,,ii #aahth ,,congress #b;d ,session ,s4 #cihh ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,march #bj1 #bjbd,mr4 ,wyden 7for himself and ,mr4 ,king7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to modify rules for grantor trusts4 #a4 ,short title ,this ,act may be cited as the ,getting ,rid of ,abusive ,trust ,schemes ,act or the ,,grats ,act4 #b4 ,required minimum #ae-year term1 etc41 for grantor retained annuity trusts 7a7 ,in general ,subsection 7b7 of section #bgjb of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by redesignating paragraphs 7#a71 7#b71 and 7#c7 as subparagraphs 7,a71 7,b71 and 7,c71 respectively1 and by moving such subparagraphs 7as so redesignated7 #b ems to the right1 7#b7 by striking ,for purposes of and inserting the following3 7#a7 ,in general ,for purposes of 1 7#c7 by striking paragraph 7#a7 or 7#b7 in paragraph 7#a77;,c7 7as so redesignated7 and inserting subparagraph 7,a7 or 7,b71 and 7#d7 by adding at the end the following new paragraph3 7#b7 ,additional requirements with respect to grantor retained annuity trusts ,for purposes of subsection 7a71 in the case of an interest described in paragraph 7#a77;,a7 7determined without regard to this paragraph7 which is retained by the transferor1 such interest shall be treated as described in such paragraph only if-- 7,a7 the right to receive the fixed amounts referred to in such paragraph is for a term of not less than #ae years and not more than the life expectancy of the annuitant plus #aj years1 7,b7 such fixed amounts1 when determined on an annual basis1 do not decrease during the term described in subparagraph 7,a71 and 7,c7 the remainder interest has a value1 as determined as of the time of the transfer1 which is-- 7i7 not less than an amount equal to the greater of-- 7,i7 #be percent of the fair market value of the property transferred to the trust1 or 7,,ii7 #ejj1jjj1 and 7ii7 not greater than the fair market value of the property transferred to the trust4 4 7b7 ,effective dates ,the amendments made by this section shall apply-- 7#a7 to trusts created on or after the date of enactment of this ,act1 and 7#b7 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 date4 #c4 ,certain transfers between grantor trust and deemed owner 7a7 ,in general ,part ,,iv of subchapter ,o of chapter #a of the ,internal ,revenue ,code of #aihf is amended by redesignating section #ajfb as section #ajfc and inserting after section #ajfa the following new section3 #ajfb4 ,certain transfers between grantor trust and deemed owner 7a7 ,in general ,in the case of any transfer of property for consideration between a trust and a person who is a deemed owner of the trust1 such transfer shall be treated as a sale or exchange for purposes of this chapter regardless of the fact that such person is a deemed owner of such trust4 7b7 ,exception ,subsection 7a7 shall not apply to-- 7#a7 any grantor trust which is fully revocable by the deemed owner1 7#b7 any asset-backed securities trust1 or 7#c7 any grantor trust which is identified by the ,secretary 7pursuant to regulations or other guidance7 as appropriate to exclude from the application of subsection 7a74 7c7 ,definitions ,for purposes of this section-- 7#a7 ,asset-backed securities trust 7,a7 ,in general ,the term asset-backed securities trust means any grantor trust-- 7i7 for which the assets of the trust are mortgage-backed securities or other asset-backed securities1 and 7ii7 which is engaged in securitization transactions4 7,b7 ,exception ,the term asset-backed securities trust shall not include any grantor trust identified by the ,secretary 7pursuant to regulations or other guidance7 as appropriate to exclude from the application of subsection 7b77#b74 7#b7 ,deemed owner ,the term deemed owner means1 with respect to any trust1 any person who is treated as the owner of such trust 7or a portion thereof7 under subpart ,e of part #a of subchapter ,j4 7d7 ,rule of construction ,for purposes of subsection 7a71 a transfer of property for consideration shall include-- 7#a7 any satisfaction of an annuity1 or 7#b7 any discharge of debt1 by the trust in kind4 4 7b7 ,related taxpayers ,section #bfg7;b7 of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by striking or at the end of paragraph 7#ab71 7#b7 by striking the period at the end of paragraph 7#ac7 and inserting 2 or1 and 7#c7 by adding at the end the following new paragraph3 7#ad7 ,a grantor trust and the person treated as the owner of the trust 7or portion thereof7 under subpart ,e of part #a of subchapter ,j of this chapter4 4 7c7 ,clerical amendments ,the table of sections for part ,,iv of subchapter ,o of chapter #a of the ,internal ,revenue ,code of #aihf is amended by striking the item relating to section #ajfb and inserting the following new items3 ,sec4 #ajfb4 ,certain sales to grantor trusts4,sec4 #ajfc4 ,cross references4 4 7d7 ,effective dates ,the amendments made by this section shall apply to transfers made after the date of the enactment of this ,act4 #d4 ,payment of tax on income of grantor trust 7a7 ,in general ,section #bejc of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 in subsection 7a71 by striking ,the term and inserting ,subject to subsection 7d71 the term and 7#b7 by inserting after subsection 7c7 the following3 7d7 ,payment of tax on income of grantor trust 7#a7 ,in general ,notwithstanding subsections 7b7 and 7e71 an amount equal to the taxes paid on the income of an applicable grantor trust for any calendar year by a person who is the deemed owner of such trust 7or portion thereof7 shall be treated for purposes of this subtitle as a taxable gift made during such calendar year4 7#b7 ,applicable grantor trust ,for purposes of this subsection1 the term applicable grantor trust means any trust-- 7,a7 with respect to which the taxpayer is considered an owner under subpart ,e of part ,i of subchapter ,j of chapter #a1 and 7,b7 which is not fully revocable by the taxpayer4 7#c7 ,reimbursement by trust ,paragraph 7#a7 shall not apply with respect to any amount paid by the deemed owner for any calendar year which is reimbursed by the applicable grantor trust during such calendar year4 7#d7 ,date of gift ,in the case of any amount treated for purposes of this subtitle as a taxable gift pursuant to paragraph 7#a71 such gift shall be deemed to have occurred on the earlier of-- 7,a7 ,december #ca of the calendar year for which the tax is paid by the person who is the deemed owner1 7,b7 the day before the date of the death of such person1 or 7,c7 the date on which such person renounces any right of reimbursement by the applicable grantor trust with respect to the calendar year for which the tax is paid by such person4 7#e7 ,deemed owner ,for purposes of this subsection1 the term deemed owner has the same meaning given such term under section #ajfb7;c74 4 7b7 ,conforming amendments 7#a7 ,section #bebb of the ,internal ,revenue ,code of #aihf is amended-- 7,a7 by redesignating subsection 7f7 as subsection 7g71 and 7,b7 by inserting after subsection 7e7 the following new subsection3 7f7 ,denial of deduction for payment of tax on income of grantor trust ,no deduction shall be allowed under this section for any amount which is treated as a gift by reason of section #bejc7;d74 4 7#b7 ,section #bebc of such ,code is amended by adding at the end the following new subsection3 7j7 ,denial of deduction for payment of tax on income of grantor trust ,no deduction shall be allowed under this section for any amount which is treated as a gift by reason of section #bejc7;d74 4 7c7 ,effective dates ,the amendments made by this section shall apply to trusts created on or after the date of enactment of this ,act4