RETURNS OF BENEFICIARIES OF ESTATES AND TRUSTS REQUIRED TO FILE RETURNS CONSISTENT WITH ESTATE OR TRUST RETURN OR TO NOTIFY SECRETARY OF INCONSISTENCY.

SEC. 1027. RETURNS OF BENEFICIARIES OF ESTATES AND TRUSTS REQUIRED TO FILE RETURNS CONSISTENT WITH ESTATE OR TRUST RETURN OR TO NOTIFY SECRETARY OF INCONSISTENCY. (a) Domestic Estates and Trusts.—Section 6034A (relating to information to beneficiaries of estates and trusts) is amended by adding at the end the following new subsection: “(c) Beneficiary’s Return Must be Consistent with Estate or Trust Return or Secretary Notified of Inconsistency.— “(1) In general.—A beneficiary of any estate or trust to which subsection (a) applies shall, on such beneficiary’s return, treat any reported item in a manner which is consistent with the treatment of such item on the applicable entity’s return. “(2) Notification of inconsistent treatment.— “(A) In general.—In the case of any reported item, if— “(i)(I) the applicable entity has filed a return but the beneficiary’s treatment on such beneficiary’s return is (or may be) inconsistent with the treatment of the item on the applicable entity’s return, or “(II) the applicable entity has not filed a return, and “(ii) the beneficiary files with the Secretary a statement identifying the inconsistency, paragraph (1) shall not apply to such item. “(B) Beneficiary receiving incorrect information.—A beneficiary shall be treated as having complied with clause (ii) of subparagraph (A) with respect to a reported item if the beneficiary— “(i) demonstrates to the satisfaction of the Secretary that the treatment of the reported item on the beneficiary’s return is consistent with the treatment of the item on the statement furnished under subsection (a) to the beneficiary by the applicable entity, and111 STAT. 926 “(ii) elects to have this paragraph apply with respect to that item. “(3) Effect of failure to notify.—In any case— “(A) described in subparagraph (A)(i)(I) of paragraph (2), and “(B) in which the beneficiary does not comply with subparagraph (A)(ii) of paragraph (2), any adjustment required to make the treatment of the items by such beneficiary consistent with the treatment of the items on the applicable entity’s return shall be treated as arising out of mathematical or clerical errors and assessed according to section 6213(b)(1). Paragraph (2) of section 6213(b) shall not apply to any assessment referred to in the preceding sentence. “(4) Definitions.—For purposes of this subsection— “(A) Reported item.—The term ‘reported item’ means any item for which information is required to be furnished under subsection (a). “(B) Applicable entity.—The term ‘applicable entity’ means the estate or trust of which the taxpayer is the beneficiary. “(5) Addition to tax for failure to comply with section.—For addition to tax in the case of a beneficiary’s negligence in connection with, or disregard of, the requirements of this section, see part II of subchapter A of chapter 68.”. (b) Foreign Trusts.—Subsection (d) of section 6048 (relating to information with respect to certain foreign trusts) is amended by adding at the end the following new paragraph: “(5) United states person’s return must be consistent with trust return or secretary notified of inconsistency.—Rules similar to the rules of section 6034A(c) shall apply to items reported by a trust under subsection (b)(1)(B) and to United States persons referred to in such subsection.”. (c) Effective Date.—The amendments made by this section shall apply to returns of beneficiaries and owners filed after the date of the enactment of this Act.