,,ii #aai? ,,congress #a/ ,session ,s4 #bjid ,,9 ,,! ,,s5ate ,,( ,,! ,,unit$ ,,/ates ,june #ag1 #bjbe,mr4 ,wyd5 introduc$ ! foll[+ bill2 :i* 0 read twice & ref]r$ to ! ,committee on ,f9ance ,a ,,bill ,to am5d ! ,int]nal ,rev5ue ,code ( #aihf to modify ! p>tn]%ip rules = taxation ( basis-%ift+ transactions involv+ relat$ p>ties1 & = o!r purposes4 #a4 ,%ort title ,?is ,act may be cit$ z ! ,basis ,%ift+ is a ,rip-(f ,act4 #b4 ,rules = basis-%ift+ transactions involv+ relat$ p>ties 7a7 ,di/ributions 7#a7 ,recognition ( ga9 ,section #gca ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by /rik+ subsections 7a7 & 7b7 & ins]t+ ! foll[+3 7a7 ,p>tn]s 7#a7 ,9 g5]al ,9 ! case ( a di/ribution by a p>tn]%ip to a p>tn]-- 7,a7 ga9 %all n be recogniz$ to su* p>tn]1 except to ! ext5t t any money di/ribut$ exce$s ! adju/$ basis ( su* p>tn]'s int]e/ 9 ! p>tn]%ip imm$iately be=e ! di/ribution1 & 7,b7 loss %all n be recogniz$ to su* p>tn]1 except t ^u a di/ribution 9 liquidation ( a p>tn]'s int]e/ 9 a p>tn]%ip :]e no prop]ty o!r ?an t describ$ 9 clause 7i7 or 7ii7 is di/ribut$ to su* p>tn]1 loss %all be recogniz$ to ! ext5t ( ! excess ( ! adju/$ basis ( su* p>tn]'s int]e/ 9 ! p>tn]%ip ov] ! sum (-- 7i7 any money di/ribut$1 & 7ii7 ! basis to ! di/ributee1 z det]m9$ "u section #gcb1 ( any unrealiz$ receivables 7z def9$ 9 section #gea7;c77 & inv5tory 7z def9$ 9 section #gea7;d774 ,any ga9 or loss recogniz$ "u ?is p>agraph %all be consid]$ z ga9 or loss f ! sale or ex*ange ( ! p>tn]%ip int]e/ ( ! di/ributee p>tn]4 7#b7 ,exception = c]ta9 relat$-p>ty p>tn]%ip di/ributions ,not)/&+ p>agraph 7#a77;,a7-- 7,a7 ,9 g5]al ,9 ! case ( any di/ribution ( prop]ty to :i* section #gcb7;a77#b7 or 7b7 applies :i* is made f an applicable p>tn]%ip to a p>tn] 7includ+ z "p ( ! t]m9ation ( su* p>tn]%ip71 su* p>tn] %all1 9 addition to any am\nt :i* w\ld be recogniz$ )\t reg>d to ?is subp>agraph1 recognize ga9 9 an am\nt equal to ! applicable basis increase4 7,b7 ,applicable basis increase ,= purposes ( ?is p>agraph1 ! t]m applicable basis increase means1 ) respect to any di/ribution ( any prop]ty describ$ 9 subp>agraph 7,a7 to a p>tn]1 ! aggregate increases 9 basis to "o or m p>tn]%ip prop]ties "u section #gcd7;b77#a77;,b7 7)\t reg>d to :e!r any su* increase is susp5d$ "u section #gee7 ) respect to su* di/ribution4 7,c7 ,basis adju/m5t ,9 ! case ( ea* di/ribut$ prop]ty ) respect to :i* ga9 is recogniz$ by reason ( subp>agraph 7,a71 ! basis ( su* prop]ty aft] ! di/ribution %all be ! basis det]m9$ "u section #gcb1 increas$ by ! am\nt ( su* ga9 ) respect to su* prop]ty4 7,d7 ,"* ( ga9 7i7 ,9 g5]al ,if a di/ribution ( any prop]ty to :i* subp>agraph 7,a7 applies results 9 any portion ( any applicable basis increase 9 p>tn]%ip prop]ty "u section #gcd7;b77#a77;,b71 ga9 "u subp>agraph 7,a7 ) respect to su* di/ribut$ prop]ty %all h ! same "* z ga9 f ! sale or ex*ange ( ! p>tn]%ip prop]ty to :i* su* portion is allocat$ "u section #gee4 7ii7 ,special rule :]e basis increase susp5d$ 7,i7 ,9 g5]al ,if ! allocation "u section #gee ( any portion ( an applicable basis increase describ$ 9 clause 7i7 is susp5d$ "u su* section by ! abs5ce ( prop]ty1 or insuffici5t adju/$ basis 9 prop]ty1 to :i* su* portion is to be s allocat$1 ga9 "u subp>agraph 7,a7 ) respect to su* di/ribut$ prop]ty %all be treat$ z ord9>y income4 7,,ii7 ,secret>ial au?ority ,! ,secret>y may provide t subclause 7,i7 %all n apply 9 cases :]e ! ,secret>y det]m9es necess>y & appropriate to c>ry out1 or prev5t avoidance (1 ! purposes ( ?is p>agraph4 7,e7 ,coord9ation ) m>ketable securities rules ,if any prop]ty describ$ 9 subp>agraph 7,a7 consi/s ( m>ketable securities 7z def9$ 9 subsection 7c77#b77-- 7i7 ?is p>agraph %all apply to su* prop]ty be=e ! application ( subsection 7c71 & 7ii7 9 apply+ subsection 7c71 ! basis ( su* prop]ty %all be ! basis det]m9$ aft] ! application ( subp>agraph 7,c74 ,! ,secret>y %all provide rules = ! application ( ?is subp>agraph1 includ+ coord9ation ( ! application ( ?is subp>agraph ) subsection 7c7 & ! o!r provisions ( ?is sub*apt]4 7b7 ,p>tn]%ips 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 no ga9 or loss %all be recogniz$ to a p>tn]%ip on a di/ribution to a p>tn] ( prop]ty1 includ+ money4 7#b7 ,exception = c]ta9 relat$-p>ty p>tn]%ip di/ributions 7,a7 ,9 g5]al ,9 ! case ( any di/ribution ( prop]ty f an applicable p>tn]%ip to a p>tn] :i* "u section #gcb7;c7 results 9 an increase 9 basis 9 "o or m prop]ties s di/ribut$1 ga9 %all be recogniz$ to ! p>tn]%ip 9 an am\nt equal to ! aggregate am\nt ( su* increases 9 basis4 7,b7 ,basis adju/m5t ,9 ! case ( ea* p>tn]%ip prop]ty ) respect to :i* ga9 is recogniz$ by reason ( subp>agraph 7,a71 ! basis ( su* prop]ty aft] ! di/ribution %all be ! basis det]m9$ "u section #gcd1 increas$ by ! am\nt ( su* ga9 ) respect to su* prop]ty4 7,c7 ,"* ( ga9 ,any ga9 recogniz$ "u ?is p>agraph :i* is allocable to a portion ( any basis increase 9 di/ribut$ prop]ty describ$ 9 subp>agraph 7,a7 %all h ! same "* z ga9 f ! sale or ex*ange ( su* prop]ty4 4 7#b7 ,applicable p>tn]%ip ,section #gca ( su* ,code is am5d$ by add+ at ! end ! foll[+ new subsections3 7e7 ,applicable p>tn]%ip ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m applicable p>tn]%ip means any p>tn]%ip 9 :i* two or m p>tn]s are relat$ p]sons imm$iately be=e or aft] any di/ribution to a p>tn]4 7#b7 ,small bus9ess exception 7,a7 ,9 g5]al ,a p>tn]%ip %all n be treat$ z an applicable p>tn]%ip ) respect to any di/ribution made dur+ a taxable ye> if su* p>tn]%ip meets ! gross receipts te/ "u section #ddh7;c7 7det]m9$ ) ! modification describ$ 9 subp>agraph 7,c77 = su* taxable ye>4 7,b7 ,exception n to apply to p>tn]%ips previ\sly fail+ te/ or tax %elt]s 7i7 ,p>tn]%ips fail+ te/ disqualifi$ prospectively ,if a p>tn]%ip fails to meet ! gross receipts te/ describ$ 9 subp>agraph 7,a7 = any taxable ye> :i* beg9s aft] ! date ( ! enactm5t ( ?is subsection1 subp>agraph 7,a7 %all n apply to su* p>tn]%ip 7or any successor7 = su* taxable ye> or any succe$+ taxable ye>4 7ii7 ,tax %elt]s ,subp>agraph 7,a7 %all n apply to a tax %elt] prohibit$ f us+ ! ca% receipts & disbursem5ts me?od ( acc\nt+ "u section #ddh7;a77#c71 except t1 = purposes ( apply+ ?is clause1 a syndicate 7z def9$ 9 section #abef7;e77#c77;,b77 %all n be treat$ z a tax %elt]4 7,c7 ,modification ,9 apply+ section #eb7;b7 to section #ddh7;c77#b7 = purposes ( ?is p>agraph1 ! t]m trade or bus9ess %all include any activity treat$ z a trade or bus9ess "u p>agraph 7#e7 or 7#f7 ( section #dfi7;c7 7det]m9$ )\t reg>d to ! phrase ,to ! ext5t provid$ 9 regulations 9 su* p>agraph 7#f774 7#c7 ,relat$ p]son ,a p]son %all be treat$ z relat$ to ano!r p]son if !y be> a relation%ip to su* o!r p]son describ$ 9 section #bfg7;b7 7)\t reg>d to section #bfg7;c77#c77 or #gjg7;b77#a74 7f7 ,regulations relat+ to relat$-,p>tn]%ip basis-,%ift+ transactions ,! ,secret>y %all prescribe su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! purposes ( subsection 7a77#b71 subsection 7b77#b71 & section #gdc7;g71 includ+ regulations or o!r guidance address+ di/ributions & transf]s t are sub/antially simil> to ! di/ributions & transf]s describ$ 9 su* provisions or :i* h sub/antially simil> results 7includ+ ?r\gh ! p>ticipation ( tax-indiff]5t p>ties74 ,9 ! case ( tax-indiff]5t p>ties1 su* regulations may provide = equival5t me?ods = ! recognition ( ga91 includ+ ?r\gh ! recognition ( ga9 by ! p>tn] ) an increase 9 basis "u section #gcb or by reason ( section #gcd7;b77#a74 4 7#c7 ,m&atory adju/m5ts to applicable p>tn]%ip prop]ty :5 p>tn]%ip di/ributes prop]ty ,section #gcd7;a7 ( su* ,code is am5d$-- 7,a7 by /rik+ di/ribution ( prop]ty to a p>tn] unless ! election & ins]t+ di/ribution ( prop]ty to a p>tn] unless-- 7#a7 ! election 1 7,b7 by /rik+ ) respect to su* p>tn]%ip or unless !re is & ins]t+ ) respect to su* p>tn]%ip1 7#b7 !re is 1 7,c7 by /rik+ ! p]iod at ! end & ins]t+ 1 or 7#c7 if p>agraph 7#a7 & 7#b7 d n apply1 su* di/ribution is a di/ribution f an applicable p>tn]%ip 7z def9$ 9 section #gca7;e77 b only to ! ext5t ! application ( ?is section to su* di/ribution results 9 a decrease 9 basis to p>tn]%ip prop]ty "u subsection 7b77#b74 4 7#d7 ,con=m+ am5dm5ts 7,a7 ,section #gca7;c77#a7 ( su* ,code is am5d$ by /rik+ subsection 7a77#a7 & ins]t+ subsection 7a77#a77;,a74 7,b7 ,section #gcd7;b7 ( su* ,code is am5d$-- 7i7 9 ! matt] prec$+ p>agraph 7#a7-- 7,i7 by /rik+ or aft] effect & ins]t+ a comma1 & 7,,ii7 by ins]t+ or to :i* subsection 7a77#c7 applies1 aft] r$uction11 7ii7 9 p>agraph 7#a77;,a71 by /rik+ section #gca7;a77#a7 & ins]t+ section #gca7;a77#a77;,a71 & 7iii7 9 p>agraph 7#b77;,a71 by /rik+ section #gca7;a77#b7 & ins]t+ section #gca7;a77#a77;,b74 7b7 ,transf]s ( p>tn]%ip int]e/s ,section #gdc ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by add+ at ! end ! foll[+ new subsection3 7g7 ,special rules = relat$-,p>ty transactions 7#a7 ,9 g5]al ,if subsection 7b77#a7 applies to an applicable transf]-- 7,a7 any increase to ! adju/$ basis ( p>tn]%ip prop]ty "u subsection 7b77#a7 %all n exce$ ! total ga9 7det]m9$ )\t reg>d to any loss7 recogniz$ on su* transf]1 & 7,b7 ! adju/$ basis ( p>tn]%ip prop]ty ) respect to ! transf]ee p>tn] imm$iately aft] ! transf] %all be equal to ! sum (-- 7i7 ! adju/$ basis ( p>tn]%ip prop]ty ) respect to ! transf]or p>tn] imm$iately be=e su* transf]1 plus 7ii7 ! increase 9 ! adju/$ basis ( ! p>tn]%ip prop]ty "u subsection 7b77#a7 by reason ( su* transf] 7det]m9$ aft] application ( subp>agraph 7,a774 7#b7 ,applicable transf] ,= purposes ( ?is subsection-- 7,a7 ,9 g5]al ,! t]m applicable transf] means any transf] ( a p>tn]%ip int]e/ if-- 7i7 two or m p>tn]s ( ! p>tn]%ip are relat$ p]sons imm$iately be=e or aft] ! transf]1 & 7ii7 any am\nt ( ga9 on ! transf] is n recogniz$ "u ?is *apt]4 ,su* t]m %all n include any transf] ( a p>tn]%ip int]e/ f a p>tn] to ! p>tn]'s e/ate or a deem$ transf] f a grantor tru/ own$ by ! p>tn] to a tru/ t becomes a sep>ate entity = purposes ( ?is *apt] by reason ( ! p>tn]'s dea?4 7,b7 ,relat$ p]son ,= purposes ( subp>agraph 7,a71 a p]son %all be treat$ z relat$ to ano!r p]son if !y be> a relation%ip to su* o!r p]son describ$ 9 section #bfg7;b7 7)\t reg>d to section #bfg7;c77#c77 or #gjg7;b77#a74 4 7c7 ,application ( accuracy relat$ p5alties 7#a7 ,9 g5]al ,section #fffb7;b7 ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#aa7 ,any relat$-p>ty p>tn]%ip di/ribution und]/atem5t4 4 7#b7 ,rules reg>d+ relat$-p>ty p>tn]%ip transaction und]/atem5ts ,section #fffb ( su* ,code is am5d$ by add+ at ! end ! foll[+ new subsection3 7m7 ,relat$-,p>ty p>tn]%ip di/ribution und]/atem5t 7#a7 ,relat$-p>ty p>tn]%ip di/ribution und]/atem5t ,= purposes ( ?is section1 ! t]m relat$-p>ty p>tn]%ip di/ribution und]/atem5t means1 = any taxable ye>1 ! portion ( ! und]/atem5t = su* taxable ye> :i* is attributable to ga9 recogniz$ "u section #gca7;a77#b7 or #gca7;b77#b74 7#b7 ,increase 9 p5alty ,9 ! case ( any portion ( an und]paym5t :i* is attributable to a relat$-p>ty p>tn]%ip di/ribution und]/atem5t1 subsection 7a7 %all be appli$ ) respect to su* portion by sub/itut+ #dj p]c5t = #bj p]c5t4 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to di/ributions & transf]s occurr+ aft] ,june #aa1 #bjbe4 7e7 ,no inf]5ce ,! am5dm5ts made by ?is section %all n be con/ru$ to create any inf]5ce ) respect to :e!r any di/ribution to :i* subsection 7a77#b7 or 7b77#b7 ( section #gca ( ! ,int]nal ,rev5ue ,code ( #aihf 7z add$ by ?is section7 applies1 or any applicable transf] 7z def9$ 9 section #gdc7;g77#b7 ( su* ,code1 z add$ by ?is section71 has economic sub/ance = purposes ( apply+ ! economic sub/ance doctr9e 7z def9$ 9 section #ggja7o7 ( su* ,code74