[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2907 Introduced in House (IH)]

114th CONGRESS
  1st Session
                                H. R. 2907

  To amend the Internal Revenue Code of 1986 to reinstate estate and 
           generation-skipping taxes, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 25, 2015

 Ms. Schakowsky (for herself and Mr. Ellison) 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 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. MODIFICATIONS TO ESTATE, GIFT, AND GENERATION-SKIPPING TRANSFER 
              TAXES.

    (a) Modification of Rates.--
            (1) In general.--Section 2001(c) of the Internal Revenue 
        Code of 1986 is amended by striking the last 2 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.--Section 2001(c) of such 
        Code is amended--
                    (A) by inserting before the table the following:
            ``(1) In general.--'', and
                    (B) by adding at the end the following new 
                paragraph:
            ``(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) Exclusion Amount.--
            (1) Estate tax.--Section 2010(c)(3) of such Code is amended 
        to read as follows:
            ``(3) Basic exclusion amount.--For purposes of this 
        section, the basic exclusion amount is $3,500,000.''.
            (2) Modification to gift tax exclusion amount.--Section 
        2505(a)(1) of such Code is amended to read as follows:
            ``(1) the applicable credit amount in effect under section 
        2010(c) for such calendar year (determined as if the basic 
        exclusion amount in section 2010(c)(2)(A) were $1,000,000), 
        reduced by''.
            (3) Modifications of estate and gift taxes to reflect 
        differences in credit resulting from different exclusion 
        amounts.--
                    (A) Estate tax adjustment.--Section 2001 of such 
                Code is amended by adding at the end the following new 
                subsection:
    ``(h) Adjustment To Reflect Changes in Exclusion Amount.--
            ``(1) In general.--If, with respect to any gift to which 
        subsection (b)(2) applies, the applicable exclusion amount in 
        effect at the time of the decedent's death is less than such 
        amount in effect at the time such gift is made by the decedent, 
        the amount of tax computed under subsection (b) shall be 
        reduced by the amount of tax which would have been payable 
        under chapter 12 at the time of the gift if the applicable 
        exclusion amount in effect at such time had been the applicable 
        exclusion amount in effect at the time of the decedent's death 
        and the modifications described in subsection (g) had been 
        applicable at the time of such gifts.
            ``(2) Limitation.--The aggregate amount of gifts made in 
        any calendar year to which the reduction under paragraph (1) 
        applies shall not exceed the excess of--
                    ``(A) the applicable exclusion amount in effect for 
                such calendar year, over
                    ``(B) the applicable exclusion amount in effect at 
                the time of the decedent's death.
            ``(3) Applicable exclusion amount.--The term `applicable 
        exclusion amount' means, with respect to any period, the amount 
        determined under section 2010(c) for such period, except that 
        in the case of any period for which such amount includes the 
        deceased spousal unused exclusion amount (as defined in section 
        2010(c)(4)), such term shall mean the basic exclusion amount 
        (as defined under section 2010(c)(3), as in effect for such 
        period).''.
                    (B) Gift tax adjustment.--Section 2502 of such Code 
                is amended by adding at the end the following new 
                subsection:
    ``(d) Adjustment To Reflect Changes in Exclusion Amount.--
            ``(1) In general.--If the taxpayer made a taxable gift in 
        an applicable preceding calendar period, the amount of tax 
        computed under subsection (a) shall be reduced by the amount of 
        tax which would have been payable under chapter 12 for such 
        applicable preceding calendar period if the applicable 
        exclusion amount in effect for such preceding calendar period 
        had been the applicable exclusion amount in effect for the 
        calendar year for which the tax is being computed and the 
        modifications described in subsection (g) had been applicable 
        for such preceding calendar period.
            ``(2) Limitation.--The aggregate amount of gifts made in 
        any applicable preceding calendar period to which the reduction 
        under paragraph (1) applies shall not exceed the excess of--
                    ``(A) the applicable exclusion amount for such 
                preceding calendar period, over
                    ``(B) the applicable exclusion amount for the 
                calendar year for which the tax is being computed.
            ``(3) Applicable preceding calendar year period.--The term 
        `applicable preceding calendar year period' means any preceding 
        calendar year period in which the applicable exclusion amount 
        exceeded the applicable exclusion amount for the calendar year 
        for which the tax is being computed.
            ``(4) Applicable exclusion amount.--The term `applicable 
        exclusion amount' means, with respect to any period, the amount 
        determined under section 2010(c) for such period, except that 
        in the case of any period for which such amount includes the 
        deceased spousal unused exclusion amount (as defined in section 
        2010(c)(4)), such term shall mean the basic exclusion amount 
        (as defined under section 2010(c)(3), as in effect for such 
        period).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying, and generation-skipping transfers 
and gifts made, after December 31, 2015.

SEC. 3. MODIFICATION OF RULES FOR VALUE OF CERTAIN FARM, ETC., REAL 
              PROPERTY.

    (a) In General.--Section 2032A(a)(2) of the Internal Revenue Code 
of 1986 is amended by striking ``$750,000'' and inserting 
``$3,000,000''.
    (b) Inflation Adjustment.--Section 2032A(a)(3) of such Code is 
amended--
            (1) by striking ``1998'' and inserting ``2015'',
            (2) by striking ``$750,000'' and inserting ``$3,000,000'' 
        in subparagraph (A), and
            (3) by striking ``calendar year 1997'' and inserting 
        ``calendar year 2014'' 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, 
2015.

SEC. 4. MODIFICATION OF ESTATE TAX RULES WITH RESPECT TO LAND SUBJECT 
              TO CONSERVATION EASEMENTS.

    (a) Modification of Exclusion Limitation.--Section 2031(c)(1) of 
the Internal Revenue Code of 1986 is amended by striking all that 
follows subparagraph (A) and inserting the following:
                    ``(B) $2,000,000.''.
    (b) Modification of Applicable Percentage.--Section 2031(c)(2) of 
such Code 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, 
2015.

SEC. 5. CONSISTENT BASIS REPORTING BETWEEN ESTATE AND PERSON ACQUIRING 
              PROPERTY FROM DECEDENT.

    (a) Consistent Use of Basis.--
            (1) Property acquired from a decedent.--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 Estate Tax Return.--
            ``(1) In general.--For purposes of this section, the value 
        used to determine the basis of any interest in property in the 
        hands of the person acquiring such property shall not exceed 
        the value of such interest as finally determined for purposes 
        of chapter 11.
            ``(2) Special rule where no final determination.--In any 
        case in which the final value of property has not been 
        determined under chapter 11 and there has been a statement 
        furnished under section 6035(a), the value used to determine 
        the basis of any interest in property in the hands of the 
        person acquiring such property shall not exceed the amount 
        reported on any statement furnished under section 6035(a).
            ``(3) Regulations.--The Secretary may by regulations 
        provide exceptions to the application of this subsection.''.
            (2) Property acquired by gifts and transfers in trust.--
        Section 1015 of such Code is amended by adding at the end the 
        following new subsection:
    ``(f) Basis Must Be Consistent Gift Tax Return.--
            ``(1) In general.--For purposes of this section, the value 
        used to determine the basis of any interest in property in the 
        hands of the person acquiring such property shall not exceed 
        the value of such interest as finally determined for purposes 
        of chapter 12.
            ``(2) Special rule where no final determination.--In any 
        case in which the final value of property has not been 
        determined under chapter 12 and there has been a statement 
        furnished under section 6035(b), the value used to determine 
        the basis of any interest in property in the hands of the 
        person acquiring such property shall not exceed the amount 
        reported on any statement furnished under section 6035(b).
            ``(3) Regulations.--The Secretary may by regulations 
        provide exceptions to the application of this subsection.''.
    (b) Information Reporting.--
            (1) In general.--Subpart A of part III of subchapter A of 
        chapter 61 of such Code 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 furnish to the 
        Secretary and to each person acquiring any interest in property 
        included in the decedent's gross estate for Federal estate tax 
        purposes a statement identifying the value of each interest in 
        such property as reported on such return and such other 
        information with respect to such interest as the Secretary may 
        prescribe.
            ``(2) Statements by beneficiaries.--Each person required to 
        file a return under section 6018(b) shall furnish to the 
        Secretary and to each other person who holds a legal or 
        beneficial interest in the property to which such return 
        relates a statement identifying the information described in 
        paragraph (1).
            ``(3) Time for furnishing statement.--
                    ``(A) In general.--Each statement required to be 
                furnished under paragraph (1) or (2) shall be furnished 
                at such time as the Secretary may prescribe, but in no 
                case at a time later than the earlier of--
                            ``(i) the date which is 30 days after the 
                        date on which the return under section 6018 was 
                        required to be filed (including extensions, if 
                        any), or
                            ``(ii) the date which is 30 days after the 
                        date such return is filed.
                    ``(B) Adjustments.--In any case in which there is 
                an adjustment to the information required to be 
                included on a statement filed under paragraph (1) or 
                (2) after such statement has been filed, a supplemental 
                statement under such paragraph shall be filed not later 
                than the date which is 30 days after such adjustment is 
                made.
    ``(b) Information With Respect to Property Acquired by Gift.--
            ``(1) In general.--Each person making a transfer by gift 
        who is required to file a return under section 6019 with 
        respect to such transfer shall furnish to the Secretary and to 
        each person acquiring any interest in property by reason of 
        such transfer a statement identifying the value of each 
        interest in such property as reported on such return and such 
        other information with respect to such interest as the 
        Secretary may prescribe.
            ``(2) Time for furnishing statement.--
                    ``(A) In general.--Each statement required to be 
                furnished under paragraph (1) shall be furnished at 
                such time as the Secretary may prescribe, but in no 
                case at a time later than the earlier of--
                            ``(i) the date which is 30 days after the 
                        date on which the return under section 6019 was 
                        required to be filed (including extensions, if 
                        any), or
                            ``(ii) the date which is 30 days after the 
                        date such return is filed.
                    ``(B) Adjustments.--In any case in which there is 
                an adjustment to the information required to be 
                included on a statement filed under paragraph (1) after 
                such statement has been filed, a supplemental statement 
                under such paragraph shall be filed not later than the 
                date which is 30 days after such adjustment is made.
    ``(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 property with 
        regard to which no estate or gift tax return is required to be 
        filed, and
            ``(2) situations in which the surviving joint tenant or 
        other recipient may have better information than the executor 
        regarding the basis or fair market value of the property.''.
            (2) Penalty for failure to file.--
                    (A) Return.--Section 6724(d)(1) of such Code is 
                amended by striking ``and'' at the end of subparagraph 
                (B), by striking the period at the end of subparagraph 
                (C) and inserting ``, and'', and by inserting after 
                subparagraph (C) the following new subparagraph:
                    ``(D) any statement required to be filed with the 
                Secretary under section 6035.''.
                    (B) Statement.--Section 6724(d)(2) of such Code is 
                amended by striking ``or'' at the end of subparagraph 
                (GG), by striking the period at the end of subparagraph 
                (HH) and inserting ``, or'', and by inserting after 
                subparagraph (HH) the following new subparagraph:
                    ``(II) section 6035 (other than a statement 
                described in paragraph (1)(D)).''.
            (3) Clerical amendment.--The table of sections for subpart 
        A of part III of subchapter A of chapter 61 of such Code 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.''.
    (c) Penalty for Inconsistent Reporting.--
            (1) In general.--Section 6662(b) of such Code is amended by 
        inserting after paragraph (7) the following new paragraph:
            ``(8) Any inconsistent estate or gift basis.''.
            (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' means the 
portion of the understatement which is attributable to--
            ``(1) in the case of property acquired from a decedent, a 
        basis determination with respect to such property which is not 
        consistent with the value of such property as determined under 
        section 1014(f), and
            ``(2) in the case of property acquired by gift, a basis 
        determination with respect to such property which is not 
        consistent with the value of such property as determined under 
        section 1015(f).''.
    (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. 6. VALUATION RULES FOR CERTAIN TRANSFERS OF NONBUSINESS ASSETS; 
              LIMITATION ON MINORITY DISCOUNTS.

    (a) In General.--Section 2031 of the Internal Revenue Code of 1986 
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 
transferor, the transferee, and members of the family (as defined in 
section 2032A(e)(2)) of the transferor and transferee--
            ``(1) have control of such entity, or
            ``(2) own the majority of the ownership interests (by 
        value) in 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. 7. REQUIRED MINIMUM 10-YEAR TERM, ETC., FOR GRANTOR RETAINED 
              ANNUITY TRUSTS.

    (a) In General.--Section 2702(b) 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 equal to 
                or greater than 10 percent of the value of the assets 
                transferred to the trust, 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.

SEC. 8. CERTAIN TRANSFER TAX RULES APPLICABLE TO GRANTOR TRUSTS.

    (a) In General.--Subtitle B of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new chapter:

             ``CHAPTER 16--SPECIAL RULES FOR GRANTOR TRUSTS

``Sec. 2901. Application of transfer taxes.

``SEC. 2901. APPLICATION OF TRANSFER TAXES.

    ``(a) In General.--In the case of any portion of a trust to which 
this section applies--
            ``(1) the value of the gross estate of the deceased deemed 
        owner of such portion shall include all assets attributable to 
        that portion at the time of the death of such owner,
            ``(2) any distribution from such portion to one or more 
        beneficiaries during the life of the deemed owner of such 
        portion shall be treated as a transfer by gift for purposes of 
        chapter 12, and
            ``(3) if at any time during the life of the deemed owner of 
        such portion, such owner ceases to be treated as the owner of 
        such portion under subpart E of part 1 of subchapter J of 
        chapter 1, all assets attributable to such portion at such time 
        shall be treated for purposes of chapter 12 as a transfer by 
        gift made by the deemed owner.
    ``(b) Portion of Trust to Which Section Applies.--This section 
shall apply to--
            ``(1) the portion of a trust with respect to which the 
        grantor is the deemed owner, and
            ``(2) the portion of the trust to which a person who is not 
        the grantor is a deemed owner by reason of the rules of subpart 
        E of part 1 of subchapter J of chapter 1, and such deemed owner 
        engages in a sale, exchange, or comparable transaction with the 
        trust that is disregarded for purposes of subtitle A.
For purposes of paragraph (2), the portion of the trust described with 
respect to a transaction is the portion of the trust attributable to 
the property received by the trust in such transaction, including all 
retained income therefrom, appreciation thereon, and reinvestments 
thereof, net of the amount of consideration received by the deemed 
owner in such transaction.
    ``(c) Exceptions.--This section shall not apply to--
            ``(1) any trust that is includible in the gross estate of 
        the deemed owner (without regard to subsection (a)(1)), and
            ``(2) any other type of trust that the Secretary determines 
        by regulations or other guidance does not have as a significant 
        purpose the avoidance of transfer taxes.
    ``(d) Deemed Owner Defined.--For purposes of this section, the term 
`deemed owner' means any person who is treated as the owner of a 
portion of a trust under subpart E of part 1 of subchapter J of chapter 
1.
    ``(e) Reduction for Taxable Gifts to Trust Made by Owner.--The 
amount to which subsection (a) applies shall be reduced by the value of 
any transfer by gift by the deemed owner to the trust previously taken 
into account by the deemed owner under chapter 12.
    ``(f) Liability for Payment of Tax.--Any tax imposed pursuant to 
subsection (a) shall be a liability of the trust.''.
    (b) Clerical Amendment.--The table of chapters for subtitle B of 
such Code is amended by adding at the end the following new item:

           ``Chapter 16. Special Rules for Grantor Trusts''.

    (c) Effective Date.--The amendments made by this section shall 
apply--
            (1) to trusts created on or after the date of the enactment 
        of this Act,
            (2) to any portion of a trust established before the date 
        of the enactment of this Act which is attributable to a 
        contribution made on or after such date, and
            (3) to any portion of a trust established before the date 
        of the enactment of this Act to which section 2901(a) of the 
        Internal Revenue Code of 1986 (as added by subsection (a)) 
        applies by reason of a transaction described in section 
        2901(b)(2) of such Code on or after such date.

SEC. 9. ELIMINATION OF GENERATION-SKIPPING TRANSFER TAX EXEMPTION FOR 
              CERTAIN TRUSTS.

    (a) In General.--Section 2642 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(h) Elimination of GST Exemption for Certain Trusts.--
            ``(1) In general.--
                    ``(A) Transfers from non-qualifying trusts.--In the 
                case of any generation-skipping transfer made from a 
                trust that is not a qualifying trust, the inclusion 
                ratio with respect to any property transferred in such 
                transfer shall be 1.
                    ``(B) Qualifying trust.--For purposes of this 
                subsection, the term `qualifying trust' means a trust 
                for which the date of termination of such trust is not 
                greater than 50 years after the date on which such 
                trust is created.
            ``(2) Trusts created before date of enactment.--In the case 
        of any trust created before the date of the enactment of this 
        subsection, such trust shall be deemed to be a qualifying trust 
        for a period of 50 years after the date of the enactment of 
        this subsection.
            ``(3) Date of creation of certain deemed separate trusts.--
        In the case of any portion of a trust which is treated as a 
        separate trust under section 2654(b)(1), such separate trust 
        shall be treated as created on the date of the first transfer 
        described in such section with respect to such separate trust.
            ``(4) Date of creation of pour-over trusts.--In the case of 
        any generation-skipping transfer of property which involves the 
        transfer of property from 1 trust to another trust, the date of 
        the creation of the transferee trust shall be treated as being 
        the earlier of--
                    ``(A) the date of the creation of such transferee 
                trust, or
                    ``(B) the date of the creation of the transferor 
                trust.
                In the case of multiple transfers to which the 
                preceding sentence applies, the date of the creation of 
                the transferor trust shall be determined under the 
                preceding sentence before the application of the 
                preceding sentence to determine the date of the 
                creation of the transferee trust.
            ``(5) Regulations.--The Secretary may prescribe such 
        regulations or other guidance as may be necessary or 
        appropriate to carry out this subsection.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 10. SIMPLIFYING GIFT TAX EXCLUSION FOR ANNUAL GIFTS.

    (a) In General.--Section 2503(b)(1) of the Internal Revenue Code of 
1986 is amended to read as follows:
            ``(1) In general.--
                    ``(A) Limit per donee.--In the case of gifts made 
                to any person by the donor during the calendar year, 
                the first $10,000 of such gifts to such person shall 
                not, for purposes of subsection (a), be included in the 
                total amount of gifts made during such year.
                    ``(B) Cumulative limit per donor.--
                            ``(i) In general.--The aggregate amount 
                        excluded under subparagraph (A) with respect to 
                        all transfers described in clause (ii) made by 
                        the donor during the calendar year shall not 
                        exceed twice the dollar amount in effect under 
                        such subparagraph for such calendar year.
                            ``(ii) Transfers subject to limitation.--
                        The transfers described in this clause are--
                                    ``(I) a transfer in trust,
                                    ``(II) a transfer of an interest in 
                                a passthrough entity,
                                    ``(III) a transfer of an interest 
                                subject to a prohibition on sale, and
                                    ``(IV) any other transfer of 
                                property that, without regard to 
                                withdrawal, put, or other such rights 
                                in the donee, cannot immediately be 
                                liquidated by the donee.''.
    (b) Conforming Amendment.--Section 2503 of the Internal Revenue 
Code of 1986 is amended by striking subsection (c).
    (c) Regulations.--The Secretary of the Treasury, or the Secretary 
of the Treasury's delegate, may prescribe such regulations or other 
guidance as may be necessary or appropriate to carry out the amendments 
made by this section.
    (d) Effective Date.--The amendments made by this section shall 
apply to any calendar year beginning after the date of the enactment of 
this Act.
                                 <all>