I
107TH CONGRESS
1ST SESSION
H. R. 42
To amend the Internal Revenue Code of 1986 to reduce estate and gift
tax rates, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 3, 2001
Mr. BEREUTER (for himself, Mr. LAHOOD, Mr. COOKSEY, Mr. BARR of Geor-
gia, Mr. THUNE, Mr. BILIRAKIS, Mr. MORAN of Kansas, and Mrs.
BIGGERT) introduced the following bill; which was referred to the Com-
mittee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to reduce
estate and gift tax rates, 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 ‘‘Estate Tax Relief Act
of 2001’’.
SEC. 2. REDUCTION OF ESTATE TAX RATES.
(a) IN GENERAL.—Section 2001 of the Internal Rev-
enue Code of 1986 (relating to estate tax) is amended by
striking subsections (b) and (c) and by inserting after sub-
section (a) the following new subsections:
‘‘(b) COMPUTATION OF TAX.—The tax imposed by
this section shall be 39.6 percent of the amount equal to
the excess (if any) of—
‘‘(1) the sum of—
‘‘(A) the amount of the taxable estate, and
‘‘(B) the amount of the adjusted taxable
gifts, over
‘‘(2) the aggregate amount of tax paid under
chapter 12 with respect to gifts made by the dece-
dent after December 31, 1976.
‘‘(c) ADJUSTED TAXABLE GIFTS.—For purposes of
paragraph (1)(B), 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 decedent.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 2010(c) of such Code is amended by
striking ‘‘the rate schedule set forth in section
2001(c)’’ and inserting ‘‘section 2001’’.
(2) Subsection (b) of section 2101 of such Code
is amended to read as follows:
‘‘(b) COMPUTATION OF TAX.—The tax imposed by
this section shall be the amount equal to the excess (if
any) of—
‘‘(1) a tax computed under section 2001 on the
sum of—
‘‘(A) the amount of the taxable estate, and
‘‘(B) the amount of the adjusted taxable
gifts, over
‘‘(2) the aggregate amount of tax paid under
chapter 12 with respect to gifts made by the dece-
dent after December 31, 1976.’’.
(3) Section 2502 of such Code is amended to
read as follows:
‘‘SEC. 2502. RATE OF TAX.
‘‘(a) GENERAL RULE.—The tax imposed by section
2501 for each calendar year shall be an amount equal to—
‘‘(1) the tax computed under section 2001 on
the sum of the taxable gifts for such calendar year,
over
‘‘(2) the tax computed under section 2001 on
the sum of the taxable gifts for each of the pre-
ceding calendar periods.
‘‘(b) TAX TO BE PAID BY DONOR.—The tax imposed
by section 2501 shall be paid by the donor.’’.
(4) Section 6601(j)(2)(A)(i) of such Code is
amended by striking ‘‘the rate schedule set forth in
section 2001(c)’’ and inserting ‘‘section 2001’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to estates of decedents dying, and
gifts made, after the date of the enactment of this Act.
SEC. 3. UNIFIED CREDIT AGAINST ESTATE AND GIFT TAXES
INCREASED TO EXCLUSION EQUIVALENT OF
$10,000,000; 
INFLATION 
ADJUSTMENT 
OF
CREDIT.
(a) IN GENERAL.—Subsection (c) of section 2010 of
the Internal Revenue Code of 1986 (relating to applicable
credit amount) is amended to read as follows:
‘‘(c) APPLICABLE CREDIT AMOUNT.—For purposes
of this section, the applicable credit amount is the amount
of tax which would be determined under section 2001 if
the amount with respect to which such tax is to be com-
puted were the applicable exclusion amount. For purposes
of the preceding sentence, the applicable exclusion amount
is $10,000,000.’’.
(b) INFLATION ADJUSTMENT.—
(1) IN GENERAL.—Section 2010 of such Code
is amended by redesignating subsection (d) as sub-
section (e) and by inserting after subsection (c) the
following new subsection:
‘‘(d) INFLATION ADJUSTMENT.—In the case of any
decedent dying, and gift made, in a calendar year after
2001, the $10,000,000 amount set forth in subsection (c)
shall be increased by an amount equal to—
‘‘(1) $10,000,000, multiplied by
‘‘(2) the cost-of-living adjustment determined
under section 1(f)(3) for such calendar year by sub-
stituting ‘calendar year 2000’ for ‘calendar year
1992’ in subparagraph (B) thereof.
If any amount as adjusted under the preceding sentence
is not a multiple of $10,000, such amount shall be round-
ed to the nearest multiple of $10,000.’’.
(2) 
CONFORMING
AMENDMENT.—Section
6018(a)(1) of such Code is amended by striking
‘‘section 2010(c)’’ and inserting ‘‘section 2010’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to estates of decedents dying, and
gifts made, after the date of the enactment of this Act.
SEC. 4. REPEAL OF ESTATE TAX BENEFIT FOR FAMILY-
OWNED BUSINESS INTERESTS.
(a) IN GENERAL.—Section 2057 of the Internal Rev-
enue Code of 1986 (relating to family-owned business in-
terests) is hereby repealed.
(b) CONFORMING AMENDMENTS.—