Cutting Local Taxes by Reinstating SALT Act

I 116TH CONGRESS 1ST SESSION H. R. 4274 To amend the Internal Revenue Code of 1986 to repeal the limitation on the deduction for certain taxes, including State and local property and income taxes, to limit the step-up in basis allowed in the case of property acquired from a decedent, and to deem a sale on any contribution of property to a private foundation. IN THE HOUSE OF REPRESENTATIVES SEPTEMBER 10, 2019 Mr. GOTTHEIMER (for himself and Mr. ZELDIN) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to repeal the limitation on the deduction for certain taxes, includ- ing State and local property and income taxes, to limit the step-up in basis allowed in the case of property acquired from a decedent, and to deem a sale on any contribution of property to a private foundation. 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 ‘‘Cutting Local Taxes 4 by Reinstating SALT Act’’. 5 VerDate Sep 11 2014 21:24 Sep 13, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4274.IH H4274 jbell on DSK3GLQ082PROD with BILLS 2 •HR 4274 IH SEC. 2. REPEAL OF LIMITATION ON DEDUCTION FOR STATE 1 AND LOCAL, ETC. TAXES. 2 (a) IN GENERAL.—Section 164(b) of the Internal 3 Revenue Code of 1986 is amended by striking paragraph 4 (6) (as added by Public Law 115–97) and all that follows. 5 (b) EFFECTIVE DATE.—The amendments made by 6 this section shall apply to taxable years beginning after 7 December 31, 2017. 8 SEC. 3. STEP-UP IN BASIS OF PROPERTY ACQUIRED FROM 9 DECEDENT LIMITED TO $5,000,000. 10 (a) IN GENERAL.—Section 1014(a) of the Internal 11 Revenue Code of 1986 is amended to read as follows: 12 ‘‘(a) IN GENERAL.—Except as otherwise provided in 13 this section, the basis of property in the hands of a person 14 acquiring the property from a decedent or to whom the 15 property passed from a decedent shall, if not sold, ex- 16 changed, or otherwise disposed of before the decedent’s 17 death by such person, be the lesser of— 18 ‘‘(1) the adjusted basis of the decedent, or 19 ‘‘(2) the fair market value of the property at 20 the date of the decedent’s death.’’. 21 (b) $5,000,000 BASIS INCREASE.—Section 1014 of 22 such Code is amended by adding at the end the following 23 new subsection: 24 ‘‘(g) $5,000,000 BASIS INCREASE.— 25 VerDate Sep 11 2014 21:24 Sep 13, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4274.IH H4274 jbell on DSK3GLQ082PROD with BILLS 3 •HR 4274 IH ‘‘(1) IN GENERAL.—The basis of a decedent’s 1 property to which subsection (a) applies shall be in- 2 creased by an amount equal to a portion of the ag- 3 gregate basis increase, which shall be allocated 4 amongst property of the decedent in proportion to 5 the net appreciation in value of the property. 6 ‘‘(2) AGGREGATE BASIS INCREASE.—For pur- 7 poses of this subsection, the aggregate basis increase 8 shall be an amount equal to the lesser of— 9 ‘‘(A) $5,000,000, or 10 ‘‘(B) the aggregate net appreciation in 11 value of all the decedent’s property to which 12 subsection (a) applies. 13 ‘‘(3) NET APPRECIATION.—For purposes of this 14 subsection, the net appreciation in value of any 15 property is the amount by which (if any) the fair 16 market value of the property exceeds the decedent’s 17 adjusted basis as of the date of the decedent’s death. 18 ‘‘(4) SPECIAL RULES FOR CERTAIN PROP- 19 ERTY.—For purposes of determining net apprecia- 20 tion in value of property, in lieu of fair market 21 value, the following shall be used: 22 ‘‘(A) In the case of an election under 23 2032, the property value at the applicable valu- 24 ation date prescribed by such section. 25 VerDate Sep 11 2014 21:24 Sep 13, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4274.IH H4274 jbell on DSK3GLQ082PROD with BILLS 4 •HR 4274 IH ‘‘(B) In the case of an election under sec- 1 tion 2032A, the property value determined 2 under such section. 3 ‘‘(C) To the extent of the applicability of 4 the exclusion described in section 2031(c), the 5 basis in the hands of the decedent.’’. 6 (c) CONFORMING AMENDMENTS.— 7 (1) Section 1014(d) of such Code is amended 8 by striking ‘‘under subsection (a), such basis (deter- 9 mined before the application of this subsection)’’ and 10 inserting ‘‘under this section (determined without re- 11 gard to this subsection), such basis’’. 12 (2) Section 1014(e) of such Code is amended by 13 inserting before the period at the end the following: 14 ‘‘and subsection (g) shall not apply to such prop- 15 erty’’. 16 (d) EFFECTIVE DATE.—The amendments made by 17 this section shall apply to the estates of decedents dying 18 after December 31, 2019. 19 SEC. 4. TAX TREATMENT OF CONTRIBUTIONS OF PROP- 20 ERTY TO PRIVATE FOUNDATION. 21 (a) IN GENERAL.—Part IV of subchapter P of the 22 Internal Revenue Code of 1986 is amended by adding at 23 the end the following new section: 24 VerDate Sep 11 2014 21:24 Sep 13, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4274.IH H4274 jbell on DSK3GLQ082PROD with BILLS 5 •HR 4274 IH ‘‘SEC. 1261. TREATMENT OF CONTRIBUTIONS OF PROPERTY 1 TO PRIVATE FOUNDATION. 2 ‘‘(a) IN GENERAL.—Any property contributed by a 3 taxpayer to a private foundation shall be treated for pur- 4 poses of this title as sold by the taxpayer on the date of 5 such contribution for its fair market value. 6 ‘‘(b) DETERMINATION AND RECOGNITION OF GAIN 7 AND LOSS.—In the case of any sale for the taxable year 8 under subsection (a)— 9 ‘‘(1) this subchapter shall be applied separately 10 with respect to all gains and losses from such sales, 11 ‘‘(2) losses shall be allowed only to the extent 12 of gains, and 13 ‘‘(3) the tax imposed by this chapter for such 14 taxable year shall not be less than the amount of 15 such tax (determined without regard to this section) 16 increased by an amount equal to the increase in 17 such tax which would result solely from the inclusion 18 of any net gain from all such sales. 19 ‘‘(c) COORDINATION WITH DEDUCTION.—No deduc- 20 tion shall be allowed under any other provision of this 21 chapter by reason of any contribution to which subsection 22 (a) applies.’’. 23 VerDate Sep 11 2014 21:24 Sep 13, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4274.IH H4274 jbell on DSK3GLQ082PROD with BILLS 6 •HR 4274 IH (b) CLERICAL AMENDMENT.—The table of sections 1 for subchapter P of such Code is amended by adding at 2 the end the following new item: 3 ‘‘Sec. 1261. Treatment of contributions of property to private foundation.’’. (c) EFFECTIVE DATE.—The amendments made by 4 this section shall apply to contributions of property in tax- 5 able years beginning after December 31, 2019. 6 Æ VerDate Sep 11 2014 21:24 Sep 13, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H4274.IH H4274 jbell on DSK3GLQ082PROD with BILLS