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There are no percentage limitations on the amount that may be claimed as a charitable deduction in determining estate and gift tax.


The principal issue is whether a Federally chartered, tax-exempt foundation should be established for the benefit of the U.S. Fish and Wildlife Service to carry out activities similar to those activities performed by that Service which currently are financed entirely through appropriations.

If Congress should establish a National Fish and Wildlife Foundation, a second issue is whether the regular Federal tax rules governing exempt organizations should apply to that Foundation.

Explanation of Provision

The bill would provide that the Foundation to be established by H.R. 2809 (if enacted) would not be required to provide notice to the Internal Revenue Service that it is not a private foundation. The effect of this provision is that, in order to be treated as a taxexempt organization and as a public charity, the Foundation would be subject to the provisions of the Internal Revenue Code govering organizations exempt from tax under section 501(c)(3) and would maintain its exempt status so long as it satisfies the requirements for exemption under that section.

Effective Date

The provision of the bill affecting the tax treatment of the National Fish and Wildlife Foundation would be effective on the day after the date of enactment of H.R. 2809.

Revenue Effect

It is estimated that this provision would have a negligible revenue effect.

C. Expansion of Excise Tax on Certain Arrows

Present Law

Present law imposes an 11-percent manufacturers excise tax on the sale by a manufacturer or importer of any bow which has a draw weight of 10 pounds or more and of any arrow which measures 18 inches overall or more in length (sec. 4161(b)). Revenues from this tax are appropriated to the Pittman-Robertson "fund" program for support of State wildlife programs.


The issue is whether all arrows suitable for use with taxable bows should be subject to the manufacturers excise tax on bows and arrows.

Explanation of Provision

Under the bill, the excise tax on arrows would be expanded to include arrows less than 18 inches in overall length which are suitable for use with a taxable bow.

Effective Date

This provision of the bill would be effective with respect to arrows sold after December 31, 1983.

Revenue Effect

It is estimated that this provision would increase tax revenues by a negligible amount in each year.



Extension of Time for Payment of Excise Tax on Fishing

Equipment 1

Present Law

Present law imposes a 10-percent excise tax on the sale of fishing rods, creels, reels, and artificial lures, baits, and flies (including parts or accessories of esuch articles sold on or in connection therewith, or with the sale thereof) by the manufacturer, producer, or importer (sec. 4161(a)).

Treasury Department regulations require returns of manufacturers excise taxes, including the tax on the sale of fishing equipment, to be filed quarterly, unless the Internal Revenue Service requires more frequent filing by an individual taxpayer (Treas. Reg. sec. 48.6011(a)-1). Quarterly returns are due on the last day of the first month after the quarter ends (Treas. Reg. sec. 48.6071(a)-1).

Although excise tax returns generally are filed on a quarterly basis, the regulations require monthly, or semimonthly, payment of the tax in certain cases (Treas. Reg. sec. 48.6302(c)-1). If an individual is liable in any month (other than the last month of a calendar quarter) for more than $100 of manufacturers excise tax and is not required to make semimonthly deposits, the individual must deposit the amount on or before the last day of the next month at an authorized depository or at the Federal Reserve Bank serving the area in which the individual is located.

If an individual had more than $2,000 in manufacturers excise tax liability for any month of a preceding calendar quarter, such taxes must be deposited for the following quarter (regardless of amount) on a semimonthly basis. The taxes must be deposited by the ninth day following the semimonthly period for which they are deposited.


The issue is whether the time for payment of excise taxes imposed on the sale of fishing equipment should be extended beyond the time generally permitted for manufacturers excise taxes.

Explanation of Provision

The bill would amend present law to require payment of the excise tax on fishing equipment on a quarterly basis, as follows:

1 H.R. 2163, described in Part II, contains a provision identical to that of S. 927 regarding the time of payment of the excise tax on fishing equipment.



a. March 31, in the case of articles sold during the quarter ending the previous December 31;

b. June 30, in the case of articles sold during the quarter ending the previous March 31;

c. September 24, in the case of articles sold during the quarter ending the previous June 30; and

d. On a date prescribed in Treasury Department regulations, in the case of articles sold during the quarter ending September 30.

The bill would not change the present time for filing returns of manufacturers excise taxes or the time for payment of excise taxes on articles other than fishing equipment.

Effective Date

The provisions of the bill would apply to fishing equipment sold on or after the first day of the first calendar quarter beginning after the date of enactment of the bill.

Revenue Effect

It is estimated that the provisions of the bill would reduce overall budget receipts by a negligible amount.


Exception for Educational Organizations From Certain Unrelated Business Income Provisions

Present Law

Under present law (Code sec. 511) any qualified pension trust or organization that is otherwise exempt from Federal income tax generally is taxed on income from trades or businesses that are unrelated to the organization's exempt purposes. Specific exclusions are provided for certain types of income, including rents, royalties, dividends, and interest.

Present law (sec. 514(a)) provides that an exempt organization's income from "debt-financed property" generally is subject to tax as unrelated business income in the proportion in which the property is financed by debt. Debt-financed property is defined as any property held to produce income with respect to which there is acquisition indebtedness at any time during the taxable year, or during the 12 months prior to disposition if the property is disposed of during the taxable year (sec. 514(b)). A debt constitutes acquisition indebtedness if the debt was incurred in acquiring or improving the property, or if the debt would not have been incurred but for the acquisition or improvement of the property (sec. 514(c)).

With certain exceptions, indebtedness incurred by a qualified trust as a result of the acquisition or improvement of real property is not considered "acquisition indebtedness" (sec. 514(c)(9)). Thus, income or gain received from or with respect to such debt-financed real property is not treated as income from debt-financed property. In five types of situations, the exception to the general definition of acquisition indebtedness would not apply: (1) if the acquisition price is not a fixed amount determined as of the date of acquisition; (2) if the amount of the indebtedness, or the amount payable thereon, or the time for making any payments, is dependent (in whole or in part) on the future revenues derived from the property; (3) if the property is leased by the trust to the seller or a person related to the seller; (4) if the property is acquired by a qualified trust from a person related to the plan under which the trust is formed or if such property is leased to such a related person; and (5) if the seller, a person related to the seller, or a person related to the plan provides nonrecourse financing for the transaction, and the debt is subordinate to any other indebtedness on the property or the debt bears a less than arm's-length interest rate.


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