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[House Report 114-52]
[From the U.S. Government Publishing Office]

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
          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 is:
 the tentative tax to be computed 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) 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.

                       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).

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\
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    \1\Sec. 102.
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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).
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    \2\Sec. 2010.
    \3\For 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.
    \4\For 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).
---------------------------------------------------------------------------
    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 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. Generation-skipping 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.
---------------------------------------------------------------------------
    \5\Secs. 2056 and 2523.
---------------------------------------------------------------------------
    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 
contribution of a partial interest in property, such as a 
remainder or future interest, generally is not deductible for 
gift or estate tax purposes.\8\
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    \6\Secs. 2055 and 2522.
    \7\Sec. 2055(d).
    \8\Secs. 2055(e)(2) and 2522(c)(2).
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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\
---------------------------------------------------------------------------
    \9\Sec. 2001(a).
    \10\More 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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \11\Sec. 2031(a).
    \12\Sec. 2032.
---------------------------------------------------------------------------
    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 (generally, the right to determine who 
will have beneficial ownership).\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\
---------------------------------------------------------------------------
    \13\Sec. 2033.
    \14\Sec. 2035.
    \15\Sec. 2036.
    \16\Sec. 2037.
    \17\Sec. 2038.
    \18\Sec. 2041.
    \19\Sec. 2042.
---------------------------------------------------------------------------
            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.
---------------------------------------------------------------------------
    \20\Sec. 2058.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \21\Sec. 2053.
    \22\Sec. 2054.
---------------------------------------------------------------------------
            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.
---------------------------------------------------------------------------
    \23\Sec. 2010.
---------------------------------------------------------------------------
    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 paid (generally, where the 
property is situated in a foreign country but included in the 
decedent's U.S. gross estate).\26\
---------------------------------------------------------------------------
    \24\Sec. 2012.
    \25\Sec. 2013.
    \26\Sec. 2014. In certain cases, an election may be made to deduct 
foreign death taxes. See section 2053(d).
---------------------------------------------------------------------------
            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.
---------------------------------------------------------------------------
    \27\Sec. 2032A.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \28\Prior 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.
---------------------------------------------------------------------------
    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 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.
---------------------------------------------------------------------------
    \29\Sec. 6166.
    \30\The interest rate on this portion adjusts with the Federal 
short-term rate.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------
    \31\Sec. 2501(a).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \32\Sec. 2511(a).
    \33\Sec. 2512(a).
    \34\Sec. 2512(b).
---------------------------------------------------------------------------
    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 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\
---------------------------------------------------------------------------
    \35\Sec. 2503(e).
    \36\Sec. 2501(a)(4).
---------------------------------------------------------------------------
            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\
---------------------------------------------------------------------------
    \37\Sec. 2503(b).
    \38\Sec. 529(c)(2).
---------------------------------------------------------------------------
    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 generation-skipping transfer tax 
exemption effectively reduces the tax rate on a generation-
skipping transfer.
    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).
---------------------------------------------------------------------------
    \39\The 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.
---------------------------------------------------------------------------
            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 generally represents a taxpayer's 
investment in property with certain 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 stepped-up 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 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).
---------------------------------------------------------------------------
    \40\See secs. 1291(e) and 1296(i).
---------------------------------------------------------------------------

                           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 section 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:

                                                                      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.

    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 revenue 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.

                               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.

     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 ``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

           *       *       *       *       *       *       *

              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 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
                  (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).

           *       *       *       *       *       *       *

      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 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

     * * * * * * *
[Sec. 2505. Unified credit against gift tax.]
Sec. 2505. 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.]
  (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  The tentative tax is:
 tentative tax to be computed 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. [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]
          (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
                  (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 [section 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.--
          (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).

           *       *       *       *       *       *       *

                         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 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.

                                  [all]
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