For the 99.8 Percent Act

I 116TH CONGRESS 1ST SESSION H. R. 4857 To amend the Internal Revenue Code of 1986 to reinstate estate and generation-skipping taxes, and for other purposes. IN THE HOUSE OF REPRESENTATIVES OCTOBER 24, 2019 Mr. GOMEZ (for himself, Mr. BLUMENAUER, Mr. CARSON of Indiana, Mr. CARTWRIGHT, Ms. JUDY CHU of California, Mr. COHEN, Mr. DANNY K. DAVIS of Illinois, Ms. DELAURO, Mr. DESAULNIER, Mr. DEFAZIO, Mr. MICHAEL F. DOYLE of Pennsylvania, Mr. ESPAILLAT, Mr. GARCI´A of Illi- nois, Mr. GREEN of Texas, Mr. GRIJALVA, Ms. HAALAND, Ms. NORTON, Ms. JACKSON LEE, Ms. JAYAPAL, Mr. KHANNA, Ms. LEE of California, Mr. LEVIN of Michigan, Mr. LOWENTHAL, Mr. MCGOVERN, Mr. NAD- LER, Mrs. NAPOLITANO, Ms. OCASIO-CORTEZ, Ms. OMAR, Mr. PAYNE, Mr. POCAN, Ms. PRESSLEY, Ms. SCHAKOWSKY, Mr. SERRANO, Mr. TAKANO, Mr. TONKO, Ms. TLAIB, Ms. VELA´ZQUEZ, and Mrs. WATSON COLEMAN) introduced the following bill; which was referred to the Com- mittee on Ways and Means 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 VerDate Sep 11 2014 04:02 Oct 30, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4857.IH H4857 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 4857 IH SEC. 2. MODIFICATIONS TO ESTATE, GIFT, AND GENERA- 1 TION-SKIPPING TRANSFER TAXES. 2 (a) MODIFICATION OF RATES.—Section 2001(c) of 3 the Internal Revenue Code of 1986 is amended by striking 4 the last 2 rows and inserting the following: 5 ‘‘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.— 6 (1) ESTATE TAX.—Paragraph (3) of section 7 2010(c) of the Internal Revenue Code of 1986 is 8 amended to read as follows: 9 ‘‘(3) BASIC EXCLUSION AMOUNT.—For pur- 10 poses of this section, the basic exclusion amount is 11 $3,500,000.’’. 12 (2) MODIFICATION TO GIFT TAX EXCLUSION 13 AMOUNT.—Paragraph (1) of section 2505(a) of the 14 VerDate Sep 11 2014 04:02 Oct 30, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4857.IH H4857 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 4857 IH Internal Revenue Code of 1986 is amended to read 1 as follows: 2 ‘‘(1) the applicable credit amount in effect 3 under section 2010(c) for such calendar year (deter- 4 mined as if the basic exclusion amount in section 5 2010(c)(2)(A) were $1,000,000), reduced by’’. 6 (3) MODIFICATIONS OF ESTATE AND GIFT 7 TAXES TO REFLECT DIFFERENCES IN CREDIT RE- 8 SULTING FROM DIFFERENT EXCLUSION AMOUNTS.— 9 (A) ESTATE TAX ADJUSTMENT.—Section 10 2001 of the Internal Revenue Code of 1986 is 11 amended by adding at the end the following 12 new subsection: 13 ‘‘(h) ADJUSTMENT TO REFLECT CHANGES IN EX- 14 CLUSION AMOUNT.— 15 ‘‘(1) IN GENERAL.—If, with respect to any gift 16 to which subsection (b)(2) applies, the applicable ex- 17 clusion amount in effect at the time of the dece- 18 dent’s death is less than such amount in effect at 19 the time such gift is made by the decedent, the 20 amount of tax computed under subsection (b) shall 21 be reduced by the amount of tax which would have 22 been payable under chapter 12 at the time of the 23 gift if the applicable exclusion amount in effect at 24 such time had been the applicable exclusion amount 25 VerDate Sep 11 2014 04:02 Oct 30, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4857.IH H4857 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 4857 IH in effect at the time of the decedent’s death and the 1 modifications described in subsection (g) had been 2 applicable at the time of such gifts. 3 ‘‘(2) LIMITATION.—The aggregate amount of 4 gifts made in any calendar year to which the reduc- 5 tion under paragraph (1) applies shall not exceed 6 the excess of— 7 ‘‘(A) the applicable exclusion amount in ef- 8 fect for such calendar year, over 9 ‘‘(B) the applicable exclusion amount in ef- 10 fect at the time of the decedent’s death. 11 ‘‘(3) APPLICABLE EXCLUSION AMOUNT.—The 12 term ‘applicable exclusion amount’ means, with re- 13 spect to any period, the amount determined under 14 section 2010(c) for such period, except that in the 15 case of any period for which such amount includes 16 the deceased spousal unused exclusion amount (as 17 defined in section 2010(c)(4)), such term shall mean 18 the basic exclusion amount (as defined under section 19 2010(c)(3), as in effect for such period).’’. 20 (B) GIFT TAX ADJUSTMENT.—Section 21 2502 of such Code is amended by adding at the 22 end the following new subsection: 23 ‘‘(d) ADJUSTMENT TO REFLECT CHANGES IN EX- 24 CLUSION AMOUNT.— 25 VerDate Sep 11 2014 04:02 Oct 30, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4857.IH H4857 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 4857 IH ‘‘(1) IN GENERAL.—If the taxpayer made a tax- 1 able gift in an applicable preceding calendar period, 2 the amount of tax computed under subsection (a) 3 shall be reduced by the amount of tax which would 4 have been payable under chapter 12 for such appli- 5 cable preceding calendar period if the applicable ex- 6 clusion amount in effect for such preceding calendar 7 period had been the applicable exclusion amount in 8 effect for the calendar year for which the tax is 9 being computed and the modifications described in 10 subsection (g) had been applicable for such pre- 11 ceding calendar period. 12 ‘‘(2) LIMITATION.—The aggregate amount of 13 gifts made in any applicable preceding calendar pe- 14 riod to which the reduction under paragraph (1) ap- 15 plies shall not exceed the excess of— 16 ‘‘(A) the applicable exclusion amount for 17 such preceding calendar period, over 18 ‘‘(B) the applicable exclusion amount for 19 the calendar year for which the tax is being 20 computed. 21 ‘‘(3) APPLICABLE PRECEDING CALENDAR YEAR 22 PERIOD.—The term ‘applicable preceding calendar 23 year period’ means any preceding calendar year pe- 24 riod in which the applicable exclusion amount ex- 25 VerDate Sep 11 2014 04:02 Oct 30, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4857.IH H4857 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 4857 IH ceeded the applicable exclusion amount for the cal- 1 endar year for which the tax is being computed. 2 ‘‘(4) APPLICABLE EXCLUSION AMOUNT.—The 3 term ‘applicable exclusion amount’ means, with re- 4 spect to any period, the amount determined under 5 section 2010(c) for such period, except that in the 6 case of any period for which such amount includes 7 the deceased spousal unused exclusion amount (as 8 defined in section 2010(c)(4)), such term shall mean 9 the basic exclusion amount (as defined under section 10 2010(c)(3), as in effect for such period).’’. 11 (c) EFFECTIVE DATE.—The amendments made by 12 this section shall apply to estates of decedents dying, and 13 generation-skipping transfers and gifts made, after De- 14 cember 31, 2019. 15 SEC. 3. MODIFICATION OF RULES FOR VALUE OF CERTAIN 16 FARM, ETC., REAL PROPERTY. 17 (a) IN GENERAL.—Paragraph (2) of section 18 2032A(a) of the Internal Revenue Code of 1986 is amend- 19 ed by striking ‘‘$750,000’’ and inserting ‘‘$3,000,000’’. 20 (b) INFLATION ADJUSTMENT.—Paragraph (3) of sec- 21 tion 2032A(a) of such Code is amended— 22 (1) by striking ‘‘1998’’ and inserting ‘‘2019’’; 23 (2) by striking ‘‘$750,000’’ each place it ap- 24 pears and inserting ‘‘$3,000,000’’; and 25 VerDate Sep 11 2014 04:02 Oct 30, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4857.IH H4857 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 4857 IH (3) by striking ‘‘calendar year 1997’’ and in- 1 serting ‘‘calendar year 2018’’ in subparagraph (B). 2 (c) EFFECTIVE DATE.—The amendments made by 3 this section shall apply to estates of decedents dying, and 4 gifts made, after December 31, 2019. 5 SEC. 4. MODIFICATION OF ESTATE TAX RULES WITH RE- 6 SPECT TO LAND SUBJECT TO CONSERVATION 7 EASEMENTS. 8 (a) MODIFICATION OF EXCLUSION LIMITATION.— 9 Subparagraph (B) of section 2031(c)(1) of the Internal 10 Revenue Code of 1986 is amended by striking ‘‘$500,000’’ 11 and inserting ‘‘$2,000,000’’. 12 (b) MODIFICATION OF APPLICABLE PERCENTAGE.— 13 Paragraph (2) of section 2031(c) of the Internal Revenue 14 Code of 1986 is amended by striking ‘‘40 percent’’ and 15 inserting ‘‘60 percent’’. 16 (c) EFFECTIVE DATE.—The amendments made by 17 this section shall apply to estates of decedents dying, and 18 gifts made, after December 31, 2019. 19 SEC. 5. CONSISTENT BASIS REPORTING FOR PROPERTY AC- 20 QUIRED BY GIFTS AND TRANSFERS IN TRUST. 21 (a) CONSISTENT USE OF BASIS.—Section 1015 of 22 the Internal Revenue Code of 1986 is amended by adding 23 at the end the following new subsection: 24 VerDate Sep 11 2014 04:02 Oct 30, 2019 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4857.IH H4857 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 4857 IH ‘‘(f) BASIS MUST BE CONSISTENT WITH GIFT TAX 1 RETURN.— 2 ‘‘(1) IN GENERAL.—The basis of any property 3 to which this section applies shall not exceed— 4 ‘‘(A) in the case of property the final value 5 of which has been determined for purposes of 6 the tax imposed by chapter 12 on the donor of 7 such property, such value, and 8 ‘‘(B) in the case of property not described 9 in subparagraph (A) and with respect to which 10 a statement has been furnished under section 11 6035(b) identifying the value of such property, 12 such value. 13 ‘‘(2) DETERMINATION.—For purposes of para- 14 graph (1), the basis of property has been determined 15 for purposes of the tax imposed by chapter 12 if— 16 ‘‘(A) the value of such property is shown 17 on a return under section 6019 and such value 18 is not contested by the Secretary before the ex- 19 piration of the time for assessing a tax under 20 chapter 12, 21 ‘‘(B) in a case not described in subpara- 22 graph (A), the value is specified by the Sec- 23 retary and such value is not timely contested by 24 the donor of such property, or 25 VerDate Sep 11 2014 04:02 Oct 30, 2019 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4857.IH H4857 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 4857 IH ‘‘(C) the value is determined by a court or 1 pursuant to a settlement agreement with the 2 Secretary. 3 ‘‘(3) REGULATIONS.—The Secretary may by 4 regulations provide exceptions to the application of 5 this subsection.’’. 6 (b) INFORMATION REPORTING.— 7 (1) IN GENERAL.—Section 6035 of the Internal 8 Revenue Code of 1986 is amended— 9 (A) in the heading, by inserting ‘‘OR BY 10 GIFT’’ after ‘‘DECEDENT’’; 11 (B) by redesignating subsection (b) as sub- 12 section (c); 13 (C) by inserting after subsection (a) the 14 following new subsection: 15 ‘‘(b) INFORMATION WITH RESPECT TO PROPERTY 16 ACQUIRED BY GIFT.— 17 ‘‘(1) IN GENERAL.—Each person making a 18 transfer by gift who is required to file a return 19 under section 6019 with respect to such transfer 20 shall furnish to the Secretary and to each person ac- 21 quiring any interest in property by reason of such 22 transfer a statement identifying the value of each in- 23 terest in such property as reported on such return 24 VerDate Sep 11 2014 04:02 Oct 30, 2019 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H4857.IH H4857 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 4857 IH and such other information with respect to such in- 1 terest as the Secretary may prescribe. 2 ‘‘(2) TIME FOR FURNISHING STATEMENT.— 3 ‘‘(A) IN GENERAL.—Each statement re- 4 quired to be furnished under paragraph (1) 5 shall be furnished at such time as the Secretary 6 may prescribe, but in no case at a time later 7 than the earlier of— 8 ‘‘(i) the date which is 30 days after 9 the date on which the return under section 10 6019 was required to be filed (including 11 extensions, if any), or 12 ‘‘(ii) the date which is 30 days after 13 the date such return is filed. 14 ‘‘(B) ADJUSTMENTS.—In any case in 15 which there is an adjustment to the information 16 required to be included on a statement filed 17 under paragraph (1) after such statement has 18 been filed, a supplemental statement under 19 such paragraph shall be filed not later than the 20 date which is 30 days after such adjustment is 21 made.’’; and 22 (D) in paragraph (1) of subsection (c), as 23 redesignated by subparagraph (B), by striking 24 VerDate Sep 11 2014 04:02 Oct 30, 2019 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4857.IH H4857 pamtmann on DSKBC07HB2PROD with BILLS 11 •HR 4857 IH ‘‘estate tax return’’ and inserting ‘‘estate or gift 1 tax return’’. 2 (2) CLERICAL AMENDMENT.—The table of sec- 3 tions for subpart A of part III of subchapter A of 4 chapter 61 of the Internal Revenue Code of 1986 is 5 amended by striking the item relating to section 6 6035 and inserting the following: 7 ‘‘Sec. 6035. Basis information to persons acquiring property from decedent or by gift.’’. (c) PENALTY FOR INCONSISTENT REPORTING.— 8 (1) IN GENERAL.—Paragraph (8) of section 9 6662(b) of the Internal Revenue Code of 1986 is 10 amended by inserting ‘‘or gift’’ after ‘‘estate’’. 11 (2) INCONSISTENT BASIS REPORTING.—Sub- 12 section (k) of section 6662 of such Code is amended 13 to read as follows: 14 ‘‘(k) INCONSISTENT ESTATE OR GIFT BASIS RE- 15 PORTING.—For purposes of this section, there is an ‘in- 16 consistent estate or gift basis’ if— 17 ‘‘(1) in the case of property acquired from a de- 18 cedent, the basis of property claimed on a return ex- 19 ceeds the basis as determined under section 1014(f), 20 and 21 ‘‘(2) in the case of property acquired by gift, 22 the basis of property claimed on a return exceeds 23 the basis as determined under section 1015(f).’’. 24 VerDate Sep 11 2014 04:02 Oct 30, 2019 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H4857.IH H4857 pamtmann on DSKBC07HB2PROD with BILLS 12 •HR 4857 IH (d) EFFECTIVE DATE.—The amendments made by 1 this section shall apply to transfers for which returns are 2 filed after the date of the enactment of this Act. 3 SEC. 6. VALUATION RULES FOR CERTAIN TRANSFERS OF 4 NONBUSINESS ASSETS; LIMITATION ON MI- 5 NORITY DISCOUNTS. 6 [Text truncated for display. Full text available on Congress.gov.]