Family Attribution Modernization Act

I 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 Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Family Attribution 4 Modernization Act’’. 5 SEC. 2. REFORM OF FAMILY ATTRIBUTION RULE. 6 (a) IN GENERAL.—Section 414 of the Internal Rev- 7 enue Code of 1986 is amended— 8 (1) in subsection (b)— 9 VerDate Sep 11 2014 01:50 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2796.IH H2796 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 2796 IH (A) by striking ‘‘For purposes of’’ and in- 1 serting the following: 2 ‘‘(1) IN GENERAL.—For purposes of’’, and 3 (B) by adding at the end the following new 4 paragraphs: 5 ‘‘(2) SPECIAL RULES FOR APPLYING FAMILY 6 ATTRIBUTION.—For purposes of applying the attri- 7 bution rules under section 1563 with respect to 8 paragraph (1), the following rules apply: 9 ‘‘(A) Community property laws shall be 10 disregarded for purposes of determining owner- 11 ship. 12 ‘‘(B) Any ownership that is not attributed 13 to a spouse by reason of section 1563(e)(5) 14 shall also not be attributed to the minor chil- 15 dren of the owner and the attribution rule in 16 paragraph (6)(A) shall not apply to such owner- 17 ship. 18 ‘‘(3) PLAN SHALL NOT FAIL TO BE TREATED AS 19 SATISFYING THIS SECTION.—If application of para- 20 graph (2) causes two or more entities to be a con- 21 trolled group, or an affiliated service group, or to no 22 longer be in a controlled group or an affiliated serv- 23 ice group, such change shall be treated as a trans- 24 action to which section 410(b)(6)(C) applies.’’, and 25 VerDate Sep 11 2014 01:50 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2796.IH H2796 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 2796 IH (2) in subsection (m)(6)(B), by striking ‘‘apply’’ 1 and inserting ‘‘apply, except that community prop- 2 erty laws shall be disregarded for purposes of deter- 3 mining ownership’’. 4 (b) EFFECTIVE DATE.—The amendments made by 5 this section shall apply to plan years beginning on or after 6 the date of the enactment of this section. 7 Æ VerDate Sep 11 2014 01:50 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6301 E:\BILLS\H2796.IH H2796 kjohnson on DSK79L0C42PROD with BILLS