,i #aacth ,,congress #ast ,session ,h4 ,r4 #afad ,,in ,,the ,,house ,,of ,,representatives ,april #ah1 #bjac ,mr4 ,crawford introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to authorize agricultural producers to establish and contribute to tax-exempt farm risk management accounts4 #a4 ,short title ,this ,act may be cited as the ,farm ,risk ,abatement and ,mitigation ,election ,act of #bjac or the ,,frame ,act of #bjac4 #b4 ,farm risk management accounts 7a7 ,in general ,part ,,vii of subchapter ,b of chapter #a of the ,internal ,revenue ,code of #aihf 7relating to additional itemized deductions for individuals7 is amended by redesignating section #bbd as section #bbe and by inserting after section #bbc the following new section3 #bbd4 ,,frame accounts 7a7 ,deduction allowed ,in the case of a qualified farmer1 there shall be allowed as a deduction for the taxable year an amount equal to the aggregate amount paid in cash during such taxable year by or on behalf of such individual to a ,,frame account of such individual4 7b7 ,limitation ,the amount allowable as a deduction under subsection 7a7 shall not exceed the least of the following3 7#a7 ,the taxable income of the taxpayer for the taxable year which is attributable to farming and ranching4 7#b7 #ej1jjj4 7#c7 #ejj1jjj reduced by the aggregate contributions of the taxpayer to all ,,frame accounts of the taxpayer for all taxable years4 7c7 ,qualified farmer ,for purposes of this section1 the term qualified farmer means1 with respect to any taxable year1 any individual who1 during such year-- 7#a7 was actively engaged in the trade or business of farming or ranching1 and 7#b7 has in effect an agreement with the ,secretary of ,agriculture with respect to each ,,frame account of which the individual is an account beneficiary4 7d7 ,,frame account ,for purposes of this section-- 7#a7 ,in general ,the term ,,frame account means a trust created or organized in the ,united ,states as a ,,frame account exclusively for the purpose of making qualified distributions1 but only if the written governing instrument creating the trust meets the following requirements3 7,a7 ,no contribution will be accepted unless it is in cash4 7,b7 ,the trustee is a bank 7as defined in section #djh7n77 or another person who demonstrates to the satisfaction of the ,secretary that the manner in which such person will administer the trust will be consistent with the requirements of this section4 7,c7 ,the assets of the trust will not be commingled with other property except in a common trust fund or common investment fund4 7,d7 ,the interest of an individual in the balance in his account is nonforfeitable4 7#b7 ,qualified distribution ,the term qualified distribution means any of the following amounts paid from a ,,frame account to the account beneficiary3 7,a7 ,any distributions in a taxable year during which the gross income attributable to farm to which the ,,frame account relates is less than #ie percent of the average gross income attributable to such farm for the #e preceding taxable years1 but only so much as does not exceed such difference4 7,b7 ,any distributions to the extent such distribution does not exceed amounts necessary to protect the solvency of the farm to which the ,,frame account relates1 as determined by the ,secretary4 7,c7 ,any distributions to the extent such distributions do not exceed amounts paid or incurred to procure revenue or crop insurance with respect to the farm to which the ,,frame account relates4 7#c7 ,account beneficiary ,the term account beneficiary means the individual on whose behalf the ,,frame account was established4 7#d7 ,accounts per farm limitation ,the ,secretary of ,agriculture shall have in effect not more than #d agreements for ,,frame accounts with respect to any farm4 ,the ,secretary of ,agriculture shall by regulation prescribe rules preventing the avoidance of the preceding limitation through use of multiple entities1 related parties1 division of farms1 or de minimis ownership4 7#e7 ,other rules ,rules similar to the following rules shall apply for purposes of this section3 7,a7 ,section #bai7;d77#b7 7relating to no deduction for rollovers74 7,b7 ,section #bai7;f77#c7 7relating to time when contributions deemed made74 7,c7 ,section #djh7;g7 7relating to community property laws74 7,d7 ,section #djh7;h7 7relating to custodial accounts74 7e7 ,tax treatment of accounts 7#a7 ,in general ,a ,,frame account is exempt from taxation under this subtitle unless such account has ceased to be a ,,frame account4 ,notwithstanding the preceding sentence1 any such account is subject to the taxes imposed by section #eaa 7relating to imposition of tax on unrelated business income of charitable1 etc4 organizations74 7#b7 ,termination of accounts ,if the account beneficiary ceases to engage in the trade or business of farming or ranching-- 7,a7 all ,,frame accounts of such individual shall cease to be such accounts1 and 7,b7 the balance of all such accounts shall be treated as-- 7i7 distributed to such individual1 and 7ii7 not paid in a qualified distribution4 7f7 ,tax treatment of distributions 7#a7 ,in general ,any amount paid or distributed out of a ,,frame account 7other than a rollover contribution described in paragraph 7#d77 shall be included in gross income4 7#b7 ,additional tax on non-qualified distributions 7,a7 ,in general ,the tax imposed by this chapter on the account beneficiary for any taxable year in which there is a payment or distribution from a ,,frame account of such beneficiary which is not a qualified distribution shall be increased by #bj percent of the amount of such payment or distribution which is not a qualified distribution4 7,b7 ,exception for disability or death ,subparagraph 7,a7 shall not apply if the payment or distribution is made after the account beneficiary becomes disabled within the meaning of section #gb7m77#g7 or dies4 7#c7 ,excess contributions returned before due date of return 7,a7 ,in general ,if any excess contribution is contributed for a taxable year to a ,,frame account of an individual1 paragraph 7#b7 shall not apply to distributions from the ,,frame accounts of such individual 7to the extent such distributions do not exceed the aggregate excess contributions to all such accounts of such individual for such year7 if-- 7i7 such distribution is received by the individual on or before the last day prescribed by law 7including extensions of time7 for filing such individual's return for such taxable year1 and 7ii7 such distribution is accompanied by the amount of net income attributable to such excess contribution4 ,any net income described in clause 7ii7 shall be included in the gross income of the individual for the taxable year in which it is received4 7,b7 ,excess contribution ,for purposes of subparagraph 7,a71 the term excess contribution means any contribution 7other than a rollover contribution7 which is not deductible under this section4 7#d7 ,rollover contribution ,an amount is described in this paragraph as a rollover contribution if it meets the requirements of subparagraphs 7,a7 and 7,b74 7,a7 ,in general ,for purposes of this section1 any amount paid or distributed from a ,,frame account to the account beneficiary shall be treated as a qualified distribution to the extent the amount received is paid into a ,,frame account for the benefit of such beneficiary not later than the #fjth day after the day on which the beneficiary receives the payment or distribution4 7,b7 ,limitation ,this paragraph shall not apply to any amount described in subparagraph 7,a7 received by an individual from a ,,frame account if1 at any time during the #a-year period ending on the day of such receipt1 such individual received any other amount described in subparagraph 7,a7 from a ,,frame account which was not included in the individual's gross income because of the application of this paragraph4 7#e7 ,transfer of account incident to divorce ,the transfer of an individual's interest in a ,,frame account to an individual's spouse or former spouse under a divorce or separation instrument described in subparagraph 7,a7 of section #ga7;b77#b7 shall not be considered a taxable transfer made by such individual notwithstanding any other provision of this subtitle1 and such interest shall1 after such transfer1 be treated as a ,,frame account with respect to which such spouse is the account beneficiary4 7#f7 ,treatment after death of account beneficiary 7,a7 ,treatment in case of individual designated beneficiary ,if any individual acquires such beneficiary's interest in a ,,frame account by reason of being the designated beneficiary of such account at the death of the account beneficiary1 such ,,frame account shall be treated as if such individual were the account beneficiary4 7,b7 ,other cases 7i7 ,in general ,if1 by reason of the death of the account beneficiary1 any person acquires the account beneficiary's interest in a ,,frame account in a case to which subparagraph 7,a7 does not apply-- 7,i7 such account shall cease to be a ,,frame account as of the date of death1 and 7,,ii7 an amount equal to the fair market value of the assets in such account on such date shall be included if such person is not the estate of such beneficiary1 in such person's gross income for the taxable year which includes such date1 or if such person is the estate of such beneficiary1 in such beneficiary's gross income for the last taxable year of such beneficiary4 7ii7 ,deduction for estate taxes ,an appropriate deduction shall be allowed under section #fia7;c7 to any person 7other than the decedent or the decedent's spouse7 with respect to amounts included in gross income under clause 7i7 by such person4 7g7 ,reports ,the ,secretary may require the trustee of a ,,frame account to make such reports regarding such account to the ,secretary and to the account beneficiary with respect to contributions1 distributions1 and such other matters as the ,secretary determines appropriate4 ,the reports required by this subsection shall be filed at such time and in such manner and furnished to such individuals at such time and in such manner as may be required by the ,secretary4 4 7b7 ,deduction allowed whether or not individual itemizes other deductions ,subsection 7a7 of section #fb of such ,code is amended by inserting after paragraph 7#ba7 the following new paragraph3 7#bb7 ,,frame accounts ,the deduction allowed by section #bbd4 4 7c7 ,tax on excess contributions ,section #digc of such ,code 7relating to tax on excess contributions to certain tax-favored accounts and annuities7 is amended-- 7#a7 by striking or at the end of subsection 7a77#d71 by inserting or at the end of subsection 7a77#e71 and by inserting after subsection 7a77#e7 the following new paragraph3 7#f7 a ,,frame account 7within the meaning of section #bbd7;d771 1 and 7#b7 by adding at the end the following new subsection3 7h7 ,excess contributions to ,,frame accounts ,for purposes of this section1 in the case of ,,frame accounts 7within the meaning of section #bbd7;d771 the term excess contribution means the sum of-- 7#a7 the aggregate amount contributed for the taxable year to the accounts 7other than rollover contributions described in section #bbd7;f77#d77 which is not allowable as a deduction under section #bbd for such year1 and 7#b7 the amount determined under this subsection for the preceding taxable year1 reduced by the sum of-- 7,a7 the distributions out of the accounts with respect to which additional tax was imposed under section #bbd7;f77#b71 and 7,b7 the excess 7if any7 of-- 7i7 the maximum amount allowable as a deduction under section #bbd7;b7 for the taxable year1 over 7ii7 the amount contributed to the accounts for the taxable year4 ,for purposes of this subsection1 any contribution which is distributed out of the ,,frame account in a distribution to which section #bbd7;f77#c7 applies shall be treated as an amount not contributed4 4 7d7 ,tax on prohibited transactions 7#a7 ,section #dige7;c7 of such ,code 7relating to tax on prohibited transactions7 is amended by adding at the end the following new paragraph3 7#g7 ,special rule for ,,frame accounts ,an individual for whose benefit a ,,frame account 7within the meaning of section #bbd7;d77 is established shall be exempt from the tax imposed by this section with respect to any transaction concerning such account 7which would otherwise be taxable under this section7 if1 with respect to such transaction1 the account ceases to be a ,,frame account by reason of the application of section #bbd7;e77#b7 to such account4 4 7#b7 ,section #dige7;e77#a7 of such ,code is amended by redesignating subparagraphs 7,f7 and 7,g7 as subparagraphs 7,g7 and 7,h71 respectively1 and by inserting after subparagraph 7,e7 the following new subparagraph3 7,f7 a ,,frame account described in section #bbd7;d71 4 7e7 ,failure ,to provide reports on ,,frame accounts ,section #ffic7;a77#b7 of such ,code 7relating to reports7 is amended by redesignating subparagraphs 7,d7 and 7,e7 as subparagraphs 7,e7 and 7,f71 respectively1 and by inserting after subparagraph 7,c7 the following new subparagraph3 7,d7 section #bbd7;g7 7relating to ,,frame accounts71 4 7f7 ,clerical amendment ,the table of sections for part ,,vii of subchapter ,b of chapter #a of such ,code is amended by striking the last item and inserting the following3 ,sec4 #bbd4 ,,frame accounts4 ,sec4 #bbe4 ,cross reference4 4 7g7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 #c4 ,,frame contribution credit 7a7 ,in general ,subpart ,d of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #de,s4 ,,frame contribution credit 7a7 ,general rule ,for purposes of section #ch1 in the case of a qualified farmer 7as defined in section #bbd7;c771 the ,,frame contribution credit determined under this section for any taxable year is an amount equal to the applicable percentage of the taxpayer's contributions to any ,,frame account of the taxpayer4 7b7 ,applicable percentage ,for purposes of subsection 7a71 the applicable percentage is-- 7#a7 in the case of the taxable year during which the first ,,frame account of the taxpayer is established1 and the #bnd and #crd taxable years thereafter1 #aj percent1 7#b7 in the case of the #dth through #eth taxable years thereafter1 #e percent1 and 7#c7 in the case of the #gth through #ith taxable years thereafter1 #c4e percent4 7c7 ,limitation ,only contributions for which a deduction is allowed under section #bbd shall be taken into account under this section4 4 7b7 ,credit made part of general business credit ,subsection 7b7 of section #ch of such ,code is amended by striking plus at the end of paragraph 7#ce71 by striking the period at the end of paragraph 7#cf7 and inserting 1 plus1 and by adding at the end the following new paragraph3 7#cg7 the ,,frame contribution credit determined under section #de,s7a74 4 7c7 ,clerical amendment ,the table of sections for subpart ,d of part ,,iv of subchapter ,a of chapter #a of such ,code is amended by adding at the end the following new item3 ,sec4 #de,s4 ,,frame contribution credit4 4 7d7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4