[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 519 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                 S. 519

   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

                             March 13, 2001

   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--
            (1) by redesignating paragraphs (1) and (2) as 
        subparagraphs (A) and (B), respectively,
            (2) by striking ``There'' and inserting:
            ``(1) In general.--Except as provided in paragraph (2), 
        there'', and
            (3) by adding at the end the following new paragraph:
            ``(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, 2001.
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