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Title V — Tax Exempt Entities

H.R. 1 · 113th Congress · Dec 10, 2014 · Lineage

V Tax Exempt Entities

A Unrelated Business Income Tax

Sec. 5001 Clarification of unrelated business income tax treatment of entities treated as exempt from taxation under section 501(a)

(a)
In general— Subparagraph (A) of section 511(a)(2) is amended by adding at the end the following: “For purposes of the preceding sentence, an organization shall not fail to be treated as exempt from taxation under this subtitle by reason of section 501(a) solely because such organization is also so exempt, or excludes amounts from gross income, by reason of any other provision of this title.”.
(b)
Clerical amendment— The heading for subparagraph (A) of section 511(a)(2) is amended to read as follows: “Organizations exempt from taxation by reason of section 501(a).”
(c)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2014.

Sec. 5002 Name and logo royalties treated as unrelated business taxable income

(a)
In general— Section 513 is amended by adding at the end the following new subsection:

“(k) Name and logo royalties—Any sale or licensing by an organization of any name or logo of the organization (including any trademark or copyright relating to such name or logo) shall be treated as an unrelated trade or business regularly carried on by such organization.”

(b)
Calculation of unrelated business taxable income— Subsection (b) of section 512 is amended by adding at the end the following new paragraph:

“(20) Special rule for name and logo royalties—Notwithstanding paragraph (1), (2), (3), or (5), any income derived from any sale or licensing described in section 513(k) shall be included as an item of gross income derived from an unrelated trade or business.”

(c)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2014.

Sec. 5003 Unrelated business taxable income separately computed for each trade or business activity

(a)
In general— Subsection (a) of section 512 is amended by adding at the end the following new paragraph:

“(6) Special rule for organization with more than 1 unrelated trade or business—In the case of any organization with more than 1 unrelated trade or business—

“(A) unrelated business taxable income shall be computed separately with respect to each such trade or business and without regard to subsection (b)(12),

“(B) the unrelated business taxable income of such organization shall be the sum of the unrelated business taxable income so computed with respect to each such trade or business, less a specific deduction under subsection (b)(12), and

“(C) for purposes of subparagraph (B), unrelated business taxable income with respect to any such trade or business shall not be less than zero, and

“(D) the net operating loss deduction shall only be allowed with respect to the trade or business from which the net operating loss arose.”

(b)
Effective date—
(1)
In general— Except to the extent provided in paragraph (2), the amendment made by this section shall apply to taxable years beginning after December 31, 2014.
(2)
Net operating losses—
(A)
Certain carryovers— In the case of any net operating loss arising in a taxable year beginning before January 1, 2015, that is carried over to a taxable year beginning on or after such date, section 512(a)(6)(D) of the Internal Revenue Code of 1986, as added by this Act, shall not apply.
(B)
Certain carrybacks— In the case of any net operating loss arising in a taxable year beginning after December 31, 2014, and carried back to any taxable year beginning on or before such date, in computing unrelated business taxable income of an organization under section 512(a) of such Code for the taxable year, the net operating loss deduction shall be allowed only with respect to the trade or business from which the net operating loss arose.

Sec. 5004 Exclusion of research income limited to publicly available research

(a)
In general— Paragraph (9) of section 512(b) is amended by striking “from research” and inserting “from such research”.
(b)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2014.

Sec. 5005 Parity of charitable contribution limitation between trusts and corporations

(a)
In general— Paragraph (11) of section 512(b) is amended by striking the second sentence and inserting the following: “The deduction allowed by this paragraph shall not exceed 10 percent of the unrelated business taxable income computed without the benefit of this paragraph.”
(b)
Effective date— The amendment made by this section shall apply to taxable years beginning after December 31, 2014.

Sec. 5006 Increased specific deduction

(a)
In general— Paragraph (12) of section 512(b) is amended by striking “$1,000” each place it appears and inserting “$10,000”.
(b)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2014.

Sec. 5007 Repeal of exclusion of gain or loss from disposition of distressed property

(a)
In general— Subsection (b) of section 512 is amended by striking paragraph (16).
(b)
Effective date— The amendment made by this section shall apply to property acquired after December 31, 2014.

Sec. 5008 Qualified sponsorship payments

(a)
Repeal of use or acknowledgment of product lines for qualified sponsorship payments— Subparagraphs (A) and (B)(ii)(I) of section 513(i)(2) are each amended by striking “(or product lines)”.
(b)
Use or acknowledgment limited in case of certain events— Subparagraph (B) of section 513(i)(2) is amended by adding at the end the following new clause:

“(iii) Use or acknowledgment limited in case of certain events—In the case of an event with respect to which an organization receives an aggregate amount of qualified sponsorship payments greater than $25,000, a payment shall not be treated as a qualified sponsorship payment for purposes of paragraph (1) unless the use or acknowledgment of the sponsor’s name or logo appears with, and in substantially the same manner as, the names of a significant portion of other donors to the organization. For purposes of the preceding sentence, whether a number of donors is a significant portion shall be determined based on the total number of donors and the total contributed with respect to the event, but in no event shall fewer than 2 other donors be treated as a significant portion of other donors.”

(c)
Clerical amendment— The heading for clause (ii) of section 513(i)(2)(B) is amended to read as follows: “Periodicals and qualified convention and trade show activities.”.
(d)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2014.

B Penalties

Sec. 5101 Increase in information return penalties

(a)
Failure To file return—
(1)
Organization— Subparagraph (A) of section 6652(c)(1) is amended—
(A)
by striking “$20” each place it appears and inserting “$40”, and
(B)
by striking “$100” and inserting “$200”.
(2)
Managers— Clause (ii) of section 6652(c)(1)(B) is amended by striking “$10” and inserting “$20”.
(b)
Failure To make returns, reports, and applications available for public inspection— Subparagraphs (C) and (D) of section 6652(c)(1) are each amended by striking “$20” and inserting “$40”.
(c)
Failure To file returns under section 6034 or 6043— Paragraph (2) of section 6652(c) is amended—
(1)
by striking “$10” each place it appears in subparagraphs (A) and (B) and inserting “$20”, and
(2)
by striking “substituting “$100” for “$20”,” in subparagraph (C)(ii) and inserting “substituting “$200” for “$40”,”.
(d)
Failure To file disclosure under section 6033(a)(2)—
(1)
Organization— Subparagraph (A) of section 6652(c)(3) is amended by striking “$100” and inserting “$200”.
(2)
Managers— Subparagraph (B) of section 6652(c)(3) is amended by striking “$100” and inserting “$200”.
(e)
Effective date— The amendments made by this section shall apply with respect to information returns required to be filed on or after January 1, 2015.

Sec. 5102 Manager-level accuracy-related penalty on underpayment of unrelated business income tax

(a)
In general— Section 6662 is amended by adding at the end the following new subsection:

“(k) Manager-Level penalty for substantial underpayment of unrelated business income tax

“(1) In general—In the case of any substantial underpayment of income tax which is attributable to the tax imposed by section 511 on the unrelated business taxable income of an organization for the taxable year, there is hereby imposed a tax with respect to such organization an amount equal to 5 percent of such underpayment to which the underpayment relates. Such tax shall be paid by any manager of the organization.

“(2) Manager—For purposes of this subsection, the term “manager” means any officer, director, trustee, employee, or other individual who is under a duty to perform an act in respect of which the underpayment relates.

“(3) Joint and several liability—If more than one person is liable under paragraph (1) with respect to an underpayment, all such persons shall be jointly and severally liable under such paragraph with respect to such underpayment

“(4) Limit—With respect to any substantial underpayment of income tax for a taxable year, the maximum amount of the tax added by paragraph (1) shall not exceed $20,000.”

(b)
Reportable transactions— Section 6662A is amended by adding at the end the following new subsection:

“(f) Manager-Level penalty in case of unrelated business income tax

“(1) In general—In the case of any portion of a reportable transaction understatement of the tax imposed by section 511 to which this section applies, there is hereby imposed a tax in an amount equal to 10 percent of such portion of the underpayment to which the reportable transaction understatement occurs. Such tax shall be paid by any manager of the organization.

“(2) Manager—For purposes of this subsection, the term “manager” means any officer, director, trustee, employee, or other individual who is under a duty to perform an act in respect of which such understatement occurs.

“(3) Joint and several liability—If more than one person is liable under paragraph (1) with respect to an understatement, all such persons shall be jointly and severally liable under such paragraph with respect to such understatement.

“(4) Limit—With respect to any understatement of tax to which this section applies, the maximum amount of the tax added by paragraph (1) shall not exceed $40,000”

(c)
Coordination— Section 6662 is amended—
(1)
by striking the flush matter at the end of subsection (b), and
(2)
by adding at the end the following new subsection:

“(l) Coordination with other penalties—This section shall not apply to any portion of an underpayment on which a penalty is imposed under section 6663. Except as provided in paragraph (1) or (2)(B) of section 6662A(e), this section shall not apply to the portion of any underpayment which is attributable to a reportable transaction understatement on which a penalty is imposed under section 6662A.”

(d)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2014.

C Excise Taxes

Sec. 5201 Modification of intermediate sanctions

(a)
Organization level tax— Subsection (a) of section 4958 is amended by adding at the end the following new paragraph:

“(3) On the organization—In any case in which a tax is imposed by paragraph (1), there is hereby imposed on the organization a tax equal to 10 percent of the excess benefit.”

(b)
Minimum standards of organization due diligence— Subsection (d) of section 4958 is amended by adding at the end the following new paragraph:

“(3) Minimum standards of organization due diligence

“(A) In general—Subsection (a)(3) shall not apply to a transaction, if—

“(i) the organization establishes that the minimum standards of due diligence described in subparagraph (B) were met with respect to the transaction, or

“(ii) the organization establishes to the satisfaction of the Secretary that such other reasonable procedures were used to ensure that no excess benefit was provided.

“(B) Minimum standards—An organization shall be treated as satisfying the minimum standards of due diligence described in this subparagraph with respect to any transaction, if—

“(i) the transaction was approved in advance by an authorized body of the organization composed entirely of individuals who did not have a conflict of interest with respect to the transaction,

“(ii) the authorized body obtained and relied upon appropriate data as to comparability prior to approval of the transaction, and

“(iii) the authorizing body adequately and concurrently documented the basis for approving the transaction.

“(C) No presumption as to reasonableness—Meeting the requirements of clause (i) or (ii) of subparagraph (A) with respect to a transaction shall not give rise to a presumption of reasonableness for purposes of the taxes imposed by paragraphs (1) or (2) of subsection (a) and shall not, by itself, support a conclusion that a manager did not act knowingly for purposes of subsection (a)(2).”

(c)
Repeal of exception for manager reliance on professional advice— Section 4958 is amended by adding at the end the following new subsection:

“(g) No safe harbor for reliance on professional advice—An organization manager’s reliance on a written opinion of a professional with respect to elements of a transaction within the professional’s expertise shall not, by itself, preclude the manager from being treated as participating in the transaction knowingly.”

(d)
Athletic coaches and investment managers treated as disqualified persons—
(1)
Athletic coaches—
(A)
In general— Paragraph (1) of section 4958(f) is amended by striking “and” at the end of subparagraph (E), by striking the period at the end of subparagraph (F) and inserting “, and”, and by adding at the end the following new subparagraph:

“(G) any person who performs services as an athletic coach for the organization.”

(B)
Family members— Subparagraph (B) of section 4958(f)(1) is amended by inserting “or (G)” after “subparagraph (A)”.
(2)
Investment advisors—
(A)
In general— Subparagraph (F) of section 4958(f)(1) is amended—
(i)
by striking “which involves a sponsoring organization (as defined in section 4966(d)(1)),”, and
(ii)
by striking “such sponsoring organization (as so defined)” and inserting “the organization”.
(B)
Investment advisor definition— Subparagraph (B) of section 4958(f)(8) is amended to read as follows:

“(B) Investment advisor defined—For purposes of subparagraph (A), the term “investment advisor” means—

“(i) with respect to any organization, any person who is compensated by such organization and is primarily responsible for managing the investment of, or providing investment advice with respect to, assets of such organization, and

“(ii) with respect to any sponsoring organization (as defined in section 4966(d)(1)), any person (other than an employee of such organization) compensated by such organization for managing the investment of, or providing investment advice with respect to, assets maintained in donor advised funds (as defined in section 4966(d)(2)) owned by such organization.”

(e)
Application to unions and trade associations— Paragraph (1) of section 4958(e) is amended by inserting “(5), (6),” after “(4),”.
(f)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2014.

Sec. 5202 Modification of taxes on self-dealing

(a)
Organization level tax— Subsection (a) of section 4941 is amended by adding at the end the following new paragraph:

“(3) On the foundation—In any case in which a tax is imposed by paragraph (1), there is hereby imposed on the foundation a tax equal to 2.5 percent (10 percent in the case payment of compensation) of the amount involved with respect to the act of self-dealing for each year (or part thereof) in the taxable period.”

(b)
Repeal of exception for manager reliance on advice from counsel— Section 4941 is amended by adding at the end the following new subsection:

“(f) No safe harbor for reliance on advice of counsel—A foundation manager’s reliance on a written legal opinion by legal counsel that an act is not an act of self-dealing shall not, by itself, preclude the manager from being treated as participating in the act knowingly.”

(c)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2014.

Sec. 5203 Excise tax on failure to distribute within 5 years contribution to donor advised fund

(a)
In general— Subchapter G of chapter 42 is amended by adding at the end the following new section:

“4968. Failure to distribute contributions within 5 years

“(a) In general—In the case of a contribution which is held in a donor advised fund, there is hereby imposed a tax equal to 20 percent of so much of the portion of such contribution as has not been distributed by the sponsoring organization in an eligible distribution before the beginning of the 6th (or succeeding) taxable year beginning after the taxable year during which such contribution was made. The tax imposed by this subsection shall be paid by such sponsoring organization.

“(b) Treatment of distributions—For purposes of this section—

“(1) Eligible distribution—The term “eligible distribution” means any distribution to an organization described in section 170(b)(1)(A) (other than an organization described in section 509(a)(3) or any fund or account described in section 4966(d)(2).

“(2) Accounting—Distributions shall be treated as made from contributions (and any earnings attributable thereto) on a first-in, first-out basis.”

(b)
Conforming amendment— The table of sections for subchapter G of chapter 42 is amended by adding at the end the following new item:
(c)
Effective date—
(1)
In general— Except as provided in paragraph (2), the amendments made by this section shall apply to contributions made after December 31, 2014.
(2)
Transition rule— In the case of any contribution—
(A)
which was made before January 1, 2015, and
(B)
any portion of which (including any earnings attributable thereto) is held in a donor advised fund on such date,

Sec. 5204 Simplification of excise tax on private foundation investment income

(a)
Rate reduction— Subsection (a) of section 4940 is amended by striking “2 percent” and inserting “1 percent”.
(b)
Repeal of special rules for certain private foundations— Section 4940 is amended by striking subsections (d) and (e).
(c)
Conforming amendment— Section 4945(d)(4)(A) is amended by striking clause (iii) and by inserting “or” at the end of clause (i).
(d)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2014.

Sec. 5205 Repeal of exception for private operating foundation failure to distribute income

(a)
In general— Subsection (a) of section 4942 is amended—
(1)
by striking “a private foundation—” and all that follows through “(2) to the extent” and inserting “a private foundation to the extent”, and
(2)
by redesignating subparagraphs (A), (B), (C), and (D) as paragraphs (1), (2), (3), and (4), respectively, and by moving such paragraphs, as so redesignated, two ems to the left.
(b)
Conforming amendments—
(1)
Section 4942(j) is amended by striking paragraphs (3), (4), and (5).
(2)
Section 170(b)(1)(F)(i) is amended by striking “(as defined in section 4942(j)(3))”,
(3)
Section 170(b)(1) is amended by adding at the end the following new subparagraphs:

“(H) Private operating foundation—For purposes of this paragraph, the term “private operating foundation” means any organization—

“(i) which makes qualifying distributions (within the meaning of paragraph (1) or (2) of section 4942(g)) directly for the active conduct of the activities constituting the purpose or function for which it is organized and operated equal to substantially all of the lesser of—

“(I) its adjusted net income (as defined in subsection section 4942(f)), or

“(II) its minimum investment return, and

“(ii)

“(I) substantially more than half of the assets of which are devoted directly to such activities or to functionally related businesses, or to both, or are stock of a corporation which is controlled by the foundation and substantially all of the assets of which are so devoted,

“(II) which normally makes qualifying distributions (within the meaning of paragraph (1) or (2) of section 4942(g)) directly for the active conduct of the activities constituting the purpose or function for which it is organized and operated in an amount not less than two-thirds of its minimum investment return (as defined in section 4942(e)), or

“(III) substantially all of the support (other than gross investment income as defined in section 509(e)) of which is normally received from the general public and from 5 or more exempt organizations which are not described in section 4946(a)(1)(H) with respect to each other or the recipient foundation; not more than 25 percent of the support (other than gross investment income) of which is normally received from any one such exempt organization; and not more than half of the support of which is normally received from gross investment income.

“(I) Functionally related business—For purposes of subparagraph (H), the term “functionally related business” means—

“(i) a trade or business which is not an unrelated trade or business (as defined in section 513), or

“(ii) an activity which is carried on within a larger aggregate of similar activities or within a larger complex of other endeavors which is related (aside from the need of the organization for income or funds or the use it makes of the profits derived) to the exempt purposes of the organization.”

(4)
Section 170(e)(3)(A) is amended by striking “as defined in section 4942(j)(3)” and inserting “as defined in subsection (b)(1)(H)”.
(5)
Section 150(b)(3)(F), as redesignated by this Act, is amended—
(A)
by striking “4942 (relating to the excise tax on a failure to distribute income) and”,
(B)
by striking “section 4942(j)(4)” and inserting “section 170(b)(1)(I)”.
(6)
Section 2055(e)(4)(D) is amended by striking “section 4942(j)(3)” and inserting “section 170(b)(1)(H)”.
(7)
Section 2503(g)(2)(B) is amended by striking “section 4942(j)(3)” and inserting “section 170(b)(1)(H)”.
(8)
Section 4942(g)(1)(A) is amended by striking “which is not an operating foundation (as defined in subsection (j)(3))”.
(9)
Section 4942(g)(3)(A) is amended by striking “which is not an operating foundation”.
(10)
Section 4942(g)(4)(A) is amended by striking “which is not an operating foundation”.
(11)
Section 4943(d)(3)(A) is amended by striking “section 4942(j)(4)” and inserting “section 170(b)(1)(I)”.
(12)
Section 6110(l)(2)(A) is amended by striking “section 4942(j)(3)” and inserting “section 170(b)(1)(H)”.
(13)
Section 7428(a)(1)(C) is amended by striking “section 4942(j)(3)” and inserting “section 170(b)(1)(H)”.
(c)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2014.

Sec. 5206 Excise tax based on investment income of private colleges and universities

(a)
In general— Chapter 42 is amended by adding at the end the following new subchapter:

“H Excise tax based on investment income of private colleges and universities

“4969. Excise tax based on investment income of private colleges and universities

“(a) Tax imposed—There is hereby imposed on each applicable educational institution for the taxable year a tax equal to 1 percent of the net investment income of such institution for the taxable year.

“(b) Applicable educational institution—For purposes of this subchapter—

“(1) In general—The term “applicable educational institution” means an eligible educational institution (as defined in section 25A(e)(3))—

“(A) which is not described in the first sentence of section 511(a)(2)(B) (relating to State colleges and universities), and

“(B) the aggregate fair market value of the assets of which at the end of the preceding taxable year (other than those assets which are used (or held for use) directly in carrying out the institution’s exempt purpose) is at least $100,000 per student of the institution.

“(2) Students—For purposes of paragraph (1)(B), the number of students of an institution shall be based on the daily average number of full-time students attending such institution (with part-time students taken into account on a full-time student equivalent basis).

“(c) Net investment income—For purposes of this section, net investment income shall be determined under rules similar to the rules of section 4940(c).”

(b)
Clerical amendment— The table of subchapters for chapter 42 is amended by adding at the end the following new item:
(c)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2014.

D Requirements for Organizations Exempt From Tax

Sec. 5301 Repeal of tax-exempt status for professional sports leagues

(a)
In general— Paragraph (6) of section 501(c) is amended—
(1)
by striking “, boards of trade, or professional” and all that follows through “players)” and inserting “, or boards of trade”, and
(2)
by adding at the end the following: “This paragraph shall not apply to any professional sports league (whether or not administering a pension fund for players).”.
(b)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2014.

Sec. 5302 Repeal of exemption from tax for certain insurance companies and co-op health insurance issuers

(a)
In general— Section 501(c) is amended by striking paragraphs (15) and (29).
(b)
Conforming amendments—
(1)
Section 831(d), as amended by the preceding provisions of this Act, is amended to read as follows:

“(d) Cross reference—For taxation of foreign corporations carrying on an insurance business within the United States, see section 842.”

(2)
Section 4958(e)(1) is amended by striking “(4), or (29)” and inserting “or (4)”.
(3)
Section 6033 is amended by striking subsection (m) and redesignating subsection (n) as subsection (m).
(c)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2014.
(d)
Transition rules— In the case of any organization described in paragraph (15) or (29) of section 501(c) of the Internal Revenue Code of 1986 (as in effect immediately before the enactment of this Act)—
(1)
no adjustment shall be made under section 481 (or any other provision) of the Internal Revenue Code of 1986 on account of a change in its method of accounting for its 1st taxable year beginning after December 31, 2014, and
(2)
for purposes of determining gain or loss, the adjusted basis of any asset held on the 1st day of such taxable year shall be treated as equal to its fair market value as of such day.

Sec. 5303 In-State requirement for workmen’s compensation insurance organization

(a)
In general— Clause (ii) of section 501(c)(27)(B) is amended by inserting before the comma at the end the following: “, and must not offer any other insurance”.
(b)
Effective date— The amendment made by this section shall apply to insurance policies issued, and renewals, after December 31, 2014.

Sec. 5304 Repeal of Type II and Type III supporting organizations

(a)
In general— Subparagraph (B) of section 509(a)(3) is amended—
(1)
by inserting “and” at the end of clause (i),
(2)
by striking clauses (ii) and (iii), and
(3)
by striking “is—” and all that follows through “operated, supervised, or controlled” and inserting “is operated, supervised, or controlled”.
(b)
Conforming amendments—
(1)
Section 170(f)(18)(A) is amended by striking “is not—” and all that follows through “, and” and inserting the following: “is not described in paragraph (3), (4), or (5) of subsection (c), and”.
(2)
(A)
(i)
Section 509(f) is amended by striking paragraph (1) and by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively.
(ii)
Section 4942(g)(4)(A)(ii)(I) is amended by striking “section 509(f)(3)” and inserting “section 509(f)(2)”.
(iii)
Section 4958(c)(3)(C)(ii)(II) is amended by striking “section 509(f)(3)” and inserting “section 509(f)(2)”.
(iv)
Section 4966(d)(4)(A)(ii)(I) is amended by striking “section 509(f)(3)” and inserting “section 509(f)(2)”.
(B)
Section 509(f)(1)(A), as so redesignated, is amended by striking “shall not be considered to be—” and all that follows through “if such organization” and inserting the following: “shall not be considered to be operated, supervised, or controlled by any organization described in paragraph (1) or (2) of subsection (a), if such organization”.
(3)
Section 2055(e)(5)(A) is amended by striking “is not—” and all that follows through “, and” and inserting the following: “is not described in paragraph (3) or (4) of subsection (a), and”.
(4)
Section 2522(c)(5)(A) is amended by striking “is not—” and all that follows through “, and” and inserting the following: “is not described in paragraph (3) or (4) of subsection (a), and”.
(5)
(A)
Section 4942(g)(4)(A), as amended by the preceding provision of this Act, is amended—
(i)
by redesignating subclauses (I) and (II) of clause (ii) as clauses (i) and (ii), respectively, and moving such redesignated clauses 2 ems to the left,
(ii)
by striking “paid by a private foundation to—” and all that follows through “any organization which” and inserting the following: “paid by a private foundation to any organization which”, and
(iii)
by striking “subparagraph (B) or (C)” and inserting “subparagraph (B)”.
(B)
Section 4942(g)(4)(B) is amended—
(i)
by striking clause (ii),
(ii)
by striking “section 509(a), or” and inserting “section 509(a).”,
(iii)
by striking “and is—” and all that follows through “operated, supervised, or controlled by” and inserting the following: “and is operated, supervised, or controlled by”, and
(iv)
by striking “Type I and type II” in the heading thereof.
(C)
Section 4942(g)(4) is amended by striking subparagraph (C).
(D)
Section 4945(d)(4)(A)(ii) is amended by striking “clause (i) or (ii) of section 4942(g)(4)(A)” and inserting “section 4942(g)(4)(A)”.
(6)
Section 4943 is amended by striking subsection (f).
(7)
(A)
Section 4966(d)(4)(A), as amended by this Act, is amended—
(i)
by redesignating subclauses (I) and (II) of clause (ii) as clauses (i) and (ii), respectively, and moving such redesignated clauses 2 ems to the left,
(ii)
by striking “with respect to any distribution—” and all that follows through “any organization which” and inserting the following: “with respect to any distribution, any organization which”, and
(iii)
by striking “subparagraph (B) or (C)” and inserting “subparagraph (B)”.
(B)
Section 4966(d)(4)(B) is amended—
(i)
by striking clause (ii),
(ii)
by striking “section 509(a), or” and inserting “section 509(a).”,
(iii)
by striking “and is—” and all that follows through “operated, supervised, or controlled by” and inserting the following: “and is operated, supervised, or controlled by”, and
(iv)
by striking “Type I and type II” in the heading thereof.
(C)
Section 4966(d)(4) is amended by striking subparagraph (C).
(8)
Section 6033(l) is amended by inserting “and” at the end of paragraph (1), by striking paragraph (2), and by redesignating paragraph (3) as paragraph (2).
(c)
Effective date—
(1)
In general— Except as provided in paragraph (2), the amendments made by this section shall take effect on the date of the enactment of this Act.
(2)
Delay for current supporting organizations— In the case of an organization which, as of the date of the enactment of this Act, meets the requirements of subparagraphs (A) and (C) of section 509(a)(3) of the Internal Revenue Code of 1986 and is—
(A)
supervised or controlled in connection with one or more organizations described in paragraph (1) or (2) of section 509(a) of such Code, or
(B)
is operated in connection with one or more such organizations,