II 

116TH CONGRESS 

1ST SESSION S. 2231 

To establish American opportunity accounts, to modify estate and gift tax 

rules, to reform the taxation of capital income, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 23, 2019 

Mr. BOOKER introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To establish American opportunity accounts, to modify estate 

and gift tax rules, to reform the taxation of capital 

income, 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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘American Opportunity Accounts Act’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—AMERICAN OPPORTUNITY ACCOUNTS 

Sec. 101. Definitions. 

Sec. 102. American Opportunity Fund. 


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Sec. 103. AO accounts. 

Sec. 104. Assignment, alienation, and treatment of deceased individuals. 

Sec. 105. Rules governing AO accounts relating to investment, accounting, and 

reporting. 

Sec. 106. American Opportunity Fund Board. 

Sec. 107. Fiduciary responsibilities. 

Sec. 108. Accounts disregarded in determining eligibility for Federal benefits. 

Sec. 109. Reports. 

Sec. 110. Programs for promoting financial capability. 

Sec. 111. Tax treatment. 

TITLE II—REVENUE PROVISIONS 

Subtitle A—Estate and Gift Tax Provisions 

Sec. 201. Modification of estate tax rate and basic exclusion amount. 

Sec. 202. Required minimum 10-year term, etc., for grantor retained annuity 

trusts. 

Sec. 203. Certain transfer tax rules applicable to grantor trusts. 

Sec. 204. Simplifying gift tax exclusion for annual gifts. 

Sec. 205. Modification of rules for value of certain farm real property. 

Subtitle B—Reform of Taxation of Capital Income 

Sec. 211. Increase in capital gains rate. 

Sec. 212. Deemed realization of capital gains at time of gift or death. 

Sec. 213. Exclusion of certain amounts of realized capital gain. 

Sec. 214. Extension of time for payment of tax. 

Sec. 215. Waiver of penalty for underpayment of estimated tax. 

Sec. 216. Effective date. 

1 TITLE I—AMERICAN 

2 OPPORTUNITY ACCOUNTS 

3 SEC. 101. DEFINITIONS. 

4 For purposes of this title— 

5 (1) AMERICAN OPPORTUNITY FUND.—The term 

6 ‘‘American Opportunity Fund’’ means the fund es7 tablished under section 102. 

8 (2) AO ACCOUNT.—The term ‘‘AO account’’ 

9 means an American opportunity account established 

10 under section 103. 


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1 (3) SECRETARY.—The term ‘‘Secretary’’ means 

2 the Secretary of the Treasury or the Secretary’s del3 egate. 

4 (4) AMERICAN OPPORTUNITY FUND BOARD.— 

5 The term ‘‘American Opportunity Fund Board’’ 

6 means the board established pursuant to section 

7 106. 

8 (5) EXECUTIVE DIRECTOR.—The term ‘‘Execu9 tive Director’’ means the executive director ap10 pointed pursuant to section 106. 

11 SEC. 102. AMERICAN OPPORTUNITY FUND. 

12 (a) ESTABLISHMENT.—There is established in the 

13 Treasury of the United States a fund to be known as the 

14 ‘‘American Opportunity Fund’’. 

15 (b) AMOUNTS HELD BY FUND.—The American Op16 portunity Fund consists of the sum of all amounts paid 

17 into the Fund under this title, increased by the total net 

18 earnings from investments of sums held in the Fund or 

19 reduced by the total net losses from investments of sums 

20 held in the Fund, and reduced by the total amount of pay21 ments made from the Fund (including payments for ad22 ministrative expenses). 

23 (c) USE OF FUND.— 


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1 (1) IN GENERAL.—The sums in the American 

2 Opportunity Fund are appropriated and shall re3 main available without fiscal year limitation— 

4 (A) to make contributions to AO accounts; 

5 (B) to invest under section 105; 

6 (C) to make distributions in accordance 

7 with this title; 

8 (D) to pay the administrative expenses of 

9 carrying out this title; and 

10 (E) to purchase insurance as provided in 

11 section 107(c)(2). 

12 (2) EXCLUSIVE PURPOSES.—The sums in the 

13 American Opportunity Fund shall not be appro14 priated for any purpose other than the purposes 

15 specified in this section and may not be used for any 

16 other purpose. 

17 (d) TRANSFERS TO AMERICAN OPPORTUNITY

18 FUND.—The Secretary shall make transfers from the gen19 eral fund of the Treasury to the American Opportunity 

20 Fund as follows: 

21 (1) INITIAL CONTRIBUTION FOR ELIGIBLE INDI22 VIDUALS BORN AFTER DECEMBER 31, 2019.—Upon 

23 receipt of a certification under section 103(b)(2) 

24 with respect to an individual born after December 


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1 31, 2019, the Secretary shall transfer $1,000 to the 

2 AO account of the individual. 

3 (2) ANNUAL CONTRIBUTIONS.— 

4 (A) IN GENERAL.—Each year which occurs 

5 after the year in which an AO account is estab6 lished for an eligible individual and before the 

7 year the eligible individual attains the age of 

8 18, the Secretary shall transfer the annual con9 tribution amount to the AO account of the indi10 vidual. 

11 (B) ANNUAL CONTRIBUTION AMOUNT.— 

12 The annual contribution amount shall be the 

13 amount such that the annual contribution 

14 amount for any taxpayer whose household in15 come is within an income tier specified in the 

16 following table shall decrease, on a sliding scale 

17 in a linear manner, from the initial amount to 

18 the final amount specified in such table for 

19 such income tier: 

In the case of household income 

(expressed as a percent of the poverty line) 

within the following income tier: 

The initial 

amount is— 

The final 

amount is— 

Up to 100 percent .................................................. $2,000 $2,000 

100 percent up to 125 percent ............................... 2,000 1,500 

125 percent up to 175 percent ............................... 1,500 1,000 

175 percent up to 225 percent ............................... 1,000 500 

225 percent up to 325 percent ............................... 500 250 

325 percent up to 500 percent ............................... 250 0 

500 percent or more ............................................... 0 0 


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1 (C) APPLICABLE HOUSEHOLD INCOME; 

2 POVERTY LINE.—For purposes of this para3 graph— 

4 (i) APPLICABLE HOUSEHOLD IN5 COME.—The term ‘‘applicable household 

6 income’’ means household income (as de7 fined in section 36B(d) of the Internal 

8 Revenue Code of 1986), except that— 

9 (I) with respect to any calendar 

10 year, the Secretary shall use the in11 come of the most recent taxable year 

12 for which information is available; and 

13 (II) in determining household in14 come the Secretary shall aggregate 

15 the income of married individuals fil16 ing separate tax returns. 

17 (ii) POVERTY LINE.—The term ‘‘pov18 erty line’’ has the meaning given such term 

19 under section 36B(d) of the Internal Rev20 enue Code of 1986. 

21 (D) AUTHORITY TO PROVIDE TAX INFOR22 MATION.— 

23 (i) IN GENERAL.—Section 6103(l) of 

24 the Internal Revenue Code of 1986 is 


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1 amended by adding at the end the fol2 lowing new paragraph: 

3 ‘‘(23) DISCLOSURE OF RETURN INFORMATION

4 TO CARRY OUT ELIGIBILITY REQUIREMENTS FOR

5 CERTAIN PROGRAMS.— 

6 ‘‘(A) IN GENERAL.—The Secretary shall 

7 disclose to officers and employees of the De8 partment of Treasury or the American Oppor9 tunity Fund Board return information of any 

10 taxpayer whose income is relevant in deter11 mining any annual contribution to an American 

12 Opportunity Account under section 102 of the 

13 American Opportunity Accounts Act. Such re14 turn information shall be limited to— 

15 ‘‘(i) taxpayer identity information 

16 with respect to such taxpayer, 

17 ‘‘(ii) the filing status of such tax18 payer, 

19 ‘‘(iii) the number of individuals for 

20 whom a deduction is allowed under section 

21 151 with respect to the taxpayer (including 

22 the taxpayer and the taxpayer’s spouse), 

23 ‘‘(iv) the modified adjusted gross in24 come (as defined in section 36B) of such 

25 taxpayer, of any spouse of such taxpayer 


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1 who filed a separate return, and of each of 

2 the other individuals included under clause 

3 (iii) who are required to file a return of tax 

4 imposed by chapter 1 for the taxable year, 

5 ‘‘(v) such other information as is pre6 scribed by the Secretary by regulation as 

7 might indicate whether the taxpayer is eli8 gible for such an annual contribution (and 

9 the amount thereof), and 

10 ‘‘(vi) the taxable year with respect to 

11 which the preceding information relates or, 

12 if applicable, the fact that such informa13 tion is not available. 

14 ‘‘(B) RESTRICTION ON USE OF DISCLOSED

15 INFORMATION.—Return information disclosed 

16 under subparagraph (A) may be used by offi17 cers and employees of the Department of Treas18 ury or the American Opportunity Fund Board 

19 for the purposes of, and to the extent necessary 

20 in establishing eligibility for, and verifying the 

21 appropriate amount of, any annual contribution 

22 described in subparagraph (A).’’. 

23 (ii) PROCEDURES AND RECORD24 KEEPING RELATED TO DISCLOSURES.— 

25 Paragraph (4) of section 6103(p) of such 


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1 Code is amended by striking ‘‘or (22)’’ 

2 each place it appears and inserting ‘‘(22), 

3 or (23)’’. 

4 (E) STUDY ON INCORPORATION OF OTHER

5 WEALTH FACTORS.—Not later than 2 years 

6 after the date of the enactment of this Act, the 

7 Comptroller General shall submit to Congress 

8 and the Secretary of Treasury a report on the 

9 feasibility and distributive impacts of a new 

10 measure for determining the amount of the an11 nual contribution amount under this paragraph 

12 based on family wealth, total assets, and overall 

13 net worth. Such measure may— 

14 (i) include financial assets, the value 

15 of family home, retirement accounts, busi16 ness and entrepreneurial ventures, poten17 tial future inheritances, and any other as18 sets or debts; and 

19 (ii) continue to factor in current or 

20 past income to the extent such information 

21 is useful in estimating overall household 

22 wealth. 

23 (3) ADJUSTMENT FOR INFLATION.— 

24 (A) IN GENERAL.—For each calendar year 

25 beginning after 2020, each of the dollar 


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1 amounts under paragraphs (1) and (2)(B)(i) 

2 shall be increased by such dollar amount multi3 plied by the cost-of-living adjustment deter4 mined under section 1(f)(3) of the Internal 

5 Revenue Code of 1986 determined by sub6 stituting ‘‘calendar year 2019’’ for ‘‘calendar 

7 year 2016’’ in subparagraph (A)(ii) thereof. 

8 (B) ROUNDING.—If any amount adjusted 

9 under paragraph (1) is not a multiple of $50, 

10 such amount shall be rounded to the next low11 est multiple of $50. 

12 (e) PROHIBITION ON USE OF PAYROLL TAXES TO

13 FUND AO ACCOUNTS.—The American Opportunity Fund 

14 and AO accounts are wholly separate and unique from the 

15 Social Security system. No amount from any tax on em16 ployment may be contributed to the American Opportunity 

17 Fund or AO accounts. 

18 SEC. 103. AO ACCOUNTS. 

19 (a) IN GENERAL.— 

20 (1) ESTABLISHMENT.—The Executive Director 

21 shall establish in the American Opportunity Fund an 

22 account (to be known as an ‘‘American Opportunity 

23 account’’ or an ‘‘AO account’’) for each eligible indi24 vidual certified under subsection (b). Each such ac25 count shall be identified to its account holder by 


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1 means of a unique personal identifier currently rec2 ognized by the Internal Revenue Service and shall 

3 remain in the American Opportunity Fund. 

4 (2) ACCOUNT BALANCE.—The balance in an ac5 count holder’s AO account at any time is the excess 

6 of— 

7 (A) the sum of— 

8 (i) all deposits made into the Amer9 ican Opportunity Fund and credited to the 

10 account under paragraph (3); and 

11 (ii) the total amount of allocations 

12 made to and reductions made in the ac13 count pursuant to paragraph (4); over 

14 (B) the amounts paid out of the account 

15 with respect to such individual under subsection 

16 (c). 

17 (3) CREDITING OF CONTRIBUTIONS.—Pursuant 

18 to regulations which shall be prescribed by the Exec19 utive Director, the Executive Director shall credit to 

20 each AO account the amounts paid into the Amer21 ican Opportunity Fund under section 102(d) which 

22 are attributable to the account holder of such ac23 count. 

24 (4) ALLOCATION OF EARNINGS AND LOSSES.— 

25 The Executive Director shall allocate to each AO acVerDate Sep 11 2014 06:03 Aug 02, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S2231.IS S2231

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1 count an amount equal to the net earnings and net 

2 losses from each investment of sums in the Amer3 ican Opportunity Fund which are attributable, on a 

4 pro rata basis, to sums credited to such account, re5 duced by an appropriate share of the administrative 

6 expenses paid out of the net earnings, as determined 

7 by the Executive Director. 

8 (b) ELIGIBLE INDIVIDUAL.—For purposes of this 

9 title— 

10 (1) IN GENERAL.—The term ‘‘eligible indi11 vidual’’ means any individual who— 

12 (A) was born after December 31, 2003; 

13 (B) has not yet attained the age of 18 

14 years; and 

15 (C) has a valid, unique, Federal Govern16 ment issued identification number recognized by 

17 the Internal Revenue Service. 

18 (2) CERTIFICATION OF ACCOUNT HOLDERS.— 

19 (A) AUTOMATIC CERTIFICATION FOR CER20 TAIN INDIVIDUALS BORN AFTER DECEMBER 31, 

21 2019.—On any date after December 31, 2019, 

22 on which an eligible individual is issued a social 

23 security account number under section 

24 203(c)(2) of the Social Security Act, the Com25 missioner of Social Security shall certify to the 


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1 Executive Director and the Secretary of the 

2 Treasury the name of, and social security num3 ber issued to, such eligible individual. 

4 (B) OTHER INDIVIDUALS.—In the case of 

5 an eligible individual who is not certified under 

6 subparagraph (A), such individual may request 

7 the establishment an AO account under this 

8 subparagraph by application to the Executive 

9 Director, and the Executive Director shall cer10 tify such individual under this subparagraph. 

11 (c) RESTRICTIONS ON DISTRIBUTIONS.— 

12 (1) AGE-RELATED RESTRICTIONS.— 

13 (A) IN GENERAL.—Except as otherwise 

14 provided in this paragraph, no amount may be 

15 distributed from an AO account before the date 

16 on which the account holder attains the age of 

17 18. 

18 (B) HIGHER EDUCATION EXPENSES.— 

19 Subparagraph (A) shall not apply to amounts 

20 paid for qualified tuition and related expenses 

21 (as defined in section 25A(f)(1) of the Internal 

22 Revenue Code of 1986) of the account holder if 

23 the account holder is an eligible student (as de24 fined in section 25A(b)(3) of such Code) with 

25 respect to such expenses. 


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1 (C) AUTHORITY TO PROVIDE HIGHER AGE

2 LIMIT FOR CERTAIN DISTRIBUTIONS.—The Sec3 retary, in consultation with the American Op4 portunity Fund Advisory Board, may by regula5 tions provide for a higher age limitation with 

6 respects to distributions relating to certain cat7 egories of qualified expenses if the Secretary de8 termines that such higher age limitation is ap9 propriate. 

10 (2) USE-RELATED RESTRICTIONS.— 

11 (A) IN GENERAL.—No amount may be dis12 tributed from an AO account unless the account 

13 holder establishes, under rules established by 

14 the Executive Director in consultation with the 

15 American Opportunity Fund Advisory Board, 

16 that such amount shall be used for a qualified 

17 expense. 

18 (B) QUALIFIED EXPENSE.—For purposes 

19 of this subsection— 

20 (i) IN GENERAL.—The term ‘‘qualified 

21 expense’’ means expenses for any of the 

22 following: 

23 (I) Education of the account 

24 holder. 


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1 (II) Ownership of a home by the 

2 account holder. 

3 (III) Any expenses paid or in4 curred on or after the date on which 

the account holder attains age 591 5 ⁄2. 

6 (IV) Any other investment in fi7 nancial assets or personal capital that 

8 provides long-term gains to wages and 

9 wealth, as established under regula10 tions promulgated by the Secretary, in 

11 consultation with the Executive Direc12 tor and the American Opportunity 

13 Fund Advisory Board. 

14 (ii) EXCEPTION.—Such term shall not 

15 include any expense described in clause (i) 

16 which is paid to a person who does not 

17 meet such standards as are prescribed by 

18 the Secretary, in consultation with the Ex19 ecutive Director and the American Oppor20 tunity Fund Advisory Board. 

21 (3) AMERICAN OPPORTUNITY ACCOUNT ADVI22 SORY BOARD.—For purposes of this subsection, the 

23 term ‘‘American Opportunity Fund Advisory Board’’ 

24 means an advisory board established by the Sec25 retary consisting of individuals with expertise in savVerDate Sep 11 2014 06:03 Aug 02, 2019 Jkt 089200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\S2231.IS S2231

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1 ings and asset-building, home financing, education 

2 financing, consumer financial protection, and such 

3 other areas as the Secretary may determine appro4 priate. 

5 SEC. 104. ASSIGNMENT, ALIENATION, AND TREATMENT OF 

6 DECEASED INDIVIDUALS. 

7 (a) ASSIGNMENT AND ALIENATION.—Under regula8 tions which shall be prescribed by the Executive Director, 

9 rules relating to assignment and alienation applicable 

10 under chapter 84 of title 5, United States Code, with re11 spect to amounts held in accounts in the Thrift Savings 

12 Fund shall apply with respect to amounts held in AO ac13 counts in the American Opportunity Fund. 

14 (b) TREATMENT OF ACCOUNTS OF DECEASED INDI15 VIDUALS.—In the case of a deceased account holder of an 

16 AO account which has an account balance greater than 

17 zero, upon receipt of notification of such individual’s 

18 death, the Executive Director shall close the account and 

19 shall transfer the balance in such account to the AO ac20 count of such account holder’s surviving spouse or, if there 

21 is no such account of a surviving spouse, to the duly ap22 pointed legal representative of the estate of the deceased 

23 account holder, or if there is no such representative, to 

24 the person or persons determined to be entitled thereto 


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1 under the laws of the domicile of the deceased account 

2 holder. 

3 SEC. 105. RULES GOVERNING AO ACCOUNTS RELATING TO 

4 INVESTMENT, ACCOUNTING, AND REPORT5 ING. 

6 (a) INVESTMENT PROGRAM.—The Secretary shall es7 tablish, and the American Opportunity Fund Board shall 

8 invest in debt obligations of the United States Government 

9 with a term of 30 years. 

10 (b) INDEPENDENT PUBLIC ACCOUNTANT.— 

11 (1) IN GENERAL.—Under regulations which 

12 shall be prescribed by the Executive Director, and 

13 subject to the provisions of this title, section 8439(b) 

14 of title 5, United States Code (relating to engage15 ment of independent qualified public accountant), 

16 shall apply with respect to the American Oppor17 tunity Fund and accounts maintained in such Fund 

18 in the same manner and to the same extent as such 

19 section relates to the Thrift Savings Fund and the 

20 accounts maintained in the Thrift Savings Fund. 

21 (2) APPLICATION RULES.—For purposes of 

22 paragraph (1), references in such section 8439(b) to 

23 an employee, Member, former employee, or former 

24 Member shall be deemed references to an account 


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1 holder of an AO account in the American Oppor2 tunity Fund. 

3 (c) CONFIDENTIALITY AND DISCLOSURE.— 

4 (1) IN GENERAL.—Except as otherwise author5 ized by Federal law, the American Opportunity 

6 Fund Board, the Executive Director, and any em7 ployee of the American Opportunity Fund Board 

8 shall not disclose information with respect to the 

9 American Opportunity Fund or any account main10 tained in such Fund. 

11 (2) DISCLOSURE TO DESIGNEE OF BENE12 FICIARY.—The Executive Director may, subject to 

13 such requirements and conditions as he may pre14 scribe by regulations, disclose such information with 

15 respect to the AO account of the beneficiary to such 

16 person or persons as the beneficiary may designate 

17 in a request for or consent to such disclosure, or to 

18 any other person at the beneficiary’s request to the 

19 extent necessary to comply with a request for infor20 mation or assistance made by the beneficiary to such 

21 other person. 

22 SEC. 106. AMERICAN OPPORTUNITY FUND BOARD. 

23 (a) IN GENERAL.—There is established in the execu24 tive branch of the Government an American Opportunity 

25 Fund Board. 


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1 (b) COMPOSITION, DUTIES, AND RESPONSIBIL2 ITIES.—Subject to the provisions of this title, the following 

3 provisions shall apply with respect to the American Oppor4 tunity Fund Board in the same manner and to the same 

5 extent as such provisions relate to the Federal Retirement 

6 Thrift Investment Board: 

7 (1) Section 8472 of title 5, United States Code 

8 (relating to composition of Federal Retirement 

9 Thrift Investment Board). 

10 (2) Section 8474 of such title (relating to Exec11 utive Director). 

12 (3) Section 8476 of such title (relating to ad13 ministrative provisions). 

14 SEC. 107. FIDUCIARY RESPONSIBILITIES. 

15 (a) IN GENERAL.—Under regulations of the Sec16 retary of Labor, the provisions of sections 8477 and 8478 

17 of title 5, United States Code, shall apply in connection 

18 with the American Opportunity Fund and the accounts 

19 maintained in such Fund in the same manner and to the 

20 same extent as such provisions apply in connection with 

21 the Thrift Savings Fund and the accounts maintained in 

22 the Thrift Savings Fund. 

23 (b) INVESTIGATIVE AUTHORITY.—Any authority 

24 available to the Secretary of Labor under section 504 of 

25 the Employee Retirement Income Security Act of 1974 


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1 (29 U.S.C. 1134) is hereby made available to the Sec2 retary of Labor, and any officer designated by the Sec3 retary of Labor, to determine whether any person has vio4 lated, or is about to violate, any provision applicable under 

5 subsection (a). 

6 (c) EXCULPATORY PROVISIONS; INSURANCE.— 

7 (1) IN GENERAL.—Any provision in an agree8 ment or instrument which purports to relieve a fidu9 ciary from responsibility or liability for any responsi10 bility, obligation, or duty under this title shall be 

11 void. 

12 (2) INSURANCE.—Amounts in the American 

13 Opportunity Fund available for administrative ex14 penses shall be available and may be used at the dis15 cretion of the Executive Director to purchase insur16 ance to cover potential liability of persons who serve 

17 in a fiduciary capacity with respect to the Fund and 

18 accounts maintained therein, without regard to 

19 whether a policy of insurance permits recourse by 

20 the insurer against the fiduciary in the case of a 

21 breach of a fiduciary obligation. 

22 SEC. 108. ACCOUNTS DISREGARDED IN DETERMINING ELI23 GIBILITY FOR FEDERAL BENEFITS. 

24 Amounts in any AO account shall not be taken into 

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1 nancial eligibility for, or amount of, any benefit or service, 

2 paid for in whole or in part with Federal funds, including 

3 student financial aid. 

4 SEC. 109. REPORTS. 

5 (a) REPORTS TO CONGRESS.—The Executive Direc6 tor, in consultation with the Secretary, shall annually 

7 transmit a written report to the Congress. Such report 

8 shall include— 

9 (1) a detailed description of the status and op10 eration of the American Opportunity Fund and the 

11 management of the AO accounts; and 

12 (2) a detailed accounting of the administrative 

13 expenses in carrying out this title, including the 

14 ratio of such administrative expenses to the balance 

15 of the American Opportunity Fund and the method16 ology adopted by the Executive Director for allo17 cating such expenses among the AO accounts. 

18 (b) REPORTS TO ACCOUNT HOLDERS.—The Amer19 ican Opportunity Fund Board shall prescribe regulations 

20 under which each individual for whom an AO account is 

21 maintained shall be furnished with an annual statement 

22 relating to the individual’s account, which shall include— 

23 (1) a statement of the balance of individual’s 

24 AO account; 


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1 (2) a projection of the account’s growth by the 

2 time the individual attains the age of 18; and 

3 (3) such other information as the Secretary 

4 deems relevant. 

5 SEC. 110. PROGRAMS FOR PROMOTING FINANCIAL CAPA6 BILITY. 

7 The Secretary of the Treasury, in coordination with 

8 the Financial Literacy and Education Commission, shall 

9 develop programs to promote the financial capability of 

10 account holders of AO accounts. 

11 SEC. 111. TAX TREATMENT. 

12 (a) CONTRIBUTIONS AND DISTRIBUTIONS.—Part III 

13 of subchapter B of chapter 1 of the Internal Revenue Code 

14 of 1986 is amended by inserting after section 139G the 

15 following new section: 

16 ‘‘SEC. 139H. CONTRIBUTIONS TO AND DISTRIBUTIONS 

17 FROM AO ACCOUNTS. 

18 ‘‘Gross income shall not include— 

19 ‘‘(1) any contribution credited to the AO ac20 count of the taxpayer under section 103(a)(3) of the 

21 American Opportunity Accounts Act, and 

22 ‘‘(2) any distribution from such an AO ac23 count.’’. 

24 (b) TAX TREATMENT OF EARNINGS AND DISTRIBU25 TIONS.—Subchapter F of chapter 1 of the Internal RevVerDate Sep 11 2014 06:03 Aug 02, 2019 Jkt 089200 PO 00000 Frm 00022 Fmt 6652 Sfmt 6201 E:\BILLS\S2231.IS S2231

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1 enue Code of 1986 is amended by adding at the end the 

2 following new part: 

3 ‘‘PART IX—AMERICAN OPPORTUNITY FUND AND 

4 AO ACCOUNTS 

‘‘Sec. 530A. American Opportunity Fund and AO accounts. 

5 ‘‘SEC. 530A. AMERICAN OPPORTUNITY FUND AND AO AC6 COUNTS. 

7 ‘‘(a) GENERAL RULE.—The American Opportunity 

8 Fund and AO accounts shall be exempt from taxation 

9 under this subtitle. Notwithstanding the preceding sen10 tence, a AO account shall be subject to the taxes imposed 

11 by section 511 (relating to imposition of tax on unrelated 

12 business income of charitable organizations). 

13 ‘‘(b) DEFINITIONS.—For purposes of this section, the 

14 terms ‘American Opportunity Fund’ and ‘AO account’ 

15 have the meanings given such terms under title I of the 

16 American Opportunity Accounts Act.’’. 

17 (c) CONFORMING AMENDMENTS.— 

18 (1) The table of sections for part III of sub19 chapter B of chapter 1 of the Internal Revenue Code 

20 of 1986 is amended by inserting after the item re21 lated to section 139G the following new item: 

‘‘Sec. 139H. Contributions to and distributions from AO accounts.’’. 


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1 (2) The table of parts for subchapter F of 

2 chapter 1 of such Code is amended by adding at the 

3 end the following new item: 

‘‘PART IX—AMERICAN OPPORTUNITY FUND AND AO ACCOUNTS’’. 

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

5 this section shall apply to taxable years beginning after 

6 December 31, 2019. 

7 TITLE II—REVENUE PROVISIONS 

8 Subtitle A—Estate and Gift Tax 

9 Provisions 

10 SEC. 201. MODIFICATION OF ESTATE TAX RATE AND BASIC 

11 EXCLUSION AMOUNT. 

12 (a) PERMANENT EXTENSION OF MAXIMUM ESTATE

13 TAX RATE AND BASIC EXCLUSION AMOUNT AS IN EF14 FECT IN 2009.— 

15 (1) MAXIMUM ESTATE TAX RATE.—The last 

16 row of the table contained in subsection (c) of sec17 tion 2001 of the Internal Revenue Code of 1986 is 

18 amended by striking ‘‘40 percent’’ and inserting ‘‘45 

19 percent’’. 

20 (2) BASIC EXCLUSION AMOUNT.—Paragraph 

21 (3) of section 2010(c) of the Internal Revenue Code 

22 of 1986 is amended to read as follows: 

23 ‘‘(3) BASIC EXCLUSION AMOUNT.—For pur24 poses of this subsection, the basic exclusion amount 

25 is $3,500,000.’’. 


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•S 2231 IS

1 (b) ADDITIONAL TAXES FOR ESTATES OVER

2 $10,000,000.—The table contained in section 2001(c), as 

3 amended by subsection (a), is amended— 

4 (1) by inserting ‘‘but not over $10,000,000’’ 

5 after ‘‘Over $1,000,000’’ in the last row; and 

6 (2) by adding at the end the following: 

‘‘Over $10,000,000 but not over 

$50,000,000.

$4,395,800, plus 55 percent of the 

excess of such amount over 

$10,000,000. 

Over $50,000,000 .......................... $26,395,800, plus 65 percent of the 

excess of such amount over 

$50,000,000.’’. 

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, 2019. 

10 SEC. 202. REQUIRED MINIMUM 10-YEAR TERM, ETC., FOR 

11 GRANTOR RETAINED ANNUITY TRUSTS. 

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

13 amended— 

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

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

16 and by moving such subparagraphs (as so redesig17 nated) 2 ems to the right; 

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

19 the following: 

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


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•S 2231 IS

1 (3) by striking ‘‘paragraph (1) or (2)’’ in para2 graph (1)(C) (as so redesignated) and inserting 

3 ‘‘subparagraph (A) or (B)’’; and 

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

5 paragraph: 

6 ‘‘(2) ADDITIONAL REQUIREMENTS WITH RE7 SPECT TO GRANTOR RETAINED ANNUITIES.—For 

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

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

10 regard to this paragraph) which is retained by the 

11 transferor, such interest shall be treated as de12 scribed in such paragraph only if— 

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

14 referred to in such paragraph is for a term of 

15 not less than 10 years and not more than the 

16 life expectancy of the annuitant plus 10 years, 

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

18 on an annual basis, do not decrease during the 

19 term described in subparagraph (A), and 

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

21 determined as of the time of the transfer, which 

22 is— 

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

24 the greater of— 


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•S 2231 IS

1 ‘‘(I) 25 percent of the fair mar2 ket value of the property in the trust, 

3 or 

4 ‘‘(II) $500,000, and 

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

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

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

8 this section shall apply to transfers made after the date 

9 of the enactment of this Act. 

10 SEC. 203. CERTAIN TRANSFER TAX RULES APPLICABLE TO 

11 GRANTOR TRUSTS. 

12 (a) IN GENERAL.—Subtitle B is amended by adding 

13 at the end the following new chapter: 

14 ‘‘CHAPTER 16—SPECIAL RULES FOR 

15 GRANTOR TRUSTS 

‘‘Sec. 2901. Application of transfer taxes. 

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

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

18 trust to which this section applies— 

19 ‘‘(1) the value of the gross estate of the de20 ceased deemed owner of such portion shall include 

21 all assets attributable to that portion at the time of 

22 the death of such owner, 

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

24 or more beneficiaries during the life of the deemed 


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•S 2231 IS

1 owner of such portion shall be treated as a transfer 

2 by gift for purposes of chapter 12, and 

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

4 deemed owner of such portion, such owner ceases to 

5 be treated as the owner of such portion under sub6 part E of part 1 of subchapter J of chapter 1, all 

7 assets attributable to such portion at such time shall 

8 be treated for purposes of chapter 12 as a transfer 

9 by gift made by the deemed owner. 

10 ‘‘(b) PORTION OF TRUST TO WHICH SECTION AP11 PLIES.—This section shall apply to— 

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

13 which the grantor is the deemed owner, and 

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

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

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

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

18 sale, exchange, or comparable transaction with the 

19 trust that is disregarded for purposes of subtitle A. 

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

21 described with respect to a transaction is the portion of 

22 the trust attributable to the property received by the trust 

23 in such transaction, including all retained income there24 from, appreciation thereon, and reinvestments thereof, net 


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•S 2231 IS

1 of the amount of consideration received by the deemed 

2 owner in such transaction. 

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

4 ‘‘(1) any trust that is includible in the gross es5 tate of the deemed owner (without regard to sub6 section (a)(1)), and 

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

8 determines by regulations or other guidance does not 

9 have as a significant purpose the avoidance of trans10 fer taxes. 

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

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

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

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

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

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

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

18 gift by the deemed owner to the trust previously taken 

19 into account by the deemed owner under chapter 12. 

20 ‘‘(f) LIABILITY FOR PAYMENT OF TAX.—Any tax im21 posed pursuant to subsection (a) shall be a liability of the 

22 trust.’’. 

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

24 for subtitle B is amended by adding at the end the fol25 lowing new item: 

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


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

2 this section shall apply— 

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

4 enactment of this Act; 

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

6 the date of the enactment of this Act which is attrib7 utable to a contribution made on or after such date; 

8 and 

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

10 the date of the enactment of this Act to which sec11 tion 2901(a) of the Internal Revenue Code of 1986 

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

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

14 Code on or after such date. 

15 SEC. 204. SIMPLIFYING GIFT TAX EXCLUSION FOR ANNUAL 

16 GIFTS. 

17 (a) IN GENERAL.—Section 2503 of the Internal Rev18 enue Code of 1986 is amended— 

19 (1) by striking paragraph (1) of subsection (b) 

20 and inserting the following: 

21 ‘‘(1) IN GENERAL.— 

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

23 gifts made to any person by the donor during 

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

25 gifts to such person shall not, for purposes of 


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•S 2231 IS

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

2 of gifts made during such year. 

3 ‘‘(B) CUMULATIVE LIMIT PER DONOR.— 

4 ‘‘(i) IN GENERAL.—The aggregate 

5 amount excluded under subparagraph (A) 

6 with respect to all transfers described in 

7 clause (ii) made by the donor during the 

8 calendar year shall not exceed $50,000. 

9 ‘‘(ii) TRANSFERS SUBJECT TO LIMITA10 TION.—The transfers described in this 

11 clause are— 

12 ‘‘(I) a transfer in trust (with the 

13 exception of any transfer to a trust 

14 described in section 2642(c)(2)), 

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

16 a passthrough entity, 

17 ‘‘(III) a transfer of an interest 

18 subject to a prohibition on sale, and 

19 ‘‘(IV) any other transfer of prop20 erty that, without regard to with21 drawal, put, or other such rights in 

22 the donee, cannot immediately be liq23 uidated by the donee.’’, and 

24 (2) by striking subsection (c). 

25 (b) CONFORMING AMENDMENTS.— 


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•S 2231 IS

1 (1) Subparagraph (B) of section 529(c)(2) of 

2 the Internal Revenue Code of 1986 is amended by 

3 striking ‘‘section 2503(b)’’ and inserting ‘‘section 

4 2503(b)(1)(A). 

5 (2) Clause (i) of section 529A(b)(2)(B) of such 

6 Code is amended by striking ‘‘section 2503(b)’’ and 

7 inserting ‘‘section 2503(b)(1)(A)’’. 

8 (3) Paragraph (2) of section 2523(i) of such 

9 Code is amended by striking ‘‘section 2503(b)’’ and 

10 inserting ‘‘section 2503(b)(1)(A)’’. 

11 (4) Subsection (c) of such Code of section 2801 

12 is amended by striking ‘‘2503(b)’’ and inserting 

13 ‘‘2503(b)(1)(A)’’. 

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

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

16 such regulations or other guidance as may be necessary 

17 or appropriate to carry out the amendments made by this 

18 section. 

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

20 this section shall apply to any calendar year beginning 

21 after the date of the enactment of this Act. 

22 SEC. 205. MODIFICATION OF RULES FOR VALUE OF CER23 TAIN FARM REAL PROPERTY. 

24 (a) INCREASE IN LIMITATION.— 


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•S 2231 IS

1 (1) IN GENERAL.—Paragraph (2) of section 

2 2032A(a) of the Internal Revenue Code of 1986 is 

3 amended by striking ‘‘$750,000’’ and inserting 

4 ‘‘$3,000,000’’. 

5 (2) INFLATION ADJUSTMENT.—Paragraph (3) 

6 of section 2032A(a) of such Code is amended— 

7 (A) by striking ‘‘1998’’ and inserting 

8 ‘‘2020’’; 

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

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

11 (C) by striking ‘‘calendar year 1997’’ and 

12 inserting ‘‘calendar year 2019’’ in subpara13 graph (B). 

14 (b) QUALIFIED USE LIMITED TO FARMING PUR15 POSES.— 

16 (1) IN GENERAL.—Section 2032A(b)(2) is 

17 amended by striking ‘‘the devotion of the property’’ 

18 and all that follows and inserting ‘‘the devotion of 

19 the property to use as a farm for farming pur20 poses.’’. 

21 (2) CONFORMING AMENDMENTS.— 

22 (A) Subsections (c)(6)(A), (h)(3), and 

23 (i)(3) of section 2032A of the such Code are 

24 each amended by striking ‘‘subparagraph (A) or 

25 (B) of’’. 


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•S 2231 IS

1 (B) The heading of section 2032A of such 

2 Code (and the item relating to section 2032A in 

3 the table of sections for part III of subchapter 

4 A of chapter 11 of such Code) is amended by 

5 striking ‘‘, etc.,’’. 

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

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

8 gifts made, after December 31, 2019. 

9 Subtitle B—Reform of Taxation of 

10 Capital Income 

11 SEC. 211. INCREASE IN CAPITAL GAINS RATE. 

12 (a) IN GENERAL.—Section 1(h)(1)(D) of the Internal 

13 Revenue Code of 1986 is amended by striking ‘‘20 per14 cent’’ and inserting ‘‘24.2 percent’’. 

15 (b) MINIMUM TAX.—Section 55(b)(3)(D) of the In16 ternal Revenue Code of 1986 is amended by striking ‘‘20 

17 percent’’ and inserting ‘‘24.2 percent’’. 

18 (c) CONFORMING AMENDMENTS.—The following pro19 visions are each amended by striking ‘‘20 percent’’ and 

20 inserting ‘‘20.4 percent’’: 

21 (1) Section 531 of the Internal Revenue Code 

22 of 1986. 

23 (2) Section 541 of the Internal Revenue Code 

24 of 1986. 


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•S 2231 IS

1 (3) Section 1445(e)(1) of the Internal Revenue 

2 Code of 1986. 

3 (4) Section 1445(e)(6) of the Internal Revenue 

4 Code of 1986. 

5 (5) The second sentence of section 

6 7518(g)(6)(A) of the Internal Revenue Code of 

7 1986. 

8 (6) Section 53511(f)(2) of title 46, United 

9 States Code. 

10 (d) EFFECTIVE DATES.— 

11 (1) IN GENERAL.—Except as otherwise pro12 vided, the amendments made by this section shall 

13 apply to taxable years beginning after December 31, 

14 2019. 

15 (2) WITHHOLDING.—The amendments made by 

16 paragraphs (3) and (4) of subsection (c) shall apply 

17 to amounts paid on or after January 1, 2019. 

18 SEC. 212. DEEMED REALIZATION OF CAPITAL GAINS AT 

19 TIME OF GIFT OR DEATH. 

20 (a) TREATMENT AS SALE.— 

21 (1) IN GENERAL.—Part IV of subchapter P of 

22 chapter 1 of the Internal Revenue Code of 1986 is 

23 amended by adding at the end the following new sec24 tion: 


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•S 2231 IS

1 ‘‘SEC. 1261. GAINS FROM CERTAIN PROPERTY TRANS2 FERRED BY GIFT OR UPON DEATH. 

3 ‘‘(a) IN GENERAL.—Any capital asset which is trans4 ferred by gift or upon death shall be treated as sold for 

5 its fair market value on the date of such gift, death, or 

6 transfer. 

7 ‘‘(b) EXCEPTIONS.— 

8 ‘‘(1) TANGIBLE PROPERTY.—This section shall 

9 not apply to any tangible personal property other 

10 than a collectible (as defined in section 408(m) with11 out regard to paragraph (3) thereof). 

12 ‘‘(2) SPOUSAL EXCEPTION.—This section shall 

13 not apply to any transfer if such transfer is made 

14 to the spouse or surviving spouse of the transferor. 

15 ‘‘(3) GIFTS TO CHARITY.—This section shall 

16 not apply to any transfer if such transfer is made 

17 to an organization described in section 170(c).’’. 

18 (2) CLERICAL AMENDMENT.—The table of sec19 tions for part IV of subchapter P of chapter 1 of 

20 such Code is amended by adding at the end the fol21 lowing new item: 

‘‘Sec. 1261. Gains from certain property transferred by gift or upon death.’’. 

22 (b) TREATMENT OF BASIS FOR GIFTS AND BE23 QUESTS TO WHICH TAX APPLIES.— 


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•S 2231 IS

1 (1) ELIMINATION OF CARRYOVER BASIS FOR

2 GIFTS.—Subsection (a) section 1015 of the Internal 

3 Revenue Code of 1986 is amended— 

4 (A) by striking ‘‘If the property’’ and in5 serting the following: 

6 ‘‘(1) GIFTS BEFORE JANUARY 1, 2020.—If the 

7 property’’; 

8 (B) by inserting ‘‘and before January 1, 

9 2020’’ after ‘‘after December 31, 1920’’; and 

10 (C) by adding at the end the following new 

11 paragraph: 

12 ‘‘(2) GIFTS AFTER DECEMBER 31, 2019.— 

13 ‘‘(A) IN GENERAL.—If the property was 

14 acquired by gift after December 31, 2019, the 

15 basis shall be the fair market value of such 

16 property at the time of the gift. 

17 ‘‘(B) SPECIAL RULES FOR CHARITABLE

18 ORGANIZATIONS.—In the case of any property 

19 acquired by an organization described in section 

20 170(c) by gift, subparagraph (A) shall not 

21 apply and paragraph (1) shall be applied with22 out regard to the phrase ‘and before January 1, 

23 2020’.’’. 


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•S 2231 IS

1 (2) PROPERTY ACQUIRED FROM DECEDENT

2 SPOUSES.—Section 1014 of such Code is amended 

3 by adding at the end the following new subsection: 

4 ‘‘(g) PROPERTY ACQUIRED FROM DECEDENT

5 SPOUSES.—In the case of any property acquired from or 

6 which has passed from a decedent in a transfer described 

7 in section 1041(a)(1), the basis of such property in the 

8 hands of the transferee shall be determined under section 

9 1041(b) and not this section.’’. 

10 (3) RULE FOR TRANSFERS BETWEEN

11 SPOUSES.— 

12 (A) IN GENERAL.—Section 1041(b) of the 

13 Internal Revenue Code of 1986 is amended to 

14 read as follows: 

15 ‘‘(b) TRANSFEREE HAS TRANSFEROR’S BASIS.—In 

16 the case of any transfer of property described in sub17 section (a), the basis of the transferee in the property shall 

18 be the adjusted basis of the transferor.’’. 

19 (B) CONFORMING AMENDMENT.—Section 

20 1015(e) of such Code is amended by striking 

21 ‘‘1041(b)(2)’’ and inserting ‘‘1041(b)’’. 

22 SEC. 213. EXCLUSION OF CERTAIN AMOUNTS OF REALIZED 

23 CAPITAL GAIN. 

24 (a) IN GENERAL.—Part III of subchapter B of chap25 ter 1 of the Internal Revenue Code of 1986, as amended 


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•S 2231 IS

1 by section 111, is amended by inserting after section 

2 139H the following new section: 

3 ‘‘SEC. 139I. EXCLUSION GAIN FROM TRANSFERS OF APPRE4 CIATED ASSETS BY GIFT OR AT DEATH. 

5 ‘‘(a) IN GENERAL.—Gross income shall not include 

6 so much of the aggregate gain from transfers at death 

7 described in 1261(a) of any capital asset as does not ex8 ceed $100,000. 

9 ‘‘(b) SPECIAL RULES FOR REAL PROPERTY USED

10 FOR FARMING.— 

11 ‘‘(1) IN GENERAL.— 

12 ‘‘(A) APPLICATION OF SECTION.—In the 

13 case of qualified real property— 

14 ‘‘(i) subsection (a) shall be applied 

15 separately to such qualified real property 

16 and other property, and 

17 ‘‘(ii) in applying subsection (a) to 

18 such qualified real property, ‘the applicable 

19 amount’ shall be substituted for 

20 ‘$100,000’. 

21 ‘‘(B) APPLICABLE AMOUNT.—For purposes 

22 of subparagraph (A), the applicable amount is 

23 an amount equal to the sum of— 

24 ‘‘(i) $1,000,000, plus 


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•S 2231 IS

1 ‘‘(ii) the excess (not less than zero) of 

2 the amount in effect under subsection (a) 

3 over the aggregate amount of gain from 

4 transfers at death described in section 

5 1261(a) of capital assets other than quali6 fied real property. 

7 ‘‘(2) IMPOSITION OF ADDITIONAL TAX.— 

8 ‘‘(A) IN GENERAL.—The Secretary shall, 

9 by regulations, provide for recapturing the ben10 efit under any exclusion allowable under para11 graph (1) with respect to any qualified real 

12 property if, within 10 years after the decedent’s 

13 death and before the death of the qualified 

14 heir— 

15 ‘‘(i) the qualified heir disposes of any 

16 interest in qualified real property (other 

17 than by a disposition to a member of his 

18 family), or 

19 ‘‘(ii) the qualified heir ceases to use 

20 for the qualified use the qualified real 

21 property which was acquired (or passed) 

22 from the decedent. 

23 ‘‘(B) LIABILITY.—The benefit recaptured 

24 under subparagraph (A) shall be recaptured 

25 from the qualified heir. 


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•S 2231 IS

1 ‘‘(3) DEFINITIONS.—Any term used in this sub2 section which is also used in section 2032A shall 

3 have the meaning given such term under section 

4 2032A. 

5 ‘‘(c) INFLATION ADJUSTMENT.— 

6 ‘‘(1) IN GENERAL.—In the case of any taxable 

7 year beginning after 2020, the $100,000 amount in 

8 subsection (a) and the $1,000,000 in subsection 

9 (b)(1)(B)(i) shall each be increased by an amount 

10 equal to— 

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

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

14 year in which the taxable year begins, deter15 mined by substituting in subparagraph (A)(ii) 

16 thereof ‘calendar year 2019’ for ‘calendar year 

17 2016’. 

18 ‘‘(2) ROUNDING.— 

19 ‘‘(A) IN GENERAL.—If the dollar amount 

20 in subsection (a), after being increased under 

21 paragraph (1), is not a multiple of $10,000, 

22 such dollar amount shall be rounded to the next 

23 lowest multiple of $10,000. 

24 ‘‘(B) QUALIFIED REAL PROPERTY.—If the 

25 dollar amount in subsection (b)(1)(B)(i), after 


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•S 2231 IS

1 being increased under paragraph (1), is not a 

2 multiple of $100,000, such amount shall be 

3 rounded to the next lowest multiple of 

4 $100,000.’’. 

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

6 for part III of subchapter B of chapter 1 of such Code 

7 is amended by inserting after section 139H the following 

8 new item: 

‘‘Sec. 139I. Exclusion gain from transfers of appreciated assets by gift or at 

death.’’. 

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

10 this section shall apply to taxable years beginning after 

11 December 31, 2019. 

12 SEC. 214. EXTENSION OF TIME FOR PAYMENT OF TAX. 

13 (a) EXTENSION OF TIME.— 

14 (1) IN GENERAL.—Subpart B of chapter 62 of 

15 the Internal Revenue Code of 1986 is amended by 

16 adding at the end the following new section: 

17 ‘‘SEC. 6168. EXTENSION OF TIME FOR PAYMENT OF CAP18 ITAL GAINS ON CERTAIN ASSETS REALIZED 

19 BY REASON OF DEATH. 

20 ‘‘(a) 15-YEAR INSTALLMENT PAYMENT.— 

21 ‘‘(1) IN GENERAL.—In the case of any gain 

22 with respect to an eligible capital asset that is recog23 nized under section 1261 by reason of the death of 

24 the taxpayer, the taxpayer may elect to pay part or 


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•S 2231 IS

1 all of tax imposed on such gain in 2 or more (but 

2 not exceeding 15) equal installments. 

3 ‘‘(2) DATE FOR PAYMENT OF INSTALLMENTS.— 

4 If an election is made under paragraph (1), the first 

5 installment shall be paid not later than the date on 

6 which the tax for the taxable year in which the gain 

7 described in paragraph (1) occurs is due, and each 

8 succeeding installment shall be paid on or before the 

9 date which is 1 year after the date prescribed by this 

10 paragraph for payment of the preceding installment. 

11 ‘‘(b) ELIGIBLE CAPITAL ASSET.—For purposes of 

12 this section, the term ‘eligible capital asset’ means any 

13 capital asset other than personal property of a type which 

14 is actively traded (within the meaning of section 

15 1092(d)(1)). 

16 ‘‘(c) PORTION OF TAX ELIGIBLE.—The amount of 

17 tax to which this section applies shall not exceed the excess 

18 of— 

19 ‘‘(1) the tax computed under chapter 1 (deter20 mined after application of section 1261), over 

21 ‘‘(2) the tax computed under chapter 1 (deter22 mined without regard to section 1261). 

23 ‘‘(d) ELECTION.—Any election under subsection (a) 

24 shall be made not later than the time prescribed by section 

25 6072 for filing the return of tax imposed under chapter 


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•S 2231 IS

1 1 (including extensions thereof), and shall be made in such 

2 manner as the Secretary shall by regulations prescribe. If 

3 an election under subsection (a) is made, the provisions 

4 of this subtitle shall apply as though the Secretary were 

5 extending the time for payment of the tax. 

6 ‘‘(e) PRORATION OF DEFICIENCY TO INSTALL7 MENTS.—If an election is made under subsection (a) to 

8 pay any part of the tax imposed under chapter 1 in install9 ments and a deficiency has been assessed, the deficiency 

10 shall (subject to the limitation provided by subsection 

11 (a)(2)) be prorated to the installments payable under sub12 section (a). The part of the deficiency so prorated to any 

13 installment the date for payment of which has not arrived 

14 shall be collected at the same time as, and as a part of, 

15 such installment. The part of the deficiency so prorated 

16 to any installment the date for payment of which has ar17 rived shall be paid upon notice and demand from the Sec18 retary. This subsection shall not apply if the deficiency 

19 is due to negligence, to intentional disregard of rules and 

20 regulations, or to fraud with intent to evade tax. 

21 ‘‘(f) TIME FOR PAYMENT OF INTEREST.—If the time 

22 for payment of any amount of tax has been extended 

23 under this section, interest payable under section 6601 on 

24 any unpaid portion shall be paid annually at the same time 

25 as, and as part of, each installment payment of the tax. 


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•S 2231 IS

1 ‘‘(g) REGULATIONS.—The Secretary shall prescribe 

2 such regulations as may be necessary to the application 

3 of this section. 

4 ‘‘(h) CROSS REFERENCES.— 

5 ‘‘(1) SECURITY.—For authority of the Sec6 retary to require security in the case of an extension 

7 under this section, see section 6165. 

8 ‘‘(2) INTEREST.—For provisions relating to in9 terest on tax payable in installments under this sec10 tion, see subsection (k) of section 6601.’’. 

11 (2) CLERICAL AMENDMENT.—The table of sec12 tions for subpart B of chapter 62 is amended by 

13 adding at the end the following new item: 

‘‘Sec. 6168. Extension of time for payment of capital gains on certain assets 

realized by reason of death.’’. 

14 (b) INTEREST.—Section 6601 of the Internal Rev15 enue Code of 1986 is amended by redesignating subsection 

16 (k) as subsection (l) and by inserting after subsection (j) 

17 the following new subsection: 

18 ‘‘(k) SPECIAL RATE FOR TAX EXTENDED UNDER

19 SECTION 6168.—If the time for payment of an amount 

20 of tax imposed by chapter 11 is extended as provided in 

21 section 6168, in lieu of the annual rate provided by sub22 section (a), interest shall be paid at a rate equal to 45 

23 percent of the annual rate provided by subsection (a). For 

24 purposes of this subsection, the amount of any deficiency 


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•S 2231 IS

1 which is prorated to installments payable under section 

2 6168 shall be treated as an amount of tax payable in in3 stallments under such section.’’. 

4 SEC. 215. WAIVER OF PENALTY FOR UNDERPAYMENT OF 

5 ESTIMATED TAX. 

6 Section 6654(e)(3) of the Internal Revenue Code of 

7 1986 is amended by adding at the end the following new 

8 subparagraph: 

9 ‘‘(C) CAPITAL GAINS PAYABLE UPON

10 DEATH.—No addition to tax shall be imposed 

11 under subsection (a) with respect to any under12 payment if the taxpayer died during the taxable 

13 year and the Secretary determines that the 

14 amount of the underpayment is due to capital 

15 gains that were realized by reason of section 

16 1261.’’. 

17 SEC. 216. EFFECTIVE DATE. 

18 Except as otherwise provided, the amendments made 

19 by this subtitle shall apply to transfers after December 

20 31, 2019, in taxable years beginning after such date. 

Æ 


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