I 

114TH CONGRESS 

1ST SESSION H. R. 2907 

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

generation-skipping taxes, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 25, 2015 

Ms. SCHAKOWSKY (for herself and Mr. ELLISON) introduced the following bill; 

which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to reinstate 

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

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Responsible Estate 

5 Tax Act’’. 

6 SEC. 2. MODIFICATIONS TO ESTATE, GIFT, AND GENERA7 TION-SKIPPING TRANSFER TAXES. 

8 (a) MODIFICATION OF RATES.— 


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1 (1) IN GENERAL.—Section 2001(c) of the Inter2 nal Revenue Code of 1986 is amended by striking 

3 the last 2 rows and inserting the following: 

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

such amount over 

$750,000. 

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

percent of the excess of such amount 

over $3,500,000. 

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

percent of the excess of such amount 

over $10,000,000. 

Over $50,000,000 ................................................ $24,245,800 plus 55 

percent of the excess of such amount 

over $50,000,000.’’. 

4 (2) SURTAX ON WEALTHY ESTATES.—Section 

5 2001(c) of such Code is amended— 

6 (A) by inserting before the table the fol7 lowing: 

8 ‘‘(1) IN GENERAL.—’’, and 

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

10 paragraph: 

11 ‘‘(2) SURTAX ON ESTATES OVER $500,000,000.— 

12 Notwithstanding paragraph (1), if the amount with 

13 respect to which the tentative tax to be computed is 

14 over $500,000,000, the rate of tax otherwise in ef15 fect under this subsection with respect to the 

16 amount in excess of $500,000,000 shall be increased 

17 by 10 percent.’’. 


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1 (b) EXCLUSION AMOUNT.— 

2 (1) ESTATE TAX.—Section 2010(c)(3) of such 

3 Code is amended to read as follows: 

4 ‘‘(3) BASIC EXCLUSION AMOUNT.—For pur5 poses of this section, the basic exclusion amount is 

6 $3,500,000.’’. 

7 (2) MODIFICATION TO GIFT TAX EXCLUSION

8 AMOUNT.—Section 2505(a)(1) of such Code is 

9 amended to read as follows: 

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

11 under section 2010(c) for such calendar year (deter12 mined as if the basic exclusion amount in section 

13 2010(c)(2)(A) were $1,000,000), reduced by’’. 

14 (3) MODIFICATIONS OF ESTATE AND GIFT

15 TAXES TO REFLECT DIFFERENCES IN CREDIT RE16 SULTING FROM DIFFERENT EXCLUSION AMOUNTS.— 

17 (A) ESTATE TAX ADJUSTMENT.—Section 

18 2001 of such Code is amended by adding at the 

19 end the following new subsection: 

20 ‘‘(h) ADJUSTMENT TO REFLECT CHANGES IN EX21 CLUSION AMOUNT.— 

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

23 to which subsection (b)(2) applies, the applicable ex24 clusion amount in effect at the time of the dece25 dent’s death is less than such amount in effect at 


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

2 amount of tax computed under subsection (b) shall 

3 be reduced by the amount of tax which would have 

4 been payable under chapter 12 at the time of the 

5 gift if the applicable exclusion amount in effect at 

6 such time had been the applicable exclusion amount 

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

8 modifications described in subsection (g) had been 

9 applicable at the time of such gifts. 

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

11 gifts made in any calendar year to which the reduc12 tion under paragraph (1) applies shall not exceed 

13 the excess of— 

14 ‘‘(A) the applicable exclusion amount in ef15 fect for such calendar year, over 

16 ‘‘(B) the applicable exclusion amount in ef17 fect at the time of the decedent’s death. 

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

19 term ‘applicable exclusion amount’ means, with re20 spect to any period, the amount determined under 

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

22 case of any period for which such amount includes 

23 the deceased spousal unused exclusion amount (as 

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


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1 the basic exclusion amount (as defined under section 

2 2010(c)(3), as in effect for such period).’’. 

3 (B) GIFT TAX ADJUSTMENT.—Section 

4 2502 of such Code is amended by adding at the 

5 end the following new subsection: 

6 ‘‘(d) ADJUSTMENT TO REFLECT CHANGES IN EX7 CLUSION AMOUNT.— 

8 ‘‘(1) IN GENERAL.—If the taxpayer made a tax9 able gift in an applicable preceding calendar period, 

10 the amount of tax computed under subsection (a) 

11 shall be reduced by the amount of tax which would 

12 have been payable under chapter 12 for such appli13 cable preceding calendar period if the applicable ex14 clusion amount in effect for such preceding calendar 

15 period had been the applicable exclusion amount in 

16 effect for the calendar year for which the tax is 

17 being computed and the modifications described in 

18 subsection (g) had been applicable for such pre19 ceding calendar period. 

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

21 gifts made in any applicable preceding calendar pe22 riod to which the reduction under paragraph (1) ap23 plies shall not exceed the excess of— 

24 ‘‘(A) the applicable exclusion amount for 

25 such preceding calendar period, over 


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1 ‘‘(B) the applicable exclusion amount for 

2 the calendar year for which the tax is being 

3 computed. 

4 ‘‘(3) APPLICABLE PRECEDING CALENDAR YEAR

5 PERIOD.—The term ‘applicable preceding calendar 

6 year period’ means any preceding calendar year pe7 riod in which the applicable exclusion amount ex8 ceeded the applicable exclusion amount for the cal9 endar year for which the tax is being computed. 

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

11 term ‘applicable exclusion amount’ means, with re12 spect to any period, the amount determined under 

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

14 case of any period for which such amount includes 

15 the deceased spousal unused exclusion amount (as 

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

17 the basic exclusion amount (as defined under section 

18 2010(c)(3), as in effect for such period).’’. 

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

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

21 generation-skipping transfers and gifts made, after De22 cember 31, 2015. 


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

2 FARM, ETC., REAL PROPERTY. 

3 (a) IN GENERAL.—Section 2032A(a)(2) of the Inter4 nal Revenue Code of 1986 is amended by striking 

5 ‘‘$750,000’’ and inserting ‘‘$3,000,000’’. 

6 (b) INFLATION ADJUSTMENT.—Section 2032A(a)(3) 

7 of such Code is amended— 

8 (1) by striking ‘‘1998’’ and inserting ‘‘2015’’, 

9 (2) by striking ‘‘$750,000’’ and inserting 

10 ‘‘$3,000,000’’ in subparagraph (A), and 

11 (3) by striking ‘‘calendar year 1997’’ and in12 serting ‘‘calendar year 2014’’ in subparagraph (B). 

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

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

15 gifts made, after December 31, 2015. 

16 SEC. 4. MODIFICATION OF ESTATE TAX RULES WITH RE17 SPECT TO LAND SUBJECT TO CONSERVATION 

18 EASEMENTS. 

19 (a) MODIFICATION OF EXCLUSION LIMITATION.— 

20 Section 2031(c)(1) of the Internal Revenue Code of 1986 

21 is amended by striking all that follows subparagraph (A) 

22 and inserting the following: 

23 ‘‘(B) $2,000,000.’’. 

24 (b) MODIFICATION OF APPLICABLE PERCENTAGE.— 

25 Section 2031(c)(2) of such Code is amended by striking 

26 ‘‘40 percent’’ and inserting ‘‘60 percent’’. 


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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, 2015. 

4 SEC. 5. CONSISTENT BASIS REPORTING BETWEEN ESTATE 

5 AND PERSON ACQUIRING PROPERTY FROM 

6 DECEDENT. 

7 (a) CONSISTENT USE OF BASIS.— 

8 (1) PROPERTY ACQUIRED FROM A DECE9 DENT.—Section 1014 of the Internal Revenue Code 

10 of 1986 is amended by adding at the end the fol11 lowing new subsection: 

12 ‘‘(f) BASIS MUST BE CONSISTENT WITH ESTATE

13 TAX RETURN.— 

14 ‘‘(1) IN GENERAL.—For purposes of this sec15 tion, the value used to determine the basis of any in16 terest in property in the hands of the person acquir17 ing such property shall not exceed the value of such 

18 interest as finally determined for purposes of chap19 ter 11. 

20 ‘‘(2) SPECIAL RULE WHERE NO FINAL DETER21 MINATION.—In any case in which the final value of 

22 property has not been determined under chapter 11 

23 and there has been a statement furnished under sec24 tion 6035(a), the value used to determine the basis 

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1 son acquiring such property shall not exceed the 

2 amount reported on any statement furnished under 

3 section 6035(a). 

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

5 regulations provide exceptions to the application of 

6 this subsection.’’. 

7 (2) PROPERTY ACQUIRED BY GIFTS AND

8 TRANSFERS IN TRUST.—Section 1015 of such Code 

9 is amended by adding at the end the following new 

10 subsection: 

11 ‘‘(f) BASIS MUST BE CONSISTENT GIFT TAX RE12 TURN.— 

13 ‘‘(1) IN GENERAL.—For purposes of this sec14 tion, the value used to determine the basis of any in15 terest in property in the hands of the person acquir16 ing such property shall not exceed the value of such 

17 interest as finally determined for purposes of chap18 ter 12. 

19 ‘‘(2) SPECIAL RULE WHERE NO FINAL DETER20 MINATION.—In any case in which the final value of 

21 property has not been determined under chapter 12 

22 and there has been a statement furnished under sec23 tion 6035(b), the value used to determine the basis 

24 of any interest in property in the hands of the per25 son acquiring such property shall not exceed the 


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1 amount reported on any statement furnished under 

2 section 6035(b). 

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

4 regulations provide exceptions to the application of 

5 this subsection.’’. 

6 (b) INFORMATION REPORTING.— 

7 (1) IN GENERAL.—Subpart A of part III of 

8 subchapter A of chapter 61 of such Code is amended 

9 by inserting after section 6034A the following new 

10 section: 

11 ‘‘SEC. 6035. BASIS INFORMATION TO PERSONS ACQUIRING 

12 PROPERTY FROM DECEDENT OR BY GIFT. 

13 ‘‘(a) INFORMATION WITH RESPECT TO PROPERTY

14 ACQUIRED FROM DECEDENTS.— 

15 ‘‘(1) IN GENERAL.—The executor of any estate 

16 required to file a return under section 6018(a) shall 

17 furnish to the Secretary and to each person acquir18 ing any interest in property included in the dece19 dent’s gross estate for Federal estate tax purposes 

20 a statement identifying the value of each interest in 

21 such property as reported on such return and such 

22 other information with respect to such interest as 

23 the Secretary may prescribe. 

24 ‘‘(2) STATEMENTS BY BENEFICIARIES.—Each 

25 person required to file a return under section 


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1 6018(b) shall furnish to the Secretary and to each 

2 other person who holds a legal or beneficial interest 

3 in the property to which such return relates a state4 ment identifying the information described in para5 graph (1). 

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

7 ‘‘(A) IN GENERAL.—Each statement re8 quired to be furnished under paragraph (1) or 

9 (2) shall be furnished at such time as the Sec10 retary may prescribe, but in no case at a time 

11 later than the earlier of— 

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

13 the date on which the return under section 

14 6018 was required to be filed (including 

15 extensions, if any), or 

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

17 the date such return is filed. 

18 ‘‘(B) ADJUSTMENTS.—In any case in 

19 which there is an adjustment to the information 

20 required to be included on a statement filed 

21 under paragraph (1) or (2) after such state22 ment has been filed, a supplemental statement 

23 under such paragraph shall be filed not later 

24 than the date which is 30 days after such ad25 justment is made. 


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1 ‘‘(b) INFORMATION WITH RESPECT TO PROPERTY

2 ACQUIRED BY GIFT.— 

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

4 transfer by gift who is required to file a return 

5 under section 6019 with respect to such transfer 

6 shall furnish to the Secretary and to each person ac7 quiring any interest in property by reason of such 

8 transfer a statement identifying the value of each in9 terest in such property as reported on such return 

10 and such other information with respect to such in11 terest as the Secretary may prescribe. 

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

13 ‘‘(A) IN GENERAL.—Each statement re14 quired to be furnished under paragraph (1) 

15 shall be furnished at such time as the Secretary 

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

17 than the earlier of— 

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

19 the date on which the return under section 

20 6019 was required to be filed (including 

21 extensions, if any), or 

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

23 the date such return is filed. 

24 ‘‘(B) ADJUSTMENTS.—In any case in 

25 which there is an adjustment to the information 


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1 required to be included on a statement filed 

2 under paragraph (1) after such statement has 

3 been filed, a supplemental statement under 

4 such paragraph shall be filed not later than the 

5 date which is 30 days after such adjustment is 

6 made. 

7 ‘‘(c) REGULATIONS.—The Secretary shall prescribe 

8 such regulations as necessary to carry out this section, in9 cluding regulations relating to— 

10 ‘‘(1) the application of this section to property 

11 with regard to which no estate or gift tax return is 

12 required to be filed, and 

13 ‘‘(2) situations in which the surviving joint ten14 ant or other recipient may have better information 

15 than the executor regarding the basis or fair market 

16 value of the property.’’. 

17 (2) PENALTY FOR FAILURE TO FILE.— 

18 (A) RETURN.—Section 6724(d)(1) of such 

19 Code is amended by striking ‘‘and’’ at the end 

20 of subparagraph (B), by striking the period at 

21 the end of subparagraph (C) and inserting ‘‘, 

22 and’’, and by inserting after subparagraph (C) 

23 the following new subparagraph: 

24 ‘‘(D) any statement required to be filed 

25 with the Secretary under section 6035.’’. 


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1 (B) STATEMENT.—Section 6724(d)(2) of 

2 such Code is amended by striking ‘‘or’’ at the 

3 end of subparagraph (GG), by striking the pe4 riod at the end of subparagraph (HH) and in5 serting ‘‘, or’’, and by inserting after subpara6 graph (HH) the following new subparagraph: 

7 ‘‘(II) section 6035 (other than a statement 

8 described in paragraph (1)(D)).’’. 

9 (3) CLERICAL AMENDMENT.—The table of sec10 tions for subpart A of part III of subchapter A of 

11 chapter 61 of such Code is amended by inserting 

12 after the item relating to section 6034A the fol13 lowing new item: 

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

by gift.’’. 

14 (c) PENALTY FOR INCONSISTENT REPORTING.— 

15 (1) IN GENERAL.—Section 6662(b) of such 

16 Code is amended by inserting after paragraph (7) 

17 the following new paragraph: 

18 ‘‘(8) Any inconsistent estate or gift basis.’’. 

19 (2) INCONSISTENT BASIS REPORTING.—Section 

20 6662 of such Code is amended by adding at the end 

21 the following new subsection: 

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1 sistent estate or gift basis’ means the portion of the under2 statement which is attributable to— 

3 ‘‘(1) in the case of property acquired from a de4 cedent, a basis determination with respect to such 

5 property which is not consistent with the value of 

6 such property as determined under section 1014(f), 

7 and 

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

9 basis determination with respect to such property 

10 which is not consistent with the value of such prop11 erty as determined under section 1015(f).’’. 

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

13 this section shall apply to transfers for which returns are 

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

15 SEC. 6. VALUATION RULES FOR CERTAIN TRANSFERS OF 

16 NONBUSINESS ASSETS; LIMITATION ON MI17 NORITY DISCOUNTS. 

18 (a) IN GENERAL.—Section 2031 of the Internal Rev19 enue Code of 1986 is amended by redesignating subsection 

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

21 the following new subsections: 

22 ‘‘(d) VALUATION RULES FOR CERTAIN TRANSFERS

23 OF NONBUSINESS ASSETS.—For purposes of this chapter 

24 and chapter 12— 


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

2 of any interest in an entity other than an interest 

3 which is actively traded (within the meaning of sec4 tion 1092)— 

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

6 held by the entity with respect to such interest 

7 shall be determined as if the transferor had 

8 transferred such assets directly to the trans9 feree (and no valuation discount shall be al10 lowed with respect to such nonbusiness assets), 

11 and 

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

13 taken into account in determining the value of 

14 the interest in the entity. 

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

16 this subsection— 

17 ‘‘(A) IN GENERAL.—The term ‘nonbusi18 ness asset’ means any asset which is not used 

19 in the active conduct of 1 or more trades or 

20 businesses. 

21 ‘‘(B) EXCEPTION FOR CERTAIN PASSIVE

22 ASSETS.—Except as provided in subparagraph 

23 (C), a passive asset shall not be treated for pur24 poses of subparagraph (A) as used in the active 

25 conduct of a trade or business unless— 


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

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

3 is a hedge with respect to such property, 

4 or 

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

6 the active conduct of 1 or more real prop7 erty trades or businesses (within the mean8 ing of section 469(c)(7)(C)) in which the 

9 transferor materially participates and with 

10 respect to which the transferor meets the 

11 requirements of section 469(c)(7)(B)(ii). 

12 For purposes of clause (ii), material participa13 tion shall be determined under the rules of sec14 tion 469(h), except that section 469(h)(3) shall 

15 be applied without regard to the limitation to 

16 farming activity. 

17 ‘‘(C) EXCEPTION FOR WORKING CAP18 ITAL.—Any asset (including a passive asset) 

19 which is held as a part of the reasonably re20 quired working capital needs of a trade or busi21 ness shall be treated as used in the active con22 duct of a trade or business. 

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

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

25 ‘‘(A) cash or cash equivalents, 


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

2 Secretary, stock in a corporation or any other 

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

4 ‘‘(C) evidence of indebtedness, option, for5 ward or futures contract, notional principal con6 tract, or derivative, 

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

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

9 ‘‘(E) annuity, 

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

11 property trades or businesses (as defined in sec12 tion 469(c)(7)(C)), 

13 ‘‘(G) asset (other than a patent, trade14 mark, or copyright) which produces royalty in15 come, 

16 ‘‘(H) commodity, 

17 ‘‘(I) collectible (within the meaning of sec18 tion 401(m)), or 

19 ‘‘(J) any other asset specified in regula20 tions prescribed by the Secretary. 

21 ‘‘(4) LOOK-THRU RULES.— 

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

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

24 any other entity, this subsection shall be ap25 plied by disregarding the 10-percent interest 


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1 and by treating the entity as holding directly its 

2 ratable share of the assets of the other entity. 

3 This subparagraph shall be applied successively 

4 to any 10-percent interest of such other entity 

5 in any other entity. 

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

7 ‘10-percent interest’ means— 

8 ‘‘(i) in the case of an interest in a cor9 poration, ownership of at least 10 percent 

10 (by vote or value) of the stock in such cor11 poration, 

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

13 partnership, ownership of at least 10 per14 cent of the capital or profits interest in the 

15 partnership, and 

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

17 at least 10 percent of the beneficial inter18 ests in the entity. 

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

20 Subsection (b) shall apply after the application of 

21 this subsection. 

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

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

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1 tion 1092), no discount shall be allowed by reason of the 

2 fact that the transferee does not have control of such enti3 ty if the transferor, the transferee, and members of the 

4 family (as defined in section 2032A(e)(2)) of the trans5 feror and transferee— 

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

7 ‘‘(2) own the majority of the ownership inter8 ests (by value) in such entity.’’. 

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

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

11 enactment of this Act. 

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

13 GRANTOR RETAINED ANNUITY TRUSTS. 

14 (a) IN GENERAL.—Section 2702(b) of the Internal 

15 Revenue Code of 1986 is amended— 

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

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

18 and by moving such subparagraphs (as so redesig19 nated) 2 ems to the right; 

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

21 the following: 

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

23 (3) by striking ‘‘paragraph (1) or (2)’’ in para24 graph (1)(C) (as so redesignated) and inserting 

25 ‘‘subparagraph (A) or (B)’’; and 


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

2 paragraph: 

3 ‘‘(2) ADDITIONAL REQUIREMENTS WITH RE4 SPECT TO GRANTOR RETAINED ANNUITIES.—For 

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

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

7 regard to this paragraph) which is retained by the 

8 transferor, such interest shall be treated as de9 scribed in such paragraph only if— 

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

11 referred to in such paragraph is for a term of 

12 not less than 10 years, 

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

14 on an annual basis, do not decrease relative to 

15 any prior year during the first 10 years of the 

16 term referred to in subparagraph (A), and 

17 ‘‘(C) the remainder interest has a value 

18 equal to or greater than 10 percent of the value 

19 of the assets transferred to the trust, deter20 mined as of the time of the transfer.’’. 

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

22 this section shall apply to transfers made after the date 

23 of the enactment of this Act. 


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1 SEC. 8. CERTAIN TRANSFER TAX RULES APPLICABLE TO 

2 GRANTOR TRUSTS. 

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

5 following new chapter: 

6 ‘‘CHAPTER 16—SPECIAL RULES FOR 

7 GRANTOR TRUSTS 

‘‘Sec. 2901. Application of transfer taxes. 

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

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

10 trust to which this section applies— 

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

13 all assets attributable to that portion at the time of 

14 the death of such owner, 

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

16 or more beneficiaries during the life of the deemed 

17 owner of such portion shall be treated as a transfer 

18 by gift for purposes of chapter 12, and 

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

20 deemed owner of such portion, such owner ceases to 

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

23 assets attributable to such portion at such time shall 

24 be treated for purposes of chapter 12 as a transfer 

25 by gift made by the deemed owner. 


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

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

4 which the grantor is the deemed owner, and 

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

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

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

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

9 sale, exchange, or comparable transaction with the 

10 trust that is disregarded for purposes of subtitle A. 

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

12 described with respect to a transaction is the portion of 

13 the trust attributable to the property received by the trust 

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

16 of the amount of consideration received by the deemed 

17 owner in such transaction. 

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

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

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

23 determines by regulations or other guidance does not 

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


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

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

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

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

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

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

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

8 gift by the deemed owner to the trust previously taken 

9 into account by the deemed owner under chapter 12. 

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

12 trust.’’. 

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

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

15 end the following new item: 

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

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

17 this section shall apply— 

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

19 enactment of this Act, 

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

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

23 and 

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

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

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

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

4 Code on or after such date. 

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

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

9 following new subsection: 

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

12 ‘‘(1) IN GENERAL.— 

13 ‘‘(A) TRANSFERS FROM NON-QUALIFYING

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

16 qualifying trust, the inclusion ratio with respect 

17 to any property transferred in such transfer 

18 shall be 1. 

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

20 of this subsection, the term ‘qualifying trust’ 

21 means a trust for which the date of termination 

22 of such trust is not greater than 50 years after 

23 the date on which such trust is created. 

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


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1 the date of the enactment of this subsection, such 

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

3 period of 50 years after the date of the enactment 

4 of this subsection. 

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

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

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

9 as created on the date of the first transfer described 

10 in such section with respect to such separate trust. 

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

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

13 transfer of property which involves the transfer of 

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

15 the creation of the transferee trust shall be treated 

16 as being the earlier of— 

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

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

21 In the case of multiple transfers to which the 

22 preceding sentence applies, the date of the cre23 ation of the transferor trust shall be determined 

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1 cation of the preceding sentence to determine 

2 the date of the creation of the transferee trust. 

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

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

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

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

9 of this Act. 

10 SEC. 10. SIMPLIFYING GIFT TAX EXCLUSION FOR ANNUAL 

11 GIFTS. 

12 (a) IN GENERAL.—Section 2503(b)(1) of the Internal 

13 Revenue Code of 1986 is amended to read as follows: 

14 ‘‘(1) IN GENERAL.— 

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

16 gifts made to any person by the donor during 

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

18 gifts to such person shall not, for purposes of 

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

20 of gifts made during such year. 

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

22 ‘‘(i) IN GENERAL.—The aggregate 

23 amount excluded under subparagraph (A) 

24 with respect to all transfers described in 

25 clause (ii) made by the donor during the 


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1 calendar year shall not exceed twice the 

2 dollar amount in effect under such sub3 paragraph for such calendar year. 

4 ‘‘(ii) TRANSFERS SUBJECT TO LIMITA5 TION.—The transfers described in this 

6 clause are— 

7 ‘‘(I) a transfer in trust, 

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

9 a passthrough entity, 

10 ‘‘(III) a transfer of an interest 

11 subject to a prohibition on sale, and 

12 ‘‘(IV) any other transfer of prop13 erty that, without regard to with14 drawal, put, or other such rights in 

15 the donee, cannot immediately be liq16 uidated by the donee.’’. 

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

18 Internal Revenue Code of 1986 is amended by striking 

19 subsection (c). 

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

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

22 such regulations or other guidance as may be necessary 

23 or appropriate to carry out the amendments made by this 

24 section. 


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

2 this section shall apply to any calendar year beginning 

3 after the date of the enactment of this Act. 

Æ 


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