[Congressional Bills 104th Congress]
[From the U.S. Government Printing Office]
[H.R. 1212 Introduced in House (IH)]
104th CONGRESS
1st Session
H. R. 1212
To amend the Internal Revenue Code of 1986 to revise the estate and
gift taxes in order to preserve American family enterprise, and for
other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 10, 1995
Mrs. Smith of Washington (for herself, Ms. Dunn of Washington, Mr.
Herger, and Mr. Collins of Georgia) introduced the following bill;
which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to revise the estate and
gift taxes in order to preserve American family enterprise, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``National Family Enterprise
Preservation Act of 1995''.
SEC. 2. INCREASE IN UNIFIED ESTATE AND GIFT TAX CREDITS FOR FAMILY
ENTERPRISES.
(a) Estate Tax.--Section 2010 of the Internal Revenue Code of 1986
(relating to unified credit against estate tax) is amended by
redesignating subsections (b) and (c) as subsections (c) and (d),
respectively, by inserting after subsection (a) the following new
subsection:
``(b) Additional Credit for Family Enterprises.--The amount of the
credit allowable under subsection (a) shall be increased by an amount
equal to the value of any family enterprise property (as defined in
section 2032B(b)) included in the decedent's gross estate, to the
extent the additional credit does not exceed $121,800.''
(b) Gift Tax.--Section 2505 of such Code (relating to unified
credit against gift tax) is amended by redesignating subsections (b)
and (c) as subsections (c) and (d), respectively, and by inserting
after subsection (a) the following new subsection:
``(b) Additional Credit for Family Enterprises.--The amount of the
credit allowable under subsection (a) for each calendar year shall be
increased by an amount equal to--
``(1) the value of taxable gifts of family enterprise
property (as defined in section 2032B(b)), to the extent the
additional credit does not exceed $121,800, reduced by
``(2) the sum of the amounts allowable as a credit to the
individual under this subsection for all preceding calendar
periods.''
(c) Effective Dates.--
(1) Estate tax credit.--The amendments made by subsection
(a) shall apply to the estates of decedents dying after
December 31, 1995.
(2) Gift tax credit.--The amendments made by subsection (b)
shall apply to gifts made after December 31, 1995.
SEC. 3. INCREASE IN ANNUAL GIFT TAX EXCLUSION.
(a) In General.--Section 2503 of the Internal Revenue Code of 1986
(relating to taxable gifts) is amended by redesignating subsection (c)
as subsection (d) and by inserting after subsection (b) the following
new subsection:
``(c) Additional Exclusion From Gifts.--The amount of the exclusion
allowable under subsection (b) during a calendar year shall be
increased by an amount equal to the value of gifts of family enterprise
property (as defined in section 2032B(b)) made during such year, to the
extent such value does not exceed $10,000.''
(b) Effective Date.--The amendments made by this section shall
apply to gifts made after December 31, 1995.
SEC. 4. FAMILY ENTERPRISE INTERESTS.
(a) In General.--Part III of subchapter A of chapter 11 of the
Internal Revenue Code of 1986 (relating to gross estate) is amended by
inserting after section 2032A the following new section:
``SEC. 2032B. FAMILY ENTERPRISE PROPERTY.
``(a) General Rule.--The value of family enterprise property
included in the gross estate of a decedent who is a citizen or resident
of the United States shall be--
``(1) the value of such property, reduced by
``(2) the lesser of--
``(A) 50 percent of the value of such property, or
``(B) $1,000,000.
``(b) Family Enterprise Property.--
``(1) In general.--For purposes of this section, the term
`family enterprise property' means any interest in real or
personal property which is devoted to use as a farm or used for
farming purposes (within the meaning of paragraphs (4) and (5)
of section 2032A(e)) or is used in any other trade or business,
if at least 80 percent of the ownership interests in such farm
or other trade or business is held--
``(A) by 5 or fewer individuals, or
``(B) by individuals who are members of the same
family within the meaning of section 2032A(e)(2)).
``(2) Limited partnership interest excluded.--An interest
in a limited partnership, other than a family limited
partnership, shall in no event be treated as family enterprise
property.
``(c) Tax Treatment of Dispositions and Failure To Use for
Qualifying Use.--
``(1) Imposition of additional estate tax.--With respect to
family enterprise property acquired from or passed from the
decedent to an individual, if within 10 years after the
decedent's death and before the death of such individual--
``(A) such individual disposes of any interest in
such property (other than by a disposition to a member
of the individual's family), or
``(B) such individual or a member of the
individual's family ceases to participate in the active
management of such property,
then there is hereby imposed an additional estate tax.
``(2) Amount of additional tax.--The amount of the
additional tax imposed by paragraph (1) with respect to any
interest in family enterprise property shall be--
``(A) the amount determined under section
2032A(c)(2) with respect to such interest, reduced by
``(B) 5 percent of the amount described in
subparagraph (A) for each year following the date of
the decedent's death in which the individual described
in paragraph (1) or a member of the individual's family
participated in the active management of such family
enterprise property.
Rules similar to the rules of paragraphs (3), (4), and (5) of
section 2032A(c) shall apply to such tax.
``(3) Active management.--For purposes of this subsection,
the term `active management' means the making of the management
decisions of a business other than the daily operating
decisions.''
(b) Clerical Amendment.--The table of sections for part III of
subchapter A of chapter 11 of such Code is amended by inserting after
the item relating to section 2032A the following new item:
``Sec. 2032B. Family enterprise
property.''
(c) Effective Date.--The amendments made by this section shall
apply to the estates of decedents dying after December 31, 1995.
SEC. 5. VALUATION OF CERTAIN FARM, ETC., REAL PROPERTY.
(a) In General.--Section 2032A(a)(2) of the Internal Revenue Code
of 1986 (relating to limitation on aggregate reduction in fair market
value) is amended by striking ``$750,000'' and inserting
``$1,000,000''.
(b) Effective Date.--The amendment made by this section shall apply
to the estates of decedents dying after December 31, 1995.
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