I 
117TH CONGRESS 
1ST SESSION H. R. 2286 
To amend the Internal Revenue Code of 1986 to treat property transferred 
by gift or at death as sold for fair market value, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 29, 2021 
Mr. PASCRELL 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 treat prop-
erty transferred by gift or at death as sold for fair 
market value, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. DEEMED REALIZATION OF CAPITAL GAINS AT 
TIME OF GIFT OR DEATH. 
(a) TREATMENT AS SALE.— 
(1) IN GENERAL.—Part IV of subchapter P of 
chapter 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new sec-
tion: 
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‘‘SEC. 1261. GAINS FROM CERTAIN PROPERTY TRANS-
FERRED BY GIFT OR UPON DEATH. 
‘‘(a) IN GENERAL.—Any property which is trans-
ferred by gift or at death shall be treated as sold for its 
fair market value on the date of such gift or death. 
‘‘(b) EXCEPTIONS.— 
‘‘(1) SPOUSE OR SURVIVING SPOUSE.—This sec-
tion shall not apply to a transfer of property to the 
transferor’s spouse or surviving spouse if such 
spouse or surviving spouse is a citizen of the United 
States. 
‘‘(2) CERTAIN
TANGIBLE
PERSONAL
PROP-
ERTY.—In the case of tangible personal property, 
this section shall apply only to the following: 
‘‘(A) Property held in connection with a 
trade or business. 
‘‘(B) Property held for investment. 
‘‘(C) Collectibles (as defined in section 
408(m) (determined without regard to para-
graph (3) thereof)). 
‘‘(3) CHARITABLE CONTRIBUTIONS.—This sec-
tion shall not apply to any transfer to an organiza-
tion described in section 170(c). 
‘‘(c) SPECIAL RULES FOR TRUSTS.— 
‘‘(1) CERTAIN GRANTOR TRUSTS.—In the case 
of any property which— 
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‘‘(A) is held in a trust of which the grantor 
or another person is treated as the owner under 
subpart E of part I of subchapter J of chapter 
1, and 
‘‘(B) is includible in the gross estate of the 
grantor or such other person under chapter 11, 
such property shall be treated as transferred under 
subsection (a) when the grantor or such other per-
son ceases to be treated as the owner of such prop-
erty, or such property ceases to be includible in the 
gross estate of the grantor or such other person (in-
cluding by reason of the death of the grantor or 
such other person, or the distribution of such prop-
erty to a person other than the grantor or such 
other person). 
‘‘(2) OTHER
TRUSTS.— In the case of any 
property held in trust and not described in para-
graph (1), such property shall be treated as trans-
ferred under subsection (a) upon the transfer of 
such property to a trust. 
‘‘(3) TRANSFERS FROM AND MODIFICATIONS OF 
TRUSTS.—Any modification of the direct or indirect 
beneficiaries of a trust (or the rights of the bene-
ficiaries to trust assets) or any transfer or distribu-
tion of trust assets (including to another trust) shall 
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‘‘(A) IN GENERAL.—Paragraphs (1), (2), 
(3), and (4) shall not apply in the case of a 
qualifying spousal trust, and the property of 
such trust shall be treated as transferred under 
subsection (a)— 
‘‘(i) upon the death of the spousal 
beneficiary, 
‘‘(ii) upon the distribution of such 
property from such trust to any person 
other than the spousal beneficiary who is a 
citizen of the United States, or 
‘‘(iii) at such time such property 
ceases to be held by a qualifying spousal 
trust. 
‘‘(B) QUALIFYING SPOUSAL TRUST.—For 
purposes of this section, a trust is a qualifying 
spousal trust if— 
‘‘(i) such trust is a qualified domestic 
trust (as defined in section 2056A), 
‘‘(ii) the sole current income bene-
ficiary of such trust is the spouse or sur-
viving spouse of the transferor of property 
to such trust, and 
‘‘(iii) such transferor (during the life 
of such transferor) or such spouse or sur-
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viving spouse has the power to appoint 
over the entire trust. 
‘‘(d) EXCLUSION OF CERTAIN GIFTS.—In the case 
of gifts made to any individual during the taxable year, 
so much of the dollar amount of such gifts to such indi-
vidual as does not exceed the amount in effect for the cal-
endar year under section 2503(b) in which the taxable 
year begins shall not be taken into account under sub-
section (a) for such taxable year. 
‘‘(e) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary to prevent the avoid-
ance of the purposes of this section.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for part IV of subchapter P of chapter 1 of 
such Code is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 1261. Gains from certain property transferred by gift or upon death.’’. 
(b) COORDINATION
OF
RELATED
PARTY
LOSS 
RULES.—Section 267 of such Code is amended by adding 
at the end the following new subsection: 
‘‘(h) PROPERTY TREATED AS SOLD AT DEATH.— 
Subsection (a)(1) shall not apply to any property that is 
transferred at death and treated as sold under section 
1261.’’. 
(c) TREATMENT
OF BASIS
FOR GIFTS
AND BE-
QUESTS TO WHICH TAX APPLIES.— 
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(1) ELIMINATION
OF
CARRYOVER
BASIS
FOR 
GIFTS.—Section 1015(a) of such Code is amended— 
(A) by striking ‘‘If the property’’ and in-
serting the following: 
‘‘(1) GIFTS BEFORE JANUARY 1, 2022.—If the 
property’’; 
(B) by inserting ‘‘, and before January 1, 
2022’’ after ‘‘after December 31, 1920’’; and 
(C) by adding at the end the following new 
paragraph: 
‘‘(2) GIFTS AFTER DECEMBER 31, 2021.—If the 
property was acquired by gift after December 31, 
2021, the basis shall be the fair market value of 
such property at the time of the gift.’’. 
(2) 
RULES
FOR
TRANSFERS
BETWEEN 
SPOUSES.— 
(A) IN
GENERAL.—Section 1041(b) of 
such Code is amended to read as follows: 
‘‘(b) TRANSFEREE HAS TRANSFEROR’S BASIS.—In 
the case of any transfer of property described in sub-
section (a), the basis of the transferee in the property shall 
be the adjusted basis of the transferor.’’. 
(B) 
TRANSFERS
AT
DEATH.—Section 
1041(a) of such Code is amended by inserting 
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‘‘(including at death)’’ after ‘‘transfer of prop-
erty’’. 
(C) CONFORMING AMENDMENTS.— 
(i) Section 1014 of such Code is 
amended by adding at the end the fol-
lowing new subsection: 
‘‘(g) 
PROPERTY
ACQUIRED
FROM
DECEDENT 
SPOUSE.—In the case of property which passes from the 
decedent to (or in trust for the benefit of) the decedent’s 
surviving spouse in a transfer described in section 
1041(a)(1), the basis of such property in the hands of the 
transferee shall be determined under section 1041(b) and 
not this section.’’, and 
(ii) Section 1015(e) of such Code is 
amended by striking ‘‘1041(b)(2)’’ and in-
serting ‘‘1041(b)’’. 
(3) BASIS MUST BE CONSISTENT WITH GAINS 
RECOGNIZED IN DEEMED REALIZATION.— 
(A) PROPERTY
ACQUIRED
FROM
DECE-
DENT.—Section 1014 of such Code, as amend-
ed by the preceding provisions of this Act, is 
amended by adding at the end the following 
new subsection: 
‘‘(h) BASIS MUST BE CONSISTENT WITH GAINS 
RECOGNIZED IN DEEMED REALIZATION.—The basis of 
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any property to which subsection (a) applies shall not ex-
ceed the amount for which the property was treated as 
sold under section 1261.’’. 
(B) PROPERTY ACQUIRED BY GIFT.—Sec-
tion 1015 of such Code is amended by adding 
at the end the following new subsection: 
‘‘(f) BASIS MUST BE CONSISTENT WITH GAINS REC-
OGNIZED IN DEEMED REALIZATION.—The basis of any 
property to which subsection (a)(2) applies shall not ex-
ceed the amount for which the property was treated as 
sold under section 1261.’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Section 7477(a) of such Code is amended 
by striking ‘‘chapter 12’’ and inserting ‘‘chapter 1 or 
12’’. 
(2) Section 7517(a) of such Code is amended 
by striking ‘‘chapter 11’’ and inserting ‘‘chapter 1, 
11’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transfers by gift (including 
transfers treated as gifts by reason of the amendments 
made by this section), or at death by decedents dying, 
after December 31, 2021. 
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SEC. 2. EXCLUSION OF CERTAIN AMOUNTS OF REALIZED 
CAPITAL GAIN. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by inserting before section 140 the following new section: 
‘‘SEC. 139I. EXCLUSION OF GAIN FROM TRANSFERS OF AP-
PRECIATED ASSETS AT DEATH. 
‘‘(a) IN GENERAL.—Gross income shall not include 
so much of the net capital gain for the taxable year from 
transfers at death to which 1261(a) applies as does not 
exceed $1,000,000. 
‘‘(b) INFLATION ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of any taxable 
year beginning after 2022, the $1,000,000 amount 
in subsection (a) shall be increased by an amount 
equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
year in which the taxable year begins, deter-
mined by substituting in subparagraph (A)(ii) 
thereof ‘calendar year 2021’ for ‘calendar year 
2016’. 
‘‘(2) ROUNDING.—If the dollar amount in sub-
section (a), after being increased under paragraph 
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(1), is not a multiple of $10,000, such amount shall 
be rounded to the next lowest multiple of $10,000.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for part III of subchapter B of chapter 1 of such Code 
is amended by inserting after section 139H the following 
new item: 
‘‘Sec. 139I. Exclusion of gain from transfers of appreciated assets at death.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transfers at death by decedents 
dying after December 31, 2021, in taxable years beginning 
after such date. 
SEC. 3. INFORMATION REPORTING OF CERTAIN GIFTS. 
(a) IN GENERAL.—Subpart B of part III of sub-
chapter A of chapter 61 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new 
section: 
‘‘SEC. 6050Z. RETURNS RELATING TO CERTAIN GIFTS AND 
BEQUESTS. 
‘‘(a) IN GENERAL.—In the case of an applicable 
transfer, the individual making such gift, or the executor 
in the case of a transfer at death, shall furnish to the 
Secretary the following information: 
‘‘(1) The name and taxpayer identification 
number of the person to whom such transfer was 
made. 
‘‘(2) A description of the property transferred. 
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‘‘(3) The fair market value of the property 
transferred and the basis of such property to the 
transferee. 
‘‘(b) APPLICABLE TRANSFER.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘applicable transfer’ means— 
‘‘(A) any gift (other than a covered secu-
rity (as defined in section 6045(g)(3))) which is 
taken into account under section 1261, and 
‘‘(B) so much of any transfer at death 
(other than such a covered security) which is so 
taken into account under section 1261 and the 
gain from which is includible in gross income 
for the taxable year of such transfer. 
‘‘(2) DE MINIMIS.— 
‘‘(A) GIFTS.—For gifts not exceeding the 
limitation for such year under section 2503(b) 
and not taken into account under section 1261, 
see subsection (d) thereof. 
‘‘(B) TRANSFERS AT DEATH.—For amount 
of gain excluded from gross income in case of 
a transfer at death, see section 139I(a). 
‘‘(c) STATEMENTS TO BE FURNISHED TO PERSONS 
WITH RESPECT TO WHOM INFORMATION IS REQUIRED.— 
Every person required to make a return under subsection 
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(a) shall furnish to each person whose name is required 
to set forth in such return a written statement showing 
the information described in subsection (a). 
‘‘(d) TIMING.—The returns and statements required 
under this section shall be furnished at such time and in 
such form and manner as the Secretary shall by regulation 
prescribe.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subpart B of part III of subchapter A of chapter 61 
of such Code is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 6050Z. Returns relating to certain gifts.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transfers after December 31, 
2021, in taxable years beginning after such date. 
SEC. 4. EXTENSION OF TIME FOR PAYMENT OF TAX. 
(a) EXTENSION OF TIME.— 
(1) IN GENERAL.—Subchapter B of chapter 62 
of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new section: 
‘‘SEC. 6168. EXTENSION OF TIME FOR PAYMENT OF CAP-
ITAL GAINS ON CERTAIN ASSETS REALIZED 
BY REASON OF DEATH. 
‘‘(a) 7-YEAR INSTALLMENT PAYMENT.— 
‘‘(1) IN GENERAL.—In the case of any gain 
with respect to eligible property that is recognized 
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under section 1261 by reason of the death of the 
taxpayer, the taxpayer may elect to pay part or all 
of tax imposed on such gain in 2 or more (but not 
exceeding 7) equal installments. 
‘‘(2) DATE FOR PAYMENT OF INSTALLMENTS.— 
If an election is made under paragraph (1), the first 
installment shall be paid not later than the date on 
which the tax for the taxable year in which the gain 
described in paragraph (1) occurs is due, and each 
succeeding installment shall be paid on or before the 
date which is 1 year after the date prescribed by this 
paragraph for payment of the preceding installment. 
‘‘(b) ELIGIBLE CAPITAL ASSET.—For purposes of 
this section, the term ‘eligible property’ means any prop-
erty other than personal property of a type which is ac-
tively traded (within the meaning of section 1092(d)(1)). 
‘‘(c) PORTION OF TAX ELIGIBLE.—The amount of 
tax to which this section applies shall not exceed the excess 
of— 
‘‘(1) the tax computed under chapter 1 (deter-
mined after application of section 1261), over 
‘‘(2) the tax computed under chapter 1 (deter-
mined without regard to section 1261). 
‘‘(d) ELECTION.—Any election under subsection (a) 
shall be made not later than the time prescribed by section 
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6072 for filing the return of tax imposed under chapter 
1 (including extensions thereof), and shall be made in such 
manner as the Secretary shall by regulations prescribe. If 
an election under subsection (a) is made, the provisions 
of this subtitle shall apply as though the Secretary were 
extending the time for payment of the tax. 
‘‘(e) PRORATION
OF
DEFICIENCY
TO
INSTALL-
MENTS.—If an election is made under subsection (a) to 
pay any part of the tax imposed under chapter 1 in install-
ments and a deficiency has been assessed, the deficiency 
shall (subject to the limitation provided by subsection 
(a)(2)) be prorated to the installments payable under sub-
section (a). The part of the deficiency so prorated to any 
installment the date for payment of which has not arrived 
shall be collected at the same time as, and as a part of, 
such installment. The part of the deficiency so prorated 
to any installment the date for payment of which has ar-
rived shall be paid upon notice and demand from the Sec-
retary. This subsection shall not apply if the deficiency 
is due to negligence, to intentional disregard of rules and 
regulations, or to fraud with intent to evade tax. 
‘‘(f) TIME FOR PAYMENT OF INTEREST.—If the time 
for payment of any amount of tax has been extended 
under this section, interest payable under section 6601 on 
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any unpaid portion shall be paid annually at the same time 
as, and as part of, each installment payment of the tax. 
‘‘(g) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary to the application 
of this section. 
‘‘(h) CROSS-REFERENCES.— 
‘‘(1) SECURITY.—For authority of the Sec-
retary to require security in the case of an extension 
under this section, see section 6165. 
‘‘(2) INTEREST.—For provisions relating to in-
terest on tax payable in installments under this sec-
tion, see subsection (k) of section 6601.’’. 
(2) COORDINATION WITH TRANSFEREE LIABIL-
ITY.—Section 6109 of such Code is amended by re-
designating subsections (g), (h), and (i) as sub-
sections (h), (i), and (j), respectively, and by insert-
ing after subsection (f) the following new subsection: 
‘‘(g) PERIOD OF ASSESSMENT IN CASE OF EXTEN-
SION OF TIME FOR PAYMENT OF TAX UNDER SECTION 
1261.—For purposes of subsection (c), the period of limi-
tation for assessment against the transferor of any tax im-
posed under section 1261 the payment of which is ex-
tended under section 6168 shall not be treated as expiring 
earlier than the due date for the last payment under (a)(2) 
of such section.’’. 
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