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the taxpayer may not claim a date of acquisition prior to the date on which the adjustment was applied. This would prevent a taxpayer from benefitting twice from an adjustment for the same period.

The bill would provide that, in cases where a corporation is treated as a collapsible corporation with respect to a distribution or sale of stock (sec. 341), the full amount of gain which would be recognized and taxed as ordinary income under present law would continue to be so treated.

Effective Date

The bill would apply to dispositions of indexed assets after December 31, 1983.

Prior Congressional Action

In 1978, the House passed a provision similar to the bill as part of H.R. 13511, the Revenue Act of 1978. That provision was deleted in conference.

In 1982, the Senate passed a similar provision as part of H.R. 4961, the Tax Equity and Fiscal Responsibility Act of 1982. That provision was deleted in conference.

2. S. 1579-Senator Armstrong

Charitable Expense Deduction for Use of Passenger Automobile

Present Law

Individual taxpayers who itemize their deductions may deduct charitable contributions made to qualified organizations, subject to certain limitations (Code sec. 170(a)).

Individuals who do not itemize deductions may also deduct charitable contributions, subject to limitations (sec. 170(i)). For 1982 and 1983, the deduction is limited to 25 percent of the first $100 of contributions, or a maximum deduction of $25. For 1984, the contribution limit is raised to $300, or a maximum deduction of $75. For 1985, the deduction is allowed for 50 percent of contributions, with no dollar limit, and for 1986 the deduction is allowed for 100 percent of contributions (subject to the general limitations). This provision expires after 1986.

Under present law, a taxpayer may deduct unreimbursed out-ofpocket expenses incurred incident to the rendition of services provided to a charitable organization, such as fuel costs for a vehicle (Treas. Reg. sec. 1.170A-1(g)). In determining the amount of the contribution deduction attributable to the operation of a vehicle, the taxpayer may deduct actual expenses or, may use a standard rate. As most recently established, this rate is nine cents a mile. Under either computation method, the taxpayer may also deduct parking fees and tolls, but may not deduct general repair or maintenance expenses, depreciation, or insurance.

Explanation of the Bill

Under the bill, taxpayers could determine the amount of their charitable contribution deduction for the use of a passenger automobile under the standard mileage rate applicable for that year in computing the business expense deduction (sec. 162) for business use of a passenger automobile.

As most recently established, the standard mileage rate which may be used in computing the business expense deduction for business use of a passenger automobile (if the vehicle is not fully depreciated) is 20 cents a mile for the first 15,000 miles of business use during the taxable year, and 11 cents a mile for each additional mile.9

8 This rate was established in a revenue procedure issued by the Internal Revenue Service

(Rev. Proc. 82-61, 1982-2 С.В. 849).

9 Rev. Proc. 82-61, supra note 8.

Effective Date

The provisions of the bill would apply to taxable years beginning after 1982.

3. S. 108-Senators Grassley, Jepsen, Durenberger, and Thurmond

Tax Incentives for Vocational Education Programs

a. Increased charitable deduction for contributions of equipment to postsecondary vocational education programs

Present Law

In general, the amount of charitable deduction otherwise allowable for donated property 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 on the date of the donation (Code sec. 170(e)).

Thus, a donor of inventory or other ordinary-income property (property the sale of which would not give rise to long-term capital gain) generally may deduct only the donor's basis in the property, rather than its full fair market value. In the case of property used in the taxpayer's trade or business (sec. 1231 property), the charitable deduction must be reduced by the amount of depreciation recapture which would be recognized on sale of the donated property.

Under a special rule, corporations are allowed an augmented charitable deduction for donations of newly manufactured scientific equipment or apparatus to a college or university for research use in the physical or biological sciences (sec. 170(e)(4), enacted in the Economic Recovery Tax Act of 1981).10 The augmented deduction is generally for the sum of (1) the corporation's basis in the donated property and (2) one-half of the unrealized appreciation (i.e., onehalf 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.

Overview

Explanation of Provision

Section 1 of the bill would provide an augmented charitable deduction for taxpayers (not limited to corporations) making certain donations of tangible personal property to a public community college or public technical institute (within the meaning of sec. 742(b) of the Higher Education Act of 1965 11), or any other institution of higher education (within the meaning of section 1201(a) of such Act 12), if the donated property is used for training students enrolled in a postsecondary vocational education program.

10 Under a special rule enacted in 1976, an augmented charitable deduction also is allowed for corporate contributions of certain types of ordinary income property donated for the care of the needy, the ill, or infants (sec. 170(e)(3)).

11 Section 742(b) of the Higher Education Act of 1965, as amended, defines a public community college or public technical institute as an institution of higher education which is under public supervision and control, and is organized and administered principally to provide a twoContinued year program which is acceptable for full credit toward a bachelor's degree, or a two-year program in engineering, mathematics, or the physical or biological sciences which is designed to prepare the student to work as a technician and at a semiprofessional level in engineering, scientific, or other technological fields which require the understanding and application of basic engineering, scientific, or mathematical principles or knowledge; and the term includes a branch of an institution of higher education offering four or more years of higher education which is located in a community different from that in which its parent institution is located (20 U.S.C. sec. 1132e-1).

Requirements for favorable treatment

To qualify, a donation of equipment would be required, under the bill, to satisfy the following requirements:

(1) The donated property must not be transferred by the donee in exchange for money, other property, or services;

(2) Substantially all of the use of the property by the donee must be for training students enrolled in a postsecondary vocational education program offered by the donee; and

(3) The taxpayer must receive from the donee a written statement representing that the use and disposition of the donated property will be in accordance with the last two requirements.

A postsecondary vocational education program would be defined as any organized education program which is either (1) a two-year program in engineering, mathematics, or the physical or biological sciences, designed to prepare a student to work as a technician or at the semiprofessional level in engineering, scientific, or other technological fields requiring the understanding and application of basic engineering, scientific, or mathematical principles of knowledge, or (2) directly related to the preparation of individuals for paid or unpaid employment or for a career which does not require a baccalaureate or advanced degree.

Allowable deduction

If all the requirements of section 1 of the bill are satisfied, the augmented charitable deduction allowed for the donation of equipment generally would be the sum of (1) the taxpayer's basis in the

12 Section 1201(a) of the Higher Education Act of 1965, as amended, defines an institution of higher education as an educational institution in any State which (1) admits as regular students only persons having a certificate of graduation from a school providing secondary education, or the recognized equivalent of such a certificate; (2) is legally authorized within such State to provide a program of education beyond secondary education; (3) provides an educational program for which it awards a bachelor's degree or provides not less than a two-year program which is acceptable for full credit toward such a degree; (4) is a public or other nonprofit institution; and (5) is accredited by a nationally recognized accrediting agency or association or, if not so accredited, (A) is an institution with respect to which the Secretary [of Education] has determined that there is satisfactory assurance, considering the resources available to the institution, the period of time, if any, during which it has operated, the effort it is making to meet accreditation standards, and the purpose for which this determination is being made, that the institution will meet the accreditation standards of such an agency or association within a reasonable time, or (B) is an institution whose credits are accepted, on transfer, by not less than three institutions which are so accredited, for credit on the same basis as if transferred from an institution so accredited. such term also includes any school which provides not less than a one-year program of training to prepare students for gainful employment in a recognized occupation and which meets the provisions of clauses (1), (2), (4), and (5). For purposes of this subsection, the Secretary [of Education] shall publish a list of nationally recognized accrediting agencies or associations which he determines to be reliable authority as to the quality of training offered. Such term also includes a public or nonprofit private educational institution in any State which, in lieu of the requirement in clause (1), admits as regular students persons who are beyond the age of compulsory school attendance in the state in which the institution is located who have the ability to benefit from the training offered by the institution (20 U.S.C. sec. 1141).

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