I

107TH CONGRESS

1ST SESSION H. R. 8

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

gift taxes over a 10-year period, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 14, 2001

Ms. DUNN (for herself, Mr. TANNER, Mr. COX, Mr. ABERCROMBIE, Mr.

BROWN of South Carolina, Mr. CULBERSON, Mr. EVERETT, Mr. GOODE,

Mr. COOKSEY, Mr. BACHUS, Mr. PENCE, Mr. LAHOOD, Mr. SHADEGG,

Mr. DUNCAN, Mr. WHITFIELD, Mr. SAXTON, Mr. BONILLA, Mrs. ROUKEMA, Mrs. BIGGERT, Mr. FERGUSON, Mr. GILCHREST, Mr. RADANOVICH, Mr. SHAW, Mr. MALONEY of Connecticut, Mr. SAM JOHNSON of

Texas, Mr. TANCREDO, Mr. BOUCHER, Mr. TRAFICANT, Mr. KELLER,

Mr. BURTON of Indiana, Mr. SHOWS, Mr. GARY MILLER of California,

Mr. ROGERS of Michigan, Mr. CUNNINGHAM, Mr. ROYCE, Mr. GREENWOOD, Mr. SMITH of Texas, Mr. FOLEY, Mr. HAYWORTH, Mr. WELLER,

Mr. KIRK, Mr. YOUNG of Alaska, Mr. BAIRD, Mr. WAMP, Mr. DOOLEY

of California, Mr. EHLERS, Mr. CANTOR, Mr. POMBO, Mr. SIMMONS, Mr.

CAMP, Mr. MCINTYRE, Mr. HAYES, Mr. NETHERCUTT, Ms. HART, Mr.

BARTON of Texas, Mrs. WILSON, Mr. HALL of Texas, Mr. HYDE, Mr.

WOLF, Mr. SUNUNU, Mr. GRUCCI, Mr. CALLAHAN, Mr. RYAN of Wisconsin, Mrs. KELLY, Mr. LARGENT, Mr. DEAL of Georgia, Mr. CANNON,

Mr. ADERHOLT, Mr. CRANE, Ms. GRANGER, Mr. BLUNT, Mr. GREEN of

Wisconsin, Mr. HERGER, Mr. ENGLISH, Mr. LOBIONDO, Mr. JENKINS,

Mr. PITTS, Mr. LEWIS of California, Mr. OXLEY, Mr. RILEY, Mr.

CHAMBLISS, Mr. WATTS of Oklahoma, Mrs. NORTHUP, Mr. OSE, Mr.

SMITH of New Jersey, Mr. LEWIS of Kentucky, Mr. LUCAS of Oklahoma,

Mr. SIMPSON, Mr. PETERSON of Pennsylvania, Mr. MCCRERY, Mrs.

BONO, Mr. CALVERT, Mr. NEY, Mr. DOOLITTLE, Mr. HUNTER, Mr.

SKEEN, Mr. HOEKSTRA, Mr. LATOURETTE, Mr. SHIMKUS, Mr. FLETCHER, Mrs. CAPITO, Mr. EHRLICH, Mr. BISHOP, Mr. ROHRABACHER, Mr.

BOEHLERT, Mr. RYUN of Kansas, Mr. CRAMER, Mrs. EMERSON, Mr.

SCHAFFER, Mr. SESSIONS, Mr. ISAKSON, Ms. ROS-LEHTINEN, Mr. BURR

of North Carolina, Mr. BARR of Georgia, Mr. HASTINGS of Washington,

Mr. MILLER of Florida, Mr. HORN, Mr. RAMSTAD, Mr. MCHUGH, Mr.

WALSH, Mr. CRENSHAW, Mr. NORWOOD, Mr. COBLE, Mr. NUSSLE, Mr.

PLATTS, Mr. JONES of North Carolina, Mr. GEKAS, Mr. ROGERS of Kentucky, Mr. BASS, Mr. TERRY, Mr. SCHROCK, Mr. GOODLATTE, Mr.

TOOMEY, Mr. WICKER, Mr. PORTMAN, Mr. TAUZIN, Mr. HANSEN, Mr.
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ARMEY, Mr. HILLEARY, Mr. MCINNIS, Mr. COMBEST, Mr. DELAY, Mrs.

CUBIN, Mr. LINDER, Mr. MICA, Mrs. MCCARTHY of New York, Mr.

FRELINGHUYSEN, Mr. BERRY, Mr. JOHN, Mr. CONDIT, Mr. SANDLIN,

Mr. SWEENEY, Mr. KNOLLENBERG, Mr. PHELPS, Mr. CARSON of Oklahoma, Mr. GANSKE, Mr. THUNE, Mr. KERNS, Ms. PRYCE of Ohio, Mr.

STUMP, Mr. SENSENBRENNER, Mr. OTTER, Mr. RAHALL, Mr. SISISKY,

Mr. HULSHOF, Mr. LUCAS of Kentucky, Mr. WALDEN of Oregon, Mr.

WYNN, Mr. FORD, Mr. REYNOLDS, Mr. BRADY of Texas, Mr. PAUL, Mr.

GORDON, Mrs. JO ANN DAVIS of Virginia, Mr. COSTELLO, Mr. GILLMOR,

Mr. WATKINS, Mr. PUTNAM, Mr. GIBBONS, Mr. AKIN, Mr. ISSA, Mr.

FARR of California, Mr. BARCIA, Mrs. MYRICK, Mr. BARTLETT of Maryland, Mr. CHABOT, Mr. KINGSTON, Mr. HEFLEY, Mr. GALLEGLY, Mr.

GILMAN, Mr. GOSS, Mr. WELDON of Florida, Mr. DEMINT, Mr. SOUDER,

Mr. FOSSELLA, Mr. KOLBE, Mr. BILIRAKIS, Mr. LATHAM, Mr. TIAHRT,

Mr. TAYLOR of North Carolina, Mr. SCARBOROUGH, Mr. VITTER, Mr.

HOSTETTLER, Mr. GRAHAM, Mr. SPENCE, Mr. TOM DAVIS of Virginia,

Mr. BOEHNER, Mr. OSBORNE, Mr. BRYANT, Mr. DREIER, Mr. PICKERING, Mr. THORNBERRY, Mr. WELDON of Pennsylvania, Mr. BAKER,

Mr. KING, Mr. HUTCHINSON, Mr. MCKEON, Mr. MANZULLO, Mr. SMITH

of Washington, Mr. LAMPSON, and Mrs. CLAYTON) 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 phaseout

the estate and gift taxes over a 10-year period, 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 ‘‘Death Tax Elimination

5 Act’’.
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1 TITLE I—REPEAL OF ESTATE,

2 GIFT, AND GENERATION-SKIP3 PING TAXES.

4 SEC. 101. PHASEOUT OF ESTATE AND GIFT TAXES.

5 (a) REPEAL OF ESTATE AND GIFT TAXES.—Subtitle

6 B of the Internal Revenue Code of 1986 (relating to estate

7 and gift taxes) is repealed effective with respect to estates

8 of decedents dying, and gifts made, after December 31,

9 2010.

10 (b) PHASEOUT OF TAX.—Subsection (c) of section

11 2001 of such Code (relating to imposition and rate of tax)

12 is amended by adding at the end the following new para13 graph:

14 ‘‘(3) PHASEOUT OF TAX.—In the case of es15 tates of decedents dying, and gifts made, during any

16 calendar year after 2000 and before 2011—

17 ‘‘(A) IN GENERAL.—The tentative tax

18 under this subsection shall be determined by

19 using a table prescribed by the Secretary (in

20 lieu of using the table contained in paragraph

21 (1)) which is the same as such table; except

22 that—

23 ‘‘(i) each of the rates of tax shall be

24 reduced (but not below zero) by the num-
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1 ber of percentage points determined under

2 subparagraph (B), and

3 ‘‘(ii) the amounts setting forth the tax

4 shall be adjusted to the extent necessary to

5 reflect the adjustments under clause (i).

6 ‘‘(B) PERCENTAGE POINTS OF REDUC7 TION.—

The number of

‘‘For calendar year: percentage points is:

2001 ......................................................................................... 5

2002 ......................................................................................... 10

2003 ......................................................................................... 15

2004 ......................................................................................... 20

2005 ......................................................................................... 25

2006......................................................................................... 30

2007 ......................................................................................... 35

2008 ......................................................................................... 40

2009 ......................................................................................... 45

2010 ......................................................................................... 50.

8 ‘‘(C) COORDINATION WITH PARAGRAPH

9 (2).—Paragraph (2) shall be applied by reduc10 ing the 55 percent percentage contained therein

11 by the number of percentage points determined

12 for such calendar year under subparagraph (B).

13 ‘‘(D) COORDINATION WITH CREDIT FOR

14 STATE DEATH TAXES.—Rules similar to the

15 rules of subparagraph (A) shall apply to the

16 table contained in section 2011(b) except that

17 the number of percentage points referred to in

18 subparagraph (A)(i) shall be determined under

19 the following table:
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The number of

‘‘For calendar year: percentage points is:

2001 ......................................................................................... 11⁄2

2002 ......................................................................................... 3

2003 ......................................................................................... 41⁄2

2004 ......................................................................................... 6

2005 ......................................................................................... 71⁄2

2006......................................................................................... 9

2007 ......................................................................................... 101⁄2

2008 ......................................................................................... 12

2009 ......................................................................................... 131⁄2

2010 ......................................................................................... 15.’’

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

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

3 gifts made, after December 31, 2000.

4 TITLE II—INCREASE IN UNIFIED

5 ESTATE AND GIFT TAX CREDIT.

6 SEC. 201. INCREASE IN UNIFIED ESTATE AND GIFT TAX

7 CREDIT.

8 (a) IN GENERAL.—The table in subsection (c) of sec9 tion 2010 of the Internal Revenue Code of 1986 (relating

10 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:

2001 or thereafter ................................................. $1,300,000

11 (b) EFFECTIVE DATE.—The amendment made by

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

13 gifts made, after December 31, 2000.

14 SEC. 202. REPEAL OF ESTATE TAX BENEFIT FOR FAMILY15 OWNED BUSINESS INTERESTS.

16 (a) IN GENERAL.—Section 2057 of the Internal Rev17 enue Code of 1986 (relating to family-owned business in18 terests) is hereby repealed.
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1 (b) CONFORMING AMENDMENTS.—

2 (1) Paragraph (10) of section 2031(c) of such

3 Code is amended by inserting ‘‘(as in effect on the

4 day before the date of the enactment of the Death

5 Tax Elimination Act)’’ before the period.

6 (2) The table of sections for part IV of sub7 chapter A of chapter 11 of such Code is amended by

8 striking the item relating to section 2057.

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

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

11 gifts made, after December 31, 2000.

12 TITLE III—MODIFICATIONS OF

13 GENERATION-SKIPPING

14 TRANSFER TAX

15 SEC. 301. DEEMED ALLOCATION OF GST EXEMPTION TO

16 LIFETIME TRANSFERS TO TRUSTS; RETRO17 ACTIVE ALLOCATIONS.

18 (a) IN GENERAL.—Section 2632 of the Internal Rev19 enue Code of 1986 (relating to special rules for allocation

20 of GST exemption) is amended by redesignating sub21 section (c) as subsection (e) and by inserting after sub22 section (b) the following new subsections:

23 ‘‘(c) DEEMED ALLOCATION TO CERTAIN LIFETIME

24 TRANSFERS TO GST TRUSTS.—
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1 ‘‘(1) IN GENERAL.—If any individual makes an

2 indirect skip during such individual’s lifetime, any

3 unused portion of such individual’s GST exemption

4 shall be allocated to the property transferred to the

5 extent necessary to make the inclusion ratio for such

6 property zero. If the amount of the indirect skip ex7 ceeds such unused portion, the entire unused portion

8 shall be allocated to the property transferred.

9 ‘‘(2) UNUSED PORTION.—For purposes of para10 graph (1), the unused portion of an individual’s

11 GST exemption is that portion of such exemption

12 which has not previously been—

13 ‘‘(A) allocated by such individual,

14 ‘‘(B) treated as allocated under subsection

15 (b) with respect to a direct skip occurring dur16 ing or before the calendar year in which the in17 direct skip is made, or

18 ‘‘(C) treated as allocated under paragraph

19 (1) with respect to a prior indirect skip.

20 ‘‘(3) DEFINITIONS.—

21 ‘‘(A) INDIRECT SKIP.—For purposes of

22 this subsection, the term ‘indirect skip’ means

23 any transfer of property (other than a direct

24 skip) subject to the tax imposed by chapter 12

25 made to a GST trust.
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1 ‘‘(B) GST TRUST.—The term ‘GST trust’

2 means a trust that could have a generation3 skipping transfer with respect to the transferor

4 unless—

5 ‘‘(i) the trust instrument provides that

6 more than 25 percent of the trust corpus

7 must be distributed to or may be with8 drawn by one or more individuals who are

9 non-skip persons—

10 ‘‘(I) before the date that the indi11 vidual attains age 46,

12 ‘‘(II) on or before one or more

13 dates specified in the trust instrument

14 that will occur before the date that

15 such individual attains age 46, or

16 ‘‘(III) upon the occurrence of an

17 event that, in accordance with regula18 tions prescribed by the Secretary, may

19 reasonably be expected to occur before

20 the date that such individual attains

21 age 46;

22 ‘‘(ii) the trust instrument provides

23 that more than 25 percent of the trust cor24 pus must be distributed to or may be with25 drawn by one or more individuals who are
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1 non-skip persons and who are living on the

2 date of death of another person identified

3 in the instrument (by name or by class)

4 who is more than 10 years older than such

5 individuals;

6 ‘‘(iii) the trust instrument provides

7 that, if one or more individuals who are

8 non-skip persons die on or before a date or

9 event described in clause (i) or (ii), more

10 than 25 percent of the trust corpus either

11 must be distributed to the estate or estates

12 of one or more of such individuals or is

13 subject to a general power of appointment

14 exercisable by one or more of such individ15 uals;

16 ‘‘(iv) the trust is a trust any portion

17 of which would be included in the gross es18 tate of a non-skip person (other than the

19 transferor) if such person died immediately

20 after the transfer;

21 ‘‘(v) the trust is a charitable lead an22 nuity trust (within the meaning of section

23 2642(e)(3)(A)) or a charitable remainder

24 annuity trust or a charitable remainder
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1 unitrust (within the meaning of section

2 664(d)); or

3 ‘‘(vi) the trust is a trust with respect

4 to which a deduction was allowed under

5 section 2522 for the amount of an interest

6 in the form of the right to receive annual

7 payments of a fixed percentage of the net

8 fair market value of the trust property (de9 termined yearly) and which is required to

10 pay principal to a non-skip person if such

11 person is alive when the yearly payments

12 for which the deduction was allowed termi13 nate.

14 For purposes of this subparagraph, the value of

15 transferred property shall not be considered to

16 be includible in the gross estate of a non-skip

17 person or subject to a right of withdrawal by

18 reason of such person holding a right to with19 draw so much of such property as does not ex20 ceed the amount referred to in section 2503(b)

21 with respect to any transferor, and it shall be

22 assumed that powers of appointment held by

23 non-skip persons will not be exercised.

24 ‘‘(4) AUTOMATIC ALLOCATIONS TO CERTAIN

25 GST TRUSTS.—For purposes of this subsection, an
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1 indirect skip to which section 2642(f ) applies shall

2 be deemed to have been made only at the close of

3 the estate tax inclusion period. The fair market

4 value of such transfer shall be the fair market value

5 of the trust property at the close of the estate tax

6 inclusion period.

7 ‘‘(5) APPLICABILITY AND EFFECT.—

8 ‘‘(A) IN GENERAL.—An individual—

9 ‘‘(i) may elect to have this subsection

10 not apply to—

11 ‘‘(I) an indirect skip, or

12 ‘‘(II) any or all transfers made

13 by such individual to a particular

14 trust, and

15 ‘‘(ii) may elect to treat any trust as a

16 GST trust for purposes of this subsection

17 with respect to any or all transfers made

18 by such individual to such trust.

19 ‘‘(B) ELECTIONS.—

20 ‘‘(i) ELECTIONS WITH RESPECT TO

21 INDIRECT SKIPS.—An election under sub22 paragraph (A)(i)(I) shall be deemed to be

23 timely if filed on a timely filed gift tax re24 turn for the calendar year in which the

25 transfer was made or deemed to have been
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1 made pursuant to paragraph (4) or on

2 such later date or dates as may be pre3 scribed by the Secretary.

4 ‘‘(ii) OTHER ELECTIONS.—An election

5 under clause (i)(II) or (ii) of subparagraph

6 (A) may be made on a timely filed gift tax

7 return for the calendar year for which the

8 election is to become effective.

9 ‘‘(d) RETROACTIVE ALLOCATIONS.—

10 ‘‘(1) IN GENERAL.—If—

11 ‘‘(A) a non-skip person has an interest or

12 a future interest in a trust to which any trans13 fer has been made,

14 ‘‘(B) such person—

15 ‘‘(i) is a lineal descendant of a grand16 parent of the transferor or of a grand17 parent of the transferor’s spouse or former

18 spouse, and

19 ‘‘(ii) is assigned to a generation below

20 the generation assignment of the trans21 feror, and

22 ‘‘(C) such person predeceases the trans23 feror,

24 then the transferor may make an allocation of any

25 of such transferor’s unused GST exemption to any
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1 previous transfer or transfers to the trust on a

2 chronological basis.

3 ‘‘(2) SPECIAL RULES.—If the allocation under

4 paragraph (1) by the transferor is made on a gift

5 tax return filed on or before the date prescribed by

6 section 6075(b) for gifts made within the calendar

7 year within which the non-skip person’s death oc8 curred—

9 ‘‘(A) the value of such transfer or trans10 fers for purposes of section 2642(a) shall be de11 termined as if such allocation had been made

12 on a timely filed gift tax return for each cal13 endar year within which each transfer was

14 made,

15 ‘‘(B) such allocation shall be effective im16 mediately before such death, and

17 ‘‘(C) the amount of the transferor’s unused

18 GST exemption available to be allocated shall

19 be determined immediately before such death.

20 ‘‘(3) FUTURE INTEREST.—For purposes of this

21 subsection, a person has a future interest in a trust

22 if the trust may permit income or corpus to be paid

23 to such person on a date or dates in the future.’’.

24 (b) CONFORMING AMENDMENT.—Paragraph (2) of

25 section 2632(b) of such Code is amended by striking ‘‘with
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1 respect to a direct skip’’ and inserting ‘‘or subsection

2 (c)(1)’’.

3 (c) EFFECTIVE DATES.—

4 (1) DEEMED ALLOCATION.—Section 2632(c) of

5 the Internal Revenue Code of 1986 (as added by

6 subsection (a)), and the amendment made by sub7 section (b), shall apply to transfers subject to chap8 ter 11 or 12 made after December 31, 1999, and to

9 estate tax inclusion periods ending after December

10 31, 1999.

11 (2) RETROACTIVE ALLOCATIONS.—Section

12 2632(d) of the Internal Revenue Code of 1986 (as

13 added by subsection (a)) shall apply to deaths of

14 non-skip persons occurring after December 31,

15 1999.

16 SEC. 302. SEVERING OF TRUSTS.

17 (a) IN GENERAL.—Subsection (a) of section 2642 of

18 the Internal Revenue Code of 1986 (relating to inclusion

19 ratio) is amended by adding at the end the following new

20 paragraph:

21 ‘‘(3) SEVERING OF TRUSTS.—

22 ‘‘(A) IN GENERAL.—If a trust is severed in

23 a qualified severance, the trusts resulting from

24 such severance shall be treated as separate

25 trusts thereafter for purposes of this chapter.
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1 ‘‘(B) QUALIFIED SEVERANCE.—For pur2 poses of subparagraph (A)—

3 ‘‘(i) IN GENERAL.—The term ‘quali4 fied severance’ means the division of a sin5 gle trust and the creation (by any means

6 available under the governing instrument

7 or under local law) of two or more trusts

8 if—

9 ‘‘(I) the single trust was divided

10 on a fractional basis, and

11 ‘‘(II) the terms of the new trusts,

12 in the aggregate, provide for the same

13 succession of interests of beneficiaries

14 as are provided in the original trust.

15 ‘‘(ii) TRUSTS WITH INCLUSION RATIO

16 GREATER THAN ZERO.—If a trust has an

17 inclusion ratio of greater than zero and

18 less than 1, a severance is a qualified sev19 erance only if the single trust is divided

20 into two trusts, one of which receives a

21 fractional share of the total value of all

22 trust assets equal to the applicable fraction

23 of the single trust immediately before the

24 severance. In such case, the trust receiving

25 such fractional share shall have an inclu-
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1 sion ratio of zero and the other trust shall

2 have an inclusion ratio of 1.

3 ‘‘(iii) REGULATIONS.—The term

4 ‘qualified severance’ includes any other

5 severance permitted under regulations pre6 scribed by the Secretary.

7 ‘‘(C) TIMING AND MANNER OF

8 SEVERANCES.—A severance pursuant to this

9 paragraph may be made at any time. The Sec10 retary shall prescribe by forms or regulations

11 the manner in which the qualified severance

12 shall be reported to the Secretary.’’.

13 (b) EFFECTIVE DATE.—The amendment made by

14 this section shall apply to severances after December 31,

15 1999.

16 SEC. 303. MODIFICATION OF CERTAIN VALUATION RULES.

17 (a) GIFTS FOR WHICH GIFT TAX RETURN FILED OR

18 DEEMED ALLOCATION MADE.—Paragraph (1) of section

19 2642(b) of such Code (relating to valuation rules, etc.)

20 is amended to read as follows:

21 ‘‘(1) GIFTS FOR WHICH GIFT TAX RETURN

22 FILED OR DEEMED ALLOCATION MADE.—If the allo23 cation of the GST exemption to any transfers of

24 property is made on a gift tax return filed on or be25 fore the date prescribed by section 6075(b) for such
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1 transfer or is deemed to be made under section 2632

2 (b)(1) or (c)(1)—

3 ‘‘(A) the value of such property for pur4 poses of subsection (a) shall be its value as fi5 nally determined for purposes of chapter 12

6 (within the meaning of section 2001(f )(2)), or,

7 in the case of an allocation deemed to have been

8 made at the close of an estate tax inclusion pe9 riod, its value at the time of the close of the es10 tate tax inclusion period, and

11 ‘‘(B) such allocation shall be effective on

12 and after the date of such transfer, or, in the

13 case of an allocation deemed to have been made

14 at the close of an estate tax inclusion period, on

15 and after the close of such estate tax inclusion

16 period.’’.

17 (b) TRANSFERS AT DEATH.—Subparagraph (A) of

18 section 2642(b)(2) of such Code is amended to read as

19 follows:

20 ‘‘(A) TRANSFERS AT DEATH.—If property

21 is transferred as a result of the death of the

22 transferor, the value of such property for pur23 poses of subsection (a) shall be its value as fi24 nally determined for purposes of chapter 11; ex25 cept that, if the requirements prescribed by the
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1 Secretary respecting allocation of post-death

2 changes in value are not met, the value of such

3 property shall be determined as of the time of

4 the distribution concerned.’’.

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

6 this section shall apply to transfers subject to chapter 11

7 or 12 of the Internal Revenue Code of 1986 made after

8 December 31, 1999.

9 SEC. 304. RELIEF PROVISIONS.

10 (a) IN GENERAL.—Section 2642 of such Code is

11 amended by adding at the end the following new sub12 section:

13 ‘‘(g) RELIEF PROVISIONS.—

14 ‘‘(1) RELIEF FROM LATE ELECTIONS.—

15 ‘‘(A) IN GENERAL.—The Secretary shall by

16 regulation prescribe such circumstances and

17 procedures under which extensions of time will

18 be granted to make—

19 ‘‘(i) an allocation of GST exemption

20 described in paragraph (1) or (2) of sub21 section (b), and

22 ‘‘(ii) an election under subsection

23 (b)(3) or (c)(5) of section 2632.

24 Such regulations shall include procedures for

25 requesting comparable relief with respect to
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1 transfers made before the date of the enactment

2 of this paragraph.

3 ‘‘(B) BASIS FOR DETERMINATIONS.—In

4 determining whether to grant relief under this

5 paragraph, the Secretary shall take into ac6 count all relevant circumstances, including evi7 dence of intent contained in the trust instru8 ment or instrument of transfer and such other

9 factors as the Secretary deems relevant. For

10 purposes of determining whether to grant relief

11 under this paragraph, the time for making the

12 allocation (or election) shall be treated as if not

13 expressly prescribed by statute.

14 ‘‘(2) SUBSTANTIAL COMPLIANCE.—An alloca15 tion of GST exemption under section 2632 that

16 demonstrates an intent to have the lowest possible

17 inclusion ratio with respect to a transfer or a trust

18 shall be deemed to be an allocation of so much of

19 the transferor’s unused GST exemption as produces

20 the lowest possible inclusion ratio. In determining

21 whether there has been substantial compliance, all

22 relevant circumstances shall be taken into account,

23 including evidence of intent contained in the trust

24 instrument or instrument of transfer and such other

25 factors as the Secretary deems relevant.’’.
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1 (b) EFFECTIVE DATES.—

2 (1) RELIEF FROM LATE ELECTIONS.—Section

3 2642(g)(1) of the Internal Revenue Code of 1986

4 (as added by subsection (a)) shall apply to requests

5 pending on, or filed after, December 31, 1999.

6 (2) SUBSTANTIAL COMPLIANCE.—Section

7 2642(g)(2) of such Code (as so added) shall apply

8 to transfers subject to chapter 11 or 12 of the Inter9 nal Revenue Code of 1986 made after December 31,

10 1999. No implication is intended with respect to the

11 availability of relief from late elections or the appli12 cation of a rule of substantial compliance on or be13 fore such date.

14 TITLE IV—EXTENSION OF TIME

15 FOR PAYMENT OF ESTATE TAX

16 SEC. 401. INCREASE IN NUMBER OF ALLOWABLE PARTNERS

17 AND SHAREHOLDERS IN CLOSELY HELD

18 BUSINESSES.

19 (a) IN GENERAL.—Paragraphs (1)(B)(ii), (1)(C)(ii),

20 and (9)(B)(iii)(I) of section 6166(b) of the Internal Rev21 enue Code of 1986 (relating to definitions and special

22 rules) are each amended by striking ‘‘15’’ and inserting

23 ‘‘75’’.
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1 (b) EFFECTIVE DATE.—The amendments made by

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

3 gifts made, after December 31, 2000.

Æ