49–006 

114TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 114–52 

DEATH TAX REPEAL ACT OF 2015 

APRIL 6, 2015.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. RYAN of Wisconsin, from the Committee on Ways and Means, 

submitted the following 

R E P O R T 

together with 

DISSENTING VIEWS 

[To accompany H.R. 1105] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Ways and Means, to whom was referred the 

bill (H.R. 1105) to amend the Internal Revenue Code of 1986 to repeal the estate and generation-skipping transfer taxes, and for 

other purposes, having considered the same, report favorably thereon with an amendment and recommend that the bill as amended 

do pass. 

CONTENTS 

Page 

I. SUMMARY AND BACKGROUND ............................................................... 4 

A. Purpose and Summary ..................................................................... 4 

B. Background and Need for Legislation ............................................. 4 

C. Legislative History ............................................................................ 4 

II. EXPLANATION OF THE BILL ................................................................... 5 

A. Repeal of the Estate and Generation-Skipping Transfer Taxes 

and Modifications to the Gift Tax (secs. 2 and 3 of the bill, 

secs. 2502, 2505, and 2511 of the Code, and new secs. 2210 

and 2664 of the Code) .................................................................... 5 

III. VOTES OF THE COMMITTEE .................................................................... 15 

IV. BUDGET EFFECTS OF THE BILL ............................................................ 15 

A. Committee Estimate of Budgetary Effects ...................................... 15 

B. Statement Regarding New Budget Authority and Tax Expenditures Budget Authority .................................................................. 17 

C. Cost Estimate Prepared by the Congressional Budget Office ....... 17 

V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF 

THE HOUSE .............................................................................................. 20 


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A. Committee Oversight Findings and Recommendations ................. 20 

B. Statement of General Performance Goals and Objectives ............. 20 

C. Information Relating to Unfunded Mandates ................................ 20 

D. Applicability of House Rule XXI 5(b) .............................................. 20 

E. Tax Complexity Analysis .................................................................. 20 

F. Congressional Earmarks, Limited Tax Benefits, and Limited 

Tariff Benefits ................................................................................. 21 

G. Duplication of Federal Programs ..................................................... 21 

H. Disclosure of Directed Rule Makings .............................................. 21 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED 21 

A. Text of Existing Law Amended or Repealed by the Bill, as 

Reported .......................................................................................... 21 

B. Changes in Existing Law Proposed by the Bill, as Reported ........ 24 

VII. DISSENTING VIEWS ................................................................................... 30 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Death Tax Repeal Act of 2015’’. 

SEC. 2. REPEAL OF ESTATE AND GENERATION-SKIPPING TRANSFER TAXES. 

(a) ESTATE TAX REPEAL.—Subchapter C of chapter 11 of subtitle B of the Internal 

Revenue Code of 1986 is amended by adding at the end the following new section: 

‘‘SEC. 2210. TERMINATION. 

‘‘(a) IN GENERAL.—Except as provided in subsection (b), this chapter shall not 

apply to the estates of decedents dying on or after the date of the enactment of the 

Death Tax Repeal Act of 2015. 

‘‘(b) CERTAIN DISTRIBUTIONS FROM QUALIFIED DOMESTIC TRUSTS.—In applying 

section 2056A with respect to the surviving spouse of a decedent dying before the 

date of the enactment of the Death Tax Repeal Act of 2015— 

‘‘(1) section 2056A(b)(1)(A) shall not apply to distributions made after the 10- 

year period beginning on such date, and 

‘‘(2) section 2056A(b)(1)(B) shall not apply on or after such date.’’. 

(b) GENERATION-SKIPPING TRANSFER TAX REPEAL.—Subchapter G of chapter 13 of 

subtitle B of such Code is amended by adding at the end the following new section: 

‘‘SEC. 2664. TERMINATION. 

‘‘This chapter shall not apply to generation-skipping transfers on or after the date 

of the enactment of the Death Tax Repeal Act of 2015.’’. 

(c) CONFORMING AMENDMENTS.— 

(1) The table of sections for subchapter C of chapter 11 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item: 

‘‘Sec. 2210. Termination.’’. 

(2) The table of sections for subchapter G of chapter 13 of such Code is 

amended by adding at the end the following new item: 

‘‘Sec. 2664. Termination.’’. 

(d) EFFECTIVE DATE.—The amendments made by this section shall apply to the 

estates of decedents dying, and generation-skipping transfers, on or after the date 

of the enactment of this Act. 

SEC. 3. MODIFICATIONS OF GIFT TAX. 

(a) COMPUTATION OF GIFT TAX.—Subsection (a) of section 2502 of the Internal 

Revenue Code of 1986 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 an amount equal to the excess of— 

‘‘(A) a tentative tax, computed under paragraph (2), on the aggregate sum 

of the taxable gifts for such calendar year and for each of the preceding calendar periods, over 

‘‘(B) a tentative tax, computed under paragraph (2), on the aggregate sum 

of the taxable gifts for each of the preceding calendar periods. 

‘‘(2) RATE SCHEDULE.— 

‘‘If the amount with respect to which the tentative tax to 

be computed is:.

The tentative tax is: 

Not over $10,000 ................................................................................ 18% of such amount. 


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Over $10,000 but not over $20,000 ................................................... $1,800, plus 20% of the excess over $10,000. 

Over $20,000 but not over $40,000 ................................................... $3,800, plus 22% of the excess over $20,000. 

Over $40,000 but not over $60,000 ................................................... $8,200, plus 24% of the excess over $40,000. 

Over $60,000 but not over $80,000 ................................................... $13,000, plus 26% of the excess over $60,000. 

Over $80,000 but not over $100,000 ................................................. $18,200, plus 28% of the excess over $80,000. 

Over $100,000 but not over $150,000 ............................................... $23,800, plus 30% of the excess over $100,000. 

Over $150,000 but not over $250,000 ............................................... $38,800, plus 32% of the excess of $150,000. 

Over $250,000 but not over $500,000 ............................................... $70,800, plus 34% of the excess over $250,000. 

Over $500,000 .................................................................................... $155,800, plus 35% of the 

excess of $500,000.’’. 

(b) TREATMENT OF CERTAIN TRANSFERS IN TRUST.—Section 2511 of the Internal 

Revenue Code of 1986 is amended by adding at the end the following new subsection: 

‘‘(c) TREATMENT OF CERTAIN TRANSFERS IN TRUST.—Notwithstanding any other 

provision of this section and except as provided in regulations, a transfer in trust 

shall be treated as a taxable gift under section 2503, unless the trust is treated as 

wholly owned by the donor or the donor’s spouse under subpart E of part I of subchapter J of chapter 1.’’. 

(c) LIFETIME GIFT EXEMPTION.— 

(1) IN GENERAL.—Paragraph (1) of section 2505(a) of the Internal Revenue 

Code of 1986 is amended to read as follows: 

‘‘(1) the amount of the tentative tax which would be determined under the 

rate schedule set forth in section 2502(a)(2) if the amount with respect to which 

such tentative tax is to be computed were $5,000,000, reduced by’’. 

(2) INFLATION ADJUSTMENT.—Section 2505 of such Code is amended by adding 

at the end the following new subsection: 

‘‘(d) INFLATION ADJUSTMENT.— 

‘‘(1) IN GENERAL.—In the case of any calendar year after 2011, the dollar 

amount in subsection (a)(1) 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. 

‘‘(2) ROUNDING.—If any amount as adjusted under paragraph (1) is not a multiple of $10,000, such amount shall be rounded to the nearest multiple of 

$10,000.’’. 

(d) CONFORMING AMENDMENTS.— 

(1) The heading for section 2505 of such Code is amended by striking ‘‘UNIFIED’’. 

(2) The item in the table of sections for subchapter A of chapter 12 of such 

Code relating to section 2505 is amended to read as follows: 

‘‘Sec. 2505. Credit against gift tax.’’. 

(3) Section 2801(a)(1) of such Code is amended by striking ‘‘section 2001(c) as 

in effect on the date of such receipt’’ and inserting ‘‘section 2502(a)(2)’’. 

(e) EFFECTIVE DATE.—The amendments made by this section shall apply to gifts 

made on or after the date of the enactment of this Act. 

(f) TRANSITION RULE.— 

(1) IN GENERAL.—For purposes of applying sections 1015(d), 2502, and 2505 

of the Internal Revenue Code of 1986, the calendar year in which this Act is 

enacted shall be treated as 2 separate calendar years one of which ends on the 

day before the date of the enactment of this Act and the other of which begins 

on such date of enactment. 

(2) APPLICATION OF SECTION 2504(b).—For purposes of applying section 

2504(b) of the Internal Revenue Code of 1986, the calendar year in which this 

Act is enacted shall be treated as one preceding calendar period. 


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I. SUMMARY AND BACKGROUND 

A. PURPOSE AND SUMMARY

H.R. 1105, reported by the Committee on Ways and Means, provides for the repeal of the estate tax and the generation skipping 

transfer tax and lowers the highest gift tax rate from 40 percent 

to 35 percent, effective for decedents dying and gifts after the date 

of enactment. H.R. 1105 provides a transition rule for assets placed 

in a qualified domestic trust by a decedent who died before the effective date. Under the transition rule, the estate tax will not be 

imposed on: (1) distributions before the death of a surviving spouse 

from the trust more than ten years after the date of enactment; or 

(2) assets remaining in the qualified domestic trust upon the death 

of the surviving spouse. H.R. 1105 provides that a transfer in trust 

shall be treated as a taxable gift, unless the trust is treated as 

wholly owned by the donor or the donor’s spouse for income tax 

purposes. H.R. 1105 also provides that the year of enactment shall 

be treated as two separate calendar years, one ending the day before the date of enactment and the other beginning on the date of 

enactment, for purposes of: (1) computing the gift tax under section 

2502 and determining the unified credit for gift tax purposes under 

section 2505, and (2) determining any increase in basis for gift tax 

paid. 

B. BACKGROUND AND NEED FOR LEGISLATION

While the Committee continues actively to pursue comprehensive 

tax reform as a critical means of promoting economic growth and 

job creation, the Committee also believes it is important to provide 

family businesses and farms with immediate tax relief to help encourage economic growth and job creation. By repealing the estate 

tax and the generation skipping transfer tax, families no longer 

will be threatened with the loss of a business due to the untimely 

death of a family member. Families also will be free to focus their 

attention on expanding their businesses and creating jobs rather 

than wasting critical resources on estate planning. A family business or farm facing an estate tax bill could be forced to sell critical 

assets such as land and inventory, and the business also could face 

years of lower capital investment, limiting growth opportunities. In 

addition, the Committee believes that the estate tax imposes a double or, in some cases, triple tax on assets. Repeal of the estate tax 

eliminates this unfair tax burden. 

C. LEGISLATIVE HISTORY

Background 

H.R. 1105 was introduced on February 26, 2015, and was referred to the Committee on Ways and Means. 

Committee action 

The Committee on Ways and Means marked up H.R. 1105, the 

‘‘Death Tax Repeal Act of 2015,’’ on March 25, 2015, and ordered 

the bill, as amended, favorably reported (with a quorum being 

present). 


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1Sec. 102. 

2Sec. 2010. 

3For 2011 and later years, the gift and estate taxes were reunified, meaning that the gift tax 

exemption amount was increased to equal the estate tax exemption amount. 4For 2015, the $5.43 exemption amount results in a unified credit of $2,117,800, after applying the applicable rates set forth in section 2001(c). 

Committee hearings 

The need for permanent repeal of the estate tax was discussed 

at a Select Revenue Measures Subcommittee Hearing on the Burden of the Estate Tax on Family Businesses and Farms on March 

18, 2015. 

II. EXPLANATION OF THE BILL 

A. REPEAL OF THE ESTATE AND GENERATION-SKIPPING TRANSFER

TAXES AND MODIFICATIONS TO THE GIFT TAX (SECS. 2 AND 3 OF

THE BILL, SECS. 2502, 2505, AND 2511 OF THE CODE, AND NEW

SECS. 2210 AND 2664 OF THE CODE) 

PRESENT LAW

In General 

A gift tax is imposed on certain lifetime transfers, and an estate 

tax is imposed on certain transfers at death. A generation-skipping 

transfer tax generally is imposed on transfers, either directly or in 

trust or similar arrangement, to a ‘‘skip person’’ (i.e., a beneficiary 

in a generation more than one generation younger than that of the 

transferor). Transfers subject to the generation-skipping transfer 

tax include direct skips, taxable terminations, and taxable distributions. 

Income tax rules determine the recipient’s tax basis in property 

acquired from a decedent or by gift. Gifts and bequests generally 

are excluded from the recipient’s gross income.1

Common Features of the Estate, Gift and Generation-Skipping 

Transfer Taxes 

Unified credit (exemption) and tax rates 

Unified credit.—A unified credit is available with respect to taxable transfers by gift and at death.2 The unified credit offsets tax, 

computed using the applicable estate and gift tax rates, on a specified amount of transfers, referred to as the applicable exclusion 

amount, or exemption amount. The exemption amount was set at 

$5 million for 2011 and is indexed for inflation for later years.3 For 

2015, the inflation-indexed exemption amount is $5.43 million.4 Exemption used during life to offset taxable gifts reduces the amount 

of exemption that remains at death to offset the value of a decedent’s estate. An election is available under which exemption that 

is not used by a decedent may be used by the decedent’s surviving 

spouse (exemption portability). 

Common tax rate table.—A common tax-rate table with a top 

marginal tax rate of 40 percent is used to compute gift tax and estate tax. The 40-percent rate applies to transfers in excess of $1 

million (to the extent not exempt). Because the exemption amount 

currently shields the first $5.43 million in gifts and bequests from 


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5Secs. 2056 and 2523. 

6Secs. 2055 and 2522. 

7Sec. 2055(d). 

tax, transfers in excess of the exemption amount generally are subject to tax at the highest marginal 40-percent rate. 

Generation-skipping transfer tax exemption and rate.—The generation-skipping transfer tax is a separate tax that can apply in addition to either the gift tax or the estate tax. The tax rate and exemption amount for generation-skipping transfer tax purposes, 

however, are set by reference to the estate tax rules. Generationskipping transfer tax is imposed using a flat rate equal to the highest estate tax rate (40 percent). Tax is imposed on cumulative generation-skipping transfers in excess of the generation-skipping 

transfer tax exemption amount in effect for the year of the transfer. The generation-skipping transfer tax exemption for a given 

year is equal to the estate tax exemption amount in effect for that 

year (currently $5.43 million). 

Transfers between spouses.—A 100-percent marital deduction 

generally is permitted for the value of property transferred between spouses.5 In addition, transfers of ‘‘qualified terminable interest property’’ also are eligible for the marital deduction. Qualified terminable interest property is property: (1) that passes from 

the decedent, (2) in which the surviving spouse has a ‘‘qualifying 

income interest for life,’’ and (3) to which an election under these 

rules applies. A qualifying income interest for life exists if: (1) the 

surviving spouse is entitled to all the income from the property 

(payable annually or at more frequent intervals) or has the right 

to use the property during the spouse’s life, and (2) no person has 

the power to appoint any part of the property to any person other 

than the surviving spouse. 

A marital deduction generally is denied for property passing to 

a surviving spouse who is not a citizen of the United States. A marital deduction is permitted, however, for property passing to a 

qualified domestic trust of which the noncitizen surviving spouse is 

a beneficiary. A qualified domestic trust is a trust that has as its 

trustee at least one U.S. citizen or U.S. corporation. No corpus may 

be distributed from a qualified domestic trust unless the U.S. trustee has the right to withhold any estate tax imposed on the distribution. 

Tax is imposed on (1) any distribution from a qualified domestic 

trust before the date of the death of the noncitizen surviving 

spouse and (2) the value of the property remaining in a qualified 

domestic trust on the date of death of the noncitizen surviving 

spouse. The tax is computed as an additional estate tax on the estate of the first spouse to die. 

Transfers to charity.—Contributions to section 501(c)(3) charitable organizations and certain other organizations may be deducted from the value of a gift or from the value of the assets in 

an estate for Federal gift or estate tax purposes.6 The effect of the 

deduction generally is to remove the full fair market value of assets 

transferred to charity from the gift or estate tax base; unlike the 

income tax charitable deduction, there are no percentage limits on 

the deductible amount. For estate tax purposes, the charitable deduction is limited to the value of the transferred property that is 

required to be included in the gross estate.7 A charitable contribuVerDate Sep 11 2014 04:20 Apr 08, 2015 Jkt 049006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\HR052.XXX HR052

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8Secs. 2055(e)(2) and 2522(c)(2). 

9Sec. 2001(a). 

10More mechanically, the taxable estate is combined with the value of adjusted taxable gifts 

made during the decedent’s life (generally, post–1976 gifts), before applying tax rates to determine a tentative total amount of tax. The portion of the tentative tax attributable to lifetime 

gifts is then subtracted from the total tentative tax to determine the gross estate tax, i.e., the 

amount of estate tax before considering available credits. Credits are then subtracted to determine the estate tax liability. 

This method of computation was designed to ensure that a taxpayer only gets one run up 

through the rate brackets for all lifetime gifts and transfers at death, at a time when the thresholds for applying the higher marginal rates exceeded the exemption amount. However, the higher ($5.43 million) present-law exemption amount effectively renders the lower rate brackets irrelevant, because the top marginal rate bracket applies to all transfers in excess of $1 million. 

In other words, all transfers that are not exempt by reason of the $5.43 million exemption 

amount are taxed at the highest marginal rate of 40 percent. 11Sec. 2031(a). 12Sec. 2032. 13Sec. 2033. 14Sec. 2035. 15Sec. 2036. 16Sec. 2037. 17Sec. 2038. 

tion of a partial interest in property, such as a remainder or future 

interest, generally is not deductible for gift or estate tax purposes.8

The Estate Tax 

Overview 

The Code imposes a tax on the transfer of the taxable estate of 

a decedent who is a citizen or resident of the United States.9 The 

taxable estate is determined by deducting from the value of the decedent’s gross estate any deductions provided for in the Code. After 

applying tax rates to determine a tentative amount of estate tax, 

certain credits are subtracted to determine estate tax liability.10

Because the estate tax shares a common unified credit (exemption) and tax rate table with the gift tax, the exemption amounts 

and tax rates are described together above, along with certain 

other common features of these taxes. 

Gross estate 

A decedent’s gross estate includes, to the extent provided for in 

other sections of the Code, the date-of-death value of all of a decedent’s property, real or personal, tangible or intangible, wherever 

situated.11 In general, the value of property for this purpose is the 

fair market value of the property as of the date of the decedent’s 

death, although an executor may elect to value certain property as 

of the date that is six months after the decedent’s death (the alternate valuation date).12

The gross estate includes not only property directly owned by the 

decedent, but also other property in which the decedent had a beneficial interest at the time of his or her death.13 The gross estate 

also includes certain transfers made by the decedent prior to his 

or her death, including: (1) certain gifts made within three years 

prior to the decedent’s death;14 (2) certain transfers of property in 

which the decedent retained a life estate;15 (3) certain transfers 

taking effect at death;16 and (4) revocable transfers.17 In addition, 

the gross estate also includes property with respect to which the 

decedent had, at the time of death, a general power of appointment 

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18Sec. 2041. 19Sec. 2042. 20Sec. 2058. 21Sec. 2053. 22Sec. 2054. 23Sec. 2010. 24Sec. 2012. 25Sec. 2013. 

ship).18 The value of a life insurance policy on the decedent’s life 

is included in the gross estate if the proceeds are payable to the 

decedent’s estate or the decedent had incidents of ownership with 

respect to the policy at the time of his or her death. 19

Deductions from the gross estate 

A decedent’s taxable estate is determined by subtracting from the 

value of the gross estate any deductions provided for in the Code. 

Marital and charitable transfers.—As described above, transfers 

to a surviving spouse or to charity generally are deductible for estate tax purposes. The effect of the marital and charitable deductions generally is to remove assets transferred to a surviving 

spouse or to charity from the estate tax base. 

State death taxes.—An estate tax deduction is permitted for 

death taxes (e.g., any estate, inheritance, legacy, or succession 

taxes) actually paid to any State or the District of Columbia, in respect of property included in the gross estate of the decedent.20

Such State taxes must have been paid and claimed before the later 

of: (1) four years after the filing of the estate tax return; or (2) (a) 

60 days after a decision of the U.S. Tax Court determining the estate tax liability becomes final, (b) the expiration of the period of 

extension to pay estate taxes over time under section 6166, or (c) 

the expiration of the period of limitations in which to file a claim 

for refund or 60 days after a decision of a court in which such refund suit has become final. 

Other deductions.—A deduction is available for funeral expenses, 

estate administration expenses, and claims against the estate, including certain taxes.21 A deduction also is available for uninsured 

casualty and theft losses incurred during the settlement of the estate.22

Credits against tax 

After accounting for allowable deductions, a gross amount of estate tax is computed. Estate tax liability is then determined by 

subtracting allowable credits from the gross estate tax. 

Unified credit.—The most significant credit allowed for estate tax 

purposes is the unified credit, which is discussed in greater detail 

above.23 For 2015, the value of the unified credit is $2,117,800, 

which has the effect of exempting $5.43 million in transfers from 

tax. The unified credit available at death is reduced by the amount 

of unified credit used to offset gift tax on gifts made during the decedent’s life. 

Other credits.—Estate tax credits also are allowed for: (1) gift tax 

paid on certain pre–1977 gifts (before the estate and gift tax computations were integrated); 24 (2) estate tax paid on certain prior 

transfers (to limit the estate tax burden when estate tax is imposed 

on transfers of the same property in two estates by reason of 

deaths in rapid succession); 25 and (3) certain foreign death taxes 


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26Sec. 2014. In certain cases, an election may be made to deduct foreign death taxes. See section 2053(d). 27Sec. 2032A. 28Prior to 2004, an estate also was permitted to deduct the adjusted value of a qualified family-owned business interest of the decedent, up to $675,000. Sec. 2057. A qualified family-owned 

business interest generally was defined as any interest in a trade or business (regardless of the 

form in which it is held) with a principal place of business in the United States if the decedent’s 

family owns at least 50 percent of the trade or business, two families own 70 percent, or three 

families own 90 percent, as long as the decedent’s family owns at least 30 percent of the trade 

or business. To qualify for the exclusion, the decedent (or a member of the decedent’s family) 

must have owned and materially participated in the trade or business for at least five of the 

eight years preceding the decedent’s date of death. In addition, at least one qualified heir (or 

member of the qualified heir’s family) was required to have materially participated in the trade 

or business for at least 10 years following the decedent’s death. The qualified family-owned business rules provided a graduated recapture based on the number of years after the decedent’s 

death within which a disqualifying event occurred. 

The qualified family-owned business deduction and the unified credit effective exemption amount were coordinated. If the maximum deduction amount of $675,000 is elected, then the 

unified credit effective exemption amount is $625,000, for a total of $1.3 million. If the qualified 

family-owned business deduction is less than $675,000, then the unified credit effective exemption amount is equal to $625,000, increased by the difference between $675,000 and the amount 

of the qualified family-owned business deduction. However, the unified credit effective exemption amount cannot be increased above such amount in effect for the taxable year. Because of 

the coordination between the qualified family-owned business deduction and the unified credit 

effective exemption amount, the qualified family-owned business deduction did not provide a 

benefit in any year in which the applicable exclusion amount exceeded $1.3 million. 29Sec. 6166. 

paid (generally, where the property is situated in a foreign country 

but included in the decedent’s U.S. gross estate).26

Provisions affecting small and family-owned businesses and 

farms 

Special-use valuation.—An executor can elect to value for estate 

tax purposes certain ‘‘qualified real property’’ used in farming or 

another qualifying closely-held trade or business at its current-use 

value, rather than its fair market value.27 The maximum reduction 

in value for such real property is $750,000 (adjusted for inflation 

occurring after 1997; the inflation-adjusted amount for 2015 is 

$1,100,000). In general, real property generally qualifies for special-use valuation only if (1) at least 50 percent of the adjusted 

value of the decedent’s gross estate (including both real and personal property) consists of a farm or closely-held business property 

in the decedent’s estate and (2) at least 25 percent of the adjusted 

value of the gross estate consists of farm or closely held business 

real property. In addition, the property must be used in a qualified 

use (e.g., farming) by the decedent or a member of the decedent’s 

family for five of the eight years before the decedent’s death. 

If, after a special-use valuation election is made, the heir who acquired the real property ceases to use it in its qualified use within 

10 years of the decedent’s death, an additional estate tax is imposed to recapture the entire estate-tax benefit of the special-use 

valuation.28

Installment payment of estate tax for closely held businesses.— 

Under present law, the estate tax generally is due within nine 

months of a decedent’s death. However, an executor generally may 

elect to pay estate tax attributable to an interest in a closely held 

business in two or more installments (but no more than 10).29 An 

estate is eligible for payment of estate tax in installments if the 

value of the decedent’s interest in a closely held business exceeds 

35 percent of the decedent’s adjusted gross estate (i.e., the gross estate less certain deductions). If the election is made, the estate may 

defer payment of principal and pay only interest for the first five 


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30The interest rate on this portion adjusts with the Federal short-term rate. 31Sec. 2501(a). 32Sec. 2511(a). 33Sec. 2512(a). 34Sec. 2512(b). 

years, followed by up to 10 annual installments of principal and interest. This provision effectively extends the time for paying estate 

tax by 14 years from the original due date of the estate tax. A special two-percent interest rate applies to the amount of deferred estate tax attributable to the first $1 million (adjusted annually for 

inflation occurring after 1998; the inflation-adjusted amount for 

2015 is $1,470,000) in taxable value of a closely held business. The 

interest rate applicable to the amount of estate tax attributable to 

the taxable value of the closely held business in excess of $1 million (adjusted for inflation) is equal to 45 percent of the rate applicable to underpayments of tax under section 6621 of the Code (i.e., 45 percent of the Federal short-term rate plus three percentage 

points).30 Interest paid on deferred estate taxes is not deductible 

for estate or income tax purposes. 

The Gift Tax 

Overview 

The Code imposes a tax for each calendar year on the transfer 

of property by gift during such year by any individual, whether a 

resident or nonresident of the United States.31 The amount of taxable gifts for a calendar year is determined by subtracting from the 

total amount of gifts made during the year: (1) the gift tax annual 

exclusion (described below); and (2) allowable deductions. 

Gift tax for the current taxable year is determined by: (1) computing a tentative tax on the combined amount of all taxable gifts 

for the current and all prior calendar years using the common gift 

tax and estate tax rate table; (2) computing a tentative tax only on 

all prior-year gifts; (3) subtracting the tentative tax on prior-year 

gifts from the tentative tax computed for all years to arrive at the 

portion of the total tentative tax attributable to current-year gifts; 

and, finally, (4) subtracting the amount of unified credit not consumed by prior-year gifts. 

Because the gift tax shares a common unified credit (exemption) 

and tax rate table with the estate tax, the exemption amounts and 

tax rates are described together above, along with certain other 

common features of these taxes. 

Transfers by gift 

The gift tax applies to a transfer by gift regardless of whether: 

(1) the transfer is made outright or in trust; (2) the gift is direct 

or indirect; or (3) the property is real or personal, tangible or intangible.32 For gift tax purposes, the value of a gift of property is the 

fair market value of the property at the time of the gift.33 Where 

property is transferred for less than full consideration, the amount 

by which the value of the property exceeds the value of the consideration is considered a gift and is included in computing the total 

amount of a taxpayer’s gifts for a calendar year.34

For a gift to occur, a donor generally must relinquish dominion 

and control over donated property. For example, if a taxpayer 

transfers assets to a trust established for the benefit of his or her 


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35Sec. 2503(e). 36Sec. 2501(a)(4). 37Sec. 2503(b). 38Sec. 529(c)(2). 

children, but retains the right to revoke the trust, the taxpayer 

may not have made a completed gift, because the taxpayer has retained dominion and control over the transferred assets. A completed gift made in trust, on the other hand, often is treated as a 

gift to the trust beneficiaries. 

By reason of statute, certain transfers are not treated as transfers by gift for gift tax purposes. These include, for example, certain transfers for educational and medical purposes 35 and transfers 

to section 527 political organizations.36

Taxable gifts 

As stated above, the amount of a taxpayer’s taxable gifts for the 

year is determined by subtracting from the total amount of the taxpayer’s gifts for the year the gift tax annual exclusion and any 

available deductions. 

Gift tax annual exclusion.—Under present law, donors of lifetime 

gifts are provided an annual exclusion of $14,000 per donee in 2015 

(indexed for inflation from the 1997 annual exclusion amount of 

$10,000) for gifts of present interests in property during the taxable year.37 If the non-donor spouse consents to split the gift with 

the donor spouse, then the annual exclusion is $28,000 per donee 

in 2015. In general, unlimited transfers between spouses are permitted without imposition of a gift tax. Special rules apply to the 

contributions to a qualified tuition program (‘‘529 Plan’’) including 

an election to treat a contribution that exceeds the annual exclusion as a contribution made ratably over a five-year period beginning with the year of the contribution.38

Marital and charitable deductions.—As described above, transfers to a surviving spouse or to charity generally are deductible for 

gift tax purposes. The effect of the marital and charitable deductions generally is to remove assets transferred to a surviving 

spouse or to charity from the gift tax base. 

The Generation-Skipping Transfer Tax 

A generation-skipping transfer tax generally is imposed (in addition to the gift tax or the estate tax) on transfers, either directly 

or in trust or similar arrangement, to a ‘‘skip person’’ (i.e., a beneficiary in a generation more than one generation below that of the 

transferor). Transfers subject to the generation-skipping transfer 

tax include direct skips, taxable terminations, and taxable distributions. 

Exemption and tax rate 

An exemption generally equal to the estate tax exemption 

amount ($5.43 million for 2015) is provided for each person making 

generation-skipping transfers. The exemption may be allocated by 

a transferor (or his or her executor) to transferred property, and in 

some cases is automatically allocated. The allocation of generationskipping transfer tax exemption effectively reduces the tax rate on 

a generation-skipping transfer. 


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39The inclusion ratio is one minus the applicable fraction. The applicable fraction is the 

amount of exemption allocated to a trust (or to a direct skip) divided by the value of assets 

transferred. 

The tax rate on generation-skipping transfers is a flat rate of tax 

equal to the maximum estate and gift tax rate (40 percent) multiplied by the ‘‘inclusion ratio.’’ The inclusion ratio with respect to 

any property transferred indicates the amount of ‘‘generation-skipping transfer tax exemption’’ allocated to a trust (or to property 

transferred in a direct skip) relative to the total value of property 

transferred.39 If, for example, a taxpayer transfers $5 million in property to a trust and allocates $5 million of exemption to the 

transfer, the inclusion ratio is zero, and the applicable tax rate on 

any subsequent generation-skipping transfers from the trust is zero 

percent (40 percent multiplied by the inclusion ratio of zero). If, 

however, the taxpayer allocated only $2.5 million of exemption to 

the transfer, the inclusion ratio is 0.5, and the applicable tax rate 

on any subsequent generation-skipping transfers from the trust is 

20 percent (40 percent multiplied by the inclusion ratio of 0.5). If 

the taxpayer allocates no exemption to the transfer, the inclusion 

ratio is one, and the applicable tax rate on any subsequent generation-skipping transfers from the trust is 40 percent (40 percent 

multiplied by the inclusion ratio of one). 

Generation-skipping transfers 

Generation-skipping transfer tax generally is imposed at the 

time of a generation-skipping transfer—a direct skip, a taxable termination, or a taxable distribution. 

A direct skip is any transfer subject to estate or gift tax of an 

interest in property to a skip person. A skip person may be a natural person or certain trusts. All persons assigned to the second or 

more remote generation below the transferor are skip persons (e.g., grandchildren and great-grandchildren). Trusts are skip persons if 

(1) all interests in the trust are held by skip persons, or (2) no person holds an interest in the trust and at no time after the transfer 

may a distribution (including distributions and terminations) be 

made to a non-skip person. 

A taxable termination is a termination (by death, lapse of time, 

release of power, or otherwise) of an interest in property held in 

trust unless, immediately after such termination, a non-skip person 

has an interest in the property, or unless at no time after the termination may a distribution (including a distribution upon termination) be made from the trust to a skip person. 

A taxable distribution is a distribution from a trust to a skip person (other than a taxable termination or direct skip). If a transferor 

allocates generation-skipping transfer tax exemption to a trust 

prior to the taxable distribution, generation-skipping transfer tax 

may be avoided. 

Income Tax Basis in Property Received 

In general 

Gain or loss, if any, on the disposition of property is measured 

by the taxpayer’s amount realized (i.e., gross proceeds received) on 

the disposition, less the taxpayer’s basis in such property. Basis 

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40See secs. 1291(e) and 1296(i). 

tain adjustments required after acquisition. For example, basis is 

increased by the cost of capital improvements made to the property 

and decreased by depreciation deductions taken with respect to the 

property. 

A gift or bequest of appreciated (or loss) property is not an income tax realization event for the transferor. The Code provides 

special rules for determining a recipient’s basis in assets received 

by lifetime gift or from a decedent. 

Basis in property received by lifetime gift 

Under present law, property received from a donor of a lifetime 

gift generally takes a carryover basis. ‘‘Carryover basis’’ means that 

the basis in the hands of the donee is the same as it was in the 

hands of the donor. The basis of property transferred by lifetime 

gift also is increased, but not above fair market value, by any gift 

tax paid by the donor. The basis of a lifetime gift, however, generally cannot exceed the property’s fair market value on the date 

of the gift. If a donor’s basis in property is greater than the fair 

market value of the property on the date of the gift, then, for purposes of determining loss on a subsequent sale of the property, the 

donee’s basis is the property’s fair market value on the date of the 

gift. 

Basis in property acquired from a decedent 

Property acquired from a decedent’s estate generally takes a 

stepped-up basis. ‘‘Stepped-up basis’’ means that the basis of property acquired from a decedent’s estate generally is the fair market 

value on the date of the decedent’s death (or, if the alternate valuation date is elected, the earlier of six months after the decedent’s 

death or the date the property is sold or distributed by the estate). 

Providing a fair market value basis eliminates the recognition of 

income on any appreciation of the property that occurred prior to 

the decedent’s death and eliminates the tax benefit from any unrealized loss. 

In community property states, a surviving spouse’s one-half 

share of community property held by the decedent and the surviving spouse (under the community property laws of any State, 

U.S. possession, or foreign country) generally is treated as having 

passed from the decedent and, thus, is eligible for stepped-up basis. 

Thus, both the decedent’s one-half share and the surviving spouse’s 

one-half share are stepped up to fair market value. This rule applies if at least one-half of the whole of the community interest is 

includible in the decedent’s gross estate. 

Stepped-up basis treatment generally is denied to certain interests in foreign entities. Stock in a passive foreign investment company (including those for which a mark-to-market election has been 

made) generally takes a carryover basis, except that stock of a passive foreign investment company for which a decedent shareholder 

had made a qualified electing fund election is allowed a steppedup basis.40 Stock owned by a decedent in a domestic international 

sales corporation (or former domestic international sales corporation) takes a stepped-up basis reduced by the amount (if any) 

which would have been included in gross income under section 


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995(c) as a dividend if the decedent had lived and sold the stock 

at its fair market value on the estate tax valuation date (i.e., generally the date of the decedent’s death unless an alternate valuation date is elected). 

REASONS FOR CHANGE

The Committee believes the Federal estate and generation-skipping transfer taxes harm taxpayers and the economy and therefore 

should be repealed. A tax on capital, such as the estate tax, motivates wealth holders to reduce savings and increase spending during life, rather than passing it to the next generation, ultimately 

increasing the consumption gap between the wealthy and poor. A 

tax on capital also causes investors to provide less capital to workers, thereby reducing wages in the long run. 

The Committee is particularly concerned about the effect of the 

estate tax on the owners of farms and family businesses, which create jobs and support our economy. The estate tax hits such entrepreneurs especially hard, forcing families of deceased owners to 

make the difficult decision to sell all or part of the farm or business 

to satisfy the estate tax liability. 

EXPLANATION OF PROVISION

The provision repeals the estate tax and the generation-skipping 

transfer tax for estates of decedents dying and generation-skipping 

transfers made after the date of enactment. The provision includes 

a transition rule for assets placed in a qualified domestic trust by 

a decedent who died before the effective date of the proposal. Specifically, estate tax will not be imposed on: (1) distributions before 

the death of a surviving spouse from the trust more than 10 years 

after the date of enactment; or (2) assets remaining in the qualified 

domestic trust upon the death of the surviving spouse. 

The provision retains the gift tax with a top marginal gift tax 

rate of 35 percent. The lifetime gift tax exemption amount under 

the proposal is the same as the present-law amount, i.e., $5 million 

adjusted for inflation for years after 2011, and the gift tax annual 

exclusion ($14,000 for 2015) will continue to apply. The provision 

provides that a transfer in trust shall be treated as a taxable gift, 

unless the trust is treated as wholly owned by the donor or the donor’s spouse for income tax purposes (i.e., is a grantor trust). 

The provision does not amend the rules for determining the income tax basis of assets acquired by gift or from a decedent. As a 

result, property received from a donor of a lifetime gift generally 

will continue to take a carryover basis, and property acquired from 

a decedent’s estate generally will continue to take a stepped-up 

basis. 

EFFECTIVE DATE

The provision is effective for decedents dying and gifts made on 

or after the date of enactment. The year of enactment shall be 

treated as two separate calendar years, one ending the day before 

the date of enactment and the other beginning on the date of enactment, for purposes of: (1) computing the gift tax under section 2502 

and determining the unified credit for gift tax purposes under secVerDate Sep 11 2014 04:20 Apr 08, 2015 Jkt 049006 PO 00000 Frm 00014 Fmt 6659 Sfmt 6602 E:\HR\OC\HR052.XXX HR052

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tion 2505, and (2) determining any increase in basis under section 

1015(d) of property acquired by gift. 

III. VOTES OF THE COMMITTEE 

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the following statement is made concerning the vote of the Committee on Ways and Means in its consideration of H.R. 1105, the ‘‘Death Tax Repeal Act of 2015,’’ on 

March 25, 2015. 

The bill, H.R. 1105, as amended, was ordered favorably reported 

to the House of Representatives by a roll call vote of 22 yeas to 10 

nays (with a quorum being present). 

IV. BUDGET EFFECTS OF THE BILL 

A. COMMITTEE ESTIMATE OF BUDGETARY EFFECTS

In compliance with clause 3(d) of rule XIII of the Rules of the 

House of Representatives, the following statement is made concerning the effects on the budget of the bill, H.R. 1105, as reported. 

The bill, as reported, is estimated to have the following effect on 

Federal budget receipts for fiscal years 2015–2025: 


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FISCAL YEARS 

[Millions of Dollars] 

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2015–20 2015–25 

— ¥14,616 ¥23,880 ¥25,157 ¥26,070 ¥27,059 ¥28,104 ¥29,323 ¥30,450 ¥31,529 ¥32,776 ¥116,782 ¥268,965 

NOTE: Details do not add to totals due to rounding. 


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Pursuant to clause 8 of rule XIII of the Rules of the House of 

Representatives, the following statement is made by the Joint Committee on Taxation with respect to the provisions of the bill amending the Internal Revenue Code of 1986: the gross budgetary effect 

(before incorporating macroeconomic effects) in any fiscal year is 

less than 0.25 percent of the current projected gross domestic product of the United States for that fiscal year; therefore, the bill is 

not ‘‘major legislation’’ for purposes of requiring that the estimate 

include the budgetary effects of changes in economic output, employment, capital stock and other macroeconomic variables. 

B. STATEMENT REGARDING NEW BUDGET AUTHORITY AND TAX

EXPENDITURES BUDGET AUTHORITY

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee states that the bill involves no new or increased budget authority. The Committee further states that there are no new or increased tax expenditures. 

C. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET

OFFICE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, requiring a cost estimate prepared by 

the CBO, the following statement by CBO is provided. 

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, April 2, 2015. 

Hon. PAUL RYAN, 

Chairman, Committee on Ways and Means, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 1105, the Death Tax Repeal Act of 2015. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Logan Timmerhoff. 

Sincerely, 

KEITH HALL, 

Director. 

Enclosure. 

H.R. 1105—Death Tax Repeal Act of 2015 

H.R. 1105 would amend the Internal Revenue Code to repeal the 

estate tax for estates of individuals dying on or after the date of 

enactment. The bill would also repeal the generation-skipping 

transfer tax for such transfers made on or after the date of enactment. In addition, H.R. 1105 would lower the top marginal gift tax 

rate from 40 percent to 35 percent. 

The staff of the Joint Committee on Taxation (JCT) estimates 

that enacting H.R. 1105 would reduce revenues, thus increasing 

federal deficits, by about $269 billion over the 2015–2025 period. 

The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct 

spending and revenues. Enacting H.R. 1105 would result in revVerDate Sep 11 2014 04:20 Apr 08, 2015 Jkt 049006 PO 00000 Frm 00017 Fmt 6659 Sfmt 6602 E:\HR\OC\HR052.XXX HR052

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enue losses in each year beginning in 2016. The estimated increases in the deficit are shown in the following table. 

JCT has determined that the bill contains no intergovernmental 

or private-sector mandates as defined in the Unfunded Mandates 

Reform Act. 

The CBO staff contact for this estimate is Logan Timmerhoff. 

The estimate was approved by David Weiner, Assistant Director for 

Tax Analysis. 


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CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 1105, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON MARCH 25, 2015 

By fiscal year, in millions of dollars— 

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2015–2020 2015–2025 

NET INCREASE IN THE DEFICIT 

Statutory Pay-As-You-Go Impact ................... 0 14,616 23,880 25,157 26,070 27,059 28,104 29,323 30,450 31,529 32,776 116,782 268,965 

Source: Staff of the Joint Committee on Taxation. Note: Components may not sum to totals because of rounding. 


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V. OTHER MATTERS TO BE DISCUSSED UNDER THE 

RULES OF THE HOUSE 

A. COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

With respect to clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives (relating to oversight findings), the Committee advises that it was as a result of the Committee’s review of 

the provisions of H.R. 1105 that the Committee concluded that it 

is appropriate to report the bill, as amended, favorably to the 

House of Representatives with the recommendation that the bill do 

pass. 

B. STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

With respect to clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the bill contains no measure that authorizes funding, so no statement of general performance goals and objectives for which any measure authorizes funding is required. 

C. INFORMATION RELATING TO UNFUNDED MANDATES

This information is provided in accordance with section 423 of 

the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104–4). 

The Committee has determined that the bill does not contain 

Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental 

mandate on State, local, or tribal governments. 

D. APPLICABILITY OF HOUSE RULE XXI 5(b) 

Rule XXI 5(b) of the Rules of the House of Representatives provides, in part, that ‘‘A bill or joint resolution, amendment, or conference report carrying a Federal income tax rate increase may not 

be considered as passed or agreed to unless so determined by a 

vote of not less than three-fifths of the Members voting, a quorum 

being present.’’ The Committee has carefully reviewed the bill, and 

states that the bill does not involve any Federal income tax rate 

increases within the meaning of the rule. 

E. TAX COMPLEXITY ANALYSIS

Section 4022(b) of the Internal Revenue Service Restructuring 

and Reform Act of 1998 requires the staff of the Joint Committee 

on Taxation (in consultation with the Internal Revenue Service and 

the Treasury Department) to provide a tax complexity analysis. 

The complexity analysis is required for all legislation reported by 

the Senate Committee on Finance, the House Committee on Ways 

and Means, or any committee of conference if the legislation includes a provision that directly or indirectly amends the Internal 

Revenue Code and has widespread applicability to individuals or 

small businesses. 

Pursuant to clause 3(h)(1) of rule XIII of the Rules of the House 

of Representatives, the staff of the Joint Committee on Taxation 

has determined that a complexity analysis is not required under 

section 4022(b) of the IRS Reform Act because the bill contains no 

provisions that amend the Internal Revenue Code and that have 


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‘‘widespread applicability’’ to individuals or small businesses, within the meaning of the rule. 

F. CONGRESSIONAL EARMARKS, LIMITED TAX BENEFITS, AND

LIMITED TARIFF BENEFITS

With respect to clause 9 of rule XXI of the Rules of the House 

of Representatives, the Committee has carefully reviewed the provisions of the bill, and states that the provisions of the bill do not 

contain any congressional earmarks, limited tax benefits, or limited 

tariff benefits within the meaning of the rule. 

G. DUPLICATION OF FEDERAL PROGRAMS

In compliance with Sec. 3(g)(2) of H. Res. 5 (114th Congress), the 

Committee states that no provision of the bill establishes or reauthorizes: (1) a program of the Federal Government known to be duplicative of another Federal program, (2) a program included in any 

report from the Government Accountability Office to Congress pursuant to section 21 of Public Law 111–139, or (3) a program related 

to a program identified in the most recent Catalog of Federal Domestic Assistance, published pursuant to the Federal Program Information Act (Public Law 95–220, as amended by Public Law 98– 

169). 

H. DISCLOSURE OF DIRECTED RULE MAKINGS

In compliance with Sec. 3(i) of H. Res. 5 (114th Congress), the 

following statement is made concerning directed rule makings: The 

Committee estimates that the bill requires no directed rule makings within the meaning of such section. 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS 

REPORTED 

A. TEXT OF EXISTING LAW AMENDED OR REPEALED BY THE BILL, AS

REPORTED

In compliance with clause 3(e)(1)(A) of rule XIII of the Rules of 

the House of Representatives, the text of each section proposed to 

be amended or repealed by the bill, as reported, is shown below: 

INTERNAL REVENUE CODE OF 1986 

* * * * * * * 

Subtitle B—Estate and Gift Taxes 

* * * * * * * 

CHAPTER 12—GIFT TAX 

* * * * * * * 


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Subchapter A—Determination of Tax Liability 

* * * * * * * 

Sec. 2505. Unified credit against gift tax. 

* * * * * * * 

SEC. 2502. RATE OF TAX. 

(a) COMPUTATION OF TAX.—The tax imposed by section 2501 for 

each calendar year shall be an amount equal to the excess of— 

(1) a tentative tax, computed under section 2001(c), on the 

aggregate sum of the taxable gifts for such calendar year and 

for each of the preceding calendar periods, over 

(2) a tentative tax, computed under such section, on the aggregate sum of the taxable gifts for each of the preceding calendar periods. 

(b) PRECEDING CALENDAR PERIOD.—Whenever used in this title 

in connection with the gift tax imposed by this chapter, the term 

‘‘preceding calendar period’’ means— 

(1) calendar years 1932 and 1970 and all calendar years intervening between calendar year 1932 and calendar year 1970, 

(2) the first calendar quarter of calendar year 1971 and all 

calendar quarters intervening between such calendar quarter 

and the first calendar quarter of calendar year 1982, and 

(3) all calendar years after 1981 and before the calendar year 

for which the tax is being computed. 

For purposes of paragraph (1), the term ‘‘calendar year 1932’’ includes only that portion of such year after June 6, 1932. 

(c) TAX TO BE PAID BY DONOR.—The tax imposed by section 2501 

shall be paid by the donor. 

* * * * * * * 

SEC. 2505. UNIFIED CREDIT AGAINST GIFT TAX. 

(a) GENERAL RULE.—In the case of a citizen or resident of the 

United States, there shall be allowed as a credit against the tax 

imposed by section 2501 for each calendar year an amount equal 

to— 

(1) the applicable credit amount in effect under section 

2010(c) which would apply if the donor died as of the end of 

the calendar year, reduced by 

(2) the sum of the amounts allowable as a credit to the individual under this section for all preceding calendar periods. 

For purposes of applying paragraph (2) for any calendar year, the 

rates of tax in effect under section 2502(a)(2) for such calendar year 

shall, in lieu of the rates of tax in effect for preceding calendar periods, be used in determining the amounts allowable as a credit 

under this section for all preceding calendar periods. 

(b) ADJUSTMENT TO CREDIT FOR CERTAIN GIFTS MADE BEFORE

1977.—The amount allowable under subsection (a) shall be reduced 

by an amount equal to 20 percent of the aggregate amount allowed 

as a specific exemption under section 2521 (as in effect before its 

repeal by the Tax Reform Act of 1976) with respect to gifts made 

by the individual after September 8, 1976. 

(c) LIMITATION BASED ON AMOUNT OF TAX.—The amount of the 

credit allowed under subsection (a) for any calendar year shall not 


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exceed the amount of the tax imposed by section 2501 for such calendar year. 

* * * * * * * 

Subchapter B—Transfers 

SEC. 2511. TRANSFERS IN GENERAL. 

(a) SCOPE.—Subject to the limitations contained in this chapter, 

the tax imposed by section 2501 shall apply whether the transfer 

is in trust or otherwise, whether the gift is direct or indirect, and 

whether the property is real or personal, tangible or intangible; but 

in the case of a nonresident not a citizen of the United States, shall 

apply to a transfer only if the property is situated within the 

United States. 

(b) INTANGIBLE PROPERTY.—For purposes of this chapter, in the 

case of a nonresident not a citizen of the United States who is excepted from the application of section 2501(a)(2)— 

(1) shares of stock issued by a domestic corporation, and 

(2) debt obligations of— 

(A) a United States person, or 

(B) the United States, a State or any political subdivision thereof, or the District of Columbia, 

which are owned and held by such nonresident shall be deemed to 

be property situated within the United States. 

* * * * * * * 

CHAPTER 15—GIFTS AND BEQUESTS FROM 

EXPATRIATES 

SEC. 2801. IMPOSITION OF TAX. 

(a) IN GENERAL.—If, during any calendar year, any United States 

citizen or resident receives any covered gift or bequest, there is 

hereby imposed a tax equal to the product of— 

(1) the highest rate of tax specified in the table contained in 

section 2001(c) as in effect on the date of such receipt, and 

(2) the value of such covered gift or bequest. 

(b) TAX TO BE PAID BY RECIPIENT.—The tax imposed by subsection (a) on any covered gift or bequest shall be paid by the person receiving such gift or bequest. 

(c) EXCEPTION FOR CERTAIN GIFTS.—Subsection (a) shall apply 

only to the extent that the value of covered gifts and bequests received by any person during the calendar year exceeds the dollar 

amount in effect under section 2503(b) for such calendar year. 

(d) TAX REDUCED BY FOREIGN GIFT OR ESTATE TAX.—The tax imposed by subsection (a) on any covered gift or bequest shall be reduced by the amount of any gift or estate tax paid to a foreign 

country with respect to such covered gift or bequest. 

(e) COVERED GIFT OR BEQUEST.— 

(1) IN GENERAL.—For purposes of this chapter, the term ‘‘covered gift or bequest’’ means— 

(A) any property acquired by gift directly or indirectly 

from an individual who, at the time of such acquisition, is 

a covered expatriate, and 


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(B) any property acquired directly or indirectly by reason 

of the death of an individual who, immediately before such 

death, was a covered expatriate. 

(2) EXCEPTIONS FOR TRANSFERS OTHERWISE SUBJECT TO ES- TATE OR GIFT TAX.—Such term shall not include— 

(A) any property shown on a timely filed return of tax 

imposed by chapter 12 which is a taxable gift by the covered expatriate, and 

(B) any property included in the gross estate of the covered expatriate for purposes of chapter 11 and shown on 

a timely filed return of tax imposed by chapter 11 of the 

estate of the covered expatriate. 

(3) EXCEPTIONS FOR TRANSFERS TO SPOUSE OR CHARITY.— 

Such term shall not include any property with respect to which 

a deduction would be allowed under section 2055, 2056, 2522, 

or 2523, whichever is appropriate, if the decedent or donor 

were a United States person. 

(4) TRANSFERS IN TRUST.— (A) DOMESTIC TRUSTS.—In the case of a covered gift or 

bequest made to a domestic trust— 

(i) subsection (a) shall apply in the same manner as 

if such trust were a United States citizen, and 

(ii) the tax imposed by subsection (a) on such gift or 

bequest shall be paid by such trust. 

(B) FOREIGN TRUSTS.— (i) IN GENERAL.—In the case of a covered gift or bequest made to a foreign trust, subsection (a) shall 

apply to any distribution attributable to such gift or 

bequest from such trust (whether from income or corpus) to a United States citizen or resident in the same 

manner as if such distribution were a covered gift or 

bequest. 

(ii) DEDUCTION FOR TAX PAID BY RECIPIENT.—There 

shall be allowed as a deduction under section 164 the 

amount of tax imposed by this section which is paid or 

accrued by a United States citizen or resident by reason of a distribution from a foreign trust, but only to 

the extent such tax is imposed on the portion of such 

distribution which is included in the gross income of 

such citizen or resident. 

(iii) ELECTION TO BE TREATED AS DOMESTIC TRUST.— 

Solely for purposes of this section, a foreign trust may 

elect to be treated as a domestic trust. Such an election may be revoked with the consent of the Secretary. 

(f) COVERED EXPATRIATE.—For purposes of this section, the term 

‘‘covered expatriate’’ has the meaning given to such term by section 

877A(g)(1). 

* * * * * * * 

B. CHANGES IN EXISTING LAW PROPOSED BY THE BILL, AS REPORTED

In compliance with clause 3(e)(1)(B) of rule XIII of the Rules of 

the House of Representatives, changes in existing law proposed by 

the bill, as reported, are shown as follows (existing law proposed 

to be omitted is enclosed in black brackets, new matter is printed 


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in italic, existing law in which no change is proposed is shown in 

roman): 

INTERNAL REVENUE CODE OF 1986 

* * * * * * * 

Subtitle B—Estate and Gift Taxes 

* * * * * * * 

CHAPTER 11—ESTATE TAX 

* * * * * * * 

Subchapter C—Miscellaneous 

* * * * * * * 

Sec. 2210. Termination. 

* * * * * * * 

SEC. 2210. TERMINATION. 

(a) IN GENERAL.—Except as provided in subsection (b), this chapter shall not apply to the estates of decedents dying on or after the 

date of the enactment of the Death Tax Repeal Act of 2015. 

(b) CERTAIN DISTRIBUTIONS FROM QUALIFIED DOMESTIC

TRUSTS.—In applying section 2056A with respect to the surviving 

spouse of a decedent dying before the date of the enactment of the 

Death Tax Repeal Act of 2015— 

(1) section 2056A(b)(1)(A) shall not apply to distributions 

made after the 10-year period beginning on such date, and 

(2) section 2056A(b)(1)(B) shall not apply on or after such 

date. 

* * * * * * * 

CHAPTER 12—GIFT TAX 

* * * * * * * 

Subchapter A—Determination of Tax Liability 

* * * * * * * 

øSec. 2505. Unified credit against gift tax.¿ 

Sec. 2505. Credit against gift tax. 

* * * * * * * 

SEC. 2502. RATE OF TAX. 

ø(a) COMPUTATION OF TAX.—The tax imposed by section 2501 for 

each calendar year shall be an amount equal to the excess of— 

ø(1) a tentative tax, computed under section 2001(c), on the 

aggregate sum of the taxable gifts for such calendar year and 

for each of the preceding calendar periods, over 


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26 

ø(2) a tentative tax, computed under such section, on the aggregate sum of the taxable gifts for each of the preceding calendar periods.¿ 

(a) COMPUTATION OF TAX.— 

(1) IN GENERAL.—The tax imposed by section 2501 for each 

calendar year shall be an amount equal to the excess of— 

(A) a tentative tax, computed under paragraph (2), on the 

aggregate sum of the taxable gifts for such calendar year 

and for each of the preceding calendar periods, over 

(B) a tentative tax, computed under paragraph (2), on the 

aggregate sum of the taxable gifts for each of the preceding 

calendar periods. 

(2) RATE SCHEDULE.— 

If the amount with respect to which the tentative tax to be 

computed is:.

The tentative tax is: 

Not over $10,000 ................................................................................. 18% of such amount. 

Over $10,000 but not over $20,000 .................................................... $1,800, plus 20% of the excess over $10,000. 

Over $20,000 but not over $40,000 .................................................... $3,800, plus 22% of the excess over $20,000. 

Over $40,000 but not over $60,000 .................................................... $8,200, plus 24% of the excess over $40,000. 

Over $60,000 but not over $80,000 .................................................... $13,000, plus 26% of the excess over $60,000. 

Over $80,000 but not over $100,000 .................................................. $18,200, plus 28% of the excess over $80,000. 

Over $100,000 but not over $150,000 ................................................ $23,800, plus 30% of the excess over $100,000. 

Over $150,000 but not over $250,000 ................................................ $38,800, plus 32% of the excess of $150,000. 

Over $250,000 but not over $500,000 ................................................ $70,800, plus 34% of the excess over $250,000.

Over $500,000 ..................................................................................... $155,800, plus 35% of the excess of $500,000. 

(b) PRECEDING CALENDAR PERIOD.—Whenever used in this title 

in connection with the gift tax imposed by this chapter, the term 

‘‘preceding calendar period’’ means— 

(1) calendar years 1932 and 1970 and all calendar years intervening between calendar year 1932 and calendar year 1970, 

(2) the first calendar quarter of calendar year 1971 and all 

calendar quarters intervening between such calendar quarter 

and the first calendar quarter of calendar year 1982, and 

(3) all calendar years after 1981 and before the calendar year 

for which the tax is being computed. 

For purposes of paragraph (1), the term ‘‘calendar year 1932’’ includes only that portion of such year after June 6, 1932. 

(c) TAX TO BE PAID BY DONOR.—The tax imposed by section 2501 

shall be paid by the donor. 

* * * * * * * 

SEC. 2505. øUNIFIED¿ CREDIT AGAINST GIFT TAX. 

(a) GENERAL RULE.—In the case of a citizen or resident of the 

United States, there shall be allowed as a credit against the tax 

imposed by section 2501 for each calendar year an amount equal 

to— 


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27 

ø(1) the applicable credit amount in effect under section 

2010(c) which would apply if the donor died as of the end of 

the calendar year, reduced by¿ 

(1) the amount of the tentative tax which would be determined under the rate schedule set forth in section 2502(a)(2) if 

the amount with respect to which such tentative tax is to be 

computed were $5,000,000, reduced by 

(2) the sum of the amounts allowable as a credit to the individual under this section for all preceding calendar periods. 

For purposes of applying paragraph (2) for any calendar year, the 

rates of tax in effect under section 2502(a)(2) for such calendar year 

shall, in lieu of the rates of tax in effect for preceding calendar periods, be used in determining the amounts allowable as a credit 

under this section for all preceding calendar periods. 

(b) ADJUSTMENT TO CREDIT FOR CERTAIN GIFTS MADE BEFORE

1977.—The amount allowable under subsection (a) shall be reduced 

by an amount equal to 20 percent of the aggregate amount allowed 

as a specific exemption under section 2521 (as in effect before its 

repeal by the Tax Reform Act of 1976) with respect to gifts made 

by the individual after September 8, 1976. 

(c) LIMITATION BASED ON AMOUNT OF TAX.—The amount of the 

credit allowed under subsection (a) for any calendar year shall not 

exceed the amount of the tax imposed by section 2501 for such calendar year. 

(d) INFLATION ADJUSTMENT.— (1) IN GENERAL.—In the case of any calendar year after 2011, 

the dollar amount in subsection (a)(1) 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. 

(2) ROUNDING.—If any amount as adjusted under paragraph 

(1) is not a multiple of $10,000, such amount shall be rounded 

to the nearest multiple of $10,000. 

* * * * * * * 

Subchapter B—Transfers 

SEC. 2511. TRANSFERS IN GENERAL. 

(a) SCOPE.—Subject to the limitations contained in this chapter, 

the tax imposed by section 2501 shall apply whether the transfer 

is in trust or otherwise, whether the gift is direct or indirect, and 

whether the property is real or personal, tangible or intangible; but 

in the case of a nonresident not a citizen of the United States, shall 

apply to a transfer only if the property is situated within the 

United States. 

(b) INTANGIBLE PROPERTY.—For purposes of this chapter, in the 

case of a nonresident not a citizen of the United States who is excepted from the application of section 2501(a)(2)— 

(1) shares of stock issued by a domestic corporation, and 

(2) debt obligations of— 

(A) a United States person, or 


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(B) the United States, a State or any political subdivision thereof, or the District of Columbia, 

which are owned and held by such nonresident shall be deemed to 

be property situated within the United States. 

(c) TREATMENT OF CERTAIN TRANSFERS IN TRUST.—Notwithstanding any other provision of this section and except as provided 

in regulations, a transfer in trust shall be treated as a taxable gift 

under section 2503, unless the trust is treated as wholly owned by 

the donor or the donor’s spouse under subpart E of part I of subchapter J of chapter 1. 

* * * * * * * 

CHAPTER 13—TAX ON GENERATION-SKIPPING 

TRANSFERS 

* * * * * * * 

Subchapter G—Administration 

* * * * * * * 

Sec. 2664. Termination. 

* * * * * * * 

SEC. 2664. TERMINATION. 

This chapter shall not apply to generation-skipping transfers on 

or after the date of the enactment of the Death Tax Repeal Act of 

2015. 

* * * * * * * 

CHAPTER 15—GIFTS AND BEQUESTS FROM 

EXPATRIATES 

SEC. 2801. IMPOSITION OF TAX. 

(a) IN GENERAL.—If, during any calendar year, any United States 

citizen or resident receives any covered gift or bequest, there is 

hereby imposed a tax equal to the product of— 

(1) the highest rate of tax specified in the table contained in 

øsection 2001(c) as in effect on the date of such receipt¿ section 

2502(a)(2), and 

(2) the value of such covered gift or bequest. 

(b) TAX TO BE PAID BY RECIPIENT.—The tax imposed by subsection (a) on any covered gift or bequest shall be paid by the person receiving such gift or bequest. 

(c) EXCEPTION FOR CERTAIN GIFTS.—Subsection (a) shall apply 

only to the extent that the value of covered gifts and bequests received by any person during the calendar year exceeds the dollar 

amount in effect under section 2503(b) for such calendar year. 

(d) TAX REDUCED BY FOREIGN GIFT OR ESTATE TAX.—The tax imposed by subsection (a) on any covered gift or bequest shall be reduced by the amount of any gift or estate tax paid to a foreign 

country with respect to such covered gift or bequest. 

(e) COVERED GIFT OR BEQUEST.— 


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(1) IN GENERAL.—For purposes of this chapter, the term ‘‘covered gift or bequest’’ means— 

(A) any property acquired by gift directly or indirectly 

from an individual who, at the time of such acquisition, is 

a covered expatriate, and 

(B) any property acquired directly or indirectly by reason 

of the death of an individual who, immediately before such 

death, was a covered expatriate. 

(2) EXCEPTIONS FOR TRANSFERS OTHERWISE SUBJECT TO ESTATE OR GIFT TAX.—Such term shall not include— 

(A) any property shown on a timely filed return of tax 

imposed by chapter 12 which is a taxable gift by the covered expatriate, and 

(B) any property included in the gross estate of the covered expatriate for purposes of chapter 11 and shown on 

a timely filed return of tax imposed by chapter 11 of the 

estate of the covered expatriate. 

(3) EXCEPTIONS FOR TRANSFERS TO SPOUSE OR CHARITY.— 

Such term shall not include any property with respect to which 

a deduction would be allowed under section 2055, 2056, 2522, 

or 2523, whichever is appropriate, if the decedent or donor 

were a United States person. 

(4) TRANSFERS IN TRUST.— 

(A) DOMESTIC TRUSTS.—In the case of a covered gift or 

bequest made to a domestic trust— 

(i) subsection (a) shall apply in the same manner as 

if such trust were a United States citizen, and 

(ii) the tax imposed by subsection (a) on such gift or 

bequest shall be paid by such trust. 

(B) FOREIGN TRUSTS.— 

(i) IN GENERAL.—In the case of a covered gift or bequest made to a foreign trust, subsection (a) shall 

apply to any distribution attributable to such gift or 

bequest from such trust (whether from income or corpus) to a United States citizen or resident in the same 

manner as if such distribution were a covered gift or 

bequest. 

(ii) DEDUCTION FOR TAX PAID BY RECIPIENT.—There 

shall be allowed as a deduction under section 164 the 

amount of tax imposed by this section which is paid or 

accrued by a United States citizen or resident by reason of a distribution from a foreign trust, but only to 

the extent such tax is imposed on the portion of such 

distribution which is included in the gross income of 

such citizen or resident. 

(iii) ELECTION TO BE TREATED AS DOMESTIC TRUST.— 

Solely for purposes of this section, a foreign trust may 

elect to be treated as a domestic trust. Such an election may be revoked with the consent of the Secretary. 

(f) COVERED EXPATRIATE.—For purposes of this section, the term 

‘‘covered expatriate’’ has the meaning given to such term by section 

877A(g)(1). 

* * * * * * * 


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VII. DISSENTING VIEWS 

Committee Democrats oppose H.R. 1105. The estate tax has been 

an important component of our tax code that promotes fairness and 

reduces economic inequality. Repeal of the estate tax would increase the deficit by more than a quarter of a trillion dollars to provide tax cuts to the wealthiest estates in our country. 

Estate taxes promote fairness by providing an essential counterweight to the extraordinary benefits conferred on inherited wealth 

under our income tax system, and work to mitigate the impacts of 

wealth inequality. This legislation would further exacerbate the 

growing wealth and income inequality in the United States. The 

wealth gap is a problem for the economic health of the country as 

studies have consistently found that significant disparities in 

wealth correlate with poor economic performance. The share of 

total wealth owned by the top 0.1% in the U.S. grew from 7% in 

1978 to 22% in 2012, according to the National Bureau of Economic 

Research. In 2013, the median wealth of upper income families 

($639,400) was nearly seven times the median wealth of middle income families ($96,500), the widest wealth gap since the Federal 

Reserve began collecting data 30 years ago. The Congress must not 

accelerate our country’s growing wealth inequality by conferring 

extraordinary tax benefits on the small number of ultra-wealthy 

taxpayers. 

Under present law, estates valued at less than $5.43 million 

($10.86 million jointly) are exempt from the estate tax, with this 

exemption increasing annually for inflation. The reach of the estate 

tax has been significantly reduced over the past decade as the exemption amounts have increased so significantly over time such 

that 99.85 percent of estates are not subject to any estate tax. 

While the majority argues that the estate tax burdens all Americans, the fact is that only the estates of the wealthiest 0.15 percent 

pay any estate tax at all. Analysis from the Joint Committee on 

Taxation shows that H.R. 1105 would provide an average tax cut 

of over $22 million to each estate valued at over $50 million. 

These tax cuts for the wealthiest of estates would come at a cost 

of nearly $270 billion over the 10-year window. This is more than 

the budgets for the Centers for Disease Control and Prevention, the 

Food and Drug Administration, and the Environmental Protection 

Agency combined. In past years, the Republican Congress has battled over spending the dollars required to provide adequate funding 

for National Institutes for Health, which has an annual budget of 

$30.9 billion. Misguided Republican priorities have led to consistent underfunding of important research and public health institutions, while draining the fisc to deliver hundreds of billions of tax 

cuts for the nation’s wealthiest. Furthermore, the Republican budget does not include repeal of the estate tax, which, if passed, would 

put their own budget out of balance. Indeed, the Republican Tax 


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Reform plan that was released last year recognized the significant 

cost of repeal, both in terms of the revenue raised by the tax and 

by distribution, and retained the estate tax. 

The issue of the estate tax affecting small businesses and family 

farms has been used as a justification for outright repeal of the estate tax. In general, a small percentage of taxable estates contain 

farm or business assets. According to recent Internal Revenue 

Service and U.S. Department of Agriculture data, roughly 0.6 percent of all farm operator estates owed any estate tax, with 97.3 

percent of all farm operator estates falling below the current exemption. Committee Democrats do not disagree with the importance of maintaining protections for small businesses and family 

farms. Congress has recognized their importance and has included 

exemptions and special provisions to address perceived burdens in 

existing law. If those protections are inadequate, the Congress can 

act to ensure that working family farms and active small businesses are not harmed without eviscerating the wealth transfer tax 

regime. 

It is important to shed light on an argument put forth by Republicans on the Committee during the Committee’s consideration of 

this issue. During the Select Revenue Measures Subcommittee 

hearing on the burdens of the estate tax on family farms and small 

businesses and the recent full committee markup of H.R. 1105, a 

Republican Committee Member argued that the estate tax had the 

effect of capturing as much as 10 to 13 percent of African American 

wealth, and cited to a Boston College Center on Wealth and Philanthropy study. During his remarks, he referenced an article published by the National Black Chamber of Commerce, and referred 

to the tax as a ‘‘Black Tax.’’ Simple research into the study shows 

that these inflammatory assertions are based on flawed assumptions and outdated data. At the markup, Committee Democrats 

submitted a table from the very same Boston College study that 

showed 0.00% of African American households had a net worth exceeding $5 million—lower than the existing exemption amount of 

$5.43 million ($10.46 jointly). Furthermore, the authors of this 

study analyzed the law as was in place at the time, and could not 

have contemplated the significant permanent expansions to the exemptions that were enacted in 2012. Unfortunately, the fact that 

tables in the study clearly contradict inflammatory arguments 

made by Committee Republicans has not stopped them from using 

the arguments to repeal the estate tax. 

SANDER M. LEVIN. 

Æ 


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