[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 309 Introduced in Senate (IS)]
<DOC>
115th CONGRESS
1st Session
S. 309
To amend the Internal Revenue Code of 1986 to reinstate estate and
generation-skipping taxes, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 31, 2019
Mr. Sanders introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to reinstate estate and
generation-skipping taxes, and for other purposes.
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 ``For the 99.8 Percent Act''.
SEC. 2. MODIFICATIONS TO ESTATE, GIFT, AND GENERATION-SKIPPING TRANSFER
TAXES.
(a) Modification of Rates.--Section 2001(c) of the Internal Revenue
Code of 1986 is amended by striking the last 2 rows and inserting the
following:
``Over $750,000 but not over $248,300 plus 39 percent of the
$3,500,000. excess of such amount over
$750,000.
Over $3,500,000 but not over $1,320,800 plus 45 percent of
$10,000,000. the excess of such amount over
$3,500,000.
Over $10,000,000 but not over $4,245,800 plus 50 percent of
$50,000,000. the excess of such amount over
$10,000,000.
Over $50,000,000 but not over $24,245,800 plus 55 percent of
$1,000,000,000. the excess of such amount over
$50,000,000.
Over $1,000,000,000.................. $546,745,800 plus 77 percent of
the excess of such amount over
$1,000,000,000.''.
(b) Exclusion Amount.--
(1) Estate tax.--Paragraph (3) of section 2010(c) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(3) Basic exclusion amount.--For purposes of this
section, the basic exclusion amount is $3,500,000.''.
(2) Modification to gift tax exclusion amount.--Paragraph
(1) of section 2505(a) of the Internal Revenue Code of 1986 is
amended to read as follows:
``(1) the applicable credit amount in effect under section
2010(c) for such calendar year (determined as if the basic
exclusion amount in section 2010(c)(2)(A) were $1,000,000),
reduced by''.
(3) Modifications of estate and gift taxes to reflect
differences in credit resulting from different exclusion
amounts.--
(A) Estate tax adjustment.--Section 2001 of the
Internal Revenue Code of 1986 is amended by adding at
the end the following new subsection:
``(h) Adjustment To Reflect Changes in Exclusion Amount.--
``(1) In general.--If, with respect to any gift to which
subsection (b)(2) applies, the applicable exclusion amount in
effect at the time of the decedent's death is less than such
amount in effect at the time such gift is made by the decedent,
the amount of tax computed under subsection (b) shall be
reduced by the amount of tax which would have been payable
under chapter 12 at the time of the gift if the applicable
exclusion amount in effect at such time had been the applicable
exclusion amount in effect at the time of the decedent's death
and the modifications described in subsection (g) had been
applicable at the time of such gifts.
``(2) Limitation.--The aggregate amount of gifts made in
any calendar year to which the reduction under paragraph (1)
applies shall not exceed the excess of--
``(A) the applicable exclusion amount in effect for
such calendar year, over
``(B) the applicable exclusion amount in effect at
the time of the decedent's death.
``(3) Applicable exclusion amount.--The term `applicable
exclusion amount' means, with respect to any period, the amount
determined under section 2010(c) for such period, except that
in the case of any period for which such amount includes the
deceased spousal unused exclusion amount (as defined in section
2010(c)(4)), such term shall mean the basic exclusion amount
(as defined under section 2010(c)(3), as in effect for such
period).''.
(B) Gift tax adjustment.--Section 2502 of such Code
is amended by adding at the end the following new
subsection:
``(d) Adjustment To Reflect Changes in Exclusion Amount.--
``(1) In general.--If the taxpayer made a taxable gift in
an applicable preceding calendar period, the amount of tax
computed under subsection (a) shall be reduced by the amount of
tax which would have been payable under chapter 12 for such
applicable preceding calendar period if the applicable
exclusion amount in effect for such preceding calendar period
had been the applicable exclusion amount in effect for the
calendar year for which the tax is being computed and the
modifications described in subsection (g) had been applicable
for such preceding calendar period.
``(2) Limitation.--The aggregate amount of gifts made in
any applicable preceding calendar period to which the reduction
under paragraph (1) applies shall not exceed the excess of--
``(A) the applicable exclusion amount for such
preceding calendar period, over
``(B) the applicable exclusion amount for the
calendar year for which the tax is being computed.
``(3) Applicable preceding calendar year period.--The term
`applicable preceding calendar year period' means any preceding
calendar year period in which the applicable exclusion amount
exceeded the applicable exclusion amount for the calendar year
for which the tax is being computed.
``(4) Applicable exclusion amount.--The term `applicable
exclusion amount' means, with respect to any period, the amount
determined under section 2010(c) for such period, except that
in the case of any period for which such amount includes the
deceased spousal unused exclusion amount (as defined in section
2010(c)(4)), such term shall mean the basic exclusion amount
(as defined under section 2010(c)(3), as in effect for such
period).''.
(c) Effective Date.--The amendments made by this section shall
apply to estates of decedents dying, and generation-skipping transfers
and gifts made, after December 31, 2019.
SEC. 3. MODIFICATION OF RULES FOR VALUE OF CERTAIN FARM, ETC., REAL
PROPERTY.
(a) In General.--Paragraph (2) of section 2032A(a) of the Internal
Revenue Code of 1986 is amended by striking ``$750,000'' and inserting
``$3,000,000''.
(b) Inflation Adjustment.--Paragraph (3) of section 2032A(a) of
such Code is amended--
(1) by striking ``1998'' and inserting ``2019'',
(2) by striking ``$750,000'' each place it appears and
inserting ``$3,000,000'', and
(3) by striking ``calendar year 1997'' and inserting
``calendar year 2018'' in subparagraph (B).
(c) Effective Date.--The amendments made by this section shall
apply to estates of decedents dying, and gifts made, after December 31,
2019.
SEC. 4. MODIFICATION OF ESTATE TAX RULES WITH RESPECT TO LAND SUBJECT
TO CONSERVATION EASEMENTS.
(a) Modification of Exclusion Limitation.--Subparagraph (B) of
section 2031(c)(1) of the Internal Revenue Code of 1986 is amended by
striking ``$500,000'' and inserting ``$2,000,000''.
(b) Modification of Applicable Percentage.--Paragraph (2) of
section 2031(c) of the Internal Revenue Code of 1986 is amended by
striking ``40 percent'' and inserting ``60 percent''.
(c) Effective Date.--The amendments made by this section shall
apply to estates of decedents dying, and gifts made, after December 31,
2019.
SEC. 5. CONSISTENT BASIS REPORTING FOR PROPERTY ACQUIRED BY GIFTS AND
TRANSFERS IN TRUST.
(a) Consistent Use of Basis.--Section 1015 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
subsection:
``(f) Basis Must Be Consistent With Gift Tax Return.--
``(1) In general.--The basis of any property to which this
section applies shall not exceed--
``(A) in the case of property the final value of
which has been determined for purposes of the tax
imposed by chapter 12 on the donor of such property,
such value, and
``(B) in the case of property not described in
subparagraph (A) and with respect to which a statement
has been furnished under section 6035(b) identifying
the value of such property, such value.
``(2) Determination.--For purposes of paragraph (1), the
basis of property has been determined for purposes of the tax
imposed by chapter 12 if--
``(A) the value of such property is shown on a
return under section 6019 and such value is not
contested by the Secretary before the expiration of the
time for assessing a tax under chapter 12,
``(B) in a case not described in subparagraph (A),
the value is specified by the Secretary and such value
is not timely contested by the donor of such property,
or
``(C) the value is determined by a court or
pursuant to a settlement agreement with the Secretary.
``(3) Regulations.--The Secretary may by regulations
provide exceptions to the application of this subsection.''.
(b) Information Reporting.--
(1) In general.--Section 6035 of the Internal Revenue Code
of 1986 is amended--
(A) in the heading, by inserting ``or by gift''
after ``decedent'',
(B) by redesignating subsection (b) as subsection
(c),
(C) by inserting after subsection (a) the following
new subsection:
``(b) Information With Respect to Property Acquired by Gift.--
``(1) In general.--Each person making a transfer by gift
who is required to file a return under section 6019 with
respect to such transfer shall furnish to the Secretary and to
each person acquiring any interest in property by reason of
such transfer a statement identifying the value of each
interest in such property as reported on such return and such
other information with respect to such interest as the
Secretary may prescribe.
``(2) Time for furnishing statement.--
``(A) In general.--Each statement required to be
furnished under paragraph (1) shall be furnished at
such time as the Secretary may prescribe, but in no
case at a time later than the earlier of--
``(i) the date which is 30 days after the
date on which the return under section 6019 was
required to be filed (including extensions, if
any), or
``(ii) the date which is 30 days after the
date such return is filed.
``(B) Adjustments.--In any case in which there is
an adjustment to the information required to be
included on a statement filed under paragraph (1) after
such statement has been filed, a supplemental statement
under such paragraph shall be filed not later than the
date which is 30 days after such adjustment is made.'',
and
(D) in paragraph (1) of subsection (c), as
redesignated by subparagraph (B), by striking ``estate
tax return'' and inserting ``estate or gift tax
return''.
(2) Clerical amendment.--The table of sections for subpart
A of part III of subchapter A of chapter 61 of the Internal
Revenue Code of 1986 is amended by striking the item relating
to section 6035 and inserting the following:
``Sec. 6035. Basis information to persons acquiring property from
decedent or by gift.''.
(c) Penalty for Inconsistent Reporting.--
(1) In general.--Paragraph (8) of section 6662(b) of the
Internal Revenue Code of 1986 is amended by inserting ``or
gift'' after ``estate''.
(2) Inconsistent basis reporting.--Subsection (k) of
section 6662 of such Code is amended to read as follows:
``(k) Inconsistent Estate or Gift Basis Reporting.--For purposes of
this section, there is an `inconsistent estate or gift basis' if--
``(1) in the case of property acquired from a decedent, the
basis of property claimed on a return exceeds the basis as
determined under section 1014(f), and
``(2) in the case of property acquired by gift, the basis
of property claimed on a return exceeds the basis as determined
under section 1015(f).''.
(d) Effective Date.--The amendments made by this section shall
apply to transfers for which returns are filed after the date of the
enactment of this Act.
SEC. 6. VALUATION RULES FOR CERTAIN TRANSFERS OF NONBUSINESS ASSETS;
LIMITATION ON MINORITY DISCOUNTS.
(a) In General.--Section 2031 of the Internal Revenue Code of 1986
is amended by redesignating subsection (d) as subsection (f) and by
inserting after subsection (c) the following new subsections:
``(d) Valuation Rules for Certain Transfers of Nonbusiness
Assets.--For purposes of this chapter and chapter 12--
``(1) In general.--In the case of the transfer of any
interest in an entity other than an interest which is actively
traded (within the meaning of section 1092)--
``(A) the value of any nonbusiness assets held by
the entity with respect to such interest shall be
determined as if the transferor had transferred such
assets directly to the transferee (and no valuation
discount shall be allowed with respect to such
nonbusiness assets), and
``(B) such nonbusiness assets shall not be taken
into account in determining the value of the interest
in the entity.
``(2) Nonbusiness assets.--For purposes of this
subsection--
``(A) In general.--The term `nonbusiness asset'
means any asset which is not used in the active conduct
of 1 or more trades or businesses.
``(B) Exception for certain passive assets.--Except
as provided in subparagraph (C), a passive asset shall
not be treated for purposes of subparagraph (A) as used
in the active conduct of a trade or business unless--
``(i) the asset is property described in
paragraph (1) or (4) of section 1221(a) or is a
hedge with respect to such property, or
``(ii) the asset is real property used in
the active conduct of 1 or more real property
trades or businesses (within the meaning of
section 469(c)(7)(C)) in which the transferor
materially participates and with respect to
which the transferor meets the requirements of
section 469(c)(7)(B)(ii).
For purposes of clause (ii), material participation
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) Exception for working capital.--Any asset
(including a passive asset) which is held as a part 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 business.
``(3) Passive asset.--For purposes of this subsection, the
term `passive asset' means any--
``(A) cash or cash equivalents,
``(B) except to the extent provided by the
Secretary, stock in a corporation or any other equity,
profits, or capital interest in any entity,
``(C) evidence of indebtedness, option, forward or
futures contract, notional principal contract, 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 section
469(c)(7)(C)),
``(G) asset (other than a patent, trademark, or
copyright) which produces royalty income,
``(H) commodity,
``(I) collectible (within the meaning of section
408(m)), or
``(J) any other asset specified in regulations
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 applied 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
corporation, 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, ownership of at least 10 percent
of the capital or profits interest in the
partnership, and
``(iii) in any other case, ownership of at
least 10 percent of the beneficial interests 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 interest which is actively traded (within the
meaning of section 1092), no discount shall be allowed by reason of the
fact that the transferee does not have control of such entity if the
transferor, the transferee, and members of the family (as defined in
section 2032A(e)(2)) of the transferor and transferee--
``(1) have control of such entity, or
``(2) own the majority of the ownership interests (by
value) in such entity.''.
(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 redesignated) 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 paragraph
(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 respect 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 described 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 market
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.
SEC. 8. CERTAIN TRANSFER TAX RULES APPLICABLE TO GRANTOR TRUSTS.
(a) In General.--Subtitle B of the Internal Revenue 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 deceased 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 subpart 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 Applies.--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 therefrom, 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 estate of
the deemed owner (without regard to subsection (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 transfer taxes.
``(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 imposed 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 attributable 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 section 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 TRANSFER TAX EXEMPTION FOR
CERTAIN TRUSTS.
(a) In General.--Section 2642 of the Internal Revenue Code of 1986
is amended by adding at the end the following new subsection:
``(h) Elimination of GST Exemption for Certain Trusts.--
``(1) In general.--
``(A) Transfers from non-qualifying trusts.--In the
case of any generation-skipping transfer made from a
trust that is not a qualifying trust, the inclusion
ratio with respect to any property transferred in such
transfer shall be 1.
``(B) Qualifying trust.--For purposes of this
subsection, the term `qualifying trust' means a trust
for which the date of termination of such trust is not
greater than 50 years after the date on which such
trust is created.
``(2) Trusts created before date of enactment.--In the case
of any trust created before the date of the enactment of this
subsection, such trust shall be deemed to be a qualifying trust
for a period of 50 years after the date of the enactment of
this subsection.
``(3) Date of creation of certain deemed separate trusts.--
In the case of any portion of a trust which is treated as a
separate trust under section 2654(b)(1), such separate trust
shall be treated as created on the date of the first transfer
described in such section with respect to such separate trust.
``(4) Date of creation of pour-over trusts.--In the case of
any generation-skipping transfer of property which involves the
transfer of property from 1 trust to another trust, the date of
the creation of the transferee trust shall be treated as being
the earlier of--
``(A) the date of the creation of such transferee
trust, or
``(B) the date of the creation of the transferor
trust.
In the case of multiple transfers to which the preceding
sentence applies, the date of the creation of the transferor
trust shall be determined under the preceding sentence before
the application of the preceding sentence to determine the date
of the creation of the transferee trust.
``(5) Regulations.--The Secretary may prescribe such
regulations or other guidance as may be necessary or
appropriate to carry out this subsection.''.
(b) Effective Date.--The amendments made by this section shall take
effect on the date of the 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:
``(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 subparagraph for such calendar year.
``(ii) Transfers subject to limitation.--
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
property that, without regard to
withdrawal, put, or other such rights
in the donee, cannot immediately be
liquidated 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.
<all>
For the 99.8 Percent Act
#309 | S Congress #116
Policy Area: Taxation
Last Action: Read twice and referred to the Committee on Finance. (Sponsor introductory remarks on measure: CR S807-809) (1/31/2019)
Bill Text Source: Congress.gov
Summary and Impacts
Original Text