to computation of tax) is amended to read as fol-
lows:
‘‘(b) COMPUTATION OF TAX.—
‘‘(1) IN GENERAL.—The tax imposed by this
section shall be the amount equal to the excess (if
any) of—
‘‘(A) the tentative tax determined under
paragraph (2), over
‘‘(B) the aggregate amount of tax which
would have been payable under chapter 12 with
respect to gifts made by the decedent after De-
cember 31, 1976, if the provisions of subsection
(c) (as in effect at the decedent’s death) had
been applicable at the time of such gifts.
‘‘(2) TENTATIVE TAX.—For purposes of para-
graph (1), the tentative tax determined under this
paragraph is a tax computed under subsection (c) on
the excess of—
‘‘(A) the sum of—
‘‘(i) the amount of the taxable estate,
and
‘‘(ii) the amount of the adjusted tax-
able gifts, over
‘‘(B) the exemption amount.
‘‘(3) EXEMPTION
AMOUNT.—For purposes of
paragraph (2), the term ‘exemption amount’ means
$10,000,000.
‘‘(4) ADJUSTED
TAXABLE
GIFTS.—For pur-
poses of paragraph (2), the term ‘adjusted taxable
gifts’ means the total amount of the taxable gifts
(within the meaning of section 2503) made by the
decedent after December 31, 1976, other than gifts
which are includible in the gross estate of the dece-
dent.’’.
(2) GIFT TAX.—Subsection (a) of section 2502
of such Code (relating to computation of tax) is
amended to read as follows:
‘‘(a) COMPUTATION OF TAX.—
‘‘(1) IN GENERAL.—The tax imposed by section
2501 for each calendar year shall be the amount
equal to the excess (if any) of—
‘‘(A) the tentative tax determined under
paragraph (2) for such calendar year, over
‘‘(B) the aggregate amount of tax that
would have been payable under this chapter
with respect to gifts made by the donor in pre-
ceding calendar periods if the tax had been
computed under the provisions of section
2001(c) as in effect for such calendar year.
‘‘(2) TENTATIVE TAX.—For purposes of para-
graph (1), the tentative tax determined under this
paragraph for a calendar year is a tax computed
under section 2001(c) on the excess of—
‘‘(A) the aggregate sum of the taxable gifts
for such calendar year and for each of the pre-
ceding calendar periods, over
‘‘(B) the exemption amount under section
2001(b)(3) for such calendar year.’’.
(b) REPEAL OF UNIFIED CREDITS.—
(1) Section 2010 of such Code (relating to uni-
fied credit against estate tax) is hereby repealed.
(2) Section 2505 of such Code (relating to uni-
fied credit against gift tax) is hereby repealed.
(c) CONFORMING AMENDMENTS.—
(1)(A) Subsection (b) of section 2011 of such
Code is amended—
(i) by striking ‘‘adjusted’’ in the table; and
(ii) by striking the last sentence.
(B) Subsection (f) of section 2011 of such Code
is amended by striking ‘‘, reduced by the amount of
the unified credit provided by section 2010’’.
(2) Subsection (a) of section 2012 of such Code
is amended by striking ‘‘and the unified credit pro-
vided by section 2010’’.
(3) Subparagraph (A) of section 2013(c)(1) of
such Code is amended by striking ‘‘2010,’’.
(4) Paragraph (2) of section 2014(b) of such
Code is amended by striking ‘‘2010, 2011,’’ and in-
serting ‘‘2011’’.
(5) Clause (ii) of section 2056A(b)(12)(C) of
such Code is amended to read as follows:
‘‘(ii) to treat any reduction in the tax
imposed by paragraph (1)(A) by reason of
the credit allowable under section 2010 (as
in effect on the day before the date of the
enactment of the Estate Tax Relief Act of
2001) or the exemption amount allowable
under section 2001(b) with respect to the
decedent as a credit under section 2505
(as so in effect) or exemption under section
2501 (as the case may be) allowable to
such surviving spouse for purposes of de-
termining the amount of the exemption al-
lowable under section 2501 with respect to
taxable gifts made by the surviving spouse
during the year in which the spouse be-
comes a citizen or any subsequent year,’’.
(6)(A) Section 2057 of such Code is repealed
and 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.
(B) Paragraph (10) of section 2031(c) of such
Code is amended by inserting ‘‘(as in effect on the
day before the date of the enactment of this par-
enthetical)’’ before the period.
(7) Subsection (b) of section 2101 of such Code
is amended to read as follows:
‘‘(b) COMPUTATION OF TAX.—
‘‘(1) IN GENERAL.—The tax imposed by this
section shall be the amount equal to the excess (if
any) of—
‘‘(A) the tentative tax determined under
paragraph (2), over
‘‘(B) a tentative tax computed under sec-
tion 2001(c) on the amount of the adjusted tax-
able gifts.
‘‘(2) TENTATIVE TAX.—For purposes of para-
graph (1), the tentative tax determined under this
paragraph is a tax computed under section 2001(c)
on the excess of—
‘‘(A) the sum of—
‘‘(i) the amount of the taxable estate,
and
‘‘(ii) the amount of the adjusted tax-
able gifts, over
‘‘(B) the exemption amount for the cal-
endar year in which the decedent died.
‘‘(3) EXEMPTION AMOUNT.—
‘‘(A) IN GENERAL.—The term ‘exemption
amount’ means $60,000.
‘‘(B) RESIDENTS OF POSSESSIONS OF THE
UNITED
STATES.—In the case of a decedent
who is considered to be a nonresident not a cit-
izen of the United States under section 2209,
the exemption amount under this paragraph
shall be the greater of—
‘‘(i) $60,000, or
‘‘(ii) that proportion of $175,000
which the value of that part of the dece-
dent’s gross estate which at the time of his
death is situated in the United States
bears to the value of his entire gross estate
wherever situated.
‘‘(C) SPECIAL RULES.—
‘‘(i) 
COORDINATION
WITH
TREA-
TIES.—To the extent required under any
treaty obligation of the United States, the
exemption amount allowed under this para-
graph shall be equal to the amount which
bears the same ratio to the exemption
amount under section 2001(b)(3) (for the
calendar year in which the decedent died)
as the value of the part of the decedent’s
gross estate which at the time of his death
is situated in the United States bears to
the value of his entire gross estate wher-
ever situated. For purposes of the pre-
ceding sentence, property shall not be
treated as situated in the United States if
such property is exempt from the tax im-
posed by this subchapter under any treaty
obligation of the United States.
‘‘(ii) COORDINATION WITH GIFT TAX
EXEMPTION AND UNIFIED CREDIT.—If an
exemption has been allowed under section
2501 (or a credit has been allowed under
section 2505 as in effect on the day before
the date of the enactment of the Estate
Tax Relief Act of 2001) with respect to
any gift made by the decedent, each dollar
amount contained in subparagraph (A) or
(B) or the exemption amount applicable
under clause (i) of this subparagraph
(whichever applies) shall be reduced by the
exemption so allowed under section 2501
(or, in the case of such a credit, by the
amount of the gift for which the credit was
so allowed).’’.
(8) Section 2102 of such Code is amended by
striking subsection (c).
(9)(A) Paragraph (1) of section 2107(a) of
such Code is amended by striking ‘‘the table con-
tained in’’.
(B) Paragraph (1) of section 2107(c) of such
Code is amended to read as follows:
‘‘(1) EXEMPTION
AMOUNT.—For purposes of
subsection (a), the exemption amount under section
2001 shall be $60,000.’’
(C) Paragraph (3) of section 2107(c) of such
Code is amended by striking the second sentence.
(D) The heading of subsection (c) of section
2107 of such Code is amended to read as follows:
‘‘(c) EXEMPTION AMOUNT AND CREDITS.—’’.
(10) Paragraph (1) of section 6018(a) of such
Code is amended by striking ‘‘the applicable exclu-
sion amount in effect under section 2010(c)’’ and in-
serting ‘‘the exemption amount under section
2001(b)(3)’’.
(11) Subparagraph (A) of section 6601(j)(2) of
such Code is amended to read as follows:
‘‘(A) 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 $1,000,000, or’’.
(12) The table of sections for part II of sub-
chapter A of chapter 11 of such Code is amended by
striking the item relating to section 2010.
(13) The table of sections for subchapter A of
chapter 12 of such Code is amended by striking the
item relating to section 2505.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to estates of decedents dying and
gifts made after December 31, 2000.
SEC. 4. INCREASE IN ANNUAL GIFT EXCLUSION AMOUNT.
(a) IN GENERAL.—Paragraph (1) of section 2503(b)
of the Internal Revenue Code of 1986 (relating to general
exclusion from gifts) is amended by striking ‘‘$10,000’’
and inserting ‘‘$50,000’’.
(b) INFLATION ADJUSTMENT.—Paragraph (2) of sec-
tion 2503(b) of such Code is amended—
(1) by striking ‘‘$10,000’’ both places it ap-
pears and inserting ‘‘$50,000’’,
(2) by striking ‘‘1998’’ and inserting ‘‘2001’’,
and
(3) by striking ‘‘1997’’ and inserting ‘‘2000’’.
(c) CONFORMING AMENDMENT.—Section 2523(i)(2)
of such Code is amended by striking ‘‘$10,000’’ and in-
serting ‘‘$50,000’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to estates of decedents dying and
gifts made after December 31, 2000.
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