II 

117TH CONGRESS 

1ST SESSION S. 994 

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

generation-skipping taxes, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 25, 2021 

Mr. SANDERS (for himself, Mrs. GILLIBRAND, Mr. WHITEHOUSE, Mr. VAN

HOLLEN, and Mr. REED) introduced the following bill; which was read 

twice and referred to the Committee on Finance 

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 ‘‘For the 99.5 Percent 

5 Act’’. 

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

8 (a) MODIFICATION OF RATES.—Section 2001(c) of 

9 the Internal Revenue Code of 1986 is amended by striking 

10 the last 2 rows and inserting the following: 


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‘‘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 but not over $1,000,000,000 $24,245,800 plus 55 

percent of the excess of such amount 

over $50,000,000. 

Over $1,000,000,000 ............................................. $546,745,800 plus 65 

percent of the excess of such amount 

over 

$1,000,000,000.’’. 

1 (b) EXCLUSION AMOUNT.— 

2 (1) ESTATE TAX.—Paragraph (3) of section 

3 2010(c) of the Internal Revenue Code of 1986 is 

4 amended to read as follows: 

5 ‘‘(3) BASIC EXCLUSION AMOUNT.—For pur6 poses of this section, the basic exclusion amount is 

7 $3,500,000.’’. 

8 (2) MODIFICATION TO GIFT TAX EXCLUSION

9 AMOUNT.—Paragraph (1) of section 2505(a) of the 

10 Internal Revenue Code of 1986 is amended to read 

11 as follows: 

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

13 under section 2010(c) for such calendar year (deter14 mined as if the basic exclusion amount in section 

15 2010(c)(2)(A) were $1,000,000), reduced by’’. 


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

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

3 generation-skipping transfers and gifts made, after De4 cember 31, 2021. 

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

6 FARM, ETC., REAL PROPERTY. 

7 (a) IN GENERAL.—Paragraph (2) of section 

8 2032A(a) of the Internal Revenue Code of 1986 is amend9 ed by striking ‘‘$750,000’’ and inserting ‘‘$3,000,000’’. 

10 (b) INFLATION ADJUSTMENT.—Paragraph (3) of sec11 tion 2032A(a) of such Code is amended— 

12 (1) by striking ‘‘1998’’ and inserting ‘‘2022’’, 

13 (2) by striking ‘‘$750,000’’ each place it ap14 pears and inserting ‘‘$3,000,000’’, and 

15 (3) by striking ‘‘calendar year 1997’’ and in16 serting ‘‘calendar year 2021’’ in subparagraph (B). 

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

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

19 gifts made, after December 31, 2021. 

20 SEC. 4. MODIFICATION OF ESTATE TAX RULES WITH RE21 SPECT TO LAND SUBJECT TO CONSERVATION 

22 EASEMENTS. 

23 (a) MODIFICATION OF EXCLUSION LIMITATION.— 

24 Subparagraph (B) of section 2031(c)(1) of the Internal 


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1 Revenue Code of 1986 is amended by striking ‘‘$500,000’’ 

2 and inserting ‘‘$2,000,000’’. 

3 (b) MODIFICATION OF APPLICABLE PERCENTAGE.— 

4 Paragraph (2) of section 2031(c) of the Internal Revenue 

5 Code of 1986 is amended by striking ‘‘40 percent’’ and 

6 inserting ‘‘60 percent’’. 

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

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

9 gifts made, after December 31, 2021. 

10 SEC. 5. DISALLOWANCE OF STEP-UP IN BASIS FOR PROP11 ERTY HELD IN CERTAIN GRANTOR TRUSTS. 

12 (a) IN GENERAL.—Section 1014 of the Internal Rev13 enue Code of 1986 is amended— 

14 (1) by redesignating subsection (f) as sub15 section (g), and 

16 (2) by inserting after subsection (e) the fol17 lowing: 

18 ‘‘(f) PROPERTY HELD IN CERTAIN GRANTOR

19 TRUSTS.—This section shall not apply to property— 

20 ‘‘(1) held in a trust of which the transferor is 

21 considered the owner under subpart E of part I of 

22 subchapter J, and 

23 ‘‘(2) if, after the transfer of such property to 

24 the trust, such property is not includible in the gross 

25 estate of the transferor for purposes of chapter 11.’’. 


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1 (b) CONFORMING AMENDMENT.—Section 6662(k) of 

2 the Internal Revenue Code of 1986 is amended by striking 

3 ‘‘1014(f)’’ and inserting ‘‘1014(g)’’. 

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

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

6 enactment of this Act. 

7 SEC. 6. VALUATION RULES FOR CERTAIN TRANSFERS OF 

8 NONBUSINESS ASSETS; LIMITATION ON MI9 NORITY DISCOUNTS. 

10 (a) IN GENERAL.—Section 2031 of the Internal Rev11 enue Code of 1986 is amended by redesignating subsection 

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

13 the following new subsections: 

14 ‘‘(d) VALUATION RULES FOR CERTAIN TRANSFERS

15 OF NONBUSINESS ASSETS.—For purposes of this chapter 

16 and chapter 12— 

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

18 of any interest in an entity other than an interest 

19 which is actively traded (within the meaning of sec20 tion 1092)— 

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

22 held by the entity with respect to such interest 

23 shall be determined as if the transferor had 

24 transferred such assets directly to the trans25 feree (and no valuation discount shall be alVerDate Sep 11 2014 22:43 Apr 18, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S994.IS S994

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1 lowed with respect to such nonbusiness assets), 

2 and 

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

4 taken into account in determining the value of 

5 the interest in the entity. 

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

7 this subsection— 

8 ‘‘(A) IN GENERAL.—The term ‘nonbusi9 ness asset’ means any asset which is not used 

10 in the active conduct of 1 or more trades or 

11 businesses. 

12 ‘‘(B) EXCEPTION FOR CERTAIN PASSIVE

13 ASSETS.—Except as provided in subparagraph 

14 (C), a passive asset shall not be treated for pur15 poses of subparagraph (A) as used in the active 

16 conduct of a trade or business unless— 

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

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

19 is a hedge with respect to such property, 

20 or 

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

22 the active conduct of 1 or more real prop23 erty trades or businesses (within the mean24 ing of section 469(c)(7)(C)) in which the 

25 transferor materially participates and with 


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1 respect to which the transferor meets the 

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

3 For purposes of clause (ii), material participa4 tion shall be determined under the rules of sec5 tion 469(h), except that section 469(h)(3) shall 

6 be applied without regard to the limitation to 

7 farming activity. 

8 ‘‘(C) EXCEPTION FOR WORKING CAP9 ITAL.—Any asset (including a passive asset) 

10 which is held as a part of the reasonably re11 quired working capital needs of a trade or busi12 ness shall be treated as used in the active con13 duct of a trade or business. 

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

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

16 ‘‘(A) cash or cash equivalents, 

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

18 Secretary, stock in a corporation or any other 

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

20 ‘‘(C) evidence of indebtedness, option, for21 ward or futures contract, notional principal con22 tract, or derivative, 

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

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

25 ‘‘(E) annuity, 


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

2 property trades or businesses (as defined in sec3 tion 469(c)(7)(C)), 

4 ‘‘(G) asset (other than a patent, trade5 mark, or copyright) which produces royalty in6 come, 

7 ‘‘(H) commodity, 

8 ‘‘(I) collectible (within the meaning of sec9 tion 408(m)), or 

10 ‘‘(J) any other asset specified in regula11 tions prescribed by the Secretary. 

12 ‘‘(4) LOOK-THRU RULES.— 

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

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

15 any other entity, this subsection shall be ap16 plied by disregarding the 10-percent interest 

17 and by treating the entity as holding directly its 

18 ratable share of the assets of the other entity. 

19 This subparagraph shall be applied successively 

20 to any 10-percent interest of such other entity 

21 in any other entity. 

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

23 ‘10-percent interest’ means— 

24 ‘‘(i) in the case of an interest in a cor25 poration, ownership of at least 10 percent 


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1 (by vote or value) of the stock in such cor2 poration, 

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

4 partnership, ownership of at least 10 per5 cent of the capital or profits interest in the 

6 partnership, and 

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

8 at least 10 percent of the beneficial inter9 ests in the entity. 

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

11 Subsection (b) shall apply after the application of 

12 this subsection. 

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

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

15 the transfer of any interest in an entity other than an in16 terest which is actively traded (within the meaning of sec17 tion 1092), no discount shall be allowed by reason of the 

18 fact that the transferee does not have control of such enti19 ty, or by reason of the lack of marketability of the interest, 

20 if the transferor, the transferee, and members of the fam21 ily (as defined in section 2032A(e)(2)) of the transferor 

22 and transferee— 

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

24 ‘‘(2) own the majority of the ownership inter25 ests (by value) in such entity.’’. 


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

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

3 enactment of this Act. 

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

5 GRANTOR RETAINED ANNUITY TRUSTS. 

6 (a) IN GENERAL.—Subsection (b) of section 2702 of 

7 the Internal Revenue Code of 1986 is amended— 

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

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

10 and by moving such subparagraphs (as so redesig11 nated) 2 ems to the right; 

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

13 the following: 

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

15 (3) by striking ‘‘paragraph (1) or (2)’’ in para16 graph (1)(C) (as so redesignated) and inserting 

17 ‘‘subparagraph (A) or (B)’’; and 

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

19 paragraph: 

20 ‘‘(2) ADDITIONAL REQUIREMENTS WITH RE21 SPECT TO GRANTOR RETAINED ANNUITIES.—For 

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

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

24 regard to this paragraph) which is retained by the 


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1 transferor, such interest shall be treated as de2 scribed in such paragraph only if— 

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

4 referred to in such paragraph is for a term of 

5 not less than 10 years and not more than the 

6 life expectancy of the annuitant plus 10 years, 

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

8 on an annual basis, do not decrease during the 

9 term described in subparagraph (A), and 

10 ‘‘(C) the remainder interest has a value, as 

11 determined as of the time of the transfer, which 

12 is— 

13 ‘‘(i) not less than an amount equal to 

14 the greater of— 

15 ‘‘(I) 25 percent of the fair mar16 ket value of the property in the trust, 

17 or 

18 ‘‘(II) $500,000, and 

19 ‘‘(ii) not greater than the fair market 

20 value of the property in the trust.’’. 

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 any trust that is includible in the gross estate of the 

20 deemed owner (without regard to subsection (a)(1)). 

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

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

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

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


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

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

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

4 gift by the deemed owner to the trust previously taken 

5 into account by the deemed owner under chapter 12. 

6 ‘‘(f) LIABILITY FOR PAYMENT OF TAX.—Any tax im7 posed pursuant to subsection (a) shall be a liability of the 

8 trust.’’. 

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

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

11 end the following new item: 

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

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

13 this section shall apply— 

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

15 enactment of this Act, 

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

17 the date of the enactment of this Act which is attrib18 utable to a contribution made on or after such date, 

19 and 

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

21 the date of the enactment of this Act to which sec22 tion 2901(a) of the Internal Revenue Code of 1986 

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

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

25 Code on or after such date. 


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1 SEC. 9. ELIMINATION OF GENERATION-SKIPPING TRANS2 FER TAX EXEMPTION FOR CERTAIN TRUSTS. 

3 (a) IN GENERAL.—Section 2642 of the Internal Rev4 enue Code of 1986 is amended by adding at the end the 

5 following new subsection: 

6 ‘‘(h) ELIMINATION OF GST EXEMPTION FOR CER7 TAIN TRUSTS.— 

8 ‘‘(1) IN GENERAL.— 

9 ‘‘(A) TRANSFERS FROM NON-QUALIFYING

10 TRUSTS.—In the case of any generation-skip11 ping transfer made from a trust that is not a 

12 qualifying trust, the inclusion ratio with respect 

13 to any property transferred in such transfer 

14 shall be 1. 

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

16 of this subsection, the term ‘qualifying trust’ 

17 means a trust for which the date of termination 

18 of such trust is not greater than 50 years after 

19 the date on which such trust is created. 

20 ‘‘(2) TRUSTS CREATED BEFORE DATE OF EN21 ACTMENT.—In the case of any trust created before 

22 the date of the enactment of this subsection, such 

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

24 period of 50 years after the date of the enactment 

25 of this subsection. 


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

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

3 trust which is treated as a separate trust under sec4 tion 2654(b)(1), such separate trust shall be treated 

5 as created on the date of the first transfer described 

6 in such section with respect to such separate trust. 

7 ‘‘(4) DATE OF CREATION OF POUR-OVER

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

9 transfer of property which involves the transfer of 

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

11 the creation of the transferee trust shall be treated 

12 as being the earlier of— 

13 ‘‘(A) the date of the creation of such trans14 feree trust, or 

15 ‘‘(B) the date of the creation of the trans16 feror trust. 

17 In the case of multiple transfers to which the pre18 ceding sentence applies, the date of the creation of 

19 the transferor trust shall be determined under the 

20 preceding sentence before the application of the pre21 ceding sentence to determine the date of the creation 

22 of the transferee trust. 

23 ‘‘(5) REGULATIONS.—The Secretary may pre24 scribe such regulations or other guidance as may be 


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1 necessary or appropriate to carry out this sub2 section.’’. 

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

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

5 of this Act. 

6 SEC. 10. SIMPLIFYING GIFT TAX EXCLUSION FOR ANNUAL 

7 GIFTS. 

8 (a) IN GENERAL.—Paragraph (1) of section 2503(b) 

9 of the Internal Revenue Code of 1986 is amended to read 

10 as follows: 

11 ‘‘(1) IN GENERAL.— 

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

13 gifts made to any person by the donor during 

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

15 gifts to such person shall not, for purposes of 

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

17 of gifts made during such year. 

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

19 ‘‘(i) IN GENERAL.—The aggregate 

20 amount excluded under subparagraph (A) 

21 with respect to all transfers described in 

22 clause (ii) made by the donor during the 

23 calendar year shall not exceed twice the 

24 dollar amount in effect under such sub25 paragraph for such calendar year. 


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1 ‘‘(ii) TRANSFERS SUBJECT TO LIMITA2 TION.—The transfers described in this 

3 clause are— 

4 ‘‘(I) a transfer in trust, 

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

6 a passthrough entity, 

7 ‘‘(III) a transfer of an interest 

8 subject to a prohibition on sale, and 

9 ‘‘(IV) any other transfer of prop10 erty that, without regard to with11 drawal, put, or other such rights in 

12 the donee, cannot immediately be liq13 uidated by the donee.’’. 

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

15 Internal Revenue Code of 1986 is amended by striking 

16 subsection (c). 

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

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

19 such regulations or other guidance as may be necessary 

20 or appropriate to carry out the amendments made by this 

21 section. 

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

23 this section shall apply to any calendar year beginning 

24 after the date of the enactment of this Act. 

Æ 


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