106TH CONGRESS
2D SESSION
H. R. 8
AN ACT
To amend the Internal Revenue Code of 1986 to
phaseout the estate and gift taxes over a 10-year
period.
106TH CONGRESS
2D SESSION
H. R. 8
AN ACT
To amend the Internal Revenue Code of 1986 to phaseout
the estate and gift taxes over a 10-year period.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Death Tax Elimination Act of 2000’’.
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986.
TITLE I—REPEAL OF ESTATE,
GIFT, AND GENERATION-SKIP-
PING 
TAXES; 
REPEAL 
OF
STEP UP IN BASIS AT DEATH
SEC. 101. REPEAL OF ESTATE, GIFT, AND GENERATION-
SKIPPING TAXES.
(a) IN GENERAL.—Subtitle B is hereby repealed.
(b) EFFECTIVE DATE.—The repeal made by sub-
section (a) shall apply to the estates of decedents dying,
and gifts and generation-skipping transfers made, after
December 31, 2009.
SEC. 102. TERMINATION OF STEP UP IN BASIS AT DEATH.
(a) TERMINATION
OF APPLICATION
OF SECTION
1014.—Section 1014 (relating to basis of property ac-
quired from a decedent) is amended by adding at the end
the following:
‘‘(f) TERMINATION.—In the case of a decedent dying
after December 31, 2009, this section shall not apply to
property for which basis is provided by section 1022.’’.
(b) CONFORMING AMENDMENT.—Subsection (a) of
section 1016 (relating to adjustments to basis) is amended
by striking ‘‘and’’ at the end of paragraph (26), by strik-
ing the period at the end of paragraph (27) and inserting
‘‘, and’’, and by adding at the end the following:
‘‘(28) to the extent provided in section 1022
(relating to basis for certain property acquired from
a decedent dying after December 31, 2009).’’.
SEC. 103. CARRYOVER BASIS AT DEATH.
(a) GENERAL RULE.—Part II of subchapter O of
chapter 1 (relating to basis rules of general application)
is amended by inserting after section 1021 the following
new section:
‘‘SEC. 1022. CARRYOVER BASIS FOR CERTAIN PROPERTY
ACQUIRED FROM A DECEDENT DYING AFTER
DECEMBER 31, 2009.
‘‘(a) CARRYOVER BASIS.—Except as otherwise pro-
vided in this section, the basis of carryover basis property
in the hands of a person acquiring such property from a
decedent shall be determined under section 1015.
‘‘(b) CARRYOVER BASIS PROPERTY DEFINED.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘carryover basis property’ means any
property—
‘‘(A) which is acquired from or passed
from a decedent who died after December 31,
2009, and
‘‘(B) which is not excluded pursuant to
paragraph (2).
The property taken into account under subpara-
graph (A) shall be determined under section 1014(b)
without regard to subparagraph (A) of the last sen-
tence of paragraph (9) thereof.
‘‘(2) CERTAIN
PROPERTY
NOT
CARRYOVER
BASIS PROPERTY.—The term ‘carryover basis prop-
erty’ does not include—
‘‘(A) any item of gross income in respect
of a decedent described in section 691,
‘‘(B) property of the decedent to the extent
that the aggregate adjusted fair market value
of such property does not exceed $1,300,000,
and
‘‘(C) property which was acquired from the
decedent by the surviving spouse of the dece-
dent (and which would be carryover basis prop-
erty without regard to this subparagraph) but
only if the value of such property would have
been deductible from the value of the taxable
estate of the decedent under section 2056, as in
effect on the day before the date of the enact-
ment of the Death Tax Elimination Act of
2000.
For purposes of this subsection, the term ‘adjusted
fair market value’ means, with respect to any prop-
erty, fair market value reduced by any indebtedness
secured by such property.
‘‘(3) LIMITATION
ON
EXCEPTION
FOR
PROP-
ERTY ACQUIRED BY SURVIVING SPOUSE.—The ad-
justed fair market value of property which is not
carryover basis property by reason of paragraph
(2)(C) shall not exceed $3,000,000.
‘‘(4) ALLOCATION OF EXCEPTED AMOUNTS.—
The executor shall allocate the limitations under
paragraphs (2)(B) and (3).
‘‘(5) INFLATION
ADJUSTMENT
OF
EXCEPTED
AMOUNTS.—In the case of decedents dying in a cal-
endar year after 2010, the dollar amounts in para-
graphs (2)(B) and (3) shall each be increased by an
amount equal to the product of—
‘‘(A) such dollar amount, and
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for such calendar
year, determined by substituting ‘2009’ for
‘1992’ in subparagraph (B) thereof.
If any increase determined under the preceding sen-
tence is not a multiple of $10,000, such increase
shall be rounded to the nearest multiple of $10,000.
‘‘(c) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary to carry out the pur-
poses of this section.’’.
(b) MISCELLANEOUS AMENDMENTS RELATED TO
CARRYOVER BASIS.—
(1) CAPITAL GAIN TREATMENT FOR INHERITED
ART WORK OR SIMILAR PROPERTY.—
(A) IN
GENERAL.—Subparagraph (C) of
section 1221(a)(3) (defining capital asset) is
amended by inserting ‘‘(other than by reason of
section 1022)’’ after ‘‘is determined’’.
(B) COORDINATION WITH SECTION 170.—
Paragraph (1) of section 170(e) (relating to
certain contributions of ordinary income and
capital gain property) is amended by adding at
the end the following: ‘‘For purposes of this
paragraph, the determination of whether prop-
erty is a capital asset shall be made without re-
gard to the exception contained in section
1221(a)(3)(C) for basis determined under sec-
tion 1022.’’.
(2) 
DEFINITION
OF
EXECUTOR.—Section
7701(a) (relating to definitions) is amended by add-
ing at the end the following:
‘‘(47) EXECUTOR.—The term ‘executor’ means
the executor or administrator of the decedent, or, if
there is no executor or administrator appointed,
qualified, and acting within the United States, then
any person in actual or constructive possession of
any property of the decedent.’’.
(3) CLERICAL AMENDMENT.—The table of sec-
tions for part II of subchapter O of chapter 1 is
amended by adding at the end the following new
item:
‘‘Sec. 1022. Carryover basis for certain property acquired from a
decedent dying after December 31, 2009.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to estates of decedents dying after
December 31, 2009.
TITLE II—REDUCTIONS OF ES-
TATE AND GIFT TAX RATES
PRIOR TO REPEAL
SEC. 201. ADDITIONAL REDUCTIONS OF ESTATE AND GIFT
TAX RATES.
(a) MAXIMUM RATE OF TAX REDUCED TO 50 PER-
CENT.—
(1) IN GENERAL.—The table contained in sec-
tion 2001(c)(1) is amended by striking the two high-
est brackets and inserting the following:
‘‘Over $2,500,000 ..........................
$1,025,800, plus 50% of the excess
over $2,500,000.’’.
(2) PHASE-IN OF REDUCED RATE.—Subsection
(c) of section 2001 is amended by adding at the end
the following new paragraph:
‘‘(3) PHASE-IN
OF
REDUCED
RATE.—In the
case of decedents dying, and gifts made, during
2001, the last item in the table contained in para-
graph (1) shall be applied by substituting ‘53%’ for
‘50%’.’’.
(b) 
REPEAL
OF
PHASEOUT
OF
GRADUATED
RATES.—Subsection (c) of section 2001 is amended by
striking paragraph (2) and redesignating paragraph (3),
as added by subsection (a), as paragraph (2).
(c) ADDITIONAL REDUCTIONS OF RATES OF TAX.—
Subsection (c) of section 2001, as so amended, is amended
by adding at the end the following new paragraph:
‘‘(3) PHASEDOWN OF TAX.—In the case of es-
tates of decedents dying, and gifts made, during any
calendar year after 2002 and before 2010—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (C), the tentative tax under this
subsection shall be determined by using a table
prescribed by the Secretary (in lieu of using the
table contained in paragraph (1)) which is the
same as such table; except that—
‘‘(i) each of the rates of tax shall be
reduced by the number of percentage
points determined under subparagraph
(B), and
‘‘(ii) the amounts setting forth the tax
shall be adjusted to the extent necessary to
reflect the adjustments under clause (i).
‘‘(B) PERCENTAGE
POINTS
OF
REDUC-
TION.—
The number of
‘‘For calendar year:
percentage points is:
2003 .............................................................................
1.0
2004 .............................................................................
2.0
2005 .............................................................................
3.0
2006 .............................................................................
4.0
2007 .............................................................................
5.5
2008 .............................................................................
7.5
2009 .............................................................................
9.5.
‘‘(C) COORDINATION
WITH
INCOME
TAX
RATES.—The reductions under subparagraph
(A)—
‘‘(i) shall not reduce any rate under
paragraph (1) below the lowest rate in sec-
tion 1(c), and
‘‘(ii) shall not reduce the highest rate
under paragraph (1) below the highest rate
in section 1(c).
‘‘(D) COORDINATION
WITH
CREDIT
FOR
STATE
DEATH
TAXES.—Rules similar to the
rules of subparagraph (A) shall apply to the
table contained in section 2011(b) except that
the Secretary shall prescribe percentage point
reductions which maintain the proportionate re-
lationship (as in effect before any reduction
under this paragraph) between the credit under
section 2011 and the tax rates under subsection
(c).’’.
(d) EFFECTIVE DATES.—
(1) SUBSECTIONS (a) AND (b).—The amend-
ments made by subsections (a) and (b) shall apply
to estates of decedents dying, and gifts made, after
December 31, 2000.