II 

109TH CONGRESS 

2D SESSION S. 3626 

To amend the Internal Revenue Code of 1986 to provide estate tax relief 

and reform, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 29, 2006 

Ms. LANDRIEU introduced the following bill; which was read twice and 

referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

estate tax relief and reform, 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 ‘‘Estate Tax Relief and 

5 Reform Act of 2006’’. 

6 SEC. 2. ESTATE TAX RELIEF AND REFORM AFTER 2009. 

7 (a) EXCLUSION EQUIVALENT OF UNIFIED CREDIT

8 EQUAL TO $5,000,000.—Subsection (c) of section 2010 

9 of the Internal Revenue Code of 1986 (relating to unified 

10 credit against estate tax) is amended to read as follows: 


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1 ‘‘(c) APPLICABLE CREDIT AMOUNT.— 

2 ‘‘(1) IN GENERAL.—For purposes of this sec3 tion, the applicable credit amount is the amount of 

4 the tentative tax which would be determined under 

5 section 2001(c) if the amount with respect to which 

6 such tentative tax is to be computed were equal to 

7 the applicable exclusion amount. 

8 ‘‘(2) APPLICABLE EXCLUSION AMOUNT.— 

9 ‘‘(A) IN GENERAL.—For purposes of this 

10 subsection, the applicable exclusion amount is 

11 $5,000,000, reduced (but not below zero) by an 

12 amount equal to 5 percent of so much of the 

13 amount with respect to which the tentative tax 

14 is to be computed as exceeds $100,000,000. 

15 ‘‘(B) INFLATION ADJUSTMENT.—In the 

16 case of any decedent dying in a calendar year 

17 after 2010, the $5,000,000 amount in subpara18 graph (A) shall be increased by an amount 

19 equal to— 

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

21 ‘‘(ii) the cost-of-living adjustment de22 termined under section 1(f)(3) for such 

23 calendar year by substituting ‘calendar 

24 year 2009’ for ‘calendar year 1992’ in sub25 paragraph (B) thereof. 


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1 If any amount as adjusted under the preceding 

2 sentence is not a multiple of $10,000, such 

3 amount shall be rounded to the nearest multiple 

4 of $10,000.’’. 

5 (b) FLAT ESTATE AND GIFT TAX RATES.—Sub6 section (c) of section 2001 of the Internal Revenue Code 

7 of 1986 (relating to imposition and rate of tax) is amend8 ed to read as follows: 

9 ‘‘(c) TENTATIVE TAX.—The tentative tax is 35 per10 cent of the amount with respect to which the tentative tax 

11 is to be computed.’’. 

12 (c) INCREASE IN AGGREGATE REDUCTION IN FAIR

13 MARKET VALUE ALLOWED UNDER SPECIAL USE VALU14 ATION.—Section 2032A(a) of the Internal Revenue Code 

15 of 1986 (relating to value based on use under which prop16 erty qualifies) is amended— 

17 (1) by striking ‘‘$750,000’’ each place it ap18 pears and inserting ‘‘$5,000,000’’, 

19 (2) by striking ‘‘after 1998’’ in paragraph (3) 

20 and inserting ‘‘after 2010’’, and 

21 (3) by striking ‘‘1997’’ in paragraph (3)(B) and 

22 inserting ‘‘2009’’. 

23 (d) TAX DEDUCTION FOR FAMILY-OWNED BUSINESS

24 INTERESTS.— 


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1 (1) IN GENERAL.—Section 2057(a) of the In2 ternal Revenue Code of 1986 (relating to deduction 

3 for family-owned business interests) is amended— 

4 (A) by striking ‘‘$675,000’’ in paragraph 

5 (2) and inserting ‘‘$2,500,000’’, and 

6 (B) by striking paragraph (3). 

7 (2) PERMANENT DEDUCTION.—Section 2057 of 

8 such Code is amended by striking subsection (j). 

9 (e) MODIFICATIONS OF ESTATE AND GIFT TAXES TO

10 REFLECT DIFFERENCES IN UNIFIED CREDIT RESULTING

11 FROM DIFFERENT TAX RATES.— 

12 (1) ESTATE TAX.— 

13 (A) IN GENERAL.—Section 2001(b)(2) of 

14 the Internal Revenue Code of 1986 (relating to 

15 computation of tax) is amended by striking ‘‘if 

16 the provisions of subsection (c) (as in effect at 

17 the decedent’s death)’’ and inserting ‘‘if the 

18 modifications described in subsection (g)’’. 

19 (B) MODIFICATIONS.—Section 2001 of 

20 such Code is amended by adding at the end the 

21 following new subsection: 

22 ‘‘(g) MODIFICATIONS TO GIFT TAX PAYABLE TO RE23 FLECT DIFFERENT TAX RATES.—For purposes of apply24 ing subsection (b)(2) with respect to 1 or more gifts, the 

25 rates of tax under subsection (c) in effect at the decedent’s 


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1 death shall, in lieu of the rates of tax in effect at the time 

2 of such gifts, be used both to compute— 

3 ‘‘(1) the tax imposed by chapter 12 with respect 

4 to such gifts, and 

5 ‘‘(2) the credit allowed against such tax under 

6 section 2505, including in computing— 

7 ‘‘(A) the applicable credit amount under 

8 section 2505(a)(1), and 

9 ‘‘(B) the sum of the amounts allowed as a 

10 credit for all preceding periods under section 

11 2505(a)(2). 

12 For purposes of paragraph (2)(A), the applicable 

13 credit amount for any calendar year before 1998 is 

14 the amount which would be determined under sec15 tion 2010(c) if the applicable exclusion amount were 

16 the dollar amount under section 6018(a)(1) for such 

17 year.’’. 

18 (2) GIFT TAX.—Section 2505(a) of such Code 

19 (relating to unified credit against gift tax) is amend20 ed by adding at the end the following new flush sen21 tence: 

22 ‘‘For purposes of applying paragraph (2) for any calendar 

23 year, the rates of tax in effect under section 2502(a)(2) 

24 for such calendar year shall, in lieu of the rates of tax 

25 in effect for preceding calendar periods, be used in deterVerDate Aug 31 2005 03:57 Jul 04, 2006 Jkt 049200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3626.IS S3626

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1 mining the amounts allowable as a credit under this sec2 tion for all preceding calendar periods.’’. 

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

4 this section shall apply to estates of decedents dying, gen5 eration-skipping transfers, and gifts made, after Decem6 ber 31, 2009. 

7 (g) ADDITIONAL MODIFICATIONS TO ESTATE TAX.— 

8 (1) IN GENERAL.—The following provisions of 

9 the Economic Growth and Tax Relief Reconciliation 

10 Act of 2001, and the amendments made by such 

11 provisions, are hereby repealed: 

12 (A) Subtitles A and E of title V. 

13 (B) Subsection (d), and so much of sub14 section (f)(3) as relates to subsection (d), of 

15 section 511. 

16 (C) Paragraph (2) of subsection (b), and 

17 paragraph (2) of subsection (e), of section 521. 

18 The Internal Revenue Code of 1986 shall be applied 

19 as if such provisions and amendments had never 

20 been enacted. 

21 (2) SUNSET NOT TO APPLY TO TITLE v OF

22 EGTRRA.—Section 901 of the Economic Growth and 

23 Tax Relief Reconciliation Act of 2001 shall not 

24 apply to title V of such Act. 

25 (3) REPEAL OF DEADWOOD.— 


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1 (A) Sections 2011 and 2604 of the Inter2 nal Revenue Code of 1986 are hereby repealed. 

3 (B) The table of sections for part II of 

4 subchapter A of chapter 11 of such Code is 

5 amended by striking the item relating to section 

6 2011. 

7 (C) The table of sections for subchapter A 

8 of chapter 13 of such Code is amended by strik9 ing the item relating to section 2604. 

Æ 


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