,,ii  #aacth ,,congress  #b;d ,session  
,s4 #bgaj  ,,in ,,the ,,senate ,,of     
,,the ,,united ,,states  ,july #cj1     
#bjad ,mr4 ,menendez 7for himself and   
,mr4 ,thune7 introduced the following   
bill2 which was read twice and referred 
to the ,committee on ,finance  ,a ,,bill
  ,to amend the ,internal ,revenue ,code
 of #aihf to exempt private foundations 
from the tax on excess business holdings
 in the case of certain philanthropic   
enterprises which are independently     
supervised1 and for other purposes4  #a4
  ,short title  ,this ,act may be cited 
as the ,philanthropic ,enterprise ,act  
of #bjad4  #b4  ,exception from private 
foundation excess business holding tax  
for certain philanthropic business      
holdings  7a7  ,in general  ,section    
#didc of the ,internal ,revenue ,code of
 #aihf is amended by adding at the end  
the following new subsection3  7g7      
,exception for certain philanthropic    
business holdings  7#a7  ,in general    
,subsection 7a7 shall not apply with    

respect to the holdings of a private    
foundation in any business enterprise   
which for the taxable year meets--  7,a7
 the exclusive ownership requirements of
 paragraph 7#b71  7,b7 the all profits  
to charity requirement of paragraph     
7#c71 and  7,c7 the independent         
operation requirements of paragraph     
7#d74  7#b7  ,exclusive ownership  ,the 
exclusive ownership requirements of this
 paragraph are met if--  7,a7 all       
ownership interests in the business     
enterprise are held by the private      
foundation at all times during the      
taxable year1 and  7,b7 all the private 
foundation's ownership interests in the 
business enterprise were acquired under 
the terms of a will or trust upon the   
death of the testator or settlor1 as the
 case may be4  7#c7  ,all profits to    
charity  7,a7  ,in general  ,the all    
profits to charity requirement of this  
paragraph is met if the business        
enterprise1 not later than #abj days    
after the close of the taxable year1    

distributes an amount equal to its net  
operating income for such taxable year  
to the private foundation4  7,b7  ,net  
operating income  ,for purposes of this 
paragraph1 the net operating income of  
any business enterprise for any taxable 
year is an amount equal to the gross    
income of the business enterprise for   
the taxable year1 reduced by the sum    
of--  7i7 the deductions allowed by     
chapter #a for the taxable year which   
are directly connected with the         
production of such income1  7ii7 the tax
 imposed by chapter #a on the business  
enterprise for the taxable year1 and    
7iii7 an amount for a reasonable reserve
 for working capital and other business 
needs of the business enterprise4  7#d7 
,independent operation  ,the independent
 operation requirements of this         
paragraph are met if1 at all times      
during the taxable year--  7,a7 no      
substantial contributor 7as defined in  
section #dieh7;c77#c77;,c77 to the      
private foundation1 or family member of 

such a contributor 7determined under    
section #dieh7;f77#d77 is a director1   
officer1 trustee1 manager1 employee1 or 
contractor of the business enterprise   
7or an individual having powers or      
responsibilities similar to any of the  
foregoing71  7,b7 at least a majority of
 the board of directors of the private  
foundation are not-- 7i7 also directors 
or officers of the business enterprise1 
or  7ii7 members of the family          
7determined under section #dieh7;f77#d77
 of a substantial contributor 7as       
defined in section #dieh7;c77#c77;,c77  
to the private foundation1 and  7,c7    
there is no loan outstanding from the   
business enterprise to a substantial    
contributor 7as so defined7 to the      
private foundation or a family member of
 such contributor 7as so determined74   
7#e7  ,certain deemed private           
foundations excluded  ,this subsection  
shall not apply to--  7,a7 any fund or  
organization treated as a private       
foundation for purposes of this section 

by reason of subsection 7e7 or 7f71     
7,b7 any trust described in section     
#didg7;a77#a7 7relating to charitable   
trusts71 and  7,c7 any trust described  
in section #didg7;a77#b7 7relating to   
split-interest trusts74  4  7b7         
,effective date  ,the amendments made by
 this section shall apply to taxable    
years beginning after ,december #ca1    
#bjac4  #c4  ,exception to unrelated    
business tax on specified payments from 
certain controlled entities  7a7  ,in   
general  ,paragraph 7#ac7 of section    
#eab7;b7 of the ,internal ,revenue ,code
 of #aihf is amended by adding at the   
end the following new subparagraph3     
7,g7  ,subparagraph not to apply to     
payments from certain philanthropic     
controlled entities  ,subparagraph 7,a7 
shall not apply to any payment not in   
excess of fair market value to a private
 foundation from an entity which is a   
business enterprise described in section
 #didc7;g77#a7 with respect to such     
foundation4  4  7b7  ,effective date    

,the amendments made by this section    
shall apply to taxable years beginning  
after ,december #ca1 #bjac4