PUBLIC LAW 109–280—AUG. 17, 2006
120 STAT. 1095
Tax Increase Prevention and Reconciliation Act of 2005, is amended by adding at the end the following new subchapter: ‘‘Subchapter G—Donor Advised Funds ‘‘Sec. 4966. Taxes on taxable distributions. ‘‘Sec. 4967. Taxes on prohibited benefits. ‘‘SEC. 4966. TAXES ON TAXABLE DISTRIBUTIONS.
26 USC 4966.
‘‘(a) IMPOSITION OF TAXES.— ‘‘(1) ON THE SPONSORING ORGANIZATION.—There is hereby imposed on each taxable distribution a tax equal to 20 percent of the amount thereof. The tax imposed by this paragraph shall be paid by the sponsoring organization with respect to the donor advised fund. ‘‘(2) ON THE FUND MANAGEMENT.—There is hereby imposed on the agreement of any fund manager to the making of a distribution, knowing that it is a taxable distribution, a tax equal to 5 percent of the amount thereof. The tax imposed by this paragraph shall be paid by any fund manager who agreed to the making of the distribution. ‘‘(b) SPECIAL RULES.—For purposes of subsection (a)— ‘‘(1) JOINT AND SEVERAL LIABILITY.—If more than one person is liable under subsection (a)(2) with respect to the making of a taxable distribution, all such persons shall be jointly and severally liable under such paragraph with respect to such distribution. ‘‘(2) LIMIT FOR MANAGEMENT.—With respect to any one taxable distribution, the maximum amount of the tax imposed by subsection (a)(2) shall not exceed $10,000. ‘‘(c) TAXABLE DISTRIBUTION.—For purposes of this section— ‘‘(1) IN GENERAL.—The term ‘taxable distribution’ means any distribution from a donor advised fund— ‘‘(A) to any natural person, or ‘‘(B) to any other person if— ‘‘(i) such distribution is for any purpose other than one specified in section 170(c)(2)(B), or ‘‘(ii) the sponsoring organization does not exercise expenditure responsibility with respect to such distribution in accordance with section 4945(h). ‘‘(2) EXCEPTIONS.—Such term shall not include any distribution from a donor advised fund— ‘‘(A) to any organization described in section 170(b)(1)(A) (other than a disqualified supporting organization), ‘‘(B) to the sponsoring organization of such donor advised fund, or ‘‘(C) to any other donor advised fund. ‘‘(d) DEFINITIONS.—For purposes of this subchapter— ‘‘(1) SPONSORING ORGANIZATION.—The term ‘sponsoring organization’ means any organization which— ‘‘(A) is described in section 170(c) (other than in paragraph (1) thereof, and without regard to paragraph (2)(A) thereof), ‘‘(B) is not a private foundation (as defined in section 509(a)), and ‘‘(C) maintains 1 or more donor advised funds. ‘‘(2) DONOR ADVISED FUND.—
VerDate 14-DEC-2004
10:20 Jul 12, 2007
Jkt 059194
PO 00001
Frm 01093
Fmt 6580
Sfmt 6581
E:\PUBLAW\PUBL001.109
APPS06
PsN: PUBL001
�
