26 U.S.C. § 4968

Current through P.L. 118-107 (published on www.congress.gov on 11/21/2024)

Section 4968 - Excise tax based on investment income of private colleges and universities

(a) Tax imposed

There is hereby imposed on each applicable educational institution for the taxable year a tax equal to 1.4 percent of the net investment income of such institution for the taxable year.

(b) Applicable educational institution

For purposes of this subchapter-

(1) In general

The term "applicable educational institution" means an eligible educational institution (as defined in section 25A(f)(2))-

(A) which had at least 500 tuition-paying students during the preceding taxable year,

(B) more than 50 percent of the tuition-paying students of which are located in the United States,

(C) which is not described in the first sentence of section 511(a)(2)(B) (relating to State colleges and universities), and

(D) the aggregate fair market value of the assets of which at the end of the preceding taxable year (other than those assets which are used directly in carrying out the institution's exempt purpose) is at least $500,000 per student of the institution.

(2) Students

For purposes of paragraph (1), the number of students of an institution (including for purposes of determining the number of students at a particular location) shall be based on the daily average number of full-time students attending such institution (with part-time students taken into account on a full-time student equivalent basis).

(c) Net investment income

For purposes of this section, net investment income shall be determined under rules similar to the rules of section 4940(c).

(d) Assets and net investment income of related organizations

(1) In general

For purposes of subsections (b)(1)(C) and (c), assets and net investment income of any related organization with respect to an educational institution shall be treated as assets and net investment income, respectively, of the educational institution, except that-

(A) no such amount shall be taken into account with respect to more than 1 educational institution, and

(B) unless such organization is controlled by such institution or is described in section 509(a)(3) with respect to such institution for the taxable year, assets and net investment income which are not intended or available for the use or benefit of the educational institution shall not be taken into account.

(2) Related organization

For purposes of this subsection, the term "related organization" means, with respect to an educational institution, any organization which-

(A) controls, or is controlled by, such institution,

(B) is controlled by 1 or more persons which also control such institution, or

(C) is a supported organization (as defined in section 509(f)(3)), or an organization described in section 509(a)(3), during the taxable year with respect to such institution.

26 U.S.C. § 4968

Added Pub. L. 115-97, title I, §13701(a), Dec. 22, 2017, 131 Stat. 2167; amended Pub. L. 115-123, div. D, title II, §41109(a), Feb. 9, 2018, 132 Stat. 159.

EDITORIAL NOTES

AMENDMENTS2018-Subsec. (b)(1)(A). Pub. L. 115-123, §41109(a)(1), inserted "tuition-paying" after "500". Subsec. (b)(1)(B). Pub. L. 115-123, §41109(a)(2), inserted "tuition-paying" after "50 percent of the".

STATUTORY NOTES AND RELATED SUBSIDIARIES

EFFECTIVE DATE OF 2018 AMENDMENT Pub. L. 115-123, div. D, title II, §41109(b), Feb. 9, 2018, 132 Stat. 159, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2017."

EFFECTIVE DATE Pub. L. 115-97, §13701(c), Dec. 22, 2017, 131 Stat. 2168, provided that: "The amendments made by this section [enacting this section] shall apply to taxable years beginning after December 31, 2017."

State: The term "State" shall be construed to include the District of Columbia, where such construction is necessary to carry out provisions of this title.
student: The term "student" means any individual-(i) who is temporarily present in the United States-(I) under subparagraph (F) or (M) of section 101(15) of the Immigration and Nationality Act, or(II) as a student under subparagraph (J) or (Q) of such section 101(15), and(ii) who substantially complies with the requirements for being so present.
taxable year: The term "taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the taxable income is computed under subtitle A. "Taxable year" means, in the case of a return made for a fractional part of a year under the provisions of subtitle A or under regulations prescribed by the Secretary, the period for which such return is made.