For the 99.8 Percent Act

II 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 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 ‘‘For the 99.8 Percent 4 Act’’. 5 SEC. 2. MODIFICATIONS TO ESTATE, GIFT, AND GENERA- 6 TION-SKIPPING TRANSFER TAXES. 7 (a) MODIFICATION OF RATES.—Section 2001(c) of 8 the Internal Revenue Code of 1986 is amended by striking 9 the last 2 rows and inserting the following: 10 VerDate Sep 11 2014 00:08 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S309.IS S309 pamtmann on DSKBFK8HB2PROD with BILLS 2 •S 309 IS ‘‘Over $750,000 but not over $3,500,000 ............. $248,300 plus 39 per- cent of the excess of such amount over $750,000. Over $3,500,000 but not over $10,000,000 ........ $1,320,800 plus 45 percent of the ex- cess of such amount over $3,500,000. Over $10,000,000 but not over $50,000,000 ...... $4,245,800 plus 50 percent of the ex- cess of such amount over $10,000,000. Over $50,000,000 but not over $1,000,000,000 $24,245,800 plus 55 percent of the ex- cess of such amount over $50,000,000. Over $1,000,000,000 ............................................. $546,745,800 plus 77 percent of the ex- cess of such amount over $1,000,000,000.’’. (b) EXCLUSION AMOUNT.— 1 (1) ESTATE TAX.—Paragraph (3) of section 2 2010(c) of the Internal Revenue Code of 1986 is 3 amended to read as follows: 4 ‘‘(3) BASIC EXCLUSION AMOUNT.—For pur- 5 poses of this section, the basic exclusion amount is 6 $3,500,000.’’. 7 (2) MODIFICATION TO GIFT TAX EXCLUSION 8 AMOUNT.—Paragraph (1) of section 2505(a) of the 9 Internal Revenue Code of 1986 is amended to read 10 as follows: 11 ‘‘(1) the applicable credit amount in effect 12 under section 2010(c) for such calendar year (deter- 13 mined as if the basic exclusion amount in section 14 2010(c)(2)(A) were $1,000,000), reduced by’’. 15 VerDate Sep 11 2014 00:08 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S309.IS S309 pamtmann on DSKBFK8HB2PROD with BILLS 3 •S 309 IS (3) MODIFICATIONS OF ESTATE AND GIFT 1 TAXES TO REFLECT DIFFERENCES IN CREDIT RE- 2 SULTING FROM DIFFERENT EXCLUSION AMOUNTS.— 3 (A) ESTATE TAX ADJUSTMENT.—Section 4 2001 of the Internal Revenue Code of 1986 is 5 amended by adding at the end the following 6 new subsection: 7 ‘‘(h) ADJUSTMENT TO REFLECT CHANGES IN EX- 8 CLUSION AMOUNT.— 9 ‘‘(1) IN GENERAL.—If, with respect to any gift 10 to which subsection (b)(2) applies, the applicable ex- 11 clusion amount in effect at the time of the dece- 12 dent’s death is less than such amount in effect at 13 the time such gift is made by the decedent, the 14 amount of tax computed under subsection (b) shall 15 be reduced by the amount of tax which would have 16 been payable under chapter 12 at the time of the 17 gift if the applicable exclusion amount in effect at 18 such time had been the applicable exclusion amount 19 in effect at the time of the decedent’s death and the 20 modifications described in subsection (g) had been 21 applicable at the time of such gifts. 22 ‘‘(2) LIMITATION.—The aggregate amount of 23 gifts made in any calendar year to which the reduc- 24 VerDate Sep 11 2014 00:08 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S309.IS S309 pamtmann on DSKBFK8HB2PROD with BILLS 4 •S 309 IS tion under paragraph (1) applies shall not exceed 1 the excess of— 2 ‘‘(A) the applicable exclusion amount in ef- 3 fect for such calendar year, over 4 ‘‘(B) the applicable exclusion amount in ef- 5 fect at the time of the decedent’s death. 6 ‘‘(3) APPLICABLE EXCLUSION AMOUNT.—The 7 term ‘applicable exclusion amount’ means, with re- 8 spect to any period, the amount determined under 9 section 2010(c) for such period, except that in the 10 case of any period for which such amount includes 11 the deceased spousal unused exclusion amount (as 12 defined in section 2010(c)(4)), such term shall mean 13 the basic exclusion amount (as defined under section 14 2010(c)(3), as in effect for such period).’’. 15 (B) GIFT TAX ADJUSTMENT.—Section 16 2502 of such Code is amended by adding at the 17 end the following new subsection: 18 ‘‘(d) ADJUSTMENT TO REFLECT CHANGES IN EX- 19 CLUSION AMOUNT.— 20 ‘‘(1) IN GENERAL.—If the taxpayer made a tax- 21 able gift in an applicable preceding calendar period, 22 the amount of tax computed under subsection (a) 23 shall be reduced by the amount of tax which would 24 have been payable under chapter 12 for such appli- 25 VerDate Sep 11 2014 00:08 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S309.IS S309 pamtmann on DSKBFK8HB2PROD with BILLS 5 •S 309 IS cable preceding calendar period if the applicable ex- 1 clusion amount in effect for such preceding calendar 2 period had been the applicable exclusion amount in 3 effect for the calendar year for which the tax is 4 being computed and the modifications described in 5 subsection (g) had been applicable for such pre- 6 ceding calendar period. 7 ‘‘(2) LIMITATION.—The aggregate amount of 8 gifts made in any applicable preceding calendar pe- 9 riod to which the reduction under paragraph (1) ap- 10 plies shall not exceed the excess of— 11 ‘‘(A) the applicable exclusion amount for 12 such preceding calendar period, over 13 ‘‘(B) the applicable exclusion amount for 14 the calendar year for which the tax is being 15 computed. 16 ‘‘(3) APPLICABLE PRECEDING CALENDAR YEAR 17 PERIOD.—The term ‘applicable preceding calendar 18 year period’ means any preceding calendar year pe- 19 riod in which the applicable exclusion amount ex- 20 ceeded the applicable exclusion amount for the cal- 21 endar year for which the tax is being computed. 22 ‘‘(4) APPLICABLE EXCLUSION AMOUNT.—The 23 term ‘applicable exclusion amount’ means, with re- 24 spect to any period, the amount determined under 25 VerDate Sep 11 2014 00:08 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S309.IS S309 pamtmann on DSKBFK8HB2PROD with BILLS 6 •S 309 IS section 2010(c) for such period, except that in the 1 case of any period for which such amount includes 2 the deceased spousal unused exclusion amount (as 3 defined in section 2010(c)(4)), such term shall mean 4 the basic exclusion amount (as defined under section 5 2010(c)(3), as in effect for such period).’’. 6 (c) EFFECTIVE DATE.—The amendments made by 7 this section shall apply to estates of decedents dying, and 8 generation-skipping transfers and gifts made, after De- 9 cember 31, 2019. 10 SEC. 3. MODIFICATION OF RULES FOR VALUE OF CERTAIN 11 FARM, ETC., REAL PROPERTY. 12 (a) IN GENERAL.—Paragraph (2) of section 13 2032A(a) of the Internal Revenue Code of 1986 is amend- 14 ed by striking ‘‘$750,000’’ and inserting ‘‘$3,000,000’’. 15 (b) INFLATION ADJUSTMENT.—Paragraph (3) of sec- 16 tion 2032A(a) of such Code is amended— 17 (1) by striking ‘‘1998’’ and inserting ‘‘2019’’, 18 (2) by striking ‘‘$750,000’’ each place it ap- 19 pears and inserting ‘‘$3,000,000’’, and 20 (3) by striking ‘‘calendar year 1997’’ and in- 21 serting ‘‘calendar year 2018’’ in subparagraph (B). 22 (c) EFFECTIVE DATE.—The amendments made by 23 this section shall apply to estates of decedents dying, and 24 gifts made, after December 31, 2019. 25 VerDate Sep 11 2014 00:08 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S309.IS S309 pamtmann on DSKBFK8HB2PROD with BILLS 7 •S 309 IS SEC. 4. MODIFICATION OF ESTATE TAX RULES WITH RE- 1 SPECT TO LAND SUBJECT TO CONSERVATION 2 EASEMENTS. 3 (a) MODIFICATION OF EXCLUSION LIMITATION.— 4 Subparagraph (B) of section 2031(c)(1) of the Internal 5 Revenue Code of 1986 is amended by striking ‘‘$500,000’’ 6 and inserting ‘‘$2,000,000’’. 7 (b) MODIFICATION OF APPLICABLE PERCENTAGE.— 8 Paragraph (2) of section 2031(c) of the Internal Revenue 9 Code of 1986 is amended by striking ‘‘40 percent’’ and 10 inserting ‘‘60 percent’’. 11 (c) EFFECTIVE DATE.—The amendments made by 12 this section shall apply to estates of decedents dying, and 13 gifts made, after December 31, 2019. 14 SEC. 5. CONSISTENT BASIS REPORTING FOR PROPERTY AC- 15 QUIRED BY GIFTS AND TRANSFERS IN TRUST. 16 (a) CONSISTENT USE OF BASIS.—Section 1015 of 17 the Internal Revenue Code of 1986 is amended by adding 18 at the end the following new subsection: 19 ‘‘(f) BASIS MUST BE CONSISTENT WITH GIFT TAX 20 RETURN.— 21 ‘‘(1) IN GENERAL.—The basis of any property 22 to which this section applies shall not exceed— 23 ‘‘(A) in the case of property the final value 24 of which has been determined for purposes of 25 VerDate Sep 11 2014 00:08 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S309.IS S309 pamtmann on DSKBFK8HB2PROD with BILLS 8 •S 309 IS the tax imposed by chapter 12 on the donor of 1 such property, such value, and 2 ‘‘(B) in the case of property not described 3 in subparagraph (A) and with respect to which 4 a statement has been furnished under section 5 6035(b) identifying the value of such property, 6 such value. 7 ‘‘(2) DETERMINATION.—For purposes of para- 8 graph (1), the basis of property has been determined 9 for purposes of the tax imposed by chapter 12 if— 10 ‘‘(A) the value of such property is shown 11 on a return under section 6019 and such value 12 is not contested by the Secretary before the ex- 13 piration of the time for assessing a tax under 14 chapter 12, 15 ‘‘(B) in a case not described in subpara- 16 graph (A), the value is specified by the Sec- 17 retary and such value is not timely contested by 18 the donor of such property, or 19 ‘‘(C) the value is determined by a court or 20 pursuant to a settlement agreement with the 21 Secretary. 22 ‘‘(3) REGULATIONS.—The Secretary may by 23 regulations provide exceptions to the application of 24 this subsection.’’. 25 VerDate Sep 11 2014 00:08 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S309.IS S309 pamtmann on DSKBFK8HB2PROD with BILLS 9 •S 309 IS (b) INFORMATION REPORTING.— 1 (1) IN GENERAL.—Section 6035 of the Internal 2 Revenue Code of 1986 is amended— 3 (A) in the heading, by inserting ‘‘OR BY 4 GIFT’’ after ‘‘DECEDENT’’, 5 (B) by redesignating subsection (b) as sub- 6 section (c), 7 (C) by inserting after subsection (a) the 8 following new subsection: 9 ‘‘(b) INFORMATION WITH RESPECT TO PROPERTY 10 ACQUIRED BY GIFT.— 11 ‘‘(1) IN GENERAL.—Each person making a 12 transfer by gift who is required to file a return 13 under section 6019 with respect to such transfer 14 shall furnish to the Secretary and to each person ac- 15 quiring any interest in property by reason of such 16 transfer a statement identifying the value of each in- 17 terest in such property as reported on such return 18 and such other information with respect to such in- 19 terest as the Secretary may prescribe. 20 ‘‘(2) TIME FOR FURNISHING STATEMENT.— 21 ‘‘(A) IN GENERAL.—Each statement re- 22 quired to be furnished under paragraph (1) 23 shall be furnished at such time as the Secretary 24 VerDate Sep 11 2014 00:08 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S309.IS S309 pamtmann on DSKBFK8HB2PROD with BILLS 10 •S 309 IS may prescribe, but in no case at a time later 1 than the earlier of— 2 ‘‘(i) the date which is 30 days after 3 the date on which the return under section 4 6019 was required to be filed (including 5 extensions, if any), or 6 ‘‘(ii) the date which is 30 days after 7 the date such return is filed. 8 ‘‘(B) ADJUSTMENTS.—In any case in 9 which there is an adjustment to the information 10 required to be included on a statement filed 11 under paragraph (1) after such statement has 12 been filed, a supplemental statement under 13 such paragraph shall be filed not later than the 14 date which is 30 days after such adjustment is 15 made.’’, and 16 (D) in paragraph (1) of subsection (c), as 17 redesignated by subparagraph (B), by striking 18 ‘‘estate tax return’’ and inserting ‘‘estate or gift 19 tax return’’. 20 (2) CLERICAL AMENDMENT.—The table of sec- 21 tions for subpart A of part III of subchapter A of 22 chapter 61 of the Internal Revenue Code of 1986 is 23 amended by striking the item relating to section 24 6035 and inserting the following: 25 VerDate Sep 11 2014 00:08 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S309.IS S309 pamtmann on DSKBFK8HB2PROD with BILLS 11 •S 309 IS ‘‘Sec. 6035. Basis information to persons acquiring property from decedent or by gift.’’. (c) PENALTY FOR INCONSISTENT REPORTING.— 1 (1) IN GENERAL.—Paragraph (8) of section 2 6662(b) of the Internal Revenue Code of 1986 is 3 amended by inserting ‘‘or gift’’ after ‘‘estate’’. 4 (2) INCONSISTENT BASIS REPORTING.—Sub- 5 section (k) of section 6662 of such Code is amended 6 to read as follows: 7 ‘‘(k) INCONSISTENT ESTATE OR GIFT BASIS RE- 8 PORTING.—For purposes of this section, there is an ‘in- 9 consistent estate or gift basis’ if— 10 ‘‘(1) in the case of property acquired from a de- 11 cedent, the basis of property claimed on a return ex- 12 ceeds the basis as determined under section 1014(f), 13 and 14 ‘‘(2) in the case of property acquired by gift, 15 the basis of property claimed on a return exceeds 16 the basis as determined under section 1015(f).’’. 17 (d) EFFECTIVE DATE.—The amendments made by 18 this section shall apply to transfers for which returns are 19 filed after the date of the enactment of this Act. 20 VerDate Sep 11 2014 00:08 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S309.IS S309 pamtmann on DSKBFK8HB2PROD with BILLS 12 •S 309 IS SEC. 6. VALUATION RULES FOR CERTAIN TRANSFERS OF 1 NONBUSINESS ASSETS; LIMITATION ON MI- 2 NORITY DISCOUNTS. 3 (a) IN GENERAL.—Section 2031 of the Internal Rev- 4 enue Code of 1986 is amended by redesignating subsection 5 (d) as subsection (f) and by inserting after subsection (c) 6 the following new subsections: 7 ‘‘(d) VALUATION RULES FOR CERTAIN TRANSFERS 8 OF NONBUSINESS ASSETS.—For purposes of this chapter 9 and chapter 12— 10 ‘‘(1) IN GENERAL.—In the case of the transfer 11 of any interest in an entity other than an interest 12 which is actively traded (within the meaning of sec- 13 tion 1092)— 14 ‘‘(A) the value of any nonbusiness assets 15 held by the entity with respect to such interest 16 shall be determined as if the transferor had 17 transferred such asset [Text truncated for display. Full text available on Congress.gov.]