[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 2899 Introduced in Senate (IS)]
113th CONGRESS
2d Session
S. 2899
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
September 18, 2014
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 ``Responsible Estate Tax Act''.
SEC. 2. MODIFICATIONS TO ESTATE, GIFT, AND GENERATION-SKIPPING TRANSFER
TAXES.
(a) Modification of Rates.--
(1) In general.--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 40 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.................... $24,245,800 plus 55 percent of
the excess of such amount over
$50,000,000.''.
(2) Surtax on wealthy estates.--Subsection (c) of section
2011(c) of such Code is amended--
(A) by inserting before the table the following:
``(1) In general.--'', and
(B) by adding at the end the following new
paragraph:
``(2) Surtax on estates over $500,000,000.--Notwithstanding
paragraph (1), if the amount with respect to which the
tentative tax to be computed is over $500,000,000, the rate of
tax otherwise in effect under this subsection with respect to
the amount in excess of $500,000,000 shall be increased by 10
percent.''.
(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, 2014.
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 ``2014'',
(2) by striking ``$750,000'' and inserting ``$3,000,000''
in subparagraph (A), and
(3) by striking ``calendar year 1997'' and inserting
``calendar year 2013'' 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,
2014.
SEC. 4. MODIFICATION OF ESTATE TAX RULES WITH RESPECT TO LAND SUBJECT
TO CONSERVATION EASEMENTS.
(a) Modification of Exclusion Limitation.--The table in paragraph
(3) of section 2031(c) of the Internal Revenue Code of 1986 is
amended--
(1) by striking ``or thereafter'' in the last row and
inserting ``through 2014'', and
(2) by adding at the end the following row:
``2015 and thereafter................ $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,
2014.
SEC. 5. CONSISTENT BASIS REPORTING BETWEEN ESTATE AND PERSON ACQUIRING
PROPERTY FROM DECEDENT.
(a) Consistent Use of Basis.--
(1) Property acquired from a decedent.--Section 1014 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new subsection:
``(f) Basis Must Be Consistent With Estate Tax Return.--
``(1) In general.--For purposes of this section, the value
used to determine the basis of any interest in property in the
hands of the person acquiring such property shall not exceed
the value of such interest as finally determined for purposes
of chapter 11.
``(2) Special rule where no final determination.--In any
case in which the final value of property has not been
determined under chapter 11 and there has been a statement
furnished under section 6035(a), the value used to determine
the basis of any interest in property in the hands of the
person acquiring such property shall not exceed the amount
reported on any statement furnished under section 6035(a).
``(3) Regulations.--The Secretary may by regulations
provide exceptions to the application of this subsection.''.
(2) Property acquired by gifts and transfers in trust.--
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 Gift Tax Return.--
``(1) In general.--For purposes of this section, the value
used to determine the basis of any interest in property in the
hands of the person acquiring such property shall not exceed
the value of such interest as finally determined for purposes
of chapter 12.
``(2) Special rule where no final determination.--In any
case in which the final value of property has not been
determined under chapter 12 and there has been a statement
furnished under section 6035(b), the value used to determine
the basis of any interest in property in the hands of the
person acquiring such property shall not exceed the amount
reported on any statement furnished under section 6035(b).
``(3) Regulations.--The Secretary may by regulations
provide exceptions to the application of this subsection.''.
(b) Information Reporting.--
(1) In general.--Subpart A of part III of subchapter A of
chapter 61 of the Internal Revenue Code of 1986 is amended by
inserting after section 6034A the following new section:
``SEC. 6035. BASIS INFORMATION TO PERSONS ACQUIRING PROPERTY FROM
DECEDENT OR BY GIFT.
``(a) Information With Respect to Property Acquired From
Decedents.--
``(1) In general.--The executor of any estate required to
file a return under section 6018(a) shall furnish to the
Secretary and to each person acquiring any interest in property
included in the decedent's gross estate for Federal estate tax
purposes 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) Statements by beneficiaries.--Each person required to
file a return under section 6018(b) shall furnish to the
Secretary and to each other person who holds a legal or
beneficial interest in the property to which such return
relates a statement identifying the information described in
paragraph (1).
``(3) Time for furnishing statement.--
``(A) In general.--Each statement required to be
furnished under paragraph (1) or (2) 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 6018 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) or
(2) 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.
``(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.
``(c) Regulations.--The Secretary shall prescribe such regulations
as necessary to carry out this section, including regulations relating
to--
``(1) the application of this section to property with
regard to which no estate or gift tax return is required to be
filed, and
``(2) situations in which the surviving joint tenant or
other recipient may have better information than the executor
regarding the basis or fair market value of the property.''.
(2) Penalty for failure to file.--
(A) Return.--Section 6724(d)(1) of the Internal
Revenue Code of 1986 is amended by striking ``and'' at
the end of subparagraph (B), by striking the period at
the end of subparagraph (C) and inserting ``, and'',
and by inserting after subparagraph (C) the following
new subparagraph:
``(D) any statement required to be filed with the
Secretary under section 6035.''.
(B) Statement.--Section 6724(d)(2) of such Code is
amended by striking ``or'' at the end of subparagraph
(GG), by striking the period at the end of subparagraph
(HH) and inserting ``, or'', and by inserting after
subparagraph (HH) the following new subparagraph:
``(II) section 6035 (other than a statement
described in paragraph (1)(D)).''.
(3) 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 inserting after the item
relating to section 6034A the following new item:
``Sec. 6035. Basis information to persons acquiring property from
decedent or by gift.''.
(c) Penalty for Inconsistent Reporting.--
(1) In general.--Subsection (b) of section 6662 of the
Internal Revenue Code of 1986 is amended by inserting after
paragraph (7) the following new paragraph:
``(8) Any inconsistent estate or gift basis.''.
(2) Inconsistent basis reporting.--Section 6662 of such
Code is amended by adding at the end the following new
subsection:
``(k) Inconsistent Estate or Gift Basis Reporting.--For purposes of
this section, the term `inconsistent estate or gift basis' means the
portion of the understatement which is attributable to--
``(1) in the case of property acquired from a decedent, a
basis determination with respect to such property which is not
consistent with the value of such property as determined under
section 1014(f), and
``(2) in the case of property acquired by gift, a basis
determination with respect to such property which is not
consistent with the value of such property 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
401(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,
``(B) such fixed amounts, when determined on an
annual basis, do not decrease relative to any prior
year during the first 10 years of the term referred to
in subparagraph (A), and
``(C) the remainder interest has a value equal to
or greater than 10 percent of the value of the assets
transferred to the trust, determined as of the time of
the transfer.''.
(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.
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