Amends the Internal Revenue Code to require a taxpayer seeking an income tax deduction for the charitable contribution of a patent, copyright, trademark, trade name, trade secret, know-how, software or similar technology property to: (1) contribute the entire right, title, and interest in such property to certain tax-exempt universities, teaching hospitals or reseach institutions; and (2) require that any cash or cash equivalents donated with such property be used for patent prosecution or maintenance and for the scientific and commercial development of such patents or other technology property.
Requires the Secretary of the Treasury to prescribe regulations for the appraisal of such patents or other technology property and for the prevention of taxpayer abuse of charitable deductions for such property.
[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3837 Introduced in House (IH)]
108th CONGRESS
2d Session
H. R. 3837
To amend the Internal Revenue Code of 1986 to limit the deduction for
charitable contributions of patents and similar property.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 25, 2004
Mr. Houghton (for himself, Mr. Portman, and Mr. Moran of Kansas)
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 limit the deduction for
charitable contributions of patents and similar property.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. LIMITATION OF DEDUCTION FOR CHARITABLE CONTRIBUTIONS OF
PATENTS AND SIMILAR PROPERTY.
(a) In General.--Subparagraph (B) of section 170(e)(1) of the
Internal Revenue Code of 1986 (relating to certain contributions of
capital gain property) is amended by striking ``or'' at the end of
clause (i), by inserting ``or'' at the end of clause (ii), and by
inserting after clause (ii) the following new clause:
``(iii) except as provided in paragraph
(7), of any patent, copyright, trademark, trade
name, trade secret, know-how, software, or
similar property,''.
(b) Special Rule.--Section 170(e) of such Code is amended by adding
at the end the following new paragraph:
``(7) Special rule for certain contributions of patents,
copyrights, etc.--
``(A) Exception for contributions to qualified
research organizations.--Subparagraph (B) of paragraph
(1) shall not apply to any qualified contribution to a
qualified research organization.
``(B) Qualified research organization defined.--For
purposes of this paragraph, the term `qualified
research organization' means an organization that
applies its expertise to the scientific and commercial
development of qualified contributions and is described
in clause (iii), (iv), or (vi) of subsection (b)(1)(A)
or subparagraph (A), (B), or (C) of section 41(e)(6) .
``(C) Qualified contribution defined.--For purposes
of this paragraph, a contribution of property described
in paragraph (1)(B)(iii) shall be treated as a
qualified contribution only if--
``(i) such contribution is a gift of all
right, title, and interest in and to property
described in clause (iii) of paragraph (1)(B),
``(ii) the donor and donee of any cash or
cash equivalent in connection with such
contribution agree to limit the use of such
cash or cash equivalent to costs of patent
prosecution or maintenance and the scientific
and commercial development of qualified
donations in general, and
``(iii) under regulations prescribed by the
Secretary, the donor of the qualified
contribution discloses both the contribution
described in clause (i) and a complete
description of the terms of any restricted cash
or cash equivalents grant described in clause
(ii) on its income tax return for the taxable
year during which such contribution is made.''.
(c) Qualified Appraisal Required.--
(1) In general.--The Secretary of the Treasury shall
prescribe regulations or other guidance under section 170(a)(1)
of the Internal Revenue Code of 1986 requiring the donor of
property described in section 170(e)(1)(B)(iii) of such Code to
obtain one or more qualified appraisals of the fair market
value of such property by a qualified appraiser or appraisers.
(2) Qualified appraiser.--For purposes of paragraph (1),
the term ``qualified appraiser'' means an appraiser who has
valuation credentials and experience in appraising such
property, who is not an employee of the donor or donee, and who
satisfies any professional valuation education and
qualification requirements that are prescribed by the
Secretary.
(3) Qualified appraisal.--For purposes of paragraph (1),
the term ``qualified appraisal'' means an appraisal that
satisfies the requirements (without regard to any value
limitation) for a qualified appraisal under section 170(a)(1)
of such Code (as in effect on the date of the enactment of this
Act), with the following modifications:
(A) The valuation methodologies to be used shall be
those prescribed by the Secretary.
(B) The appraisal shall take into account the
competitive patent environment and remaining life of a
donated patent.
(C) The valuation of property described in section
170(e)(7) of such Code shall take into account the
potential use of such property by any qualified donee,
including the value to be generated through further
technology development and commercialization by the
donee and potential licensees of the property.
(D) If the value of the property exceeds
$5,000,000, a second appraisal prepared by a qualified
appraiser independently selected by a professional
organization designated by the Secretary shall be
required.
(E) The donee shall acknowledge receipt of the
appraisal summary required to be filed by the donor.
(F) The amount of any cash or cash equivalent grant
described in section 170(e)(7)(C)(ii) of such Code and
a complete description of the terms of any such grant
shall be fully described in the information returns of
the donee organization for the taxable year of receipt
and subsequent taxable years, as required by the
Secretary.
(d) Anti-Abuse Rules.--The Secretary may prescribe such regulations
or other guidance as may be necessary or appropriate to prevent the
avoidance of the purposes of paragraphs (1)(B)(iii) and (7) of section
170(e) of such Code (as added by this section), including preventing--
(1) the circumvention of the reduction of the deduction
under such section by embedding or bundling the patent or
similar property as part of a charitable contribution of
property that includes the patent or similar property,
(2) the manipulation of the basis of the property to
increase the amount of the charitable deduction through the use
of related persons, pass-thru entities, or other
intermediaries, or through the use of any provision of law or
regulation (including the consolidated return regulations), and
(3) a donor from changing the form of the patent or similar
property to property of a form for which different deduction
rules would apply.
(e) Effective Date.--
(1) In general.--Except as provided by paragraph (2), the
amendments made by this section shall apply to contributions
made after the date of the enactment of this Act.
(2) Appraisals.--Subsection (c) shall apply to
contributions made after the date of adoption of regulations,
or date of issuance of guidance, required by subsection (c),
whichever is earlier.
<all>
Introduced in House
Introduced in House
Sponsor introductory remarks on measure. (CR E232)
Referred to the House Committee on Ways and Means.
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