Increase in rate of tax on net investment income of certain private foundations

(a) In general Section 4940(a) is amended by striking 1.39 percent and inserting the applicable percentage. (b) Applicable percentage Section 4940(a) is amended— (1) by striking There is hereby and inserting the following: (1) Imposition of tax There is hereby, and (2) by adding at the end the following new paragraphs: (2) Applicable percentage For purposes of this subsection, the term applicable percentage means, with respect to any taxable year— (A) in the case of a private foundation with assets of less than $50,000,000, 1.39 percent, (B) in the case of a private foundation with assets of at least $50,000,000, and less than $250,000,000, 2.78 percent, (C) in the case of a private foundation with assets of at least $250,000,000, and less than $5,000,000,000, 5 percent, and (D) in the case of a private foundation with assets of at least $5,000,000,000, 10 percent. (3) Assets For purposes of this subsection, the assets of any private foundation shall be determined with respect to any taxable year as being the aggregate fair market value of all assets of such private foundation, as determined as of the close of such taxable year. The preceding sentence shall be applied without reduction for any liabilities. (4) Aggregation (A) In general For purposes of paragraphs (2) this subsection and (3), subsection (c), assets and net investment income of any related organization with respect to a private foundation shall be treated as assets and net investment income, respectively, of the private foundation, except that— (i) no such assets amount shall be taken into account with respect to more than 1 private foundation, and (ii) unless such organization is controlled by such private foundation, assets and net investment income which are not intended or available for the use or benefit of the private foundation shall not be taken into account. (B) Related organization For purposes of this paragraph, the term related organization means, with respect to a private foundation, any organization which— (i) controls, or is controlled by, such private foundation, or (ii) is controlled by 1 or more persons which also control such private foundation.. (c) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.