with a capacity for at least 32,000 bytes, and which is (or can be) connected with a screen for visual display of the data;

(b) a display screen, a printer, or a disc drive, but only if such equipment is donated by the taxpayer for use in connection with such a data processor donated by the taxpayer; and

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(c) any installation equipment for equipment, donated by the taxpayer, which is described in (a) or (b) above.

2. Eligible donees

The computer equipment must be donated either to an educational organization (within the meaning of sec. 170(b)(1)(A)(ii), or to a primary or secondary school operated as an activity of a taxexempt section 501(c)(3) organization (such as a church), provided that such school normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. Also, the donee must be located in the United States and may not be an institution of higher education (as defined in sec. 3304(f)).o

3. Time of contribution

The contribution must be made within six months after substantial completion of assembly of the computer equipment, and must be made during the calendar year 1984.

4. Limitation to new equipment

The original use of the donated computer equipment must be by the donee.

5. Student education use requirement

Substantially all of the use of the donated computer equipment by the donee is at the location of the donee and is directly in the education of students.

6. Prohibition on donee sale

The donated computer equipment may not be transferred by the donee in exchange for money, other property, or services.

6The capacity is to be determined by reference to the donated computer equipment, without regard to additional random access memory capacity which could be achieved through use of additional equipment which is not donated.

7 The term installation equipment is limited to cables and display screen, printer, or cassette recorder "hook up" equipment such as modulators, interface boards, or interface cards.

8 An educational organization is described in sec. 170(b)(1)(A)(ii) "if its primary function is the presentation of formal instruction and it normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. The term includes institutions such as primary, secondary, preparatory, or high schools." and includes both public and private schools (Treas. Reg. sec. 1.170A-9(b)(1)).

9 An institution of higher education, as defined in sec. 3304(f), means an educational institu tion which (1) admits as regular students only individuals having a certificate of graduation from a high school, or the recognized equivalent of such a certificate; (2) is legally authorized to provide a program of education beyond high school; (3) provides an educational program for which it awards a bachelor's or higher degree, provides a program which is acceptable for full credit toward a degree, or offers a program of training to prepare students for gainful employ ment in a recognized occupation; and (4) is a public or other nonprofit institution.

The donor corporation must receive a written statement from the donee representing that the use and disposition of the donated computer equipment will be in accordance with the preceding two requirements.

8. Distributional requirements

The contribution must be made pursuant to a written plan of the donor corporation which shall seek to prevent undue concentrations of the donor's contributions of computer equipment from either a geographic standpoint or from the standpoint of the relative economic status of the students of the donees which receive contributions from the donor. The bill would not require that the donor's actual contributions in fact satisfy these distributional requirements.

Allowable deduction

If all the requirements of the bill are satisfied, the charitable deduction allowed by the bill generally would be for the sum of (1) the corporation's basis in the property, plus (2) one-half of the unrealized appreciation (i.e., one-half of the difference between the fair market value of the property and the basis).10

However, in no event would a deduction be allowed for any amount in excess of twice the basis of the property. For example, if a manufacturer makes a qualifying contribution of a computer with a cost basis of $5X, and a fair market value of $16X, the bill would allow the manufacturer a charitable deduction of $10X (twice the $5X basis, since that amount is less than basis plus onehalf of the unrealized appreciation). If instead the fair market value of the computer is $11X, the deduction would be $8X ($5X basis plus one-half of the $6X difference between value and basis).

Effective Date

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.

10 Where donated property is of a type which the taxpayer sells in the course of its business, the fair market value is the price which the taxpayer would have received if the taxpayer had sold the contributed property in the usual market in which it customarily sells, at the time and place of the contribution, and, in the case of a contribution of goods in quantity, in the quantity contributed. The usual market of a manufacturer or other producer consists of the wholesalers or other distributors to or through whom it customarily sells; but if it sells only at retail, the usual market consists of its retail customers (Treas. Reg. sec. 170A-1(c)(2)).