A bill to provide an exemption from the tax on failure to distribute income, by and on excess business holdings of, a private foundation under the Internal Revenue Code of 1954.

Exempts from the penalty taxes on failure to distribute income and on excess business holdings under the Internal Revenue Code any tax-exempt private foundation which: (1) was organized before January 1, 1950; (2) received by bequest before January 1, 1958, all of the outstanding stock of a manufacturing corporation (subject to intervening life estates which terminated before January 1, 1972); (3) is located in a community which, as of the 1980 decennial census, had a population of fewer than 10,000 persons; (4) employed, as of January 1, 1980, fewer than 200 employees; and (5) owns stock in a manufacturing corporation which pays dividends for the calendar year with or within which the taxable year of the foundation ends in an amount equal to at least 30 percent of the average annual earnings of such corporation for the three-year period ending with the calendar year.

Applies this Act to taxable years beginning after December 31, 1979.