PUBLIC LAW 109–280—AUG. 17, 2006
120 STAT. 1105
organization, if such amount is more than 2 percent of the total contributions and bequests received by the organization before the close of the taxable year of the organization in which the contribution or bequest is received by the organization from such person. In the case of a trust, such term also means the creator of the trust. Rules similar to the rules of subparagraphs (B) and (C) of section 507(d)(2) shall apply for purposes of this subparagraph. ‘‘(ii) EXCEPTION.—Such term shall not include any organization described in paragraph (1), (2), or (4) of section 509(a).’’. (c) EFFECTIVE DATES.— (1) SUBSECTION (a).—The amendments made by subsection (a) shall apply to transactions occurring after the date of the enactment of this Act. (2) SUBSECTION (b).—The amendments made by subsection (a) shall apply to transactions occurring after July 25, 2006.
26 USC 4958 note.
SEC. 1243. EXCESS BUSINESS HOLDINGS OF SUPPORTING ORGANIZATIONS.
(a) IN GENERAL.—Section 4943, as amended by this Act, is amended by adding at the end the following new subsection: ‘‘(f) APPLICATION OF TAX TO SUPPORTING ORGANIZATIONS.— ‘‘(1) IN GENERAL.—For purposes of this section, an organization which is described in paragraph (3) shall be treated as a private foundation. ‘‘(2) EXCEPTION.—The Secretary may exempt the excess business holdings of any organization from the application of this subsection if the Secretary determines that such holdings are consistent with the purpose or function constituting the basis for its exemption under section 501. ‘‘(3) ORGANIZATIONS DESCRIBED.—An organization is described in this paragraph if such organization is— ‘‘(A) a type III supporting organization (other than a functionally integrated type III supporting organization), or ‘‘(B) an organization which meets the requirements of subparagraphs (A) and (C) of section 509(a)(3) and which is supervised or controlled in connection with one or more organizations described in paragraph (1) or (2) of section 509(a), but only if such organization accepts any gift or contribution from any person described in section 509(f)(2)(B). ‘‘(4) DISQUALIFIED PERSON.— ‘‘(A) IN GENERAL.—In applying this section to any organization described in paragraph (3), the term ‘disqualified person’ means, with respect to the organization— ‘‘(i) any person who was, at any time during the 5-year period ending on the date described in subsection (a)(2)(A), in a position to exercise substantial influence over the affairs of the organization, ‘‘(ii) any member of the family (determined under section 4958(f)(4)) of an individual described in clause (i), ‘‘(iii) any 35-percent controlled entity (as defined in section 4958(f)(3) by substituting ‘persons described
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26 USC 4943.
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