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House Report 107-37 (Death Tax Elimination Act)

House Report 107-37 (Death Tax Elimination Act)

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Published by Tax History
Legislative History of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001, aka first Bush tax cut.
Legislative History of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001, aka first Bush tax cut.

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Published by: Tax History on Dec 30, 2009
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12/29/2009

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89–006
107
TH
C
ONGRESS
R
EPORT
 " !
HOUSE OF REPRESENTATIVES
1st Session
107–37
DEATH TAX ELIMINATION ACT OF 2001
 A
PRIL
3, 2001.—Committed to the Committee of the Whole House on the State of the Union and ordered to be printed
Mr. T
HOMAS
, from the Committee on Ways and Means,submitted the following
R E P O R T
together withDISSENTING VIEWS
[To accompany H.R. 8][Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred thebill (H.R. 8) to amend the Internal Revenue Code of 1986 to phase-out the estate and gift taxes over a 10-year period, and for otherpurposes, having considered the same, report favorably thereonwith an amendment and recommend that the bill as amended dopass.
CONTENTS
Page
I. Summary and Background ........................................................................... 17 A. Purpose and Summary .................................................................... 17B. Background and Need for Legislation ............................................ 19C. Legislative History ........................................................................... 19II. Explanation of the Bill .................................................................................. 19 A. Phase in Repeal of Estate, Gift, and Generation-SkippingTransfer Taxes (secs. 101–402) ..................................................... 19B. Expand Estate Tax Rule for Conservation Easements (sec. 501) 32C. Modify Generation-Skipping Transfer Tax Rules (secs. 601–604) .................................................................................................. 33D. Expand Availability of Installment Payment of Estate Tax forClosely-Held Businesses (sec. 701) ................................................ 41III. Votes of the Committee ................................................................................. 42IV. Budget Effects of the Bill .............................................................................. 44 A. Committee Estimates of Budgetary Effects ................................... 44B. Statement Regarding New Budget Authority and Tax Expendi-tures Budget Authority .................................................................. 46C. Cost Estimate Prepared by the Congressional Budget Office ...... 46
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2
 V.Other Matters To Be Discussed Under the Rules of the House................47 A.Committee Oversight Findings and Recommendations................47B.Statement of General Performance Goals and Objectives............48C.Constitutional Authority Statement...............................................48D.Information Relating to Unfunded Mandates...............................48E.Applicability of House Rule XXI 5(b)..............................................48F.Tax Complexity Analysis.................................................................48 VI.Changes in Existing Law Made by the Bill as Reported............................49 VII.Dissenting Views...........................................................................................194
The amendment is as follows:Strike all after the enacting clause and insert the following:
SECTION 1. SHORT TITLE; ETC.
(a) S
HORT
T
ITLE
.
This Act may be cited as the
‘‘
Death Tax Elimination Act of 2001
’’
.(b) A
MENDMENT OF
1986 C
ODE
.
Except as otherwise expressly provided, when-ever in this Act an amendment or repeal is expressed in terms of an amendmentto, or repeal of, a section or other provision, the reference shall be considered to bemade to a section or other provision of the Internal Revenue Code of 1986.(c) T
 ABLE OF
C
ONTENTS
.
Sec.1.Short title; etc.TITLE I
REPEAL OF ESTATE, GIFT, AND GENERATION-SKIPPING TAXESSec.101.Repeal of estate, gift, and generation-skipping taxes.TITLE II
REDUCTIONS OF ESTATE AND GIFT TAX RATES PRIOR TO REPEALSec.201.Additional reductions of estate and gift tax rates.TITLE III
UNIFIED CREDIT REPLACED WITH UNIFIED EXEMPTION AMOUNTSec.301.Unified credit against estate and gift taxes replaced with unified exemption amount.TITLE IV
CARRYOVER BASIS AT DEATH; OTHER CHANGES TAKING EFFECT WITH REPEALSec.401.Termination of step-up in basis at death.Sec.402.Treatment of property acquired from a decedent dying after December 31, 2010.TITLE V
CONSERVATION EASEMENTSSec.501.Expansion of estate tax rule for conservation easements.TITLE VI
MODIFICATIONS OF GENERATION-SKIPPING TRANSFER TAXSec.601.Deemed allocation of GST exemption to lifetime transfers to trusts; retroactive allocations.Sec.602.Severing of trusts.Sec.603.Modification of certain valuation rules.Sec.604.Relief provisions.TITLE VII
EXTENSION OF TIME FOR PAYMENT OF ESTATE TAXSec.701.Increase in number of allowable partners and shareholders in closely held businesses.
TITLE I—REPEAL OF ESTATE, GIFT, ANDGENERATION-SKIPPING TAXES
SEC. 101. REPEAL OF ESTATE, GIFT, AND GENERATION-SKIPPING TAXES.
(a) I
N
G
ENERAL
.
Subtitle B is hereby repealed.(b) E
FFECTIVE
D
 ATE
.
The repeal made by subsection (a) shall apply to the estatesof decedents dying, and gifts and generation-skipping transfers made, after Decem-ber 31, 2010.
TITLE II—REDUCTIONS OF ESTATE AND GIFTTAX RATES PRIOR TO REPEAL
SEC. 201. ADDITIONAL REDUCTIONS OF ESTATE AND GIFT TAX RATES.
(a) M
 AXIMUM
R
 ATE OF
T
 AX
R
EDUCED TO
50 P
ERCENT
.
(1) I
N GENERAL
.
The table contained in section 2001(c)(1) is amended bystriking the two highest brackets and inserting the following:
‘‘
Over $2,500,000.........................................................$1,025,800, plus 50% of the excess over $2,500,000.
’’
.
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3
(2) P
HASE
-
IN OF REDUCED RATE
.
Subsection (c) of section 2001 is amendedby adding at the end the following new paragraph:
‘‘
(3) P
HASE
-
IN OF REDUCED RATE
.
In the case of decedents dying, and giftsmade, during 2002, the last item in the table contained in paragraph (1) shallbe applied by substituting
53%
for
50%
.
’’
.(b) R
EPEAL OF
P
HASEOUT OF
G
RADUATED
R
 ATES
.
Subsection (c) of section 2001is amended by striking paragraph (2) and redesignating paragraph (3), as added bysubsection (a), as paragraph (2).(c) A
DDITIONAL
R
EDUCTIONS OF
R
 ATES OF
T
 AX
.
Subsection (c) of section 2001, asso amended, is amended by adding at the end the following new paragraph:
‘‘
(3) P
HASEDOWN OF TAX
.
In the case of estates of decedents dying, and giftsmade, during any calendar year after 2003 and before 2011
‘‘
(A) I
N GENERAL
.
Except as provided in subparagraph (C), the tentativetax under this subsection shall be determined by using a table prescribedby 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 per-centage points determined under subparagraph (B), and
‘‘
(ii) the amounts setting forth the tax shall be adjusted to the extentnecessary to reflect the adjustments under clause (i).
‘‘
(B) P
ERCENTAGE POINTS OF REDUCTION
.
The number of 
‘‘
For calendar year:percentage points is:
2004................................................................................................................................................1.02005................................................................................................................................................2.02006................................................................................................................................................3.02007................................................................................................................................................5.02008................................................................................................................................................7.02009................................................................................................................................................9.02010................................................................................................................................................11.0.
‘‘
(C) C
OORDINATION WITH INCOME TAX RATES
.
The reductions under sub-paragraph (A)
‘‘
(i) shall not reduce any rate under paragraph (1) below the lowestrate in section 1(c) applicable to the taxable year which includes thedate of death (or, in the case of a gift, the date of the gift), and
‘‘
(ii) shall not reduce the highest rate under paragraph (1) below thehighest rate in section 1(c) for such taxable year.
‘‘
(D) C
OORDINATION WITH CREDIT FOR STATE DEATH TAXES
.
Rules similarto the rules of subparagraph (A) shall apply to the table contained in sec-tion 2011(b) except that the Secretary shall prescribe percentage point re-ductions which maintain the proportionate relationship (as in effect beforeany reduction under this paragraph) between the credit under section 2011and the tax rates under subsection (c).
’’
.(d) E
FFECTIVE
D
 ATES
.
(1) S
UBSECTIONS
(a)
 AND
(b).
The amendments made by subsections (a) and(b) shall apply to estates of decedents dying, and gifts made, after December31, 2001.(2) S
UBSECTION
(c).
The amendment made by subsection (c) shall apply toestates of decedents dying, and gifts made, after December 31, 2003.
TITLE III
UNIFIED CREDIT REPLACED WITHUNIFIED EXEMPTION AMOUNT
SEC. 301. UNIFIED CREDIT AGAINST ESTATE AND GIFT TAXES REPLACED WITH UNIFIED EX-EMPTION AMOUNT.
(a) I
N
G
ENERAL
.
(1) E
STATE TAX
.
Subsection (b) of section 2001 (relating to computation of tax) is amended to read as follows:
‘‘
(b) C
OMPUTATION OF
T
 AX
.
‘‘
(1) I
N GENERAL
.
The tax imposed by this section shall be the amount equalto 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 underchapter 12 with respect to gifts made by the decedent after December 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.
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