,,ii  #aai? ,,congress  #b;d ,session   
,s4 #dabb  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,m>* #ag1 #bjbf,mr4    
,m>key 7= himself1 ,mr4 ,s&]s1 ,mr4     
,m]kley1 & ,mr4 ,book]7 introduc$ !     
foll[+ bill2 :i* 0 read twice & ref]r$  
to ! ,committee on ,f9ance  ,a ,,bill   
,to am5d ! ,int]nal ,rev5ue ,code (     
#aihf to equalize treatm5t ( capital    
ga9s & e>n$ income4  #a4 ,%ort title    
,?is ,act may be cit$ z ! ,equal ,tax   
,act4  #b4 ,pref]5tial rates = divid5ds 
& capital ga9s limit$ to incomes (      
#a1jjj1jjj or less  7a7 ,9 g5]al        
,section #a7;h7 ( ! ,int]nal ,rev5ue    
,code ( #aihf is am5d$ by ins]t+ on s   
mu* ( su* ga9 z does n cause ! taxable  
income ( ! taxpay] to exce$ #a1jjj1jjj  
7comput$ aft] tak+ into acc\nt all o!r  
taxable income ( ! taxpay]7 aft] ! tax  
impos$ by ?is section = su* taxable ye>4
  7b7 ,treatm5t ( qualify+ family f>m or
 bus9ess ,section #a7;h7 ( su* ,code1 z 
am5d$ by subsection 7a71 is fur!r am5d$ 
by ins]t+ & )\t reg>d to ga9 realiz$ f !

 transf] by gift or beque/ ( a qualify+ 
family f>m or bus9ess describ$ 9 section
 #aci,m7c7 aft] all o!r taxable income (
 ! taxpay]4  7c7 ,effective date ,!     
am5dm5ts made by ?is section %all apply 
to taxable ye>s beg9n+ aft] ,decemb]    
#ca1 #bjbf4  #c4 ,deem$ realization (   
capital ga9s at "t ( gift or dea?  7a7  
,treatm5t z sale  7#a7 ,9 g5]al ,"p ,,iv
 ( sub*apt] ,p ( *apt] #a ( ! ,int]nal  
,rev5ue ,code ( #aihf is am5d$ by add+  
at ! end ! foll[+ new section3  #abfa4  
,ga9s f c]ta9 prop]ty transf]r$ by gift 
or ^u dea?  7a7 ,9 g5]al ,any prop]ty   
:i* is transf]r$ by gift or at dea? %all
 be treat$ z sold = its fair m>ket value
 on ! date ( su* gift or dea?4  7b7     
,exceptions  7#a7 ,sp\se or surviv+     
sp\se ,?is section %all n apply to a    
transf] ( prop]ty to ! sp\se or surviv+ 
sp\se ( ! transf]or 7or to a qualifi$   
sp\sal tru/74  7#b7 ,c]ta9 tangible     
p]sonal prop]ty ,9 ! case ( tangible    
p]sonal prop]ty1 ?is section %all only  
apply to ! foll[+3 7,a7 ,prop]ty held 9 

connection ) a trade or bus9ess4  7,b7  
,prop]ty held = inve/m5t4  7,c7         
,collectibles 7z def9$ 9 section #djh7m7
 7det]m9$ )\t reg>d to p>agraph 7#c7    
!re(774  7#c7 ,*>itable contributions   
,?is section %all n apply to any transf]
 to an organization describ$ 9 section  
#agj7;c74  7c7 ,special rules = tru/s   
7#a7 ,c]ta9 grantor tru/s ,9 ! case (   
any prop]ty :i*-- 7,a7 is held 9 a tru/ 
( :i* ! grantor or ano!r p]son is treat$
 z ! own] "u subp>t ,e ( "p ,i (        
sub*apt] ,j ( *apt] #a1 &  7,b7 is      
includible 9 ! gross e/ate ( ! grantor  
or su* o!r p]son "u *apt] #aa1  su*     
prop]ty %all be treat$ z transf]r$ "u   
subsection 7a7 :5 ! grantor or su* o!r  
p]son ceases to be treat$ z ! own] ( su*
 prop]ty1 or su* prop]ty ceases to be   
includible 9 ! gross e/ate ( ! grantor  
or su* o!r p]son 7includ+ by reason ( ! 
dea? ( ! grantor or su* o!r p]son1 or ! 
di/ribution ( su* prop]ty to a p]son o!r
 ?an ! grantor or su* o!r p]son74  7#b7 
,o!r tru/s ,9 ! case ( any prop]ty held 

9 tru/ & n describ$ 9 p>agraph 7#a71 su*
 prop]ty %all be treat$ z transf]r$ "u  
subsection 7a7 ^u ! transf] ( su*       
prop]ty to a tru/4  7#c7 ,transf]s f &  
modifications ( tru/s ,! ,secret>y may  
by regulation prescribe su* rules to    
treat ! modification ( ! t]ms ( a tru/  
or ! transf] or di/ribution ( tru/      
assets 7includ+ to ano!r tru/7 z a      
transf] describ$ 9 subsection 7a7 z are 
necess>y or appropriate to prev5t !     
avoidance ( ?is section4  7#d7          
,g5]ation-skipp+ tru/s ,at ! end ( ea*  
#cj-ye> p]iod = :i* any prop]ty is      
cont9u\sly held 9 tru/ 7o!r ?an prop]ty 
describ$ 9 p>agraph 7#a771 su* prop]ty  
%all be treat$ z transf]r$ pursuant to  
subsection 7a74  7#e7 ,qualify+ sp\sal  
tru/  7,a7 ,9 g5]al ,! prop]ty ( a      
qualify+ sp\sal tru/ %all be treat$ z   
transf]r$ "u subsection 7a7-- 7i7 ^u !  
dea? ( ! sp\sal b5efici>y1  7ii7 ^u !   
di/ribution ( su* prop]ty f su* tru/ to 
any p]son o!r ?an ! sp\sal b5efici>y1 or
  7iii7 at su* "t su* prop]ty ceases to 

be held by a qualify+ sp\sal tru/4  7,b7
 ,qualify+ sp\sal tru/ ,= purposes ( ?is
 section1 a tru/ is a qualify+ sp\sal   
tru/ if-- 7i7 ! sole b5efici>y ( su*    
tru/ is ! sp\se1 or surviv+ sp\se ( !   
transf]or1 or  7ii7 su* sp\se or surviv+
 sp\se is ! sole life t5ant1 or sole    
income b5efici>y1 ( su* tru/4  7d7      
,exclusion ( c]ta9 gifts ,9 ! case (    
gifts 7o!r ?an gifts ( future int]e/s 9 
prop]ty7 made to any p]son dur+ !       
taxable ye>1 s mu* ( ! doll> am\nt ( su*
 gifts to su* p]son z does n exce$ !    
am\nt 9 effect = ! cal5d> ye> "u section
 #bejc7;b7 9 :i* ! taxable ye> beg9s    
%all n be tak5 into acc\nt "u subsection
 7a7 = su* taxable ye>4 ,:]e !re has be5
 a transf] to any p]son ( a pres5t      
int]e/ 9 prop]ty1 ! possibility t su*   
int]e/ may be dim9i%$ by ! ex]cise ( a  
p[] %all be disreg>d$ 9 apply+ ?is      
subsection1 if no "p ( su* int]e/ w at  
any "t pass to any o!r p]son4  7e7      
,regulations ,! ,secret>y %all prescribe
 su* regulations z may be necess>y to   

prev5t ! avoidance ( ! purposes ( ?is   
section4  4  7#b7 ,cl]ical am5dm5t ,!   
table ( sections = "p ,,iv ( sub*apt] ,p
 ( *apt] #a ( su* ,code is am5d$ by add+
 at ! end ! foll[+ new item3  ,sec4     
#abfa4 ,ga9s f c]ta9 prop]ty transf]r$  
by gift or ^u dea?4  4  7b7 ,coord9ation
 ( relat$ p>ty loss rules ,section #bfg 
( su* ,code is am5d$ by add+ at ! end ! 
foll[+ new subsection3  7h7 ,prop]ty    
treat$ z sold at dea? ,subsection       
7a77#a7 %all n apply to any prop]ty t is
 transf]r$ at dea? & treat$ z sold "u   
section #abfa4  4  7c7 ,treatm5t ( basis
 = gifts & beque/s to :i* tax applies   
7#a7 ,elim9ation ( c>ryov] basis = gifts
 ,section #ajae7;a7 ( su* ,code is      
am5d$-- 7,a7 by /rik+ ,if ! prop]ty &   
ins]t+ ! foll[+3  7#a7 ,gifts be=e      
,janu>y #a1 #bjbg ,if ! prop]ty  2  7,b7
 by ins]t+ 1 & be=e ,janu>y #a1 #bjbg   
aft] aft] ,decemb] #ca1 #aibj2 &  7,c7  
by add+ at ! end ! foll[+ new p>agraph3 
7#b7 ,gifts aft] ,decemb] #ca1 #bjbf ,if
 ! prop]ty 0 acquir$ by gift aft]       

,decemb] #ca1 #bjbf1 ! basis %all be !  
fair m>ket value ( su* prop]ty at ! "t (
 ! gift4  4  7#b7 ,rules = transf]s     
betwe5 sp\ses  7,a7 ,9 g5]al ,section   
#ajda7;b7 ( su* ,code is am5d$ to read z
 foll[s3  7b7 ,transf]ee has transf]or's
 basis ,9 ! case ( any transf] ( prop]ty
 describ$ 9 subsection 7a71 ! basis ( ! 
transf]ee 9 ! prop]ty %all be ! adju/$  
basis ( ! transf]or4  4  7,b7 ,transf]s 
at dea? ,section #ajda7;a7 ( su* ,code  
is am5d$ by ins]t+ 7includ+ at dea?7    
aft] transf] ( prop]ty4  7,c7 ,con=m+   
am5dm5ts  7i7 ,section #ajad ( su* ,code
 is am5d$ by add+ at ! end ! foll[+ new 
subsection3  7g7 ,prop]ty acquir$ f     
dec$5t sp\se ,9 ! case ( prop]ty :i*    
passes f ! dec$5t to 7or 9 tru/ = !     
b5efit (7 ! dec$5t's surviv+ sp\se 9 a  
transf] describ$ 9 section              
#ajda7;a77#a71 ! basis ( su* prop]ty 9 !
 h&s ( ! transf]ee %all be det]m9$ "u   
section #ajda7;b7 & n ?is section4  4   
7ii7 ,section #ajae7;e7 ( su* ,code is  
am5d$ by /rik+ #ajda7;b77#b7 & ins]t+   

#ajda7;b74  7#c7 ,basis mu/ be consi/5t 
) ga9s recogniz$ 9 deem$ realization    
7,a7 ,prop]ty acquir$ f dec$5t ,section 
#ajad ( su* ,code1 z am5d$ by ! prec$+  
provisions ( ?is ,act1 is am5d$ by add+ 
at ! end ! foll[+ new subsection3  7h7  
,basis mu/ be consi/5t ) ga9s recogniz$ 
9 deem$ realization ,! basis ( any      
prop]ty to :i* subsection 7a7 applies   
%all n exce$ ! am\nt = :i* ! prop]ty 0  
treat$ z sold "u section #abfa4  4  7,b7
 ,prop]ty acquir$ by gift ,section #ajae
 ( su* ,code is am5d$ by add+ at ! end !
 foll[+ new subsection3  7f7 ,basis mu/ 
be consi/5t ) ga9s recogniz$ 9 deem$    
realization ,! basis ( any prop]ty to   
:i* subsection 7a77#b7 applies %all n   
exce$ ! am\nt = :i* ! prop]ty 0 treat$ z
 sold "u section #abfa4  4  7d7 ,con=m+ 
am5dm5ts  7#a7 ,section #gdgg7;a7 ( su* 
,code is am5d$ by /rik+ *apt] #ab &     
ins]t+ *apt] #a or #ab4  7#b7 ,section  
#geag7;a7 ( su* ,code is am5d$ by /rik+ 
*apt] #aa & ins]t+ *apt] #a1 #aa4  7e7  
,effective date ,! am5dm5ts made by ?is 

section %all apply to transf]s by gift1 
or at dea? by dec$5ts dy+1 aft] ,decemb]
 #ca1 #bjbf4  #d4 ,exclusion ( c]ta9    
am\nts ( realiz$ capital ga9  7a7 ,9    
g5]al ,"p ,,iii ( sub*apt] ,b ( *apt] #a
 ( ! ,int]nal ,rev5ue ,code ( #aihf is  
am5d$ by ins]t+ be=e section #adj !     
foll[+ new section3  #aci,m4 ,exclusion 
( ga9 f transf]s ( appreciat$ assets at 
dea?  7a7 ,9 g5]al ,gross income %all n 
include-- 7#a7 s mu* ( ! net capital ga9
 = ! taxable ye> f transf]s at dea? to  
:i* #abfa7;a7 applies z does n exce$    
#a1jjj1jjj1 &  7#b7 9 ! case ( prop]ty t
 is a qualify+ family f>m or bus9ess t  
meets ! c]tification requirem5t (       
subsection 7d71 #ej p]c5t ( s mu* ( any 
ga9 f a transf] describ$ 9 p>agraph 7#a7
 z exce$s #a1jjj1jjj4  7b7 ,inflation   
adju/m5t  7#a7 ,9 g5]al ,9 ! case ( any 
taxable ye> beg9n+ aft] #bjbg1 !        
#a1jjj1jjj am\nts 9 subsection 7a7 %all 
be increas$ by an am\nt equal to-- 7,a7 
su* doll> am\nt1 multipli$ by  7,b7 !   
co/-(-liv+ adju/m5t det]m9$ "u section  

#a7;f77#c7 = ! cal5d> ye> 9 :i* !       
taxable ye> beg9s1 det]m9$ by sub/itut+ 
9 subp>agraph 7,a77ii7 !re( cal5d> ye>  
#bjbf = cal5d> ye> #bjaf4  7#b7 ,r\nd+  
,if ! doll> am\nt 9 subsection 7a71 aft]
 be+ increas$ "u p>agraph 7#a71 is n a  
multiple ( #aj1jjj1 su* am\nt %all be   
r\nd$ to ! next l[e/ multiple ( #aj1jjj4
  7c7 ,def9itions ,= purposes ( ?is     
section-- 7#a7 ,qualify+ family f>m or  
bus9ess ,! t]m qualify+ family f>m or   
bus9ess means real prop]ty locat$ 9 !   
,unit$ ,/ates if dur+ p]iods aggregat+  
#c ye>s or m ( ! #e-ye> p]iod end+ on ! 
date ( ! beque/ ( su* real prop]ty1 su* 
real prop]ty 0 us$ z a f>m = f>m+       
purposes or a family bus9ess4  7#b7 ,o!r
 def9itions ,! t]ms f>m & f>m+ purposes1
 & mat]ial p>ticipation h ! respective  
mean+s giv5 su* t]ms by p>agraphs 7#d7 &
 7#e7 ( section #bjcb;,a7e71            
respectively4  7d7 ,use c]tification z  
f>m = f>m+ purposes or family bus9ess ,!
 c]tification requirem5t ( ?is          
subsection is a c]tification t ! use ( !

 qualify+ family f>m or bus9ess ref]r$  
to 9 subsection 7a7 w be z a f>m = f>m+ 
purposes or family bus9ess 7z ! case may
 be7 = n less ?an ! #abj-mon? p]iod     
beg9n+ on ! date ( ! beque/ ref]r$ to 9 
subsection 7a74  7e7 ,special rules ,=  
purposes ( ?is section1 ! foll[+ rules  
%all apply3 7#a7 ,rules simil> to !     
rules ( subsections 7e7 & 7f7 ( section 
#aba4  7#b7 ,rules simil> to ! rules (  
p>agraphs 7#d7 & 7#e7 ( section         
#bjcb;,a7b7 & p>agraph 7#c7 ( section   
#bjcb;,a7e74  7f7 ,treatm5t (           
disposition or *ange 9 use ( prop]ty    
7#a7 ,9 g5]al ,if1 z ( ! close ( any    
taxable ye>1 !re is a recapture ev5t )  
respect to any qualify+ family f>m or   
bus9ess transf]r$ to ! taxpay] 9 a      
beque/ describ$ 9 subsection 7a71 !n !  
tax ( ! taxpay] "u ?is *apt] = su*      
taxable ye> %all be increas$ by an am\nt
 equal to ! product (-- 7,a7 ! am\nt    
det]m9$ by divid+-- 7i7 ! am\nt ( ga9   
exclud$ f gross income ( ! taxpay] "u   
subsection 7a77#b7 on ! date su* prop]ty

 0 transf]r$ to ! taxpay]1 ov]  7ii7    
#abj1 &  7,b7 ! numb] ( full mon?s      
rema9+ 9 ! #abj-mon? t]m describ$ 9     
subsection 7d7 z ( ! date ( su*         
recapture ev5t4  7#b7 ,recapture ev5t   
def9$ ,= purposes ( ?is subsection1 !   
t]m recapture ev5t means-- 7,a7         
,cessation ( op]ation ,! cessation ( !  
op]ation ( any prop]ty ! sale or ex*ange
 ( :i* to ! taxpay] is describ$ 9       
subsection 7a7 z a qualify+ family f>m  
or bus9ess4  7,b7 ,*ange 9 own]%ip  7i7 
,9 g5]al ,except z provid$ 9 clause     
7ii71 ! disposition ( a taxpay]'s int]e/
 9 any prop]ty ! sale or ex*ange ( :i*  
to ! taxpay] is describ$ 9 subsection   
7a74  7ii7 ,agreem5t to assume recapture
 liability ,clause 7i7 %all n apply if !
 p]son acquir+ su* int]e/ 9 ! prop]ty   
agrees 9 writ+ to assume ! recapture    
liability ( ! p]son dispos+ ( su* int]e/
 9 effect imm$iately be=e su*           
disposition4 ,9 ! ev5t ( su* an         
assumption1 ! p]son acquir+ ! int]e/ 9 !
 prop]ty %all be treat$ z ! taxpay] =   

purposes ( assess+ any recapture        
liability 7comput$ z if !re _h be5 no   
*ange 9 own]%ip74  7#c7 ,special rules  
7,a7 ,no cr$its aga9/ tax ,any increase 
9 tax "u ?is subsection %all n be treat$
 z a tax impos$ by ?is *apt] = purposes 
( det]m9+ ! am\nt ( any cr$it "u subp>t 
,a1 ,b1 or ,d ( "p ,,iv ( sub*apt] ,a4  
7,b7 ,no recapture by reason ( h>d%ip ,!
 increase 9 tax "u ?is subsection %all n
 apply to any disposition ( prop]ty or  
cessation ( ! op]ation ( any prop]ty z a
 f>m = f>m+ purposes by reason ( any    
h>d%ip z det]m9$ by ! ,secret>y4  4  7b7
 ,cl]ical am5dm5t ,! table ( sections = 
"p ,,iii ( sub*apt] ,b ( *apt] #a ( su* 
,code is am5d$ by ins]t+ be=e ! item    
relat+ to section #adj ! foll[+ new     
item3  ,sec4 #aci,m4 ,exclusion ( ga9 f 
transf]s ( appreciat$ assets at dea?4  4
  7c7 ,effective date ,! am5dm5ts made  
by ?is section %all apply to transf]s at
 dea? by dec$5ts dy+ aft] ,decemb] #ca1 
#bjbf1 9 taxable ye>s beg9n+ aft] su*   
date4  #e4 ,in=mation report+ ( c]ta9   

gifts  7a7 ,9 g5]al ,subp>t ,b ( "p     
,,iii ( sub*apt] ,a ( *apt] #fa ( !     
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by add+ at ! end ! foll[+ new section3  
#fjej;,,bb4 ,returns relat+ to c]ta9    
gifts & beque/s  7a7 ,9 g5]al ,9 ! case 
( an applicable transf]1 ! individual   
mak+ su* gift1 or ! executor 9 ! case ( 
a transf] at dea?1 %all furni% to !     
,secret>y ! foll[+ in=mation3 7#a7 ,! "n
 & taxpay] id5tification numb] ( ! p]son
 to :om su* transf] 0 made4  7#b7 ,a    
description ( ! prop]ty transf]r$4  7#c7
 ,! fair m>ket value ( ! prop]ty        
transf]r$ & ! basis ( su* prop]ty to !  
transf]ee4  7b7 ,applicable transf]     
7#a7 ,9 g5]al ,= purposes ( ?is section1
 ! t]m applicable transf] means-- 7,a7  
any gift 7o!r ?an a cov]$ security 7z   
def9$ 9 section #fjde7;g77#c777 :i* is  
tak5 into acc\nt "u section #abfa1 &    
7,b7 s mu* ( any transf] at dea? 7o!r   
?an su* a cov]$ security7 :i* is s tak5 
into acc\nt "u section #abfa & ! ga9 f  
:i* is includible 9 gross income = !    

taxable ye> ( su* transf]4  7#b7 ,de    
m9imis  7,a7 ,gifts ,= gifts exce$+ !   
limitation = su* ye> "u section         
#bejc7;b7 & n tak5 into acc\nt "u       
section #abfa1 see subsection 7d7 !re(4 
7,b7 ,transf]s at dea? ,= am\nt ( ga9   
exclud$ f gross income 9 case ( a       
transf] at dea?1 see section #aci,m7a74 
7c7 ,/atem5ts ,to ,be furni%$ to p]sons 
) respect to :om in=mation is requir$ ,e
 p]son requir$ to make a return "u      
subsection 7a7 %all furni% to ea* p]son 
^: "n is requir$ to set =? 9 su* return 
a writt5 /atem5t %[+ ! in=mation        
describ$ 9 subsection 7a74  7d7 ,tim+ ,!
 returns & /atem5ts requir$ "u ?is      
section %all be furni%$ at su* "t & 9   
su* =m & mann] z ! ,secret>y %all by    
regulation prescribe4  4  7b7 ,cl]ical  
am5dm5t ,! table ( sections = subp>t ,b 
( "p ,,iii ( sub*apt] ,a ( *apt] #fa (  
su* ,code is am5d$ by add+ at ! end !   
foll[+ new item3  ,sec4 #fjej;,,bb4     
,returns relat+ to c]ta9 gifts4  4  7c7 
,effective date ,! am5dm5ts made by ?is 

section %all apply to transf]s aft]     
,decemb] #ca1 #bjbf1 9 taxable ye>s     
beg9n+ aft] su* date4  #f4 ,ext5sion (  
"t = paym5t ( tax  7a7 ,ext5sion ( "t   
7#a7 ,9 g5]al ,sub*apt] ,b ( *apt] #fb (
 ! ,int]nal ,rev5ue ,code ( #aihf is    
am5d$ by add+ at ! end ! foll[+ new     
section3  #fafh4 ,ext5sion ( "t = paym5t
 ( capital ga9s on c]ta9 assets realiz$ 
by reason ( dea?  7a7 #e-,ye> in/allm5t 
paym5t  7#a7 ,9 g5]al ,9 ! case ( any   
ga9 ) respect to eligible prop]ty t is  
recogniz$ "u section #abfa by reason ( !
 dea? ( ! taxpay]1 ! taxpay] may elect  
to pay "p or all ( tax impos$ on su* ga9
 9 #b or m 7b n exce$+ #e7 equal        
in/allm5ts4  7#b7 ,date = paym5t (      
in/allm5ts ,if an election is made "u   
p>agraph 7#a71 ! fir/ in/allm5t %all be 
paid n lat] ?an ! date on :i* ! tax = ! 
taxable ye> 9 :i* ! ga9 describ$ 9      
p>agraph 7#a7 occurs is due1 & ea*      
succe$+ in/allm5t %all be paid on or    
be=e ! date :i* is #a ye> aft] ! date   
prescrib$ by ?is p>agraph = paym5t ( !  

prec$+ in/allm5t4  7b7 ,eligible capital
 asset ,= purposes ( ?is section1 ! t]m 
eligible prop]ty means any prop]ty o!r  
?an p]sonal prop]ty ( a type :i* is     
actively trad$ 7)9 ! mean+ ( section    
#ajib7;d77#a774  7c7 ,portion ( tax     
eligible ,! am\nt ( tax to :i* ?is      
section applies %all n exce$ ! excess   
(-- 7#a7 ! tax comput$ "u *apt] #a      
7det]m9$ aft] application ( section     
#abfa71 ov]  7#b7 ! tax comput$ "u *apt]
 #a 7det]m9$ )\t reg>d to section       
#abfa74  7d7 ,election ,any election "u 
subsection 7a7 %all be made n lat] ?an !
 "t prescrib$ by section #fjgb = fil+ ! 
return ( tax impos$ "u *apt] #a 7includ+
 ext5sions !re(71 & %all be made 9 su*  
mann] z ! ,secret>y %all by regulations 
prescribe4 ,if an election "u subsection
 7a7 is made1 ! provisions ( ?is        
subtitle %all apply z ?\gh ! ,secret>y 7
 ext5d+ ! "t = paym5t ( ! tax4  7e7     
,proration ( defici5cy to in/allm5ts ,if
 an election is made "u subsection 7a7  
to pay any "p ( ! tax impos$ "u *apt] #a

 9 in/allm5ts & a defici5cy has be5     
assess$1 ! defici5cy %all 7subject to ! 
limitation provid$ by subsection        
7a77#b77 be prorat$ to ! in/allm5ts     
payable "u subsection 7a74 ,! "p ( !    
defici5cy s prorat$ to any in/allm5t !  
date = paym5t ( :i* has n arriv$ %all be
 collect$ at ! same "t z1 & z a "p (1   
su* in/allm5t4 ,! "p ( ! defici5cy s    
prorat$ to any in/allm5t ! date = paym5t
 ( :i* has arriv$ %all be paid ^u notice
 & dem& f ! ,secret>y4 ,?is subsection  
%all n apply if ! defici5cy is due to   
neglig5ce1 to int5tional disreg>d (     
rules & regulations1 or to fraud ) int5t
 to evade tax4  7f7 ,"t = paym5t (      
int]e/ ,if ! "t = paym5t ( any am\nt (  
tax has be5 ext5d$ "u ?is section1      
int]e/ payable "u section #ffja on any  
unpaid portion %all be paid annually at 
! same "t z1 & z "p (1 ea* in/allm5t    
paym5t ( ! tax4  7g7 ,regulations ,!    
,secret>y %all prescribe su* regulations
 z may be necess>y to ! application (   
?is section4  7h7 ,cross-,ref]5ces  7#a7

 ,security ,= au?ority ( ! ,secret>y to 
require security 9 ! case ( an ext5sion 
"u ?is section1 see section #fafe4  7#b7
 ,int]e/ ,= provisions relat+ to int]e/ 
on tax payable 9 in/allm5ts "u ?is      
section1 see subsection 7k7 ( section   
#ffja4  4  7#b7 ,coord9ation ) transf]ee
 liability ,section #faji ( su* ,code is
 am5d$ by r$esignat+ subsections 7g71   
7h71 & 7i7 z subsections 7h71 7i71 &    
7j71 respectively1 & by ins]t+ aft]     
subsection 7f7 ! foll[+ new subsection3 
7g7 ,p]iod ( assessm5t 9 case ( ext5sion
 ( "t = paym5t ( tax "u section #abfa ,=
 purposes ( subsection 7c71 ! p]iod (   
limitation = assessm5t aga9/ ! transf]or
 ( any tax impos$ "u section #abfa !    
paym5t ( :i* is ext5d$ "u section #fafh 
%all n be treat$ z expir+ e>li] ?an !   
due date = ! la/ paym5t "u 7a77#b7 ( su*
 section4  4  7#c7 ,cl]ical am5dm5t ,!  
table ( sections = subp>t ,b ( *apt] #fb
 ( su* ,code is am5d$ by add+ at ! end !
 foll[+ new item3  ,sec4 #fafh4         
,ext5sion ( "t = paym5t ( capital ga9s  

on c]ta9 assets realiz$ by reason (     
dea?4  4  7b7 ,int]e/ ,section #ffja (  
su* ,code is am5d$ by r$esignat+        
subsection 7k7 z subsection 7l7 & by    
ins]t+ aft] subsection 7j7 ! foll[+ new 
subsection3  7k7 ,special rate = tax    
ext5d$ "u section #fafh ,if ! "t =      
paym5t ( an am\nt ( tax impos$ by       
section #abfa is ext5d$ z provid$ 9     
section #fafh1 9 lieu ( ! annual rate   
provid$ by subsection 7a71 int]e/ %all  
be paid at a rate equal to #de p]c5t ( !
 annual rate provid$ by subsection 7a74 
,= purposes ( ?is subsection1 ! am\nt ( 
any defici5cy :i* is prorat$ to         
in/allm5ts payable "u section #fafh %all
 be treat$ z an am\nt ( tax payable 9   
in/allm5ts "u su* section4  4  7c7      
,effective date ,! am5dm5ts made by ?is 
section %all apply to taxable ye>s      
beg9n+ aft] ,decemb] #ca1 #bjbf4  #g4   
,limitation on use ( l-k9d ex*anges to  
avoid tax on real e/ate ga9s  7a7       
,limitation on nonrecognition ( ga9     
,section #ajca7;a7 ( ! ,int]nal ,rev5ue 

,code ( #aihf is am5d$ by add+ at ! end 
! foll[+ new p>agraph3  7#d7            
,limitations  7,a7 ,annual limitation ,!
 am\nt ( ga9 exclud$ f recognition "u   
p>agraph 7#a7 ) respect to any prop]ty (
 ! taxpay] dur+ ! taxable ye> :i* is n  
qualifi$ prop]ty %all n exce$ #ejj1jjj4 
7,b7 ,aggregate limitation ,! aggregate 
am\nt ( ga9 exclud$ f recognition "u    
subp>agraph 7,a7 by ! taxpay] = all     
taxable ye>s %all n exce$ #a1jjj1jjj4   
7,c7 ,qualifi$ prop]ty ,= purposes ( ?is
 p>agraph1 ! t]m qualifi$ prop]ty means 
prop]ty-- 7i7 :i* is us$ = f>m+         
purposes1 or  7ii7 :i* is ex*ang$ =     
prop]ty t w s]ve ! same specific        
purpose4  4  7b7 ,effective date ,!     
am5dm5t made by ?is section %all apply  
to ex*anges ( real prop]ty aft] ,decemb]
 #ca1 #bjbf4  #h4 ,limitation on        
d$uction = qualifi$ bus9ess income  7a7 
,9 g5]al ,section #aii;,a7a77#b7 ( !    
,int]nal ,rev5ue ,code ( #aihf is       
am5d$-- 7#a7 9 subp>agraph 7,a71 by     
/rik+ ! taxable income ( ! taxpay] = !  

taxable ye> & ins]t+ s mu* ( ! taxable  
income ( ! taxpay] = ! taxable ye> z    
does n exce$ #a1jjj1jjj1 &  7#b7 9      
subp>agraph 7,b71 by /rik+ ! net capital
 ga9 7z def9$ 9 section #a7;h77 ( !     
taxpay] = su* taxable ye> & ins]t+ all  
income ( ! taxpay] = su* taxable ye> o!r
 ?an qualifi$ bus9ess income4  7b7      
,effective date ,! am5dm5t made by ?is  
section %all apply to taxable ye>s      
beg9n+ aft] ,decemb] #ca1 #bjbf4