I

106TH CONGRESS

2D SESSION H. R. 5315

To amend the Internal Revenue Code of 1986 to reduce estate and gift

tax rates, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 27, 2000

Mr. TANNER (for himself, Mr. STENHOLM, Mr. BOYD, Ms. HOOLEY of Oregon, Mr. SPRATT, Mr. DOOLEY of California, Ms. ESHOO, Mr. ABERCROMBIE, Mrs. MCCARTHY of New York, Ms. LOFGREN, Mr. CROWLEY,

Mr. LUCAS of Kentucky, Ms. DANNER, Mr. HALL of Texas, Mr. SISISKY,

Mr. TURNER, Mrs. TAUSCHER, Mr. SMITH of Washington, Mr. BERRY,

Mr. SHOWS, Mr. THOMPSON of California, Mr. HOLDEN, Mr. HILL of Indiana, Mr. JOHN, Mr. CRAMER, and Mr. DOYLE) 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 reduce

estate and gift tax rates, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Death Tax Relief Now Act of 2000’’.

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend-
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1 ment or repeal is expressed in terms of an amendment

2 to, or repeal of, a section or other provision, the reference

3 shall be considered to be made to a section or other provi4 sion of the Internal Revenue Code of 1986.

5 SEC. 2. 20 PERCENT REDUCTION OF ESTATE TAX RATES.

6 (a) IN GENERAL.—Subsection (c) of section 2001 is

7 amended by redesignating paragraph (2) as paragraph (3)

8 and by striking paragraph (1) and inserting the following

9 new paragraphs:

10 ‘‘(1) IN GENERAL.—

‘‘If the amount with respect

to which the tentative tax

is to be computed is:

The tentative tax is:

Not over $10,000 .......................... 14.4% of such amount.

Over $10,000 but not over

$20,000.

$1,440, plus 16% of the excess of

such amount over $10,000

Over $20,000 but not over

$40,000.

$3,040, plus 17.6% of the excess of

such amount over $20,000

Over $40,000 but not over

$60,000.

$6,560, plus 19.2% of the excess of

such amount over $40,000

Over $60,000 but not over

$80,000.

$10,400, plus 20.8% of the excess of

such amount over $60,000

Over $80,000 but not over

$100,000.

$14,560, plus 22.4% of the excess of

such amount over $80,000

Over $100,000 but not over

$150,000.

$19,040, plus 24% of the excess of

such amount over $100,000

Over $150,000 but not over

$250,000.

$31,040, plus 25.6% of the excess of

such amount over $150,000

Over $250,000 but not over

$500,000.

$56,640, plus 27.2% of the excess of

such amount over $250,000

Over $500,000 but not over

$750,000.

$124,640, plus 29.6% of the excess

of such amount over $500,000

Over $750,000 but not over

$1,000,000.

$198,640, plus 31.2% of the excess

of such amount over $750,000

Over $1,000,000 but not over

$1,250,000.

$276,640, plus 32.8% of the excess

of such amount over $1,000,000

Over $1,250,000 but not over

$1,500,000.

$358,640, plus 34.4% of the excess

of such amount over $1,250,000

Over $1,500,000 but not over

$2,000,000.

$444,640, plus 36% of the excess of

such amount over $1,500,000

Over $2,000,000 but not over

$2,500,000.

$624,640, plus 39.2% of the excess

of such amount over $2,000,000
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‘‘If the amount with respect

to which the tentative tax

is to be computed is:

The tentative tax is:

Over $2,500,000 but not over

$3,000,000.

$820,640, plus 42.4% of the excess

of such amount over $2,500,000

Over $3,000,000 ............................ $1,032,640, plus 44% of the excess

of such amount over $3,000,000.

1 ‘‘(2) REDUCTION IN MAXIMUM RATE AFTER

2 2009.—In the case of decedents dying, and gifts

3 made, after 2009, the following item shall be sub4 stituted for the last 2 items in the schedule con5 tained in paragraph (1):

Over $2,500,000 ............................ $820,640, plus 39.6% of the excess

of such amount over $2,500,000.’’

6 (b) RESTORATION OF PHASEOUT OF UNIFIED CRED7 IT.—Paragraph (2) of section 2001(c) is amended by

8 striking ‘‘$10,000,000’’ and all that follows and inserting

9 ‘‘$10,000,000. The amount of the increase under the pre10 ceding sentence shall not exceed the sum of—

11 ‘‘(A) the applicable credit amount under

12 section 2010(c), and

13 ‘‘(B) the excess of the amount equal to 44

14 percent of $3,000,000 over the amount of the

15 tentative tax under paragraph (1) on

16 $3,000,000.

17 In the case of decedents dying, and gifts made, after

18 2009, subparagraph (B) shall be applied by sub19 stituting ‘39.6 percent’ for ‘44 percent’ and

20 ‘$2,500,000’ for ‘$3,000,000’.’’
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1 (c) EFFECTIVE DATE.—The amendments made by

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

3 gifts made, after December 31, 2000.

4 SEC. 3. INCREASE IN EXEMPTION EQUIVALENT OF UNIFIED

5 CREDIT; INFLATION ADJUSTMENT OF CRED6 IT.

7 (a) IN GENERAL.—The table contained in section

8 2010(c) (relating to applicable credit amount) is amended

9 to read as follows:

‘‘In the case of estates of decedents The applicable

dying, and gifts made, during: exclusion amount is:

2001 and 2002 ...................................................... $1,300,000

2003 and 2004 ...................................................... $1,500,000

2005 and 2006 ...................................................... $1,700,000

2007 and 2008 ...................................................... $1,900,000

2009 or thereafter ................................................. $2,000,000.’’

10 (b) INFLATION ADJUSTMENT.—

11 (1) IN GENERAL.—Section 2010 is amended by

12 redesignating subsection (d) as subsection (e) and by

13 inserting after subsection (c) the following new sub14 section:

15 ‘‘(d) INFLATION ADJUSTMENT.—In the case of any

16 decedent dying, and gift made, in a calendar year after

17 2010, the $2,000,000 amount set forth in subsection (c)

18 shall be increased by an amount equal to—

19 ‘‘(1) $2,000,000, multiplied by

20 ‘‘(2) the cost-of-living adjustment determined

21 under section 1(f)(3) for such calendar year by sub-
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1 stituting ‘calendar year 2009’ for ‘calendar year

2 1992’ in subparagraph (B) thereof.

3 If any amount as adjusted under the preceding sentence

4 is not a multiple of $10,000, such amount shall be round5 ed to the nearest multiple of $10,000.’’

6 (2) CONFORMING AMENDMENTS.—Sections

7 2033A(a)(2), 6018(a)(1), 6601(j)(2)(A)(i) are each

8 amended by striking ‘‘section 2010(c)’’ and inserting

9 ‘‘section 2010’’.

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

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

12 gifts made, after December 31, 2000.

13 SEC. 4. REPEAL OF ESTATE TAX BENEFIT FOR FAMILY14 OWNED BUSINESS INTERESTS.

15 (a) IN GENERAL.—Section 2057 is hereby repealed.

16 (b) CONFORMING AMENDMENTS.—

17 (1) Paragraph (10) of section 2031(c) is

18 amended by inserting ‘‘(as in effect on the day be19 fore the date of the enactment of the Death Tax Re20 lief Now Act of 2000)’’ before the period.

21 (2) The table of sections for part IV of sub22 chapter A of chapter 11 is amended by striking the

23 item relating to section 2057.
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1 (c) EFFECTIVE DATE.—The amendments made by

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

3 gifts made, after December 31, 2000.

4 SEC. 5. CREDIT FOR STATE DEATH TAXES REPLACED WITH

5 DEDUCTION FOR SUCH TAXES.

6 (a) REPEAL OF CREDIT.—Section 2011 (relating to

7 credit for State death taxes) is hereby repealed.

8 (b) DEDUCTION FOR STATE DEATH TAXES.—Part

9 IV of subchapter A of chapter 11 is amended by adding

10 at the end the following new section:

11 ‘‘SEC. 2058. STATE DEATH TAXES.

12 ‘‘(a) ALLOWANCE OF DEDUCTION.—For purposes of

13 the tax imposed by section 2001, the value of the taxable

14 estate shall be determined by deducting from the value

15 of the gross estate the amount of any estate, inheritance,

16 legacy, or succession taxes actually paid to any State or

17 the District of Columbia, in respect of any property in18 cluded in the gross estate (not including any such taxes

19 paid with respect to the estate of a person other than the

20 decedent).

21 ‘‘(b) PERIOD OF LIMITATIONS.—The deduction al22 lowed by this section shall include only such taxes as were

23 actually paid and deduction therefor claimed within 4

24 years after the filing of the return required by section

25 6018, except that—
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1 ‘‘(1) If a petition for redetermination of a defi2 ciency has been filed with the Tax Court within the

3 time prescribed in section 6213(a), then within such

4 4-year period or before the expiration of 60 days

5 after the decision of the Tax Court becomes final.

6 ‘‘(2) If, under section 6161 or 6166, an exten7 sion of time has been granted for payment of the tax

8 shown on the return, or of a deficiency, then within

9 such 4-year period or before the date of the expira10 tion of the period of the extension.

11 ‘‘(3) If a claim for refund or credit of an over12 payment of tax imposed by this chapter has been

13 filed within the time prescribed in section 6511, then

14 within such 4-year period or before the expiration of

15 60 days from the date of mailing by certified mail

16 or registered mail by the Secretary to the taxpayer

17 of a notice of the disallowance of any part of such

18 claim, or before the expiration of 60 days after a de19 cision by any court of competent jurisdiction be20 comes final with respect to a timely suit instituted

21 upon such claim, whichever is later.

22 Refund based on the deduction may (despite the provisions

23 of sections 6511 and 6512) be made if claim therefor is

24 filed within the period above provided. Any such refund

25 shall be made without interest.’’
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1 (c) CONFORMING AMENDMENTS.—

2 (1) Subsection (a) of section 2012 is amended

3 by striking ‘‘the credit for State death taxes pro4 vided by section 2011 and’’.

5 (2) Subparagraph (A) of section 2013(c)(1) is

6 amended by striking ‘‘2011,’’.

7 (3) Paragraph (2) of section 2014(b) is amend8 ed by striking ‘‘, 2011,’’.

9 (4) Sections 2015 and 2016 are each amended

10 by striking ‘‘2011 or’’.

11 (5) Subsection (d) of section 2053 is amended

12 to read as follows:

13 ‘‘(d) CERTAIN FOREIGN DEATH TAXES.—

14 ‘‘(1) IN GENERAL.—Notwithstanding the provi15 sions of subsection (c)(1)(B) of this section, for pur16 poses of the tax imposed by section 2001, the value

17 of the taxable estate may be determined, if the ex18 ecutor so elects before the expiration of the period

19 of limitation for assessment provided in section

20 6501, by deducting from the value of the gross es21 tate the amount (as determined in accordance with

22 regulations prescribed by the Secretary) of any es23 tate, succession, legacy, or inheritance tax imposed

24 by and actually paid to any foreign country, in re25 spect of any property situated within such foreign
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1 country and included in the gross estate of a citizen

2 or resident of the United States, upon a transfer by

3 the decedent for public, charitable, or religious uses

4 described in section 2055. The determination under

5 this paragraph of the country within which property

6 is situated shall be made in accordance with the

7 rules applicable under subchapter B (sec. 2101 and

8 following) in determining whether property is situ9 ated within or without the United States. Any elec10 tion under this paragraph shall be exercised in ac11 cordance with regulations prescribed by the Sec12 retary.

13 ‘‘(2) CONDITION FOR ALLOWANCE OF DEDUC14 TION.—No deduction shall be allowed under para15 graph (1) for a foreign death tax specified therein

16 unless the decrease in the tax imposed by section

17 2001 which results from the deduction provided in

18 paragraph (1) will inure solely for the benefit of the

19 public, charitable, or religious transferees described

20 in section 2055 or section 2106(a)(2). In any case

21 where the tax imposed by section 2001 is equitably

22 apportioned among all the transferees of property

23 included in the gross estate, including those de24 scribed in sections 2055 and 2106(a)(2) (taking into

25 account any exemptions, credits, or deductions al-
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1 lowed by this chapter), in determining such decrease,

2 there shall be disregarded any decrease in the Fed3 eral estate tax which any transferees other than

4 those described in sections 2055 and 2106(a)(2) are

5 required to pay.

6 ‘‘(3) EFFECT ON CREDIT FOR FOREIGN DEATH

7 TAXES OF DEDUCTION UNDER THIS SUBSECTION.—

8 ‘‘(A) ELECTION.—An election under this

9 subsection shall be deemed a waiver of the right

10 to claim a credit, against the Federal estate

11 tax, under a death tax convention with any for12 eign country for any tax or portion thereof in

13 respect of which a deduction is taken under this

14 subsection.

15 ‘‘(B) CROSS REFERENCE.—

‘‘See section 2014(f) for the effect of a deduction

taken under this paragraph on the credit for foreign

death taxes.’’

16 (6) Subparagraph (A) of section 2056A(b)(10)

17 is amended—

18 (A) by striking ‘‘2011,’’, and

19 (B) by inserting ‘‘2058,’’ after ‘‘2056,’’.

20 (7)(A) Subsection (a) of section 2102 is amend21 ed to read as follows:

22 ‘‘(a) IN GENERAL.—The tax imposed by section 2101

23 shall be credited with the amounts determined in accord-
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1 ance with sections 2012 and 2013 (relating to gift tax and

2 tax on prior transfers).’’

3 (B) Section 2102 is amended by striking sub4 section (b) and by redesignating subsection (c) as

5 subsection (b).

6 (C) Section 2102(b)(5) (as redesignated by sub7 paragraph (B)) and section 2107(c)(3) are each

8 amended by striking ‘‘2011 to 2013, inclusive,’’ and

9 inserting ‘‘2012 and 2013’’.

10 (8) Subsection (a) of section 2106 is amended

11 by adding at the end the following new paragraph:

12 ‘‘(4) STATE DEATH TAXES.—The amount which

13 bears the same ratio to the State death taxes as the

14 value of the property, as determined for purposes of

15 this chapter, upon which State death taxes were paid

16 and which is included in the gross estate under sec17 tion 2103 bears to the value of the total gross estate

18 under section 2103. For purposes of this paragraph,

19 the term ‘State death taxes’ means the taxes de20 scribed in section 2011(a).’’

21 (9) Section 2201 is amended—

22 (A) by striking ‘‘as defined in section

23 2011(d)’’, and

24 (B) by adding at the end the following new

25 flush sentence:
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1 ‘‘For purposes of this section, the additional estate tax

2 is the difference between the tax imposed by section 2001

3 or 2101 and the amount equal to 125 percent of the max4 imum credit provided by section 2011(b), as in effect be5 fore its repeal by the Estate Tax Relief Act of 2000.’’

6 (10) Paragraph (2) of section 6511(i) is amend7 ed by striking ‘‘2011(c), 2014(b),’’ and inserting

8 ‘‘2014(b)’’.

9 (11) Subsection (c) of section 6612 is amended

10 by striking ‘‘section 2011(c) (relating to refunds due

11 to credit for State taxes),’’.

12 (12) The table of sections for part II of sub13 chapter A of chapter 11 is amended by striking the

14 item relating to section 2011.

15 (13) The table of sections for part IV of sub16 chapter A of chapter 11 is amended by adding at

17 the end the following new item:

‘‘Sec. 2058. State death taxes.’’

18 (d) EFFECTIVE DATE.—The amendments made by

19 this section shall apply to estates of decedents dying after

20 December 31, 2000.
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1 SEC. 6. INCREASE IN NUMBER OF ALLOWABLE PARTNERS

2 AND SHAREHOLDERS IN CLOSELY HELD

3 BUSINESSES FOR PURPOSES OF EXTENSION

4 OF TIME FOR PAYING ESTATE TAX.

5 (a) IN GENERAL.—Paragraphs (1)(B)(ii), (1)(C)(ii),

6 and (9)(B)(iii)(I) of section 6166(b) of the Internal Rev7 enue Code of 1986 (relating to definitions and special

8 rules) are each amended by striking ‘‘15’’ and inserting

9 ‘‘45’’.

10 (b) EFFECTIVE DATE.—The amendment made by

11 this section shall apply to estates of decedents dying after

12 December 31, 2000.

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