Sec. 5103. Excise tax based on investment income of private colleges and universities
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Chapter 42 is amended by adding at the end the following new subchapter: Sec. 4969. Excise tax based on investment income of private colleges and universities. 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. For purposes of this subchapter— The term applicable educational institution means an eligible educational institution (as defined in section 25A(e)(3))— which has at least 500 students during the preceding taxable year, which is not described in the first sentence of section 511(a)(2)(B), and 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 $250,000 per student of the institution.
For purposes of paragraph (1), the number of students of an institution 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). For purposes of this section, net investment income shall be determined under rules similar to the rules of section 4940(c). For purposes of subsections (b)(1)(C) and (c), the assets and net investment income of any related organization shall be treated as the assets and net investment income of the eligible educational institution.
For purposes of this subsection, the term related organization means, with respect to an eligible educational institution, any organization which— controls, or is controlled by, such institution, is controlled by one or more persons that control such institution, or 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. . The table of subchapters for chapter 42 is amended by adding at the end the following new item:
Subchapter H—Excise tax based on investment income of private colleges and universities . The amendments made by this section shall apply to taxable years beginning after December 31, 2017.