‘‘(F) real property used in one or more 
real property trades or businesses (as defined in 
section 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 
‘‘(J) any other asset specified in regula-
tions prescribed by the Secretary. 
‘‘(4) LOOK-THRU RULES.— 
‘‘(A) IN GENERAL.—If a nonbusiness asset 
of an entity consists of a 10-percent interest in 
any other entity, this subsection shall be ap-
plied by disregarding the 10-percent interest 
and by treating the entity as holding directly its 
ratable share of the assets of the other entity. 
This subparagraph shall be applied successively 
to any 10-percent interest of such other entity 
in any other entity. 
‘‘(B) 10-PERCENT
INTEREST.—The term 
‘10-percent interest’ means— 
‘‘(i) in the case of an interest in a cor-
poration, ownership of at least 10 percent 
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(by vote or value) of the stock in such cor-
poration, 
‘‘(ii) in the case of an interest in a 
partnership, ownership of at least 10 per-
cent of the capital or profits interest in the 
partnership, and 
‘‘(iii) in any other case, ownership of 
at least 10 percent of the beneficial inter-
ests in the entity. 
‘‘(5) COORDINATION WITH SUBSECTION (b).— 
Subsection (b) shall apply after the application of 
this subsection. 
‘‘(e) LIMITATION ON MINORITY DISCOUNTS.—For 
purposes of this chapter and chapter 12, in the case of 
the transfer of any interest in an entity other than an in-
terest which is actively traded (within the meaning of sec-
tion 1092), no discount shall be allowed by reason of the 
fact that the transferee does not have control of such enti-
ty if the transferor, the transferee, and members of the 
family (as defined in section 2032A(e)(2)) of the trans-
feror and transferee— 
‘‘(1) have control of such entity, or 
‘‘(2) own the majority of the ownership inter-
ests (by value) in such entity.’’. 
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(b) 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 
(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 
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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 
‘‘(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. 
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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 
‘‘(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. 
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‘‘(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. 
‘‘(c) EXCEPTIONS.—This section shall not apply to— 
‘‘(1) any trust that is includible in the gross es-
tate of the deemed owner (without regard to sub-
section (a)(1)), and 
‘‘(2) any other type of trust that the Secretary 
determines by regulations or other guidance does not 
have as a significant purpose the avoidance of trans-
fer taxes. 
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