‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A), a passive asset shall be 
treated as a nonbusiness asset unless— 
‘‘(I) the asset is property de-
scribed in paragraph (1) or (4) of sec-
tion 1221(a) or is a hedge with re-
spect to such property, or 
‘‘(II) the asset is real property 
used in the active conduct of 1 or 
more real property trades or busi-
nesses (within the meaning of section 
469(c)(7)(C)) in which the transferor 
materially participates and with re-
spect to which the transferor meets 
the 
requirements 
of 
section 
469(c)(7)(B)(ii). 
‘‘(ii) MATERIAL PARTICIPATION.—For 
purposes of clause (i)(II), material partici-
pation shall be determined under the rules 
of section 469(h), except that section 
469(h)(3) shall be applied without regard 
to the limitation to farming activity. 
‘‘(C) WORKING
CAPITAL
TREATED
AS 
USED IN TRADE OR BUSINESS.—Any asset (in-
cluding a passive asset) which is held as a part 
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of the reasonably required working capital 
needs of a trade or business shall be treated as 
used in the active conduct of a trade or busi-
ness. 
‘‘(3) PASSIVE
ASSET.—For purposes of this 
subsection, the term ‘passive asset’ means any— 
‘‘(A) cash or cash equivalents, 
‘‘(B) stock in a corporation or any other 
equity, profits, or capital interest in any entity, 
‘‘(C) evidence of indebtedness, option, for-
ward or futures contract, notional principal con-
tract, or derivative, 
‘‘(D) asset described in clause (iii), (iv), or 
(v) of section 351(e)(1)(B), 
‘‘(E) annuity, 
‘‘(F) real property used in 1 or more real 
property trades or businesses (as defined in sec-
tion 469(c)(7)(C)), 
‘‘(G) asset (other than a patent, trade-
mark, or copyright) which produces royalty in-
come, 
‘‘(H) commodity, 
‘‘(I) collectible (within the meaning of sec-
tion 408(m)), or 
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‘‘(J) any other asset specified in regula-
tions prescribed by the Secretary. 
‘‘(4) LOOK-THRU RULE.— 
‘‘(A) IN GENERAL.—If a nonbusiness asset 
of an entity described in paragraph (1) consists 
of a 10-percent interest in any other entity, this 
subsection shall be applied by disregarding the 
10-percent interest and by treating the entity 
as holding directly its ratable share of the as-
sets of the other entity. 
‘‘(B) 10-PERCENT
INTEREST.—The term 
‘10-percent interest’ means— 
‘‘(i) in the case of an interest in a cor-
poration, direct ownership of at least 10 
percent (by vote or value) of the stock in 
such corporation, 
‘‘(ii) in the case of an interest in a 
partnership, direct ownership of at least 10 
percent of the capital or profits interest in 
the partnership, and 
‘‘(iii) in any other case, direct owner-
ship of at least 10 percent of the beneficial 
interests in the entity.’’. 
(b) CONFORMING AMENDMENTS.— 
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(1) Section 2031(b) of the Internal Revenue 
Code of 1986 is amended by inserting ‘‘(after appli-
cation of section 2705(b))’’ after ‘‘shall be deter-
mined’’. 
(2) The table of sections of chapter 14 of sub-
title B of such Code is amended by adding at the 
end the following: 
‘‘Sec. 2705. Limitation on discounts; valuation rules for certain transfers of 
nonbusiness assets.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transfers after the date of the 
enactment of this Act. 
SEC. 7. REQUIRED MINIMUM 10-YEAR TERM, ETC., FOR 
GRANTOR RETAINED ANNUITY TRUSTS. 
(a) IN GENERAL.—Subsection (b) of section 2702 of 
the Internal Revenue Code of 1986 is amended— 
(1) by redesignating paragraphs (1), (2), and 
(3) as subparagraphs (A), (B), and (C), respectively, 
and by moving such subparagraphs (as so redesig-
nated) 2 ems to the right; 
(2) by striking ‘‘For purposes of’’ and inserting 
the following: 
‘‘(1) IN GENERAL.—For purposes of’’; 
(3) by striking ‘‘paragraph (1) or (2)’’ in para-
graph (1)(C) (as so redesignated) and inserting 
‘‘subparagraph (A) or (B)’’; and 
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(4) by adding at the end the following new 
paragraph: 
‘‘(2) ADDITIONAL
REQUIREMENTS
WITH
RE-
SPECT
TO
GRANTOR
RETAINED
ANNUITIES.—For 
purposes of subsection (a), in the case of an interest 
described in paragraph (1)(A) (determined without 
regard to this paragraph) which is retained by the 
transferor, such interest shall be treated as de-
scribed in such paragraph only if— 
‘‘(A) the right to receive the fixed amounts 
referred to in such paragraph is for a term of 
not less than 10 years and not more than the 
life expectancy of the annuitant plus 10 years, 
‘‘(B) such fixed amounts, when determined 
on an annual basis, do not decrease during the 
term described in subparagraph (A), and 
‘‘(C) the remainder interest has a value, as 
determined as of the time of the transfer, which 
is— 
‘‘(i) not less than an amount equal to 
the greater of— 
‘‘(I) 25 percent of the fair mar-
ket value of the property in the trust, 
or 
‘‘(II) $500,000, and 
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‘‘(ii) not greater than the fair market 
value of the property in the trust.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transfers made after the date 
of the enactment of this Act. 
SEC. 8. CERTAIN TRANSFER TAX RULES APPLICABLE TO 
GRANTOR TRUSTS. 
(a) IN GENERAL.—Subtitle B of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new chapter: 
‘‘CHAPTER 16—SPECIAL RULES FOR 
GRANTOR TRUSTS 
‘‘Sec. 2901. Application of transfer taxes. 
‘‘SEC. 2901. APPLICATION OF TRANSFER TAXES. 
‘‘(a) IN GENERAL.—In the case of any portion of a 
trust to which this section applies— 
‘‘(1) the value of the gross estate of the de-
ceased deemed owner of such portion shall include 
all assets attributable to that portion at the time of 
the death of such owner, 
‘‘(2) any distribution from such portion to one 
or more beneficiaries during the life of the deemed 
owner of such portion shall be treated as a transfer 
by gift for purposes of chapter 12, and 
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‘‘(3) if at any time during the life of the 
deemed owner of such portion, such owner ceases to 
be treated as the owner of such portion under sub-
part E of part 1 of subchapter J of chapter 1, all 
assets attributable to such portion at such time shall 
be treated for purposes of chapter 12 as a transfer 
by gift made by the deemed owner. 
‘‘(b) PORTION OF TRUST TO WHICH SECTION AP-
PLIES.—This section shall apply to— 
‘‘(1) the portion of a trust with respect to 
which the grantor is the deemed owner, and 
‘‘(2) the portion of the trust to which a person 
who is not the grantor is a deemed owner by reason 
of the rules of subpart E of part 1 of subchapter J 
of chapter 1, and such deemed owner engages in a 
sale, exchange, or comparable transaction with the 
trust that is disregarded for purposes of subtitle A. 
For purposes of paragraph (2), the portion of the trust 
described with respect to a transaction is the portion of 
the trust attributable to the property received by the trust 
in such transaction, including all retained income there-
from, appreciation thereon, and reinvestments thereof, net 
of the amount of consideration received by the deemed 
owner in such transaction. 
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‘‘(c) EXCEPTIONS.—This section shall not apply to 
any trust that is includible in the gross estate of the 
deemed owner (without regard to subsection (a)(1)). 
‘‘(d) DEEMED OWNER DEFINED.—For purposes of 
this section, the term ‘deemed owner’ means any person 
who is treated as the owner of a portion of a trust under 
subpart E of part 1 of subchapter J of chapter 1. 
‘‘(e) REDUCTION FOR TAXABLE GIFTS TO TRUST 
MADE BY OWNER.—The amount to which subsection (a) 
applies shall be reduced by the value of any transfer by 
gift by the deemed owner to the trust previously taken 
into account by the deemed owner under chapter 12. 
‘‘(f) LIABILITY FOR PAYMENT OF TAX.—Any tax im-
posed pursuant to subsection (a) shall be a liability of the 
trust.’’. 
(b) CLERICAL AMENDMENT.—The table of chapters 
for subtitle B of such Code is amended by adding at the 
end the following new item: 
‘‘CHAPTER 16. SPECIAL RULES FOR GRANTOR TRUSTS’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply— 
(1) to trusts created on or after the date of the 
enactment of this Act, 
(2) to any portion of a trust established before 
the date of the enactment of this Act which is attrib-
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utable to a contribution made on or after such date, 
and 
(3) to any portion of a trust established before 
the date of the enactment of this Act to which sec-
tion 2901(a) of the Internal Revenue Code of 1986 
(as added by subsection (a)) applies by reason of a 
transaction described in section 2901(b)(2) of such 
Code on or after such date. 
SEC. 9. ELIMINATION OF GENERATION-SKIPPING TRANS-
FER TAX EXEMPTION FOR TRANSFERS TO 
CERTAIN PERSONS. 
(a) IN GENERAL.—Section 2642 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(h) ELIMINATION OF GST EXEMPTION FOR TRANS-
FERS TO CERTAIN PERSONS.— 
‘‘(1) IN GENERAL.— 
‘‘(A) TRANSFER
TO
NON-EXEMPT
PER-
SON.—In the case of any direct skip or taxable 
distribution made to any person who is not an 
exempt person, the inclusion ratio shall be 1. 
‘‘(B) TAXABLE
TERMINATION.—In the 
case of any taxable termination which occurs at 
any time immediately after no exempt person is 
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a beneficiary of the trust, the inclusion ratio 
shall be 1. 
‘‘(C) EXEMPT PERSON.— 
‘‘(i) IN
GENERAL.—For purposes of 
this subsection, the term ‘exempt person’ 
means— 
‘‘(I) a natural person— 
‘‘(aa) who is assigned to a 
generation which is 2 or fewer 
generations below the generation 
assignment of the transferor, or 
‘‘(bb) whose date of birth 
precedes the date on which the 
trust was created, or 
‘‘(II) a trust in which all inter-
ests are held by persons described in 
subclause (I). 
‘‘(ii) EXCEPTION.—For purposes of 
clause (i)(II), any interest which is used 
primarily to postpone or avoid the applica-
tion of this subsection shall be disregarded. 
‘‘(2) DATE OF CREATION.— 
‘‘(A) IN GENERAL.—For purposes of deter-
mining the date on which a trust was created 
under paragraph (1)(C)(i)(I)(bb), if the trust 
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was created before January 1, 2024, such trust 
shall be deemed to have been created on Janu-
ary 1, 2024. 
‘‘(B) DATE OF CREATION OF POUR-OVER 
TRUSTS.— 
‘‘(i) IN GENERAL.—In the case of any 
generation-skipping transfer of property 
which involves the transfer of property 
from one trust to another trust, the date 
of the creation of the transferee trust shall 
be treated as being the earlier of— 
‘‘(I) the date of the creation of 
such transferee trust, or 
‘‘(II) the date of the creation of 
the transferor trust. 
‘‘(ii) MULTIPLE TRANSFERS.—In the 
case of multiple transfers to which clause 
(i) applies— 
‘‘(I) the date of the creation of 
the transferor trust shall be deter-
mined under such clause, and 
‘‘(II) subsequent to the deter-
mination described in subclause (I), 
the date of the creation of the trans-
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feree trust shall be determined under 
such clause. 
‘‘(3) GENERATION ASSIGNMENT.—For purposes 
of this subsection, the provisions of section 2653(a) 
shall not apply. 
‘‘(4) REGULATIONS.—The Secretary may pre-
scribe such regulations or other guidance as may be 
necessary or appropriate to carry out this sub-
section.’’. 
(b) REPEAL.—Section 1433(b)(2) of the Tax Reform 
Act of 1986 (Public Law 99–514) is repealed. 
(c) EFFECTIVE DATES.— 
(1) IN
GENERAL.—The amendment made by 
subsection (a) shall take effect on the date of the en-
actment of this Act. 
(2) REPEAL.—The amendment made by sub-
section (b) shall apply to generation-skipping trans-
fers (within the meaning of section 2611 of the In-
ternal Revenue Code of 1986) made after the date 
of enactment of this Act. 
SEC. 10. SIMPLIFYING GIFT TAX EXCLUSION FOR ANNUAL 
GIFTS. 
(a) IN GENERAL.—Paragraph (1) of section 2503(b) 
of the Internal Revenue Code of 1986 is amended to read 
as follows: 
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‘‘(1) IN GENERAL.— 
‘‘(A) LIMIT PER DONEE.—In the case of 
gifts made to any person by the donor during 
the calendar year, the first $10,000 of such 
gifts to such person shall not, for purposes of 
subsection (a), be included in the total amount 
of gifts made during such year. 
‘‘(B) CUMULATIVE LIMIT PER DONOR.— 
‘‘(i) IN
GENERAL.—The aggregate 
amount excluded under subparagraph (A) 
with respect to all transfers described in 
clause (ii) made by the donor during the 
calendar year shall not exceed twice the 
dollar amount in effect under such sub-
paragraph for such calendar year. 
‘‘(ii) TRANSFERS SUBJECT TO LIMITA-
TION.—The transfers described in this 
clause are— 
‘‘(I) a transfer in trust, 
‘‘(II) a transfer of an interest in 
a passthrough entity, 
‘‘(III) a transfer of an interest 
subject to a prohibition on sale, and 
‘‘(IV) any other transfer of prop-
erty that, without regard to with-
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drawal, put, or other such rights in 
the donee, cannot immediately be liq-
uidated by the donee.’’. 
(b) CONFORMING AMENDMENT.—Section 2503 of the 
Internal Revenue Code of 1986 is amended by striking 
subsection (c). 
(c) REGULATIONS.—The Secretary of the Treasury, 
or the Secretary of the Treasury’s delegate, may prescribe 
such regulations or other guidance as may be necessary 
or appropriate to carry out the amendments made by this 
section. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to any calendar year beginning 
after the date of the enactment of this Act. 
SEC. 11. GROSS UP FOR TAXABLE GIFTS. 
(a) IN GENERAL.—Section 2503 of the Internal Rev-
enue Code of 1986, as amended by section 10, is amend-
ed— 
(1) in subsection (a), by striking ‘‘The term’’ 
and inserting ‘‘Subject to subsection (c), the term’’, 
and 
(2) by inserting after subsection (b) the fol-
lowing: 
‘‘(c) GROSS UP.—An amount equal to the taxes paid 
by an individual under section 2501 for any calendar year 
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on the transfer of property by gift during such calendar 
year shall be treated for purposes of this subtitle as a tax-
able gift made during such calendar year.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to calendar years beginning after 
the date of enactment of this Act. 
SEC. 12. DEFINITION OF EXECUTOR. 
(a) ESTABLISHMENT OF GENERAL DEFINITION OF 
EXECUTOR FOR INTERNAL REVENUE CODE OF 1986.— 
(1) Subchapter C of chapter 11 of subtitle B of 
the Internal Revenue Code of 1986 is amended by 
striking section 2203. 
(2) Section 7701(a) of such Code is amended 
by adding at the end the following: 
‘‘(51) EXECUTOR.— 
‘‘(A) IN
GENERAL.—The term ‘executor’ 
means— 
‘‘(i) the executor or administrator of 
the decedent, or 
‘‘(ii) if there is no executor or admin-
istrator appointed, qualified, and acting 
within the United States, any person in ac-
tual or constructive possession of any prop-
erty of the decedent. 
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‘‘(B) AUTHORITY.—For purposes of this 
title, an executor shall be authorized to act on 
behalf of the decedent, including with respect to 
any liability or obligation incurred under this 
title which preceded the death of the decedent. 
‘‘(C) REGULATIONS.—The Secretary shall 
issue such regulations or other guidance as may 
be necessary or appropriate to determine the 
executor of a decedent in the case where 2 or 
more persons satisfy the applicable require-
ments under subparagraph (A) with respect to 
the decedent.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 2652 of the Internal Revenue Code 
of 1986 is amended by striking subsection (d). 
(2) Section 6036 of such Code is amended by 
striking ‘‘(as defined in section 2203)’’. 
(3) The table of sections for subchapter C of 
chapter 11 of subtitle B of such Code is amended 
by striking the item relating to section 2203. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of enactment of 
this Act. 
Æ 
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