,,ii #aai? ,,congress #b;d ,session ,s4 #ddij ,,9 ,,! ,,s5ate ,,( ,,! ,,unit$ ,,/ates ,may #ab1 #bjbf,mrs4 ,murray 7= h]self1 ,mr4 ,wyd51 ,mr4 ,van ,holl51 ,mr4 ,book]1 & ,ms4 ,alsobrooks7 introduc$ ! foll[+ bill2 :i* 0 read twice & ref]r$ to ! ,committee on ,f9ance ,a ,,bill ,to am5d ! ,int]nal ,rev5ue ,code ( #aihf to provide a tax on ! assets ( tru/s1 & = o!r purposes4 #a4 ,%ort title ,?is ,act may be cit$ z ! ,fair ,tru/s = ,fiscal ,responsibility ,act4 #b4 ,imposition ( tax on assets ( tru/s 7a7 ,9 g5]al ,subtitle ,b ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by add+ at ! end ! foll[+ new *apt]3 #af ,tax on tru/ assets ,,sub*apt] ,a--,tax imposed,s,u,b,c,h,a,p,t,e,r ,b--,tru/ )hold+ cr$it account,s,u,b,c,h,a,p,t,e,r ,c--,def9itions & o!r rules ,a ,tax impos$ ,sec4 #bija4 ,imposition ( tax4,sec4 #bijb4 ,computation ( tax4 #bija4 ,imposition ( tax 7a7 ,9 g5]al ,!re is h]eby impos$ a tax on ! net value ( all assets ( an applicable tru/ held on ! la/ day ( any cal5d> ye>4 7b7 ,limitation ,! am\nt ( tax impos$ "u ?is *apt] on any applicable tru/ %all n exce$ ! excess 7if any7 (-- 7#a7 product (-- 7,a7 ! sum (-- 7i7 ! net value ( all assets ( ! tru/ held z ( ! la/ day ( ! cal5d> ye>1 plus 7ii7 ! balance ( ! tru/ )hold+ cr$it acc\nt 7z det]m9$ "u section #biaa7 z ( su* day1 & 7,b7 ! highe/ rate ( tax "u section #bjja7;c7 on ! e/ates ( dec$5ts dy+ on su* day1 ov] 7#b7 ! am\nt det]m9$ "u p>agraph 7#a77;,a77ii74 #bijb4 ,computation ( tax 7a7 ,9 g5]al ,! tax impos$ by section #bija %all be equal to ! sum (-- 7#a7 #j p]c5t ( s mu* ( ! net value ( all assets ( ! tru/ z does n exce$ ! #a p]c5t bracket ?re%old1 7#b7 #a p]c5t ( s mu* ( ! net value ( all assets ( ! tru/ 9 excess ( ! #a p]c5t bracket ?re%old b n 9 excess ( ! #a4e p]c5t bracket ?re%old1 7#c7 #a4e p]c5t ( s mu* ( ! net value ( all assets ( ! tru/ 9 excess ( ! #a4e p]c5t bracket ?re%old b n 9 excess ( ! #b p]c5t bracket ?re%old1 7#d7 #b p]c5t ( s mu* ( ! net value ( all assets ( ! tru/ 9 excess ( ! #b p]c5t bracket ?re%old b n 9 excess ( ! #c p]c5t bracket ?re%old1 plus 7#e7 #c p]c5t ( s mu* ( ! net value ( all assets ( ! tru/ 9 excess ( ! #c p]c5t bracket ?re%old4 7b7 ,det]m9ation ( bracket ?re%olds 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is *apt]-- 7,a7 #a p]c5t bracket ?re%old ,! #a p]c5t bracket ?re%old %all be equal to ! less] (-- 7i7 #ej1jjj1jjj1 or 7ii7 ! sum (-- 7,i7 #j1 plus 7,,ii7 ! l[e/ unus$ #a p]c5t bracket am\nt allocat$ to ! tru/ f among all b5efici>ies ( ! tru/4 7,b7 #a4e p]c5t bracket ?re%old ,! #a4e p]c5t bracket ?re%old %all be equal to ! less] (-- 7i7 #ajj1jjj1jjj1 or 7ii7 ! sum (-- 7,i7 ! #a p]c5t bracket ?re%old1 plus 7,,ii7 ! l[e/ unus$ #a4e p]c5t bracket am\nt allocat$ to ! tru/ f among all b5efici>ies ( ! tru/4 7,c7 #b p]c5t bracket ?re%old ,! #b p]c5t bracket ?re%old %all be equal to ! less] (-- 7i7 #bej1jjj1jjj1 or 7ii7 ! sum (-- 7,i7 ! #a4e p]c5t bracket ?re%old1 plus 7,,ii7 ! l[e/ unus$ #b p]c5t bracket am\nt allocat$ to ! tru/ f among all b5efici>ies ( ! tru/4 7,d7 #c p]c5t bracket ?re%old ,! #c p]c5t bracket ?re%old %all be equal to ! less] (-- 7i7 #a1jjj1jjj1jjj1 or 7ii7 ! sum (-- 7,i7 ! #b p]c5t bracket ?re%old1 plus 7,,ii7 ! l[e/ unus$ #c p]c5t bracket am\nt allocat$ to ! tru/ f among all b5efici>ies ( ! tru/4 7#b7 ,treatm5t ( corporations1 p>tn]%ips1 & tru/s ,9 ! case ( any tru/ all ( ! b5efici>ies ( :i* are corporations1 p>tn]%ips1 or tru/s 7aft] application ( ! rules ( p>agraphs 7#b7 & 7#c7 ( section #bibb7;b77-- 7,a7 ! #a p]c5t bracket ?re%old %all be equal to ! am\nt 9 effect "u p>agraph 7#a77;,a77i71 7,b7 ! #a4e p]c5t bracket ?re%old %all be equal to ! am\nt 9 effect "u p>agraph 7#a77;,b77i71 7,c7 ! #b p]c5t bracket ?re%old %all be equal to ! am\nt 9 effect "u p>agraph 7#a77;,c77i71 & 7,d7 ! #c p]c5t bracket ?re%old %all be equal to ! am\nt 9 effect "u p>agraph 7#a77;,d77i74 7#c7 ,inflation adju/m5t 7,a7 ,9 g5]al ,9 ! case ( any cal5d> ye> beg9n+ aft] #bjbg1 ea* ( ! doll> am\nts 9 subp>agraphs 7,a77i71 7,b77i71 7,c77i71 & 7,d77i7 ( p>agraph 7#a7 %all be increas$ by an am\nt equal to-- 7i7 su* doll> am\nt1 multipli$ by 7ii7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;f77#c7 = su* cal5d> ye>1 det]m9$ by sub/itut+ 9 subp>agraph 7,a77ii7 !re( cal5d> ye> #bjbf = cal5d> ye> #bjaf4 7,b7 ,r\nd+ ,if any am\nt z adju/$ "u subp>agraph 7,a7 is n a multiple ( #aj1jjj1 su* doll> am\nt %all be r\nd$ to ! next l[e/ multiple ( #aj1jjj4 7c7 ,allocation ( unus$ bracket am\nts 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am\nt ( any category ( unus$ bracket am\nt allocat$ to any tru/ f a b5efici>y %all be equal to ! product (-- 7,a7 ! maximum am\nt ) respect to su* category z det]m9$ "u p>agraph 7#c77;,b71 & 7,b7 ! ratio (-- 7i7 ! pres5t value ( ! b5efici>y's b5eficial int]e/ 9 su* tru/ 7det]m9$ z provid$ 9 section #fjci,m7c77#c771 to 7ii7 ! pres5t value ( ! b5efici>y's b5eficial int]e/ 7z s det]m9$7 9 all applicable tru/s4 7#b7 ,election to assign diff]5t am\nts ,a b5efici>y may elect to allocate ! am\nt ( any category ( unus$ bracket am\nt 9 a diff]5t mann] ?an provid$ 9 p>agraph 7#a71 except t ! aggregate am\nt ( any category ( unus$ bracket am\nts allocat$ to all tru/s = :i* su* p]son is a b5efici>y may n exce$ ! maximum am\nt ) respect to su* category z det]m9$ "u p>agraph 7#c77;,b74 ,an election made "u ?is section %all be made at su* "t & 9 su* mann] z specifi$ by ! ,secret>y 9 regulations4 7#c7 ,categories ( unus$ bracket am\nts2 maximum am\nt 7,a7 ,categories ( unus$ bracket am\nts ,= purposes ( ?is subsection1 ! categories ( unus$ bracket am\nts are-- 7i7 ! unus$ #a p]c5t bracket am\nt1 7ii7 ! unus$ #a4e p]c5t bracket am\nt1 7iii7 ! unus$ #b p]c5t bracket am\nt1 & 7iv7 ! unus$ #c p]c5t bracket am\nt4 7,b7 ,maximum am\nt ,) respect to any p]son = any cal5d> ye>-- 7i7 ! maximum am\nt ) respect to ! unus$ #a p]c5t bracket am\nt %all be equal to ! am\nt 9 effect "u subsection 7b77#a77;,a77i71 7ii7 ! maximum am\nt ) respect to ! unus$ #a4e p]c5t bracket am\nt %all be equal to ! am\nt 9 effect "u subsection 7b77#a77;,b77i71 7iii7 ! maximum am\nt ) respect to ! unus$ #b p]c5t bracket am\nt %all be equal to ! am\nt 9 effect "u subsection 7b77#a77;,c77i71 & 7iv7 ! maximum am\nt ) respect to ! unus$ #c p]c5t bracket am\nt %all be equal to ! am\nt 9 effect "u subsection 7b77#a77;,d77i74 7#d7 ,special rule = c]ta9 b5efici>ies 7,a7 ,9 g5]al ,9 ! case ( any b5efici>y describ$ 9 subp>agraph 7,b71 no am\nt %all be allocat$ "u ?is section & ! det]m9ation ( ! l[e/ am\nt allocat$ to a tru/ "u subp>agraphs 7,a77ii77,,ii71 7,b77ii77,,ii71 7,c77ii77,,ii71 & 7,d77ii77,,ii7 ( subsection 7b77#a7 %all be det]m9$ )\t reg>d to su* b5efici>y4 7,b7 ,b5efici>ies describ$ ,a b5efici>y is describ$ 9 ?is subp>agraph if-- 7i7 su* b5efici>y is an exempt b5efici>y1 or 7ii7 su* b5efici>y is p]son describ$ 9 section #fjci,m7b77#b74 ,b ,tru/ )hold+ cr$it acc\nt ,sec4 #biaa4 ,tru/ )hold+ cr$it acc\nt4 #biaa4 ,tru/ )hold+ cr$it acc\nt 7a7 ,9 g5]al ,"u rules e/abli%$ by ! ,secret>y-- 7#a7 ea* applicable tru/ :i* is subject to a tax impos$ "u ?is *apt]1 & 7#b7 ea* b5efici>y ( an applicable tru/ :o receives a qualifi$ di/ribution1 %all e/abli% a tru/ )hold+ cr$it acc\nt4 7b7 ,additions to acc\nt 7#a7 ,tru/s ,! balance ( ! tru/ )hold+ cr$it acc\nt = any applicable tru/ %all be increas$ by ! am\nt ( tax impos$ "u ?is *apt] :i* is paid by or on behalf ( ! tru/4 7#b7 ,b5efici>ies 7,a7 ,9 g5]al ,! balance ( ! tru/ )hold+ cr$it acc\nt = any b5efici>y :o receives a qualifi$ di/ribution %all be increas$ by ! ratable %>e ) respect to su* di/ribution4 7,b7 ,di/ributions to c]ta9 corporate %>ehold]s & p>tn]s -- 7i7 ,9 g5]al ,= purposes ( ?is section1 9 ! case ( a qualifi$ di/ribution to a corporation or p>tn]%ip ) respect to :i* a %>ehold] or p>tn] is treat$ z a b5efici>y by reason ( section #bibb7;b77#c77;,b71 su* %>ehold] or p>tn] 7z ! case may be7 %all be treat$ z hav+ directly receiv$ a qualifi$ di/ribution 9 an am\nt equal to ! applicable p]c5tage ( ! am\nt ( ! di/ribution made to su* corporation or p>tn]%ip4 7ii7 ,applicable p]c5tage ,= purposes ( ?is subp>agraph1 ! applicable p]c5tage is ! p]c5tage ( ! own]%ip int]e/ held by su* individual 9 ! corporation or p>tn]%ip at ! "t ( ! di/ribution 7det]m9$ z provid$ "u section #bibb7;b77#c77;,b774 7,c7 ,limitation ,9 ! case ( a qualifi$ di/ribution :i* is a direct skip f a tru/ 7)9 ! mean+ ( *apt] #ac71 ! am\nt ( ! increase "u subp>agraph 7,a7 %all be r$uc$ by ! am\nt ( cr$it all[$ "u section #bfjd7;c77#b7 7if any7 to ! tru/ mak+ ! di/ribution4 7c7 ,subtractions 7#a7 ,tru/s ,! balance ( ! tru/ )hold+ cr$it acc\nt = any applicable tru/ %all be r$uc$ by-- 7,a7 ! ratable %>e ) respect to any qualifi$ di/ribution made by ! tru/1 & 7,b7 9 ! case ( a taxable t]m9ation 7z def9$ 9 section #bfab71 ! sum (-- 7i7 ! am\nt ( any cr$it all[$ "u section #bfjd7;a71 plus 7ii7 ! product (-- 7,i7 ! am\nt det]m9$ "u section #bfjd7;a77#a7 ) respect to su* taxable t]m9ation1 & 7,,ii7 ! excess ( #a ov] ! inclusion ratio 7z def9$ 9 section #bfdb74 7#b7 ,b5efici>ies ,! balance ( ! tru/ )hold+ cr$it acc\nt = any b5efici>y %all be r$uc$ by ! am\nt ( cr$its all[$ to ! b5efici>y "u sections #bjag1 #bfjd7;b71 & #bfjd7;c74 7d7 ,qualifi$ di/ribution ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m qualifi$ di/ribution means any di/ribution :i*-- 7,a7 is made f an applicable tru/ :i* is subject to a tax "u ?is *apt]1 & 7,b7 is made to any p]son o!r ?an an exempt b5efici>y4 7#b7 ,special rule = c]ta9 tru/s ,9 ! case ( a prop]ty 9 an applicable tru/ :i* is includible 9 ! gross e/ate ( an individual1 su* prop]ty %all be treat$ z di/ribut$ f ! applicable tru/ to ! individual 9 a qualifi$ di/ribution 7& su* individual %all be treat$ z ! b5efici>y ( su* tru/ = purposes ( subsection 7b77#b77 on ! e>li] (-- 7,a7 ! date su* prop]ty is di/ribut$ f ! tru/1 or 7,b7 ! date ( ! dea? ( su* individual4 7e7 ,ratable %>e ,= purposes ( ?is section1 ! t]m ratable %>e means1 ) respect to any qualifi$ di/ribution1 ! am\nt :i* be>s ! same ratio to ! balance ( ! tru/ )hold+ cr$it acc\nt 7det]m9$ imm$iately be=e ! qualifi$ di/ribution7 z-- 7#a7 ! am\nt ( ! qualifi$ di/ribution1 be>s to 7#b7 ! net value ( assets ( ! tru/ 7det]m9$ imm$iately be=e ! qualifi$ di/ribution74 ,c ,def9itions & o!r rules ,sec4 #biba4 ,det]m9ation ( net value ( assets4,sec4 #bibb4 ,o!r def9itions & special rules4 #biba4 ,det]m9ation ( net value ( assets 7a7 ,9 g5]al ,= purposes ( ?is *apt]1 ! t]m net value ( all assets means1 z ( any date1 ! value ( all prop]ty ( ! tru/1 real or p]sonal1 tangible or intangible1 :]ev] situat$1 r$uc$ by any qualifi$ debts ow$ by ! taxpay]4 7b7 ,value ( prop]ty 7#a7 ,tradable assets 7,a7 ,9 g5]al ,9 ! case ( any tradable asset1 ! value ( su* asset %all be ! fair m>ket value ( su* asset4 7,b7 ,tradable asset ,= purposes ( ?is p>agraph1 ! t]m tradable asset means any asset if-- 7i7 int]e/s 9 su* asset are trad$ on an e/abli%$ securities m>ket1 7ii7 int]e/s 9 su* assets are readily tradable on a second>y m>ket 7or ! sub/antial equival5t !re(71 7iii7 int]e/s 9 su* assets are available on an onl9e or electronic plat=m t regul>ly mat*es1 or facilitates ! mat*+ (1 buy]s & sell]s ( su* assets1 or 7iv7 su* asset is an asset = :i* ! ,secret>y det]m9es !re is a reasonable basis to det]m9e ! asset's fair m>ket value annually4 7#b7 ,o!r assets 7,a7 ,9 g5]al ,9 ! case ( any asset :i* is n a tradable asset1 ! value ( su* asset %all be-- 7i7 9 any case 9 :i* !re has be5 a qualifi$ appraisal 7z def9$ 9 section #agj7;f77#aa77;,e77 conduct$ )9 ! #b-ye> p]iod end+ on ! date ! value is det]m9$ = purposes ( ?is *apt]1 ! value det]m9$ "u su* appraisal1 & 7ii7 9 any o!r case1 ! value ( su* prop]ty det]m9$ "u su* o!r me?od z prescrib$ by ! ,secret>y4 7,b7 ,det]m9ation :]e no alt]native me?od ,if subp>agraph 7,a77i7 does n apply & ! ,secret>y has n prescrib$ a me?od "u subp>agraph 7,a77ii71 ! value ( su* asset %all be ! great] (-- 7i7 ! sum (-- 7,i7 ! basis ( su* asset1 & 7,,ii7 ! product (-- 7aa7 ! am\nt det]m9$ "u subclause 7,i71 & 7bb7 ! sum ( #a p]c5t & ! long-t]m rate det]m9$ "u section #abgd7;d7 = ! applicable mon?1 comp\nd$ semiannually1 or 7ii7 ! value ( su* prop]ty det]m9$ by a qualifi$ appraisal 7z def9$ 9 section #agj7;f77#aa77;,e77 conduct$ )9 ! #e-ye> p]iod end+ on ! date ! value is det]m9$ = purposes ( ?is *apt]4 7,c7 ,applicable mon? ,= purposes ( subp>agraph 7,b77i77,,ii7-- 7i7 ,9 g5]al ,except z provid$ 9 clause 7ii71 ! t]m applicable mon? means1 ) respect to any asset1 ! mon? 9 :i* su* asset 0 acquir$ by ! taxpay]4 7ii7 ,c]ta9 assets ) c>ryov] basis ,9 ! case ( any asset ! basis 9 ! h&s ( ! taxpay] 0 det]m9$ by ref]5ce to ! basis 9 ! h&s ( ano!r p]son1 ! t]m applicable mon? means ! mon? 9 :i* su* asset 0 acquir$ by su* o!r p]son4 7#c7 ,limitation on disc\nt by reason ( family control 7,a7 ,9 g5]al ,= purposes ( ?is *apt]1 9 ! case ( any int]e/ 9 an entity o!r ?an an int]e/ :i* is actively trad$ 7)9 ! mean+ ( section #ajib71 if ! p]son :o transf]r$ su* int]e/1 ! transf]ee1 & memb]s ( ! family ( ! transf]or & transf]ee h control ( su* entity imm$iately be=e su* transf]1 no disc\nt %all be all[$-- 7i7 by reason ( ! fact t ! transf]or or transf]ee does n h control ( su* entity1 7ii7 by reason ( ! lack ( m>ketability ( ! int]e/1 or 7iii7 = any o!r reason4 7,b7 ,def9itions ,9 ?is p>agraph1 ! t]ms control & memb] ( ! family h ! same mean+s giv5 su* t]ms 9 section #bgjd7;c74 7,c7 ,attribution ,= purposes ( ?is p>agraph1 ! rule ( section #bgja7;e77#c7 %all apply = purposes ( det]m9+ ! int]e/s held by any individual4 7#d7 ,valuation rules = c]ta9 nonbus9ess assets held by nontradable entities 7,a7 ,9 g5]al ,= purposes ( ?is *apt]1 9 ! case ( any int]e/ 9 an entity o!r ?an an int]e/ :i* is a tradable asset-- 7i7 ! value ( any nonbus9ess assets held by ! entity ) respect to su* int]e/ %all be det]m9$ z if ! own] ( ! entity directly held its ratable %>e ( su* nonbus9ess assets 7& no valuation disc\nt %all be all[$ ) respect to su* nonbus9ess assets71 & 7ii7 su* nonbus9ess assets %all n be tak5 into acc\nt 9 det]m9+ ! value ( ! int]e/ 9 ! entity & ! basis ( su* nonbus9ess assets %all n be tak5 into acc\nt 9 det]m9+ ! basis ( su* int]e/ "u p>agraph 7#b77;,a77i74 7,b7 ,nonbus9ess assets ,= purposes ( ?is p>agraph-- 7i7 ,9 g5]al ,! t]m nonbus9ess asset means any asset o!r ?an an asset :i* is us$ 9 ! active conduct ( a trade or bus9ess4 7ii7 ,passive assets treat$ z nonbus9ess assets ,= purposes ( clause 7i71 a passive asset %all be treat$ z a nonbus9ess asset unless-- 7,i7 ! asset is prop]ty describ$ 9 p>agraph 7#a7 or 7#d7 ( section #abba7;a7 or is a h$ge ) respect to su* prop]ty1 or 7,,ii7 ! asset is real prop]ty us$ 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 7iii7 ,mat]ial p>ticipation ,= purposes ( clause 7ii77,,ii71 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 7iv7 ,work+ capital treat$ z us$ 9 trade or bus9ess ,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 p>agraph1 ! t]m passive asset means any-- 7i7 ca% or ca% equival5ts1 7ii7 /ock 9 a corporation or any o!r equity1 pr(its1 or capital int]e/ 9 any entity1 7iii7 evid5ce ( indebt$ness1 option1 =w>d or futures contract1 notional pr9cipal contract1 or d]ivative1 7iv7 asset describ$ 9 clause 7iii71 7iv71 or 7v7 ( section #cea7;e77#a77;,b71 7v7 annuity1 7vi7 real prop]ty us$ 9 #a or m real prop]ty trades or bus9esses 7z def9$ 9 section #dfi7;c77#g77;,c771 7vii7 asset 7o!r ?an a pat5t1 tradem>k1 or copyright7 :i* produces royalty income1 7viii7 commodity1 7ix7 collectible 7)9 ! mean+ ( section #djh7m771 or 7x7 any o!r asset specifi$ 9 regulations prescrib$ by ! ,secret>y4 7,d7 ,look-?ru rule 7i7 ,9 g5]al ,if a nonbus9ess asset ( an entity describ$ 9 subp>agraph 7,a7 consi/s ( a #aj-p]c5t int]e/ 9 any o!r entity1 ?is p>agraph %all be appli$ by disreg>d+ ! #aj-p]c5t int]e/ & by treat+ ! entity z hold+ directly its ratable %>e ( ! assets ( ! o!r entity4 7ii7 #aj-p]c5t int]e/ ,! t]m #aj-p]c5t int]e/ means-- 7,i7 9 ! case ( an int]e/ 9 a corporation1 direct own]%ip ( at lea/ #aj p]c5t 7by vote or value7 ( ! /ock 9 su* corporation1 7,,ii7 9 ! case ( an int]e/ 9 a p>tn]%ip1 direct own]%ip ( at lea/ #aj p]c5t ( ! capital or pr(its int]e/ 9 ! p>tn]%ip1 & 7,,iii7 9 any o!r case1 direct own]%ip ( at lea/ #aj p]c5t ( ! b5eficial int]e/s 9 ! entity4 7c7 ,qualifi$ debt ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m qualifi$ debt means any debt o!r ?an any debt to a p]son-- 7,a7 :o made a contribution to ! tru/1 7,b7 :o is a b5efici>y ( ! tru/1 or 7,c7 :o is relat$ 7)9 ! mean+ ( section #bfg7;b77 to ! tru/ or to a p]son describ$ 9 subp>agraph 7,a7 or 7,b74 7#b7 ,treatm5t ( nonrec\rse debt ,9 ! case ( any debt :i* is nonrec\rse debt1 ! am\nt ( qualifi$ debt %all n exce$ ! value ( ! prop]ty secur+ su* debt4 7d7 ,regulations ,n lat] ?an #ab mon?s aft] ! date ( ! enactm5t ( ?is section1 ! ,secret>y %all e/abli% rules & me?ods = det]m9+ ! value ( any asset = purposes ( ?is *apt]1 includ+ rules = ! valuation ( assets t are n publicly trad$ or t d n h a readily asc]ta9able value4 #bibb4 ,o!r def9itions & special rules 7a7 ,applicable tru/ ,= purposes ( ?is *apt]-- 7#a7 ,9 g5]al ,! t]m applicable tru/ means any tru/ or any portion ( a tru/ to ! ext5t t su* tru/ or portion-- 7,a7 is a ,unit$ ,/ates p]son describ$ 9 section #ggja7;a77#cj77;,e71 7,b7 has "o or m b5efici>ies :o are ,unit$ ,/ates p]sons describ$ 9 section #ggja7;a77#cj71 or 7,c7 has "o or m liv+ grantors :o are ,unit$ ,/ates p]sons describ$ 9 section #ggja7;a77#cj77;,a74 ,= purposes ( ?is p>agraph1 a liv+ p]son :o is relat$ 7det]m9$ "u section #bfg7;b71 appli$ by sub/itut+ #e p]c5t = #ej p]c5t ea* place x appe>s7 to a grantor describ$ 9 subp>agraph 7,c7 %all be treat$ z a p]son describ$ 9 su* subp>agraph4 7#b7 ,exceptions ,! t]m applicable tru/ does n include-- 7,a7 a tru/-- 7i7 :i* is an organization describ$ 9 p>agraphs 7#a7 ?r\gh 7#e7 ( section #bjee7;a71 or 7ii7 f :i* only transf]s describ$ 9 section #bjee7;a7 may be made1 7,b7 a tru/ describ$ 9 section #dja7;a7 & exempt f tax "u section #eja7;a71 7,c7 a tru/ us$ to facilitate issuance ( securities 7z det]m9$ by ! ,secret>y "u regulations71 7,d7 a tru/ :i*-- 7i7 has a maximum duration ( less ?an #a ye>1 & 7ii7 is organiz$ & op]at$ exclusively = a comm]cial purpose det]m9$ by ! ,secret>y to be applicable "u ?is subsection1 & 7,e7 any tru/ or portion ( a tru/ :]e9 ! p[] to reve/ absolutely 9 ! grantor title to ! tru/ prop]ty to :i* su* portion is attributable is ex]cisable solely by ! grantor )\t ! approval or cons5t ( any o!r p]son4 7b7 ,det]m9ation ( b5efici>ies2 exempt b5efici>y ,= purposes ( ?is *apt]-- 7#a7 ,cont+5t b5efici>ies 7,a7 ,9 g5]al ,except z provid$ 9 subp>agraph 7,b71 ! t]m b5efici>y %all n include any p]son ^: int]e/ 9 an applicable tru/ is cont+5t on ! dea? ( ano!r p]son ) an int]e/ 9 su* tru/4 7,b7 ,exception ,! t]m b5efici>y %all include a p]son ^: int]e/ 9 an applicable tru/ is cont+5t on ! dea? ( ano!r p]son ) an int]e/ 9 su* tru/ if-- 7i7 !re exi/s "o or m p]sons ^: int]e/ 9 su* tru/ is n cont+5t on ! dea? ( ano!r p]son1 & 7ii7 ! am\nt ( funds t may be di/ribut$ to any su* p]son are limit$ by ! tru/ in/rum5t or by means o!r ?an ! sole discretion ( ! tru/ee4 7#b7 ,treatm5t ( b5efici>y tru/s ,if a tru/ is ! b5efici>y ( ano!r tru/1 ea* tru/ or individual :i* holds a b5eficial int]e/ 9 su* tru/ %all be treat$ z a b5efici>y ( su* o!r tru/4 7#c7 ,corporations & p>tn]%ips 7,a7 ,9 g5]al ,except = purposes ( subp>agraph 7,b71 ! t]m b5efici>y %all n include a corporation or a p>tn]%ip4 7,b7 ,treatm5t ( #e-p]c5t own]s 7i7 ,9 g5]al ,! t]m b5efici>y %all include-- 7,i7 any %>ehold] ( a corporation :i* is ! b5efici>y ( an applicable tru/ if su* %>ehold] holds #e p]c5t or m ( ! /ock 7by vote or value7 ( su* corporation1 & 7,,ii7 any p>tn] ( a p>tn]%ip :i* is ! b5efici>y ( an applicable tru/ if su* p>tn] owns m ?an #e p]c5t ( ! capital or pr(its int]e/ 9 ! p>tn]%ip4 7ii7 ,con/ructive own]%ip rules ,= purposes ( clause 7i71 rules simil> to ! rules ( p>agraphs 7#b71 7#c71 7#d71 & 7#e7 ( section #cah7;a7 %all apply4 7#d7 ,exempt b5efici>y ,! t]m exempt b5efici>y means any b5efici>y :i* is an organization describ$ 9 section #bjee7;a74 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 #fjci,l ! foll[+ new section3 #fjci,m4 ,in=mation ) respect to tru/ asset tax 7a7 ,/atem5t ( net assets ,n lat] ?an ,april #a ( ea* cal5d> ye>1 e applicable tru/ %all file ) ! ,secret>y a /atem5t sett+ =?-- 7#a7 ! "n & taxpay] id5tification numb] ( su* tru/1 7#b7 ! net value ( assets ( su* tru/ z ( ! la/ day ( ! prec$+ cal5d> ye>1 7#c7 ! "n & taxpay] id5tification numb] ( ea* b5efici>y ( su* tru/1 & 7#d7 ! pres5t value ( ! b5eficial int]e/s 9 ! tru/ ( ea* su* b5efici>y z ( ! la/ day ( ! prec$+ cal5d> ye>4 7b7 ,allocation ( unus$ bracket am\nt 7#a7 ,9 g5]al ,n lat] ?an ,june #a ( ea* cal5d> ye>1 ea* b5efici>y ( an applicable tru/ %all submit to ! ,secret>y a /atem5t sett+ =?-- 7,a7 ! "n & taxpay] id5tification numb] ( su* b5efici>y1 7,b7 ! "n & taxpay] id5tification numb] ( ea* applicable tru/ ( :i* su* individual is a b5efici>y1 & 7,c7 ! am\nt (-- 7i7 ! unus$ #a p]c5t bracket am\nt allocat$ to ea* su* tru/ "u section #bijb7;c71 7ii7 ! unus$ #a4e p]c5t bracket am\nt allocat$ to ea* su* tru/ "u section #bijb7;c71 7iii7 ! unus$ #b p]c5t bracket am\nt allocat$ to ea* su* tru/ "u section #bijb7;c71 & 7iv7 ! unus$ #c p]c5t bracket am\nt allocat$ to ea* su* tru/ "u section #bijb7;c74 7#b7 ,exception ,p>agraph 7#a7 %all n apply to any p]son if ! aggregate pres5t value ( b5eficial int]e/s 9 all tru/s ) respect to :i* su* p]son is a b5efici>y is less ?an #bej1jjj4 7#c7 ,copies to tru/s ,ea* b5efici>y requir$ to submit a /atem5t "u p>agraph 7#a7 %all 7on or be=e ! day on :i* ! /atem5t 0 requir$ to be fil$7 furni% to ea* applicable tru/ id5tifi$ on ! /atem5t ! in=mation requir$ "u p>agraph 7#a7 ) respect to su* applicable tru/4 7c7 ,def9itions & o!r rules ,= purposes ( ?is section-- 7#a7 ,applicable tru/ ,! t]m applicable tru/ has ! mean+ giv5 su* t]m "u *apt] #af4 7#b7 ,b5efici>y ,! t]m b5efici>y has ! mean+ giv5 su* t]m "u section #bibb7;b74 7#c7 ,pres5t value ( b5eficial int]e/s ,! pres5t value ( a p]son's b5eficial int]e/ 9 a tru/ %all be det]m9$ 9 proportion to ! actu>ial int]e/ ( su* p]son 9 su* tru/4 4 7#b7 ,p5alties 7,a7 ,initial /atem5ts ,section #fgbd7;d77#a7 ( su* ,code is am5d$ by /rik+ & at ! end ( subp>agraph 7,b71 by /rik+ & at ! end ( subp>agraph 7,c71 by /rik+ ! p]iod at ! end ( subp>agraph 7,d7 & ins]t+ 1 &1 & by ins]t+ aft] subp>agraph 7,d7 ! foll[+ new subp>agraph3 7,e7 any /atem5t requir$ to be fil$ "u subsection 7a7 or 7b77#a7 ( section #fjci,m4 4 7,b7 ,copies ,section #fgbd7;d77#b7 ( su* ,code is am5d$ by /rik+ or at ! end ( subp>agraph 7,,nn71 by /rik+ ! p]iod at ! end ( subp>agraph 7,,oo7 & ins]t+ 1 or1 & by ins]t+ aft] subp>agraph 7,,oo7 ! foll[+ new subp>agraph3 7,,pp7 section #fjci,m7b77#c74 4 7#c7 ,cl]ical am5dm5t ,! table ( sections = subp>t ,a ( "p ,,iii ( sub*apt] ,a ( *apt] #fa ( su* ,code is am5d$ by ins]t+ aft] ! item relat+ to section #fjci,l ! foll[+ new item3 ,sec4 #fjci,m4 ,in=mation ) respect to tru/ asset tax4 4 7c7 ,no d$uction f income taxes ,section #bge ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by ins]t+ aft] p>agraph 7#f7 ! foll[+ new p>agraph3 7#g7 ,taxes impos$ by *apt] #af4 4 7d7 ,cl]ical am5dm5t ,! table ( *apt]s = ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by ins]t+ aft] ! item relat+ to *apt] #ae ! foll[+ new item3 ,*apt] #af--,tax on tru/ assets 4 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to cal5d> ye>s beg9n+ aft] ,decemb] #ca1 #bjbf4 #c4 ,coord9ation ) e/ate & g5]ation-skipp+ & e/ate taxes 7a7 ,tax on g5]ation-,skipp+ transf]s 7#a7 ,gross-up ( taxable am\nt ,sub*apt] ,c ( *apt] #ac ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by add+ at ! end ! foll[+ new section3 #bfbe4 ,gross up ( taxable am\nt to include additions to tru/ )hold+ cr$it acc\nt ,! taxable am\nt %all be increas$-- 7#a7 9 ! case ( a taxable t]m9ation1 by ! am\nt :i* be>s ! same ratio to ! balance ( ! tru/ )hold+ cr$it acc\nt ( ! tru/ involv$ 7det]m9$ "u section #biaa imm$iately be=e ! taxable t]m9ation7 z-- 7,a7 ! taxable am\nt 7det]m9$ )\t reg>d to ?is section71 be>s to 7,b7 ! net value ( assets ( su* tru/ 7det]m9$ "u *apt] #af imm$iately be=e su* taxable di/ribution71 & 7#b7 9 ! case ( a taxable di/ribution or a direct skip f a tru/1 by ! am\nt :i* be>s ! same ratio to ! balance ( ! tru/ )hold+ cr$it acc\nt ( ! tru/ f :i* ! taxable di/ribution or direct skip1 z ! case may be1 0 made 7det]m9$ "u section #biaa imm$iately be=e ! taxable di/ribution7 z-- 7,a7 ! taxable am\nt 7det]m9$ )\t reg>d to ?is section71 be>s to 7,b7 ! net value ( assets ( su* tru/ 7det]m9$ "u *apt] #af imm$iately be=e su* taxable di/ribution74 4 7#b7 ,cr$it = tru/ )hold+ taxes ,sub*apt] ,a ( *apt] #ac ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by add+ at ! end ! foll[+ new section3 #bfjd4 ,cr$it = previ\sly paid tru/ asset taxes 7a7 ,taxable t]m9ations ,9 ! case ( a taxable t]m9ation1 !re %all be all[$ a cr$it aga9/ ! tax impos$ by section #bfja an am\nt equal to ! product (-- 7#a7 ! am\nt :i* be>s ! same ratio to ! balance ( ! tru/ )hold+ cr$it acc\nt ( ! tru/ involv$ 7det]m9$ "u section #biaa z ( ! "t ( ! taxable t]m9ation7 z-- 7,a7 ! taxable am\nt 7det]m9$ )\t reg>d to section #bfbe71 be>s to 7,b7 ! net value ( assets ( ! tru/ 7det]m9$ "u *apt] #af z ( ! date ( ! taxable t]m9ation71 & 7#b7 ! inclusion ratio4 7b7 ,taxable di/ributions ,9 ! case ( a taxable di/ribution1 !re %all be all[$ a cr$it aga9/ ! tax impos$ by section #bfja an am\nt equal to ! product (-- 7#a7 ! am\nt :i* be>s ! same ratio to ! balance ( ! tru/ )hold+ cr$it acc\nt ( ! transf]ee involv$ 7det]m9$ "u section #biaa imm$iately aft] ! "t ( ! taxable di/ribution7 z-- 7,a7 ! taxable am\nt 7det]m9$ )\t reg>d to section #bfbe71 be>s to 7,b7 ! net value ( assets ( ! tru/ 7det]m9$ "u *apt] #af z ( ! "t ( ! taxable di/ribution71 & 7#b7 ! inclusion ratio4 7c7 ,direct skips 7#a7 ,9 g5]al ,9 ! case ( a direct skip1 !re %all be all[$ a cr$it aga9/ ! tax impos$ by section #bfja an am\nt equal to ! less] (-- 7,a7 ! product (-- 7i7 ! balance ( ! tru/ )hold+ cr$it acc\nt ( ! p]son liable = su* tax 7det]m9$ "u section #biaa imm$iately be=e ! "t ( ! direct skip71 & 7ii7 ! inclusion ratio1 or 7,b7 ! am\nt ( tax s impos$4 7#b7 ,direct skips f a tru/ ,9 ! case ( a direct skip f a tru/1 ! am\nt ( ! cr$it det]m9$ "u ?is subsection %all n exce$ ! product (-- 7,a7 ! am\nt :i* be>s ! same ratio to ! balance ( ! tru/ )hold+ cr$it acc\nt ( ! tru/ involv$ 7det]m9$ "u section #biaa imm$iately be=e ! "t ( ! direct skip7 z-- 7i7 ! taxable am\nt 7det]m9$ )\t reg>d to section #bfbe71 be>s to 7ii7 ! net value ( assets ( ! tru/ 7det]m9$ "u *apt] #af z ( ! "t ( ! direct skip71 & 7,b7 ! inclusion ratio4 4 7#c7 ,cl]ical am5dm5ts 7,a7 ,! table ( sections = sub*apt] ,a ( *apt] #ac ( su* ,code is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #bfjd4 ,cr$it = previ\sly paid tru/ asset taxes4 4 7,b7 ,! table ( sections = sub*apt] ,a ( *apt] #ac ( su* ,code is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #bfbe4 ,gross up ( taxable am\nt to include additions to tru/ )hold+ cr$it acc\nt4 4 7b7 ,e/ate tax 7#a7 ,gross up ( tax 7,a7 ,citiz5s & resid5ts ,"p ,,iii ( sub*apt] ,a ( *apt] #aa ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by add+ at ! end ! foll[+ new section3 #bjdg4 ,tru/ )hold+ cr$it acc\nt balance ,! gross e/ate %all include ! balance ( ! tru/ )hold+ cr$it acc\nt 7det]m9$ "u section #biaa7 ( ! dec$5t4 4 7,b7 ,nonresid5ts n citiz5s ,section #bajc ( su* ,code is am5d$ by add+ at ! end ! foll[+ new s5t5ce3 ,= purposes ( ?is section1 ! balance ( ! tru/ )hold+ cr$it acc\nt %all be treat$ z situat$ 9 ! ,unit$ ,/ates44 7#b7 ,cr$it = previ\sly paid tru/ )hold+ taxes 7,a7 ,e/ates ( citiz5s & resid5ts ,"p ,,ii ( sub*apt] ,a ( *apt] #aa ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by add+ at ! end ! foll[+ new section3 #bjag4 ,cr$it = previ\sly paid tru/ asset taxes ,!re %all be all[$ z a cr$it aga9/ ! tax impos$ by section #bjja an am\nt equal to ! balance ( ! tru/ )hold+ cr$it acc\nt 7det]m9$ "u section #biaa7 ( ! dec$5t4 4 7,b7 ,e/ates ( nonresid5ts n citiz5s ,section #bajb7;a7 ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by /rik+ #bjab & #bjac 7relat+ to gift tax & tax on prior transf]s7 & ins]t+ #bjab1 #bjac1 & #bjag4 7,c7 ,refunds ( unus$ cr$its ,section #fdja7;b7 ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,e/ate tax cr$it = previ\sly paid tru/ asset taxes 7,a7 ,citiz5s & resid5ts ,if ! am\nt all[able z cr$it "u section #bjag exce$s ! tax impos$ "u section #bjja 7r$uc$ by ! am\nt ( cr$its all[$ "u sections #bjaj ?r\gh #bjaf71 ! am\nt ( su* excess %all be consid]$ an ov]paym5t4 7,b7 ,nonresid5ts n citiz5s ,if ! am\nt det]m9$ 9 accordance ) section #bjag & all[able z a cr$it "u section #bajb exce$s ! tax impos$ "u section #bjaa 7r$uc$ by ! am\nt det]m9$ 9 accordance ) sections #bjab & #bjac & all[$ z a cr$it "u section #bajb71 ! am\nt ( su* excess %all be consid]$ an ov]paym5t4 4 7#c7 ,cl]ical am5dm5ts 7,a7 ,! table ( sections = sub*apt] ,a ( *apt] #ac ( su* ,code is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #bjag4 ,cr$it = previ\sly paid tru/ asset taxes4 4 7,b7 ,! table ( sections = sub*apt] ,a ( *apt] #ac ( su* ,code is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #bjdg4 ,tru/ )hold+ cr$it acc\nt balance4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to transf]s made 9 cal5d> ye>s beg9n+ aft]1 & dec$5ts dy+ aft]1 ,decemb] #ca1 #bjbf4 #d4 ,paym5t ( taxes ( grantor tru/s 7a7 ,9 g5]al ,section #bejc ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$-- 7#a7 9 subsection 7a71 by /rik+ ,! t]m & ins]t+ ,subject to subsection 7d71 ! t]m1 & 7#b7 by ins]t+ aft] subsection 7c7 ! foll[+3 7d7 ,paym5t ( tax on income ( grantor tru/ 7#a7 ,9 g5]al ,not)/&+ subsections 7b7 & 7e71 an am\nt equal to ! applicable taxes paid ) respect to an applicable grantor tru/ = any cal5d> ye> by a p]son :o is ! deem$ own] ( su* tru/ 7or portion !re(7 %all be treat$ = purposes ( ?is subtitle z a taxable gift made dur+ su* cal5d> ye>4 7#b7 ,applicable grantor tru/ ,= purposes ( ?is subsection1 ! t]m applicable grantor tru/ means any tru/or portion ( a tru/-- 7,a7 ) respect to :i* ! taxpay] is consid]$ an own] "u subp>t ,e ( "p ,i ( sub*apt] ,j ( *apt] #a1 & 7,b7 :i* is n fully revocable by ! taxpay]4 7#c7 ,applicable taxes ,= purposes ( ?is subsection1 ! t]m applicable taxes means1 ) respect to any applicable grantor tru/-- 7,a7 taxes paid on income1 & 7,b7 taxes paid on ! value ( assets ( ! tru/4 7#d7 ,reimbursem5t by tru/ ,p>agraph 7#a7 %all n apply ) respect to any am\nt paid by ! deem$ own] = any cal5d> ye> :i* is reimburs$ by ! applicable grantor tru/ dur+ su* cal5d> ye>4 7#e7 ,date ( gift ,9 ! case ( any am\nt treat$ = purposes ( ?is subtitle z a taxable gift pursuant to p>agraph 7#a71 su* gift %all be deem$ to h occurr$ on ! e>li] (-- 7,a7 ,decemb] #ca ( ! cal5d> ye> = :i* ! tax is paid by ! p]son :o is ! deem$ own]1 7,b7 ! day be=e ! date ( ! dea? ( su* p]son1 or 7,c7 ! date on :i* su* p]son r5\nces any "r ( reimbursem5t by ! applicable grantor tru/ ) respect to ! cal5d> ye> = :i* ! tax is paid by su* p]son4 7#f7 ,deem$ own] ,= purposes ( ?is subsection1 ! t]m deem$ own] has ! same mean+ giv5 su* t]m "u section #ajfb7;c74 4 7b7 ,con=m+ am5dm5ts 7#a7 ,section #bebb ( ! ,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[+ new subsection3 7f7 ,d5ial ( d$uction = paym5t ( tax on income ( grantor tru/ ,no d$uction %all be all[$ "u ?is section = any am\nt :i* is treat$ z a gift by reason ( section #bejc7;d74 4 7#b7 ,section #bebc ( su* ,code is am5d$ by add+ at ! end ! foll[+ new subsection3 7j7 ,d5ial ( d$uction = paym5t ( tax on income ( grantor tru/ ,no d$uction %all be all[$ "u ?is section = any am\nt :i* is treat$ z a gift by reason ( section #bejc7;d74 4 7c7 ,effective dates ,! am5dm5ts made by ?is section %all apply to am\nts paid or incurr$ aft] ! date ( ! enactm5t ( ?is ,act4