American Solution for Simplifying the Estate Tax Act of 2014

Summary: American Solution for Simplifying the Estate Tax Act of 2014 - Amends the Internal Revenue to: (1)&nbsp;allow taxpayers an election to make annual payments of 1% of their adjusted gross income for a minimum seven-year period in lieu of existing estate and generation-skipping transfer taxes, and (2) allow a step-up in basis for estate property of a taxpayer making an election under this Act.&nbsp;Sets forth requirements for the filing of an estate tax return for taxpayers who have made an election under this Act. 

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``American Solution 
for Simplifying the Estate Tax Act of 2014''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Congressional findings.
Sec. 3. Elective simplified estate tax.
Sec. 4. Carry-over basis.
Sec. 5. Returns.
Sec. 6. Special rule for revocation of trusts in connection with 
                            election.

SEC. 2. CONGRESSIONAL FINDINGS.

    Congress finds the following:
            (1) The current method of collecting Federal estate tax 
        often cripples American family owned businesses, farms, and 
        ranches by forcing the sale of ongoing concerns in order to pay 
        tax liability arising from the death of an owner, creating 
        inefficiencies, dislocation, and often job losses.
            (2) From farmers and ranchers to urban business owners, the 
        Federal estate tax looms heavily and has a counterproductive 
        effect on our Nation's family owned businesses that costs 
        numerous jobs.
            (3) The job losses, economic dislocation, and excessive 
        compliance costs are not justified given the fact that the 
        estate tax has averaged one percent of total IRS collections 
        since 1960, with $14 billion collected in Fiscal Year 2013 
        (less than \1/2\ percent of total IRS collections).
            (4) The Joint Economic Committee in its May 2006 study 
        concluded that in order to avoid wealth transfer taxes, 
        individuals' costs of complying with the estate tax roughly 
        equals the revenue yield of the estate tax for the U.S. 
        Treasury.
            (5) The current method of collection of the estate tax 
        leads many wealthy Americans to lock up capital in trusts to 
        minimize or eliminate tax liability, meaning that billions of 
        dollars are left idle instead of facilitating the creation of 
        new business ventures that could stimulate the economy.
            (6) As recently as 2009, of the 34,000 estate tax returns 
        filed that year, only half owed any estate tax, indicating that 
        many wealthy Americans have found means to avoid paying this 
        tax. In 2012, 9,400 Americans still had to file estate tax 
        returns, even with the higher $5 million threshold.
            (7) It is in the national interest to modify the mechanism 
        for collection of revenues from those Americans who have the 
        largest estates, provided that it is done in a revenue neutral 
        manner that ensures the ongoing collection of an appropriate 
        percentage of the historical average of 1 percent of total IRS 
        tax receipts that reflects the lower amount of estate tax 
        revenues generated under the 2010 and 2012 amendments due to a 
        higher exemption amount.

SEC. 3. ELECTIVE SIMPLIFIED ESTATE TAX.

    (a) In General.--Chapter 11 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subchapter:

                 ``Subchapter D--Simplified Estate Tax

``Sec. 2301. Simplified estate tax.
``Sec. 2302. Imposition and rate.
``Sec. 2303. Election.
``Sec. 2304. Seven taxable year minimum.

``SEC. 2301. SIMPLIFIED ESTATE TAX.

    ``In the case of an individual (and, if married, such individual's 
spouse) who elects the application of this subchapter--
            ``(1) chapter 11 shall thereafter not apply with respect to 
        the transfer of the estate of such individual (or such spouse),
            ``(2) chapter 13 shall thereafter not apply with respect to 
        any generation-skipping transfer (as defined in section 2611) 
        made by such individual (or such spouse), and
            ``(3) a tax shall be imposed by section 2302 with respect 
        to such individual (and such spouse) for the taxable year of 
        the election and each taxable year thereafter.

``SEC. 2302. IMPOSITION AND RATE.

    ``(a) In General.--The tax imposed by this section for any taxable 
year shall be treated as an increase in the taxpayer's tax under 
chapter 1 for the taxable year by an amount equal to 1 percent of the 
modified adjusted gross income of the taxpayer for the taxable year.
    ``(b) Modified Adjusted Gross Income.--For purposes of this 
section, the term `modified adjusted gross income' means adjusted gross 
income increased by--
            ``(1) any amount excluded from gross income under section 
        911, 931, or 933, or
            ``(2) any amount of interest received or accrued by the 
        taxpayer during the taxable year which is exempt from tax.

``SEC. 2303. ELECTION.

    ``(a) In General.--Except as the Secretary shall by regulation 
prescribe in the case of separation, divorce, remarriage, or other 
circumstances the Secretary determines equitable, election for this 
subchapter to apply, once made, shall be irrevocable.
    ``(b) Married Couples To File Jointly.--If the taxpayer and the 
taxpayer's spouse elect the application of this subchapter and are 
married (within the meaning of section 7703) at the end of the taxable 
year, the taxpayer and the taxpayer's spouse shall file a joint return 
for the taxable year.

``SEC. 2304. SEVEN TAXABLE YEAR MINIMUM.

    ``(a) In General.--In the case of a decedent whose last taxable 
year is not at least the 7th taxable year for which the tax under 
section 2302 is imposed, the application of this subchapter shall be 
treated as not having been elected.
    ``(b) Transition Rule for 2015 and 2016.--
            ``(1) In general.--In the case of a decedent who first 
        elected the application of this subchapter during 2015 or 2016, 
        subsection (a) shall not apply if the executor of the 
        decedent's estate elects to increase the amount of the tax 
        imposed under chapter 1 for the decedent's last taxable year by 
        an amount equal to--
                    ``(A) the highest amount of tax imposed by section 
                2302 with respect to such decedent for any taxable year 
                (including the decedent's last taxable year), 
                multiplied by
                    ``(B) an amount equal to the difference of--
                            ``(i) 7, over
                            ``(ii) the number of taxable years for 
                        which such tax was imposed with respect to such 
                        decedent (including the decedent's last taxable 
                        year).
            ``(2) Special rule for decedent dying during year of 
        election.--In the case of a decedent to whom paragraph (1) 
        applies and who first elected the application of this 
        subchapter with respect to the last taxable year of the 
        decedent, the amount under subparagraph (A) shall not be less 
        than the amount of tax which would have been imposed by section 
        2302 had such election first been elected with respect to the 
        preceding taxable year.
    ``(c) Credit for Taxes Paid.--
            ``(1) In general.--In the case of a decedent to which 
        subsection (a) applies, the Secretary shall by regulation 
        provide for allowing for a credit against the tax imposed by 
        chapter 11 with respect to the decedent to account for any 
        taxes paid by the decedent under section 2302.
            ``(2) Interest.--The amount of any credit determined under 
        paragraph (1) with respect to any tax paid shall include 
        interest, which shall be determined--
                    ``(A) at the overpayment rate established under 
                section 6621, and
                    ``(B) from the date of payment of such tax to the 
                due date of the amount against which the credit is 
                allowed.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after, and estates of decedents dying 
after, December 31, 2014.

SEC. 4. CARRY-OVER BASIS.

    (a) In General.--Part II of subchapter O of chapter 1 of such Code 
is amended by inserting after section 1021 the following new section:

``SEC. 1022. TREATMENT OF PROPERTY ACQUIRED FROM A DECEDENT WHO ELECTED 
              SIMPLIFIED ESTATE TAX TREATMENT.

    ``(a) In General.--In the case of property acquired from a decedent 
who elected the application of subchapter D of chapter 11--
            ``(1) such property shall be treated for purposes of this 
        subtitle as transferred by gift, and
            ``(2) the basis of the person acquiring property from such 
        a decedent shall be the lesser of--
                    ``(A) the adjusted basis of the decedent, or
                    ``(B) the fair market value of the property at the 
                date of the decedent's death.
    ``(b) Property Acquired From the Decedent.--For purposes of this 
section, the following property shall be considered to have been 
acquired from the decedent:
            ``(1) Property acquired by bequest, devise, or inheritance, 
        or by the decedent's estate from the decedent.
            ``(2) Property transferred by the decedent during his 
        lifetime--
                    ``(A) to a qualified revocable trust (as defined in 
                section 645(b)(1)), or
                    ``(B) to any other trust with respect to which the 
                decedent reserved the right to make any change in the 
                enjoyment thereof through the exercise of a power to 
                alter, amend, or terminate the trust.
            ``(3) Any other property passing from the decedent by 
        reason of death to the extent that such property passed without 
        consideration.''.
    (b) Effective Date.--The amendments made by this section shall 
apply with respect to estates of decedents dying after December 31, 
2014.

SEC. 5. SIMPLIFIED ESTATE TAX RETURNS.

    (a) Information Returns.--
            (1) In general.--Subpart C of part II of subchapter A of 
        chapter 61 of such Code is amended by inserting after section 
        6018 the following new section:

``SEC. 6018A. SIMPLIFIED ESTATE TAX RETURNS.

    ``(a) In General.--In the case of property acquired from a decedent 
who has in effect an election under subchapter D of chapter 11, the 
executor of the estate of such decedent shall make a return containing 
the following information with respect to such property:
            ``(1) The name and TIN of the recipient of such property.
            ``(2) An accurate description of such property.
            ``(3) The adjusted basis of such property in the hands of 
        the decedent and its fair market value at the time of death.
            ``(4) The decedent's holding period for such property.
            ``(5) Sufficient information to determine whether any gain 
        on the disposition of the property would be treated as ordinary 
        income.
    ``(b) Property Acquired From Decedent.----For purposes of this 
section, section 1022 shall apply for purposes of determining the 
property acquired from a decedent.
    ``(c) Statements To Be Furnished to Certain Persons.--Every person 
required to make a return under subsection (a) shall furnish to each 
person whose name is required to be set forth in such return (other 
than the person required to make such return) a written statement 
showing--
            ``(1) the name, address, and phone number of the person 
        required to make such return, and
            ``(2) the information specified in subsection (a) with 
        respect to property acquired from, or passing from, the 
        decedent to the person required to receive such statement.
The written statement required under the preceding sentence shall be 
furnished not later than 30 days after the date that the return 
required by subsection (a) is filed.
    ``(d) Annual Beneficiary Asset Status Return.--Each recipient of 
property with respect to whom a statement is required to be furnished 
under subsection (c) and who owns any such property during the taxable 
year shall make a return with respect to such property containing the 
following information:
            ``(1) An accurate description of such property.
            ``(2) An accounting of the disposition of any such property 
        during the taxable year.
            ``(3) The adjusted basis of such property as of the later 
        of the end of the taxable year or the date of any such 
        disposition.
    ``(e) Excepted Property.--
            ``(1) In general.--Subsections (a) and (b) shall not apply 
        with respect to--
                    ``(A) any property the fair market value of which, 
                at the time of the decedent's death, does not exceed 
                $10,000, and
                    ``(B) any property the basis of which was 
                determined by reference to the fair market value of the 
                property at the date of the decedent's death.
            ``(2) Inflation adjustment.--
                    ``(A) In general.--In the case of any calendar year 
                after 2015, the $10,000 amount under paragraph (1) 
                shall be increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year, determined by substituting 
                        `calendar year 2014' for `calendar year 1992' 
                        in subparagraph (B) thereof.
                    ``(B) Rounding.--If any amount as adjusted under 
                subparagraph (A) is not a multiple of $100, such amount 
                shall be rounded to the next lowest multiple of 
                $100.''.
            (2) Clerical amendment.--The table of sections for subpart 
        C of part II of subchapter A of chapter 61 of such Code is 
        amended by inserting after the item relating to section 6018 
        the following new item:

``Sec. 6018A. Simplified estate tax returns.''.
    (b) Time for Filing Returns.--Section 6075(a) of such Code is 
amended--
            (1) by striking ``Estate Tax Return.--Returns made'' and 
        inserting the following: , ``Estate Tax Return.--
            ``(1) In general.--Returns made'', and
            (2) by adding at the end the following new paragraph:
            ``(2) Simplified estate tax.--
                    ``(A) In general.--Returns made under section 
                6018A(a) shall be filed not later than 180 days after 
                the date of the decedent's death.
                    ``(B) Annual beneficiary asset status returns.--
                Returns made under section 6018A(d) for a taxable year 
                shall be filed concurrently with the individual's 
                return of income tax for the taxable year.''.
    (c) Penalty for Failure To File Returns.--
            (1) In general.--Part 1 of subchapter B of chapter 68 of 
        such Code is amended by adding at the end the following new 
        section:

``SEC. 6720D. FAILURE TO FILE INFORMATION WITH RESPECT TO SIMPLIFIED 
              ESTATE TAX RETURNS.

    ``(a) Information Required To Be Filed With Secretary.--Any person 
required to furnish any information under section 6018A(a) who fails to 
do so on the date prescribed therfor (determined with regard to any 
extension of time for filing) shall pay a penalty of $10,000 for each 
such failure.
    ``(b) Information Required To Be Furnished to Beneficiaries.--Any 
person required to furnish in writing to each person described in 
section 6018A(c) the information required under such section who fails 
to do so shall pay a penalty of $250 for each such failure.
    ``(c) Annual Information Return Required To Be Furnished by 
Beneficiary.--Any person required to furnish any information under 
section 6018A(d) who fails to do so on the date prescribed therefor 
(determined with regard to any extension of time for filing) shall pay 
a penalty of $5,000 for each such failure.
    ``(d) Reasonable Cause Exception.--No penalty shall be imposed 
under subsection (a), (b), or (c) with respect to a failure if it is 
shown that such failure is due to reasonable cause.
    ``(e) Intentional Disregard.--If any failure under subsection (a), 
(b), or (c) is due to intentional disregard of the requirements under 
sections 6018A, the penalty under such subsection shall be 5 percent of 
the fair market value as of the date of death (in the case of section 
6018A(d), as of the date prescribed for furnishing such return 
(determined with regard to any extension of time for filing)) of the 
property with respect to which the information is required.
    ``(f) Deficiency Procedures Not To Apply.--Subchapter B of chapter 
63 (relating to deficiency procedures for income, estate, gift, and 
certain excise taxes) shall not apply in respect of the assessment or 
collection of any penalty imposed by this section.''.
            (2) Clerical amendment.--The table of sections for part 1 
        of subchapter B of chapter 68 of such Code is amended by adding 
        at the end the following new item:

``Sec. 6720D. Failure to file information with respect to simplified 
                            estate tax returns.''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to estates of decedents dying after December 31, 
2014.

SEC. 6. SPECIAL RULE FOR REVOCATION OF TRUSTS IN CONNECTION WITH 
              ELECTION.

    Any revesting in the grantor of title to property held in a trust, 
whether by revocation, dissolution, or otherwise, shall not be subject 
to any tax imposed by the Internal Revenue Code of 1986 if such 
revesting occurs in 2015 or 2016 and is in connection with the 
grantor's election for subchapter D of chapter 11 to apply.