,,ii  #aag? ,,congress  #a/ ,session    
,s4 #iid  ,,9 ,,! ,,s5ate ,,( ,,!       
,,unit$ ,,/ates  ,m>* #be1 #bjba,mr4    
,s&]s 7= himself1 ,mrs4 ,gillibr&1 ,mr4 
,:iteh\se1 ,mr4 ,van ,holl51 & ,mr4     
,re$7 introduc$ ! 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 ! ,= ! #ii4e ,p]c5t ,act4    
#b4 ,modifications to e/ate1 gift1 &    
g5]ation-skipp+ transf] taxes  7a7      
,modification ( rates ,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 #de 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] #ej1jjj1jjj b n   
ov] #a1jjj1jjj1jjjbd1bde1hjj plus #ee   
p]c5t ( ! excess ( su* am\nt ov]        
#ej1jjj1jjj4,ov]                        
#a1jjj1jjj1jjjedf1gde1hjj plus #fe p]c5t
 ( ! excess ( su* am\nt ov]             
#a1jjj1jjj1jjj4 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  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 #bjba4  #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+ #bjbb1  7#b7 by 
/rik+ #gej1jjj ea* place x appe>s &     
ins]t+ #c1jjj1jjj1 &  7#c7 by /rik+     
cal5d> ye> #aiig & ins]t+ cal5d> ye>    
#bjba 9 subp>agraph 7,b74  7c7          
,effective date ,! am5dm5ts made by ?is 
section %all apply to e/ates ( dec$5ts  
dy+1 & gifts made1 aft] ,decemb] #ca1   
#bjba4  #d4 ,modification ( e/ate tax   
rules ) respect to l& subject to        
cons]vation easem5ts  7a7 ,modification 
( exclusion limitation ,subp>agraph 7,b7
 ( section #bjca7;c77#a7 ( ! ,int]nal   
,rev5ue ,code ( #aihf is am5d$ by /rik+ 
#ejj1jjj & ins]t+ #b1jjj1jjj4  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$5ts dy+1 & gifts made1 aft] ,decemb]
 #ca1 #bjba4  #e4 ,disall[ance ( /ep-up 
9 basis = prop]ty held 9 c]ta9 grantor  
tru/s  7a7 ,9 g5]al ,section #ajad ( !  
,int]nal ,rev5ue ,code ( #aihf is       
am5d$-- 7#a7 by r$esignat+ subsection   
7f7 z subsection 7g71 &  7#b7 by ins]t+ 
aft] subsection 7e7 ! foll[+3  7f7      
,prop]ty held 9 c]ta9 grantor tru/s ,?is
 section %all n apply to prop]ty-- 7#a7 
held 9 a tru/ ( :i* ! transf]or is      
consid]$ ! own] "u subp>t ,e ( "p ,i (  
sub*apt] ,j1 &  7#b7 if1 aft] ! transf] 
( su* prop]ty to ! tru/1 su* prop]ty is 
n includible 9 ! gross e/ate ( !        
transf]or = purposes ( *apt] #aa4  4    
7b7 ,con=m+ am5dm5t ,section #fffb7k7 ( 
! ,int]nal ,rev5ue ,code ( #aihf is     
am5d$ by /rik+ #ajad7;f7 & ins]t+       
#ajad7;g74  7c7 ,effective date ,!      
am5dm5ts made by ?is section %all apply 

to transf]s 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       
#djh7m771 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*   
entity1 or by reason ( ! lack (         
m>ketability ( ! int]e/1 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>s & n m ?an ! life      
expectancy ( ! annuitant plus #aj ye>s1 
7,b7 su* fix$ am\nts1 :5 det]m9$ on an  
annual basis1 d n decrease dur+ ! t]m   
describ$ 9 subp>agraph 7,a71 &  7,c7 !  
rema9d] int]e/ has a value1 z det]m9$ z 
( ! "t ( ! transf]1 :i* is-- 7i7 n less 
?an an am\nt equal to ! great] (-- 7,i7 
#be p]c5t ( ! fair m>ket value ( !      
prop]ty 9 ! tru/1 or  7,,ii7 #ejj1jjj1 &
  7ii7 n great] ?an ! fair m>ket value (
 ! prop]ty 9 ! tru/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 any tru/ t is   
includible 9 ! gross e/ate ( ! deem$    
own] 7)\t reg>d to subsection 7a77#a774 

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  #i4 ,elim9ation (               
g5]ation-skipp+ transf] tax exemption = 
c]ta9 tru/s  7a7 ,9 g5]al ,section #bfdb
 ( ! ,int]nal ,rev5ue ,code ( #aihf is  
am5d$ by add+ at ! end ! foll[+ new     
subsection3  7h7 ,elim9ation ( ,,g/     
exemption = c]ta9 tru/s  7#a7 ,9 g5]al  
7,a7 ,transf]s f non-qualify+ tru/s ,9 !
 case ( any g5]ation-skipp+ transf] made
 f a tru/ t is n a qualify+ tru/1 !     
inclusion ratio ) respect to any prop]ty
 transf]r$ 9 su* transf] %all be #a4    
7,b7 ,qualify+ tru/ ,= purposes ( ?is   
subsection1 ! t]m qualify+ tru/ means a 
tru/ = :i* ! date ( t]m9ation ( su* tru/
 is n great] ?an #ej ye>s aft] ! date on
 :i* su* tru/ is creat$4  7#b7 ,tru/s   
creat$ be=e date ( enactm5t ,9 ! case ( 
any tru/ creat$ be=e ! date ( ! enactm5t

 ( ?is subsection1 su* tru/ %all be     
deem$ to be a qualify+ tru/ = a p]iod ( 
#ej ye>s aft] ! date ( ! enactm5t ( ?is 
subsection4  7#c7 ,date ( creation (    
c]ta9 deem$ sep>ate tru/s ,9 ! case (   
any portion ( a tru/ :i* is treat$ z a  
sep>ate tru/ "u section #bfed7;b77#a71  
su* sep>ate tru/ %all be treat$ z creat$
 on ! date ( ! fir/ transf] describ$ 9  
su* section ) respect to su* sep>ate    
tru/4  7#d7 ,date ( creation ( p\r-ov]  
tru/s ,9 ! case ( any g5]ation-skipp+   
transf] ( prop]ty :i* involves ! transf]
 ( prop]ty f #a tru/ to ano!r tru/1 !   
date ( ! creation ( ! transf]ee tru/    
%all be treat$ z be+ ! e>li] (-- 7,a7 ! 
date ( ! creation ( su* transf]ee tru/1 
or  7,b7 ! date ( ! creation ( !        
transf]or tru/4  ,9 ! case ( multiple   
transf]s to :i* ! prec$+ s5t5ce applies1
 ! date ( ! creation ( ! transf]or tru/ 
%all be det]m9$ "u ! prec$+ s5t5ce be=e 
! application ( ! prec$+ s5t5ce to      
det]m9e ! date ( ! creation ( !         
transf]ee tru/4  7#e7 ,regulations ,!   

,secret>y may prescribe su* regulations 
or o!r guidance z may be necess>y or    
appropriate to c>ry out ?is subsection4 
4  7b7 ,effective date ,! am5dm5ts made 
by ?is section %all take effect on !    
date ( ! enactm5t ( ?is ,act4  #aj4     
,simplify+ gift tax exclusion = annual  
gifts  7a7 ,9 g5]al ,p>agraph 7#a7 (    
section #bejc7;b7 ( ! ,int]nal ,rev5ue  
,code ( #aihf is am5d$ to read z foll[s3
  7#a7 ,9 g5]al  7,a7 ,limit p] donee ,9
 ! case ( gifts made to any p]son by !  
donor dur+ ! cal5d> ye>1 ! fir/ #aj1jjj 
( su* gifts to su* p]son %all n1 =      
purposes ( subsection 7a71 be includ$ 9 
! total am\nt ( gifts made dur+ su* ye>4
  7,b7 ,cumulative limit p] donor  7i7  
,9 g5]al ,! aggregate am\nt exclud$ "u  
subp>agraph 7,a7 ) respect to all       
transf]s describ$ 9 clause 7ii7 made by 
! donor dur+ ! cal5d> ye> %all n exce$  
twice ! doll> am\nt 9 effect "u su*     
subp>agraph = su* cal5d> ye>4  7ii7     
,transf]s subject to limitation ,!      
transf]s describ$ 9 ?is clause are--    

7,i7 a transf] 9 tru/1  7,,ii7 a transf]
 ( an int]e/ 9 a pas/hr\gh entity1      
7,,iii7 a transf] ( an int]e/ subject to
 a prohibition on sale1 &  7,,iv7 any   
o!r transf] ( prop]ty t1 )\t reg>d to   
)drawal1 put1 or o!r su* rights 9 !     
donee1 _c imm$iately be liquidat$ by !  
donee4  4  7b7 ,con=m+ am5dm5t ,section 
#bejc ( ! ,int]nal ,rev5ue ,code ( #aihf
 is am5d$ by /rik+ subsection 7c74  7c7 
,regulations ,! ,secret>y ( ! ,treasury1
 or ! ,secret>y ( ! ,treasury's         
delegate1 may prescribe su* regulations 
or o!r guidance z may be necess>y or    
appropriate to c>ry out ! am5dm5ts made 
by ?is section4  7d7 ,effective date ,! 
am5dm5ts made by ?is section %all apply 
to any cal5d> ye> beg9n+ aft] ! date ( !
 enactm5t ( ?is ,act4