,,ii #aagth ,,congress #ast ,session ,s4 #aiha ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,june #i1 #bjba,mr4 ,king 7for himself and ,mr4 ,grassley7 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 modify rules relating to donor advised funds1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,accelerating ,charitable ,efforts ,act or the ,,ace ,act4 #b4 ,additional restrictions on deductions for contributions to donor advised funds 7a7 ,limitation on deduction ,section #agj7;f7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new paragraph3 7#ai7 ,time for deduction of contributions to donor advised funds 7,a7 ,nonqualified donor advised funds 7i7 ,in general ,in the case of a contribution to a donor advised fund 7as defined in section #diff7;d77#b77 which is not a qualified donor advised fund or a qualified community foundation donor advised fund-- 7,i7 in the case of any contribution of property other than cash1 no deduction shall be allowed under this section unless the sponsoring organization sells such property for cash1 7,,ii7 no deduction shall be allowed under this section for any contribution before the taxable year that includes the date on which the sponsoring organization makes a qualifying distribution of such contribution 7or the proceeds from the sale of such contribution71 and 7,,iii7 the amount of the deduction shall be equal to the amount of the qualifying distribution4 7ii7 ,qualifying distribution ,for purposes of this subparagraph1 the term qualifying distribution means any distribution which is not a taxable distribution 7as defined in section #diff7;c71 determined without regard to paragraph 7#b77;,c7 thereof74 7iii7 ,ordering rule ,for purposes of this subparagraph1 distributions shall be treated as made from contributions 7and any earnings attributable thereto7 on a first-in1 first-out basis4 7,b7 ,nonpublicly traded assets of qualified donor advised funds 7i7 ,in general ,in the case of a contribution of a non-publicly traded asset to a qualified donor advised fund or a qualified community foundation donor advised fund-- 7,i7 no deduction shall be allowed under this section for any taxable year before the taxable year that includes the date on which the sponsoring organization sells the asset1 and 7,,ii7 the amount of the deduction allowed under subsection 7a7 shall not exceed the amount of gross proceeds received from such sale and credited to the account or fund identified with the taxpayer4 7ii7 ,non-publicly traded asset ,for purposes of this subparagraph1 the term non-publicly traded asset means any asset for which 7as of the date of the contribution7 market quotations are not readily available on an established securities market4 7,c7 ,contemporaneous written acknowledgement 7i7 ,in general ,in the case of a contribution described in subparagraph 7,a7 or 7,b71 no deduction shall be allowed under subsection 7a7 for such contribution unless the taxpayer substantiates the contribution by a contemporaneous written acknowledgement of the contribution by the sponsoring organization that meets the requirements of clause 7ii74 7ii7 ,content of acknowledgement ,an acknowledgement meets the requirements of this subparagraph if it includes the following information3 7,i7 ,the name of the donor4 7,,ii7 ,in the case of a contribution described in subparagraph 7,a7-- 7aa7 if such contribution is described in subparagraph 7,a77i77,i71 a certification that the asset was sold for cash and the amount of cash received in such sale1 and 7bb7 a certification that a qualifying distribution has been made from such contribution 7or the proceeds from the sale of such contribution71 an identification of the amount of such qualifying distribution1 and a statement that the deductible amount may not exceed the amount of such qualifying distribution4 7,,iii7 ,in the case of a contribution described in subparagraph 7,b71 a certification that the asset was sold and the amount of the gross proceeds received from such sale and credited to the account or fund of the taxpayer1 together with a statement that the deductible amount may not exceed the amount of the gross proceeds received from the sale of the asset and credited to the account or fund of the taxpayer4 7iii7 ,contemporaneous ,for purposes of clause 7i71 an acknowledgement shall be considered to be contemporaneous if the sponsoring organization provides it within #cj days of-- 7,i7 in the case of a contribution described in subparagraph 7,a71 the date of the qualifying distribution1 and 7,,ii7 in the case of a contribution described in subparagraph 7,b71 the date that the gross proceeds from the sale of the asset are credited to the account or fund of the taxpayer4 7iv7 ,information to ,secretary ,a sponsoring organization required to provide an acknowledgement under this paragraph shall provide to the ,secretary the information contained in the acknowledgement4 ,such information shall be provided at such time and in such manner as the ,secretary may prescribe4 7,d7 ,qualified donor advised fund ,for purposes of this paragraph1 the term qualified donor advised fund means a donor advised fund 7as defined in section #diff7;d77#b77 established under an agreement that requires1 for the duration of such fund1 the termination of any advisory privilege with respect to any contribution 7including any earnings thereon7 made by any donor 7or any person appointed or designated by a donor7 before the last day of the #adth taxable year beginning after the taxable year in which the contribution was made4 7,e7 ,qualified community foundation donor advised fund ,for purposes of this paragraph-- 7i7 ,in general ,the term qualified community foundation donor advised fund means a donor advised fund 7as defined in section #diff7;d77#b77 which is owned or controlled by a qualified community foundation and which meets one or more of the requirements of clauses 7ii7 or 7iii74 7ii7 ,maximum value of advisory privileges 7,i7 ,in general ,a donor advised fund meets the requirements of this clause if each individual who has advisory privileges with respect to such fund does not have advisory privileges with respect to #a or more donor advised funds held by the qualified community foundation with an aggregate value at any time after the date of the enactment of this paragraph in excess of #a1jjj1jjj4 7,,ii7 ,inflation adjustment ,in the case of any taxable year beginning after #bjba1 the #a1jjj1jjj amount in subclause 7,i7 shall be increased by an amount equal to such dollar amount multiplied by the cost-of-living adjustment determined under section #a7;f77#c7 for the calendar year in which the taxable year begins1 determined by substituting in subparagraph 7,a77ii7 thereof calendar year #bjbj for calendar year #bjaf4 ,if any amount as adjusted under the preceding sentence is not a multiple of #aj1jjj1 such dollar amount shall be rounded to the next lowest multiple of #aj1jjj4 7iii7 ,minimum payout ,a donor advised fund meets the requirements of this paragraph if the fund is established under an agreement that requires that the fund make qualifying distributions 7as defined in subparagraph 7,a77ii77 each calendar year in an amount not less than #e percent of the value of the fund 7determined as of the last day of the preceding calendar year74 7iv7 ,qualified community foundation ,the term qualified community foundation means an organization-- 7,i7 which is described in section #eja7;c77#c71 7,,ii7 which is organized and operated for the purpose of understanding and serving the needs of a particular geographic community that is no larger than #d ,states by engaging donors and pooling donations to create charitable funds in direct furtherance of those needs1 and 7,,iii7 which holds substantial assets 7but in no case less than #be percent of the organization's total assets7 outside of donor advised funds4 7v7 ,sponsoring organization ,the term sponsoring organization has the meaning given such term under section #diff7;d77#a74 4 7b7 ,other requirements for qualified donor advised funds ,section #agj7;f77#ah7 of the ,internal ,revenue ,code of #aihf is amended by striking and at the end of subparagraph 7,a77ii71 by striking the period at the end of subparagraph 7,b7 and inserting 1 and1 and by adding at the end the following new subparagraph3 7,c7 in the case of a contribution to a qualified donor advised fund 7as defined in paragraph 7#ai77;,d771 the taxpayer identifies for the sponsoring organization a preferred organization for the purposes of making distributions of so much of the amount contributed 7and any earnings attributable thereto7 as has not been distributed before the end of the last day of the #adth taxable year beginning after the taxable year in which the contribution was made4 4 7c7 ,effective date ,the amendments made by this section shall apply to contributions made after the date of the enactment of this ,act4 #c4 ,failure of donor advised funds to distribute contributions 7a7 ,in general ,subchapter ,g of chapter #db of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #difg;,a4 ,failure of donor advised funds to distribute contributions 7a7 ,in general ,in the case of a contribution which is held in a donor advised fund 7other than a qualified community foundation donor advised fund71 there is hereby imposed a tax equal to #ej percent of so much of the portion of such contribution 7and any earnings attributable thereto7 as has not been distributed by the sponsoring organization in a qualifying distribution before the last day of the sixth month following the last day of the applicable taxable year with respect to such contribution4 ,the tax imposed by this subsection shall be paid by such sponsoring organization4 7b7 ,applicable taxable year ,for purposes of this section1 the term applicable taxable year means-- 7#a7 in the case of a contribution to a qualified donor advised fund1 the #adth taxable year beginning after the taxable year in which the contribution was made1 and 7#b7 in the case of a contribution to any other donor advised fund 7other than a qualified community foundation donor advised fund71 the #dith taxable year beginning after the taxable year in which the contribution was made4 7c7 ,definitions and other rules 7#a7 ,qualified donor advised fund ,the term qualified donor advised fund has the meaning given such term under section #agj7;f77#ai77;,d74 7#b7 ,qualified community foundation donor advised fund ,the term qualified community foundation donor advised fund has the meaning given such term under section #agj7;f77#ai77;,e74 7#c7 ,qualifying distribution ,the term qualifying distribution has the meaning given such term under section #agj7;f77#ai77;,a77ii74 7#d7 ,ordering rule ,rules similar to the rules of section #agj7;f77#ai77;,a77iii7 shall apply for purposes of this section4 4 7b7 ,conforming amendment ,the table of sections for subchapter ,g of chapter #db of such ,code is amended by adding at the end the following new item3 ,sec4 #difg;,a4 ,failure of donor advised funds to distribute contributions4 4 7c7 ,effective date ,the amendments made by this section shall apply to contributions made after the date of the enactment of this ,act4 #d4 ,treatment of private foundation administrative expenses paid to disqualified persons 7a7 ,in general ,section #didb7;g7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new paragraph3 7#e7 ,disallowance of administrative expenses paid to disqualified persons 7,a7 ,in general ,for purposes of paragraph 7#a77;,a71 administrative expenses paid to any person described in subparagraph 7,b7 shall not be treated as a qualifying distribution4 7,b7 ,person described ,a person is described in this subparagraph if such person is a disqualified person 7as defined in section #didf7;a77#a77 with respect to the private foundation1 other than a foundation manager 7as defined in section #didf7;b77#a77 of such private foundation who is not a member of the family 7as defined in section #didf7;d77 of any individual described in subparagraph 7,a7 or 7,c7 of section #didf7;a77#a74 4 7b7 ,effective date ,the amendment made by this section shall apply to taxable years beginning after ,december #ca1 #bjba4 #e4 ,treatment of distributions to donor advised funds from private foundations 7a7 ,prohibition on treatment as qualifying distributions 7#a7 ,in general ,section #didb7;g77#a77;,a7 of the ,internal ,revenue ,code of #aihf is amended by striking paragraph 7#c71 or and inserting paragraph 7#c71 or 7iii7 a sponsoring organization 7as defined in section #diff7;d77#a77 if such contribution will be held in a donor advised fund 7as defined in section #diff7;d77#b771 except as provided in paragraph 7#c71 or4 7#b7 ,conforming amendment ,section #didb7;g77#c7 is amended by striking 7i7 or 7ii7 and inserting 7i71 7ii71 or 7iii74 7b7 ,reporting ,section #fjcc7;c7 of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by redesignating paragraphs 7#a7 and 7#b7 as paragraphs 7#b7 and 7#c71 respectively1 7#b7 by inserting before paragraph 7#b7 7as redesignated7 the following new paragraph3 7#a7 the private foundation shall include in its annual return under this section information on-- 7,a7 the amount of any contribution to a sponsoring organization 7as defined in section #diff7;d77#a77 which will be held in a donor advised fund 7as defined in section #diff7;d77#b771 7,b7 the sponsoring organization to which such contribution was made1 and 7,c7 the donation advice given to such organization 7if any71 1 and 7#c7 in the matter following paragraph 7#c7 7as redesignated7 by striking paragraph 7#a7 and inserting paragraph 7#b74 7c7 ,effective dates 7#a7 ,prohibition ,the amendment made by subsection 7a7 shall apply to distributions made after ,december #ca1 #bjba4 7#b7 ,reporting ,the amendments made by subsection 7b7 shall apply to returns required to be filed after ,december #ca1 #bjba4 #f4 ,treatment of contributions from donor advised funds for purposes of determining public support 7a7 ,private foundations ,section #eji of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7g7 ,special rules for support from donor advised funds 7#a7 ,in general ,for purposes of subsection 7a77#b71 except as otherwise provided in this subsection1 all amounts received from sponsoring organizations 7as defined in section #diff7;d77#a77-- 7,a7 shall not be treated as support received from an organization described in section #agj7;b77#a77;,a71 and 7,b7 shall be treated as support received from one person4 7#b7 ,exception where donor identified ,in the case of support from a sponsoring organization which is provided from funds which are identified with a donor to a donor advised fund 7as defined in section #diff7;d77#b77 and the sponsoring organization identifies such donor1 such support shall be treated as provided by such donor4 7#c7 ,exception for amounts not contributed from donor advised funds ,paragraph 7#a7 shall not apply to any amount if the sponsoring organization specifies that-- 7,a7 the amount is not a distribution from a donor advised fund 7as so defined71 and 7,b7 no donor 7or any person appointed or designated by such donor7 had advisory privileges with respect to the provision of the support4 4 7b7 ,determination of contribution limitations ,section #agj7;b77#a77;,a7 of such ,code is amended by adding at the end the following3 ,for purposes of clause 7vi71 rules similar to the rules of section #eji7;g7 shall apply44 7c7 ,effective date ,the amendments made by this section shall apply to contributions made in taxable years beginning after the date of the enactment of this ,act4 #g4 ,exemption from tax on investment income for certain private foundations making significant qualifying distributions 7a7 ,in general ,section #didj of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7e7 ,exemption for foundations making significant qualifying distributions ,no tax shall be imposed by this section for any taxable year on any private foundation if such private foundation makes qualifying distributions 7as defined in section #didb7;g77 during such taxable year in an amount that is not less than #g percent of the excess of-- 7#a7 the aggregate fair market value of all assets of the foundation 7other than those which are used 7or held for use7 directly in carrying out the foundation's exempt purpose7 determined as of the first date of the taxable year1 over 7#b7 the acquisition indebtedness with respect to such assets 7determined under section #ead7;c77#a774 4 7b7 ,effective date ,the amendment made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 #h4 ,exemption from tax on investment income of limited-duration private foundations 7a7 ,in general ,section #didj of the ,internal ,revenue ,code of #aihf1 as amended by section #g1 is amended by adding at the end the following new subsection3 7f7 ,exemption for limited-,duration foundations 7#a7 ,exemption 7,a7 ,in general ,no tax shall be imposed by subsection 7a7 on any private foundation if such private foundation meets the requirements of subparagraph 7,b74 7,b7 ,requirements ,a private foundation meets the requirements of this subparagraph if1 at the time of its establishment and at all times thereafter-- 7i7 such private foundation has a duration specified in its governing documents of not more than #be years1 and 7ii7 such private foundation makes no distributions to disqualified private foundations4 7,c7 ,disqualified private foundation ,for purposes of this subsection1 the term disqualified private foundation means1 with respect to the private foundation described in subparagraph 7,b71 another private foundation with respect to which there is a disqualified person who is also a disqualified person with respect to such private foundation described in subparagraph 7,b74 7#b7 ,recapture tax 7,a7 ,in general ,if-- 7i7 no tax is imposed under subsection 7a7 on a private foundation by reason of paragraph 7#a71 and 7ii7 such private foundation-- 7,i7 fails to meet the requirements of paragraph 7#a77;,b7 in any subsequent taxable year1 7,,ii7 has a duration of more than #be years1 or 7,,iii7 makes a distribution to a disqualified private foundation1 a tax shall be imposed on such foundation in the amount determined under subparagraph 7,b7 for the first taxable year in which such private foundation is described in clause 7ii74 7,b7 ,amount of tax ,the amount of tax determined under this subparagraph is the aggregate amount of taxes which would have been imposed on such private foundation for all taxable years before the first taxable year in which such foundation was described in subparagraph 7,a77ii7 if paragraph 7#a7 had not applied4 4 7b7 ,effective date ,the amendment made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4