[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1011 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                S. 1011

   To amend the Internal Revenue Code of 1986 to provide that trusts 
 established for the benefit of individuals with disabilities shall be 
            taxed at the same rates as individual taxpayers.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 11, 1999

   Mr. Frist 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 provide that trusts 
 established for the benefit of individuals with disabilities shall be 
            taxed at the same rates as individual taxpayers.

    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 ``Tax Fairness for Support of the 
Permanently Disabled Act''.

SEC. 2. MODIFICATION OF TAX RATES FOR TRUSTS FOR INDIVIDUALS WHO ARE 
              DISABLED.

    (a) In General.--Section 1(e) of the Internal Revenue Code of 1986 
(relating to tax imposed on estates and trusts) is amended to read as 
follows:
    ``(e) Estates and Trusts.--
            ``(1) In general.--Except as provided in paragraph (2), 
        there is hereby imposed on the taxable income of--
                    ``(A) every estate, and
                    ``(B) every trust,
        taxable under this subsection a tax determined in accordance 
        with the following table:

``If taxable income is:             The tax is:
    Not over $1,500................
                                        15% of taxable income.
    Over $1,500 but not over $3,500
                                        $225, plus 28% of the excess 
                                                over $1,500.
    Over $3,500 but not over $5,500
                                        $785, plus 31% of the excess 
                                                over $3,500.
    Over $5,500 but not over $7,500
                                        $1,405, plus 36% of the excess 
                                                over $5,500.
    Over $7,500....................
                                        $2,125, plus 39.6% of the 
                                                excess over $7,500.
            ``(2) Special rule for trusts for disabled individuals.--
                    ``(A) In general.--There is hereby imposed on the 
                taxable income of an eligible trust taxable under this 
                subsection a tax determined in the same manner as under 
                subsection (c).
                    ``(B) Eligible trust.--For purposes of subparagraph 
                (A), a trust shall be treated as an eligible trust for 
                any taxable year if, at all times during such year 
                during which the trust is in existence, the exclusive 
                purpose of the trust is to provide reasonable amounts 
                for the support and maintenance of 1 or more 
                beneficiaries each of whom is permanently and totally 
                disabled (within the meaning of section 22(e)(3)). A 
                trust shall not fail to meet the requirements of this 
                subparagraph merely because the corpus of the trust may 
                revert to the grantor or a member of the grantor's 
                family upon the death of the beneficiary.''
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.
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