‘‘(B) LIMITATION.—This paragraph shall 
not apply to any amount described in subpara-
graph (A) received by an individual from a 
FRAME account if, at any time during the 1- 
year period ending on the day of such receipt, 
such individual received any other amount de-
scribed in subparagraph (A) from a FRAME 
account which was not included in the individ-
ual’s gross income because of the application of 
this paragraph. 
‘‘(5) TRANSFER OF ACCOUNT INCIDENT TO DI-
VORCE.—The transfer of an individual’s interest in 
a FRAME account to an individual’s spouse or 
former spouse under a divorce or separation instru-
ment described in subparagraph (A) of section 
71(b)(2) shall not be considered a taxable transfer 
made by such individual notwithstanding any other 
provision of this subtitle, and such interest shall, 
after such transfer, be treated as a FRAME account 
with respect to which such spouse is the account 
beneficiary. 
‘‘(6) TREATMENT AFTER DEATH OF ACCOUNT 
BENEFICIARY.— 
‘‘(A) TREATMENT IN CASE OF INDIVIDUAL 
DESIGNATED BENEFICIARY.—If any individual 
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acquires 
such 
beneficiary’s 
interest 
in 
a 
FRAME account by reason of being the des-
ignated beneficiary of such account at the death 
of the account beneficiary, such FRAME ac-
count shall be treated as if such individual were 
the account beneficiary. 
‘‘(B) OTHER CASES.— 
‘‘(i) IN GENERAL.—If, by reason of 
the death of the account beneficiary, any 
person acquires the account beneficiary’s 
interest in a FRAME account in a case to 
which subparagraph (A) does not apply— 
‘‘(I) such account shall cease to 
be a FRAME account as of the date 
of death, and 
‘‘(II) an amount equal to the fair 
market value of the assets in such ac-
count on such date shall be included 
if such person is not the estate of 
such beneficiary, in such person’s 
gross income for the taxable year 
which includes such date, or if such 
person is the estate of such bene-
ficiary, in such beneficiary’s gross in-
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come for the last taxable year of such 
beneficiary. 
‘‘(ii) 
DEDUCTION
FOR
ESTATE 
TAXES.—An appropriate deduction shall be 
allowed under section 691(c) to any person 
(other than the decedent or the decedent’s 
spouse) with respect to amounts included 
in gross income under clause (i) by such 
person. 
‘‘(g) REPORTS.—The Secretary may require the 
trustee of a FRAME account to make such reports regard-
ing such account to the Secretary and to the account bene-
ficiary with respect to contributions, distributions, and 
such other matters as the Secretary determines appro-
priate. The reports required by this subsection shall be 
filed at such time and in such manner and furnished to 
such individuals at such time and in such manner as may 
be required by the Secretary.’’. 
(b) DEDUCTION ALLOWED WHETHER OR NOT INDI-
VIDUAL ITEMIZES OTHER DEDUCTIONS.—Subsection (a) 
of section 62 of such Code is amended by inserting after 
paragraph (20) the following new paragraph: 
‘‘(21) FRAME ACCOUNTS.—The deduction al-
lowed by section 224.’’. 
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(c) TAX ON EXCESS CONTRIBUTIONS.—Section 4973 
of such Code (relating to tax on excess contributions to 
certain tax-favored accounts and annuities) is amended— 
(1) by striking ‘‘or’’ at the end of subsection 
(a)(4), by inserting ‘‘or’’ at the end of subsection 
(a)(5), and by inserting after subsection (a)(5) the 
following new paragraph: 
‘‘(6) a FRAME account (within the meaning of 
section 224(d)),’’, and 
(2) by adding at the end the following new sub-
section: 
‘‘(h) EXCESS
CONTRIBUTIONS
TO
FRAME AC-
COUNTS.—For purposes of this section, in the case of 
FRAME accounts (within the meaning of section 224(d)), 
the term ‘excess contribution’ means the sum of— 
‘‘(1) the aggregate amount contributed for the 
taxable year to the accounts (other than rollover 
contributions described in section 224(f)(4)) which is 
not allowable as a deduction under section 224 for 
such year, and 
‘‘(2) the amount determined under this sub-
section for the preceding taxable year, reduced by 
the sum of— 
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‘‘(A) the distributions out of the accounts 
with respect to which additional tax was im-
posed under section 224(f)(2), and 
‘‘(B) the excess (if any) of— 
‘‘(i) the maximum amount allowable 
as a deduction under section 224(b) for 
the taxable year, over 
‘‘(ii) the amount contributed to the 
accounts for the taxable year. 
For purposes of this subsection, any contribution 
which is distributed out of the FRAME account in 
a distribution to which section 224(f)(3) applies 
shall be treated as an amount not contributed.’’. 
(d) TAX ON PROHIBITED TRANSACTIONS.— 
(1) Section 4975(c) of such Code (relating to 
tax on prohibited transactions) is amended by add-
ing at the end the following new paragraph: 
‘‘(7) SPECIAL RULE FOR FRAME ACCOUNTS.— 
An individual for whose benefit a FRAME account 
(within the meaning of section 224(d)) is established 
shall be exempt from the tax imposed by this section 
with respect to any transaction concerning such ac-
count (which would otherwise be taxable under this 
section) if, with respect to such transaction, the ac-
count ceases to be a FRAME account by reason of 
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the application of section 224(e)(2) to such ac-
count.’’. 
(2) Section 4975(e)(1) of such Code is amended 
by redesignating subparagraphs (F) and (G) as sub-
paragraphs (G) and (H), respectively, and by insert-
ing after subparagraph (E) the following new sub-
paragraph: 
‘‘(F) a FRAME account described in sec-
tion 224(d),’’. 
(e) FAILURE TO PROVIDE REPORTS ON FRAME AC-
COUNTS.—Section 6693(a)(2) of such Code (relating to 
reports) is amended by redesignating subparagraphs (D) 
and (E) as subparagraphs (E) and (F), respectively, and 
by inserting after subparagraph (C) the following new sub-
paragraph: 
‘‘(D) section 224(g) (relating to FRAME 
accounts),’’. 
(f) CLERICAL AMENDMENT.—The table of sections 
for part VII of subchapter B of chapter 1 of such Code 
is amended by striking the last item and inserting the fol-
lowing: 
‘‘Sec. 224. FRAME accounts. 
‘‘Sec. 225. Cross reference.’’. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
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SEC. 3. FRAME CONTRIBUTION CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new 
section: 
‘‘SEC. 45S. FRAME CONTRIBUTION CREDIT. 
‘‘(a) GENERAL RULE.—For purposes of section 38, 
in the case of a qualified farmer (as defined in section 
224(c)), the FRAME contribution credit determined 
under this section for any taxable year is an amount equal 
to the applicable percentage of the taxpayer’s contribu-
tions to any FRAME account of the taxpayer. 
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 
subsection (a), the applicable percentage is— 
‘‘(1) in the case of the taxable year during 
which the first FRAME account of the taxpayer is 
established, and the 2nd and 3rd taxable years 
thereafter, 10 percent, 
‘‘(2) in the case of the 4th through 5th taxable 
years thereafter, 5 percent, and 
‘‘(3) in the case of the 7th through 9th taxable 
years thereafter, 3.5 percent. 
‘‘(c) LIMITATION.—Only contributions for which a 
deduction is allowed under section 224 shall be taken into 
account under this section.’’. 
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(b) CREDIT MADE PART OF GENERAL BUSINESS 
CREDIT.—Subsection (b) of section 38 of such Code is 
amended by striking ‘‘plus’’ at the end of paragraph (35), 
by striking the period at the end of paragraph (36) and 
inserting ‘‘, plus’’, and by adding at the end the following 
new paragraph: 
‘‘(37) the FRAME contribution credit deter-
mined under section 45S(a).’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
of such Code is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 45S. FRAME contribution credit.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
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