119-s2045

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 2045 Introduced in Senate

    (IS) ]

<DOC>

119th CONGRESS
 1st Session
 S. 2045

 To amend the Internal Revenue Code of 1986 to impose an excise tax on 
 certain investments of private colleges and universities.

_______________________________________________________________________

 IN THE SENATE OF THE UNITED STATES

 June 12, 2025

Mr. Ricketts (for himself, Mr. Cotton, and Mrs. Fischer) introduced the 
 following bill; which was read twice and referred to the Committee on 
 Finance

_______________________________________________________________________

 A BILL

 To amend the Internal Revenue Code of 1986 to impose an excise tax on 
 certain investments of private colleges and universities.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

 This Act may be cited as the ``Protecting Endowments from Our 
Adversaries Act''.

SEC. 2. EXCISE TAX ON CERTAIN INVESTMENTS OF PRIVATE COLLEGES AND 
 UNIVERSITIES.

    (a) In General.--Subchapter H of chapter 42 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new section:

``

SEC. 4969. EXCISE TAX ON CERTAIN INVESTMENTS OF PRIVATE COLLEGES AND 
 UNIVERSITIES.

 ``

    (a) Tax on Acquisition of Listed Investments.--In the case of any 
specified educational institution which acquires (directly or 
indirectly through any chain of ownership) one or more listed 
investments during any taxable year, there is hereby imposed for such 
taxable year a tax equal to 50 percent of the fair market values of 
such investments determined as of the dates of such acquisitions.
 ``

    (b) Tax on Net Income From 1-Year Listed Investments.--
 ``

    (1) In general.--There is hereby imposed on each 
 specified educational institution for the taxable year a tax 
 equal to 100 percent of the excess (if any) of--
 ``
        (A) the sum of--
 ``
            (i) all income received with respect to 
 any 1-year listed investment during such 
 taxable year, plus
 ``
            (ii) all gains recognized with respect to 
 the sale or other disposition of any 1-year 
 listed investments during such taxable year, 
 over
 ``
        (B) the sum of--
 ``
            (i) all deductions properly allocable to 
 income described in subparagraph
        (A)
            (i) , plus
 ``
            (ii) all losses recognized with respect 
 to the sale or other disposition of any 1-year 
 listed investments during such taxable year.
 ``

    (2) 1-year listed investment.--For purposes of this 
 section, with respect to any income received or gain or loss 
 recognized, the term `1-year listed investment' means any 
 listed investment which was such a listed investment at all 
 times during the 1-year period ending on the date such income 
 was received or such gain or loss was recognized.
 ``
            (c) Listed Investment.--For purposes of this section--
 ``

    (1) In general.--The term `listed investment' means any 
 specified interest with respect to any person listed on one or 
 more of--
 ``
        (A) the Entity List maintained by the Secretary 
 of Commerce,
 ``
        (B) the Military End User

    (MEU) List maintained 
 by the Secretary of Commerce,
 ``
            (C) the Unverified List maintained by the 
 Secretary of Commerce, or
 ``
            (D) the list maintained by the Federal 
 Communications Commission of equipment and services 
 covered by 

section 2 of the Secure and Trusted 
 Communications Networks Act of 2019 (commonly referred 
 to as the FCC Covered List).
 ``

    (2) Listed persons list.--The Secretary shall establish 
 (not later than 60 days after the date of the enactment of this 
 section), update, and maintain a list of the persons which are 
 listed on one or more of the lists described in paragraph

    (1) .
 ``

    (3) Specified interest.--The term `specified interest' 
 means, with respect to any person--
 ``
        (A) stock or any other equity or profits interest 
 of such person,
 ``
        (B) debt issued by such person, or
 ``
            (C) any contract or derivative with respect to 
 any interest described in subparagraph
        (A) or
        (B) .
 ``

    (4) Inclusion of certain pooled funds.--
 ``
        (A) In general.--Any specified interest acquired 
 through a regulated investment company, exchange traded 
 fund, or any other pooled investment shall not fail to 
 be treated as acquired through a chain of ownership 
 described in subsection

    (a) .
 ``
        (B) Certifications of pooled funds.--The 
 Secretary shall establish procedures under which 
 regulated investment companies, exchange traded funds, 
 and other pooled investments may be certified by the 
 Secretary as not holding any listed investments.
 ``
            (d) Specified Educational Institution.--For purposes of this 
section--
 ``

    (1) In general.--The term `specified educational 
 institution' means, with respect to any taxable year, any 
 eligible educational institution (as defined in 

section 25A

    (f)

    (2) )--
 ``
        (A) which is not described in the first sentence 
 of 

section 511

    (a)

    (2)
        (B) (relating to State colleges and 
 universities), and
 ``
        (B) 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 in 
 excess of $1,000,000,000.
 ``

    (2) Treatment of related organizations.--For purposes of 
 subsections

    (a) and

    (b) , assets held by any related 
 organization (as defined in 

section 4968
            (d) (2) ) with respect to 
 an educational institution shall be treated as held by such 
 educational institution, except that--
 ``
        (A) such assets shall not 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, assets which are not 
 intended or available for the use or benefit of such 
 educational institution shall not be taken into 
 account.
 ``

    (e) Valuation of Debt.--For purposes of subsection

    (a) , the fair 
market value of any debt shall be treated as being the principal amount 
of such debt.
 ``

    (f) Regulations.--The Secretary may issue such regulations or 
other guidance as may be necessary or appropriate to carry out the 
purposes of this section, including regulations or other guidance 
providing for the proper application of this section with respect to 
institutionally related foundations and pooled investments.''.

    (b) Clerical Amendments.--

    (1) The table of sections for subchapter H of chapter 42 of 
 the Internal Revenue Code of 1986 is amended by adding at the 
 end the following new item:

``

Sec. 4969. Excise tax on certain investments of private colleges and 
 universities.''.

    (2) The heading of subchapter H of chapter 42 of such Code 
 (and the item relating to such subchapter in the table of 
 subchapters for such chapter) are each amended by striking 
 ``Tax Based on Investment Income'' and inserting ``Taxes Based 
 on Investments''.
            (c) Effective Dates.--

    (1) In general.--Except as otherwise provided in this 
 subsection, the amendments made by this section shall apply to 
 taxable years ending after the earlier of--
        (A) the end of the first calendar year beginning 
 after the date of the enactment of this Act, or
        (B) the end of the 1-year period beginning on the 
 date on which the Secretary of the Treasury (or the 
 Secretary's delegate) establishes the listed persons 
 list under 

section 4969
            (c) (2) of the Internal Revenue 
 Code of 1986 (as added by this section).

    (2) Certain prior acquisitions.--

Section 4969

    (a) of the 
 Internal Revenue Code of 1986 (as added by this section) shall 
 not apply to investments acquired before the end of the 
 calendar year referred to in paragraph

    (1)
        (A) .

    (3) Certain prior income and gains.--

Section 4969

    (b) of the 
 Internal Revenue Code of 1986 (as added by this section) shall 
 not apply to income received, or gains or losses recognized, 
 before the end of the 1-year period referred to in paragraph

    (1)
        (B) .
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