[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 3533 Introduced in Senate (IS)]

111th CONGRESS
  2d Session
                                S. 3533

  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

                             June 24, 2010

  Mr. Sanders (for himself, Mr. Whitehouse, Mr. Harkin, Mr. Brown of 
 Ohio, and Mr. Franken) 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 Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Responsible Estate Tax Act''.

SEC. 2. REINSTATEMENT AND EXTENSION OF ESTATE AND GENERATION-SKIPPING 
              TAXES; REPEAL OF CARRYOVER BASIS.

    (a) In General.--The following provisions of the Economic Growth 
and Tax Relief Reconciliation Act of 2001, and the amendments made by 
such provisions, are hereby repealed:
            (1) Subtitles A and E of title V.
            (2) Subsection (d), and so much of subsection (f)(3) as 
        relates to subsection (d), of section 511.
            (3) Paragraph (2) of subsection (b), and paragraph (2) of 
        subsection (e), of section 521.
Any provision of the Internal Revenue Code of 1986 amended by such 
provisions are amended to read as such provisions would read if such 
sections had never been enacted.
    (b) Sunset Not To Apply.--
            (1) Subsection (a) of section 901 of the Economic Growth 
        and Tax Relief Reconciliation Act of 2001 is amended by 
        striking ``this Act'' and all that follows and inserting ``this 
        Act (other than title V) shall not apply to taxable, plan, or 
        limitation years beginning after December 31, 2010.''.
            (2) Subsection (b) of such section 901 is amended by 
        striking ``, estates, gifts, and transfers''.

SEC. 3. MODIFICATION OF RATES AND MAINTENANCE OF UNIFIED CREDIT AGAINST 
              THE ESTATE TAX.

    (a) Modification of Rates.--
            (1) In general.--The table in paragraph (1) of section 
        2001(c) of the Internal Revenue Code of 1986 is amended by 
        striking the last 6 rows and inserting the following:


  ``Over $750,000 but not over           $248,300 plus 39 percent of the
   $3,500,000.                            excess of such amount over
                                          $750,000
  Over $3,500,000 but not over           $1,320,800 plus 45 percent of
   $10,000,000.                           the excess of such amount over
                                          $3,500,000
  Over $10,000,000 but not over          $4,245,800 plus 50 percent of
   $50,000,000.                           the excess of such amount over
                                          $10,000,000
  Over $50,000,000.....................  $24,245,800 plus 55 percent of
                                          the excess of such amount over
                                          $50,000,000''.
 

            (2) Surtax on wealthy estates.--Paragraph (2) of section 
        2011(c) of such Code is amended to read as follows:
            ``(2) Surtax on estates over $500,000,000.--Notwithstanding 
        paragraph (1), if the amount with respect to which the 
        tentative tax to be computed is over $500,000,000, the rate of 
        tax otherwise in effect under this subsection with respect to 
        the amount in excess of $500,000,000 shall be increased by 10 
        percent.''.
    (b) Maintenance of Unified Credit.--The table in subsection (c) of 
section 2010 of the Internal Revenue Code of 1986 (relating to 
applicable credit amount) is amended by inserting ``and thereafter'' 
after ``2009''.
    (c) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying, and gifts made, after December 31, 
2009.

SEC. 4. MODIFICATION OF RULES FOR VALUE OF CERTAIN FARM, ETC., REAL 
              PROPERTY.

    (a) In General.--Paragraph (2) of section 2032A(a) of the Internal 
Revenue Code of 1986 is amended by striking ``$750,000'' and inserting 
``$3,000,000''.
    (b) Inflation Adjustment.--Paragraph (3) of section 2032A(a) of 
such Code is amended--
            (1) by striking ``1998'' and inserting ``2009'',
            (2) by striking ``$750,000'' and inserting ``$3,000,000'' 
        in subparagraph (A), and
            (3) by striking ``calendar year 1997'' and inserting 
        ``calendar year 2008'' in subparagraph (B).
    (c) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying, and gifts made, after December 31, 
2009.

SEC. 5. MODIFICATION OF ESTATE TAX RULES WITH RESPECT TO LAND SUBJECT 
              TO CONSERVATION EASEMENTS.

    (a) Modification of Exclusion Limitation.--The table in paragraph 
(3) of section 2031(c) of the Internal Revenue Code of 1986 is 
amended--
            (1) by striking ``or thereafter'' in the last row and 
        inserting ``through 2009'', and
            (2) by adding at the end the following row:


  ``2010 and thereafter................  $2,000,000''.
 

    (b) Modification of Applicable Percentage.--Paragraph (2) of 
section 2031(c) of the Internal Revenue Code of 1986 is amended by 
striking ``40 percent'' and inserting ``60 percent''.
    (c) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying, and gifts made, after December 31, 
2009.

SEC. 6. CONSISTENT BASIS REPORTING BETWEEN ESTATE AND PERSON ACQUIRING 
              PROPERTY FROM DECEDENT.

    (a) Information Reporting.--
            (1) In general.--Subpart A of part III of subchapter A of 
        chapter 61 of the Internal Revenue Code of 1986 is amended by 
        inserting after section 6034A the following new section:

``SEC. 6035. BASIS INFORMATION TO PERSONS ACQUIRING PROPERTY FROM 
              DECEDENT OR BY GIFT.

    ``(a) Information With Respect to Property Acquired From 
Decedents.--
            ``(1) In general.--The executor of any estate required to 
        file a return under section 6018(a) shall, on or before the 
        date on which such return was required to be filed, furnish to 
        the Secretary and to each person acquiring property from the 
        decedent a statement identifying--
                    ``(A) the value of such property,
                    ``(B) in the case of any property to which the 
                exclusion under section 2031(c) applies or to which 
                section 1014(e) applies, the adjusted basis of such 
                property in the hands of the decedent,
                    ``(C) in the case of any property which consists of 
                stock in a DISC or former DISC (as defined in section 
                992(a)), the basis of the decedent in such stock 
                reduced by the amount (if any) which would have been 
                included in gross income under section 995(c) as a 
                dividend if the decedent had lived and sold the stock 
                at its fair market value on the estate tax valuation 
                date (determined under the rules of section 1014(d)), 
                and
                    ``(D) such other information with respect to such 
                property as the Secretary may prescribe.
            ``(2) Value.--For purposes of this subsection, the value of 
        any property shall be determined under the rules of section 
        1014(a).
    ``(b) Information With Respect to Property Acquired by Gift.--The 
person who makes a transfer by gift and who is required to file a 
return under section 6019(a) shall, on or before the date on which such 
return is required to be filed, furnish to the Secretary and to each 
person acquiring property though such transfer a statement 
identifying--
            ``(1) the adjusted basis of such property,
            ``(2) the fair market value of such property at the time of 
        the transfer,
            ``(3) in the case of a transfer in trust, the amount of the 
        gain or loss recognized by the grantor on such transfer,
            ``(4) the amount, if any, of gift tax paid by the 
        transferor, and
            ``(5) such other information with respect to such property 
        as the Secretary may prescribe.
    ``(c) Regulations.--The Secretary shall prescribe such regulations 
as necessary to carry out this section, including regulations relating 
to--
            ``(1) the application of this section to situations in 
        which no estate tax return is required to be filed or in which 
        gifts are excluded from gift tax under section 2503,
            ``(2) situations in which the surviving joint tenant or 
        other recipient may have better information than the executor, 
        and
            ``(3) the timing of the required reporting in the event of 
        adjustments to the reported value subsequent to the filing of 
        an estate or gift tax return.''.
            (2) Penalty for failure to file.--
                    (A) Return.--Subparagraph (B) of section 6724(d)(1) 
                of the Internal Revenue Code of 1986 is amended by 
                striking ``or'' at the end of clause (xxiv), by 
                striking ``and'' at the end of clause (xxv) and 
                inserting ``or'', and by adding at the end the 
                following new clause:
                            ``(xxvi) section 6035 (relating to returns 
                        relating to basis information to persons 
                        acquiring property from decedent), and''.
                    (B) Statement.--Subparagraph (A) of section 
                6724(d)(2)(A) of such Code is amended by inserting 
                ``6035,'' after ``6034A,''.
            (3) Clerical amendment.--The table of sections for subpart 
        A of part III of subchapter A of chapter 61 of the Internal 
        Revenue Code of 1986 is amended by inserting after the item 
        relating to section 6034A the following new item:

``Sec. 6035. Basis information to persons acquiring property from 
                            decedent or by gift.''.
    (b) Consistent Use of Basis.--
            (1) Property acquired from a descendant.--Section 1014 of 
        the Internal Revenue Code of 1986 is amended by adding at the 
        end the following new subsection:
    ``(f) Basis Must Be Consistent With Information Reports.--Except as 
provided by the Secretary in regulations, in any case in which the 
executor of the estate was required to make a return under section 
6035, the basis of the property in the hands of the person acquiring 
such property shall be calculated using the information reported to 
such person under section 6035(a).''.
            (2) Property acquired by gifts and transfers in trust.--
        Section 1015 of the Internal Revenue Code of 1986 is amended by 
        adding at the end the following new subsection:
    ``(f) Basis Must Be Consistent With Information Reports.--Except as 
provided by the Secretary in regulations, in any case in which the 
transferor was required to make a return under section 6035, the basis 
of the property in the hands of the person acquiring such property 
shall be calculated using the information reported to such person under 
section 6035(b).''.
    (c) Penalty for Inconsistent Reporting.--
            (1) In general.--Subsection (b) of section 6662 of the 
        Internal Revenue Code of 1986 is amended by inserting after 
        paragraph (7) the following new paragraph:
            ``(8) Any inconsistent estate or gift basis reporting.''.
            (2) Inconsistent basis reporting.--Section 6662 of such 
        Code is amended by adding at the end the following new 
        subsection:
    ``(k) Inconsistent Estate or Gift Basis Reporting.--For purposes of 
this section, the term `inconsistent estate or gift basis reporting' 
means the portion of the understatement which is attributable to the 
failure by the taxpayer to use the information reported to such 
taxpayer under section 6035 in calculating the basis of any property 
acquired from a decedent or by gift or transfer in trust.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to transfers for which returns are filed after the date of the 
enactment of this Act.

SEC. 7. VALUATION RULES FOR CERTAIN TRANSFERS OF NONBUSINESS ASSETS; 
              LIMITATION ON MINORITY DISCOUNTS.

    (a) In General.--Section 2031 of the Internal Revenue Code of 1986 
(relating to definition of gross estate) is amended by redesignating 
subsection (d) as subsection (f) and by inserting after subsection (c) 
the following new subsections:
    ``(d) Valuation Rules for Certain Transfers of Nonbusiness 
Assets.--For purposes of this chapter and chapter 12--
            ``(1) In general.--In the case of the transfer of any 
        interest in an entity other than an interest which is actively 
        traded (within the meaning of section 1092)--
                    ``(A) the value of any nonbusiness assets held by 
                the entity with respect to such interest shall be 
                determined as if the transferor had transferred such 
                assets directly to the transferee (and no valuation 
                discount shall be allowed with respect to such 
                nonbusiness assets), and
                    ``(B) such nonbusiness assets shall not be taken 
                into account in determining the value of the interest 
                in the entity.
            ``(2) Nonbusiness assets.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `nonbusiness asset' 
                means any asset which is not used in the active conduct 
                of 1 or more trades or businesses.
                    ``(B) Exception for certain passive assets.--Except 
                as provided in subparagraph (C), a passive asset shall 
                not be treated for purposes of subparagraph (A) as used 
                in the active conduct of a trade or business unless--
                            ``(i) the asset is property described in 
                        paragraph (1) or (4) of section 1221(a) or is a 
                        hedge with respect to such property, or
                            ``(ii) the asset is real property used in 
                        the active conduct of 1 or more real property 
                        trades or businesses (within the meaning of 
                        section 469(c)(7)(C)) in which the transferor 
                        materially participates and with respect to 
                        which the transferor meets the requirements of 
                        section 469(c)(7)(B)(ii).
                For purposes of clause (ii), material participation 
                shall be determined under the rules of section 469(h), 
                except that section 469(h)(3) shall be applied without 
                regard to the limitation to farming activity.
                    ``(C) Exception for working capital.--Any asset 
                (including a passive asset) which is held as a part of 
                the reasonably required working capital needs of a 
                trade or business shall be treated as used in the 
                active conduct of a trade or business.
            ``(3) Passive asset.--For purposes of this subsection, the 
        term `passive asset' means any--
                    ``(A) cash or cash equivalents,
                    ``(B) except to the extent provided by the 
                Secretary, stock in a corporation or any other equity, 
                profits, or capital interest in any entity,
                    ``(C) evidence of indebtedness, option, forward or 
                futures contract, notional principal contract, or 
                derivative,
                    ``(D) asset described in clause (iii), (iv), or (v) 
                of section 351(e)(1)(B),
                    ``(E) annuity,
                    ``(F) real property used in 1 or more real property 
                trades or businesses (as defined in section 
                469(c)(7)(C)),
                    ``(G) asset (other than a patent, trademark, or 
                copyright) which produces royalty income,
                    ``(H) commodity,
                    ``(I) collectible (within the meaning of section 
                401(m)), or
                    ``(J) any other asset specified in regulations 
                prescribed by the Secretary.
            ``(4) Look-thru rules.--
                    ``(A) In general.--If a nonbusiness asset of an 
                entity consists of a 10-percent interest in any other 
                entity, this subsection shall be applied by 
                disregarding the 10-percent interest and by treating 
                the entity as holding directly its ratable share of the 
                assets of the other entity. This subparagraph shall be 
                applied successively to any 10-percent interest of such 
                other entity in any other entity.
                    ``(B) 10-percent interest.--The term `10-percent 
                interest' means--
                            ``(i) in the case of an interest in a 
                        corporation, ownership of at least 10 percent 
                        (by vote or value) of the stock in such 
                        corporation,
                            ``(ii) in the case of an interest in a 
                        partnership, ownership of at least 10 percent 
                        of the capital or profits interest in the 
                        partnership, and
                            ``(iii) in any other case, ownership of at 
                        least 10 percent of the beneficial interests in 
                        the entity.
            ``(5) Coordination with subsection (b).--Subsection (b) 
        shall apply after the application of this subsection.
    ``(e) Limitation on Minority Discounts.--For purposes of this 
chapter and chapter 12, in the case of the transfer of any interest in 
an entity other than an interest which is actively traded (within the 
meaning of section 1092), no discount shall be allowed by reason of the 
fact that the transferee does not have control of such entity if the 
transferee and members of the family (as defined in section 
2032A(e)(2)) of the transferee have control of such entity.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to transfers after the date of the enactment of this Act.

SEC. 8. REQUIRED MINIMUM 10-YEAR TERM, ETC., FOR GRANTOR RETAINED 
              ANNUITY TRUSTS.

    (a) In General.--Subsection (b) of section 2702 of the Internal 
Revenue Code of 1986 is amended--
            (1) by redesignating paragraphs (1), (2), and (3) as 
        subparagraphs (A), (B), and (C), respectively, and by moving 
        such subparagraphs (as so redesignated) 2 ems to the right;
            (2) by striking ``For purposes of'' and inserting the 
        following:
            ``(1) In general.--For purposes of'';
            (3) by striking ``paragraph (1) or (2)'' in paragraph 
        (1)(C) (as so redesignated) and inserting ``subparagraph (A) or 
        (B)''; and
            (4) by adding at the end the following new paragraph:
            ``(2) Additional requirements with respect to grantor 
        retained annuities.--For purposes of subsection (a), in the 
        case of an interest described in paragraph (1)(A) (determined 
        without regard to this paragraph) which is retained by the 
        transferor, such interest shall be treated as described in such 
        paragraph only if--
                    ``(A) the right to receive the fixed amounts 
                referred to in such paragraph is for a term of not less 
                than 10 years,
                    ``(B) such fixed amounts, when determined on an 
                annual basis, do not decrease relative to any prior 
                year during the first 10 years of the term referred to 
                in subparagraph (A), and
                    ``(C) the remainder interest has a value greater 
                than zero determined as of the time of the transfer.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to transfers made after the date of the enactment of this Act.
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