I 

117TH CONGRESS 

1ST SESSION H. R. 2286 

To amend the Internal Revenue Code of 1986 to treat property transferred 

by gift or at death as sold for fair market value, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 29, 2021 

Mr. PASCRELL 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 treat property transferred by gift or at death as sold for fair 

market value, 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. DEEMED REALIZATION OF CAPITAL GAINS AT 

4 TIME OF GIFT OR DEATH. 

5 (a) TREATMENT AS SALE.— 

6 (1) IN GENERAL.—Part IV of subchapter P of 

7 chapter 1 of the Internal Revenue Code of 1986 is 

8 amended by adding at the end the following new sec9 tion: 


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1 ‘‘SEC. 1261. GAINS FROM CERTAIN PROPERTY TRANS2 FERRED BY GIFT OR UPON DEATH. 

3 ‘‘(a) IN GENERAL.—Any property which is trans4 ferred by gift or at death shall be treated as sold for its 

5 fair market value on the date of such gift or death. 

6 ‘‘(b) EXCEPTIONS.— 

7 ‘‘(1) SPOUSE OR SURVIVING SPOUSE.—This sec8 tion shall not apply to a transfer of property to the 

9 transferor’s spouse or surviving spouse if such 

10 spouse or surviving spouse is a citizen of the United 

11 States. 

12 ‘‘(2) CERTAIN TANGIBLE PERSONAL PROP13 ERTY.—In the case of tangible personal property, 

14 this section shall apply only to the following: 

15 ‘‘(A) Property held in connection with a 

16 trade or business. 

17 ‘‘(B) Property held for investment. 

18 ‘‘(C) Collectibles (as defined in section 

19 408(m) (determined without regard to para20 graph (3) thereof)). 

21 ‘‘(3) CHARITABLE CONTRIBUTIONS.—This sec22 tion shall not apply to any transfer to an organiza23 tion described in section 170(c). 

24 ‘‘(c) SPECIAL RULES FOR TRUSTS.— 

25 ‘‘(1) CERTAIN GRANTOR TRUSTS.—In the case 

26 of any property which— 


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1 ‘‘(A) is held in a trust of which the grantor 

2 or another person is treated as the owner under 

3 subpart E of part I of subchapter J of chapter 

4 1, and 

5 ‘‘(B) is includible in the gross estate of the 

6 grantor or such other person under chapter 11, 

7 such property shall be treated as transferred under 

8 subsection (a) when the grantor or such other per9 son ceases to be treated as the owner of such prop10 erty, or such property ceases to be includible in the 

11 gross estate of the grantor or such other person (in12 cluding by reason of the death of the grantor or 

13 such other person, or the distribution of such prop14 erty to a person other than the grantor or such 

15 other person). 

16 ‘‘(2) OTHER TRUSTS.— In the case of any 

17 property held in trust and not described in para18 graph (1), such property shall be treated as trans19 ferred under subsection (a) upon the transfer of 

20 such property to a trust. 

21 ‘‘(3) TRANSFERS FROM AND MODIFICATIONS OF

22 TRUSTS.—Any modification of the direct or indirect 

23 beneficiaries of a trust (or the rights of the bene24 ficiaries to trust assets) or any transfer or distribu25 tion of trust assets (including to another trust) shall 


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1 be treated as a transfer described in subsection (a), 

2 unless the Secretary determines that any such trans3 fer or modification is of a type which does not have 

4 the potential for tax avoidance. 

5 ‘‘(4) DYNASTY TRUSTS.— 

6 ‘‘(A) IN GENERAL.—Any property that is 

7 continuously held in trust and is not subject to 

8 subsection (a) for a period of 30 years shall be 

9 treated as transferred pursuant to subsection 

10 (a) at the end of such 30 year period. 

11 ‘‘(B) PROPERTY HELD IN TRUST ON THE

12 EFFECTIVE DATE.—Any property held in trust 

13 on January 1, 2022, that has been continuously 

14 held in trust for more than 30 years as of such 

15 date shall be treated as transferred pursuant to 

16 subsection (a) on such date. 

17 ‘‘(C) CERTAIN GRANTOR TRUSTS AND

18 QUALIFYING SPOUSAL TRUSTS.—For purposes 

19 of this paragraph, property shall not be treated 

20 as held in trust during any period when such 

21 property is held by a trust described in para22 graphs (1)(A) and (1)(B), or when such prop23 erty is held by a qualifying spousal trust. 

24 ‘‘(5) QUALIFYING SPOUSAL TRUST.— 


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1 ‘‘(A) IN GENERAL.—Paragraphs (1), (2), 

2 (3), and (4) shall not apply in the case of a 

3 qualifying spousal trust, and the property of 

4 such trust shall be treated as transferred under 

5 subsection (a)— 

6 ‘‘(i) upon the death of the spousal 

7 beneficiary, 

8 ‘‘(ii) upon the distribution of such 

9 property from such trust to any person 

10 other than the spousal beneficiary who is a 

11 citizen of the United States, or 

12 ‘‘(iii) at such time such property 

13 ceases to be held by a qualifying spousal 

14 trust. 

15 ‘‘(B) QUALIFYING SPOUSAL TRUST.—For 

16 purposes of this section, a trust is a qualifying 

17 spousal trust if— 

18 ‘‘(i) such trust is a qualified domestic 

19 trust (as defined in section 2056A), 

20 ‘‘(ii) the sole current income bene21 ficiary of such trust is the spouse or sur22 viving spouse of the transferor of property 

23 to such trust, and 

24 ‘‘(iii) such transferor (during the life 

25 of such transferor) or such spouse or surVerDate Sep 11 2014 01:36 May 26, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2286.IH H2286

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1 viving spouse has the power to appoint 

2 over the entire trust. 

3 ‘‘(d) EXCLUSION OF CERTAIN GIFTS.—In the case 

4 of gifts made to any individual during the taxable year, 

5 so much of the dollar amount of such gifts to such indi6 vidual as does not exceed the amount in effect for the cal7 endar year under section 2503(b) in which the taxable 

8 year begins shall not be taken into account under sub9 section (a) for such taxable year. 

10 ‘‘(e) REGULATIONS.—The Secretary shall prescribe 

11 such regulations as may be necessary to prevent the avoid12 ance of the purposes of this section.’’. 

13 (2) CLERICAL AMENDMENT.—The table of sec14 tions for part IV of subchapter P of chapter 1 of 

15 such Code is amended by adding at the end the fol16 lowing new item: 

‘‘Sec. 1261. Gains from certain property transferred by gift or upon death.’’. 

17 (b) COORDINATION OF RELATED PARTY LOSS

18 RULES.—Section 267 of such Code is amended by adding 

19 at the end the following new subsection: 

20 ‘‘(h) PROPERTY TREATED AS SOLD AT DEATH.— 

21 Subsection (a)(1) shall not apply to any property that is 

22 transferred at death and treated as sold under section 

23 1261.’’. 

24 (c) TREATMENT OF BASIS FOR GIFTS AND BE25 QUESTS TO WHICH TAX APPLIES.— 


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1 (1) ELIMINATION OF CARRYOVER BASIS FOR

2 GIFTS.—Section 1015(a) of such Code is amended— 

3 (A) by striking ‘‘If the property’’ and in4 serting the following: 

5 ‘‘(1) GIFTS BEFORE JANUARY 1, 2022.—If the 

6 property’’; 

7 (B) by inserting ‘‘, and before January 1, 

8 2022’’ after ‘‘after December 31, 1920’’; and 

9 (C) by adding at the end the following new 

10 paragraph: 

11 ‘‘(2) GIFTS AFTER DECEMBER 31, 2021.—If the 

12 property was acquired by gift after December 31, 

13 2021, the basis shall be the fair market value of 

14 such property at the time of the gift.’’. 

15 (2) RULES FOR TRANSFERS BETWEEN

16 SPOUSES.— 

17 (A) IN GENERAL.—Section 1041(b) of 

18 such Code is amended to read as follows: 

19 ‘‘(b) TRANSFEREE HAS TRANSFEROR’S BASIS.—In 

20 the case of any transfer of property described in sub21 section (a), the basis of the transferee in the property shall 

22 be the adjusted basis of the transferor.’’. 

23 (B) TRANSFERS AT DEATH.—Section 

24 1041(a) of such Code is amended by inserting 


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1 ‘‘(including at death)’’ after ‘‘transfer of prop2 erty’’. 

3 (C) CONFORMING AMENDMENTS.— 

4 (i) Section 1014 of such Code is 

5 amended by adding at the end the fol6 lowing new subsection: 

7 ‘‘(g) PROPERTY ACQUIRED FROM DECEDENT

8 SPOUSE.—In the case of property which passes from the 

9 decedent to (or in trust for the benefit of) the decedent’s 

10 surviving spouse in a transfer described in section 

11 1041(a)(1), the basis of such property in the hands of the 

12 transferee shall be determined under section 1041(b) and 

13 not this section.’’, and 

14 (ii) Section 1015(e) of such Code is 

15 amended by striking ‘‘1041(b)(2)’’ and in16 serting ‘‘1041(b)’’. 

17 (3) BASIS MUST BE CONSISTENT WITH GAINS

18 RECOGNIZED IN DEEMED REALIZATION.— 

19 (A) PROPERTY ACQUIRED FROM DECE20 DENT.—Section 1014 of such Code, as amend21 ed by the preceding provisions of this Act, is 

22 amended by adding at the end the following 

23 new subsection: 

24 ‘‘(h) BASIS MUST BE CONSISTENT WITH GAINS

25 RECOGNIZED IN DEEMED REALIZATION.—The basis of 


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1 any property to which subsection (a) applies shall not ex2 ceed the amount for which the property was treated as 

3 sold under section 1261.’’. 

4 (B) PROPERTY ACQUIRED BY GIFT.—Sec5 tion 1015 of such Code is amended by adding 

6 at the end the following new subsection: 

7 ‘‘(f) BASIS MUST BE CONSISTENT WITH GAINS REC8 OGNIZED IN DEEMED REALIZATION.—The basis of any 

9 property to which subsection (a)(2) applies shall not ex10 ceed the amount for which the property was treated as 

11 sold under section 1261.’’. 

12 (d) CONFORMING AMENDMENTS.— 

13 (1) Section 7477(a) of such Code is amended 

14 by striking ‘‘chapter 12’’ and inserting ‘‘chapter 1 or 

15 12’’. 

16 (2) Section 7517(a) of such Code is amended 

17 by striking ‘‘chapter 11’’ and inserting ‘‘chapter 1, 

18 11’’. 

19 (e) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to transfers by gift (including 

21 transfers treated as gifts by reason of the amendments 

22 made by this section), or at death by decedents dying, 

23 after December 31, 2021. 


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1 SEC. 2. EXCLUSION OF CERTAIN AMOUNTS OF REALIZED 

2 CAPITAL GAIN. 

3 (a) IN GENERAL.—Part III of subchapter B of chap4 ter 1 of the Internal Revenue Code of 1986 is amended 

5 by inserting before section 140 the following new section: 

6 ‘‘SEC. 139I. EXCLUSION OF GAIN FROM TRANSFERS OF AP7 PRECIATED ASSETS AT DEATH. 

8 ‘‘(a) IN GENERAL.—Gross income shall not include 

9 so much of the net capital gain for the taxable year from 

10 transfers at death to which 1261(a) applies as does not 

11 exceed $1,000,000. 

12 ‘‘(b) INFLATION ADJUSTMENT.— 

13 ‘‘(1) IN GENERAL.—In the case of any taxable 

14 year beginning after 2022, the $1,000,000 amount 

15 in subsection (a) shall be increased by an amount 

16 equal to— 

17 ‘‘(A) such dollar amount, multiplied by 

18 ‘‘(B) the cost-of-living adjustment deter19 mined under section 1(f)(3) for the calendar 

20 year in which the taxable year begins, deter21 mined by substituting in subparagraph (A)(ii) 

22 thereof ‘calendar year 2021’ for ‘calendar year 

23 2016’. 

24 ‘‘(2) ROUNDING.—If the dollar amount in sub25 section (a), after being increased under paragraph 


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1 (1), is not a multiple of $10,000, such amount shall 

2 be rounded to the next lowest multiple of $10,000.’’. 

3 (b) CLERICAL AMENDMENT.—The table of sections 

4 for part III of subchapter B of chapter 1 of such Code 

5 is amended by inserting after section 139H the following 

6 new item: 

‘‘Sec. 139I. Exclusion of gain from transfers of appreciated assets at death.’’. 

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

8 this section shall apply to transfers at death by decedents 

9 dying after December 31, 2021, in taxable years beginning 

10 after such date. 

11 SEC. 3. INFORMATION REPORTING OF CERTAIN GIFTS. 

12 (a) IN GENERAL.—Subpart B of part III of sub13 chapter A of chapter 61 of the Internal Revenue Code of 

14 1986 is amended by adding at the end the following new 

15 section: 

16 ‘‘SEC. 6050Z. RETURNS RELATING TO CERTAIN GIFTS AND 

17 BEQUESTS. 

18 ‘‘(a) IN GENERAL.—In the case of an applicable 

19 transfer, the individual making such gift, or the executor 

20 in the case of a transfer at death, shall furnish to the 

21 Secretary the following information: 

22 ‘‘(1) The name and taxpayer identification 

23 number of the person to whom such transfer was 

24 made. 

25 ‘‘(2) A description of the property transferred. 


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1 ‘‘(3) The fair market value of the property 

2 transferred and the basis of such property to the 

3 transferee. 

4 ‘‘(b) APPLICABLE TRANSFER.— 

5 ‘‘(1) IN GENERAL.—For purposes of this sec6 tion, the term ‘applicable transfer’ means— 

7 ‘‘(A) any gift (other than a covered secu8 rity (as defined in section 6045(g)(3))) which is 

9 taken into account under section 1261, and 

10 ‘‘(B) so much of any transfer at death 

11 (other than such a covered security) which is so 

12 taken into account under section 1261 and the 

13 gain from which is includible in gross income 

14 for the taxable year of such transfer. 

15 ‘‘(2) DE MINIMIS.— 

16 ‘‘(A) GIFTS.—For gifts not exceeding the 

17 limitation for such year under section 2503(b) 

18 and not taken into account under section 1261, 

19 see subsection (d) thereof. 

20 ‘‘(B) TRANSFERS AT DEATH.—For amount 

21 of gain excluded from gross income in case of 

22 a transfer at death, see section 139I(a). 

23 ‘‘(c) STATEMENTS TO BE FURNISHED TO PERSONS

24 WITH RESPECT TO WHOM INFORMATION IS REQUIRED.— 

25 Every person required to make a return under subsection 


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1 (a) shall furnish to each person whose name is required 

2 to set forth in such return a written statement showing 

3 the information described in subsection (a). 

4 ‘‘(d) TIMING.—The returns and statements required 

5 under this section shall be furnished at such time and in 

6 such form and manner as the Secretary shall by regulation 

7 prescribe.’’. 

8 (b) CLERICAL AMENDMENT.—The table of sections 

9 for subpart B of part III of subchapter A of chapter 61 

10 of such Code is amended by adding at the end the fol11 lowing new item: 

‘‘Sec. 6050Z. Returns relating to certain gifts.’’. 

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

13 this section shall apply to transfers after December 31, 

14 2021, in taxable years beginning after such date. 

15 SEC. 4. EXTENSION OF TIME FOR PAYMENT OF TAX. 

16 (a) EXTENSION OF TIME.— 

17 (1) IN GENERAL.—Subchapter B of chapter 62 

18 of the Internal Revenue Code of 1986 is amended by 

19 adding at the end the following new section: 

20 ‘‘SEC. 6168. EXTENSION OF TIME FOR PAYMENT OF CAP21 ITAL GAINS ON CERTAIN ASSETS REALIZED 

22 BY REASON OF DEATH. 

23 ‘‘(a) 7-YEAR INSTALLMENT PAYMENT.— 

24 ‘‘(1) IN GENERAL.—In the case of any gain 

25 with respect to eligible property that is recognized 


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1 under section 1261 by reason of the death of the 

2 taxpayer, the taxpayer may elect to pay part or all 

3 of tax imposed on such gain in 2 or more (but not 

4 exceeding 7) equal installments. 

5 ‘‘(2) DATE FOR PAYMENT OF INSTALLMENTS.— 

6 If an election is made under paragraph (1), the first 

7 installment shall be paid not later than the date on 

8 which the tax for the taxable year in which the gain 

9 described in paragraph (1) occurs is due, and each 

10 succeeding installment shall be paid on or before the 

11 date which is 1 year after the date prescribed by this 

12 paragraph for payment of the preceding installment. 

13 ‘‘(b) ELIGIBLE CAPITAL ASSET.—For purposes of 

14 this section, the term ‘eligible property’ means any prop15 erty other than personal property of a type which is ac16 tively traded (within the meaning of section 1092(d)(1)). 

17 ‘‘(c) PORTION OF TAX ELIGIBLE.—The amount of 

18 tax to which this section applies shall not exceed the excess 

19 of— 

20 ‘‘(1) the tax computed under chapter 1 (deter21 mined after application of section 1261), over 

22 ‘‘(2) the tax computed under chapter 1 (deter23 mined without regard to section 1261). 

24 ‘‘(d) ELECTION.—Any election under subsection (a) 

25 shall be made not later than the time prescribed by section 


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1 6072 for filing the return of tax imposed under chapter 

2 1 (including extensions thereof), and shall be made in such 

3 manner as the Secretary shall by regulations prescribe. If 

4 an election under subsection (a) is made, the provisions 

5 of this subtitle shall apply as though the Secretary were 

6 extending the time for payment of the tax. 

7 ‘‘(e) PRORATION OF DEFICIENCY TO INSTALL8 MENTS.—If an election is made under subsection (a) to 

9 pay any part of the tax imposed under chapter 1 in install10 ments and a deficiency has been assessed, the deficiency 

11 shall (subject to the limitation provided by subsection 

12 (a)(2)) be prorated to the installments payable under sub13 section (a). The part of the deficiency so prorated to any 

14 installment the date for payment of which has not arrived 

15 shall be collected at the same time as, and as a part of, 

16 such installment. The part of the deficiency so prorated 

17 to any installment the date for payment of which has ar18 rived shall be paid upon notice and demand from the Sec19 retary. This subsection shall not apply if the deficiency 

20 is due to negligence, to intentional disregard of rules and 

21 regulations, or to fraud with intent to evade tax. 

22 ‘‘(f) TIME FOR PAYMENT OF INTEREST.—If the time 

23 for payment of any amount of tax has been extended 

24 under this section, interest payable under section 6601 on 


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1 any unpaid portion shall be paid annually at the same time 

2 as, and as part of, each installment payment of the tax. 

3 ‘‘(g) REGULATIONS.—The Secretary shall prescribe 

4 such regulations as may be necessary to the application 

5 of this section. 

6 ‘‘(h) CROSS-REFERENCES.— 

7 ‘‘(1) SECURITY.—For authority of the Sec8 retary to require security in the case of an extension 

9 under this section, see section 6165. 

10 ‘‘(2) INTEREST.—For provisions relating to in11 terest on tax payable in installments under this sec12 tion, see subsection (k) of section 6601.’’. 

13 (2) COORDINATION WITH TRANSFEREE LIABIL14 ITY.—Section 6109 of such Code is amended by re15 designating subsections (g), (h), and (i) as sub16 sections (h), (i), and (j), respectively, and by insert17 ing after subsection (f) the following new subsection: 

18 ‘‘(g) PERIOD OF ASSESSMENT IN CASE OF EXTEN19 SION OF TIME FOR PAYMENT OF TAX UNDER SECTION

20 1261.—For purposes of subsection (c), the period of limi21 tation for assessment against the transferor of any tax im22 posed under section 1261 the payment of which is ex23 tended under section 6168 shall not be treated as expiring 

24 earlier than the due date for the last payment under (a)(2) 

25 of such section.’’. 


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1 (3) CLERICAL AMENDMENT.—The table of sec2 tions for subpart B of chapter 62 of such Code is 

3 amended by adding at the end the following new 

4 item: 

‘‘Sec. 6168. Extension of time for payment of capital gains on certain assets 

realized by reason of death.’’. 

5 (b) INTEREST.—Section 6601 of such Code is amend6 ed by redesignating subsection (k) as subsection (l) and 

7 by inserting after subsection (j) the following new sub8 section: 

9 ‘‘(k) SPECIAL RATE FOR TAX EXTENDED UNDER

10 SECTION 6168.—If the time for payment of an amount 

11 of tax imposed by section 1261 is extended as provided 

12 in section 6168, in lieu of the annual rate provided by 

13 subsection (a), interest shall be paid at a rate equal to 

14 45 percent of the annual rate provided by subsection (a). 

15 For purposes of this subsection, the amount of any defi16 ciency which is prorated to installments payable under sec17 tion 6168 shall be treated as an amount of tax payable 

18 in installments under such section.’’. 

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

20 this section shall apply to taxable years beginning after 

21 December 31, 2021. 

Æ 


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