Title: Family Attribution Modernization Act
Policy area: Taxation

Summary:
Family Attribution Modernization Act
This bill modifies testing rules for tax-exempt pension and profit sharing plans (e.g., 401k retirement plans) to eliminate attribution under the the family attribution rules (1) for spouses with separate businesses who reside in community property states, and (2) between parents with separate businesses who have minor children. The family attribution rule treats an individual taxpayer as owning property interests (e.g., stock) that are owned, directly or indirectly, by the individual's spouse, children, grandchildren, and parents.

[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2796 Introduced in House (IH)]

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117th CONGRESS
  1st Session
                                H. R. 2796

To amend section 414 of the Internal Revenue Code of 1986 to update the 
                        family attribution rule.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 22, 2021

 Mr. Panetta (for himself and Mr. Arrington) introduced the following 
      bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend section 414 of the Internal Revenue Code of 1986 to update the 
                        family attribution rule.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Family Attribution Modernization 
Act''.

SEC. 2. REFORM OF FAMILY ATTRIBUTION RULE.

    (a) In General.--Section 414 of the Internal Revenue Code of 1986 
is amended--
            (1) in subsection (b)--
                    (A) by striking ``For purposes of'' and inserting 
                the following:
            ``(1) In general.--For purposes of'', and
                    (B) by adding at the end the following new 
                paragraphs:
            ``(2) Special rules for applying family attribution.--For 
        purposes of applying the attribution rules under section 1563 
        with respect to paragraph (1), the following rules apply:
                    ``(A) Community property laws shall be disregarded 
                for purposes of determining ownership.
                    ``(B) Any ownership that is not attributed to a 
                spouse by reason of section 1563(e)(5) shall also not 
                be attributed to the minor children of the owner and 
                the attribution rule in paragraph (6)(A) shall not 
                apply to such ownership.
            ``(3) Plan shall not fail to be treated as satisfying this 
        section.--If application of paragraph (2) causes two or more 
        entities to be a controlled group, or an affiliated service 
        group, or to no longer be in a controlled group or an 
        affiliated service group, such change shall be treated as a 
        transaction to which section 410(b)(6)(C) applies.'', and
            (2) in subsection (m)(6)(B), by striking ``apply'' and 
        inserting ``apply, except that community property laws shall be 
        disregarded for purposes of determining ownership''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years beginning on or after the date of the enactment of 
this section.
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