II 

111TH CONGRESS 

2D SESSION S. 3533 

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 

JUNE 24, 2010 

Mr. SANDERS (for himself, Mr. WHITEHOUSE, Mr. HARKIN, Mr. BROWN of 

Ohio, and Mr. FRANKEN) 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 ‘‘Responsible Estate 

5 Tax Act’’. 

6 SEC. 2. REINSTATEMENT AND EXTENSION OF ESTATE AND 

7 GENERATION-SKIPPING TAXES; REPEAL OF 

8 CARRYOVER BASIS. 

9 (a) IN GENERAL.—The following provisions of the 

10 Economic Growth and Tax Relief Reconciliation Act of 


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1 2001, and the amendments made by such provisions, are 

2 hereby repealed: 

3 (1) Subtitles A and E of title V. 

4 (2) Subsection (d), and so much of subsection 

5 (f)(3) as relates to subsection (d), of section 511. 

6 (3) Paragraph (2) of subsection (b), and para7 graph (2) of subsection (e), of section 521. 

8 Any provision of the Internal Revenue Code of 1986 

9 amended by such provisions are amended to read as such 

10 provisions would read if such sections had never been en11 acted. 

12 (b) SUNSET NOT TO APPLY.— 

13 (1) Subsection (a) of section 901 of the Eco14 nomic Growth and Tax Relief Reconciliation Act of 

15 2001 is amended by striking ‘‘this Act’’ and all that 

16 follows and inserting ‘‘this Act (other than title V) 

17 shall not apply to taxable, plan, or limitation years 

18 beginning after December 31, 2010.’’. 

19 (2) Subsection (b) of such section 901 is 

20 amended by striking ‘‘, estates, gifts, and transfers’’. 

21 SEC. 3. MODIFICATION OF RATES AND MAINTENANCE OF 

22 UNIFIED CREDIT AGAINST THE ESTATE TAX. 

23 (a) MODIFICATION OF RATES.— 

24 (1) IN GENERAL.—The table in paragraph (1) 

25 of section 2001(c) of the Internal Revenue Code of 


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1 1986 is amended by striking the last 6 rows and in2 serting the following: 

‘‘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 .................................................. $24,245,800 plus 55 

percent of the excess of such amount 

over $50,000,000’’. 

3 (2) SURTAX ON WEALTHY ESTATES.—Para4 graph (2) of section 2011(c) of such Code is amend5 ed to read as follows: 

6 ‘‘(2) SURTAX ON ESTATES OVER $500,000,000.— 

7 Notwithstanding paragraph (1), if the amount with 

8 respect to which the tentative tax to be computed is 

9 over $500,000,000, the rate of tax otherwise in ef10 fect under this subsection with respect to the 

11 amount in excess of $500,000,000 shall be increased 

12 by 10 percent.’’. 

13 (b) MAINTENANCE OF UNIFIED CREDIT.—The table 

14 in subsection (c) of section 2010 of the Internal Revenue 

15 Code of 1986 (relating to applicable credit amount) is 

16 amended by inserting ‘‘and thereafter’’ after ‘‘2009’’. 


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

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

3 gifts made, after December 31, 2009. 

4 SEC. 4. MODIFICATION OF RULES FOR VALUE OF CERTAIN 

5 FARM, ETC., REAL PROPERTY. 

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

7 2032A(a) of the Internal Revenue Code of 1986 is amend8 ed by striking ‘‘$750,000’’ and inserting ‘‘$3,000,000’’. 

9 (b) INFLATION ADJUSTMENT.—Paragraph (3) of sec10 tion 2032A(a) of such Code is amended— 

11 (1) by striking ‘‘1998’’ and inserting ‘‘2009’’, 

12 (2) by striking ‘‘$750,000’’ and inserting 

13 ‘‘$3,000,000’’ in subparagraph (A), and 

14 (3) by striking ‘‘calendar year 1997’’ and in15 serting ‘‘calendar year 2008’’ in subparagraph (B). 

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

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

18 gifts made, after December 31, 2009. 

19 SEC. 5. MODIFICATION OF ESTATE TAX RULES WITH RE20 SPECT TO LAND SUBJECT TO CONSERVATION 

21 EASEMENTS. 

22 (a) MODIFICATION OF EXCLUSION LIMITATION.— 

23 The table in paragraph (3) of section 2031(c) of the Inter24 nal Revenue Code of 1986 is amended— 


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1 (1) by striking ‘‘or thereafter’’ in the last row 

2 and inserting ‘‘through 2009’’, and 

3 (2) by adding at the end the following row: 

‘‘2010 and thereafter ............................................. $2,000,000’’. 

4 (b) MODIFICATION OF APPLICABLE PERCENTAGE.— 

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

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

7 inserting ‘‘60 percent’’. 

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

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

10 gifts made, after December 31, 2009. 

11 SEC. 6. CONSISTENT BASIS REPORTING BETWEEN ESTATE 

12 AND PERSON ACQUIRING PROPERTY FROM 

13 DECEDENT. 

14 (a) INFORMATION REPORTING.— 

15 (1) IN GENERAL.—Subpart A of part III of 

16 subchapter A of chapter 61 of the Internal Revenue 

17 Code of 1986 is amended by inserting after section 

18 6034A the following new section: 

19 ‘‘SEC. 6035. BASIS INFORMATION TO PERSONS ACQUIRING 

20 PROPERTY FROM DECEDENT OR BY GIFT. 

21 ‘‘(a) INFORMATION WITH RESPECT TO PROPERTY

22 ACQUIRED FROM DECEDENTS.— 

23 ‘‘(1) IN GENERAL.—The executor of any estate 

24 required to file a return under section 6018(a) shall, 


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1 on or before the date on which such return was re2 quired to be filed, furnish to the Secretary and to 

3 each person acquiring property from the decedent a 

4 statement identifying— 

5 ‘‘(A) the value of such property, 

6 ‘‘(B) in the case of any property to which 

7 the exclusion under section 2031(c) applies or 

8 to which section 1014(e) applies, the adjusted 

9 basis of such property in the hands of the dece10 dent, 

11 ‘‘(C) in the case of any property which 

12 consists of stock in a DISC or former DISC (as 

13 defined in section 992(a)), the basis of the de14 cedent in such stock reduced by the amount (if 

15 any) which would have been included in gross 

16 income under section 995(c) as a dividend if the 

17 decedent had lived and sold the stock at its fair 

18 market value on the estate tax valuation date 

19 (determined under the rules of section 

20 1014(d)), and 

21 ‘‘(D) such other information with respect 

22 to such property as the Secretary may pre23 scribe. 


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1 ‘‘(2) VALUE.—For purposes of this subsection, 

2 the value of any property shall be determined under 

3 the rules of section 1014(a). 

4 ‘‘(b) INFORMATION WITH RESPECT TO PROPERTY

5 ACQUIRED BY GIFT.—The person who makes a transfer 

6 by gift and who is required to file a return under section 

7 6019(a) shall, on or before the date on which such return 

8 is required to be filed, furnish to the Secretary and to each 

9 person acquiring property though such transfer a state10 ment identifying— 

11 ‘‘(1) the adjusted basis of such property, 

12 ‘‘(2) the fair market value of such property at 

13 the time of the transfer, 

14 ‘‘(3) in the case of a transfer in trust, the 

15 amount of the gain or loss recognized by the grantor 

16 on such transfer, 

17 ‘‘(4) the amount, if any, of gift tax paid by the 

18 transferor, and 

19 ‘‘(5) such other information with respect to 

20 such property as the Secretary may prescribe. 

21 ‘‘(c) REGULATIONS.—The Secretary shall prescribe 

22 such regulations as necessary to carry out this section, in23 cluding regulations relating to— 

24 ‘‘(1) the application of this section to situations 

25 in which no estate tax return is required to be filed 


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1 or in which gifts are excluded from gift tax under 

2 section 2503, 

3 ‘‘(2) situations in which the surviving joint ten4 ant or other recipient may have better information 

5 than the executor, and 

6 ‘‘(3) the timing of the required reporting in the 

7 event of adjustments to the reported value subse8 quent to the filing of an estate or gift tax return.’’. 

9 (2) PENALTY FOR FAILURE TO FILE.— 

10 (A) RETURN.—Subparagraph (B) of sec11 tion 6724(d)(1) of the Internal Revenue Code 

12 of 1986 is amended by striking ‘‘or’’ at the end 

13 of clause (xxiv), by striking ‘‘and’’ at the end 

14 of clause (xxv) and inserting ‘‘or’’, and by add15 ing at the end the following new clause: 

16 ‘‘(xxvi) section 6035 (relating to re17 turns relating to basis information to per18 sons acquiring property from decedent), 

19 and’’. 

20 (B) STATEMENT.—Subparagraph (A) of 

21 section 6724(d)(2)(A) of such Code is amended 

22 by inserting ‘‘6035,’’ after ‘‘6034A,’’. 

23 (3) CLERICAL AMENDMENT.—The table of sec24 tions for subpart A of part III of subchapter A of 

25 chapter 61 of the Internal Revenue Code of 1986 is 


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1 amended by inserting after the item relating to sec2 tion 6034A the following new item: 

‘‘Sec. 6035. Basis information to persons acquiring property from decedent or 

by gift.’’. 

3 (b) CONSISTENT USE OF BASIS.— 

4 (1) PROPERTY ACQUIRED FROM A DESCEND5 ANT.—Section 1014 of the Internal Revenue Code of 

6 1986 is amended by adding at the end the following 

7 new subsection: 

8 ‘‘(f) BASIS MUST BE CONSISTENT WITH INFORMA9 TION REPORTS.—Except as provided by the Secretary in 

10 regulations, in any case in which the executor of the estate 

11 was required to make a return under section 6035, the 

12 basis of the property in the hands of the person acquiring 

13 such property shall be calculated using the information re14 ported to such person under section 6035(a).’’. 

15 (2) PROPERTY ACQUIRED BY GIFTS AND

16 TRANSFERS IN TRUST.—Section 1015 of the Inter17 nal Revenue Code of 1986 is amended by adding at 

18 the end the following new subsection: 

19 ‘‘(f) BASIS MUST BE CONSISTENT WITH INFORMA20 TION REPORTS.—Except as provided by the Secretary in 

21 regulations, in any case in which the transferor was re22 quired to make a return under section 6035, the basis of 

23 the property in the hands of the person acquiring such 


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1 property shall be calculated using the information reported 

2 to such person under section 6035(b).’’. 

3 (c) PENALTY FOR INCONSISTENT REPORTING.— 

4 (1) IN GENERAL.—Subsection (b) of section 

5 6662 of the Internal Revenue Code of 1986 is 

6 amended by inserting after paragraph (7) the fol7 lowing new paragraph: 

8 ‘‘(8) Any inconsistent estate or gift basis re9 porting.’’. 

10 (2) INCONSISTENT BASIS REPORTING.—Section 

11 6662 of such Code is amended by adding at the end 

12 the following new subsection: 

13 ‘‘(k) INCONSISTENT ESTATE OR GIFT BASIS RE14 PORTING.—For purposes of this section, the term ‘incon15 sistent estate or gift basis reporting’ means the portion 

16 of the understatement which is attributable to the failure 

17 by the taxpayer to use the information reported to such 

18 taxpayer under section 6035 in calculating the basis of 

19 any property acquired from a decedent or by gift or trans20 fer in trust.’’. 

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

22 this section shall apply to transfers for which returns are 

23 filed after the date of the enactment of this Act. 


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1 SEC. 7. VALUATION RULES FOR CERTAIN TRANSFERS OF 

2 NONBUSINESS ASSETS; LIMITATION ON MI3 NORITY DISCOUNTS. 

4 (a) IN GENERAL.—Section 2031 of the Internal Rev5 enue Code of 1986 (relating to definition of gross estate) 

6 is amended by redesignating subsection (d) as subsection 

7 (f) and by inserting after subsection (c) the following new 

8 subsections: 

9 ‘‘(d) VALUATION RULES FOR CERTAIN TRANSFERS

10 OF NONBUSINESS ASSETS.—For purposes of this chapter 

11 and chapter 12— 

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

13 of any interest in an entity other than an interest 

14 which is actively traded (within the meaning of sec15 tion 1092)— 

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

17 held by the entity with respect to such interest 

18 shall be determined as if the transferor had 

19 transferred such assets directly to the trans20 feree (and no valuation discount shall be al21 lowed with respect to such nonbusiness assets), 

22 and 

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

24 taken into account in determining the value of 

25 the interest in the entity. 


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

2 this subsection— 

3 ‘‘(A) IN GENERAL.—The term ‘nonbusi4 ness asset’ means any asset which is not used 

5 in the active conduct of 1 or more trades or 

6 businesses. 

7 ‘‘(B) EXCEPTION FOR CERTAIN PASSIVE

8 ASSETS.—Except as provided in subparagraph 

9 (C), a passive asset shall not be treated for pur10 poses of subparagraph (A) as used in the active 

11 conduct of a trade or business unless— 

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

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

14 is a hedge with respect to such property, 

15 or 

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

17 the active conduct of 1 or more real prop18 erty trades or businesses (within the mean19 ing of section 469(c)(7)(C)) in which the 

20 transferor materially participates and with 

21 respect to which the transferor meets the 

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

23 For purposes of clause (ii), material participa24 tion shall be determined under the rules of sec25 tion 469(h), except that section 469(h)(3) shall 


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1 be applied without regard to the limitation to 

2 farming activity. 

3 ‘‘(C) EXCEPTION FOR WORKING CAP4 ITAL.—Any asset (including a passive asset) 

5 which is held as a part of the reasonably re6 quired working capital needs of a trade or busi7 ness shall be treated as used in the active con8 duct of a trade or business. 

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

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

11 ‘‘(A) cash or cash equivalents, 

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

13 Secretary, stock in a corporation or any other 

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

15 ‘‘(C) evidence of indebtedness, option, for16 ward or futures contract, notional principal con17 tract, or derivative, 

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

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

20 ‘‘(E) annuity, 

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

22 property trades or businesses (as defined in sec23 tion 469(c)(7)(C)), 


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1 ‘‘(G) asset (other than a patent, trade2 mark, or copyright) which produces royalty in3 come, 

4 ‘‘(H) commodity, 

5 ‘‘(I) collectible (within the meaning of sec6 tion 401(m)), or 

7 ‘‘(J) any other asset specified in regula8 tions prescribed by the Secretary. 

9 ‘‘(4) LOOK-THRU RULES.— 

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

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

12 any other entity, this subsection shall be ap13 plied by disregarding the 10-percent interest 

14 and by treating the entity as holding directly its 

15 ratable share of the assets of the other entity. 

16 This subparagraph shall be applied successively 

17 to any 10-percent interest of such other entity 

18 in any other entity. 

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

20 ‘10-percent interest’ means— 

21 ‘‘(i) in the case of an interest in a cor22 poration, ownership of at least 10 percent 

23 (by vote or value) of the stock in such cor24 poration, 


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

2 partnership, ownership of at least 10 per3 cent of the capital or profits interest in the 

4 partnership, and 

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

6 at least 10 percent of the beneficial inter7 ests in the entity. 

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

9 Subsection (b) shall apply after the application of 

10 this subsection. 

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

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

13 the transfer of any interest in an entity other than an in14 terest which is actively traded (within the meaning of sec15 tion 1092), no discount shall be allowed by reason of the 

16 fact that the transferee does not have control of such enti17 ty if the transferee and members of the family (as defined 

18 in section 2032A(e)(2)) of the transferee have control of 

19 such entity.’’. 

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

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

22 enactment of this Act. 


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1 SEC. 8. REQUIRED MINIMUM 10-YEAR TERM, ETC., FOR 

2 GRANTOR RETAINED ANNUITY TRUSTS. 

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

4 the Internal Revenue Code of 1986 is amended— 

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

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

7 and by moving such subparagraphs (as so redesig8 nated) 2 ems to the right; 

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

10 the following: 

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

12 (3) by striking ‘‘paragraph (1) or (2)’’ in para13 graph (1)(C) (as so redesignated) and inserting 

14 ‘‘subparagraph (A) or (B)’’; and 

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

16 paragraph: 

17 ‘‘(2) ADDITIONAL REQUIREMENTS WITH RE18 SPECT TO GRANTOR RETAINED ANNUITIES.—For 

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

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

21 regard to this paragraph) which is retained by the 

22 transferor, such interest shall be treated as de23 scribed in such paragraph only if— 

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

25 referred to in such paragraph is for a term of 

26 not less than 10 years, 


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

2 on an annual basis, do not decrease relative to 

3 any prior year during the first 10 years of the 

4 term referred to in subparagraph (A), and 

5 ‘‘(C) the remainder interest has a value 

6 greater than zero determined as of the time of 

7 the transfer.’’. 

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

9 this section shall apply to transfers made after the date 

10 of the enactment of this Act. 

Æ 


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