I 

111TH CONGRESS 

1ST SESSION H. R. 4015 

To amend the Internal Revenue Code of 1986 to extend certain estate tax 

provisions and restore and increase the estate tax deduction for certain 

family-owned business interests. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 4, 2009 

Mr. MCNERNEY (for himself and Mr. PERRIELLO) 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 extend 

certain estate tax provisions and restore and increase 

the estate tax deduction for certain family-owned business interests. 

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 ‘‘Family Farm and 

5 Small Business Tax Relief Act of 2009’’. 

6 SEC. 2. EXTENSION OF 2009 ESTATE AND GIFT TAX LEVELS. 

7 (a) EGTRRA SUNSET NOT TO APPLY.—Section 901 

8 of the Economic Growth and Tax Relief Reconciliation Act 


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1 of 2001 shall not apply to title V of such Act (other than 

2 subtitles A and E, and sections 511(d) and 521(b)(2), 

3 thereof). 

4 (b) $3,500,000 APPLICABLE EXCLUSION AMOUNT.— 

5 (1) IN GENERAL.—Subsection (c) of section 

6 2010 of the Internal Revenue Code of 1986 is 

7 amended by striking all that follows ‘‘the applicable 

8 exclusion amount’’ and inserting ‘‘. For purposes of 

9 the preceding sentence, the applicable exclusion 

10 amount is $3,500,000.’’. 

11 (2) INFLATION ADJUSTMENT.—Section 2010 of 

12 such Code is amended by redesignating subsection 

13 (d) as subsection (e) and by inserting after sub14 section (c) the following new subsection: 

15 ‘‘(d) COST-OF-LIVING ADJUSTMENT.—In the case of 

16 any decedent dying in a calendar year after 2011, the 

17 $3,500,000 amount in subsection (c) shall be increased by 

18 an amount equal to— 

19 ‘‘(1) such amount, multiplied by 

20 ‘‘(2) the cost-of-living adjustment determined 

21 under section 1(f)(3) for such calendar year by sub22 stituting ‘calendar year 2010’ for ‘calendar year 

23 1992’ in subparagraph (B) thereof. 


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1 If any amount as adjusted under the preceding sentence 

2 is not a multiple of $10,000, such amount shall be round3 ed to the nearest multiple of $10,000.’’. 

4 (c) 45 PERCENT MAXIMUM RATE.—The table in 

5 paragraph (1) of section 2001(c) of such Code is amended 

6 by striking the last 3 items and inserting the following 

7 new item: 

‘‘Over $1,500,000 ................................ $555,800, plus 45 percent of the excess of such amount over 

$1,500,000.’’. 

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

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

10 gifts made, after December 31, 2010. 

11 SEC. 3. RESTORATION OF, AND INCREASE IN, DEDUCTION 

12 FOR FAMILY-OWNED BUSINESS INTERESTS. 

13 (a) RESTORATION.—Subsection (j) of section 2057 

14 (relating to termination) is amended to read as follows: 

15 ‘‘(j) APPLICATION OF SECTION.—This section— 

16 ‘‘(1) shall not apply to estates of decedents 

17 dying after December 31, 2003, and before January 

18 1, 2011, but 

19 ‘‘(2) shall apply to estates of decedents dying 

20 after December 31, 2010.’’. 

21 (b) INCREASE.— 

22 (1) IN GENERAL.—Subsection (a) of section 

23 2057 is amended— 


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1 (A) by striking ‘‘$675,000’’ in paragraph 

2 (2) and inserting ‘‘$8,000,000’’, and 

3 (B) by striking paragraph (3). 

4 (2) COST-OF-LIVING ADJUSTMENT.—Subsection 

5 (a) of section 2057 is amended by adding at the end 

6 the following new paragraph: 

7 ‘‘(3) COST-OF-LIVING ADJUSTMENT.—In the 

8 case of any decedent dying in a calendar year after 

9 2011, the $8,000,000 amount in paragraph (2) shall 

10 be increased by an amount equal to— 

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

12 ‘‘(B) the cost-of-living adjustment deter13 mined under section 1(f)(3) for such calendar 

14 year by substituting ‘calendar year 2010’ for 

15 ‘calendar year 1992’ in subparagraph (B) 

16 thereof. 

17 If any amount as adjusted under the preceding sen18 tence is not a multiple of $10,000, such amount 

19 shall be rounded to the nearest multiple of 

20 $10,000.’’. 

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

22 this section shall apply to estates of decedents dying after 

23 December 31, 2010. 


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1 SEC. 4. EXCLUSION FROM GROSS ESTATE FOR CERTAIN 

2 FARMLAND SO LONG AS FARMLAND USE 

3 CONTINUES. 

4 (a) IN GENERAL.—Part III of subchapter A of chap5 ter 11 of the Internal Revenue Code of 1986 (relating to 

6 gross estate) is amended by inserting after section 2033 

7 the following new section: 

8 ‘‘SEC. 2033A. EXCLUSION OF CERTAIN FARMLAND SO LONG 

9 AS USE AS FARMLAND CONTINUES. 

10 ‘‘(a) IN GENERAL.—In the case of an estate of a de11 cedent to which this section applies, if the executor makes 

12 the election described in subsection (f), the value of the 

13 gross estate shall not include the adjusted value of quali14 fied farmland included in the estate. 

15 ‘‘(b) ESTATES TO WHICH SECTION APPLIES.—This 

16 section shall apply to an estate if— 

17 ‘‘(1) the decedent was (at the date of the dece18 dent’s death) a citizen or resident of the United 

19 States, and 

20 ‘‘(2) during the 8-year period ending on the 

21 date of the decedent’s death there have been periods 

22 aggregating 5 years or more during which— 

23 ‘‘(A) the qualified farmland was owned by 

24 the decedent or a member of the decedent’s 

25 family, and 


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1 ‘‘(B) there was material participation 

2 (within the meaning of section 2032A(e)(6)) by 

3 the decedent or a member of the decedent’s 

4 family in the operation of such farmland, except 

5 that ‘material participation’ shall also include 

6 any rental of real estate and related property 

7 between the estate of the decedent or any suc8 cessor thereto and any tenant so long as the 

9 tenant uses the real estate and related property 

10 to produce agricultural or horticultural com11 modities, including but not limited to livestock, 

12 bees, poultry, orchards and woodlands, timber 

13 and fur-bearing animals and wildlife on such 

14 farmland. 

15 Rules similar to the rules of paragraphs (4) and (5) 

16 of section 2032A(b) shall apply for purposes of sub17 paragraph (B). 

18 ‘‘(c) DEFINITIONS AND SPECIAL RULE.—For pur19 poses of this section— 

20 ‘‘(1) QUALIFIED FARMLAND.—The term ‘quali21 fied farmland’ means any real property or other 

22 property related to the farm operation— 

23 ‘‘(A) which is located in the United States, 

24 ‘‘(B) which is used as a farm for farming 

25 purposes, and 


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1 ‘‘(C) which was acquired from or passed 

2 from the decedent to a qualified heir of the de3 cedent and which, on the date of the decedent’s 

4 death, was being so used by the decedent or a 

5 member of the decedent’s family. 

6 ‘‘(2) MEMBER OF FAMILY.—A member of a 

7 family, with respect to any individual, means— 

8 ‘‘(A) a member of the family (as defined 

9 by section 2031A(e)(2)), and 

10 ‘‘(B) includes— 

11 ‘‘(i) a lineal descendant of any spouse 

12 described in subparagraph (D) of section 

13 2032A(e)(2), 

14 ‘‘(ii) a lineal descendant of a sibling of 

15 a parent of such individual, 

16 ‘‘(iii) a spouse of any lineal descend17 ant described in clause (ii), and 

18 ‘‘(iv) a lineal descendant of a spouses 

19 described in clause (iii). 

20 ‘‘(3) ADJUSTED VALUE.—The term ‘adjusted 

21 value’ means the value of farmland for purposes of 

22 this chapter (determined without regard to this sec23 tion), reduced by the amount deductible under para24 graph (3) or (4) of section 2053(a). 


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1 ‘‘(4) OTHER TERMS.—Any other term used in 

2 this section which is also used in section 2032A shall 

3 have the same meaning given such term by section 

4 2032A. 

5 ‘‘(d) TAX TREATMENT OF DISPOSITIONS AND FAIL6 URES TO USE FOR FARMING PURPOSES.— 

7 ‘‘(1) IMPOSITION OF RECAPTURE TAX.—If, at 

8 any time after the decedent’s death— 

9 ‘‘(A) the qualified heir disposes of any in10 terest in qualified farmland (other than by a 

11 disposition to a member of his family), or 

12 ‘‘(B) the qualified heir ceases to use the 

13 real property which was acquired (or passed) 

14 from the decedent as a farm for farming pur15 poses, 

16 then there is hereby imposed a recapture tax on 

17 such disposition or cessation of use. 

18 ‘‘(2) AMOUNT OF RECAPTURE TAX.— 

19 ‘‘(A) IN GENERAL.—The amount of the 

20 tax imposed by paragraph (1) shall be the ex21 cess of— 

22 ‘‘(i) the tax which would have been 

23 imposed by section 2001 on the estate of 

24 the decedent but determined as if such es25 tate included the interest in qualified farmVerDate Nov 24 2008 02:16 Nov 05, 2009 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4015.IH H4015

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1 land described in paragraph (1) which was 

2 so disposed of or ceased to be so used, re3 duced by the credits allowable against such 

4 tax, over 

5 ‘‘(ii) the tax imposed by section 2001 

6 on the estate of the decedent, reduced by 

7 such credits. 

8 For purposes of this paragraph, the value of the in9 terest in qualified farmland specified in subpara10 graph (A) shall be the adjusted value of such inter11 est as of the date of the disposition or cessation of 

12 such interest described in paragraph (1). 

13 ‘‘(B) $8,000,000 EXCLUSION AMOUNT.— 

14 For purposes of subparagraph (A), the adjusted 

15 value of such interest shall be reduced by an 

16 amount equal to— 

17 ‘‘(i) $8,000,000, reduced (but not 

18 below zero) by 

19 ‘‘(ii) an amount equal to the amount 

20 by which the adjusted value of all other in21 terests in such qualified farmland has been 

22 reduced previously by reason of this sub23 paragraph. 

24 ‘‘(3) REGULATIONS.—The Secretary may pre25 scribe such regulations as may be necessary or apVerDate Nov 24 2008 02:16 Nov 05, 2009 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H4015.IH H4015

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1 propriate to carry out this subsection, including reg2 ulations requiring record keeping and information 

3 reporting, except that the Secretary may not impose 

4 a lien on the estate of the decedent or qualified 

5 farmland for such purposes. 

6 ‘‘(e) APPLICATION OF OTHER RULES.—Rules similar 

7 to the rules of subsections (e) (other than paragraph (13) 

8 thereof), (f), (g), (h), and (i) of section 2032A shall apply 

9 for purposes of this section. 

10 ‘‘(f) ELECTION.—The election under this subsection 

11 shall be made on or before the due date (including exten12 sions) for filing the return of tax imposed by section 2001 

13 and shall be made on such return.’’. 

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

15 for part III of subchapter A of chapter 11 of such Code 

16 is amended by inserting after the item relating to section 

17 2033 the following new item: 

‘‘Sec. 2033A. Exclusion of certain farmland so long as use as farmland continues.’’. 

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

19 this section shall apply to estates of decedents dying after 

20 the date of the enactment of this Act. 

Æ 


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