I 

115TH CONGRESS 

1ST SESSION H. R. 1400 

To amend the Internal Revenue Code of 1986 to authorize agricultural 

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

IN THE HOUSE OF REPRESENTATIVES 

MARCH 7, 2017 

Mr. CRAWFORD (for himself, Mr. ABRAHAM, Mr. PALAZZO, Mr. WESTERMAN, 

and Mr. HILL) introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to authorize 

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

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Farm Risk Abatement 

5 and Mitigation Election Act of 2017’’ or the ‘‘FRAME 

6 Act of 2017’’. 

7 SEC. 2. FARM RISK MANAGEMENT ACCOUNTS. 

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


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1 by redesignating section 224 as section 225 and by insert2 ing after section 223 the following new section: 

3 ‘‘SEC. 224. FRAME ACCOUNTS. 

4 ‘‘(a) DEDUCTION ALLOWED.—In the case of a quali5 fied farmer, there shall be allowed as a deduction for the 

6 taxable year an amount equal to the aggregate amount 

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

8 such individual to a FRAME account of such individual. 

9 ‘‘(b) LIMITATION.—The amount allowable as a de10 duction under subsection (a) shall not exceed the least of 

11 the following: 

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

13 taxable year which is attributable to farming and 

14 ranching. 

15 ‘‘(2) $50,000. 

16 ‘‘(3) $500,000 reduced by the aggregate con17 tributions of the taxpayer to all FRAME accounts of 

18 the taxpayer for all taxable years. 

19 ‘‘(c) QUALIFIED FARMER.—For purposes of this sec20 tion, the term ‘qualified farmer’ means, with respect to 

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

22 ‘‘(1) was actively engaged in the trade or busi23 ness of farming or ranching, and 

24 ‘‘(2) has in effect an agreement with the Sec25 retary of Agriculture with respect to each FRAME 


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1 account of which the individual is an account bene2 ficiary. 

3 ‘‘(d) FRAME ACCOUNT.—For purposes of this sec4 tion— 

5 ‘‘(1) IN GENERAL.—The term ‘FRAME ac6 count’ means a trust created or organized in the 

7 United States as a FRAME account exclusively for 

8 the purpose of making qualified distributions, but 

9 only if the written governing instrument creating the 

10 trust meets the following requirements: 

11 ‘‘(A) No contribution will be accepted un12 less it is in cash. 

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

14 section 408(n)) or another person who dem15 onstrates to the satisfaction of the Secretary 

16 that the manner in which such person will ad17 minister the trust will be consistent with the re18 quirements of this section. 

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

20 commingled with other property except in a 

21 common trust fund or common investment 

22 fund. 

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

24 balance in his account is nonforfeitable. 


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

2 ‘qualified distribution’ means any of the following 

3 amounts paid from a FRAME account to the ac4 count beneficiary: 

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

6 during which the gross income attributable to 

7 farm to which the FRAME account relates is 

8 less than 95 percent of the average gross in9 come attributable to such farm for the 5 pre10 ceding taxable years, but only so much as does 

11 not exceed such difference. 

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

13 distribution does not exceed amounts necessary 

14 to protect the solvency of the farm to which the 

15 FRAME account relates, as determined by the 

16 Secretary. 

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

18 distributions do not exceed amounts paid or in19 curred to procure revenue or crop insurance 

20 with respect to the farm to which the FRAME 

21 account relates. 

22 ‘‘(3) ACCOUNT BENEFICIARY.—The term ‘ac23 count beneficiary’ means the individual on whose be24 half the FRAME account was established. 


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

2 Secretary of Agriculture shall have in effect not 

3 more than 4 agreements for FRAME accounts with 

4 respect to any farm. The Secretary of Agriculture 

5 shall by regulation prescribe rules preventing the 

6 avoidance of the preceding limitation through use of 

7 multiple entities, related parties, division of farms, 

8 or de minimis ownership. 

9 ‘‘(5) OTHER RULES.—Rules similar to the fol10 lowing rules shall apply for purposes of this section: 

11 ‘‘(A) Section 219(d)(2) (relating to no de12 duction for rollovers). 

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

14 when contributions deemed made). 

15 ‘‘(C) Section 408(g) (relating to commu16 nity property laws). 

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

18 accounts). 

19 ‘‘(e) TAX TREATMENT OF ACCOUNTS.— 

20 ‘‘(1) IN GENERAL.—A FRAME account is ex21 empt from taxation under this subtitle unless such 

22 account has ceased to be a FRAME account. Not23 withstanding the preceding sentence, any such ac24 count is subject to the taxes imposed by section 511 


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1 (relating to imposition of tax on unrelated business 

2 income of charitable, etc. organizations). 

3 ‘‘(2) TERMINATION OF ACCOUNTS.—If the ac4 count beneficiary ceases to engage in the trade or 

5 business of farming or ranching— 

6 ‘‘(A) all FRAME accounts of such indi7 vidual shall cease to be such accounts, and 

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

9 be treated as— 

10 ‘‘(i) distributed to such individual, 

11 and 

12 ‘‘(ii) not paid in a qualified distribu13 tion. 

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

15 ‘‘(1) IN GENERAL.—Any amount paid or dis16 tributed out of a FRAME account (other than a 

17 rollover contribution described in paragraph (4)) 

18 shall be included in gross income. 

19 ‘‘(2) ADDITIONAL TAX ON NON-QUALIFIED DIS20 TRIBUTIONS.— 

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

22 this chapter on the account beneficiary for any 

23 taxable year in which there is a payment or dis24 tribution from a FRAME account of such bene25 ficiary which is not a qualified distribution shall 


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1 be increased by 20 percent of the amount of 

2 such payment or distribution which is not a 

3 qualified distribution. 

4 ‘‘(B) EXCEPTION FOR DISABILITY OR

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

6 the payment or distribution is made after the 

7 account beneficiary becomes disabled within the 

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

9 ‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE10 FORE DUE DATE OF RETURN.— 

11 ‘‘(A) IN GENERAL.—If any excess con12 tribution is contributed for a taxable year to a 

13 FRAME account of an individual, paragraph 

14 (2) shall not apply to distributions from the 

15 FRAME accounts of such individual (to the ex16 tent such distributions do not exceed the aggre17 gate excess contributions to all such accounts of 

18 such individual for such year) if— 

19 ‘‘(i) such distribution is received by 

20 the individual on or before the last day 

21 prescribed by law (including extensions of 

22 time) for filing such individual’s return for 

23 such taxable year, and 


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1 ‘‘(ii) such distribution is accompanied 

2 by the amount of net income attributable 

3 to such excess contribution. 

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

5 included in the gross income of the individual 

6 for the taxable year in which it is received. 

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

9 contribution’ means any contribution (other 

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

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

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

15 (A) and (B). 

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

17 section, any amount paid or distributed from a 

18 FRAME account to the account beneficiary 

19 shall be treated as a qualified distribution to 

20 the extent the amount received is paid into a 

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

23 on which the beneficiary receives the payment 

24 or distribution. 


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

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

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

5 year period ending on the day of such receipt, 

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

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

10 this paragraph. 

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

13 a FRAME account to an individual’s spouse or 

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

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

17 made by such individual notwithstanding any other 

18 provision of this subtitle, and such interest shall, 

19 after such transfer, be treated as a FRAME account 

20 with respect to which such spouse is the account 

21 beneficiary. 

22 ‘‘(6) TREATMENT AFTER DEATH OF ACCOUNT

23 BENEFICIARY.— 

24 ‘‘(A) TREATMENT IN CASE OF INDIVIDUAL

25 DESIGNATED BENEFICIARY.—If any individual 


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1 acquires such beneficiary’s interest in a 

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

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

6 the account beneficiary. 

7 ‘‘(B) OTHER CASES.— 

8 ‘‘(i) IN GENERAL.—If, by reason of 

9 the death of the account beneficiary, any 

10 person acquires the account beneficiary’s 

11 interest in a FRAME account in a case to 

12 which subparagraph (A) does not apply— 

13 ‘‘(I) such account shall cease to 

14 be a FRAME account as of the date 

15 of death, and 

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

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

19 if such person is not the estate of 

20 such beneficiary, in such person’s 

21 gross income for the taxable year 

22 which includes such date, or if such 

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1 come for the last taxable year of such 

2 beneficiary. 

3 ‘‘(ii) DEDUCTION FOR ESTATE

4 TAXES.—An appropriate deduction shall be 

5 allowed under section 691(c) to any person 

6 (other than the decedent or the decedent’s 

7 spouse) with respect to amounts included 

8 in gross income under clause (i) by such 

9 person. 

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

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

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

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

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

18 be required by the Secretary.’’. 

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

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

22 paragraph (21) the following new paragraph: 

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


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

2 of such Code is amended— 

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

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

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

6 following new paragraph: 

7 ‘‘(7) a FRAME account (within the meaning of 

8 section 224(d)),’’, and 

9 (2) by adding at the end the following new sub10 section: 

11 ‘‘(h) EXCESS CONTRIBUTIONS TO FRAME AC12 COUNTS.—For purposes of this section, in the case of 

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

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

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

16 taxable year to the accounts (other than rollover 

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

18 not allowable as a deduction under section 224 for 

19 such year, and 

20 ‘‘(2) the amount determined under this sub21 section for the preceding taxable year, reduced by 

22 the sum of— 

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

24 with respect to which additional tax was im25 posed under section 224(f)(2), and 


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1 ‘‘(B) the excess (if any) of— 

2 ‘‘(i) the maximum amount allowable 

3 as a deduction under section 224(b) for 

4 the taxable year, over 

5 ‘‘(ii) the amount contributed to the 

6 accounts for the taxable year. 

7 For purposes of this subsection, any contribution 

8 which is distributed out of the FRAME account in 

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

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

11 (d) TAX ON PROHIBITED TRANSACTIONS.— 

12 (1) Section 4975(c) of such Code is amended by 

13 adding at the end the following new paragraph: 

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

15 An individual for whose benefit a FRAME account 

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

17 shall be exempt from the tax imposed by this section 

18 with respect to any transaction concerning such ac19 count (which would otherwise be taxable under this 

20 section) if, with respect to such transaction, the ac21 count ceases to be a FRAME account by reason of 

22 the application of section 224(e)(2) to such ac23 count.’’. 

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

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1 paragraphs (G) and (H), respectively, and by insert2 ing after subparagraph (E) the following new sub3 paragraph: 

4 ‘‘(F) a FRAME account described in sec5 tion 224(d),’’. 

6 (e) FAILURE TO PROVIDE REPORTS ON FRAME AC7 COUNTS.—Section 6693(a)(2) of such Code is amended by 

8 redesignating subparagraphs (D) and (E) as subpara9 graphs (E) and (F), respectively, and by inserting after 

10 subparagraph (C) the following new subparagraph: 

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

12 accounts),’’. 

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

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

15 is amended by striking the last item and inserting the fol16 lowing: 

‘‘Sec. 224. FRAME accounts. 

‘‘Sec. 225. Cross reference.’’. 

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

18 this section shall apply to taxable years beginning after 

19 the date of the enactment of this Act. 

20 SEC. 3. FRAME CONTRIBUTION CREDIT. 

21 (a) IN GENERAL.—Subpart D of part IV of sub22 chapter A of chapter 1 of the Internal Revenue Code of 

23 1986 is amended by adding at the end the following new 

24 section: 


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

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

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

4 224(c)), the FRAME contribution credit determined 

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

6 to the applicable percentage of the taxpayer’s contribu7 tions to any FRAME account of the taxpayer. 

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

9 subsection (a), the applicable percentage is— 

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

11 which the first FRAME account of the taxpayer is 

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

13 thereafter, 10 percent, 

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

15 years thereafter, 5 percent, and 

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

17 years thereafter, 3.5 percent. 

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

19 deduction is allowed under section 224 shall be taken into 

20 account under this section.’’. 

21 (b) CREDIT MADE PART OF GENERAL BUSINESS

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

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

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

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

26 new paragraph: 


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1 ‘‘(37) the FRAME contribution credit deter2 mined under section 45S(a).’’. 

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

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

5 of such Code is amended by adding at the end the fol6 lowing new item: 

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

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

8 this section shall apply to taxable years beginning after 

9 the date of the enactment of this Act. 

Æ 


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