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[House Report 106-658]
[From the U.S. Government Publishing Office]

106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     106-658

======================================================================

 
 PROVIDING FOR THE CONSIDERATION OF H.R. 8, THE DEATH TAX ELIMINATION 
                              ACT OF 2000

                                _______
                                

June 7, 2000.--Referred to the House Calendar and ordered to be printed

                                _______
                                

   Mr. Reynolds, from the Committee on Rules, submitted the following

                              R E P O R T

                       [To accompany H. Res. 519]

    The Committee on Rules, having had under consideration 
House Resolution 519, by a nonrecord vote, report the same to 
the House with the recommendation that the resolution be 
adopted.

                summary of provisions of the resolution

    The resolution provides for the consideration in the House 
of H.R. 8, the Death Tax Elimination Act of 2000, under a 
modified-closed rule. The rule provides one hour of debate 
equally divided and controlled by the chairman and ranking 
minority member of the Committee on Ways and Means. The rule 
waives all points of order against consideration of the bill.
    The rule provides that the amendment recommended by the 
Committee on Ways and Means now printed in the bill shall be 
considered as adopted upon adoption of the resolution. The rule 
further provides for consideration of the amendment in the 
nature of a substitute printed in this report, if offered by 
Representative Rangel or his designee, which shall be 
considered as read and shall be separately debatable for one 
hour equally divided between the proponent and an opponent.
    Finally, the rule provides one motion to recommit with or 
without instructions.
    The waiver of all points of order includes a waiver of 
clause 4(a) of rule XIII (requiring a three-day layover of the 
committee report) because the report was not filed until 
Tuesday, June 6, and the bill may be considered by the House as 
early as Thursday, June 8.

                            committee votes

    Pursuant to clause 3(b) of House rule XIII the results of 
each record vote on an amendment or motion to report, together 
with the names of those voting for and against, are printed 
below:

Rules Committee Record Vote No. 107

    Date: June 7, 2000.
    Measure: H.R. 8, The Death Tax Elimination Act of 2000.
    Motion By: Mr. Moakley.
    Summary of Motion: To make in order en bloc the amendments 
by Representative Sherman and Representative Stenholm which 
make implementation of the estate, gift, and the generation-
skipping tax repeal contingent upon certification that Congress 
and the President have taken actions to ensure that we are on 
the path to eliminate the publicly held debt by 2013 and 
protect the integrity of the Social Security and Medicare trust 
funds.
    Results: Defeated 1 to 8.
    Vote by Member: Goss--Nay; Linder--Nay; Pryce--Nay; Diaz-
Balart--Nay; Hastings--Nay; Sessions--Nay; Reynolds--Nay; 
Moakley--Yea; Dreier--Nay.

Rules Committee Record Vote No. 108

    Date: June 7, 2000.
    Measure: H.R. 8, The Death Tax Elimination Act of 2000.
    Motion By: Mr. Moakley.
    Summary of Motion: To make in order the amendment by 
Representative Doggett which denies gift tax exclusion to 
organizations established under section 527 of the Internal 
Revenue Code if they fail to meet certain reporting and 
disclosure requirements.
    Results: Defeated 1 to 8.
    Vote by Member: Goss--Nay; Linder--Nay; Pryce--Nay; Diaz-
Balart--Nay; Hastings--Nay; Sessions--Nay; Reynolds--Nay; 
Moakley--Yea; Dreier--Nay.

summary of the amendment made in order under the rule to accompany h.r. 
                8, the death tax elimination act of 2000

    Rangel: Amendment in the nature of a substitute. Provides a 
20% across-the-board reduction to estate and gift tax rates; 
increases the limit on the small business exclusion from $1.3 
million to $2 million; provides that a portion of the exclusion 
not used in the estate of the spouse first to die will be 
allowed to the estate of the other spouse; and increases 
immediately the exemption equivalent of the unified credit 
against estate and gift taxes to $1.1 million with a further 
increase to $1.2 million in 2006. Offsets include restoring the 
phaseout provisions of the unified credit repealed in the 
Taxpayer Relief Act of 1997; eliminating the valuation 
discounts except as they apply to active business assets; and 
repealing the state inheritance and estate tax deductions.
    Text of the amendment made in order under the rule:

 An Amendment To Be Offered by Representative Rangel of New York, or a 
                   Designee, Debatable For 60 Minutes

    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  (a) Short Title.--This Act may be cited as the ``Estate Tax 
Relief Act of 2000''.
  (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is 
expressed in terms of an amendment to, or repeal of, a section 
or other provision, the reference shall be considered to be 
made to a section or other provision of the Internal Revenue 
Code of 1986.

SEC. 2. 20 PERCENT REDUCTION OF ESTATE TAX RATES.

  (a) In General.--Paragraph (1) of section 2001(c) is amended 
to read as follows:
  ``(1) In General.--

``If the amount with respect to which the tentative tax is to be 
    computed is:    The tentative tax is:
  Not over $10,000..14.4% of such amount................................
  Over $10,000 but n$1,440, plus 16% of the excess of such amount over .
                    $10,000
  Over $20,000 but n$3,040, plus 17.6% of the excess of such amount over 
                    $20,000
  Over $40,000 but n$6,560, plus 19.2% of the excess of such amount over 
                    $40,000
  Over $60,000 but n$10,400, plus 20.8% of the excess of such amount ...
                    over $60,000
  Over $80,000 but n$14,560, plus 22.4% of the excess of such amount ...
                    over $80,000
  Over $100,000 but $19,040, plus 24% of the excess of such amount over 
                    $100,000
  Over $150,000 but $31,040, plus 25.6% of the excess of such amount ...
                    over $150,000
  Over $250,000 but $56,640, plus 27.2% of the excess of such amount ...
                    over $250,000
  Over $500,000 but $124,640, plus 29.6% of the excess of such amount ..
                    over $500,000
  Over $750,000 but $198,640, plus 31.2% of the excess of such amount ..
                    over $750,000
  Over $1,000,000 bu$276,640, plus 32.8% of the excess of such amount ..
                    over $1,000,000
  Over $1,250,000 bu$358,640, plus 34.4% of the excess of such amount ..
                    over $1,250,000
  Over $1,500,000 bu$444,640, plus 36% of the excess of such amount over 
                    $1,500,000
  Over $2,000,000 bu$624,640, plus 39.2% of the excess of such amount ..
                    over $2,000,000
  Over $2,500,000 bu$820,640, plus 42.4% of the excess of such amount ..
                    over $2,500,000
  Over $3,000,000...$1,032,640, plus 44% of the excess of such amount ..
                    over $3,000,000''.
  (b) Restoration of Phaseout of Unified Credit.--Paragraph (2) 
of section 2001(c) is amended by striking ``$10,000,000'' and 
all that follows and inserting ``$10,000,000. The amount of the 
increase under the preceding sentence shall not exceed the sum 
of--
                  ``(A) the applicable credit amount under 
                section 2010(c), and
                  ``(B) the excess of the amount equal to 44 
                percent of $3,000,000 over the amount of the 
                tentative tax under paragraph (1) on 
                $3,000,000.''
  (c) Effective Date.--The amendments made by this section 
shall apply to estates of decedents dying, and gifts made, 
after December 31, 2000.

SEC. 3. INCREASE IN EXEMPTION EQUIVALENT OF UNIFIED CREDIT.

  (a) In General.--The table contained in section 2010(c) 
(relating to applicable credit amount) is amended to read as 
follows:

    ``In the case of estates of decedents                 The applicable
      dying, and gifts made, during:                exclusion amount is:
          2000..........................................      $ 675,000 
          2001, 2002, 2003, 2004, and 2005..............     $1,100,000 
          2006 or thereafter............................  $1,200,000.''.

  (b) Effective Date.--The amendment made by this section shall 
apply to estates of decedents dying, and gifts made, after 
December 31, 2000.

SEC. 4. INCREASE IN ESTATE TAX BENEFIT FOR FAMILY-OWNED BUSINESS 
                    INTERESTS.

  (a) Transfer to Credit Provisions.--Section 2057 (relating to 
family-owned business interests) is hereby moved to part II of 
subchapter A of chapter 11 of such Code, inserted after section 
2010, and redesignated as section 2010A.
  (b) Increase in Credit; Surviving Spouse Allowed Unused 
Credit of Decedent.--Subsection (a) of section 2010A, as 
redesignated by subsection (a) of this section, is amended to 
read as follows:
  ``(a) Increase in United Credit.--For purposes of determining 
the unified credit under section 2010 in the case of an estate 
of a decedent to which this section applies--
          ``(1) In general.--The applicable exclusion amount 
        under section 2010(c) shall be increased (but not in 
        excess of $2,000,000) by the adjusted value of the 
        qualified family-owned business interests of the 
        decedent which are described in subsection (b)(2) and 
        for which no deduction is allowed under section 2056.
          ``(2) Treatment of unused limitation of predeceased 
        spouse.--In the case of a decedent--
                  ``(A) having no surviving spouse, but
                  ``(B) who was the surviving spouse of a 
                decedent--
                          ``(i) who died after December 31, 
                        2000, and
                          ``(ii) whose estate met the 
                        requirements of subsection (b)(1) other 
                        than subparagraph (B) thereof,
        there shall be substituted for `$2,000,000' in 
        paragraph (1) an amount equal to the excess of 
        $4,000,000 over the exclusion equivalent of the credit 
        allowed under section 2010 (as increased by this 
        section) to the estate of the decedent referred to in 
        subparagraph (B). For purposes of the preceding 
        sentence, the exclusion equivalent of the credit is 
        the amount on which a tentative tax under section 2001(c) 
        equal to such credit would be imposed.''
  (c) Conforming Amendments.--
          (1) The table of sections for part IV of subchapter A 
        of chapter 11 of such Code is amended by striking the 
        item relating to section 2057.
          (2) Paragraph (10) of section 2031(c) of such Code is 
        amended by striking ``section 2057(e)(3)'' and 
        inserting ``section 2010A(e)(3)''.
          (3) The table of sections for part II of subchapter A 
        of chapter 11 of such Code is amended by inserting 
        after the item relating to section 2010 the following 
        new item:

        ``Sec. 2010A. Family-owned business interests.''.

  (d) Effective Date.--The amendments made by this section 
shall apply to estates of decedents dying after December 31, 
2000.

SEC. 5. CREDIT FOR STATE DEATH TAXES REPLACED WITH DEDUCTION FOR SUCH 
                    TAXES.

  (a) Repeal of Credit.--Section 2011 (relating to credit for 
State death taxes) is hereby repealed.
  (b) Deduction for State Death Taxes.--Part IV of subchapter A 
of chapter 11 is amended by adding at the end the following new 
section:

``SEC. 2058. STATE DEATH TAXES.

  ``(a) Allowance of Deduction.--For purposes of the tax 
imposed by section 2001, the value of the taxable estate shall 
be determined by deducting from the value of the gross estate 
the amount of any estate, inheritance, legacy, or succession 
taxes actually paid to any State or the District of Columbia, 
in respect of any property included in the gross estate (not 
including any such taxes paid with respect to the estate of a 
person other than the decedent).
  ``(b) Period of Limitations.--The deduction allowed by this 
section shall include only such taxes as were actually paid and 
deduction therefor claimed within 4 years after the filing of 
the return required by section 6018, except that--
          ``(1) If a petition for redetermination of a 
        deficiency has been filed with the Tax Court within the 
        time prescribed in section 6213(a), then within such 4-
        year period or before the expiration of 60 days after 
        the decision of the Tax Court becomes final.
          ``(2) If, under section 6161 or 6166, an extension of 
        time has been granted for payment of the tax shown on 
        the return, or of a deficiency, then within such 4-year 
        period or before the date of the expiration of the 
        period of the extension.
          ``(3) If a claim for refund or credit of an 
        overpayment of tax imposed by this chapter has been 
        filed within the time prescribed in section 6511, then 
        within such 4-year period or before the expiration of 
        60 days from the date of mailing by certified mail or 
        registered mail by the Secretary to the taxpayer of a 
        notice of the disallowance of any part of such claim, 
        or before the expiration of 60 days after a decision by 
        any court of competent jurisdiction becomes final with 
        respect to a timely suit instituted upon such claim, 
        whichever is later.
Refund based on the deduction may (despite the provisions of 
sections 6511 and 6512) be made if claim therefor is filed 
within the period above provided. Any such refund shall be made 
without interest.''
  (c) Conforming Amendments.--
          (1) Subsection (a) of section 2012 is amended by 
        striking ``the credit for State death taxes provided by 
        section 2011 and''.
          (2) Subparagraph (A) of section 2013(c)(1) is amended 
        by striking ``2011,''.
          (3) Paragraph (2) of section 2014(b) is amended by 
        striking ``, 2011,''.
          (4) Sections 2015 and 2016 are each amended by 
        striking ``2011 or''.
          (5) Subsection (d) of section 2053 is amended to read 
        as follows:
  ``(d) Certain Foreign Death Taxes.--
          ``(1) In general.--Notwithstanding the provisions of 
        subsection (c)(1)(B) of this section, for purposes of 
        the tax imposed by section 2001, the value of the 
        taxable estate may be determined, if the executor so 
        elects before the expiration of the period of 
        limitation for assessment provided in section 6501, by 
        deducting from the value of the gross estate the amount 
        (as determined in accordance with regulations 
        prescribed by the Secretary) of any estate, succession, 
        legacy, or inheritance tax imposed by and actually paid 
        to any foreign country, in respect of any property 
        situated within such foreign country and included in 
        the gross estate of a citizen or resident of the United 
        States, upon a transfer by the decedent for public, 
        charitable, or religious uses described in section 
        2055. The determination under this paragraph of the 
        country within which property is situated shall be made 
        in accordance with the rules applicable under 
        subchapter B (sec. 2101 and following) in determining 
        whether property is situated within or without the 
        United States. Any election under this paragraph shall 
        be exercised in accordance with regulations prescribed 
        by the Secretary.
          ``(2) Condition for allowance of deduction.--No 
        deduction shall be allowed under paragraph (1) for a 
        foreign death tax specified therein unless the decrease 
        in the tax imposed by section 2001 which results from 
        the deduction provided in paragraph (1) will inure 
        solely for the benefit of the public, charitable, or 
        religious transferees described in section 2055 or 
        section 2106(a)(2). In any case where the tax imposed 
        by section 2001 is equitably apportioned among all the 
        transferees of property included in the gross estate, 
        including those described in sections 2055 and 
        2106(a)(2) (taking into account any exemptions, 
        credits, or deductions allowed by this chapter), in 
        determining such decrease, there shall be disregarded 
        any decrease in the Federal estate tax which any 
        transferees other than those described in sections 2055 
        and 2106(a)(2) are required to pay.
          ``(3) Effect on credit for foreign death taxes of 
        deduction under this subsection.--
                  ``(A) Election.--An election under this 
                subsection shall be deemed a waiver of the 
                right to claim a credit, against the Federal 
                estate tax, under a death tax convention with 
                any foreign country for any tax or portion 
                thereof in respect of which a deduction is 
                taken under this subsection.
                  ``(B) Cross reference.--

          ``See section 2014(f) for the effect of a deduction taken 
        under this paragraph on the credit for foreign death taxes.''

          (6) Subparagraph (A) of section 2056A(b)(10) is 
        amended--
                  (A) by striking ``2011,'', and
                  (B) by inserting ``2058,'' after ``2056,''.
          (7)(A) Subsection (a) of section 2102 is amended to 
        read as follows:
  ``(a) In General.--The tax imposed by section 2101 shall be 
credited with the amounts determined in accordance with 
sections 2012 and 2013 (relating to gift tax and tax on prior 
transfers).''
          (B) Section 2102 is amended by striking subsection 
        (b) and by redesignating subsection (c) as subsection 
        (b).
          (C) Section 2102(b)(5) (as redesignated by 
        subparagraph (B)) and section 2107(c)(3) are each 
        amended by striking ``2011 to 2013, inclusive,'' and 
        inserting ``2012 and 2013''.
          (8) Subsection (a) of section 2106 is amended by 
        adding at the end the following new paragraph:
          ``(4) State death taxes.--The amount which bears the 
        same ratio to the State death taxes as the value of the 
        property, as determined for purposes of this chapter, 
        upon which State death taxes were paid and which is 
        included in the gross estate under section 2103 bears 
        to the value of the total gross estate under section 
        2103. For purposes of this paragraph, the term `State 
        death taxes' means the taxes described in section 
        2011(a).''
          (9) Section 2201 is amended--
                  (A) by striking ``as defined in section 
                2011(d)'', and
                  (B) by adding at the end the following new 
                flush sentence:
``For purposes of this section, the additional estate tax is 
the difference between the tax imposed by section 2001 or 2101 
and the amount equal to 125 percent of the maximum credit 
provided by section 2011(b), as in effect before its repeal by 
the Estate Tax Relief Act of 2000.''
          (10) Paragraph (2) of section 6511(i) is amended by 
        striking ``2011(c), 2014(b),'' and inserting 
        ``2014(b)''.
          (11) Subsection (c) of section 6612 is amended by 
        striking ``section 2011(c) (relating to refunds due to 
        credit for State taxes),''.
          (12) The table of sections for part II of subchapter 
        A of chapter 11 is amended by striking the item 
        relating to section 2011.
          (13) The table of sections for part IV of subchapter 
        A of chapter 11 is amended by adding at the end the 
        following new item:

        ``Sec. 2058. State death taxes.''.

  (d) Effective Date.--The amendments made by this section 
shall apply to estates of decedents dying after December 31, 
2000.

SEC. 6. VALUATION RULES FOR CERTAIN TRANSFERS OF NONBUSINESS ASSETS; 
                    LIMITATION ON MINORITY DISCOUNTS.

  (a) In General.--Section 2031 (relating to definition of 
gross estate) is amended by redesignating subsection (d) as 
subsection (f) and by inserting after subsection (c) the 
following new subsections:
  ``(d) Valuation Rules for Certain Transfers of Nonbusiness 
Assets.--For purposes of this subtitle--
          ``(1) In general.--In the case of the transfer of any 
        interest in an entity other than an interest which is 
        actively traded (within the meaning of section 1092)--
                  ``(A) the value of any nonbusiness assets 
                held by the entity shall be determined as if 
                thetransferor had transferred such assets 
directly to the transferee (and no valuation discount shall be allowed 
with respect to such nonbusiness assets), and
                  ``(B) the nonbusiness assets shall not be 
                taken into account in determining the value of 
                the interest in the entity.
          ``(2) Nonbusiness assets.--For purposes of this 
        subsection--
                  ``(A) In general.--The term `nonbusiness 
                asset' means any asset which is not used in the 
                active conduct of 1 or more trades or 
                businesses.
                  ``(B) Exception for certain passive assets.--
                Except as provided in subparagraph (C), a 
                passive asset shall not be treated for purposes 
                of subparagraph (A) as used in the active 
                conduct of a trade or business unless--
                          ``(i) the asset is property described 
                        in paragraph (1) or (4) of section 
                        1221(a) or is a hedge with respect to 
                        such property, or
                          ``(ii) the asset is real property 
                        used in the active conduct of 1 or more 
                        real property trades or businesses 
                        (within the meaning of section 
                        469(c)(7)(C)) in which the transferor 
                        materially participates and with 
                        respect to which the transferor meets 
                        the requirements of section 
                        469(c)(7)(B)(ii).
                For purposes of clause (ii), material 
                participation shall be determined under the 
                rules of section 469(h), except that section 
                469(h)(3) shall be applied without regard to 
                the limitation to farming activity.
                  ``(C) Exception for working capital.--Any 
                asset (including a passive asset) which is held 
                as a part of the reasonably required working 
                capital needs of a trade or business shall be 
                treated as used in the active conduct of a 
                trade or business.
          ``(3) Passive asset.--For purposes of this 
        subsection, the term `passive asset' means any--
                  ``(A) cash or cash equivalents,
                  ``(B) except to the extent provided by the 
                Secretary, stock in a corporation or any other 
                equity, profits, or capital interest in any 
                entity,
                  ``(C) evidence of indebtedness, option, 
                forward or futures contract, notional principal 
                contract, or derivative,
                  ``(D) asset described in clause (iii), (iv), 
                or (v) of section 351(e)(1)(B),
                  ``(E) annuity,
                  ``(F) real property used in 1 or more real 
                property trades or businesses (as defined in 
                section 469(c)(7)(C)),
                  ``(G) asset (other than a patent, trademark, 
                or copyright) which produces royalty income,
                  ``(H) commodity,
                  ``(I) collectible (within the meaning of 
                section 401(m)), or
                  ``(J) any other asset specified in 
                regulations prescribed by the Secretary.
          ``(4) Look-thru rules.--
                  ``(A) In general.--If a nonbusiness asset of 
                an entity consists of a 10-percent interest in 
                any other entity, this subsection shall be 
                applied by disregarding the 10-percent interest 
                and by treating the entity as holding directly 
                its ratable share of the assets of the other 
                entity. This subparagraph shall be applied 
                successively to any 10-percent interest of such 
                other entity in any other entity.
                  ``(B) 10-percent interest.--The term `10-
                percent interest' means--
                          ``(i) in the case of an interest in a 
                        corporation, ownership of at least 10 
                        percent (by vote or value) of the stock 
                        in such corporation,
                          ``(ii) in the case of an interest in 
                        a partnership, ownership of at least 10 
                        percent of the capital or profits 
                        interest in the partnership, and
                          ``(iii) in any other case, ownership 
                        of at least 10 percent of the 
                        beneficial interests in the entity.
          ``(5) Coordination with subsection (b).--Subsection 
        (b) shall apply after the application of this 
        subsection.
  ``(e) Limitation on Minority Discounts.--For purposes of this 
subtitle, in the case of the transfer of an interest in an 
entity, no reduction in the amount which would otherwise be 
determined to be the value of such interest shall be allowed by 
reason of the fact that the interest does not represent control 
of such entity if the transferor and members of the family (as 
defined in section 2032A(e)(2)) of the transferor have control 
of such entity.''
  (c) Effective Date.--The amendments made by this section 
shall apply to transfers after the date of the enactment of 
this Act.

SEC. 7. TAX ON GIFTS AND BEQUESTS RECEIVED BY UNITED STATES CITIZENS 
                    AND RESIDENTS FROM EXPATRIATES.

  (a) In General.--Subtitle B (relating to estate and gift 
taxes) is amended by inserting after chapter 13 the following 
new chapter:

           ``CHAPTER 13A--GIFTS AND BEQUESTS FROM EXPATRIATES

        ``Sec. 2681. Imposition of tax.

``SEC. 2681. IMPOSITION OF TAX.

  ``(a) In General.--If, during any calendar year, any United 
States citizen or resident receives any covered gift or 
bequest, there is hereby imposed a tax equal to the product 
of--
          ``(1) the highest rate of tax specified in the table 
        contained in section 2001(c) as in effect on the date 
        of such receipt, and
          ``(2) the value of such covered gift or bequest.
  ``(b) Tax To Be Paid by Recipient.--The tax imposed by 
subsection (a) on any covered gift or bequest shall be paid by 
the person receiving such gift or bequest.
  ``(c) Exception for Certain Gifts.--Subsection (a) shall 
apply only to the extent that the covered gifts and bequests 
received during the calendar year exceed $10,000.
  ``(d) Tax Reduced By Foreign Gift or Estate Tax.--The tax 
imposed by subsection (a) on any covered gift or bequest shall 
be reduced by the amount of any gift or estate tax paid to a 
foreign country with respect to such covered gift or bequest.
  ``(e) Covered Gift or Bequest.--
          ``(1) In general.--For purposes of this chapter, the 
        term `covered gift or bequest' means--
                  ``(A) any property acquired by gift directly 
                or indirectly from an individual who, at the 
                time of such acquisition, was an expatriate, 
                and
                  ``(B) any property acquired by bequest, 
                devise, or inheritance directly or indirectly 
                from an individual who, at the time of death, 
                was an expatriate.
          ``(2) Exceptions for transfers otherwise subject to 
        estate or gift tax.--Such term shall not include--
                  ``(A) any property shown on a timely filed 
                return of tax imposed by chapter 12 which is a 
                taxable gift by the expatriate, and
                  ``(B) any property shown on a timely filed 
                return of tax imposed by chapter 11 of the 
                estate of the expatriate.
          ``(3) Transfers in trust.--
                  ``(A) In general.--Any covered gift or 
                bequest which is made in trust shall be treated 
                as made to the beneficiaries of such trust in 
                proportion to their respective interests in 
                such trust.
                  ``(B) Determination of beneficiaries' 
                interest in trust.--For purposes of 
                subparagraph (A), a beneficiary's interest in a 
                trust shall be based upon all relevant facts 
                and circumstances, including the terms of the 
                trust instrument and any letter of wishes or 
                similar document, historical patterns of trust 
                distributions, and the existence of and 
                functions performed by a trust protector or any 
                similar advisor.
  ``(f) Expatriate.--For purposes of this section, the term 
`expatriate' means--
          ``(1) any United States citizen who relinquishes his 
        citizenship, and
          ``(2) any long-term resident of the United States 
        who--
                  ``(A) ceases to be a lawful permanent 
                resident of the United States (within the 
                meaning of section 7701(b)(6)), or
                  ``(B) commences to be treated as a resident 
                of a foreign country under the provisions of a 
                tax treaty between the United States and the 
                foreign country and who does not waive the 
                benefits of such treaty applicable to residents 
                of the foreign country.''
  (b) Clerical Amendment.--The table of chapters for subtitle B 
of such Code is amended by inserting after the item relating to 
chapter 13 the following new item:

        ``Chapter 13A. Gifts and bequests from expatriates.''.

  (c) Effective Date.--The amendments made by this section 
shall apply to covered gifts and bequests (as defined in 
section 2681 of such Code, as added by this section) received 
on or after May 25, 2000.

                                  
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