[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 1631 Introduced in Senate (IS)]

114th CONGRESS
  1st Session
                                S. 1631

 To amend the Employee Retirement Income Security Act of 1974 and the 
Internal Revenue Code of 1986 to modify certain provisions relating to 
            multiemployer pensions, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 18, 2015

 Mr. Sanders (for himself, Mr. Brown, and Ms. Baldwin) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Employee Retirement Income Security Act of 1974 and the 
Internal Revenue Code of 1986 to modify certain provisions relating to 
            multiemployer pensions, 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 ``Keep Our Pension Promises Act''.

SEC. 2. RESTORING ANTI-CUTBACK PROVISIONS.

    Section 201 of the Multiemployer Pension Reform Act of 2014 
(division O of Public Law 113-235) and the amendments made by such 
section are repealed, and the Employee Retirement Income Security Act 
of 1974 and the Internal Revenue Code of 1986 shall be applied as if 
such section and amendments had never been enacted.

SEC. 3. PARTITIONS OF ELIGIBLE MULTIEMPLOYER PLANS.

    (a) In General.--Section 4233 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1413), as amended by section 122 of the 
Multiemployer Pension Reform Act of 2014 (division O of Public Law 113-
235), is amended to read as follows:

``SEC. 4233. PARTITIONS OF ELIGIBLE MULTIEMPLOYER PLANS.

    ``(a)(1) Upon the application by the plan sponsor of an eligible 
multiemployer plan for a partition of the plan, the corporation may 
order a partition of the plan in accordance with this section. The 
corporation shall make a determination regarding the application, in 
accordance with regulations promulgated by the corporation, not later 
than 270 days after--
            ``(A) the date such application was filed; or
            ``(B) if later, the date such application was completed.
    ``(2) At least 14 days before submitting an application for 
partition of a plan under paragraph (1), the plan sponsor of the plan 
shall notify all participants and beneficiaries of such application, in 
the form and manner prescribed by regulations issued by the 
corporation.
    ``(b) For purposes of this section, a multiemployer plan is an 
eligible multiemployer plan if--
            ``(1) the plan is in critical status and is projected to 
        become insolvent within the meaning of section 4245--
                    ``(A) during the current plan year or any of the 14 
                succeeding plan years; or
                    ``(B) during the current plan year or any of the 19 
                succeeding plan years, if the plan has a ratio of 
                inactive participants to active participants that 
                exceeds 2 to 1 and the funded percentage of the plan is 
                less than 80 percent;
            ``(2) the corporation determines, after consultation with 
        the Participant and Plan Sponsor Advocate selected under 
        section 4004, that the plan sponsor has taken (or is taking 
        concurrently with an application for partition) all reasonable 
        measures described in section 432(e)(3)(A) of the Internal 
        Revenue Code of 1986, and has made (or is making) benefit 
        adjustments under section 432(e)(8) of such Code to reduce the 
        risk of insolvency;
            ``(3) 20 percent or more of the amount by which the 
        liabilities of the plan exceed the value of plan assets is 
        attributable to the service of participants whose employers--
                    ``(A) withdrew from the plan prior to the date of 
                enactment of the Keep Our Pension Promises Act; and
                    ``(B) failed to pay (or are delinquent with respect 
                to paying) the full amount of the employer's withdrawal 
                liability under section 4201(b)(1) or as otherwise 
                determined under an agreement with the plan;
            ``(4) the corporation reasonably expects that--
                    ``(A) a partition of the plan will reduce the 
                corporation's expected long-term loss with respect to 
                the plan; and
                    ``(B) a partition of the plan is necessary for the 
                plan to remain or become solvent; and
            ``(5) the corporation certifies to Congress that after 
        partition the corporation will continue to have the ability to 
        meet existing financial assistance obligations to other plans 
        (including any liabilities associated with multiemployer plans 
        that are insolvent or that are projected to become insolvent 
        within 10 years).
    ``(c)(1) A partition under this section shall consist of a transfer 
to the plan created by the partition order of benefits to which 
eligible participants and beneficiaries were entitled under the plan 
that was partitioned, in an amount not to exceed the amount that would 
be guaranteed under section 4022A if the plan were insolvent as of the 
date of the partition order.
    ``(2) The corporation's partition order shall provide for an annual 
transfer by the corporation to the plan created by the partition order 
of an amount equal to the yearly benefits that would be guaranteed 
under section 4022A to the eligible participants and beneficiaries if 
the plan were insolvent as of the date of the partition order.
    ``(3)(A) Where practicable, the initial transfer in accordance with 
paragraph (2) shall be completed at least 60 days prior to the plan 
year that immediately follows the partition start date. The partition 
order shall require that the initial transfer be sufficient to satisfy 
the guaranteed benefits in the first plan year of the partitioned plan.
    ``(B) Subsequent transfers in accordance with paragraph (2) shall 
be completed at least 60 days prior to the first day of each succeeding 
plan year.
    ``(d)(1)(A) The plan created by the partition order is a successor 
plan to which section 4022A applies.
    ``(B) At the discretion of the plan sponsor, the plan created by 
the partition order may remain a part of the plan that was partitioned 
or be maintained as a separate plan.
    ``(2)(A) The plan sponsor and the administrator of an eligible 
multiemployer plan prior to the partition shall be the plan sponsor and 
the administrator, respectively, of the plan created by the partition 
order, and shall adopt reasonable procedures to reduce administrative 
expenses and to coordinate benefit payments and communications with the 
participants and beneficiaries in the plan created by the partition 
order.
    ``(B) Benefit payments equal to the amount of an eligible 
participant or beneficiary's guaranteed benefits shall be paid to such 
participant or beneficiary and may be--
            ``(i) paid separately by the plan created by the partition 
        order; or
            ``(ii) paid in a single, monthly payment by the plan that 
        was partitioned.
    ``(3) In the event an employer withdraws from the plan that was 
partitioned, withdrawal liability shall be computed under section 4201 
with respect to both the plan that was partitioned and the plan created 
by the partition order.
    ``(e) In addition to the payment of guaranteed benefits under 
subsection (d)(2)(B), each eligible participant or beneficiary of the 
plan created by the partition order shall receive a monthly benefit for 
each month the benefit is in pay status in an amount that--
            ``(1) the corporation, in consultation with the Participant 
        and Plan Sponsor Advocate, determines to be fair to the plan, 
        the participant or beneficiary, the employers, and the 
        corporation; and
            ``(2) is at least equal to the lesser of--
                    ``(A) the monthly nonforfeitable benefit for such 
                participant or beneficiary payable under the plan that 
                was partitioned; or
                    ``(B) 80 percent of the maximum benefit commencing 
                at age 65 guaranteed under section 4022(a) for 
                participants and beneficiaries in terminated single 
                employer plans, unreduced for early retirement.
Such monthly benefit may be combined with the monthly payment under 
subsection (d)(2)(B)(ii).
    ``(f)(1) The corporation shall establish a legacy fund for the 
purposes of funding the administrative and benefit costs to the 
corporation arising from partitions under this section, as described in 
paragraph (2).
    ``(2) Any administrative and benefit costs to the corporation 
arising from a partition ordered under this section in excess of 
amounts available in such legacy fund shall be paid from the fund for 
basic benefits guaranteed for multiemployer plans.
    ``(g) Only one partition order shall be issued with respect to each 
eligible multiemployer plan.
    ``(h) For purposes of this subsection, the term `eligible 
participant or beneficiary' means a participant or beneficiary of an 
eligible multiemployer plan that is partitioned in accordance with a 
petition order under this section, and who is an employee or 
beneficiary of an employee of an employer that is described in 
subsection (b)(3).
    ``(i) Not later than 14 days after the issuance of a partition 
order under this section, the corporation shall provide notice of such 
order to the Committee on Finance of the Senate, the Committee on 
Health, Education, Labor, and Pensions of the Senate, the Committee on 
Education and the Workforce of the House of Representatives, the 
Committee on Ways and Means of the House of Representatives, and to all 
eligible participants or beneficiaries whose guaranteed benefits will 
be paid directly or indirectly by the plan created by the partition 
order.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply with respect to plan years beginning after the date of enactment 
of this Act.
    (c) Transfers to Legacy Fund.--The Secretary of the Treasury shall 
from time to time transfer from the general fund of the Treasury to the 
legacy fund established under section 4233(f)(1) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1413(f)(1)) (as 
amended by subsection (a)) amounts equal to the increase in revenues to 
the Treasury by reason of the amendments made by sections 6 and 7 of 
this Act.
    (d) Transfers Between Funds of the PBGC.--Section 4005 of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1305) is 
amended by adding at the end the following:
    ``(i)(1) An eighth fund is established under section 4233(f) and 
credited with the amounts described in section 3(c) of the Keep Our 
Pension Promises Act.
    ``(2) Notwithstanding subsection (g), the corporation may transfer 
amounts into the legacy fund established under section 4233(f)(1) from 
other funds established under this section, as the corporation 
determines appropriate.''.

SEC. 4. EMPLOYER WITHDRAWALS RELATING TO MULTIEMPLOYER PLANS.

    The matter preceding paragraph (1) of section 4225(b) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1405(b)) is 
amended by inserting ``, including an employer undergoing liquidation 
under chapter 7 of title 11, United States Code, or similar provisions 
of State law,'' after ``dissolution,''.

SEC. 5. PRIORITIES OF CLAIMS IN BANKRUPTCY.

    (a) In General.--Section 507(a) of title 11, United States Code is 
amended--
            (1) by redesignating paragraphs (1) through 10 as 
        paragraphs (2) through (11), respectively;
            (2) by inserting before paragraph (2) (as redesignated) the 
        following:
            ``(1) First, withdrawal liability determined under part 1 
        of subtitle E of title IV of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1381 et seq.).''.
            (3) in the matter preceding subparagraph (A) of paragraph 
        (2) (as redesignated), by striking ``First:'' and inserting 
        ``Second:'';
            (4) in paragraph (3) (as redesignated), by striking 
        ``Second,'' and inserting ``Third,'';
            (5) in paragraph (4) (as redesignated), by striking 
        ``Third,'' and inserting ``Fourth,'';
            (6) in the matter preceding subparagraph (A) of paragraph 
        (5) (as redesignated), by striking ``Fourth,'' and inserting 
        ``Fifth,'';
            (7) in the matter preceding subparagraph (A) of paragraph 
        (6) (as redesignated), by striking ``Fifth,'' and inserting 
        ``Sixth,'';
            (8) in the matter preceding subparagraph (A) of paragraph 
        (7) (as redesignated), by striking ``Sixth,'' and inserting 
        ``Seventh,'';
            (9) in paragraph (8) (as redesignated), by striking 
        ``Seventh,'' and inserting ``Eighth,'';
            (10) in the matter preceding subparagraph (A) of paragraph 
        (9) (as redesignated), by striking ``Eighth,'' and inserting 
        ``Ninth,'';
            (11) in paragraph (10) (as redesignated), by striking 
        ``Ninth,'' and inserting ``Tenth,''; and
            (12) in paragraph (11) (as redesignated), by striking 
        ``Tenth,'' and inserting ``Eleventh,''.
    (b) Technical and Conforming Amendments.--
            (1) Section 502(i) of title 11, United States Code, is 
        amended by striking ``section 507(a)(8)'' and inserting 
        ``section 507(a)(9)''.
            (2) Section 503(b)(1)(B)(i) of title 11, United States 
        Code, is amended by striking ``section 507(a)(8)'' and 
        inserting ``section 507(a)(9)''.
            (3) Section 507(d) of title 11, United States Code, is 
        amended by striking ``(a)(1), (a)(4), (a)(5), (a)(6), (a)(7), 
        (a)(8), or (a)(9)'' and inserting ``(a)(2), (a)(5), (a)(6), 
        (a)(7), (a)(8), (a)(9), or (a)(10)''.
            (4) Section 523(A) of title 11, United States Code, is 
        amended by striking ``section 507(a)(3) or 507(a)(8)'' and 
        inserting ``section 507(a)(4) or 507(a)(9)''.
            (5) Section 724 of title 11, United States Code, is 
        amended--
                    (A) in subsection (b)(2), by striking ``section 
                507(a)(1)(C) or 507(a)(2)'' and inserting ``section 
                507(a)(2)(C) or 507(a)(3)''; and
                    (B) in subsection (f)--
                            (i) in paragraph (1), by striking ``section 
                        507(a)(4)'' and inserting ``section 
                        507(a)(5)''; and
                            (ii) in paragraph (2), by striking 
                        ``section 507(a)(5)'' and inserting ``section 
                        507(a)(6)''.
            (6) Section 726(b) of title 11, United States Code, is 
        amended by striking ``paragraph (1), (2), (3), (4), (5), (6), 
        (7), (8), (9), or (10) of section 507(a)'' and inserting 
        ``paragraphs (2) through (11) of section 507(a)''.
            (7) Section 752(a) of title 11, United States Code, is 
        amended by striking ``section 507(a)(2)'' and inserting 
        ``section 507(a)(3)''.
            (8) Section 766 of title 11, United States Code, is 
        amended--
                    (A) in subsection (h), by striking ``section 
                507(a)(2)'' and inserting ``section 507(a)(3)''; and
                    (B) in subsection (i)--
                            (i) in paragraph (1), by striking ``section 
                        507(a)(2)'' and inserting ``section 
                        507(a)(3)''; and
                            (ii) in paragraph (2), by striking 
                        ``section 507(a)(2)'' and inserting ``section 
                        507(a)(3)''.
            (9) Section 901 of title 11, United States Code, is amended 
        by striking ``507(a)(2)'' and inserting ``507(a)(3)''.
            (10) Section 943(b)(5) of title 11, United States Code, is 
        amended by striking ``section 507(a)(2)'' and inserting 
        ``section 507(a)(3)''.
            (11) Section 1123(a)(1) of title 11, United States Code, is 
        amended by striking ``section 507(a)(2), 507(a)(3), or 
        507(a)(8)'' and inserting ``section 507(a)(3), 507(a)(4), or 
        507(a)(9)''.
            (12) Section 1129(a)(9) of title 11, United States Code, is 
        amended--
                    (A) in subparagraph (A), by striking ``section 
                507(a)(3) or 507(a)(4)'' and inserting ``section 
                507(a)(4) or 507(a)(5)'';
                    (B) in the matter preceding clause (i) of 
                subparagraph (B), by striking ``section 507(a)(1), 
                507(a)(4), 507(a)(5), 507(a)(6), or 507(a)(7)'' and 
                inserting ``section 507(a)(2), 507(a)(5), 507(a)(6), 
                507(a)(7), or 507(a)(8)'';
                    (C) in the matter preceding clause (i) of 
                subparagraph (C), by striking ``section 507(a)(8)'' and 
                inserting ``section 507(a)(9)''; and
                    (D) in subparagraph (D), by striking ``section 
                507(a)(8)'' and inserting ``section 507(a)(9)''.
            (13) Section 1222(a)(4) of title 11, United States Code, is 
        amended by striking ``section 507(a)(1)(B)'' and inserting 
        ``507(a)(2)(B)''.
            (14) Section 1226(b)(1) of title 11, United States Code, is 
        amended by striking ``section 507(a)(2)'' and inserting 
        ``section 507(a)(3)''.
            (15) Section 1322(a)(4) of title 11, United States Code, is 
        amended by striking ``section 507(a)(1)(B)'' and inserting 
        ``section 507(a)(2)(B)''.
            (16) Section 1326(b)(1) of title 11, United States Code, is 
        amended by striking ``section 507(a)(2)'' and inserting 
        ``section 507(a)(3)''.
            (17) Section 1328(a)(2) of title 11, United States Code, is 
        amended by striking ``section 507(a)(8)(C)'' and inserting 
        ``section 507(a)(9)(C)''.

SEC. 6. LIMITATION OF NONRECOGNITION OF LIKE-KIND EXCHANGES.

    (a) In General.--Paragraph (2) of section 1031(a) of the Internal 
Revenue Code of 1986 is amended--
            (1) by redesignating subparagraphs (A), (B), (C), (D), (E), 
        and (F) as clauses (i), (ii), (iii), (iv), (v), and (vi), and 
        by moving such clauses 2 ems to the right,
            (2) by moving the flush language after the first sentence 2 
        ems to the right,
            (3) by striking ``(2) Exception.--This subsection'' and 
        inserting ``(2) Exceptions.--
                    ``(A) Excluded property.--This subsection'', and
            (4) by adding at the end the following new subparagraph:
                    ``(B) Dollar limitation for exchanges of real 
                property.--
                            ``(i) In general.--Paragraph (1) shall not 
                        apply so much of the gain which, but for such 
                        paragraph, would be recognized by the taxpayer 
                        with respect to real property exchanged during 
                        the taxable year as exceeds $1,000,000.
                            ``(ii) Special rules for partnerships and 
                        s-corporations.--In the case of a pass-through 
                        entity, clause (i) shall be applied at both the 
                        entity and at the partner or owner level.
                            ``(iii) Aggregation rules.--For purposes of 
                        this subparagraph--
                                    ``(I) Family members.--Individuals 
                                who are spouses or who bear any of the 
                                relationships described in section 
                                152(d)(2) to each other shall be 
                                treated as 1 taxpayer (without regard 
                                to whether spouses file a joint 
                                return).
                                    ``(II) Corporations and other 
                                entities.--All persons treated as a 
                                single employer under subsection (a) or 
                                (b) of section 52 or subsection (m) or 
                                (o) of section 414 shall be treated as 
                                1 person.
                            ``(iv) Adjustment for inflation.--In the 
                        case of exchanges completed in a taxable year 
                        beginning after December 31, 2016, the 
                        $1,000,000 amount in clause (i) shall be 
                        increased by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for the calendar year in which 
                                the taxable year begins, determined by 
                                substituting `calendar year 2015' for 
                                `calendar year 1992' in subparagraph 
                                (B) thereof.
                        If any amount as adjusted under the preceding 
                        sentence is not a multiple of $1,000, such 
                        amount shall be rounded to the nearest multiple 
                        of $1,000.''.
    (b) Exclusion of Art and Collectibles.--Subparagraph (A) of section 
1031(a)(2) of the Internal Revenue Code of 1986, as amended by 
subsection (a), is amended--
            (1) by striking ``or'' at the end of clause (v),
            (2) by striking the period at the end of clause (vi) and 
        inserting ``, or'', and
            (3) by inserting after clause (vi) the following new 
        clause:
                            ``(vii) any collectible (within the meaning 
                        of section 408(m), without regard to paragraph 
                        (3) thereof).''.
    (c) Regulatory Authority.--Subsection (f) of section 1031 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new paragraph:
            ``(5) Rules relating to dollar limitation.--The Secretary 
        shall prescribe such guidance as is necessary for applying 
        subsection (a)(2)(B)(i) in the case of the exchange of multiple 
        pieces of real property by related persons.''.
    (d) Conforming Amendments.--
            (1) Subsection (b) of section 1031 of the Internal Revenue 
        Code of 1986 is amended--
                    (A) by striking ``in Kind.--If an exchange'' and 
                inserting ``in Kind.--
            ``(1) In general.--If an exchange'', and
                    (B) by adding at the end the following new 
                paragraph:
            ``(2) Coordination with subsection (a)(2)(b).--In the case 
        of an exchange to which paragraph (1) applies--
                    ``(A) paragraph (1) shall be applied before the 
                application of subsection (a)(2)(B), and
                    ``(B) subsection (a)(2)(B) shall be applied--
                            ``(i) as if such exchange were within the 
                        provisions of subsection (a), and
                            ``(ii) by increasing the basis of the 
                        property disposed of by the taxpayer in such 
                        exchange by the amount of any gain determined 
                        under paragraph (1).''.
            (2) Subsection (d) of section 1031 of such Code is amended 
        by striking ``in the amount of gain'' and inserting ``in the 
        amount of gain (including any gain recognized by reason of 
        subsection (a)(2)(B)(i))''.
            (3) Subsection (i) of section 1031 of such Code is amended 
        by striking ``(a)(2)(B)'' and inserting ``(a)(2)(A)(ii)''.
    (e) Effective Date.--The amendments made by this section shall 
apply to exchanges completed in taxable years beginning after December 
31, 2015.

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 
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.
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