text: SECTION 1. MODIFICATIONS TO RULES FOR FRACTIONAL GIFTS.
  
      (a) Income Tax.--
              (1) Additional requirements for deduction.--Paragraph (1) 
          of section 170(o) of the Internal Revenue Code of 1986 is 
          amended to read as follows:
              ``(1) Denial of deduction in certain cases.--
                      ``(A) In general.--No deduction shall be allowed 
                  for a contribution of an undivided portion of a 
                  taxpayer's entire interest in tangible personal 
                  property unless--
                              ``(i) all interests in the property are 
                          held immediately before such contribution by--
                                      ``(I) the taxpayer, or
                                      ``(II) the taxpayer and the donee,
                              ``(ii) in the case of an initial fractional 
                          contribution, such contribution is an undivided 
                          portion of not less than 10 percent of all 
                          interests in the property,
                              ``(iii) in the case of an initial 
                          fractional contribution, the contribution is 
                          made pursuant to a written binding contract 
                          which requires the donor--
                                      ``(I) to contribute not less than 
                                  20 percent of all interests in the 
                                  property on or before the date that is 
                                  11 years after the date of the initial 
                                  fractional contribution, and
                                      ``(II) to contribute all of the 
                                  interests in such property to the donee 
                                  (or if such donee is no longer in 
                                  existence, to any person described in 
                                  subsection (c)) on or before the 
                                  earlier of the date of the death of the 
                                  donor or the date which is 20 years 
                                  after the date of the initial 
                                  fractional contribution, and
                              ``(iv) if the value of the tangible 
                          personal property with respect to which the 
                          undivided portion of the taxpayer's entire 
                          interest relates is greater than $1,000,000 (or 
                          such greater amount as determined by the 
                          Secretary), the taxpayer attaches to the return 
                          for the taxable year in which such contribution 
                          is made a statement of value obtained from the 
                          Internal Revenue Service.
                      ``(B) Exceptions.--The Secretary may, by 
                  regulation, provide for exceptions to subparagraph 
                  (A)(i) in cases where all persons who hold an interest 
                  in the property make proportional contributions of an 
                  undivided portion of the entire interest held by such 
                  persons. Such regulations may modify the requirements 
                  of clauses (ii) and (iii) of subparagraph (A) to the 
                  extent necessary to carry out the purposes of this 
                  subparagraph.''.
              (2) Valuation of subsequent gifts.--Paragraph (2) of 
          section 170(o) of such Code is amended to read as follows:
              ``(2) Valuation of subsequent gifts.--In the case of any 
          additional contribution, the fair market value of such 
          contribution shall be determined by multiplying--
                      ``(A) the fair market value of all of the donor's 
                  interest in the property immediately before the 
                  additional contribution, and
                      ``(B) the interest in the property (expressed as a 
                  percentage) contributed in such additional 
                  contribution.''.
              (3) Recapture of deduction.--Paragraph (3) of section 
          170(o) of such Code is amended--
                      (A) by redesignating subparagraph (B) as 
                  subparagraph (C), and
                      (B) by striking subparagraph (A) and inserting the 
                  following:
                      ``(A) Recapture.--The Secretary shall provide for 
                  the recapture of the amount of any deduction allowed 
                  under this section (plus interest) with respect to any 
                  contribution of an undivided portion of a taxpayer's 
                  entire interest in tangible personal property--
                              ``(i) in any case in which the donor fails 
                          to meet the requirements described in paragraph 
                          (1)(A)(iii), and
                              ``(ii) in any case where such property is 
                          not in the physical possession of the donee and 
                          used in a use which is related to a purpose or 
                          function constituting the basis for the donee 
                          organization's exemption under section 501 
                          during any applicable period for a period of 
                          time which bears substantially the same ratio 
                          to 5 years as--
                                      ``(I) the percentage of the 
                                  undivided interest of the donee in the 
                                  property (determined on the day after 
                                  such contribution was made), bears to
                                      ``(II) 100 percent.
                      ``(B) Applicable period.--For purposes of 
                  subparagraph (A), the applicable period means--
                              ``(i) the 5-year period beginning on the 
                          date of the later of the initial fractional 
                          contribution, and
                              ``(ii) each subsequent 5-year period 
                          occurring during the 20-year period described 
                          in paragraph (1)(A)(iii)(II).''.
      (b) Estate Tax.--Paragraph (1) of section 2055(g) of the Internal 
  Revenue Code of 1986 is amended to read as follows:
              ``(1) Valuation of subsequent gifts.--In the case of any 
          additional contribution, the fair market value of such 
          contribution shall be determined by multiplying--
                      ``(A) the fair market value of all of the donor's 
                  interest in the property immediately before the 
                  additional contribution, and
                      ``(B) the interest in the property (expressed as a 
                  percentage) contributed in such additional 
                  contribution.''.
      (c) Gift Tax.--
              (1) Additional requirements for deduction.--Paragraph (1) 
          of section 2522(e) of the Internal Revenue Code of 1986 is 
          amended to read as follows:
              ``(1) Denial of deduction in certain cases.--
                      ``(A) In general.--No deduction shall be allowed 
                  for a contribution of an undivided portion of a 
                  taxpayer's entire interest in tangible personal 
                  property unless--
                              ``(i) all interests in the property are 
                          held immediately before such contribution by--
                                      ``(I) the taxpayer, or
                                      ``(II) the taxpayer and the donee,
                              ``(ii) in the case of an initial fractional 
                          contribution, such contribution is an undivided 
                          portion of not less than 10 percent of all 
                          interests in the property,
                              ``(iii) in the case of an initial 
                          fractional contribution, the contribution is 
                          made pursuant to a written binding contract 
                          which requires the donor--
                                      ``(I) to contribute not less than 
                                  20 percent of all interests in the 
                                  property on or before the date that is 
                                  11 years after the date of the initial 
                                  fractional contribution, and
                                      ``(II) to contribute all of the 
                                  interests in such property to the donee 
                                  (or if such donee is no longer in 
                                  existence, to any person described in 
                                  section 170(c)) on or before the 
                                  earlier of the date of the death of the 
                                  donor or the date which is 20 years 
                                  after the date of the initial 
                                  fractional contribution, and
                              ``(iv) if the value of the tangible 
                          personal property with respect to which the 
                          undivided portion of the taxpayer's entire 
                          interest relates is greater than $1,000,000 (or 
                          such greater amount as determined by the 
                          Secretary), the taxpayer attaches to the return 
                          for the taxable year in which such contribution 
                          is made a statement of value obtained from the 
                          Internal Revenue Service.
                      ``(B) Exceptions.--The Secretary may, by 
                  regulation, provide for exceptions to subparagraph 
                  (A)(i) in cases where all persons who hold an interest 
                  in the property make proportional contributions of an 
                  undivided portion of the entire interest held by such 
                  persons. Such regulations may modify the requirements 
                  of clauses (ii) and (iii) of subparagraph (A) to the 
                  extent necessary to carry out the purposes of this 
                  subparagraph.''.
              (2) Valuation of subsequent gifts.--Paragraph (2) of 
          section 2522(e) of such Code is amended to read as follows:
              ``(2) Valuation of subsequent gifts.--In the case of any 
          additional contribution, the fair market value of such 
          contribution shall be determined by multiplying--
                      ``(A) the fair market value of all of the donor's 
                  interest in the property immediately before the 
                  additional contribution, and
                      ``(B) the interest in the property (expressed as a 
                  percentage) contributed in such additional 
                  contribution.''.
              (3) Recapture of deduction.--Paragraph (3) of section 
          2522(e) of such Code is amended--
                      (A) by redesignating subparagraph (B) as 
                  subparagraph (C), and
                      (B) by striking subparagraph (A) and inserting the 
                  following:
                      ``(A) Recapture.--The Secretary shall provide for 
                  the recapture of the amount of any deduction allowed 
                  under this section (plus interest) with respect to any 
                  contribution of an undivided portion of a taxpayer's 
                  entire interest in tangible personal property--
                              ``(i) in any case in which the donor fails 
                          to meet the requirements described in paragraph 
                          (1)(A)(iii), and
                              ``(ii) in any case where such property is 
                          not in the physical possession of the donee and 
                          used in a use which is related to a purpose or 
                          function constituting the basis for the donee 
                          organization's exemption under section 501 
                          during any applicable period for a period of 
                          time which bears substantially the same ratio 
                          to 5 years as--
                                      ``(I) the percentage of the 
                                  undivided interest of the donee in the 
                                  property (determined on the day after 
                                  such contribution was made), bears to
                                      ``(II) 100 percent.
                      ``(B) Applicable period.--For purposes of 
                  subparagraph (A), the applicable period means--
                              ``(i) the 5-year period beginning on the 
                          date of the later of the initial fractional 
                          contribution, and
                              ``(ii) each subsequent 5-year period 
                          occurring during the 20-year period described 
                          in paragraph (1)(A)(iii)(II).''.
      (d) Return Requirement.--Section 6033 of the Internal Revenue Code 
  of 1986 is amended by redesignating subsection (m) as subsection (n) 
  and by inserting after subsection (l) the following new subsection:
      ``(m) Additional Provisions Relating to Organizations Described in 
  Section 170(c).--Every organization described in section 170(c) shall, 
  on any return required under subsection (a), list each charitable 
  contribution received by the organization during the period covered by 
  the return which represents a contribution of an undivided portion of a 
  taxpayer's entire interest in tangible personal property and provide 
  such other information with respect to such contribution as required by 
  the Secretary.''.
      (e) Effective Date.--
              (1) In general.--Except as provided in paragraph (2), the 
          amendments made by this section shall apply to contributions, 
          bequests, and gifts made after the date of the enactment of 
          this Act.
              (2) Return requirement.--The amendments made by subsection 
          (d) shall apply to returns for taxable years ending after the 
          date of the enactment of this Act.
      (f) Transition Rule.--In the case of any additional contribution 
  (as defined in section 170(o)(4) of the Internal Revenue Code of 1986) 
  with respect to an initial fractional contribution (as defined in such 
  section) made after August 17, 2006, and before the date of the 
  enactment of this Act--
              (1) except for purposes of determining the fair market 
          value of such contribution under sections 170(o)(2), 
          2055(g)(1), and 2522(e)(2) of the Internal Revenue Code of 1986 
          (as such sections were amended by this Act), such contribution 
          shall be treated as an initial fractional contribution (as so 
          defined) subject to the amendments made by this section, and
              (2) sections 170(o)(3)(A)(i) and 2522(e)(3)(A)(i) of such 
          Code (as in effect before the date of the enactment of this 
          Act) shall not apply with respect to any prior contribution of 
          an undivided portion of the taxpayer's interest in the 
          property.
target: Amends Internal Revenue Code provisions relating to the tax deduction for donations of fractional interests in tangible personal property to: (1) permit donors to claim an increased deduction based upon the market value of subsequent gifts of fractional interests, (2) extend to 20 years the period in which donors of fractional interests must contribute their entire interest in donated property, and (3) require donors of fractional interests greater than $1 million to attach a statement of value obtained from the Internal Revenue Service (IRS) to their tax returns.
feat_title: A bill to amend the Internal Revenue Code of 1986 to reform the rules relating to fractional charitable donations of tangible personal property.