I 
112TH CONGRESS 
2D SESSION 
H. R. 3885 
To amend the Internal Revenue Code of 1986 to authorize agricultural 
producers to establish and contribute to tax-exempt farm risk manage-
ment accounts. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 2, 2012 
Mr. CRAWFORD (for himself and Mr. LUETKEMEYER) introduced the following 
bill; which was referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to authorize 
agricultural producers to establish and contribute to tax- 
exempt farm risk management accounts. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Farm Risk Abatement 
and Mitigation Election Act of 2012’’ or the ‘‘FRAME 
Act of 2012’’. 
SEC. 2. FARM RISK MANAGEMENT ACCOUNTS. 
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to 
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additional itemized deductions for individuals) is amended 
by redesignating section 224 as section 225 and by insert-
ing after section 223 the following new section: 
‘‘SEC. 224. FRAME ACCOUNTS. 
‘‘(a) DEDUCTION ALLOWED.—In the case of a quali-
fied farmer, there shall be allowed as a deduction for the 
taxable year an amount equal to the aggregate amount 
paid in cash during such taxable year by or on behalf of 
such individual to a FRAME account of such individual. 
‘‘(b) LIMITATION.—The amount allowable as a de-
duction under subsection (a) shall not exceed the least of 
the following: 
‘‘(1) The taxable income of the taxpayer for the 
taxable year which is attributable to farming and 
ranching. 
‘‘(2) $50,000. 
‘‘(3) $500,000 reduced by the aggregate con-
tributions of the taxpayer to all FRAME accounts of 
the taxpayer for all taxable years. 
‘‘(c) QUALIFIED FARMER.—For purposes of this sec-
tion, the term ‘qualified farmer’ means, with respect to 
any taxable year, any individual who, during such year— 
‘‘(1) was actively engaged in the trade or busi-
ness of farming or ranching, and 
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‘‘(2) has in effect an agreement with the Sec-
retary of Agriculture with respect to each FRAME 
account of which the individual is an account bene-
ficiary. 
‘‘(d) FRAME ACCOUNT.—For purposes of this sec-
tion— 
‘‘(1) IN
GENERAL.—The term ‘FRAME ac-
count’ means a trust created or organized in the 
United States as a FRAME account exclusively for 
the purpose of making qualified distributions, but 
only if the written governing instrument creating the 
trust meets the following requirements: 
‘‘(A) No contribution will be accepted un-
less it is in cash. 
‘‘(B) The trustee is a bank (as defined in 
section 408(n)) or another person who dem-
onstrates to the satisfaction of the Secretary 
that the manner in which such person will ad-
minister the trust will be consistent with the re-
quirements of this section. 
‘‘(C) The assets of the trust will not be 
commingled with other property except in a 
common trust fund or common investment 
fund. 
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‘‘(D) The interest of an individual in the 
balance in his account is nonforfeitable. 
‘‘(2) QUALIFIED
DISTRIBUTION.—The term 
‘qualified distribution’ means any of the following 
amounts paid from a FRAME account to the ac-
count beneficiary: 
‘‘(A) Any distributions in a taxable year 
during which the gross income attributable to 
farm to which the FRAME account relates is 
less than 95 percent of the average gross in-
come attributable to such farm for the 5 pre-
ceding taxable years, but only so much as does 
not exceed such difference. 
‘‘(B) Any distributions to the extent such 
distribution does not exceed amounts necessary 
to protect the solvency of the farm to which the 
FRAME account relates, as determined by the 
Secretary. 
‘‘(C) Any distributions to the extent such 
distributions do not exceed amounts paid or in-
curred to procure revenue or crop insurance 
with respect to the farm to which the FRAME 
account relates. 
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‘‘(3) ACCOUNT
BENEFICIARY.—The term ‘ac-
count beneficiary’ means the individual on whose be-
half the FRAME account was established. 
‘‘(4) ACCOUNTS PER FARM LIMITATION.—The 
Secretary of Agriculture shall have in effect not 
more than 4 agreements for FRAME accounts with 
respect to any farm. The Secretary of Agriculture 
shall by regulation prescribe rules preventing the 
avoidance of the preceding limitation through use of 
multiple entities, related parties, division of farms, 
or de minimis ownership. 
‘‘(5) OTHER RULES.—Rules similar to the fol-
lowing rules shall apply for purposes of this section: 
‘‘(A) Section 219(d)(2) (relating to no de-
duction for rollovers). 
‘‘(B) Section 219(f)(3) (relating to time 
when contributions deemed made). 
‘‘(C) Section 408(g) (relating to commu-
nity property laws). 
‘‘(D) Section 408(h) (relating to custodial 
accounts). 
‘‘(e) TAX TREATMENT OF ACCOUNTS.— 
‘‘(1) IN GENERAL.—A FRAME account is ex-
empt from taxation under this subtitle unless such 
account has ceased to be a FRAME account. Not-
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withstanding the preceding sentence, any such ac-
count is subject to the taxes imposed by section 511 
(relating to imposition of tax on unrelated business 
income of charitable, etc. organizations). 
‘‘(2) TERMINATION OF ACCOUNTS.—If the ac-
count beneficiary ceases to engage in the trade or 
business of farming or ranching— 
‘‘(A) all FRAME accounts of such indi-
vidual shall cease to be such accounts, and 
‘‘(B) the balance of all such accounts shall 
be treated as— 
‘‘(i) distributed to such individual, 
and 
‘‘(ii) not paid in a qualified distribu-
tion. 
‘‘(f) TAX TREATMENT OF DISTRIBUTIONS.— 
‘‘(1) IN GENERAL.—Any amount paid or dis-
tributed out of a FRAME account (other than a 
rollover contribution described in paragraph (4)) 
shall be included in gross income. 
‘‘(2) ADDITIONAL TAX ON NON-QUALIFIED DIS-
TRIBUTIONS.— 
‘‘(A) IN GENERAL.—The tax imposed by 
this chapter on the account beneficiary for any 
taxable year in which there is a payment or dis-
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tribution from a FRAME account of such bene-
ficiary which is not a qualified distribution shall 
be increased by 20 percent of the amount of 
such payment or distribution which is not a 
qualified distribution. 
‘‘(B) EXCEPTION
FOR
DISABILITY
OR 
DEATH.—Subparagraph (A) shall not apply if 
the payment or distribution is made after the 
account beneficiary becomes disabled within the 
meaning of section 72(m)(7) or dies. 
‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE-
FORE DUE DATE OF RETURN.— 
‘‘(A) IN
GENERAL.—If any excess con-
tribution is contributed for a taxable year to a 
FRAME account of an individual, paragraph 
(2) shall not apply to distributions from the 
FRAME accounts of such individual (to the ex-
tent such distributions do not exceed the aggre-
gate excess contributions to all such accounts of 
such individual for such year) if— 
‘‘(i) such distribution is received by 
the individual on or before the last day 
prescribed by law (including extensions of 
time) for filing such individual’s return for 
such taxable year, and 
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‘‘(ii) such distribution is accompanied 
by the amount of net income attributable 
to such excess contribution. 
Any net income described in clause (ii) shall be 
included in the gross income of the individual 
for the taxable year in which it is received. 
‘‘(B) EXCESS
CONTRIBUTION.—For pur-
poses of subparagraph (A), the term ‘excess 
contribution’ means any contribution (other 
than a rollover contribution) which is not de-
ductible under this section. 
‘‘(4) ROLLOVER CONTRIBUTION.—An amount is 
described in this paragraph as a rollover contribu-
tion if it meets the requirements of subparagraphs 
(A) and (B). 
‘‘(A) IN GENERAL.—For purposes of this 
section, any amount paid or distributed from a 
FRAME account to the account beneficiary 
shall be treated as a qualified distribution to 
the extent the amount received is paid into a 
FRAME account for the benefit of such bene-
ficiary not later than the 60th day after the day 
on which the beneficiary receives the payment 
or distribution. 
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