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H.R.8
One Hundred Sixth Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Monday,
the twenty-fourth day of January, two thousand
An Act
To amend the Internal Revenue Code of 1986 to phaseout the estate and
gift taxes over a 10-year period.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Death Tax
Elimination Act of 2000''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
TITLE I--REPEAL OF ESTATE, GIFT, AND GENERATION-SKIPPING TAXES; REPEAL
OF STEP UP IN BASIS AT DEATH
SEC. 101. REPEAL OF ESTATE, GIFT, AND GENERATION-SKIPPING TAXES.
(a) In General.--Subtitle B is hereby repealed.
(b) Effective Date.--The repeal made by subsection (a) shall apply
to the estates of decedents dying, and gifts and generation-skipping
transfers made, after December 31, 2009.
SEC. 102. TERMINATION OF STEP UP IN BASIS AT DEATH.
(a) Termination of Application of Section 1014.--Section 1014
(relating to basis of property acquired from a decedent) is amended by
adding at the end the following:
``(f) Termination.--In the case of a decedent dying after December
31, 2009, this section shall not apply to property for which basis is
provided by section 1022.''.
(b) Conforming Amendment.--Subsection (a) of section 1016 (relating
to adjustments to basis) is amended by striking ``and'' at the end of
paragraph (26), by striking the period at the end of paragraph (27) and
inserting ``, and'', and by adding at the end the following:
``(28) to the extent provided in section 1022 (relating to
basis for certain property acquired from a decedent dying after
December 31, 2009).''.
SEC. 103. CARRYOVER BASIS AT DEATH.
(a) General Rule.--Part II of subchapter O of chapter 1 (relating
to basis rules of general application) is amended by inserting after
section 1021 the following new section:
``SEC. 1022. CARRYOVER BASIS FOR CERTAIN PROPERTY ACQUIRED FROM A
DECEDENT DYING AFTER DECEMBER 31, 2009.
``(a) Carryover Basis.--Except as otherwise provided in this
section, the basis of carryover basis property in the hands of a person
acquiring such property from a decedent shall be determined under
section 1015.
``(b) Carryover Basis Property Defined.--
``(1) In general.--For purposes of this section, the term
`carryover basis property' means any property--
``(A) which is acquired from or passed from a decedent who
died after December 31, 2009, and
``(B) which is not excluded pursuant to paragraph (2).
The property taken into account under subparagraph (A) shall be
determined under section 1014(b) without regard to subparagraph (A)
of the last sentence of paragraph (9) thereof.
``(2) Certain property not carryover basis property.--The term
`carryover basis property' does not include--
``(A) any item of gross income in respect of a decedent
described in section 691,
``(B) property of the decedent to the extent that the
aggregate adjusted fair market value of such property does not
exceed $1,300,000, and
``(C) property which was acquired from the decedent by the
surviving spouse of the decedent (and which would be carryover
basis property without regard to this subparagraph) but only if
the value of such property would have been deductible from the
value of the taxable estate of the decedent under section 2056,
as in effect on the day before the date of the enactment of the
Death Tax Elimination Act of 2000.
For purposes of this subsection, the term `adjusted fair market
value' means, with respect to any property, fair market value
reduced by any indebtedness secured by such property.
``(3) Limitation on exception for property acquired by
surviving spouse.--The adjusted fair market value of property which
is not carryover basis property by reason of paragraph (2)(C) shall
not exceed $3,000,000.
``(4) Allocation of excepted amounts.--The executor shall
allocate the limitations under paragraphs (2)(B) and (3).
``(5) Inflation adjustment of excepted amounts.--In the case of
decedents dying in a calendar year after 2010, the dollar amounts
in paragraphs (2)(B) and (3) shall each be increased by an amount
equal to the product of--
``(A) such dollar amount, and
``(B) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year, determined by
substituting `2009' for `1992' in subparagraph (B) thereof.
If any increase determined under the preceding sentence is not a
multiple of $10,000, such increase shall be rounded to the nearest
multiple of $10,000.
``(c) Regulations.--The Secretary shall prescribe such regulations
as may be necessary to carry out the purposes of this section.''.
(b) Miscellaneous Amendments Related To Carryover Basis.--
(1) Capital gain treatment for inherited art work or similar
property.--
(A) In general.--Subparagraph (C) of section 1221(a)(3)
(defining capital asset) is amended by inserting ``(other than
by reason of section 1022)'' after ``is determined''.
(B) Coordination with section 170.--Paragraph (1) of
section 170(e) (relating to certain contributions of ordinary
income and capital gain property) is amended by adding at the
end the following: ``For purposes of this paragraph, the
determination of whether property is a capital asset shall be
made without regard to the exception contained in section
1221(a)(3)(C) for basis determined under section 1022.''.
(2) Definition of executor.--Section 7701(a) (relating to
definitions) is amended by adding at the end the following:
``(47) Executor.--The term `executor' means the executor or
administrator of the decedent, or, if there is no executor or
administrator appointed, qualified, and acting within the United
States, then any person in actual or constructive possession of any
property of the decedent.''.
(3) Clerical amendment.--The table of sections for part II of
subchapter O of chapter 1 is amended by adding at the end the
following new item:
``Sec. 1022. Carryover basis for certain property acquired from
a decedent dying after December 31, 2009.''.
(c) Effective Date.--The amendments made by this section shall
apply to estates of decedents dying after December 31, 2009.
TITLE II--REDUCTIONS OF ESTATE AND GIFT TAX RATES PRIOR TO REPEAL
SEC. 201. ADDITIONAL REDUCTIONS OF ESTATE AND GIFT TAX RATES.
(a) Maximum Rate of Tax Reduced to 50 Percent.--
(1) In general.--The table contained in section 2001(c)(1) is
amended by striking the two highest brackets and inserting the
following:
``Over $2,500,000
$1,025,800, plus 50% of the excess over $2,500,000.''.
(2) Phase-in of reduced rate.--Subsection (c) of section 2001
is amended by adding at the end the following new paragraph:
``(3) Phase-in of reduced rate.--In the case of decedents
dying, and gifts made, during 2001, the last item in the table
contained in paragraph (1) shall be applied by substituting `53%'
for `50%'.''.
(b) Repeal of Phaseout of Graduated Rates.--Subsection (c) of
section 2001 is amended by striking paragraph (2) and redesignating
paragraph (3), as added by subsection (a), as paragraph (2).
(c) Additional Reductions of Rates of Tax.--Subsection (c) of
section 2001, as so amended, is amended by adding at the end the
following new paragraph:
``(3) Phasedown of tax.--In the case of estates of decedents
dying, and gifts made, during any calendar year after 2002 and
before 2010--
``(A) In general.--Except as provided in subparagraph (C),
the tentative tax under this subsection shall be determined by
using a table prescribed by the Secretary (in lieu of using the
table contained in paragraph (1)) which is the same as such
table; except that--
``(i) each of the rates of tax shall be reduced by the
number of percentage points determined under subparagraph
(B), and
``(ii) the amounts setting forth the tax shall be
adjusted to the extent necessary to reflect the adjustments
under clause (i).
``(B) Percentage points of reduction.--
The number of
``For calendar year:
percentage points is:
2003..............................................
1.0
2004..............................................
2.0
2005..............................................
3.0
2006..............................................
4.0
2007..............................................
5.5
2008..............................................
7.5
2009..............................................
9.5.
``(C) Coordination with income tax rates.--The reductions
under subparagraph (A)--
``(i) shall not reduce any rate under paragraph (1)
below the lowest rate in section 1(c), and
``(ii) shall not reduce the highest rate under
paragraph (1) below the highest rate in section 1(c).
``(D) Coordination with credit for state death taxes.--
Rules similar to the rules of subparagraph (A) shall apply to
the table contained in section 2011(b) except that the
Secretary shall prescribe percentage point reductions which
maintain the proportionate relationship (as in effect before
any reduction under this paragraph) between the credit under
section 2011 and the tax rates under subsection (c).''.
(d) Effective Dates.--
(1) Subsections (a) and (b).--The amendments made by
subsections (a) and (b) shall apply to estates of decedents dying,
and gifts made, after December 31, 2000.
(2) Subsection (c).--The amendment made by subsection (c) shall
apply to estates of decedents dying, and gifts made, after December
31, 2002.
TITLE III--UNIFIED CREDIT REPLACED WITH UNIFIED EXEMPTION AMOUNT
SEC. 301. UNIFIED CREDIT AGAINST ESTATE AND GIFT TAXES REPLACED WITH
UNIFIED EXEMPTION AMOUNT.
(a) In General.--
(1) Estate tax.--Subsection (b) of section 2001 (relating to
computation of tax) is amended to read as follows:
``(b) Computation of Tax.--
``(1) In general.--The tax imposed by this section shall be the
amount equal to the excess (if any) of--
``(A) the tentative tax determined under paragraph (2),
over
``(B) the aggregate amount of tax which would have been
payable under chapter 12 with respect to gifts made by the
decedent after December 31, 1976, if the provisions of
subsection (c) (as in effect at the decedent's death) had been
applicable at the time of such gifts.
``(2) Tentative tax.--For purposes of paragraph (1), the
tentative tax determined under this paragraph is a tax computed
under subsection (c) on the excess of--
``(A) the sum of--
``(i) the amount of the taxable estate, and
``(ii) the amount of the adjusted taxable gifts, over
``(B) the exemption amount for the calendar year in which
the decedent died.
``(3) Exemption amount.--For purposes of paragraph (2), the
term `exemption amount' means the amount determined in accordance
with the following table:
``In the case of
The exemption
calendar year:
amount is:
2001............................................
$675,000
2002 and 2003...................................
$700,000
2004............................................
$850,000
2005............................................
$950,000
2006 or thereafter..............................
$1,000,000.
``(4) Adjusted taxable gifts.--For purposes of paragraph (2),
the term `adjusted taxable gifts' means the total amount of the
taxable gifts (within the meaning of section 2503) made by the
decedent after December 31, 1976, other than gifts which are
includible in the gross estate of the decedent.''.
(2) Gift tax.--Subsection (a) of section 2502 (relating to
computation of tax) is amended to read as follows:
``(a) Computation of Tax.--
``(1) In general.--The tax imposed by section 2501 for each
calendar year shall be the amount equal to the excess (if any) of--
``(A) the tentative tax determined under paragraph (2),
over
``(B) the tax paid under this section for all prior
calendar periods.
``(2) Tentative tax.--For purposes of paragraph (1), the
tentative tax determined under this paragraph for a calendar year
is a tax computed under section 2001(c) on the excess of--
``(A) the aggregate sum of the taxable gifts for such
calendar year and for each of the preceding calendar periods,
over
``(B) the exemption amount under section 2001(b)(3) for
such calendar year.''.
(b) Repeal of Unified Credits.--
(1) Section 2010 (relating to unified credit against estate
tax) is hereby repealed.
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