I 
110TH CONGRESS 
1ST SESSION H. R. 3170 
To make permanent the individual income tax rates for capital gains, and 
for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 24, 2007 
Mr. MITCHELL (for himself and Mr. SHAYS) introduced the following bill; 
which was referred to the Committee on Ways and Means 
A BILL 
To make permanent the individual income tax rates for 
capital gains, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Capital Gains and Es-
tate Tax Relief Act of 2007’’. 
SEC. 2. INDIVIDUAL INCOME TAX RATES FOR CAPITAL 
GAINS MADE PERMANENT. 
Section 303 of the Jobs and Growth Tax Relief Rec-
onciliation Act of 2003 is amended by striking ‘‘this title’’ 
and inserting ‘‘section 302’’. 
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SEC. 3. REFORM AND EXTENSION OF ESTATE TAX AFTER 
2009. 
(a) RESTORATION
OF UNIFIED CREDIT AGAINST 
GIFT TAX.—Paragraph (1) of section 2505(a) of the In-
ternal Revenue Code of 1986 (relating to general rule for 
unified credit against gift tax), after the application of 
subsection (g), is amended by striking ‘‘(determined as if 
the applicable exclusion amount were $1,000,000)’’. 
(b) EXCLUSION EQUIVALENT OF UNIFIED CREDIT 
INCREASED TO $5,000,000.—Subsection (c) of section 
2010 of such Code (relating to unified credit against es-
tate tax) is amended to read as follows: 
‘‘(c) APPLICABLE CREDIT AMOUNT.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the applicable credit amount is the amount of 
the tentative tax which would be determined under 
the rate schedule set forth in section 2001(c) if the 
amount with respect to which such tentative tax is 
to be computed were the applicable exclusion 
amount. 
‘‘(2) APPLICABLE EXCLUSION AMOUNT.— 
‘‘(A) IN GENERAL.—For purposes of this 
subsection, the applicable exclusion amount is 
as follows: 
‘‘(i) 
For 
calendar 
year 
2010, 
$3,750,000. 
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‘‘(ii) 
For 
calendar 
year 
2011, 
$4,000,000. 
‘‘(iii) 
For 
calendar 
year 
2012, 
$4,250,000. 
‘‘(iv) 
For 
calendar 
year 
2013, 
$4,500,000. 
‘‘(v) 
For 
calendar 
year 
2014, 
$4,750,000. 
‘‘(vi) For calendar year 2015 and 
thereafter, $5,000,000. 
‘‘(B) INFLATION
ADJUSTMENT.—In the 
case of any decedent dying in a calendar year 
after 2015, the $5,000,000 amount in subpara-
graph (A)(vi) shall be increased by an amount 
equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for such 
calendar year by substituting ‘calendar 
year 2014’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof. 
If any amount as adjusted under the pre-
ceding sentence is not a multiple of 
$50,000, such amount shall be rounded to 
the nearest multiple of $50,000.’’. 
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(c) RATE SCHEDULE.— 
(1) IN
GENERAL.—Subsection (c) of section 
2001 of such Code (relating to rate schedule) is 
amended to read as follows: 
‘‘(c) RATE SCHEDULE.— 
‘‘(1) IN GENERAL.—The tentative tax is equal 
to the sum of— 
‘‘(A) the product of the rate specified in 
section 1(h)(1)(C) in effect on the date of the 
decedent’s death multiplied by so much of the 
sum described in subsection (b)(1) as does not 
exceed $25,000,000, and 
‘‘(B) twice the rate specified in section 
1(h)(1)(C) in effect on the date of the dece-
dent’s death of so much of the sum described 
in subsection (b)(1) as exceeds $25,000,000. 
‘‘(2) INFLATION ADJUSTMENT.—In the case of 
any decedent dying in a calendar year after 2015, 
each $25,000,000 amount in subparagraphs (A) and 
(B) of paragraph (1) shall be increased by an 
amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for such calendar 
year by substituting ‘calendar year 2014’ for 
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‘calendar year 1992’ in subparagraph (B) 
thereof. 
If any amount as adjusted under the preceding 
sentence is not a multiple of $50,000, such 
amount shall be rounded to the nearest multiple 
of $50,000.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
2502(a) of such Code (relating to computation of 
tax), after the application of subsection (g), is 
amended by adding at the end the following flush 
sentence: 
‘‘In computing the tentative tax under section 2001(c) for 
purposes of this subsection, ‘the last day of the calendar 
year in which the gift was made’ shall be substituted for 
‘the date of the decedent’s death’ each place it appears 
in such section.’’. 
(d) MODIFICATIONS OF ESTATE AND GIFT TAXES TO 
REFLECT DIFFERENCES IN UNIFIED CREDIT RESULTING 
FROM DIFFERENT TAX RATES.— 
(1) ESTATE TAX.— 
(A) IN GENERAL.—Section 2001(b)(2) of 
such Code (relating to computation of tax) is 
amended by striking ‘‘if the provisions of sub-
section (c) (as in effect at the decedent’s 
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death)’’ and inserting ‘‘if the modifications de-
scribed in subsection (g)’’. 
(B) MODIFICATIONS.—Section 2001 of 
such Code is amended by adding at the end the 
following new subsection: 
‘‘(g) MODIFICATIONS TO GIFT TAX PAYABLE TO RE-
FLECT DIFFERENT TAX RATES.—For purposes of apply-
ing subsection (b)(2) with respect to 1 or more gifts, the 
rates of tax under subsection (c) in effect on the date of 
the decedent’s death shall, in lieu of the rates of tax in 
effect at the time of such gifts, be used both to compute— 
‘‘(1) the tax imposed by chapter 12 with respect 
to such gifts, and 
‘‘(2) the credit allowed against such tax under 
section 2505, including in computing— 
‘‘(A) the applicable credit amount under 
section 2505(a)(1), and 
‘‘(B) the sum of the amounts allowed as a 
credit for all preceding periods under section 
2505(a)(2). 
For purposes of paragraph (2)(A), the applicable 
credit amount for any calendar year before 1998 is 
the amount which would be determined under sec-
tion 2010(c) if the applicable exclusion amount were 
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the dollar amount under section 6018(a)(1) for such 
year.’’. 
(2) GIFT TAX.—Section 2505(a) of such Code 
(relating to unified credit against gift tax), after the 
application of subsection (g), is amended by adding 
at the end the following new flush sentence: 
‘‘For purposes of applying paragraph (2) for any calendar 
year, the rate schedule under section 2001(c) used in com-
puting the applicable credit amount under paragraph (1) 
for such calendar year shall, in lieu of the rates of tax 
in effect for preceding calendar periods, be used in deter-
mining the amounts allowable as a credit under this sec-
tion for all preceding calendar periods.’’. 
(e) REPEAL
OF DEDUCTION
FOR STATE DEATH 
TAXES.— 
(1) IN GENERAL.—Section 2058 of such Code 
(relating to State death taxes) is amended by adding 
at the end the following: 
‘‘(c) TERMINATION.—This section shall not apply to 
the estates of decedents dying after December 31, 2009.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
2106(a)(4) of such Code is amended by adding at 
the end the following new sentence: ‘‘This paragraph 
shall not apply to the estates of decedents dying 
after December 31, 2009.’’. 
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(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to estates of decedents dying, gen-
eration-skipping transfers, and gifts made, after Decem-
ber 31, 2009. 
(g) ADDITIONAL MODIFICATIONS TO ESTATE TAX.— 
(1) IN GENERAL.—The following provisions of 
the Economic Growth and Tax Relief Reconciliation 
Act of 2001, and the amendments made by such 
provisions, are hereby repealed: 
(A) Subtitles A and E of title V. 
(B) Subsection (d), and so much of sub-
section (f)(3) as relates to subsection (d), of 
section 511. 
(C) Paragraph (2) of subsection (b), and 
paragraph (2) of subsection (e), of section 521. 
The Internal Revenue Code of 1986 shall be applied 
as if such provisions and amendments had never 
been enacted. 
(2) SUNSET NOT TO APPLY.—Section 901 of 
the Economic Growth and Tax Relief Reconciliation 
Act of 2001 shall not apply to title V (other than 
subtitles F, G, and H thereof) of such Act. 
(3) REPEAL OF DEADWOOD.— 
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(A) Sections 2011, 2057, and 2604 of the 
Internal Revenue Code of 1986 are hereby re-
pealed. 
(B) The table of sections for part II of 
subchapter A of chapter 11 of such Code is 
amended by striking the item relating to section 
2011. 
(C) The table of sections for part IV of 
subchapter A of chapter 11 of such Code is 
amended by striking the item relating to section 
2057. 
(D) The table of sections for subchapter A 
of chapter 13 of such Code is amended by strik-
ing the item relating to section 2604. 
SEC. 4. UNIFIED CREDIT INCREASED BY UNUSED UNIFIED 
CREDIT OF DECEASED SPOUSE. 
(a) IN GENERAL.—Subsection (c) of section 2010 of 
the Internal Revenue Code of 1986 (defining applicable 
credit amount), as amended by section 3(b), is amended 
by striking paragraph (2) and inserting the following new 
paragraphs: 
‘‘(2) APPLICABLE
EXCLUSION
AMOUNT.—For 
purposes of this subsection, the applicable exclusion 
amount is the sum of— 
‘‘(A) the basic exclusion amount, and 
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‘‘(B) in the case of a surviving spouse, the 
aggregate deceased spousal unused exclusion 
amount. 
‘‘(3) BASIC EXCLUSION AMOUNT.— 
‘‘(A) IN GENERAL.—For purposes of this 
subsection, the basic exclusion amount is as fol-
lows: 
‘‘(i) 
For 
calendar 
year 
2010, 
$3,750,000. 
‘‘(ii) 
For 
calendar 
year 
2011, 
$4,000,000. 
‘‘(iii) 
For 
calendar 
year 
2012, 
$4,250,000. 
‘‘(iv) 
For 
calendar 
year 
2013, 
$4,500,000. 
‘‘(v) 
For 
calendar 
year 
2014, 
$4,750,000. 
‘‘(vi) For calendar year 2015 and 
thereafter, $5,000,000. 
‘‘(B) INFLATION
ADJUSTMENT.—In the 
case of any decedent dying in a calendar year 
after 2015, the $5,000,000 amount in subpara-
graph (A)(vi) shall be increased by an amount 
equal to— 
‘‘(i) such dollar amount, multiplied by 
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‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for such 
calendar year by substituting ‘calendar 
year 2014’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof. 
If any amount as adjusted under the pre-
ceding sentence is not a multiple of 
$50,000, such amount shall be rounded to 
the nearest multiple of $50,000. 
‘‘(4) AGGREGATE DECEASED SPOUSAL UNUSED 
EXCLUSION
AMOUNT.—For purposes of this sub-
section, the term ‘aggregate deceased spousal unused 
exclusion amount’ means the lesser of— 
‘‘(A) the basic exclusion amount, or 
‘‘(B) the sum of the deceased spousal un-
used exclusion amounts of the surviving spouse. 
‘‘(5) DECEASED SPOUSAL UNUSED EXCLUSION 
AMOUNT.—For purposes of this subsection, the term 
‘deceased spousal unused exclusion amount’ means, 
with respect to the surviving spouse of any deceased 
spouse dying after December 31, 2009, the excess (if 
any) of— 
‘‘(A) the applicable exclusion amount of 
the deceased spouse, over 
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‘‘(B) the amount with respect to which the 
tentative tax is determined under section 
2001(b)(1) on the estate of such deceased 
spouse. 
‘‘(6) SPECIAL RULES.— 
‘‘(A) ELECTION
REQUIRED.—A deceased 
spousal unused exclusion amount may not be 
taken into account by a surviving spouse under 
paragraph (5) unless the executor of the estate 
of the deceased spouse files an estate tax return 
on which such amount is computed and makes 
an election on such return that such amount 
may be so taken into account. Such election, 
once made, shall be irrevocable. No election 
may be made under this subparagraph if such 
return is filed after the time prescribed by law 
(including extensions) for filing such return. 
‘‘(B) EXAMINATION
OF
PRIOR
RETURNS 
AFTER EXPIRATION OF PERIOD OF LIMITATIONS 
WITH
RESPECT
TO
DECEASED
SPOUSAL
UN-
USED
EXCLUSION
AMOUNT.—Notwithstanding 
any period of limitation in section 6501, after 
the time has expired under section 6501 within 
which a tax may be assessed under chapter 11 
or 12 with respect to a deceased spousal unused 
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exclusion amount, the Secretary may examine a 
return of the deceased spouse to make deter-
minations with respect to such amount for pur-
poses of carrying out this subsection. 
‘‘(7) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary or ap-
propriate to carry out this subsection.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (1) of section 2505(a), as 
amended by section 3, is amended to read as follows: 
‘‘(1) the applicable credit amount under section 
2010(c) which would apply if the donor died as of 
the end of the calendar year, reduced by’’. 
(2) Section 2631(c) is amended by striking ‘‘the 
applicable exclusion amount’’ and inserting ‘‘the 
basic exclusion amount’’. 
(3) Section 6018(a)(1), after the application of 
section 101(g), is amended by striking ‘‘applicable 
exclusion amount’’ and inserting ‘‘basic exclusion 
amount’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to estates of decedents dying, gen-
eration-skipping transfers, and gifts made, after Decem-
ber 31, 2009. 
Æ 
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