Billionaire Minimum Income Tax Act
This bill imposes a minimum tax on individual taxpayers whose net worth for the taxable year exceeds $100 million. The tax is equal to 20% of the sum of a taxpayer's taxable income, plus net unrealized gains for the taxable year. The tax may not exceed 40% of the amount by which the taxpayer's net worth exceeds $100 million.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8558 Introduced in House (IH)]
<DOC>
117th CONGRESS
2d Session
H. R. 8558
To amend the Internal Revenue Code of 1986 to impose a minimum tax on
certain wealthy taxpayers that takes into account unrealized gains.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 28, 2022
Mr. Cohen (for himself, Mr. Beyer, Mr. Carson, Ms. DeLauro, Mr. Evans,
Mr. Foster, Mr. Garcia of Illinois, Mr. Grijalva, Mr. Jones, Ms. Lee of
California, Ms. McCollum, Ms. Newman, Mr. DeFazio, Mr. Nadler, Ms.
Schakowsky, Ms. Barragan, Mr. Gomez, Ms. Norton, Ms. Porter, Ms. Tlaib,
Mrs. Watson Coleman, Mr. Welch, Mr. Garamendi, Mr. Danny K. Davis of
Illinois, Mr. Yarmuth, Mr. McGovern, Ms. Clarke of New York, Mr.
Brendan F. Boyle of Pennsylvania, Ms. Plaskett, Mr. Takano, Mr.
Moulton, Mrs. Carolyn B. Maloney of New York, and Mr. DeSaulnier)
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 impose a minimum tax on
certain wealthy taxpayers that takes into account unrealized gains.
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 ``Billionaire Minimum Income Tax
Act''.
SEC. 2. MINIMUM TAX ON CERTAIN WEALTHY TAXPAYERS.
(a) In General.--Subtitle A of the Internal Revenue Code of 1986 is
amended by inserting after chapter 4 the following new chapter:
``CHAPTER 5--MINIMUM TAX ON CERTAIN WEALTHY TAXPAYERS
``Sec. 1481. Minimum tax on certain wealthy taxpayers.
``Sec. 1482. Certain otherwise exempt transfers by certain wealthy
taxpayers treated as taxable.
``SEC. 1481. MINIMUM TAX ON CERTAIN WEALTHY TAXPAYERS.
``(a) In General.--In the case of an applicable taxpayer, there is
hereby imposed (in addition to any other tax imposed by this subtitle)
for each taxable year a tax equal to the excess (if any) of--
``(1) 20 percent of the sum of--
``(A) the taxpayer's taxable income for such
taxable year, plus
``(B) the taxpayer's net unrealized gain for such
taxable year, over
``(2) the sum of--
``(A) the taxpayer's minimum tax account balance
for such taxable year, plus
``(B) the taxpayer's regular tax liability (as
defined in section 26(b)) for such taxable year.
``(b) Limitation on Minimum Tax.--The tax imposed under subsection
(a) with respect to any applicable taxpayer (other than an applicable
taxpayer described in subsection (c)(1)(B)) for any taxable year shall
not exceed 40 percent of the excess described in subsection (c)(1)(A)
with respect to such taxpayer for such taxable year.
``(c) Applicable Taxpayer.--For purposes of this section--
``(1) In general.--The term `applicable taxpayer' means--
``(A) any individual for any taxable year if the
taxpayer's net worth for such taxable year exceeds
$100,000,000 (half such amount in the case of a married
individual filing a separate return), and
``(B) any trust or estate treated as an applicable
taxpayer under subsection (g).
``(2) Net worth.--The term `net worth' means, with respect
to any taxpayer for any taxable year, the excess (if any),
determined as of the close of such taxable year, of--
``(A) the estimated value of all assets of the
taxpayer and all trust attributed assets of the
taxpayer, as determined under regulations provided by
the Secretary, over
``(B) all debts (and such other liabilities as the
Secretary may provide) of the taxpayer and all trust
attributed debts of the taxpayer.
``(3) Trust attributed assets.--The term `trust attributed
assets' means, with respect to any taxpayer--
``(A) any asset of a trust which such taxpayer is
treated as owning under subpart E of part I of
subchapter J of chapter 1, and
``(B) any asset of a trust (other than a trust
which a person other than the taxpayer is treated as
owning under such subpart) that is distributable to the
taxpayer or from which income is distributable to the
taxpayer in whole or in part, whether or not the
taxpayer's distribution rights are subject to a
contingency, unless that contingency is the death of
another trust beneficiary.
``(4) Trust attributed debts.--The term `trust attributed
debts' means, with respect to any taxpayer--
``(A) any debt (and such other liabilities as the
Secretary may provide) of a trust described in
paragraph (3)(A), and
``(B) any debt (and such other liabilities as the
Secretary may provide) with respect to an asset
described in paragraph (3)(B) if the holders of such
debt have a right to repayment which is senior to the
distribution rights of the taxpayer.
``(5) Gratuitous transfers.--
``(A) In general.--In the case of any asset which
was transferred by the taxpayer during the 5-year
period ending with the close of the taxable year for
which the taxpayer's net worth is determined (and which
is not otherwise taken into account in determining such
net worth), such taxpayer's net worth (as determined
for purposes of this section) shall be--
``(i) increased by the value of such
transferred asset at the time of transfer,
``(ii) decreased (but not in excess of the
amount of the increase under clause (i)) by the
amount paid in consideration for such asset by
the transferee,
``(iii) in the case of any decrease under
clause (ii), increased to the extent of any
liability of the transferee to the transferor
or related party (as defined under section
267(b)) of the transferor, incurred in
connection with the transfer of such asset, to
the extent that the right to collect such
liability is not already reflected in the net
wealth of the transferor, and
``(iv) increased by the value of any such
transferred asset transferred with a purpose
that was in substantial part to avoid tax, to
the extent not already included as an increase
under clause (i) or (iii).
``(B) Exceptions.--Subparagraph (A) shall not apply
with respect to any transfer of an asset to--
``(i) an organization described in section
170(c),
``(ii) a spouse or former spouse if section
1041 applies to such transfer, or
``(iii) a spouse if both spouses are
applicable taxpayers at the time of such
transfer.
``(C) Special rule regarding transfer to avoid
tax.--For purposes of subparagraph (A)(iv), if one or
more transfers of assets would (but for this sentence)
reduce the tax imposed under this section and the
taxpayer retains a substantial degree of control over
such assets, the purpose of such transfers shall be
treated as avoidance of tax unless the taxpayer shows
otherwise by clear and convincing evidence.
``(d) Minimum Tax Account Balance.--For purposes of this section,
the term `minimum tax account balance' means, with respect to any
taxpayer for any taxable year, the excess (if any) of--
``(1) the aggregate amount of tax imposed under this
section with respect to the taxpayer for all prior taxable
years, over
``(2) the sum of--
``(A) the aggregate credits allowed under sections
25E and 36C with respect to the taxpayer for all prior
taxable years, and
``(B) the aggregate reductions described in
subsection (h)(6) with respect to the taxpayer for all
prior taxable years.
``(e) Net Unrealized Gain.--
``(1) In general.--For purposes of this section, the term
`net unrealized gain' means, with respect to any taxpayer for
any taxable year, the excess (if any) of--
``(A) the aggregate gains which would be recognized
if such taxpayer sold each asset held at the close of
such taxable year (including any asset described in
subsection (c)(3)(A)) for such asset's estimated value
at such time, over
``(B) the aggregate losses which would be so
recognized.
``(2) Estimated value.--For purposes of this section--
``(A) In general.--Except as otherwise provided in
this subsection, the term `estimated value' means fair
market value determined in such manner as the Secretary
may provide.
``(B) Non-readily tradable assets.--
``(i) Default method.--In the absence of
regulations or other guidance under clause
(iii) or (iv) (and only in such absence), the
estimated value of a non-readily tradable asset
shall be determined by beginning with the
greatest (determined after adjustment under
clause (ii)) of--
``(I) the original basis amount,
``(II) the adjusted cost basis
amount, or
``(III) the most recent fair market
valuation amount.
``(ii) Adjustment for deemed
appreciation.--Each amount described in
subclauses (I), (II), and (III) of clause (i)
shall be separately increased by a rate of
appreciation equal to the sum of--
``(I) the annual rate of interest
determined by the Secretary to be
equivalent to the average of the 5-year
constant maturity Treasury yields, as
published by the Board of Governors of
the Federal Reserve System, for the 5-
year period ending on September 30 of
the calendar year ending before the
date with respect to which the
estimated value is determined, plus
``(II) 2 percentage points,
for the period beginning on the date with
respect to which such amount relates and ending
on the date with respect to which the estimated
value is determined.
``(iii) Regulations.--In the case of any
non-readily tradable asset, the estimated value
of such asset shall be determined by such
method as the Secretary may prescribe in
regulations or other guidance. Such method may
require a single valuation method with respect
to any such asset or may provide one or more
options for valuing any such asset and may (but
is not required to) include one or more of the
following:
``(I) Required formulaic valuations
based on any of the original basis
amount (grossed up by a formula), other
adjusted cost basis amounts
(potentially adjusted by a formula),
most recent fair market valuation
amount (grossed up by a formula), or
formulaic multiple of book value or
other financial statement valuation.
``(II) Any valuation method
utilized with respect to illiquid
taxpayers under subsection (f),
including any method under the special
valuation regime and the rule that a
valuation may be challenged by the
taxpayer only upon a showing of clear
and convincing error.
``(iv) Certain required applications of
illiquid taxpayer rules.--The Secretary may
issue regulations or other guidance which
require certain taxpayers which hold one or
more non-readily tradable assets to apply one
or more of the rules applicable to illiquid
taxpayers under paragraph (4) and subsection
(h) (without regard to whether the taxpayer
makes the election described in paragraph (4)
or any election under subsection (h)) with
respect to all or any portion of such assets.
The Secretary may require calculation and
payment of estimated annual taxes on such
assets to the extent that the Secretary
determines that doing so would best advance the
goal of minimizing gaming by taxpayers.
``(v) Recapture of depreciation and
amortization permitted.--Nothing in this
subsection shall be construed to prevent the
determination of gains and losses for purposes
of this subsection with respect to any asset on
the basis of the adjusted basis of such asset
(after taking into account any reductions in
such basis for depreciation or amortization).
``(3) Non-readily tradable asset.--For purposes of this
section, the term `non-readily tradable asset' means any asset
which is part of any class of assets with respect to which the
Secretary has determined that mandatory annual valuations are
inappropriate for purposes of this section.
``(4) Illiquid taxpayers.--
``(A) In general.--In the case of an illiquid
taxpayer which makes the election described in
subparagraph (B)--
``(i) the net unrealized gain of such
taxpayer shall be determined by only taking
into account the unrealized gains (and losses)
on assets other than non-readily tradable
assets, and
``(ii) such taxpayer shall be subject to
the requirements of subsection (f) with respect
to all non-readily tradable assets held by the
taxpayer.
``(B) Illiquid taxpayer.--For purposes of this
subsection, the term `illiquid taxpayer' means any
taxpayer for any taxable year if the estimated value of
all assets other than non-readily tradable assets of
the taxpayer as of the close of such taxable year does
not exceed 20 percent of the taxpayer's net worth for
such taxable year.
``(C) Election.--Any election made under this
paragraph shall be made at such time and in such manner
as the Secretary may provide and, once made with
respect to any asset, may be revoked only with the
consent of the Secretary (and subject to such
requirements as the Secretary may provide to ensure
proper taxation of gains and losses with respect to
such assets). If the Secretary determines that it is
consistent with the purposes of this section, the
Secretary may permit an illiquid taxpayer to elect to
apply this paragraph (and subsection (f)) with respect
to such portion of non-readily tradable assets of the
taxpayer as the Secretary determines is consistent with
such purposes.
``(f) Unliquidated Tax Reserve Accounts.--
``(1) In general.--The Secretary shall issue regulations or
other guidance under which, in the case of any taxpayer subject
to the requirements of this subsection (including by reason of
subsection (e)(2)(B)(iv) or (e)(4) or paragraph (2)(K) of this
subsection), the taxpayer's tax liability under this section,
and the timing of any such liability, with respect to any non-
readily tradable assets held by such taxpayer are determined on
the basis of the Unliquidated Tax Reserve Account rules
prescribed by the Secretary under this subsection.
``(2) Unliquidated tax reserve account rules.--The
Unliquidated Tax Reserve Account rules prescribed by the
Secretary under this subsection shall, except as otherwise
provided by the Secretary, be consistent with the following:
``(A) Any taxpayer subject to this subsection shall
be treated as having an Unliquidated Tax Reserve
Account (hereafter in this subsection referred to as an
`ULTRA') which consists of the non-readily tradable
assets held by such taxpayer (or, as the case may be,
to the portion of such assets described in subsection
(e)(2)(B)(iv) or (e)(4)(C)) (hereafter in this
subsection referred to as the `ULTRA assets').
``(B) Except as provided in subparagraph (K)--
``(i) in the case of the first year in
which a taxpayer becomes subject to this
subsection and so has assets in the ULTRA, the
notional interest percentage of the ULTRA shall
be 20 percent (0 percent in the case of a
taxpayer which elects to recognize all
unrealized gains of all assets in the ULTRA
upon initiation of the ULTRA), and
``(ii) at the end of the first year in
which a taxpayer becomes subject to this
subsection and so has assets in the ULTRA and
at the end of each subsequent year during which
the taxpayer continues to be subject to this
subsection and have assets in the ULTRA, the
notional interest percentage of the ULTRA shall
be increased annually by an amount equal to the
product of--
``(I) the deemed rate of return
multiplied by 20 percent, multiplied by
``(II) 1 minus the notional
interest percentage immediately prior
to the increase.
``(C) The deemed rate of return for purposes of
subparagraph (B)(ii)(I) shall be the estimated
investment rate of return for the entire economy as
determined by the Secretary, or if the Secretary
provides that the notional interest percentage should
be determined separately with respect to any class of
assets, such other rate of return as the Secretary
determines appropriate for such asset class.
``(D) Any sale, or other transfer, of any ULTRA
asset shall be treated as a distribution from the
ULTRA, except that the Secretary shall provide rules
for treating transfers made in the ordinary course of a
trade or business and exchanges of non-readily tradable
assets as other than distributions.
``(E) Except as otherwise provided by the
Secretary, an increase in debt shall be treated as a
distribution from the ULTRA and any subsequent decrease
in debt shall be taken into account as a reduction in
distributions from the ULTRA or as a credit against tax
(as the Secretary determines appropriate).
``(F) Any distribution from the ULTRA shall result
in an increase in the taxable income of the taxpayer
equal to the product of the estimated value of the
distribution multiplied by the notional interest
percentage at the time of the distribution.
``(G) A taxpayer may elect to pay liabilities under
this subsection in advance and proper credit shall be
provided for any such liabilities so paid in advance
upon resolution of the ULTRA.
``(H) The Secretary shall establish a special
valuation regime for purposes of determining the
estimated value of any distribution of a non-tradable
asset from an ULTRA. Such special valuation regime
shall ensure valuation accuracy, minimize the potential
for under-valuation, and minimize the potential for
taxpayer gaming. Such regime may include the use of
appraisers employed by the Secretary, formulaic
valuations, or any other method designed to ensure
valuation accuracy and minimize the potential for
gaming. Any estimated value determined under such
special valuation regime may be challenged by the
taxpayer only upon a showing of clear and convincing
error. In place of the standard due process safeguards,
a taxpayer may opt to reject such special valuations
(under rules and procedures to be determined by the
Secretary) and instead maintain the non-tradable asset
within an ULTRA.
``(I) If a taxpayer is subject to the requirements
of this subsection with respect to any assets, such
taxpayer shall remain subject to the requirements of
this subsection (without regard to whether or not such
taxpayer ceases to be an applicable taxpayer) until the
ULTRA is resolved and all liabilities with respect to
such ULTRA have been paid. For purposes of this
subsection, an ULTRA shall be treated as resolved upon
the death of the taxpayer, the distribution of all
assets of the ULTRA, a determination by the Secretary
that further treatment as an ULTRA is inconsistent with
the purposes of this section, or a determination by the
Secretary described in subparagraph (J).
``(J) If the Secretary determines, upon application
by the taxpayer, that the resolution of an ULTRA is not
inconsistent with the purposes of this section--
``(i) all remaining assets of such ULTRA
shall be treated as distributed, and
``(ii) such ULTRA shall be treated as
resolved.
``(K) Upon the resolution of the ULTRA, there shall
be imposed on the taxpayer a tax (or a refund of taxes
previously paid may be awarded) as determined by the
Secretary by applying a retrospective formula
determined by the Secretary to eliminate the entire tax
advantage of deferral. Such tax shall be determined in
a manner to take into account prior distributions from
the ULTRA and any tax previously imposed thereon and
any liability under this subsection which is paid in
advance under subparagraph (G).
``(L) If, upon the death of a taxpayer, an heir of
ULTRA assets elects to initiate a carry-over ULTRA for
such inherited assets--
``(i) such assets shall not be taken into
account under subparagraph (J) upon the
resolution of the decedent's ULTRA,
``(ii) such heir's carry-over ULTRA shall
begin with a notional interest percentage equal
to that of the decedent's ULTRA at the time of
death, and
``(iii) such carry-over ULTRA shall be
maintained separately from any ULTRA otherwise
maintained by such heir.
``(g) Treatment of Trusts and Estates as Applicable Taxpayers.--For
purposes of this chapter--
``(1) In general.--Any trust (other than a trust the assets
of which are treated as owned by another taxpayer under subpart
E of part I of subchapter J of chapter 1) or applicable estate
shall be treated as an applicable taxpayer for purposes of this
chapter if any assets of the trust are trust attributed assets
with respect to any applicable taxpayer.
``(2) Applicable estate.--An estate is an applicable estate
beginning with the third taxable year following the date of
death of the decedent if the decedent was an applicable
taxpayer for any taxable year ending during the 5-year period
ending on the date of the decedent's death.
``(3) Trusts acquiring united states beneficiaries.--
``(A) In general.--If paragraph (1) applies to a
trust for a transferor or beneficiary's taxable year,
and paragraph (1) would have applied to the trust for
any of the preceding 10 taxable years (other than years
prior to the effective date of this section) but for
the fact that in such year or years there was no United
States beneficiary for any portion of the trust, then
the transferor shall be treated as having income for
the taxable year equal to--
``(i) the aggregate increases in the tax
imposed under this title for each such prior
taxable year (beginning after the date of the
enactment of this chapter) which would have
occurred if paragraph (1) had applied to such
trust for such year, plus
``(ii) interest on such increase determined
with respect to each such taxable year
determined at the underpayment rate.
``(B) No living transferor.--In the event that
subparagraph (A) would apply, but for the fact that
there is no living transferor, then each beneficiary of
such trust, other than a contingent beneficiary, shall
be treated as having income for the taxable year equal
to--
``(i) the aggregate increases in the tax
imposed under this title for each such prior
taxable year (beginning after the date of the
enactment of this chapter) which would have
occurred if paragraph (1) had applied to such
trust, but only to the extent of such increases
in tax which would have occurred with respect
to such portion of trust assets as are
distributable to the beneficiary, or such
portion of trust income as is distributable to
the beneficiary (whether or not such assets or
income are so distributed), plus
``(ii) interest on such increase determined
with respect to each such taxable year
determined at the underpayment rate.
``(C) Contingent beneficiaries.--In the event that
no tax is imposed on a beneficiary under subparagraph
(B) because such beneficiary is contingent, then in the
first taxable year in which such beneficiary is no
longer contingent, such beneficiary shall be treated as
having income for the taxable year equal to the amount
that would have been imposed under subparagraph (B),
plus interest on such increase determined with respect
to each such taxable year determined at the
underpayment rate, but in no case will such tax and
interest be imposed with respect to any portion of
trust assets or income previously subject to tax under
this section.
``(D) Contingent.--For purposes of this paragraph,
a beneficiary's interest in a trust shall be treated as
contingent if (and only if) such interest depends on
the outcome of uncertain future events (other than the
discretion of the trustee to determine the timing of
the distribution of income).
``(h) Election To Pay Liability in Installments.--
``(1) In general.--A taxpayer may elect to pay the tax
imposed under subsection (a) or (g) for any taxable year in 5
equal annual installments (in the case of the taxpayer's first
taxable year beginning in 2023, 9 equal annual installments).
``(2) Date for payment of installments.--If an election is
made under paragraph (1), the first installment shall be paid
on or before the due date (determined without regard to any
extension of time for filing the return) for the return of tax
for the taxable year described in subsection (a) and each
succeeding installment shall be paid on or before the due date
(as so determined) for the return of tax for the taxable year
following the taxable year with respect to which the preceding
installment was made.
``(3) Acceleration of payment.--
``(A) In general.--If there is an addition to tax
for failure to timely pay any installment required
under this subsection (other than by reason of a timely
election made under paragraph (5)), a bankruptcy of the
taxpayer (including in a title 11 or similar case), or
any similar circumstance, then the unpaid portion of
all remaining installments shall be due on the date of
such event (or in the case of a title 11 or similar
case, the day before the petition is filed).
``(B) Payment within 6 months.--In the case of the
payment of any installment required under this
subsection during the 6-month period beginning on the
due date of such installment, subparagraph (A) shall
not apply and rules similar to the rules of section
6166(g)(3)(B) shall apply.
``(4) Proration of deficiency to installments.--If an
election is made under paragraph (1) to pay tax imposed under
subsection (a) in installments and a deficiency has been
assessed with respect to such tax, the deficiency shall be
prorated to the installments payable under paragraph (1). The
part of the deficiency so prorated to any installment the date
for payment of which has not arrived shall be collected at the
same time as, and as a part of, such installment. The part of
the deficiency so prorated to any installment the date for
payment of which has arrived shall be paid upon notice and
demand from the Secretary. This subsection shall not apply if
the deficiency is due to negligence, to intentional disregard
of rules and regulations, or to fraud with intent to evade tax.
``(5) Election.--Any election under paragraph (1) shall be
made at such time and in such manner as the Secretary shall
provide.
``(6) Reduction of installment payments to extent minimum
account balance is in excess of expected recognized gain.--If
the minimum account balance of the taxpayer for any taxable
year (reduced by the amount of any credit allowed under section
25E for such taxable year) exceeds 20 percent of the taxpayer's
net unrealized gain for such taxable year, such excess shall be
applied to reduce the amount of any installment payments of the
taxpayer the date for payment of which has not yet arrived
(without regard to the taxable year to which such installment
payment relates). Any reduction under the preceding sentence
shall be applied to installment payments on a last-due, first-
reduced basis.
``(i) Information Reporting.--The Secretary shall, not later than 1
year after the date of the enactment of this section, issue
regulations--
``(1) requiring such persons as the Secretary determines
appropriate to file a return with the Secretary which include
such information as the Secretary determines necessary to carry
out this section, including the provision of applicable
financial statements (within the meaning of section 451(b)),
other financial or accounting statements, insurance valuations,
or similar documents, and
``(2) requiring persons required to file returns under
paragraph (1) to furnish statements to such other persons as
the Secretary determines appropriate which contain all or a
portion of the information contained in such return.
``(j) Regulations.--The Secretary shall issue such regulations or
other guidance as may be necessary or appropriate to carry out the
purposes this section and sections 25E and 36C, including regulations
or other guidance to--
``(1) require reporting of basis and estimated value of
assets, aggregated by asset class or otherwise, held by the
applicable taxpayer, and liabilities of the applicable
taxpayer, as of the close of the taxable year, in such manner
as the Secretary may provide,
``(2) discourage applicable taxpayers from inappropriately
converting assets into assets which are non-readily tradable
assets,
``(3) treat assets held directly or indirectly by the
applicable taxpayer as held by the applicable taxpayer,
``(4) in such circumstances as the Secretary determines
there is a reasonable risk of an intent to avoid tax, treat
assets owned or controlled by persons related to the applicable
taxpayer as owned by the applicable taxpayer,
``(5) provide for the application of such sections with
respect to married individuals, including rules with respect
to--
``(A) individuals whose marital or joint return
filing status changes, and
``(B) the transfer of an individual's minimum tax
account balance to the individual's spouse or otherwise
upon the death of such individual,
``(6) provide that the tax imposed under this section shall
not be taken into account in determining the amount of any
required payment of estimated tax or in satisfying the safe
harbor to avoid a penalty for the underpayment of estimated
tax, and
``(7) if the Secretary determines appropriate to carry out
the purposes of this section, provide for the separate
application of such sections with respect to different classes
of assets.
``(k) Standards for Making Certain Determinations.--For purposes of
making any determination described in subsection (e)(2)(A),
(e)(2)(B)(iii), (e)(3), (f)(2)(C), or (f)(2)(D), the Secretary shall
balance the goals of ensuring valuation accuracy, minimizing the
potential for taxpayer gaming, and avoiding unduly excessive compliance
and administrative costs.
``SEC. 1482. CERTAIN OTHERWISE EXEMPT TRANSFERS BY CERTAIN WEALTHY
TAXPAYERS TREATED AS TAXABLE.
``(a) In General.--Notwithstanding any other provision of this
title, in the case of any specified transfer by a covered taxpayer,
gain shall be recognized by such covered taxpayer in an amount equal to
the excess (if any) of the estimated value (as defined in section
1481(e)(2)) of the property transferred over the adjusted basis of such
property.
``(b) Specified Transfer.--For purposes of this section, the term
`specified transfer' means any gift, charitable contribution, bequest,
or other transfer upon death.
``(c) Covered Taxpayer.--For purposes of this section, the term
`covered taxpayer' means, with respect to any taxable year, any
taxpayer which is an applicable taxpayer for such taxable year or was
an applicable taxpayer for any of the 10 taxable years immediately
preceding such taxable year.
``(d) Regulations.--The Secretary shall issue such regulations or
other guidance as may be necessary or appropriate to carry out the
purposes of this section, including regulations or other guidance that
provide for exceptions with respect to--
``(1) transfers which are de minimis or which otherwise do
not pose a risk of circumventing the purposes of this chapter,
and
``(2) taxpayers which do not pose such a risk.''.
(b) Credit Against Taxes on Recognized Gains.--Subpart A of part IV
of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is
amended by inserting after section 25D the following new section:
``SEC. 25E. MINIMUM TAX ON CERTAIN WEALTHY TAXPAYERS CREDITED AGAINST
RECOGNIZED GAINS.
``In the case of an individual (including any estate or trust),
there shall be allowed as a credit against the tax imposed by this
chapter for the taxable year an amount equal to the lesser of--
``(1) the taxpayer's minimum tax account balance (as
defined in section 1481) for such taxable year determined, in
the case of any tax imposed under section 1481 with respect to
which an election is made under such section to pay such tax in
installments, by only taking into account so much of such tax
as has been paid as of the close of such taxable year, and
``(2) the excess (if any) of--
``(A) the taxpayer's regular tax (as defined in
section 26(b)) for such taxable year, over
``(B) the amount which would be determined under
subparagraph (A) if the taxpayer did not recognize any
gain or loss for such taxable year.''.
(c) Refund of Excess Minimum Tax on Certain Wealthy Taxpayers.--
Subpart C of part IV of subchapter A of chapter 1 of the Internal
Revenue Code of 1986 is amended by inserting after section 36B the
following new section:
``SEC. 36C. CREDIT FOR EXCESS MINIMUM TAX ON CERTAIN WEALTHY TAXPAYERS.
``In the case of an individual (including any estate or trust),
there shall be allowed as a credit against the tax imposed by this
subtitle for any taxable year an amount equal to the excess (if any)
of--
``(1) the amount described in section 25E(1) for such
taxable year, over
``(2) the sum of--
``(A) 20 percent of the taxpayer's net unrealized
gain (as defined in section 1481) for such taxable
year,
``(B) the aggregate credits allowed under section
25E for such taxable year and all prior taxable years,
and
``(C) the aggregate reductions determined under
section 1481(h)(6) for such taxable year and all prior
taxable years.''.
(d) Penalties for Failure To Report.--
(1) Returns.--Section 6724(d)(1)(D) of the Internal Revenue
Code of 1986 is amended by inserting ``1481(i)(1) or'' before
``6055''.
(2) Statements.--Section 6724(d)(2) of such Code is
amended--
(A) in subparagraph (II), by striking ``or'' at the
end,
(B) in the first subparagraph (JJ), by striking the
period at the end and inserting a comma,
(C) in the second subparagraph (JJ)--
(i) by redesignating such subparagraph as
subparagraph (KK), and
(ii) by striking the period at the end and
inserting ``, or'', and
(D) by adding at the end the following new
subparagraph:
``(LL) section 1481(i)(2) (relating to statements
relating to minimum tax on certain wealthy
taxpayers).''.
(e) Conforming Amendments.--
(1) Section 6211(b)(4)(A) of the Internal Revenue Code of
1986 is amended by inserting ``36C,'' after ``36B,''.
(2) Paragraph (2) of section 1324(b) of title 31, United
States Code, is amended by inserting ``36C,'' after ``36B,''.
(3) The table of chapters for subtitle A of the Internal
Revenue Code of 1986 is amended by inserting after the item
relating to chapter 4 the following new item:
``Chapter 5. Minimum Tax on Certain Wealthy Taxpayers.''.
(4) The table of sections for subpart A of part IV of
subchapter A of chapter 1 of the Internal Revenue Code of 1986
is amended by inserting after the item relating to section 25D
the following new item:
``Sec. 25E. Minimum tax on certain wealthy taxpayers credited against
recognized gains.''.
(5) The table of sections for subpart C of part IV of
subchapter A of chapter 1 of the Internal Revenue Code of 1986
is amended by inserting after the item relating to section 36B
the following new item:
``Sec. 36C. Credit for excess minimum tax on certain wealthy
taxpayers.''.
(f) Sense of Congress Regarding State Residency Rules.--It is the
sense of Congress that the taxation by the several States of extreme
wealth is in the public interest and that silence on the part of
Congress shall not be construed to impose any barrier to the use of
reasonable residency rules, including such rules that apportion a tax
on deemed sales or extreme wealth over no more than five years, by the
several States or the District of Columbia.
(g) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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