Text: H.R.4015 — 111th Congress (2009-2010)All Information (Except Text)

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Introduced in House (11/04/2009)


111th CONGRESS
1st Session
H. R. 4015


To amend the Internal Revenue Code of 1986 to extend certain estate tax provisions and restore and increase the estate tax deduction for certain family-owned business interests.


IN THE HOUSE OF REPRESENTATIVES

November 4, 2009

Mr. McNerney (for himself and Mr. Perriello) 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 extend certain estate tax provisions and restore and increase the estate tax deduction for certain family-owned business interests.

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 “Family Farm and Small Business Tax Relief Act of 2009”.

SEC. 2. EXTENSION OF 2009 ESTATE AND GIFT TAX LEVELS.

(a) EGTRRA sunset not To apply.—Section 901 of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall not apply to title V of such Act (other than subtitles A and E, and sections 511(d) and 521(b)(2), thereof).

(b) $3,500,000 applicable exclusion amount.—

(1) IN GENERAL.—Subsection (c) of section 2010 of the Internal Revenue Code of 1986 is amended by striking all that follows “the applicable exclusion amount” and inserting “. For purposes of the preceding sentence, the applicable exclusion amount is $3,500,000.”.

(2) INFLATION ADJUSTMENT.—Section 2010 of such Code is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following new subsection:

“(d) Cost-of-Living Adjustment.—In the case of any decedent dying in a calendar year after 2011, the $3,500,000 amount in subsection (c) shall be increased by an amount equal to—

“(1) such amount, multiplied by

“(2) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting ‘calendar year 2010’ for ‘calendar year 1992’ in subparagraph (B) thereof.

If any amount as adjusted under the preceding sentence is not a multiple of $10,000, such amount shall be rounded to the nearest multiple of $10,000.”.

(c) 45 percent maximum rate.—The table in paragraph (1) of section 2001(c) of such Code is amended by striking the last 3 items and inserting the following new item:



“Over $1,500,000 $555,800, plus 45 percent of the excess of such amount over $1,500,000.”.

(d) Effective date.—The amendments made by this section shall apply to estates of decedents dying, and gifts made, after December 31, 2010.

SEC. 3. Restoration of, and increase in, deduction for family-owned business interests.

(a) Restoration.—Subsection (j) of section 2057 (relating to termination) is amended to read as follows:

“(j) Application of Section.—This section—

“(1) shall not apply to estates of decedents dying after December 31, 2003, and before January 1, 2011, but

“(2) shall apply to estates of decedents dying after December 31, 2010.”.

(b) Increase.—

(1) IN GENERAL.—Subsection (a) of section 2057 is amended—

(A) by striking “$675,000” in paragraph (2) and inserting “$8,000,000”, and

(B) by striking paragraph (3).

(2) COST-OF-LIVING ADJUSTMENT.—Subsection (a) of section 2057 is amended by adding at the end the following new paragraph:

“(3) COST-OF-LIVING ADJUSTMENT.—In the case of any decedent dying in a calendar year after 2011, the $8,000,000 amount in paragraph (2) shall be increased by an amount equal to—

“(A) such dollar amount, multiplied by

“(B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting ‘calendar year 2010’ for ‘calendar year 1992’ in subparagraph (B) thereof.

If any amount as adjusted under the preceding sentence is not a multiple of $10,000, such amount shall be rounded to the nearest multiple of $10,000.”.

(c) Effective Date.—The amendments made by this section shall apply to estates of decedents dying after December 31, 2010.

SEC. 4. Exclusion from gross estate for certain farmland so long as farmland use continues.

(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 2033 the following new section:

“SEC. 2033A. Exclusion of certain farmland so long as use as farmland continues.

“(a) In General.—In the case of an estate of a decedent to which this section applies, if the executor makes the election described in subsection (f), the value of the gross estate shall not include the adjusted value of qualified farmland included in the estate.

“(b) Estates to Which Section Applies.—This section shall apply to an estate if—

“(1) the decedent was (at the date of the decedent’s death) a citizen or resident of the United States, and

“(2) during the 8-year period ending on the date of the decedent’s death there have been periods aggregating 5 years or more during which—

“(A) the qualified farmland was owned by the decedent or a member of the decedent’s family, and

“(B) there was material participation (within the meaning of section 2032A(e)(6)) by the decedent or a member of the decedent’s family in the operation of such farmland, except that ‘material participation’ shall also include any rental of real estate and related property between the estate of the decedent or any successor thereto and any tenant so long as the tenant uses the real estate and related property to produce agricultural or horticultural commodities, including but not limited to livestock, bees, poultry, orchards and woodlands, timber and fur-bearing animals and wildlife on such farmland.

Rules similar to the rules of paragraphs (4) and (5) of section 2032A(b) shall apply for purposes of subparagraph (B).

“(c) Definitions and Special Rule.—For purposes of this section—

“(1) QUALIFIED FARMLAND.—The term ‘qualified farmland’ means any real property or other property related to the farm operation—

“(A) which is located in the United States,

“(B) which is used as a farm for farming purposes, and

“(C) which was acquired from or passed from the decedent to a qualified heir of the decedent and which, on the date of the decedent’s death, was being so used by the decedent or a member of the decedent’s family.

“(2) MEMBER OF FAMILY.—A member of a family, with respect to any individual, means—

“(A) a member of the family (as defined by section 2031A(e)(2)), and

“(B) includes—

“(i) a lineal descendant of any spouse described in subparagraph (D) of section 2032A(e)(2),

“(ii) a lineal descendant of a sibling of a parent of such individual,

“(iii) a spouse of any lineal descendant described in clause (ii), and

“(iv) a lineal descendant of a spouses described in clause (iii).

“(3) ADJUSTED VALUE.—The term ‘adjusted value’ means the value of farmland for purposes of this chapter (determined without regard to this section), reduced by the amount deductible under paragraph (3) or (4) of section 2053(a).

“(4) OTHER TERMS.—Any other term used in this section which is also used in section 2032A shall have the same meaning given such term by section 2032A.

“(d) Tax Treatment of Dispositions and Failures To Use for Farming Purposes.—

“(1) IMPOSITION OF RECAPTURE TAX.—If, at any time after the decedent’s death—

“(A) the qualified heir disposes of any interest in qualified farmland (other than by a disposition to a member of his family), or

“(B) the qualified heir ceases to use the real property which was acquired (or passed) from the decedent as a farm for farming purposes,

then there is hereby imposed a recapture tax on such disposition or cessation of use.

“(2) AMOUNT OF RECAPTURE TAX.—

“(A) IN GENERAL.—The amount of the tax imposed by paragraph (1) shall be the excess of—

“(i) the tax which would have been imposed by section 2001 on the estate of the decedent but determined as if such estate included the interest in qualified farmland described in paragraph (1) which was so disposed of or ceased to be so used, reduced by the credits allowable against such tax, over

“(ii) the tax imposed by section 2001 on the estate of the decedent, reduced by such credits.

For purposes of this paragraph, the value of the interest in qualified farmland specified in subparagraph (A) shall be the adjusted value of such interest as of the date of the disposition or cessation of such interest described in paragraph (1).

“(B) $8,000,000 EXCLUSION AMOUNT.—For purposes of subparagraph (A), the adjusted value of such interest shall be reduced by an amount equal to—

“(i) $8,000,000, reduced (but not below zero) by

“(ii) an amount equal to the amount by which the adjusted value of all other interests in such qualified farmland has been reduced previously by reason of this subparagraph.

“(3) REGULATIONS.—The Secretary may prescribe such regulations as may be necessary or appropriate to carry out this subsection, including regulations requiring record keeping and information reporting, except that the Secretary may not impose a lien on the estate of the decedent or qualified farmland for such purposes.

“(e) Application of Other Rules.—Rules similar to the rules of subsections (e) (other than paragraph (13) thereof), (f), (g), (h), and (i) of section 2032A shall apply for purposes of this section.

“(f) Election.—The election under this subsection shall be made on or before the due date (including extensions) for filing the return of tax imposed by section 2001 and shall be made on such return.”.

(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 2033 the following new item:


“Sec. 2033A. Exclusion of certain farmland so long as use as farmland continues.”.

(c) Effective Date.—The amendments made by this section shall apply to estates of decedents dying after the date of the enactment of this Act.