,,ii #aac? ,,congress #b;d ,session ,s4 #bhii ,,9 ,,! ,,s5ate ,,( ,,! ,,unit$ ,,/ates ,septemb] #ah1 #bjad ,mr4 ,s&]s introduc$ ! foll[+ bill2 :i* 0 read twice & ref]r$ to ! ,committee on ,f9ance ,a ,,bill ,to am5d ! ,int]nal ,rev5ue ,code ( #aihf to re9/ate e/ate & g5]ation-skipp+ taxes1 & = o!r purposes4 #a4 ,%ort title ,?is ,act may be cit$ z ! ,responsible ,e/ate ,tax ,act4 #b4 ,modifications to e/ate1 gift1 & g5]ation-skipp+ transf] taxes 7a7 ,modification ( rates 7#a7 ,9 g5]al ,section #bjja7;c7 ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by /rik+ ! la/ #b r[s & ins]t+ ! foll[+3 ,ov] #gej1jjj b n ov] #c1ejj1jjjbdh1cjj plus #ci p]c5t ( ! excess ( su* am\nt ov] #gej1jjj4 ,ov] #c1ejj1jjj b n ov] #aj1jjj1jjj #a1cbj1hjj plus #dj p]c5t ( ! excess ( su* am\nt ov] #c1ejj1jjj4 ,ov] #aj1jjj1jjj b n ov] #ej1jjj1jjjd1bde1hjj plus #ej p]c5t ( ! excess ( su* am\nt ov] #aj1jjj1jjj4 ,ov] #ej1jjj1jjjbd1bde1hjj plus #ee p]c5t ( ! excess ( su* am\nt ov] #ej1jjj1jjj4 4 7#b7 ,surtax on weal?y e/ates ,subsection 7c7 ( section #bjaa7;c7 ( su* ,code is am5d$-- 7,a7 by ins]t+ be=e ! table ! foll[+3 7#a7 ,9 g5]al 1 & 7,b7 by add+ at ! end ! foll[+ new p>agraph3 7#b7 ,surtax on e/ates ov] #ejj1jjj1jjj ,not)/&+ p>agraph 7#a71 if ! am\nt ) respect to :i* ! t5tative tax to be comput$ is ov] #ejj1jjj1jjj1 ! rate ( tax o!rwise 9 effect "u ?is subsection ) respect to ! am\nt 9 excess ( #ejj1jjj1jjj %all be increas$ by #aj p]c5t4 4 7b7 ,exclusion am\nt 7#a7 ,e/ate tax ,p>agraph 7#c7 ( section #bjaj7;c7 ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ to read z foll[s3 7#c7 ,basic exclusion am\nt ,= purposes ( ?is section1 ! basic exclusion am\nt is #c1ejj1jjj4 4 7#b7 ,modification to gift tax exclusion am\nt ,p>agraph 7#a7 ( section #beje7;a7 ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ to read z foll[s3 7#a7 ! applicable cr$it am\nt 9 effect "u section #bjaj7;c7 = su* cal5d> ye> 7det]m9$ z if ! basic exclusion am\nt 9 section #bjaj7;c77#b77;,a7 7 #a1jjj1jjj71 r$uc$ by 4 7#c7 ,modifications ( e/ate & gift taxes to reflect diff]5ces 9 cr$it result+ f diff]5t exclusion am\nts 7,a7 ,e/ate tax adju/m5t ,section #bjja ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by add+ at ! end ! foll[+ new subsection3 7h7 ,adju/m5t ,to reflect *anges 9 exclusion am\nt 7#a7 ,9 g5]al ,if1 ) respect to any gift to :i* subsection 7b77#b7 applies1 ! applicable exclusion am\nt 9 effect at ! "t ( ! dec$5t's dea? is less ?an su* am\nt 9 effect at ! "t su* gift is made by ! dec$5t1 ! am\nt ( tax comput$ "u subsection 7b7 %all be r$uc$ by ! am\nt ( tax :i* w\ld h be5 payable "u *apt] #ab at ! "t ( ! gift if ! applicable exclusion am\nt 9 effect at su* "t _h be5 ! applicable exclusion am\nt 9 effect at ! "t ( ! dec$5t's dea? & ! modifications describ$ 9 subsection 7g7 _h be5 applicable at ! "t ( su* gifts4 7#b7 ,limitation ,! aggregate am\nt ( gifts made 9 any cal5d> ye> to :i* ! r$uction "u p>agraph 7#a7 applies %all n exce$ ! excess (-- 7,a7 ! applicable exclusion am\nt 9 effect = su* cal5d> ye>1 ov] 7,b7 ! applicable exclusion am\nt 9 effect at ! "t ( ! dec$5t's dea?4 7#c7 ,applicable exclusion am\nt ,! t]m applicable exclusion am\nt means1 ) respect to any p]iod1 ! am\nt det]m9$ "u section #bjaj7;c7 = su* p]iod1 except t 9 ! case ( any p]iod = :i* su* am\nt includes ! deceas$ sp\sal unus$ exclusion am\nt 7z def9$ 9 section #bjaj7;c77#d771 su* t]m %all mean ! basic exclusion am\nt 7z def9$ "u section #bjaj7;c77#c71 z 9 effect = su* p]iod74 4 7,b7 ,gift tax adju/m5t ,section #bejb ( su* ,code is am5d$ by add+ at ! end ! foll[+ new subsection3 7d7 ,adju/m5t ,to reflect *anges 9 exclusion am\nt 7#a7 ,9 g5]al ,if ! taxpay] made a taxable gift 9 an applicable prec$+ cal5d> p]iod1 ! am\nt ( tax comput$ "u subsection 7a7 %all be r$uc$ by ! am\nt ( tax :i* w\ld h be5 payable "u *apt] #ab = su* applicable prec$+ cal5d> p]iod if ! applicable exclusion am\nt 9 effect = su* prec$+ cal5d> p]iod _h be5 ! applicable exclusion am\nt 9 effect = ! cal5d> ye> = :i* ! tax is be+ comput$ & ! modifications describ$ 9 subsection 7g7 _h be5 applicable = su* prec$+ cal5d> p]iod4 7#b7 ,limitation ,! aggregate am\nt ( gifts made 9 any applicable prec$+ cal5d> p]iod to :i* ! r$uction "u p>agraph 7#a7 applies %all n exce$ ! excess (-- 7,a7 ! applicable exclusion am\nt = su* prec$+ cal5d> p]iod1 ov] 7,b7 ! applicable exclusion am\nt = ! cal5d> ye> = :i* ! tax is be+ comput$4 7#c7 ,applicable prec$+ cal5d> ye> p]iod ,! t]m applicable prec$+ cal5d> ye> p]iod means any prec$+ cal5d> ye> p]iod 9 :i* ! applicable exclusion am\nt exce$$ ! applicable exclusion am\nt = ! cal5d> ye> = :i* ! tax is be+ comput$4 7#d7 ,applicable exclusion am\nt ,! t]m applicable exclusion am\nt means1 ) respect to any p]iod1 ! am\nt det]m9$ "u section #bjaj7;c7 = su* p]iod1 except t 9 ! case ( any p]iod = :i* su* am\nt includes ! deceas$ sp\sal unus$ exclusion am\nt 7z def9$ 9 section #bjaj7;c77#d771 su* t]m %all mean ! basic exclusion am\nt 7z def9$ "u section #bjaj7;c77#c71 z 9 effect = su* p]iod74 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to e/ates ( dec$5ts dy+1 & g5]ation-skipp+ transf]s & gifts made1 aft] ,decemb] #ca1 #bjad4 #c4 ,modification ( rules = value ( c]ta9 f>m1 etc41 real prop]ty 7a7 ,9 g5]al ,p>agraph 7#b7 ( section #bjcb;,a7a7 ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by /rik+ #gej1jjj & ins]t+ #c1jjj1jjj4 7b7 ,inflation adju/m5t ,p>agraph 7#c7 ( section #bjcb;,a7a7 ( su* ,code is am5d$-- 7#a7 by /rik+ #aiih & ins]t+ #bjad1 7#b7 by /rik+ #gej1jjj & ins]t+ #c1jjj1jjj 9 subp>agraph 7,a71 & 7#c7 by /rik+ cal5d> ye> #aiig & ins]t+ cal5d> ye> #bjac 9 subp>agraph 7,b74 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to e/ates ( dec$5ts dy+1 & gifts made1 aft] ,decemb] #ca1 #bjad4 #d4 ,modification ( e/ate tax rules ) respect to l& subject to cons]vation easem5ts 7a7 ,modification ( exclusion limitation ,! table 9 p>agraph 7#c7 ( section #bjca7;c7 ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$-- 7#a7 by /rik+ or !reaft] 9 ! la/ r[ & ins]t+ ?r\gh #bjad1 & 7#b7 by add+ at ! end ! foll[+ r[3 #bjae & !reaft]#b1jjj1jjj 4 7b7 ,modification ( applicable p]c5tage ,p>agraph 7#b7 ( section #bjca7;c7 ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by /rik+ #dj p]c5t & ins]t+ #fj p]c5t4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to e/ates ( dec$5ts dy+1 & gifts made1 aft] ,decemb] #ca1 #bjad4 #e4 ,consi/5t basis report+ betwe5 e/ate & p]son acquir+ prop]ty f dec$5t 7a7 ,consi/5t use ( basis 7#a7 ,prop]ty acquir$ f a dec$5t ,section #ajad ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by add+ at ! end ! foll[+ new subsection3 7f7 ,basis mu/ be consi/5t ) e/ate tax return 7#a7 ,9 g5]al ,= purposes ( ?is section1 ! value us$ to det]m9e ! basis ( any int]e/ 9 prop]ty 9 ! h&s ( ! p]son acquir+ su* prop]ty %all n exce$ ! value ( su* int]e/ z f9ally det]m9$ = purposes ( *apt] #aa4 7#b7 ,special rule :]e no f9al det]m9ation ,9 any case 9 :i* ! f9al value ( prop]ty has n be5 det]m9$ "u *apt] #aa & !re has be5 a /atem5t furni%$ "u section #fjce7;a71 ! value us$ to det]m9e ! basis ( any int]e/ 9 prop]ty 9 ! h&s ( ! p]son acquir+ su* prop]ty %all n exce$ ! am\nt report$ on any /atem5t furni%$ "u section #fjce7;a74 7#c7 ,regulations ,! ,secret>y may by regulations provide exceptions to ! application ( ?is subsection4 4 7#b7 ,prop]ty acquir$ by gifts & transf]s 9 tru/ ,section #ajae ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by add+ at ! end ! foll[+ new subsection3 7f7 ,basis mu/ be consi/5t gift tax return 7#a7 ,9 g5]al ,= purposes ( ?is section1 ! value us$ to det]m9e ! basis ( any int]e/ 9 prop]ty 9 ! h&s ( ! p]son acquir+ su* prop]ty %all n exce$ ! value ( su* int]e/ z f9ally det]m9$ = purposes ( *apt] #ab4 7#b7 ,special rule :]e no f9al det]m9ation ,9 any case 9 :i* ! f9al value ( prop]ty has n be5 det]m9$ "u *apt] #ab & !re has be5 a /atem5t furni%$ "u section #fjce7;b71 ! value us$ to det]m9e ! basis ( any int]e/ 9 prop]ty 9 ! h&s ( ! p]son acquir+ su* prop]ty %all n exce$ ! am\nt report$ on any /atem5t furni%$ "u section #fjce7;b74 7#c7 ,regulations ,! ,secret>y may by regulations provide exceptions to ! application ( ?is subsection4 4 7b7 ,in=mation report+ 7#a7 ,9 g5]al ,subp>t ,a ( "p ,,iii ( sub*apt] ,a ( *apt] #fa ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by ins]t+ aft] section #fjcd;,a ! foll[+ new section3 #fjce4 ,basis in=mation to p]sons acquir+ prop]ty f dec$5t or by gift 7a7 ,in=mation ) respect to prop]ty acquir$ f dec$5ts 7#a7 ,9 g5]al ,! executor ( any e/ate requir$ to file a return "u section #fjah7;a7 %all furni% to ! ,secret>y & to ea* p]son acquir+ any int]e/ 9 prop]ty includ$ 9 ! dec$5t's gross e/ate = ,f$]al e/ate tax purposes a /atem5t id5tify+ ! value ( ea* int]e/ 9 su* prop]ty z report$ on su* return & su* o!r in=mation ) respect to su* int]e/ z ! ,secret>y may prescribe4 7#b7 ,/atem5ts by b5efici>ies ,ea* p]son requir$ to file a return "u section #fjah7;b7 %all furni% to ! ,secret>y & to ea* o!r p]son :o holds a legal or b5eficial int]e/ 9 ! prop]ty to :i* su* return relates a /atem5t id5tify+ ! in=mation describ$ 9 p>agraph 7#a74 7#c7 ,"t = furni%+ /atem5t 7,a7 ,9 g5]al ,ea* /atem5t requir$ to be furni%$ "u p>agraph 7#a7 or 7#b7 %all be furni%$ at su* "t z ! ,secret>y may prescribe1 b 9 no case at a "t lat] ?an ! e>li] (-- 7i7 ! date :i* is #cj days aft] ! date on :i* ! return "u section #fjah 0 requir$ to be fil$ 7includ+ ext5sions1 if any71 or 7ii7 ! date :i* is #cj days aft] ! date su* return is fil$4 7,b7 ,adju/m5ts ,9 any case 9 :i* !re is an adju/m5t to ! in=mation requir$ to be includ$ on a /atem5t fil$ "u p>agraph 7#a7 or 7#b7 aft] su* /atem5t has be5 fil$1 a supplem5tal /atem5t "u su* p>agraph %all be fil$ n lat] ?an ! date :i* is #cj days aft] su* adju/m5t is made4 7b7 ,in=mation ) respect to prop]ty acquir$ by gift 7#a7 ,9 g5]al ,ea* p]son mak+ a transf] by gift :o is requir$ to file a return "u section #fjai ) respect to su* transf] %all furni% to ! ,secret>y & to ea* p]son acquir+ any int]e/ 9 prop]ty by reason ( su* transf] a /atem5t id5tify+ ! value ( ea* int]e/ 9 su* prop]ty z report$ on su* return & su* o!r in=mation ) respect to su* int]e/ z ! ,secret>y may prescribe4 7#b7 ,"t = furni%+ /atem5t 7,a7 ,9 g5]al ,ea* /atem5t requir$ to be furni%$ "u p>agraph 7#a7 %all be furni%$ at su* "t z ! ,secret>y may prescribe1 b 9 no case at a "t lat] ?an ! e>li] (-- 7i7 ! date :i* is #cj days aft] ! date on :i* ! return "u section #fjai 0 requir$ to be fil$ 7includ+ ext5sions1 if any71 or 7ii7 ! date :i* is #cj days aft] ! date su* return is fil$4 7,b7 ,adju/m5ts ,9 any case 9 :i* !re is an adju/m5t to ! in=mation requir$ to be includ$ on a /atem5t fil$ "u p>agraph 7#a7 aft] su* /atem5t has be5 fil$1 a supplem5tal /atem5t "u su* p>agraph %all be fil$ n lat] ?an ! date :i* is #cj days aft] su* adju/m5t is made4 7c7 ,regulations ,! ,secret>y %all prescribe su* regulations z necess>y to c>ry out ?is section1 includ+ regulations relat+ to-- 7#a7 ! application ( ?is section to prop]ty ) reg>d to :i* no e/ate or gift tax return is requir$ to be fil$1 & 7#b7 situations 9 :i* ! surviv+ jo9t t5ant or o!r recipi5t may h bett] in=mation ?an ! executor reg>d+ ! basis or fair m>ket value ( ! prop]ty4 4 7#b7 ,p5alty = failure to file 7,a7 ,return ,section #fgbd7;d77#a7 ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by /rik+ & at ! end ( subp>agraph 7,b71 by /rik+ ! p]iod at ! end ( subp>agraph 7,c7 & ins]t+ 1 &1 & by ins]t+ aft] subp>agraph 7,c7 ! foll[+ new subp>agraph3 7,d7 any /atem5t requir$ to be fil$ ) ! ,secret>y "u section #fjce4 4 7,b7 ,/atem5t ,section #fgbd7;d77#b7 ( su* ,code is am5d$ by /rik+ or at ! end ( subp>agraph 7,,gg71 by /rik+ ! p]iod at ! end ( subp>agraph 7,,hh7 & ins]t+ 1 or1 & by ins]t+ aft] subp>agraph 7,,hh7 ! foll[+ new subp>agraph3 7,,ii7 section #fjce 7o!r ?an a /atem5t describ$ 9 p>agraph 7#a77;,d774 4 7#c7 ,cl]ical am5dm5t ,! table ( sections = subp>t ,a ( "p ,,iii ( sub*apt] ,a ( *apt] #fa ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by ins]t+ aft] ! item relat+ to section #fjcd;,a ! foll[+ new item3 ,sec4 #fjce4 ,basis in=mation to p]sons acquir+ prop]ty f dec$5t or by gift4 4 7c7 ,p5alty = inconsi/5t report+ 7#a7 ,9 g5]al ,subsection 7b7 ( section #fffb ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by ins]t+ aft] p>agraph 7#g7 ! foll[+ new p>agraph3 7#h7 ,any inconsi/5t e/ate or gift basis4 4 7#b7 ,inconsi/5t basis report+ ,section #fffb ( su* ,code is am5d$ by add+ at ! end ! foll[+ new subsection3 7k7 ,inconsi/5t e/ate or gift basis report+ ,= purposes ( ?is section1 ! t]m inconsi/5t e/ate or gift basis means ! portion ( ! und]/atem5t :i* is attributable to-- 7#a7 9 ! case ( prop]ty acquir$ f a dec$5t1 a basis det]m9ation ) respect to su* prop]ty :i* is n consi/5t ) ! value ( su* prop]ty z det]m9$ "u section #ajad7;f71 & 7#b7 9 ! case ( prop]ty acquir$ by gift1 a basis det]m9ation ) respect to su* prop]ty :i* is n consi/5t ) ! value ( su* prop]ty z det]m9$ "u section #ajae7;f74 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to transf]s = :i* returns are fil$ aft] ! date ( ! enactm5t ( ?is ,act4 #f4 ,valuation rules = c]ta9 transf]s ( nonbus9ess assets2 limitation on m9ority disc\nts 7a7 ,9 g5]al ,section #bjca ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by r$esignat+ subsection 7d7 z subsection 7f7 & by ins]t+ aft] subsection 7c7 ! foll[+ new subsections3 7d7 ,valuation rules = c]ta9 transf]s ( nonbus9ess assets ,= purposes ( ?is *apt] & *apt] #ab-- 7#a7 ,9 g5]al ,9 ! case ( ! transf] ( any int]e/ 9 an entity o!r ?an an int]e/ :i* is actively trad$ 7)9 ! mean+ ( section #ajib7-- 7,a7 ! value ( any nonbus9ess assets held by ! entity ) respect to su* int]e/ %all be det]m9$ z if ! transf]or _h transf]r$ su* assets directly to ! transf]ee 7& no valuation disc\nt %all be all[$ ) respect to su* nonbus9ess assets71 & 7,b7 su* nonbus9ess assets %all n be tak5 into acc\nt 9 det]m9+ ! value ( ! int]e/ 9 ! entity4 7#b7 ,nonbus9ess assets ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m nonbus9ess asset means any asset :i* is n us$ 9 ! active conduct ( #a or m trades or bus9esses4 7,b7 ,exception = c]ta9 passive assets ,except z provid$ 9 subp>agraph 7,c71 a passive asset %all n be treat$ = purposes ( subp>agraph 7,a7 z us$ 9 ! active conduct ( a trade or bus9ess unless-- 7i7 ! asset is prop]ty describ$ 9 p>agraph 7#a7 or 7#d7 ( section #abba7;a7 or is a h$ge ) respect to su* prop]ty1 or 7ii7 ! asset is real prop]ty us$ 9 ! active conduct ( #a or m real prop]ty trades or bus9esses 7)9 ! mean+ ( section #dfi7;c77#g77;,c77 9 :i* ! transf]or mat]ially p>ticipates & ) respect to :i* ! transf]or meets ! requirem5ts ( section #dfi7;c77#g77;,b77ii74 ,= purposes ( clause 7ii71 mat]ial p>ticipation %all be det]m9$ "u ! rules ( section #dfi7;h71 except t section #dfi7;h77#c7 %all be appli$ )\t reg>d to ! limitation to f>m+ activity4 7,c7 ,exception = work+ capital ,any asset 7includ+ a passive asset7 :i* is held z a "p ( ! reasonably requir$ work+ capital ne$s ( a trade or bus9ess %all be treat$ z us$ 9 ! active conduct ( a trade or bus9ess4 7#c7 ,passive asset ,= purposes ( ?is subsection1 ! t]m passive asset means any-- 7,a7 ca% or ca% equival5ts1 7,b7 except to ! ext5t provid$ by ! ,secret>y1 /ock 9 a corporation or any o!r equity1 pr(its1 or capital int]e/ 9 any entity1 7,c7 evid5ce ( indebt$ness1 option1 =w>d or futures contract1 notional pr9cipal contract1 or d]ivative1 7,d7 asset describ$ 9 clause 7iii71 7iv71 or 7v7 ( section #cea7;e77#a77;,b71 7,e7 annuity1 7,f7 real prop]ty us$ 9 #a or m real prop]ty trades or bus9esses 7z def9$ 9 section #dfi7;c77#g77;,c771 7,g7 asset 7o!r ?an a pat5t1 tradem>k1 or copyright7 :i* produces royalty income1 7,h7 commodity1 7,i7 collectible 7)9 ! mean+ ( section #dja7m771 or 7,j7 any o!r asset specifi$ 9 regulations prescrib$ by ! ,secret>y4 7#d7 ,look-?ru rules 7,a7 ,9 g5]al ,if a nonbus9ess asset ( an entity consi/s ( a #aj-p]c5t int]e/ 9 any o!r entity1 ?is subsection %all be appli$ by disreg>d+ ! #aj-p]c5t int]e/ & by treat+ ! entity z hold+ directly its ratable %>e ( ! assets ( ! o!r entity4 ,?is subp>agraph %all be appli$ successively to any #aj-p]c5t int]e/ ( su* o!r entity 9 any o!r entity4 7,b7 #aj-p]c5t int]e/ ,! t]m #aj-p]c5t int]e/ means-- 7i7 9 ! case ( an int]e/ 9 a corporation1 own]%ip ( at lea/ #aj p]c5t 7by vote or value7 ( ! /ock 9 su* corporation1 7ii7 9 ! case ( an int]e/ 9 a p>tn]%ip1 own]%ip ( at lea/ #aj p]c5t ( ! capital or pr(its int]e/ 9 ! p>tn]%ip1 & 7iii7 9 any o!r case1 own]%ip ( at lea/ #aj p]c5t ( ! b5eficial int]e/s 9 ! entity4 7#e7 ,coord9ation ) subsection 7b7 ,subsection 7b7 %all apply aft] ! application ( ?is subsection4 7e7 ,limitation on m9ority disc\nts ,= purposes ( ?is *apt] & *apt] #ab1 9 ! case ( ! transf] ( any int]e/ 9 an entity o!r ?an an int]e/ :i* is actively trad$ 7)9 ! mean+ ( section #ajib71 no disc\nt %all be all[$ by reason ( ! fact t ! transf]ee does n h control ( su* entity if ! transf]or1 ! transf]ee1 & memb]s ( ! family 7z def9$ 9 section #bjcb;,a7e77#b77 ( ! transf]or & transf]ee-- 7#a7 h control ( su* entity1 or 7#b7 own ! majority ( ! own]%ip int]e/s 7by value7 9 su* entity4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to transf]s aft] ! date ( ! enactm5t ( ?is ,act4 #g4 ,requir$ m9imum #aj-ye> t]m1 etc41 = grantor reta9$ annuity tru/s 7a7 ,9 g5]al ,subsection 7b7 ( section #bgjb ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$-- 7#a7 by r$esignat+ p>agraphs 7#a71 7#b71 & 7#c7 z subp>agraphs 7,a71 7,b71 & 7,c71 respectively1 & by mov+ su* subp>agraphs 7z s r$esignat$7 #b ems to ! "r2 7#b7 by /rik+ ,= purposes ( & ins]t+ ! foll[+3 7#a7 ,9 g5]al ,= purposes ( 2 7#c7 by /rik+ p>agraph 7#a7 or 7#b7 9 p>agraph 7#a77;,c7 7z s r$esignat$7 & ins]t+ subp>agraph 7,a7 or 7,b72 & 7#d7 by add+ at ! end ! foll[+ new p>agraph3 7#b7 ,additional requirem5ts ) respect to grantor reta9$ annuities ,= purposes ( subsection 7a71 9 ! case ( an int]e/ describ$ 9 p>agraph 7#a77;,a7 7det]m9$ )\t reg>d to ?is p>agraph7 :i* is reta9$ by ! transf]or1 su* int]e/ %all be treat$ z describ$ 9 su* p>agraph only if-- 7,a7 ! "r to receive ! fix$ am\nts ref]r$ to 9 su* p>agraph is = a t]m ( n less ?an #aj ye>s1 7,b7 su* fix$ am\nts1 :5 det]m9$ on an annual basis1 d n decrease relative to any prior ye> dur+ ! fir/ #aj ye>s ( ! t]m ref]r$ to 9 subp>agraph 7,a71 & 7,c7 ! rema9d] int]e/ has a value equal to or great] ?an #aj p]c5t ( ! value ( ! assets transf]r$ to ! tru/1 det]m9$ z ( ! "t ( ! transf]4 4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to transf]s made aft] ! date ( ! enactm5t ( ?is ,act4 #h4 ,c]ta9 transf] tax rules applicable to grantor tru/s 7a7 ,9 g5]al ,subtitle ,b ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by add+ at ! end ! foll[+ new *apt]3 #af ,special rules = grantor tru/s ,sec4 #bija4 ,application ( transf] taxes4 #bija4 ,application ( transf] taxes 7a7 ,9 g5]al ,9 ! case ( any portion ( a tru/ to :i* ?is section applies-- 7#a7 ! value ( ! gross e/ate ( ! deceas$ deem$ own] ( su* portion %all include all assets attributable to t portion at ! "t ( ! dea? ( su* own]1 7#b7 any di/ribution f su* portion to "o or m b5efici>ies dur+ ! life ( ! deem$ own] ( su* portion %all be treat$ z a transf] by gift = purposes ( *apt] #ab1 & 7#c7 if at any "t dur+ ! life ( ! deem$ own] ( su* portion1 su* own] ceases to be treat$ z ! own] ( su* portion "u subp>t ,e ( "p #a ( sub*apt] ,j ( *apt] #a1 all assets attributable to su* portion at su* "t %all be treat$ = purposes ( *apt] #ab z a transf] by gift made by ! deem$ own]4 7b7 ,portion ( tru/ to :i* section applies ,?is section %all apply to-- 7#a7 ! portion ( a tru/ ) respect to :i* ! grantor is ! deem$ own]1 & 7#b7 ! portion ( ! tru/ to :i* a p]son :o is n ! grantor is a deem$ own] by reason ( ! rules ( subp>t ,e ( "p #a ( sub*apt] ,j ( *apt] #a1 & su* deem$ own] engages 9 a sale1 ex*ange1 or comp>able transaction ) ! tru/ t is disreg>d$ = purposes ( subtitle ,a4 ,= purposes ( p>agraph 7#b71 ! portion ( ! tru/ describ$ ) respect to a transaction is ! portion ( ! tru/ attributable to ! prop]ty receiv$ by ! tru/ 9 su* transaction1 includ+ all reta9$ income !refrom1 appreciation !reon1 & re9ve/m5ts !re(1 net ( ! am\nt ( consid]ation receiv$ by ! deem$ own] 9 su* transaction4 7c7 ,exceptions ,?is section %all n apply to-- 7#a7 any tru/ t is includible 9 ! gross e/ate ( ! deem$ own] 7)\t reg>d to subsection 7a77#a771 & 7#b7 any o!r type ( tru/ t ! ,secret>y det]m9es by regulations or o!r guidance does n h z a significant purpose ! avoidance ( transf] taxes4 7d7 ,deem$ own] def9$ ,= purposes ( ?is section1 ! t]m deem$ own] means any p]son :o is treat$ z ! own] ( a portion ( a tru/ "u subp>t ,e ( "p #a ( sub*apt] ,j ( *apt] #a4 7e7 ,r$uction = taxable gifts to tru/ made by own] ,! am\nt to :i* subsection 7a7 applies %all be r$uc$ by ! value ( any transf] by gift by ! deem$ own] to ! tru/ previ\sly tak5 into acc\nt by ! deem$ own] "u *apt] #ab4 7f7 ,liability = paym5t ( tax ,any tax impos$ pursuant to subsection 7a7 %all be a liability ( ! tru/4 4 7b7 ,cl]ical am5dm5t ,! table ( *apt]s = subtitle ,b ( su* ,code is am5d$ by add+ at ! end ! foll[+ new item3 ,*apt] #af4 special rules = grantor tru/s 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply-- 7#a7 to tru/s creat$ on or aft] ! date ( ! enactm5t ( ?is ,act1 7#b7 to any portion ( a tru/ e/abli%$ be=e ! date ( ! enactm5t ( ?is ,act :i* is attributable to a contribution made on or aft] su* date1 & 7#c7 to any portion ( a tru/ e/abli%$ be=e ! date ( ! enactm5t ( ?is ,act to :i* section #bija7;a7 ( ! ,int]nal ,rev5ue ,code ( #aihf 7z add$ by subsection 7a77 applies by reason ( a transaction describ$ 9 section #bija7;b77#b7 ( su* ,code on or aft] su* date4