II 

Calendar No. 472 

112TH CONGRESS 

2D SESSION S. 3420 

To permanently extend the 2001 and 2003 tax cuts, to provide for permanent 

alternative minimum tax relief, and to repeal the estate and generationskipping transfer taxes, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 23, 2012 

Mr. LEE (for himself, Mr. RUBIO, Mr. RISCH, Mr. DEMINT, Mr. CORNYN, 

Mr. VITTER, and Mr. JOHNSON of Wisconsin) introduced the following 

bill; which was read the first time 

JULY 24, 2012 

Read the second time and placed on the calendar 

A BILL 

To permanently extend the 2001 and 2003 tax cuts, to 

provide for permanent alternative minimum tax relief, 

and to repeal the estate and generation-skipping transfer 

taxes, 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 This Act may be cited as the ‘‘Permanent Tax Relief 

5 Act’’. 


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1 SEC. 2. PERMANENT EXTENSION OF TAX RELIEF. 

2 (a) 2001 TAX RELIEF.—The Economic Growth and 

3 Tax Relief Reconciliation Act of 2001 is amended by strik4 ing title IX. 

5 (b) 2003 RELIEF.—Title III of the Jobs and Growth 

6 Tax Relief Reconciliation Act of 2003 is amended by strik7 ing section 303. 

8 (c) ALTERNATIVE MINIMUM TAX EXEMPTION

9 AMOUNTS.— 

10 (1) INCREASED EXEMPTION AMOUNTS MADE

11 PERMANENT.— 

12 (A) IN GENERAL.—Paragraph (1) of sec13 tion 55(d) of the Internal Revenue Code of 

14 1986 is amended— 

15 (i) by striking ‘‘$45,000 ($72,450 in 

16 the case of taxable years beginning in 2010 

17 and $74,450 in the case of taxable years 

18 beginning in 2011)’’ in subparagraph (A) 

19 and inserting ‘‘$74,450’’, 

20 (ii) by striking ‘‘$33,750 ($47,450 in 

21 the case of taxable years beginning in 2010 

22 and $48,450 in the case of taxable years 

23 beginning in 2011)’’ in subparagraph (B) 

24 and inserting ‘‘$48,450’’, and 


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1 (iii) by striking ‘‘paragraph (1)(A)’’ in 

2 subparagraph (C) and inserting ‘‘subpara3 graph (A)’’. 

4 (2) EXEMPTION AMOUNTS INDEXED FOR IN5 FLATION.—Subsection (d) of section 55 of the Inter6 nal Revenue Code of 1986 is amended by adding at 

7 the end the following new paragraph: 

8 ‘‘(4) INFLATION ADJUSTMENT.— 

9 ‘‘(A) IN GENERAL.—In the case of any 

10 taxable year beginning in a calendar year after 

11 2011, each of the dollar amounts contained in 

12 subparagraphs (A) and (B) of paragraph (1) 

13 shall be increased by an amount equal to— 

14 ‘‘(i) such dollar amount, multiplied by 

15 ‘‘(ii) the cost-of-living adjustment de16 termined under section 1(f)(3) for the cal17 endar year in which the taxable year be18 gins, determined by substituting ‘calendar 

19 year 2010’ for ‘calendar year 1992’ in sub20 paragraph (B) thereof. 

21 ‘‘(B) ROUNDING.—Any increase deter22 mined under subparagraph (A) shall be rounded 

23 to the nearest multiple of $100.’’. 


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1 (3) EFFECTIVE DATE.—The amendments made 

2 by this subsection shall apply to taxable years begin3 ning after December 31, 2011. 

4 (d) ALTERNATIVE MINIMUM TAX RELIEF FOR NON5 REFUNDABLE CREDITS.— 

6 (1) IN GENERAL.—Subsection (a) of section 26 

7 of the Internal Revenue Code of 1986 is amended to 

8 read as follows: 

9 ‘‘(a) LIMITATION BASED ON AMOUNT OF TAX.—The 

10 aggregate amount of credits allowed by this subpart for 

11 the taxable year shall not exceed the sum of— 

12 ‘‘(1) the taxpayer’s regular tax liability for the 

13 taxable year reduced by the foreign tax credit allow14 able under section 27(a), and 

15 ‘‘(2) the tax imposed by section 55(a) for the 

16 taxable year.’’. 

17 (2) CONFORMING AMENDMENTS.— 

18 (A) ADOPTION CREDIT.— 

19 (i) Section 23(b) of the Internal Rev20 enue Code of 1986 is amended by striking 

21 paragraph (4). 

22 (ii) Section 23(c) of such Code is 

23 amended by striking paragraphs (1) and 

24 (2) and inserting the following: 


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1 ‘‘(1) IN GENERAL.—If the credit allowable 

2 under subsection (a) for any taxable year exceeds 

3 the limitation imposed by section 26(a) for such tax4 able year reduced by the sum of the credits allowable 

5 under this subpart (other than this section and sec6 tions 25D and 1400C), such excess shall be carried 

7 to the succeeding taxable year and added to the 

8 credit allowable under subsection (a) for such tax9 able year.’’. 

10 (iii) Section 23(c) of such Code is 

11 amended by redesignating paragraph (3) 

12 as paragraph (2). 

13 (B) CHILD TAX CREDIT.— 

14 (i) Section 24(b) of such Code is 

15 amended by striking paragraph (3). 

16 (ii) Section 24(d)(1) of such Code is 

17 amended— 

18 (I) by striking ‘‘section 26(a)(2) 

19 or subsection (b)(3), as the case may 

20 be,’’ each place it appears in subpara21 graphs (A) and (B) and inserting 

22 ‘‘section 26(a)’’, and 

23 (II) by striking ‘‘section 26(a)(2) 

24 or subsection (b)(3), as the case may 


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1 be’’ in the second last sentence and 

2 inserting ‘‘section 26(a)’’. 

3 (C) CREDIT FOR INTEREST ON CERTAIN

4 HOME MORTGAGES.—Section 25(e)(1)(C) of 

5 such Code is amended to read as follows: 

6 ‘‘(C) APPLICABLE TAX LIMIT.—For pur7 poses of this paragraph, the term ‘applicable 

8 tax limit’ means the limitation imposed by sec9 tion 26(a) for the taxable year reduced by the 

10 sum of the credits allowable under this subpart 

11 (other than this section and sections 23, 25D, 

12 and 1400C).’’. 

13 (D) SAVERS’ CREDIT.—Section 25B of 

14 such Code is amended by striking subsection 

15 (g). 

16 (E) RESIDENTIAL ENERGY EFFICIENT

17 PROPERTY.—Section 25D(c) of such Code is 

18 amended to read as follows: 

19 ‘‘(c) CARRYFORWARD OF UNUSED CREDIT.—If the 

20 credit allowable under subsection (a) exceeds the limita21 tion imposed by section 26(a) for such taxable year re22 duced by the sum of the credits allowable under this sub23 part (other than this section), such excess shall be carried 

24 to the succeeding taxable year and added to the credit alVerDate Mar 15 2010 22:06 Jul 24, 2012 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3420.PCS S3420

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1 lowable under subsection (a) for such succeeding taxable 

2 year.’’. 

3 (F) CERTAIN PLUG-IN ELECTRIC VEHI4 CLES.—Section 30(c)(2) of such Code is 

5 amended to read as follows: 

6 ‘‘(2) PERSONAL CREDIT.—For purposes of this 

7 title, the credit allowed under subsection (a) for any 

8 taxable year (determined after application of para9 graph (1)) shall be treated as a credit allowable 

10 under subpart A for such taxable year.’’. 

11 (G) ALTERNATIVE MOTOR VEHICLE CRED12 IT.—Section 30B(g)(2) of such Code is amend13 ed to read as follows: 

14 ‘‘(2) PERSONAL CREDIT.—For purposes of this 

15 title, the credit allowed under subsection (a) for any 

16 taxable year (determined after application of para17 graph (1)) shall be treated as a credit allowable 

18 under subpart A for such taxable year.’’. 

19 (H) NEW QUALIFIED PLUG-IN ELECTRIC

20 VEHICLE CREDIT.—Section 30D(c)(2) of such 

21 Code is amended to read as follows: 

22 ‘‘(2) PERSONAL CREDIT.—For purposes of this 

23 title, the credit allowed under subsection (a) for any 

24 taxable year (determined after application of paraVerDate Mar 15 2010 22:06 Jul 24, 2012 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S3420.PCS S3420

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1 graph (1)) shall be treated as a credit allowable 

2 under subpart A for such taxable year.’’. 

3 (I) CROSS REFERENCES.—Section 55(c)(3) 

4 of such Code is amended by striking ‘‘26(a), 

5 30C(d)(2),’’ and inserting ‘‘30C(d)(2)’’. 

6 (J) FOREIGN TAX CREDIT.—Section 904 of 

7 such Code is amended by striking subsection (i) 

8 and by redesignating subsections (j) , (k), and 

9 (l) as subsections (i), (j), and (k), respectively. 

10 (K) FIRST-TIME HOME BUYER CREDIT FOR

11 THE DISTRICT OF COLUMBIA.—Section 

12 1400C(d) of such Code is amended to read as 

13 follows: 

14 ‘‘(d) CARRYFORWARD OF UNUSED CREDIT.—If the 

15 credit allowable under subsection (a) exceeds the limita16 tion imposed by section 26(a) for such taxable year re17 duced by the sum of the credits allowable under subpart 

18 A of part IV of subchapter A (other than this section and 

19 section 25D), such excess shall be carried to the suc20 ceeding taxable year and added to the credit allowable 

21 under subsection (a) for such taxable year.’’. 

22 (3) EFFECTIVE DATE.—The amendments made 

23 by this subsection shall apply to taxable years begin24 ning after December 31, 2011. 


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1 SEC. 3. REPEAL OF ESTATE AND GENERATION-SKIPPING 

2 TRANSFER TAXES. 

3 (a) ESTATE TAX REPEAL.—Subchapter C of chapter 

4 11 of subtitle B of the Internal Revenue Code of 1986 

5 is amended by adding at the end the following new section: 

6 ‘‘SEC. 2210. TERMINATION. 

7 ‘‘(a) IN GENERAL.—Except as provided in subsection 

8 (b), this chapter shall not apply to the estates of decedents 

9 dying on or after the date of the enactment of the Perma10 nent Tax Relief Act. 

11 ‘‘(b) CERTAIN DISTRIBUTIONS FROM QUALIFIED

12 DOMESTIC TRUSTS.—In applying section 2056A with re13 spect to the surviving spouse of a decedent dying before 

14 the date of the enactment of the Permanent Tax Relief 

15 Act— 

16 ‘‘(1) section 2056A(b)(1)(A) shall not apply to 

17 distributions made after the 10-year period begin18 ning on such date, and 

19 ‘‘(2) section 2056A(b)(1)(B) shall not apply on 

20 or after such date.’’. 

21 (b) GENERATION-SKIPPING TRANSFER TAX RE22 PEAL.—Subchapter G of chapter 13 of subtitle B of the 

23 Internal Revenue Code of 1986 is amended by adding at 

24 the end the following new section: 


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1 ‘‘SEC. 2664. TERMINATION. 

2 ‘‘This chapter shall not apply to generation-skipping 

3 transfers on or after the date of the enactment of the Per4 manent Tax Relief Act.’’. 

5 (c) CONFORMING AMENDMENTS.— 

6 (1) The table of sections for subchapter C of 

7 chapter 11 of the Internal Revenue Code of 1986 is 

8 amended by adding at the end the following new 

9 item: 

‘‘Sec. 2210. Termination.’’. 

10 (2) The table of sections for subchapter G of 

11 chapter 13 of such Code is amended by adding at 

12 the end the following new item: 

‘‘Sec. 2664. Termination.’’. 

13 (d) RESTORATION OF PRE-EGTRRA PROVISIONS

14 NOT APPLICABLE.— 

15 (1) IN GENERAL.—Section 301 of the Tax Re16 lief, Unemployment Insurance Reauthorization, and 

17 Job Creation Act of 2010 shall not apply to estates 

18 of decedents dying, and transfers made, on or after 

19 the date of the enactment of this Act. 

20 (2) EXCEPTION FOR STEPPED-UP BASIS.— 

21 Paragraph (1) shall not apply to the provisions of 

22 law amended by subtitle E of title V of the Eco23 nomic Growth and Tax Relief Reconciliation Act of 


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1 2001 (relating to carryover basis at death; other 

2 changes taking effect with repeal). 

3 (e) SUNSET NOT APPLICABLE.—Section 304 of the 

4 Tax Relief, Unemployment Insurance Reauthorization, 

5 and Job Creation Act of 2010 is hereby repealed. 

6 (f) EFFECTIVE DATE.—The amendments made by 

7 this section shall apply to the estates of decedents dying, 

8 and generation-skipping transfers, after the date of the 

9 enactment of this Act. 

10 SEC. 4. MODIFICATIONS OF GIFT TAX. 

11 (a) COMPUTATION OF GIFT TAX.—Subsection (a) of 

12 section 2502 of the Internal Revenue Code of 1986 is 

13 amended to read as follows: 

14 ‘‘(a) COMPUTATION OF TAX.— 

15 ‘‘(1) IN GENERAL.—The tax imposed by section 

16 2501 for each calendar year shall be an amount 

17 equal to the excess of— 

18 ‘‘(A) a tentative tax, computed under para19 graph (2), on the aggregate sum of the taxable 

20 gifts for such calendar year and for each of the 

21 preceding calendar periods, over 

22 ‘‘(B) a tentative tax, computed under para23 graph (2), on the aggregate sum of the taxable 

24 gifts for each of the preceding calendar periods. 

25 ‘‘(2) RATE SCHEDULE.— 


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‘‘If the amount with respect to which the 

tentative tax to be computed is:.

The tentative 

tax is: 

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

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

the excess over 

$10,000. 

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

the excess over 

$20,000. 

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

the excess over 

$40,000. 

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

the excess over 

$60,000. 

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

the excess over 

$80,000. 

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

the excess over 

$100,000. 

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

the excess of 

$150,000. 

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

the excess over 

$250,000. 

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

the excess of 

$500,000.’’. 

1 (b) TREATMENT OF CERTAIN TRANSFERS IN

2 TRUST.—Section 2511 of the Internal Revenue Code of 

3 1986 is amended by adding at the end the following new 

4 subsection: 

5 ‘‘(c) TREATMENT OF CERTAIN TRANSFERS IN

6 TRUST.—Notwithstanding any other provision of this sec7 tion and except as provided in regulations, a transfer in 

8 trust shall be treated as a taxable gift under section 2503, 

9 unless the trust is treated as wholly owned by the donor 

10 or the donor’s spouse under subpart E of part I of sub11 chapter J of chapter 1.’’. 


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1 (c) LIFETIME GIFT EXEMPTION.—Paragraph (1) of 

2 section 2505(a) of the Internal Revenue Code of 1986 is 

3 amended to read as follows: 

4 ‘‘(1) the amount of the tentative tax which 

5 would be determined under the rate schedule set 

6 forth in section 2502(a)(2) if the amount with re7 spect to which such tentative tax is to be computed 

8 were $5,000,000, reduced by’’. 

9 (d) CONFORMING AMENDMENTS.— 

10 (1) Section 2505(a) of the Internal Revenue 

11 Code of 1986 is amended by striking the last sen12 tence. 

13 (2) The heading for section 2505 of such Code 

14 is amended by striking ‘‘UNIFIED’’. 

15 (3) The item in the table of sections for sub16 chapter A of chapter 12 of such Code relating to 

17 section 2505 is amended to read as follows: 

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

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

19 this section shall apply to gifts made on or after the date 

20 of the enactment of this Act. 

21 (f) TRANSITION RULE.— 

22 (1) IN GENERAL.—For purposes of applying 

23 sections 1015(d), 2502, and 2505 of the Internal 

24 Revenue Code of 1986, the calendar year in which 

25 this title is enacted shall be treated as 2 separate 


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1 calendar years one of which ends on the day before 

2 the date of the enactment of this Act and the other 

3 of which begins on such date of enactment. 

4 (2) APPLICATION OF SECTION 2504(b).—For 

5 purposes of applying section 2504(b) of the Internal 

6 Revenue Code of 1986, the calendar year in which 

7 this title is enacted shall be treated as one preceding 

8 calendar period. 


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Calendar No. 472 

112TH CONGRESS 

2D SESSION S. 3420 

A BILL 

To permanently extend the 2001 and 2003 tax 

purposes. generation-skipping transfer taxes, and for other imum tax relief, and to repeal the estate and cuts, to provide for permanent alternative minJULY 24, 2012 

Read the second time and placed on the calendar 


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