I 

116TH CONGRESS 

1ST SESSION H. R. 4857 

To amend the Internal Revenue Code of 1986 to reinstate estate and 

generation-skipping taxes, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 24, 2019 

Mr. GOMEZ (for himself, Mr. BLUMENAUER, Mr. CARSON of Indiana, Mr. 

CARTWRIGHT, Ms. JUDY CHU of California, Mr. COHEN, Mr. DANNY K. 

DAVIS of Illinois, Ms. DELAURO, Mr. DESAULNIER, Mr. DEFAZIO, Mr. 

MICHAEL F. DOYLE of Pennsylvania, Mr. ESPAILLAT, Mr. GARCI ́A of Illinois, Mr. GREEN of Texas, Mr. GRIJALVA, Ms. HAALAND, Ms. NORTON, 

Ms. JACKSON LEE, Ms. JAYAPAL, Mr. KHANNA, Ms. LEE of California, 

Mr. LEVIN of Michigan, Mr. LOWENTHAL, Mr. MCGOVERN, Mr. NADLER, Mrs. NAPOLITANO, Ms. OCASIO-CORTEZ, Ms. OMAR, Mr. PAYNE, 

Mr. POCAN, Ms. PRESSLEY, Ms. SCHAKOWSKY, Mr. SERRANO, Mr. 

TAKANO, Mr. TONKO, Ms. TLAIB, Ms. VELA ́ZQUEZ, and Mrs. WATSON

COLEMAN) introduced the following bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to reinstate 

estate and generation-skipping taxes, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘For the 99.8 Percent 

5 Act’’. 


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1 SEC. 2. MODIFICATIONS TO ESTATE, GIFT, AND GENERA2 TION-SKIPPING TRANSFER TAXES. 

3 (a) MODIFICATION OF RATES.—Section 2001(c) of 

4 the Internal Revenue Code of 1986 is amended by striking 

5 the last 2 rows and inserting the following: 

‘‘Over $750,000 but not over $3,500,000 ............. $248,300 plus 39 percent of the excess of 

such amount over 

$750,000. 

Over $3,500,000 but not over $10,000,000 ........ $1,320,800 plus 45 

percent of the excess of such amount 

over $3,500,000. 

Over $10,000,000 but not over $50,000,000 ...... $4,245,800 plus 50 

percent of the excess of such amount 

over $10,000,000. 

Over $50,000,000 but not over $1,000,000,000 $24,245,800 plus 55 

percent of the excess of such amount 

over $50,000,000. 

Over $1,000,000,000 ........................................... $546,745,800 plus 77 

percent of the excess of such amount 

over 

$1,000,000,000.’’. 

6 (b) EXCLUSION AMOUNT.— 

7 (1) ESTATE TAX.—Paragraph (3) of section 

8 2010(c) of the Internal Revenue Code of 1986 is 

9 amended to read as follows: 

10 ‘‘(3) BASIC EXCLUSION AMOUNT.—For pur11 poses of this section, the basic exclusion amount is 

12 $3,500,000.’’. 

13 (2) MODIFICATION TO GIFT TAX EXCLUSION

14 AMOUNT.—Paragraph (1) of section 2505(a) of the 


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1 Internal Revenue Code of 1986 is amended to read 

2 as follows: 

3 ‘‘(1) the applicable credit amount in effect 

4 under section 2010(c) for such calendar year (deter5 mined as if the basic exclusion amount in section 

6 2010(c)(2)(A) were $1,000,000), reduced by’’. 

7 (3) MODIFICATIONS OF ESTATE AND GIFT

8 TAXES TO REFLECT DIFFERENCES IN CREDIT RE9 SULTING FROM DIFFERENT EXCLUSION AMOUNTS.— 

10 (A) ESTATE TAX ADJUSTMENT.—Section 

11 2001 of the Internal Revenue Code of 1986 is 

12 amended by adding at the end the following 

13 new subsection: 

14 ‘‘(h) ADJUSTMENT TO REFLECT CHANGES IN EX15 CLUSION AMOUNT.— 

16 ‘‘(1) IN GENERAL.—If, with respect to any gift 

17 to which subsection (b)(2) applies, the applicable ex18 clusion amount in effect at the time of the dece19 dent’s death is less than such amount in effect at 

20 the time such gift is made by the decedent, the 

21 amount of tax computed under subsection (b) shall 

22 be reduced by the amount of tax which would have 

23 been payable under chapter 12 at the time of the 

24 gift if the applicable exclusion amount in effect at 

25 such time had been the applicable exclusion amount 


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1 in effect at the time of the decedent’s death and the 

2 modifications described in subsection (g) had been 

3 applicable at the time of such gifts. 

4 ‘‘(2) LIMITATION.—The aggregate amount of 

5 gifts made in any calendar year to which the reduc6 tion under paragraph (1) applies shall not exceed 

7 the excess of— 

8 ‘‘(A) the applicable exclusion amount in ef9 fect for such calendar year, over 

10 ‘‘(B) the applicable exclusion amount in ef11 fect at the time of the decedent’s death. 

12 ‘‘(3) APPLICABLE EXCLUSION AMOUNT.—The 

13 term ‘applicable exclusion amount’ means, with re14 spect to any period, the amount determined under 

15 section 2010(c) for such period, except that in the 

16 case of any period for which such amount includes 

17 the deceased spousal unused exclusion amount (as 

18 defined in section 2010(c)(4)), such term shall mean 

19 the basic exclusion amount (as defined under section 

20 2010(c)(3), as in effect for such period).’’. 

21 (B) GIFT TAX ADJUSTMENT.—Section 

22 2502 of such Code is amended by adding at the 

23 end the following new subsection: 

24 ‘‘(d) ADJUSTMENT TO REFLECT CHANGES IN EX25 CLUSION AMOUNT.— 


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1 ‘‘(1) IN GENERAL.—If the taxpayer made a tax2 able gift in an applicable preceding calendar period, 

3 the amount of tax computed under subsection (a) 

4 shall be reduced by the amount of tax which would 

5 have been payable under chapter 12 for such appli6 cable preceding calendar period if the applicable ex7 clusion amount in effect for such preceding calendar 

8 period had been the applicable exclusion amount in 

9 effect for the calendar year for which the tax is 

10 being computed and the modifications described in 

11 subsection (g) had been applicable for such pre12 ceding calendar period. 

13 ‘‘(2) LIMITATION.—The aggregate amount of 

14 gifts made in any applicable preceding calendar pe15 riod to which the reduction under paragraph (1) ap16 plies shall not exceed the excess of— 

17 ‘‘(A) the applicable exclusion amount for 

18 such preceding calendar period, over 

19 ‘‘(B) the applicable exclusion amount for 

20 the calendar year for which the tax is being 

21 computed. 

22 ‘‘(3) APPLICABLE PRECEDING CALENDAR YEAR

23 PERIOD.—The term ‘applicable preceding calendar 

24 year period’ means any preceding calendar year pe25 riod in which the applicable exclusion amount exVerDate Sep 11 2014 04:02 Oct 30, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4857.IH H4857

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1 ceeded the applicable exclusion amount for the cal2 endar year for which the tax is being computed. 

3 ‘‘(4) APPLICABLE EXCLUSION AMOUNT.—The 

4 term ‘applicable exclusion amount’ means, with re5 spect to any period, the amount determined under 

6 section 2010(c) for such period, except that in the 

7 case of any period for which such amount includes 

8 the deceased spousal unused exclusion amount (as 

9 defined in section 2010(c)(4)), such term shall mean 

10 the basic exclusion amount (as defined under section 

11 2010(c)(3), as in effect for such period).’’. 

12 (c) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to estates of decedents dying, and 

14 generation-skipping transfers and gifts made, after De15 cember 31, 2019. 

16 SEC. 3. MODIFICATION OF RULES FOR VALUE OF CERTAIN 

17 FARM, ETC., REAL PROPERTY. 

18 (a) IN GENERAL.—Paragraph (2) of section 

19 2032A(a) of the Internal Revenue Code of 1986 is amend20 ed by striking ‘‘$750,000’’ and inserting ‘‘$3,000,000’’. 

21 (b) INFLATION ADJUSTMENT.—Paragraph (3) of sec22 tion 2032A(a) of such Code is amended— 

23 (1) by striking ‘‘1998’’ and inserting ‘‘2019’’; 

24 (2) by striking ‘‘$750,000’’ each place it ap25 pears and inserting ‘‘$3,000,000’’; and 


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1 (3) by striking ‘‘calendar year 1997’’ and in2 serting ‘‘calendar year 2018’’ in subparagraph (B). 

3 (c) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to estates of decedents dying, and 

5 gifts made, after December 31, 2019. 

6 SEC. 4. MODIFICATION OF ESTATE TAX RULES WITH RE7 SPECT TO LAND SUBJECT TO CONSERVATION 

8 EASEMENTS. 

9 (a) MODIFICATION OF EXCLUSION LIMITATION.— 

10 Subparagraph (B) of section 2031(c)(1) of the Internal 

11 Revenue Code of 1986 is amended by striking ‘‘$500,000’’ 

12 and inserting ‘‘$2,000,000’’. 

13 (b) MODIFICATION OF APPLICABLE PERCENTAGE.— 

14 Paragraph (2) of section 2031(c) of the Internal Revenue 

15 Code of 1986 is amended by striking ‘‘40 percent’’ and 

16 inserting ‘‘60 percent’’. 

17 (c) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to estates of decedents dying, and 

19 gifts made, after December 31, 2019. 

20 SEC. 5. CONSISTENT BASIS REPORTING FOR PROPERTY AC21 QUIRED BY GIFTS AND TRANSFERS IN TRUST. 

22 (a) CONSISTENT USE OF BASIS.—Section 1015 of 

23 the Internal Revenue Code of 1986 is amended by adding 

24 at the end the following new subsection: 


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1 ‘‘(f) BASIS MUST BE CONSISTENT WITH GIFT TAX

2 RETURN.— 

3 ‘‘(1) IN GENERAL.—The basis of any property 

4 to which this section applies shall not exceed— 

5 ‘‘(A) in the case of property the final value 

6 of which has been determined for purposes of 

7 the tax imposed by chapter 12 on the donor of 

8 such property, such value, and 

9 ‘‘(B) in the case of property not described 

10 in subparagraph (A) and with respect to which 

11 a statement has been furnished under section 

12 6035(b) identifying the value of such property, 

13 such value. 

14 ‘‘(2) DETERMINATION.—For purposes of para15 graph (1), the basis of property has been determined 

16 for purposes of the tax imposed by chapter 12 if— 

17 ‘‘(A) the value of such property is shown 

18 on a return under section 6019 and such value 

19 is not contested by the Secretary before the ex20 piration of the time for assessing a tax under 

21 chapter 12, 

22 ‘‘(B) in a case not described in subpara23 graph (A), the value is specified by the Sec24 retary and such value is not timely contested by 

25 the donor of such property, or 


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1 ‘‘(C) the value is determined by a court or 

2 pursuant to a settlement agreement with the 

3 Secretary. 

4 ‘‘(3) REGULATIONS.—The Secretary may by 

5 regulations provide exceptions to the application of 

6 this subsection.’’. 

7 (b) INFORMATION REPORTING.— 

8 (1) IN GENERAL.—Section 6035 of the Internal 

9 Revenue Code of 1986 is amended— 

10 (A) in the heading, by inserting ‘‘OR BY

11 GIFT’’ after ‘‘DECEDENT’’; 

12 (B) by redesignating subsection (b) as sub13 section (c); 

14 (C) by inserting after subsection (a) the 

15 following new subsection: 

16 ‘‘(b) INFORMATION WITH RESPECT TO PROPERTY

17 ACQUIRED BY GIFT.— 

18 ‘‘(1) IN GENERAL.—Each person making a 

19 transfer by gift who is required to file a return 

20 under section 6019 with respect to such transfer 

21 shall furnish to the Secretary and to each person ac22 quiring any interest in property by reason of such 

23 transfer a statement identifying the value of each in24 terest in such property as reported on such return 


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1 and such other information with respect to such in2 terest as the Secretary may prescribe. 

3 ‘‘(2) TIME FOR FURNISHING STATEMENT.— 

4 ‘‘(A) IN GENERAL.—Each statement re5 quired to be furnished under paragraph (1) 

6 shall be furnished at such time as the Secretary 

7 may prescribe, but in no case at a time later 

8 than the earlier of— 

9 ‘‘(i) the date which is 30 days after 

10 the date on which the return under section 

11 6019 was required to be filed (including 

12 extensions, if any), or 

13 ‘‘(ii) the date which is 30 days after 

14 the date such return is filed. 

15 ‘‘(B) ADJUSTMENTS.—In any case in 

16 which there is an adjustment to the information 

17 required to be included on a statement filed 

18 under paragraph (1) after such statement has 

19 been filed, a supplemental statement under 

20 such paragraph shall be filed not later than the 

21 date which is 30 days after such adjustment is 

22 made.’’; and 

23 (D) in paragraph (1) of subsection (c), as 

24 redesignated by subparagraph (B), by striking 


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1 ‘‘estate tax return’’ and inserting ‘‘estate or gift 

2 tax return’’. 

3 (2) CLERICAL AMENDMENT.—The table of sec4 tions for subpart A of part III of subchapter A of 

5 chapter 61 of the Internal Revenue Code of 1986 is 

6 amended by striking the item relating to section 

7 6035 and inserting the following: 

‘‘Sec. 6035. Basis information to persons acquiring property from decedent or 

by gift.’’. 

8 (c) PENALTY FOR INCONSISTENT REPORTING.— 

9 (1) IN GENERAL.—Paragraph (8) of section 

10 6662(b) of the Internal Revenue Code of 1986 is 

11 amended by inserting ‘‘or gift’’ after ‘‘estate’’. 

12 (2) INCONSISTENT BASIS REPORTING.—Sub13 section (k) of section 6662 of such Code is amended 

14 to read as follows: 

15 ‘‘(k) INCONSISTENT ESTATE OR GIFT BASIS RE16 PORTING.—For purposes of this section, there is an ‘in17 consistent estate or gift basis’ if— 

18 ‘‘(1) in the case of property acquired from a de19 cedent, the basis of property claimed on a return ex20 ceeds the basis as determined under section 1014(f), 

21 and 

22 ‘‘(2) in the case of property acquired by gift, 

23 the basis of property claimed on a return exceeds 

24 the basis as determined under section 1015(f).’’. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to transfers for which returns are 

3 filed after the date of the enactment of this Act. 

4 SEC. 6. VALUATION RULES FOR CERTAIN TRANSFERS OF 

5 NONBUSINESS ASSETS; LIMITATION ON MI6 NORITY DISCOUNTS. 

7 (a) IN GENERAL.—Section 2031 of the Internal Rev8 enue Code of 1986 is amended by redesignating subsection 

9 (d) as subsection (f) and by inserting after subsection (c) 

10 the following new subsections: 

11 ‘‘(d) VALUATION RULES FOR CERTAIN TRANSFERS

12 OF NONBUSINESS ASSETS.—For purposes of this chapter 

13 and chapter 12— 

14 ‘‘(1) IN GENERAL.—In the case of the transfer 

15 of any interest in an entity other than an interest 

16 which is actively traded (within the meaning of sec17 tion 1092)— 

18 ‘‘(A) the value of any nonbusiness assets 

19 held by the entity with respect to such interest 

20 shall be determined as if the transferor had 

21 transferred such assets directly to the trans22 feree (and no valuation discount shall be al23 lowed with respect to such nonbusiness assets), 

24 and 


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1 ‘‘(B) such nonbusiness assets shall not be 

2 taken into account in determining the value of 

3 the interest in the entity. 

4 ‘‘(2) NONBUSINESS ASSETS.—For purposes of 

5 this subsection— 

6 ‘‘(A) IN GENERAL.—The term ‘nonbusi7 ness asset’ means any asset which is not used 

8 in the active conduct of one or more trades or 

9 businesses. 

10 ‘‘(B) EXCEPTION FOR CERTAIN PASSIVE

11 ASSETS.—Except as provided in subparagraph 

12 (C), a passive asset shall not be treated for pur13 poses of subparagraph (A) as used in the active 

14 conduct of a trade or business unless— 

15 ‘‘(i) the asset is property described in 

16 paragraph (1) or (4) of section 1221(a) or 

17 is a hedge with respect to such property, 

18 or 

19 ‘‘(ii) the asset is real property used in 

20 the active conduct of one or more real 

21 property trades or businesses (within the 

22 meaning of section 469(c)(7)(C)) in which 

23 the transferor materially participates and 

24 with respect to which the transferor meets 


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1 the requirements of section 

2 469(c)(7)(B)(ii). 

3 For purposes of clause (ii), material participa4 tion shall be determined under the rules of sec5 tion 469(h), except that section 469(h)(3) shall 

6 be applied without regard to the limitation to 

7 farming activity. 

8 ‘‘(C) EXCEPTION FOR WORKING CAP9 ITAL.—Any asset (including a passive asset) 

10 which is held as a part of the reasonably re11 quired working capital needs of a trade or busi12 ness shall be treated as used in the active con13 duct of a trade or business. 

14 ‘‘(3) PASSIVE ASSET.—For purposes of this 

15 subsection, the term ‘passive asset’ means any— 

16 ‘‘(A) cash or cash equivalents, 

17 ‘‘(B) except to the extent provided by the 

18 Secretary, stock in a corporation or any other 

19 equity, profits, or capital interest in any entity, 

20 ‘‘(C) evidence of indebtedness, option, for21 ward or futures contract, notional principal con22 tract, or derivative, 

23 ‘‘(D) asset described in clause (iii), (iv), or 

24 (v) of section 351(e)(1)(B), 

25 ‘‘(E) annuity, 


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1 ‘‘(F) real property used in one or more 

2 real property trades or businesses (as defined in 

3 section 469(c)(7)(C)), 

4 ‘‘(G) asset (other than a patent, trade5 mark, or copyright) which produces royalty in6 come, 

7 ‘‘(H) commodity, 

8 ‘‘(I) collectible (within the meaning of sec9 tion 408(m)), or 

10 ‘‘(J) any other asset specified in regula11 tions prescribed by the Secretary. 

12 ‘‘(4) LOOK-THRU RULES.— 

13 ‘‘(A) IN GENERAL.—If a nonbusiness asset 

14 of an entity consists of a 10-percent interest in 

15 any other entity, this subsection shall be ap16 plied by disregarding the 10-percent interest 

17 and by treating the entity as holding directly its 

18 ratable share of the assets of the other entity. 

19 This subparagraph shall be applied successively 

20 to any 10-percent interest of such other entity 

21 in any other entity. 

22 ‘‘(B) 10-PERCENT INTEREST.—The term 

23 ‘10-percent interest’ means— 

24 ‘‘(i) in the case of an interest in a cor25 poration, ownership of at least 10 percent 


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1 (by vote or value) of the stock in such cor2 poration, 

3 ‘‘(ii) in the case of an interest in a 

4 partnership, ownership of at least 10 per5 cent of the capital or profits interest in the 

6 partnership, and 

7 ‘‘(iii) in any other case, ownership of 

8 at least 10 percent of the beneficial inter9 ests in the entity. 

10 ‘‘(5) COORDINATION WITH SUBSECTION (b).— 

11 Subsection (b) shall apply after the application of 

12 this subsection. 

13 ‘‘(e) LIMITATION ON MINORITY DISCOUNTS.—For 

14 purposes of this chapter and chapter 12, in the case of 

15 the transfer of any interest in an entity other than an in16 terest which is actively traded (within the meaning of sec17 tion 1092), no discount shall be allowed by reason of the 

18 fact that the transferee does not have control of such enti19 ty if the transferor, the transferee, and members of the 

20 family (as defined in section 2032A(e)(2)) of the trans21 feror and transferee— 

22 ‘‘(1) have control of such entity, or 

23 ‘‘(2) own the majority of the ownership inter24 ests (by value) in such entity.’’. 


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1 (b) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to transfers after the date of the 

3 enactment of this Act. 

4 SEC. 7. REQUIRED MINIMUM 10-YEAR TERM, ETC., FOR 

5 GRANTOR RETAINED ANNUITY TRUSTS. 

6 (a) IN GENERAL.—Subsection (b) of section 2702 of 

7 the Internal Revenue Code of 1986 is amended— 

8 (1) by redesignating paragraphs (1), (2), and 

9 (3) as subparagraphs (A), (B), and (C), respectively, 

10 and by moving such subparagraphs (as so redesig11 nated) 2 ems to the right; 

12 (2) by striking ‘‘For purposes of’’ and inserting 

13 the following: 

14 ‘‘(1) IN GENERAL.—For purposes of’’; 

15 (3) by striking ‘‘paragraph (1) or (2)’’ in para16 graph (1)(C) (as so redesignated) and inserting 

17 ‘‘subparagraph (A) or (B)’’; and 

18 (4) by adding at the end the following new 

19 paragraph: 

20 ‘‘(2) ADDITIONAL REQUIREMENTS WITH RE21 SPECT TO GRANTOR RETAINED ANNUITIES.—For 

22 purposes of subsection (a), in the case of an interest 

23 described in paragraph (1)(A) (determined without 

24 regard to this paragraph) which is retained by the 


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1 transferor, such interest shall be treated as de2 scribed in such paragraph only if— 

3 ‘‘(A) the right to receive the fixed amounts 

4 referred to in such paragraph is for a term of 

5 not less than 10 years and not more than the 

6 life expectancy of the annuitant plus 10 years, 

7 ‘‘(B) such fixed amounts, when determined 

8 on an annual basis, do not decrease during the 

9 term described in subparagraph (A), and 

10 ‘‘(C) the remainder interest has a value, as 

11 determined as of the time of the transfer, which 

12 is— 

13 ‘‘(i) not less than an amount equal to 

14 the greater of— 

15 ‘‘(I) 25 percent of the fair mar16 ket value of the property in the trust, 

17 or 

18 ‘‘(II) $500,000, and 

19 ‘‘(ii) not greater than the fair market 

20 value of the property in the trust.’’. 

21 (b) EFFECTIVE DATE.—The amendments made by 

22 this section shall apply to transfers made after the date 

23 of the enactment of this Act. 


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1 SEC. 8. CERTAIN TRANSFER TAX RULES APPLICABLE TO 

2 GRANTOR TRUSTS. 

3 (a) IN GENERAL.—Subtitle B of the Internal Rev4 enue Code of 1986 is amended by adding at the end the 

5 following new chapter: 

6 ‘‘CHAPTER 16—SPECIAL RULES FOR 

7 GRANTOR TRUSTS 

‘‘Sec. 2901. Application of transfer taxes. 

8 ‘‘SEC. 2901. APPLICATION OF TRANSFER TAXES. 

9 ‘‘(a) IN GENERAL.—In the case of any portion of a 

10 trust to which this section applies— 

11 ‘‘(1) the value of the gross estate of the de12 ceased deemed owner of such portion shall include 

13 all assets attributable to that portion at the time of 

14 the death of such owner, 

15 ‘‘(2) any distribution from such portion to one 

16 or more beneficiaries during the life of the deemed 

17 owner of such portion shall be treated as a transfer 

18 by gift for purposes of chapter 12, and 

19 ‘‘(3) if at any time during the life of the 

20 deemed owner of such portion, such owner ceases to 

21 be treated as the owner of such portion under sub22 part E of part 1 of subchapter J of chapter 1, all 

23 assets attributable to such portion at such time shall 

24 be treated for purposes of chapter 12 as a transfer 

25 by gift made by the deemed owner. 


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1 ‘‘(b) PORTION OF TRUST TO WHICH SECTION AP2 PLIES.—This section shall apply to— 

3 ‘‘(1) the portion of a trust with respect to 

4 which the grantor is the deemed owner, and 

5 ‘‘(2) the portion of the trust to which a person 

6 who is not the grantor is a deemed owner by reason 

7 of the rules of subpart E of part 1 of subchapter J 

8 of chapter 1, and such deemed owner engages in a 

9 sale, exchange, or comparable transaction with the 

10 trust that is disregarded for purposes of subtitle A. 

11 For purposes of paragraph (2), the portion of the trust 

12 described with respect to a transaction is the portion of 

13 the trust attributable to the property received by the trust 

14 in such transaction, including all retained income there15 from, appreciation thereon, and reinvestments thereof, net 

16 of the amount of consideration received by the deemed 

17 owner in such transaction. 

18 ‘‘(c) EXCEPTIONS.—This section shall not apply to— 

19 ‘‘(1) any trust that is includible in the gross es20 tate of the deemed owner (without regard to sub21 section (a)(1)), and 

22 ‘‘(2) any other type of trust that the Secretary 

23 determines by regulations or other guidance does not 

24 have as a significant purpose the avoidance of trans25 fer taxes. 


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1 ‘‘(d) DEEMED OWNER DEFINED.—For purposes of 

2 this section, the term ‘deemed owner’ means any person 

3 who is treated as the owner of a portion of a trust under 

4 subpart E of part 1 of subchapter J of chapter 1. 

5 ‘‘(e) REDUCTION FOR TAXABLE GIFTS TO TRUST

6 MADE BY OWNER.—The amount to which subsection (a) 

7 applies shall be reduced by the value of any transfer by 

8 gift by the deemed owner to the trust previously taken 

9 into account by the deemed owner under chapter 12. 

10 ‘‘(f) LIABILITY FOR PAYMENT OF TAX.—Any tax im11 posed pursuant to subsection (a) shall be a liability of the 

12 trust.’’. 

13 (b) CLERICAL AMENDMENT.—The table of chapters 

14 for subtitle B of such Code is amended by adding at the 

15 end the following new item: 

‘‘CHAPTER 16. SPECIAL RULES FOR GRANTOR TRUSTS’’. 

16 (c) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply— 

18 (1) to trusts created on or after the date of the 

19 enactment of this Act; 

20 (2) to any portion of a trust established before 

21 the date of the enactment of this Act which is attrib22 utable to a contribution made on or after such date; 

23 and 

24 (3) to any portion of a trust established before 

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1 tion 2901(a) of the Internal Revenue Code of 1986 

2 (as added by subsection (a)) applies by reason of a 

3 transaction described in section 2901(b)(2) of such 

4 Code on or after such date. 

5 SEC. 9. ELIMINATION OF GENERATION-SKIPPING TRANS6 FER TAX EXEMPTION FOR CERTAIN TRUSTS. 

7 (a) IN GENERAL.—Section 2642 of the Internal Rev8 enue Code of 1986 is amended by adding at the end the 

9 following new subsection: 

10 ‘‘(h) ELIMINATION OF GST EXEMPTION FOR CER11 TAIN TRUSTS.— 

12 ‘‘(1) IN GENERAL.— 

13 ‘‘(A) TRANSFERS FROM NON-QUALIFYING

14 TRUSTS.—In the case of any generation-skip15 ping transfer made from a trust that is not a 

16 qualifying trust, the inclusion ratio with respect 

17 to any property transferred in such transfer 

18 shall be one. 

19 ‘‘(B) QUALIFYING TRUST.—For purposes 

20 of this subsection, the term ‘qualifying trust’ 

21 means a trust for which the date of termination 

22 of such trust is not greater than 50 years after 

23 the date on which such trust is created. 

24 ‘‘(2) TRUSTS CREATED BEFORE DATE OF EN25 ACTMENT.—In the case of any trust created before 


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1 the date of the enactment of this subsection, such 

2 trust shall be deemed to be a qualifying trust for a 

3 period of 50 years after the date of the enactment 

4 of this subsection. 

5 ‘‘(3) DATE OF CREATION OF CERTAIN DEEMED

6 SEPARATE TRUSTS.—In the case of any portion of a 

7 trust which is treated as a separate trust under sec8 tion 2654(b)(1), such separate trust shall be treated 

9 as created on the date of the first transfer described 

10 in such section with respect to such separate trust. 

11 ‘‘(4) DATE OF CREATION OF POUR-OVER

12 TRUSTS.—In the case of any generation-skipping 

13 transfer of property which involves the transfer of 

14 property from 1 trust to another trust, the date of 

15 the creation of the transferee trust shall be treated 

16 as being the earlier of— 

17 ‘‘(A) the date of the creation of such trans18 feree trust, or 

19 ‘‘(B) the date of the creation of the trans20 feror trust. 

21 In the case of multiple transfers to which the pre22 ceding sentence applies, the date of the creation of 

23 the transferor trust shall be determined under the 

24 preceding sentence before the application of the preVerDate Sep 11 2014 04:02 Oct 30, 2019 Jkt 099200 PO 00000 Frm 00023 Fmt 6652 Sfmt 6201 E:\BILLS\H4857.IH H4857

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1 ceding sentence to determine the date of the creation 

2 of the transferee trust. 

3 ‘‘(5) REGULATIONS.—The Secretary may pre4 scribe such regulations or other guidance as may be 

5 necessary or appropriate to carry out this sub6 section.’’. 

7 (b) EFFECTIVE DATE.—The amendments made by 

8 this section shall take effect on the date of the enactment 

9 of this Act. 

10 SEC. 10. SIMPLIFYING GIFT TAX EXCLUSION FOR ANNUAL 

11 GIFTS. 

12 (a) IN GENERAL.—Paragraph (1) of section 2503(b) 

13 of the Internal Revenue Code of 1986 is amended to read 

14 as follows: 

15 ‘‘(1) IN GENERAL.— 

16 ‘‘(A) LIMIT PER DONEE.—In the case of 

17 gifts made to any person by the donor during 

18 the calendar year, the first $10,000 of such 

19 gifts to such person shall not, for purposes of 

20 subsection (a), be included in the total amount 

21 of gifts made during such year. 

22 ‘‘(B) CUMULATIVE LIMIT PER DONOR.— 

23 ‘‘(i) IN GENERAL.—The aggregate 

24 amount excluded under subparagraph (A) 

25 with respect to all transfers described in 


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1 clause (ii) made by the donor during the 

2 calendar year shall not exceed twice the 

3 dollar amount in effect under such sub4 paragraph for such calendar year. 

5 ‘‘(ii) TRANSFERS SUBJECT TO LIMITA6 TION.—The transfers described in this 

7 clause are— 

8 ‘‘(I) a transfer in trust, 

9 ‘‘(II) a transfer of an interest in 

10 a passthrough entity, 

11 ‘‘(III) a transfer of an interest 

12 subject to a prohibition on sale, and 

13 ‘‘(IV) any other transfer of prop14 erty that, without regard to with15 drawal, put, or other such rights in 

16 the donee, cannot immediately be liq17 uidated by the donee.’’. 

18 (b) CONFORMING AMENDMENT.—Section 2503 of the 

19 Internal Revenue Code of 1986 is amended by striking 

20 subsection (c). 

21 (c) REGULATIONS.—The Secretary of the Treasury, 

22 or the Secretary of the Treasury’s delegate, may prescribe 

23 such regulations or other guidance as may be necessary 

24 or appropriate to carry out the amendments made by this 

25 section. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to any calendar year beginning 

3 after the date of the enactment of this Act. 

Æ 


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