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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4015 Introduced in House (IH)]

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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Family Farm and Small Business Tax 
Relief Act of 2009''.

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

    (a) EGTRRA Sunset Not To Apply.--Section 901 of the Economic Growth 
and Tax Relief Reconciliation Act of 2001 shall not apply to title V of 
such Act (other than subtitles A and E, and sections 511(d) and 
521(b)(2), thereof).
    (b) $3,500,000 Applicable Exclusion Amount.--
            (1) In general.--Subsection (c) of section 2010 of the 
        Internal Revenue Code of 1986 is amended by striking all that 
        follows ``the applicable exclusion amount'' and inserting ``. 
        For purposes of the preceding sentence, the applicable 
        exclusion amount is $3,500,000.''.
            (2) Inflation adjustment.--Section 2010 of such Code is 
        amended by redesignating subsection (d) as subsection (e) and 
        by inserting after subsection (c) the following new subsection:
    ``(d) Cost-of-Living Adjustment.--In the case of any decedent dying 
in a calendar year after 2011, the $3,500,000 amount in subsection (c) 
shall be increased by an amount equal to--
            ``(1) such amount, multiplied by
            ``(2) the cost-of-living adjustment determined under 
        section 1(f)(3) for such calendar year by substituting 
        `calendar year 2010' for `calendar year 1992' in subparagraph 
        (B) thereof.
If any amount as adjusted under the preceding sentence is not a 
multiple of $10,000, such amount shall be rounded to the nearest 
multiple of $10,000.''.
    (c) 45 Percent Maximum Rate.--The table in paragraph (1) of section 
2001(c) of such Code is amended by striking the last 3 items and 
inserting the following new item:

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

    (d) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying, and gifts made, after December 31, 
2010.

SEC. 3. RESTORATION OF, AND INCREASE IN, DEDUCTION FOR FAMILY-OWNED 
              BUSINESS INTERESTS.

    (a) Restoration.--Subsection (j) of section 2057 (relating to 
termination) is amended to read as follows:
    ``(j) Application of Section.--This section--
            ``(1) shall not apply to estates of decedents dying after 
        December 31, 2003, and before January 1, 2011, but
            ``(2) shall apply to estates of decedents dying after 
        December 31, 2010.''.
    (b) Increase.--
            (1) In general.--Subsection (a) of section 2057 is 
        amended--
                    (A) by striking ``$675,000'' in paragraph (2) and 
                inserting ``$8,000,000'', and
                    (B) by striking paragraph (3).
            (2) Cost-of-living adjustment.--Subsection (a) of section 
        2057 is amended by adding at the end the following new 
        paragraph:
            ``(3) Cost-of-living adjustment.--In the case of any 
        decedent dying in a calendar year after 2011, the $8,000,000 
        amount in paragraph (2) shall be increased by an amount equal 
        to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for such calendar year by 
                substituting `calendar year 2010' for `calendar year 
                1992' in subparagraph (B) thereof.
        If any amount as adjusted under the preceding sentence is not a 
        multiple of $10,000, such amount shall be rounded to the 
        nearest multiple of $10,000.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying after December 31, 2010.

SEC. 4. EXCLUSION FROM GROSS ESTATE FOR CERTAIN FARMLAND SO LONG AS 
              FARMLAND USE CONTINUES.

    (a) In General.--Part III of subchapter A of chapter 11 of the 
Internal Revenue Code of 1986 (relating to gross estate) is amended by 
inserting after section 2033 the following new section:

``SEC. 2033A. EXCLUSION OF CERTAIN FARMLAND SO LONG AS USE AS FARMLAND 
              CONTINUES.

    ``(a) In General.--In the case of an estate of a decedent to which 
this section applies, if the executor makes the election described in 
subsection (f), the value of the gross estate shall not include the 
adjusted value of qualified farmland included in the estate.
    ``(b) Estates to Which Section Applies.--This section shall apply 
to an estate if--
            ``(1) the decedent was (at the date of the decedent's 
        death) a citizen or resident of the United States, and
            ``(2) during the 8-year period ending on the date of the 
        decedent's death there have been periods aggregating 5 years or 
        more during which--
                    ``(A) the qualified farmland was owned by the 
                decedent or a member of the decedent's family, and
                    ``(B) there was material participation (within the 
                meaning of section 2032A(e)(6)) by the decedent or a 
                member of the decedent's family in the operation of 
                such farmland, except that `material participation' 
                shall also include any rental of real estate and 
                related property between the estate of the decedent or 
                any successor thereto and any tenant so long as the 
                tenant uses the real estate and related property to 
                produce agricultural or horticultural commodities, 
                including but not limited to livestock, bees, poultry, 
                orchards and woodlands, timber and fur-bearing animals 
                and wildlife on such farmland.
        Rules similar to the rules of paragraphs (4) and (5) of section 
        2032A(b) shall apply for purposes of subparagraph (B).
    ``(c) Definitions and Special Rule.--For purposes of this section--
            ``(1) Qualified farmland.--The term `qualified farmland' 
        means any real property or other property related to the farm 
        operation--
                    ``(A) which is located in the United States,
                    ``(B) which is used as a farm for farming purposes, 
                and
                    ``(C) which was acquired from or passed from the 
                decedent to a qualified heir of the decedent and which, 
                on the date of the decedent's death, was being so used 
                by the decedent or a member of the decedent's family.
            ``(2) Member of family.--A member of a family, with respect 
        to any individual, means--
                    ``(A) a member of the family (as defined by section 
                2031A(e)(2)), and
                    ``(B) includes--
                            ``(i) a lineal descendant of any spouse 
                        described in subparagraph (D) of section 
                        2032A(e)(2),
                            ``(ii) a lineal descendant of a sibling of 
                        a parent of such individual,
                            ``(iii) a spouse of any lineal descendant 
                        described in clause (ii), and
                            ``(iv) a lineal descendant of a spouses 
                        described in clause (iii).
            ``(3) Adjusted value.--The term `adjusted value' means the 
        value of farmland for purposes of this chapter (determined 
        without regard to this section), reduced by the amount 
        deductible under paragraph (3) or (4) of section 2053(a).
            ``(4) Other terms.--Any other term used in this section 
        which is also used in section 2032A shall have the same meaning 
        given such term by section 2032A.
    ``(d) Tax Treatment of Dispositions and Failures To Use for Farming 
Purposes.--
            ``(1) Imposition of recapture tax.--If, at any time after 
        the decedent's death--
                    ``(A) the qualified heir disposes of any interest 
                in qualified farmland (other than by a disposition to a 
                member of his family), or
                    ``(B) the qualified heir ceases to use the real 
                property which was acquired (or passed) from the 
                decedent as a farm for farming purposes,
        then there is hereby imposed a recapture tax on such 
        disposition or cessation of use.
            ``(2) Amount of recapture tax.--
                    ``(A) In general.--The amount of the tax imposed by 
                paragraph (1) shall be the excess of--
                            ``(i) the tax which would have been imposed 
                        by section 2001 on the estate of the decedent 
                        but determined as if such estate included the 
                        interest in qualified farmland described in 
                        paragraph (1) which was so disposed of or 
                        ceased to be so used, reduced by the credits 
                        allowable against such tax, over
                            ``(ii) the tax imposed by section 2001 on 
                        the estate of the decedent, reduced by such 
                        credits.
        For purposes of this paragraph, the value of the interest in 
        qualified farmland specified in subparagraph (A) shall be the 
        adjusted value of such interest as of the date of the 
        disposition or cessation of such interest described in 
        paragraph (1).
                    ``(B) $8,000,000 exclusion amount.--For purposes of 
                subparagraph (A), the adjusted value of such interest 
                shall be reduced by an amount equal to--
                            ``(i) $8,000,000, reduced (but not below 
                        zero) by
                            ``(ii) an amount equal to the amount by 
                        which the adjusted value of all other interests 
                        in such qualified farmland has been reduced 
                        previously by reason of this subparagraph.
            ``(3) Regulations.--The Secretary may prescribe such 
        regulations as may be necessary or appropriate to carry out 
        this subsection, including regulations requiring record keeping 
        and information reporting, except that the Secretary may not 
        impose a lien on the estate of the decedent or qualified 
        farmland for such purposes.
    ``(e) Application of Other Rules.--Rules similar to the rules of 
subsections (e) (other than paragraph (13) thereof), (f), (g), (h), and 
(i) of section 2032A shall apply for purposes of this section.
    ``(f) Election.--The election under this subsection shall be made 
on or before the due date (including extensions) for filing the return 
of tax imposed by section 2001 and shall be made on such return.''.
    (b) Clerical Amendment.--The table of sections for part III of 
subchapter A of chapter 11 of such Code is amended by inserting after 
the item relating to section 2033 the following new item:

``Sec. 2033A. Exclusion of certain farmland so long as use as farmland 
                            continues.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying after the date of the enactment of 
this Act.
                                 <all>
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