once made, is irrevocable (but may be terminated as 
provided in this section). 
‘‘(2) REQUIREMENTS OF ELECTION.—An elec-
tion under this section shall not be effective unless— 
‘‘(A) the tax imposed under section 899A 
(if any) is paid (or deferred under section 
899A(b)) at such time as the Secretary may 
provide, and 
‘‘(B) the electing individual certifies under 
penalty of perjury that the electing individual 
has met the requirements of this title for the 5 
preceding taxable years and submits such evi-
dence of such compliance as the Secretary may 
require. 
‘‘(3) TERMINATION OF ELECTION.—An election 
under this section— 
‘‘(A) shall be terminated as of the close of 
the taxable year preceding any taxable year 
(with respect to which the election would other-
wise apply) for which the electing individual is 
a resident of the United States under clause (ii) 
or (iii) of section 7701(b)(1)(B), and 
‘‘(B) may be terminated by the electing in-
dividual at such time and in such manner as 
the Secretary may provide. 
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‘‘(e) SPECIAL RULE
FOR SHORT-TERM NONRESI-
DENCY.—If an election under this section by an electing 
individual is terminated before the beginning of the fourth 
taxable year to which such election would otherwise apply, 
subsection (b) shall not apply to any taxable year to which 
such election would have otherwise applied. 
‘‘SEC. 899A. IMPOSITION OF TAX ON DEFERRED INCOME OF 
CERTAIN ELECTING INDIVIDUALS. 
‘‘(a) GENERAL RULES.—For purposes of this sub-
title— 
‘‘(1) DEEMED SALE.—All property of a speci-
fied electing individual shall be treated as sold on 
the day before the election date for its fair market 
value. 
‘‘(2) RECOGNITION OF GAIN OR LOSS.—In the 
case of any sale under paragraph (1)— 
‘‘(A) notwithstanding any other provision 
of this title, any gain arising from such sale 
shall be taken into account for the taxable year 
of the sale, and 
‘‘(B) any loss arising from such sale shall 
be taken into account for the taxable year of 
the sale to the extent otherwise provided by this 
title, except that section 1091 shall not apply to 
any such loss. 
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Proper adjustment shall be made in the amount of 
any gain or loss subsequently realized for gain or 
loss taken into account under the preceding sen-
tence. 
‘‘(b) SPECIFIED ELECTING INDIVIDUAL.—For pur-
poses of this section— 
‘‘(1) IN GENERAL.—The term ‘specified electing 
individual’ means any electing individual if the net 
worth of the individual as of the election date ex-
ceeds the basic exclusion amount in effect under sec-
tion 2010(c)(3) as of such date. 
‘‘(2) NET
WORTH.—The term ‘net worth’ 
means, with respect to any electing individual, the 
excess (if any) of— 
‘‘(A) the fair market value of all assets of 
such individual, over 
‘‘(B) the indebtedness of such individual. 
‘‘(c) ELECTION DATE.—For purposes of this section, 
the term ‘election date’ means the first day of the first 
taxable year to which the election under section 899 ap-
plies. 
‘‘(d) EXCEPTIONS.— 
‘‘(1) IN
GENERAL.—Subsection (a) shall not 
apply to any interest in the following property of the 
specified electing individual: 
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‘‘(A) Any deferred compensation item. 
‘‘(B) Any qualified retirement plan (as de-
fined in section 4974(c)). 
‘‘(C) Any specified tax deferred account. 
‘‘(D) Any interest in a nongrantor trust. 
‘‘(E) Any real property located in the 
United States. 
‘‘(F) Any real property located outside the 
United States if, during the 5-year period end-
ing on the election date, such property has been 
owned and used by the specified electing indi-
vidual as such individual’s principal residence 
for periods aggregating 2 years or more. 
‘‘(2) DEFERRED
COMPENSATION
ITEM.—For 
purposes of this subsection, the term ‘deferred com-
pensation item’ means— 
‘‘(A) any interest in a plan or arrangement 
described in section 219(g)(5), 
‘‘(B) any interest in a foreign pension plan 
or similar retirement arrangement or program, 
‘‘(C) any item of deferred compensation, 
and 
‘‘(D) any property, or right to property, 
which the individual is entitled to receive in 
connection with the performance of services to 
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the extent not previously taken into account 
under section 83 or in accordance with section 
83. 
‘‘(3) SPECIFIED
TAX
DEFERRED
ACCOUNT.— 
For purposes of this subsection, the term ‘specified 
tax deferred account’ means a qualified tuition pro-
gram (as defined in section 529), a qualified ABLE 
program (as defined in section 529A), a Coverdell 
education savings account (as defined in section 
530), a health savings account (as defined in section 
223), and an Archer MSA (as defined in section 
220). 
‘‘(4) NONGRANTOR
TRUST.—For purposes of 
this subsection, the term ‘nongrantor trust’ means 
the portion of any trust that the specified electing 
individual is not considered the owner of under sub-
part E of part I of subchapter J. The determination 
under the preceding sentence shall be made imme-
diately before the election date. 
‘‘(e) ELECTION TO DEFER TAX.— 
‘‘(1) IN GENERAL.—If the specified electing in-
dividual elects the application of this subsection with 
respect to any non-readily tradable property treated 
as sold by reason of subsection (a), the time for pay-
ment of the additional tax attributable to such prop-
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erty shall be extended until the due date of the re-
turn for the taxable year in which such property is 
disposed of (or, in the case of property disposed of 
in a transaction in which gain is not recognized in 
whole or in part, until such other date as the Sec-
retary may prescribe). 
‘‘(2) DETERMINATION OF TAX WITH RESPECT 
TO PROPERTY.—For purposes of paragraph (1), the 
additional tax attributable to any property is an 
amount which bears the same ratio to the additional 
tax imposed by this chapter for the taxable year 
solely by reason of subsection (a) as the gain taken 
into account under subsection (a) with respect to 
such property bears to the total gain taken into ac-
count under subsection (a) with respect to all prop-
erty to which subsection (a) applies. 
‘‘(3) TERMINATION OF EXTENSION.—The due 
date for payment of tax may not be extended under 
this subsection later than the due date for the re-
turn of tax imposed by this chapter for the taxable 
year which includes the date of death of the speci-
fied electing individual (or, if earlier, the time that 
the security provided with respect to the property 
fails to meet the requirements of paragraph (4), un-
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