I

107TH CONGRESS

1ST SESSION H. R. 1437

To amend the Internal Revenue Code of 1986 to reduce the maximum

estate and gift tax rate to 45 percent, to replace the unified credit

against the estate and gift tax with a unified exemption amount, and

to increase the gift exclusion amount.

IN THE HOUSE OF REPRESENTATIVES

APRIL 4, 2001

Mr. COLLINS (for himself, Mr. NORWOOD, Mr. DEAL of Georgia, and Mr.

CHAMBLISS) 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

the maximum estate and gift tax rate to 45 percent,

to replace the unified credit against the estate and gift

tax with a unified exemption amount, and to increase

the gift exclusion amount.

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 ‘‘Estate Tax Relief Act

5 of 2001’’.
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1 SEC. 2. MAXIMUM ESTATE AND GIFT TAX RATE REDUCED

2 TO 45 PERCENT.

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

4 2001(c)(1) of the Internal Revenue Code of 1986 is

5 amended by striking the four highest brackets and insert6 ing the following:

‘‘Over $1,500,000 .......................... $555,800, plus 45% of the excess

over $1,500,000.’’.

7 (b) REPEAL OF PHASEOUT OF GRADUATED

8 RATES.—

9 (1) IN GENERAL.—Subsection (c) of section

10 2001 of such Code is amended by striking para11 graph (2).

12 (2) CONFORMING AMENDMENT.—Section

13 2001(c) is amended by striking ‘‘(1) IN

14 GENERAL.—’’ and moving the text 2 ems to the left.

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

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

17 gifts made, after December 31, 2000.

18 SEC. 3. UNIFIED CREDIT AGAINST ESTATE AND GIFT TAXES

19 REPLACED WITH UNIFIED EXEMPTION

20 AMOUNT.

21 (a) IN GENERAL.—

22 (1) ESTATE TAX.—Subsection (b) of section

23 2001 of the Internal Revenue Code of 1986 (relating
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1 to computation of tax) is amended to read as fol2 lows:

3 ‘‘(b) COMPUTATION OF TAX.—

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

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

6 any) of—

7 ‘‘(A) the tentative tax determined under

8 paragraph (2), over

9 ‘‘(B) the aggregate amount of tax which

10 would have been payable under chapter 12 with

11 respect to gifts made by the decedent after De12 cember 31, 1976, if the provisions of subsection

13 (c) (as in effect at the decedent’s death) had

14 been applicable at the time of such gifts.

15 ‘‘(2) TENTATIVE TAX.—For purposes of para16 graph (1), the tentative tax determined under this

17 paragraph is a tax computed under subsection (c) on

18 the excess of—

19 ‘‘(A) the sum of—

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

21 and

22 ‘‘(ii) the amount of the adjusted tax23 able gifts, over

24 ‘‘(B) the exemption amount.
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1 ‘‘(3) EXEMPTION AMOUNT.—For purposes of

2 paragraph (2), the term ‘exemption amount’ means

3 $10,000,000.

4 ‘‘(4) ADJUSTED TAXABLE GIFTS.—For pur5 poses of paragraph (2), the term ‘adjusted taxable

6 gifts’ means the total amount of the taxable gifts

7 (within the meaning of section 2503) made by the

8 decedent after December 31, 1976, other than gifts

9 which are includible in the gross estate of the dece10 dent.’’.

11 (2) GIFT TAX.—Subsection (a) of section 2502

12 of such Code (relating to computation of tax) 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 the amount

17 equal to the excess (if any) of—

18 ‘‘(A) the tentative tax determined under

19 paragraph (2) for such calendar year, over

20 ‘‘(B) the aggregate amount of tax that

21 would have been payable under this chapter

22 with respect to gifts made by the donor in pre23 ceding calendar periods if the tax had been

24 computed under the provisions of section

25 2001(c) as in effect for such calendar year.
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1 ‘‘(2) TENTATIVE TAX.—For purposes of para2 graph (1), the tentative tax determined under this

3 paragraph for a calendar year is a tax computed

4 under section 2001(c) on the excess of—

5 ‘‘(A) the aggregate sum of the taxable gifts

6 for such calendar year and for each of the pre7 ceding calendar periods, over

8 ‘‘(B) the exemption amount under section

9 2001(b)(3) for such calendar year.’’.

10 (b) REPEAL OF UNIFIED CREDITS.—

11 (1) Section 2010 of such Code (relating to uni12 fied credit against estate tax) is hereby repealed.

13 (2) Section 2505 of such Code (relating to uni14 fied credit against gift tax) is hereby repealed.

15 (c) CONFORMING AMENDMENTS.—

16 (1)(A) Subsection (b) of section 2011 of such

17 Code is amended—

18 (i) by striking ‘‘adjusted’’ in the table; and

19 (ii) by striking the last sentence.

20 (B) Subsection (f) of section 2011 of such Code

21 is amended by striking ‘‘, reduced by the amount of

22 the unified credit provided by section 2010’’.

23 (2) Subsection (a) of section 2012 of such Code

24 is amended by striking ‘‘and the unified credit pro25 vided by section 2010’’.
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1 (3) Subparagraph (A) of section 2013(c)(1) of

2 such Code is amended by striking ‘‘2010,’’.

3 (4) Paragraph (2) of section 2014(b) of such

4 Code is amended by striking ‘‘2010, 2011,’’ and in5 serting ‘‘2011’’.

6 (5) Clause (ii) of section 2056A(b)(12)(C) of

7 such Code is amended to read as follows:

8 ‘‘(ii) to treat any reduction in the tax

9 imposed by paragraph (1)(A) by reason of

10 the credit allowable under section 2010 (as

11 in effect on the day before the date of the

12 enactment of the Estate Tax Relief Act of

13 2001) or the exemption amount allowable

14 under section 2001(b) with respect to the

15 decedent as a credit under section 2505

16 (as so in effect) or exemption under section

17 2501 (as the case may be) allowable to

18 such surviving spouse for purposes of de19 termining the amount of the exemption al20 lowable under section 2501 with respect to

21 taxable gifts made by the surviving spouse

22 during the year in which the spouse be23 comes a citizen or any subsequent year,’’.

24 (6)(A) Section 2057 of such Code is repealed

25 and the table of sections for part IV of subchapter
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1 A of chapter 11 of such Code is amended by striking

2 the item relating to section 2057.

3 (B) Paragraph (10) of section 2031(c) of such

4 Code is amended by inserting ‘‘(as in effect on the

5 day before the date of the enactment of this par6 enthetical)’’ before the period.

7 (7) Subsection (b) of section 2101 of such Code

8 is amended to read as follows:

9 ‘‘(b) COMPUTATION OF TAX.—

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

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

12 any) of—

13 ‘‘(A) the tentative tax determined under

14 paragraph (2), over

15 ‘‘(B) a tentative tax computed under sec16 tion 2001(c) on the amount of the adjusted tax17 able gifts.

18 ‘‘(2) TENTATIVE TAX.—For purposes of para19 graph (1), the tentative tax determined under this

20 paragraph is a tax computed under section 2001(c)

21 on the excess of—

22 ‘‘(A) the sum of—

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

24 and
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1 ‘‘(ii) the amount of the adjusted tax2 able gifts, over

3 ‘‘(B) the exemption amount for the cal4 endar year in which the decedent died.

5 ‘‘(3) EXEMPTION AMOUNT.—

6 ‘‘(A) IN GENERAL.—The term ‘exemption

7 amount’ means $60,000.

8 ‘‘(B) RESIDENTS OF POSSESSIONS OF THE

9 UNITED STATES.—In the case of a decedent

10 who is considered to be a nonresident not a cit11 izen of the United States under section 2209,

12 the exemption amount under this paragraph

13 shall be the greater of—

14 ‘‘(i) $60,000, or

15 ‘‘(ii) that proportion of $175,000

16 which the value of that part of the dece17 dent’s gross estate which at the time of his

18 death is situated in the United States

19 bears to the value of his entire gross estate

20 wherever situated.

21 ‘‘(C) SPECIAL RULES.—

22 ‘‘(i) COORDINATION WITH TREA23 TIES.—To the extent required under any

24 treaty obligation of the United States, the

25 exemption amount allowed under this para-
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1 graph shall be equal to the amount which

2 bears the same ratio to the exemption

3 amount under section 2001(b)(3) (for the

4 calendar year in which the decedent died)

5 as the value of the part of the decedent’s

6 gross estate which at the time of his death

7 is situated in the United States bears to

8 the value of his entire gross estate wher9 ever situated. For purposes of the pre10 ceding sentence, property shall not be

11 treated as situated in the United States if

12 such property is exempt from the tax im13 posed by this subchapter under any treaty

14 obligation of the United States.

15 ‘‘(ii) COORDINATION WITH GIFT TAX

16 EXEMPTION AND UNIFIED CREDIT.—If an

17 exemption has been allowed under section

18 2501 (or a credit has been allowed under

19 section 2505 as in effect on the day before

20 the date of the enactment of the Estate

21 Tax Relief Act of 2001) with respect to

22 any gift made by the decedent, each dollar

23 amount contained in subparagraph (A) or

24 (B) or the exemption amount applicable

25 under clause (i) of this subparagraph
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1 (whichever applies) shall be reduced by the

2 exemption so allowed under section 2501

3 (or, in the case of such a credit, by the

4 amount of the gift for which the credit was

5 so allowed).’’.

6 (8) Section 2102 of such Code is amended by

7 striking subsection (c).

8 (9)(A) Paragraph (1) of section 2107(a) of

9 such Code is amended by striking ‘‘the table con10 tained in’’.

11 (B) Paragraph (1) of section 2107(c) of such

12 Code is amended to read as follows:

13 ‘‘(1) EXEMPTION AMOUNT.—For purposes of

14 subsection (a), the exemption amount under section

15 2001 shall be $60,000.’’

16 (C) Paragraph (3) of section 2107(c) of such

17 Code is amended by striking the second sentence.

18 (D) The heading of subsection (c) of section

19 2107 of such Code is amended to read as follows:

20 ‘‘(c) EXEMPTION AMOUNT AND CREDITS.—’’.

21 (10) Paragraph (1) of section 6018(a) of such

22 Code is amended by striking ‘‘the applicable exclu23 sion amount in effect under section 2010(c)’’ and in24 serting ‘‘the exemption amount under section

25 2001(b)(3)’’.
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1 (11) Subparagraph (A) of section 6601(j)(2) of

2 such Code is amended to read as follows:

3 ‘‘(A) the amount of the tentative tax which

4 would be determined under the rate schedule

5 set forth in section 2001(c) if the amount with

6 respect to which such tentative tax is to be

7 computed were $1,000,000, or’’.

8 (12) The table of sections for part II of sub9 chapter A of chapter 11 of such Code is amended by

10 striking the item relating to section 2010.

11 (13) The table of sections for subchapter A of

12 chapter 12 of such Code is amended by striking the

13 item relating to section 2505.

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

15 this section shall apply to estates of decedents dying and

16 gifts made after December 31, 2000.

17 SEC. 4. INCREASE IN ANNUAL GIFT EXCLUSION AMOUNT.

18 (a) IN GENERAL.—Paragraph (1) of section 2503(b)

19 of the Internal Revenue Code of 1986 (relating to general

20 exclusion from gifts) is amended by striking ‘‘$10,000’’

21 and inserting ‘‘$50,000’’.

22 (b) INFLATION ADJUSTMENT.—Paragraph (2) of sec23 tion 2503(b) of such Code is amended—

24 (1) by striking ‘‘$10,000’’ both places it ap25 pears and inserting ‘‘$50,000’’,
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1 (2) by striking ‘‘1998’’ and inserting ‘‘2001’’,

2 and

3 (3) by striking ‘‘1997’’ and inserting ‘‘2000’’.

4 (c) CONFORMING AMENDMENT.—Section 2523(i)(2)

5 of such Code is amended by striking ‘‘$10,000’’ and in6 serting ‘‘$50,000’’.

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

8 this section shall apply to estates of decedents dying and

9 gifts made after December 31, 2000.

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