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II. DESCRIPTION OF THE BILL ......
Prior Congressional Action .....
The Subcommittee on Select Revenue Measures of the House Committee on Ways and Means has scheduled a public hearing in San Francisco, California, on November 11, 1983, on H.R. 701 (the "Computer Contribution Act of 1983").
H.R. 701 would provide an augmented charitable deduction for contributions, made by corporations during 1984, of certain newly manufactured computers to primary or secondary schools. The bill was introduced by Subcommittee Chairman Stark, and is cosponsored by Messrs. Shannon, Archer, Flippo, and Anthony, and others.
The first part of this pamphlet is a summary. The second part is a more detailed description of the bill, including present law, prior Congressional action, explanation of the bill, and effective date.
Under present law, the amount of charitable deduction otherwise allowable for donated property generally must be reduced by the amount of any ordinary gain which the taxpayer would have realized had the property been sold for its fair market value at the date of the contribution (Code sec. 170(e)). For example, a manufacturer which makes a charitable contribution of its inventory generally may deduct only its basis in the property.
However, under a special rule enacted in the Economic Recovery Tax Act of 1981 (P.L. 97-34), corporations are allowed an augmented charitable deduction for donations of newly manufactured scientific equipment to a college or university for research use in the physical or biological sciences (sec. 170(e)(4)). This increased deduction generally equals the sum of (1) the corporation's basis in the donated property plus (2) one-half of the unrealized appreciation (i.e., one-half of the difference between the property's fair market value determined at the time of the contribution and the donor's basis in the property). However, in no event is the deduction under the special rule allowed for an amount which exceeds twice the basis of the property.
The bill would provide an augmented charitable deduction for contributions, made by corporations during 1984, of certain newly manufactured computers to primary or secondary schools for use at the school directly in the education of students. For qualifying contributions, the augmented charitable deduction generally would equal the sum of (1) the corporation's basis in the donated computer plus (2) one-half of the difference between the fair market value of the computer at the time of the contribution and the corporation's basis. However, in no event would a deduction be allowed under the bill for any amount which exceeded twice the property's basis.
The augmented deduction rule provided by the bill would be effective for taxable years ending after 1983, with respect to qualifying contributions of computer equipment made during 1984.