenditures after the date of the enactment of this Act.