I 

113TH CONGRESS 

1ST SESSION H. R. 1614 

To amend the Internal Revenue Code of 1986 to authorize agricultural 

producers to establish and contribute to tax-exempt farm risk management accounts. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 18, 2013 

Mr. CRAWFORD 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 authorize 

agricultural producers to establish and contribute to taxexempt farm risk management accounts. 

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 ‘‘Farm Risk Abatement 

5 and Mitigation Election Act of 2013’’ or the ‘‘FRAME 

6 Act of 2013’’. 

7 SEC. 2. FARM RISK MANAGEMENT ACCOUNTS. 

8 (a) IN GENERAL.—Part VII of subchapter B of chap9 ter 1 of the Internal Revenue Code of 1986 (relating to 


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1 additional itemized deductions for individuals) is amended 

2 by redesignating section 224 as section 225 and by insert3 ing after section 223 the following new section: 

4 ‘‘SEC. 224. FRAME ACCOUNTS. 

5 ‘‘(a) DEDUCTION ALLOWED.—In the case of a quali6 fied farmer, there shall be allowed as a deduction for the 

7 taxable year an amount equal to the aggregate amount 

8 paid in cash during such taxable year by or on behalf of 

9 such individual to a FRAME account of such individual. 

10 ‘‘(b) LIMITATION.—The amount allowable as a de11 duction under subsection (a) shall not exceed the least of 

12 the following: 

13 ‘‘(1) The taxable income of the taxpayer for the 

14 taxable year which is attributable to farming and 

15 ranching. 

16 ‘‘(2) $50,000. 

17 ‘‘(3) $500,000 reduced by the aggregate con18 tributions of the taxpayer to all FRAME accounts of 

19 the taxpayer for all taxable years. 

20 ‘‘(c) QUALIFIED FARMER.—For purposes of this sec21 tion, the term ‘qualified farmer’ means, with respect to 

22 any taxable year, any individual who, during such year— 

23 ‘‘(1) was actively engaged in the trade or busi24 ness of farming or ranching, and 


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1 ‘‘(2) has in effect an agreement with the Sec2 retary of Agriculture with respect to each FRAME 

3 account of which the individual is an account bene4 ficiary. 

5 ‘‘(d) FRAME ACCOUNT.—For purposes of this sec6 tion— 

7 ‘‘(1) IN GENERAL.—The term ‘FRAME ac8 count’ means a trust created or organized in the 

9 United States as a FRAME account exclusively for 

10 the purpose of making qualified distributions, but 

11 only if the written governing instrument creating the 

12 trust meets the following requirements: 

13 ‘‘(A) No contribution will be accepted un14 less it is in cash. 

15 ‘‘(B) The trustee is a bank (as defined in 

16 section 408(n)) or another person who dem17 onstrates to the satisfaction of the Secretary 

18 that the manner in which such person will ad19 minister the trust will be consistent with the re20 quirements of this section. 

21 ‘‘(C) The assets of the trust will not be 

22 commingled with other property except in a 

23 common trust fund or common investment 

24 fund. 


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1 ‘‘(D) The interest of an individual in the 

2 balance in his account is nonforfeitable. 

3 ‘‘(2) QUALIFIED DISTRIBUTION.—The term 

4 ‘qualified distribution’ means any of the following 

5 amounts paid from a FRAME account to the ac6 count beneficiary: 

7 ‘‘(A) Any distributions in a taxable year 

8 during which the gross income attributable to 

9 farm to which the FRAME account relates is 

10 less than 95 percent of the average gross in11 come attributable to such farm for the 5 pre12 ceding taxable years, but only so much as does 

13 not exceed such difference. 

14 ‘‘(B) Any distributions to the extent such 

15 distribution does not exceed amounts necessary 

16 to protect the solvency of the farm to which the 

17 FRAME account relates, as determined by the 

18 Secretary. 

19 ‘‘(C) Any distributions to the extent such 

20 distributions do not exceed amounts paid or in21 curred to procure revenue or crop insurance 

22 with respect to the farm to which the FRAME 

23 account relates. 


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1 ‘‘(3) ACCOUNT BENEFICIARY.—The term ‘ac2 count beneficiary’ means the individual on whose be3 half the FRAME account was established. 

4 ‘‘(4) ACCOUNTS PER FARM LIMITATION.—The 

5 Secretary of Agriculture shall have in effect not 

6 more than 4 agreements for FRAME accounts with 

7 respect to any farm. The Secretary of Agriculture 

8 shall by regulation prescribe rules preventing the 

9 avoidance of the preceding limitation through use of 

10 multiple entities, related parties, division of farms, 

11 or de minimis ownership. 

12 ‘‘(5) OTHER RULES.—Rules similar to the fol13 lowing rules shall apply for purposes of this section: 

14 ‘‘(A) Section 219(d)(2) (relating to no de15 duction for rollovers). 

16 ‘‘(B) Section 219(f)(3) (relating to time 

17 when contributions deemed made). 

18 ‘‘(C) Section 408(g) (relating to commu19 nity property laws). 

20 ‘‘(D) Section 408(h) (relating to custodial 

21 accounts). 

22 ‘‘(e) TAX TREATMENT OF ACCOUNTS.— 

23 ‘‘(1) IN GENERAL.—A FRAME account is ex24 empt from taxation under this subtitle unless such 

25 account has ceased to be a FRAME account. NotVerDate Mar 15 2010 04:37 Apr 25, 2013 Jkt 029200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1614.IH H1614

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1 withstanding the preceding sentence, any such ac2 count is subject to the taxes imposed by section 511 

3 (relating to imposition of tax on unrelated business 

4 income of charitable, etc. organizations). 

5 ‘‘(2) TERMINATION OF ACCOUNTS.—If the ac6 count beneficiary ceases to engage in the trade or 

7 business of farming or ranching— 

8 ‘‘(A) all FRAME accounts of such indi9 vidual shall cease to be such accounts, and 

10 ‘‘(B) the balance of all such accounts shall 

11 be treated as— 

12 ‘‘(i) distributed to such individual, 

13 and 

14 ‘‘(ii) not paid in a qualified distribu15 tion. 

16 ‘‘(f) TAX TREATMENT OF DISTRIBUTIONS.— 

17 ‘‘(1) IN GENERAL.—Any amount paid or dis18 tributed out of a FRAME account (other than a 

19 rollover contribution described in paragraph (4)) 

20 shall be included in gross income. 

21 ‘‘(2) ADDITIONAL TAX ON NON-QUALIFIED DIS22 TRIBUTIONS.— 

23 ‘‘(A) IN GENERAL.—The tax imposed by 

24 this chapter on the account beneficiary for any 

25 taxable year in which there is a payment or disVerDate Mar 15 2010 04:37 Apr 25, 2013 Jkt 029200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1614.IH H1614

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1 tribution from a FRAME account of such bene2 ficiary which is not a qualified distribution shall 

3 be increased by 20 percent of the amount of 

4 such payment or distribution which is not a 

5 qualified distribution. 

6 ‘‘(B) EXCEPTION FOR DISABILITY OR

7 DEATH.—Subparagraph (A) shall not apply if 

8 the payment or distribution is made after the 

9 account beneficiary becomes disabled within the 

10 meaning of section 72(m)(7) or dies. 

11 ‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE12 FORE DUE DATE OF RETURN.— 

13 ‘‘(A) IN GENERAL.—If any excess con14 tribution is contributed for a taxable year to a 

15 FRAME account of an individual, paragraph 

16 (2) shall not apply to distributions from the 

17 FRAME accounts of such individual (to the ex18 tent such distributions do not exceed the aggre19 gate excess contributions to all such accounts of 

20 such individual for such year) if— 

21 ‘‘(i) such distribution is received by 

22 the individual on or before the last day 

23 prescribed by law (including extensions of 

24 time) for filing such individual’s return for 

25 such taxable year, and 


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1 ‘‘(ii) such distribution is accompanied 

2 by the amount of net income attributable 

3 to such excess contribution. 

4 Any net income described in clause (ii) shall be 

5 included in the gross income of the individual 

6 for the taxable year in which it is received. 

7 ‘‘(B) EXCESS CONTRIBUTION.—For pur8 poses of subparagraph (A), the term ‘excess 

9 contribution’ means any contribution (other 

10 than a rollover contribution) which is not de11 ductible under this section. 

12 ‘‘(4) ROLLOVER CONTRIBUTION.—An amount is 

13 described in this paragraph as a rollover contribu14 tion if it meets the requirements of subparagraphs 

15 (A) and (B). 

16 ‘‘(A) IN GENERAL.—For purposes of this 

17 section, any amount paid or distributed from a 

18 FRAME account to the account beneficiary 

19 shall be treated as a qualified distribution to 

20 the extent the amount received is paid into a 

21 FRAME account for the benefit of such bene22 ficiary not later than the 60th day after the day 

23 on which the beneficiary receives the payment 

24 or distribution. 


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1 ‘‘(B) LIMITATION.—This paragraph shall 

2 not apply to any amount described in subpara3 graph (A) received by an individual from a 

4 FRAME account if, at any time during the 1- 

5 year period ending on the day of such receipt, 

6 such individual received any other amount de7 scribed in subparagraph (A) from a FRAME 

8 account which was not included in the individ9 ual’s gross income because of the application of 

10 this paragraph. 

11 ‘‘(5) TRANSFER OF ACCOUNT INCIDENT TO DI12 VORCE.—The transfer of an individual’s interest in 

13 a FRAME account to an individual’s spouse or 

14 former spouse under a divorce or separation instru15 ment described in subparagraph (A) of section 

16 71(b)(2) shall not be considered a taxable transfer 

17 made by such individual notwithstanding any other 

18 provision of this subtitle, and such interest shall, 

19 after such transfer, be treated as a FRAME account 

20 with respect to which such spouse is the account 

21 beneficiary. 

22 ‘‘(6) TREATMENT AFTER DEATH OF ACCOUNT

23 BENEFICIARY.— 

24 ‘‘(A) TREATMENT IN CASE OF INDIVIDUAL

25 DESIGNATED BENEFICIARY.—If any individual 


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1 acquires such beneficiary’s interest in a 

2 FRAME account by reason of being the des3 ignated beneficiary of such account at the death 

4 of the account beneficiary, such FRAME ac5 count shall be treated as if such individual were 

6 the account beneficiary. 

7 ‘‘(B) OTHER CASES.— 

8 ‘‘(i) IN GENERAL.—If, by reason of 

9 the death of the account beneficiary, any 

10 person acquires the account beneficiary’s 

11 interest in a FRAME account in a case to 

12 which subparagraph (A) does not apply— 

13 ‘‘(I) such account shall cease to 

14 be a FRAME account as of the date 

15 of death, and 

16 ‘‘(II) an amount equal to the fair 

17 market value of the assets in such ac18 count on such date shall be included 

19 if such person is not the estate of 

20 such beneficiary, in such person’s 

21 gross income for the taxable year 

22 which includes such date, or if such 

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1 come for the last taxable year of such 

2 beneficiary. 

3 ‘‘(ii) DEDUCTION FOR ESTATE

4 TAXES.—An appropriate deduction shall be 

5 allowed under section 691(c) to any person 

6 (other than the decedent or the decedent’s 

7 spouse) with respect to amounts included 

8 in gross income under clause (i) by such 

9 person. 

10 ‘‘(g) REPORTS.—The Secretary may require the 

11 trustee of a FRAME account to make such reports regard12 ing such account to the Secretary and to the account bene13 ficiary with respect to contributions, distributions, and 

14 such other matters as the Secretary determines appro15 priate. The reports required by this subsection shall be 

16 filed at such time and in such manner and furnished to 

17 such individuals at such time and in such manner as may 

18 be required by the Secretary.’’. 

19 (b) DEDUCTION ALLOWED WHETHER OR NOT INDI20 VIDUAL ITEMIZES OTHER DEDUCTIONS.—Subsection (a) 

21 of section 62 of such Code is amended by inserting after 

22 paragraph (21) the following new paragraph: 

23 ‘‘(22) FRAME ACCOUNTS.—The deduction al24 lowed by section 224.’’. 


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1 (c) TAX ON EXCESS CONTRIBUTIONS.—Section 4973 

2 of such Code (relating to tax on excess contributions to 

3 certain tax-favored accounts and annuities) is amended— 

4 (1) by striking ‘‘or’’ at the end of subsection 

5 (a)(4), by inserting ‘‘or’’ at the end of subsection 

6 (a)(5), and by inserting after subsection (a)(5) the 

7 following new paragraph: 

8 ‘‘(6) a FRAME account (within the meaning of 

9 section 224(d)),’’, and 

10 (2) by adding at the end the following new sub11 section: 

12 ‘‘(h) EXCESS CONTRIBUTIONS TO FRAME AC13 COUNTS.—For purposes of this section, in the case of 

14 FRAME accounts (within the meaning of section 224(d)), 

15 the term ‘excess contribution’ means the sum of— 

16 ‘‘(1) the aggregate amount contributed for the 

17 taxable year to the accounts (other than rollover 

18 contributions described in section 224(f)(4)) which is 

19 not allowable as a deduction under section 224 for 

20 such year, and 

21 ‘‘(2) the amount determined under this sub22 section for the preceding taxable year, reduced by 

23 the sum of— 


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1 ‘‘(A) the distributions out of the accounts 

2 with respect to which additional tax was im3 posed under section 224(f)(2), and 

4 ‘‘(B) the excess (if any) of— 

5 ‘‘(i) the maximum amount allowable 

6 as a deduction under section 224(b) for 

7 the taxable year, over 

8 ‘‘(ii) the amount contributed to the 

9 accounts for the taxable year. 

10 For purposes of this subsection, any contribution 

11 which is distributed out of the FRAME account in 

12 a distribution to which section 224(f)(3) applies 

13 shall be treated as an amount not contributed.’’. 

14 (d) TAX ON PROHIBITED TRANSACTIONS.— 

15 (1) Section 4975(c) of such Code (relating to 

16 tax on prohibited transactions) is amended by add17 ing at the end the following new paragraph: 

18 ‘‘(7) SPECIAL RULE FOR FRAME ACCOUNTS.— 

19 An individual for whose benefit a FRAME account 

20 (within the meaning of section 224(d)) is established 

21 shall be exempt from the tax imposed by this section 

22 with respect to any transaction concerning such ac23 count (which would otherwise be taxable under this 

24 section) if, with respect to such transaction, the ac25 count ceases to be a FRAME account by reason of 


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1 the application of section 224(e)(2) to such ac2 count.’’. 

3 (2) Section 4975(e)(1) of such Code is amended 

4 by redesignating subparagraphs (F) and (G) as sub5 paragraphs (G) and (H), respectively, and by insert6 ing after subparagraph (E) the following new sub7 paragraph: 

8 ‘‘(F) a FRAME account described in sec9 tion 224(d),’’. 

10 (e) FAILURE TO PROVIDE REPORTS ON FRAME AC11 COUNTS.—Section 6693(a)(2) of such Code (relating to 

12 reports) is amended by redesignating subparagraphs (D) 

13 and (E) as subparagraphs (E) and (F), respectively, and 

14 by inserting after subparagraph (C) the following new sub15 paragraph: 

16 ‘‘(D) section 224(g) (relating to FRAME 

17 accounts),’’. 

18 (f) CLERICAL AMENDMENT.—The table of sections 

19 for part VII of subchapter B of chapter 1 of such Code 

20 is amended by striking the last item and inserting the fol21 lowing: 

‘‘Sec. 224. FRAME accounts. 

‘‘Sec. 225. Cross reference.’’. 

22 (g) EFFECTIVE DATE.—The amendments made by 

23 this section shall apply to taxable years beginning after 

24 the date of the enactment of this Act. 


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1 SEC. 3. FRAME CONTRIBUTION CREDIT. 

2 (a) IN GENERAL.—Subpart D of part IV of sub3 chapter A of chapter 1 of the Internal Revenue Code of 

4 1986 is amended by adding at the end the following new 

5 section: 

6 ‘‘SEC. 45S. FRAME CONTRIBUTION CREDIT. 

7 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

8 in the case of a qualified farmer (as defined in section 

9 224(c)), the FRAME contribution credit determined 

10 under this section for any taxable year is an amount equal 

11 to the applicable percentage of the taxpayer’s contribu12 tions to any FRAME account of the taxpayer. 

13 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 

14 subsection (a), the applicable percentage is— 

15 ‘‘(1) in the case of the taxable year during 

16 which the first FRAME account of the taxpayer is 

17 established, and the 2nd and 3rd taxable years 

18 thereafter, 10 percent, 

19 ‘‘(2) in the case of the 4th through 5th taxable 

20 years thereafter, 5 percent, and 

21 ‘‘(3) in the case of the 7th through 9th taxable 

22 years thereafter, 3.5 percent. 

23 ‘‘(c) LIMITATION.—Only contributions for which a 

24 deduction is allowed under section 224 shall be taken into 

25 account under this section.’’. 


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1 (b) CREDIT MADE PART OF GENERAL BUSINESS

2 CREDIT.—Subsection (b) of section 38 of such Code is 

3 amended by striking ‘‘plus’’ at the end of paragraph (35), 

4 by striking the period at the end of paragraph (36) and 

5 inserting ‘‘, plus’’, and by adding at the end the following 

6 new paragraph: 

7 ‘‘(37) the FRAME contribution credit deter8 mined under section 45S(a).’’. 

9 (c) CLERICAL AMENDMENT.—The table of sections 

10 for subpart D of part IV of subchapter A of chapter 1 

11 of such Code is amended by adding at the end the fol12 lowing new item: 

‘‘Sec. 45S. FRAME contribution credit.’’. 

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

14 this section shall apply to taxable years beginning after 

15 the date of the enactment of this Act. 

Æ 


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