I 

108TH CONGRESS 

1ST SESSION H. R. 2610

To amend the Internal Revenue Code of 1986 to restore the estate tax 

and repeal the carryover basis rule, to increase the estate and gift 

tax unified credit to an exclusion equivalent of $5,000,000, and to reduce 

the rate of the estate and gifts taxes to the generally applicable capital 

gains income tax rate. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 26, 2003

Mr. PETERSON of Minnesota (for himself, Mr. LATHAM, Mr. CRAMER, Mr. 

BOEHNER, Mr. HALL, Mr. SIMPSON, Mr. DOOLEY of California, Mr. 

GUTKNECHT, Mr. BOSWELL, Mr. JANKLOW, Mr. LUCAS of Kentucky, 

and Ms. HARRIS) introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL

To amend the Internal Revenue Code of 1986 to restore 

the estate tax and repeal the carryover basis rule, to 

increase the estate and gift tax unified credit to an 

exclusion equivalent of $5,000,000, and to reduce the 

rate of the estate and gifts taxes to the generally applicable capital gains income tax rate.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. RESTORATION OF ESTATE TAX; REPEAL OF 

2 CARRYOVER BASIS. 

3 (a) IN GENERAL.—Subtitles A and E of title V of 

4 the Economic Growth and Tax Relief Reconciliation Act 

5 of 2001, and the amendments made by such subtitles, are 

6 hereby repealed; and the Internal Revenue Code of 1986 

7 shall be applied as if such subtitles, and amendments, had 

8 never been enacted. 

9 (b) SUNSET NOT TO APPLY.—

10 (1) Subsection (a) of section 901 of the Eco11 nomic Growth and Tax Relief Reconciliation Act of 

12 2001 is amended by striking ‘‘this Act’’ and all that 

13 follows and inserting ‘‘this Act (other than title V) 

14 shall not apply to taxable, plan, or limitation years 

15 beginning after December 31, 2010.’’. 

16 (2) Subsection (b) of such section 901 is 

17 amended by striking ‘‘, estates, gifts, and transfers’’. 

18 (c) CONFORMING AMENDMENTS.—Subsections (d) 

19 and (e) of section 511 of the Economic Growth and Tax 

20 Relief Reconciliation Act of 2001, and the amendments 

21 made by such subsections, are hereby repealed; and the 

22 Internal Revenue Code of 1986 shall be applied as if such 

23 subsections, and amendments, had never been enacted. 
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1 SEC. 2. ESTATE AND GIFT TAX RATES REDUCED TO 15 PER2 CENT OR, IF LOWER, THE GENERALLY APPLI3 CABLE CAPITAL GAINS RATE FOR INDIVID4 UALS. 

5 (a) ESTATE TAX.—

6 (1) IN GENERAL.—Section 2001 of the Internal 

7 Revenue Code of 1986 (relating to estate tax) is 

8 amended by striking subsections (b) and (c) and by 

9 inserting after subsection (a) the following new sub10 section: 

11 ‘‘(b) COMPUTATION OF TAX.—

12 ‘‘(1) IN GENERAL.—The tax imposed by this 

13 section shall be the amount equal to the excess (if 

14 any) of—

15 ‘‘(A) the applicable percentage of the sum 

16 of—

17 ‘‘(i) the amount of the taxable estate, 

18 and 

19 ‘‘(ii) the amount of the adjusted tax20 able gifts, over 

21 ‘‘(B) the aggregate amount of tax paid 

22 under chapter 12 with respect to gifts made by 

23 the decedent after December 31, 1976. 

24 For purposes of subparagraph (A)(ii), the term ‘ad25 justed taxable gifts’ means the total amount of the 

26 taxable gifts (within the meaning of section 2503) 
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1 made by the decedent after December 31, 1976, 

2 other than gifts which are includible in the gross es3 tate of the decedent. 

4 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 

5 of paragraph (1), the term ‘applicable percentage’ 

6 means the lesser of 15 percent or the rate contained 

7 in section 1(h)(1)(C).’’

8 (2) CONFORMING AMENDMENTS.—

9 (A) Subsection (c) of section 2010 of such 

10 Code is amended by striking ‘‘the applicable 

11 credit amount’’ and all that follows through 

12 ‘‘the applicable exclusion amount’’ and inserting 

13 ‘‘the applicable credit amount shall be the ap14 plicable percentage (as defined in section 

15 2001(b)(2)) of the applicable exclusion 

16 amount’’. 

17 (B) Subsection (b) of section 2101 of such 

18 Code is amended to read as follows: 

19 ‘‘(b) COMPUTATION OF TAX.—The tax imposed by 

20 this section shall be the amount equal to the excess (if 

21 any) of—

22 ‘‘(1) the applicable percentage (as defined in 

23 section 2001(b)(2)) of the sum of—

24 ‘‘(A) the amount of the taxable estate, and 
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1 ‘‘(B) the amount of the adjusted taxable 

2 gifts, over 

3 ‘‘(2) the aggregate amount of tax paid under 

4 chapter 12 with respect to gifts made by the dece5 dent after December 31, 1976.’’

6 (C) Subsection (c) of section 2102 of such 

7 Code, as in effect prior to its redesignation by 

8 section 532(c)(7)(B) of the Economic Growth 

9 and Tax Relief Reconciliation Act of 2001, is 

10 amended—

11 (i) by striking ‘‘$13,000’’ each place it 

12 appears and inserting ‘‘$12,000’’, and 

13 (ii) by striking ‘‘$46,800’’ and insert14 ing ‘‘$35,000’’. 

15 (D) Subsection (a) of section 2201 of such 

16 Code is amended by striking ‘‘rate schedule set 

17 forth in section 2001(c)’’ and inserting ‘‘appli18 cable percentage (as defined in section 

19 2001(b)(2)’’. 

20 (b) GIFT TAX.—

21 (1) IN GENERAL.—Section 2502 of such Code 

22 is amended to read as follows: 

23 ‘‘SEC. 2502. RATE OF TAX. 

24 ‘‘(a) GENERAL RULE.—The tax imposed by section 

25 2501 for each calendar year shall be an amount equal to 
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1 the applicable percentage (as defined in section 

2 2001(b)(2)) of the sum of the taxable gifts for such cal3 endar year. 

4 ‘‘(b) TAX TO BE PAID BY DONOR.—The tax imposed 

5 by section 2501 shall be paid by the donor.’’

6 (2) CONFORMING AMENDMENTS.—

7 (A) Subchapter A of chapter 12 of such 

8 Code is amended by striking section 2504. 

9 (B) The table of sections for such sub10 chapter is amended by striking the item relat11 ing to section 2504. 

12 (c) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to estates of decedents dying, and 

14 gifts made, after December 31, 2003. 

15 SEC. 3. $5,000,000 EXEMPTION FROM ESTATE AND GIFT 

16 TAXES. 

17 (a) IN GENERAL.—Subsection (c) of section 2010 of 

18 the Internal Revenue Code of 1986 (relating to applicable 

19 credit amount), as amended by section 2, is amended by 

20 striking ‘‘the applicable exclusion amount’’ and all that 

21 follows and inserting ‘‘$5,000,000.’’. 

22 (b) GIFT TAX.—Paragraph (1) of section 2505(a) of 

23 such Code (relating to general rule) is amended by striking 

24 ‘‘(determined as if the applicable exclusion amount were 

25 $1,000,000)’’. 
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1 (c) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to estates of decedents dying, and 

3 gifts made, after December 31, 2003.

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