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S.2894
Rural America Prosperity Act of 2000 (Introduced in the
Senate)
SEC. 111. REPEAL OF ESTATE,
GIFT, AND GENERATION-SKIPPING TAXES.
(a) IN GENERAL- Subtitle B of the Internal Revenue Code of 1986 is hereby
repealed.
(b) EFFECTIVE DATE- The repeal made by subsection (a) shall
apply to the estates of decedents dying, and gifts and generation-skipping
transfers made, after December 31, 2009.
SEC. 112. TERMINATION OF STEP UP IN BASIS AT DEATH .
(a) TERMINATION OF APPLICATION OF SECTION 1014- Section 1014 of the
Internal Revenue Code of 1986 (relating to basis of property acquired 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 of the Internal
Revenue Code of 1986 (relating to adjustments to basis) is amended by striking
`and' at the end of paragraph (26), by striking 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. 113. CARRYOVER BASIS AT DEATH .
(a) GENERAL RULE- Part II of subchapter O of chapter 1 of the Internal
Revenue Code of 1986 (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 provided 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 section, 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 subparagraph (A) shall be
determined under section 1014(b) without regard to subparagraph (A) of the
last sentence of paragraph (9) thereof.
`(2) CERTAIN PROPERTY NOT CARRYOVER BASIS PROPERTY- The term `carryover
basis property' 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 decedent (and which would be carryover basis property
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 enactment of the Rural America Prosperity Act of
2000.
For purposes of this subsection, the term `adjusted fair market value'
means, with respect to any property, fair market value reduced by any
indebtedness secured by such property.
`(3) LIMITATION ON EXCEPTION FOR PROPERTY ACQUIRED BY SURVIVING SPOUSE-
The adjusted 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 calendar year after 2010, the dollar amounts in paragraphs (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 determined 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 sentence 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 purposes 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) of the Internal
Revenue Code of 1986 (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) of
such Code (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 property is a
capital asset shall be made without regard to the exception contained in
section 1221(a)(3)(C) for basis determined under section 1022.'.
(2) DEFINITION OF EXECUTOR- Section 7701(a) of such Code (relating to
definitions) is amended by adding 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 sections for part II of subchapter
O of chapter 1 of such Code 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.
SEC. 114. ADDITIONAL REDUCTIONS OF ESTATE AND GIFT TAX RATES.
(a) MAXIMUM RATE OF TAX
REDUCED TO 50 PERCENT-
(1) IN GENERAL- The table contained in section 2001(c)(1) of the
Internal Revenue Code of 1986 is amended by striking the two highest
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 of such
Code 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 paragraph (1)
shall be applied by substituting `53%' for `50%'.'.
(b) REPEAL OF PHASEOUT OF
GRADUATED RATES- Subsection (c) of section 2001 of the Internal Revenue Code
of 1986 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
of the Internal Revenue Code of 1986, as so amended, is amended by adding at
the end the following new paragraph:
`(3) PHASEDOWN OF TAX - In
the case of estates 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 REDUCTION-
--The number of
`For calendar year:
--percentage points is:
--1.0
--2.0
--3.0
--4.0
--5.5
--7.5
--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 section 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 relationship (as in effect
before any reduction under this paragraph) between the credit under
section 2011 and the tax
rates under subsection (c).'.
(1) SUBSECTIONS (a) AND (b)- The amendments made by subsections (a) and
(b) shall apply to estates of decedents dying, and gifts made, after
December 31, 2000.
(2) SUBSECTION (c)- The amendment made by subsection (c) shall apply to
estates of decedents dying, and gifts made, after December 31, 2002.
SEC. 115. UNIFIED CREDIT AGAINST ESTATE AND GIFT TAXES REPLACED WITH UNIFIED
EXEMPTION AMOUNT.
(1) ESTATE TAX -
Subsection (b) of section 2001 of the Internal Revenue Code of 1986
(relating to computation of tax ) 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) the aggregate amount of tax which would have been payable
under chapter 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.
`(2) TENTATIVE TAX - For
purposes of paragraph (1), the tentative tax determined under this paragraph
is a tax computed under
subsection (c) on the excess of--
`(i) the amount of the taxable estate, and
`(ii) the amount of the adjusted taxable gifts, over
`(B) the exemption amount for the calendar year in which the decedent
died.
`(3) EXEMPTION AMOUNT- For purposes of paragraph (2), the term
`exemption amount' means the amount determined in accordance with the
following table:
`In the case of
--The exemption
calendar year:
--amount is:
2001
--$675,000
2002 and 2003
--$700,000
2004
--$850,000
2005
--$950,000
2006 or thereafter
--$1,000,000.
`(4) ADJUSTED TAXABLE GIFTS- For purposes 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
decedent.'.
(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), over
`(B) the tax paid under
this section for all prior calendar periods.
`(2) TENTATIVE TAX - For
purposes of paragraph (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 preceding 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 the Internal Revenue Code of 1986 (relating to
unified credit against estate tax ) is hereby repealed.
(2) Section 2505 of such Code (relating to unified credit against gift
tax ) is hereby
repealed.
(c) CONFORMING AMENDMENTS-
(1)(A) Subsection (b) of section 2011 of the Internal Revenue Code of
1986 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 provided 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 inserting `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 Rural America Prosperity
Act of 2000) 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 2521 (as the case may be) allowable
to such surviving spouse for purposes of determining the amount of the
exemption allowable under section 2521 with respect to taxable gifts
made by the surviving spouse during the year in which the spouse becomes
a citizen or any subsequent year,'.
(6) Subsection (a) of section 2057 of such Code is amended by striking
paragraphs (2) and (3) and inserting the following new paragraph:
`(2) MAXIMUM DEDUCTION- The deduction allowed by this section shall not
exceed the excess of $1,300,000 over the exemption amount (as defined in
section 2001(b)(3)).'.
(7)(A) 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 section 2001(c) on the amount of the adjusted taxable
gifts.
`(2) TENTATIVE TAX - For
purposes of paragraph (1), the tentative tax determined under this paragraph
is a tax computed under
section 2001(c) on the excess of--
`(i) the amount of the taxable estate, and
`(ii) the amount of the adjusted taxable gifts, over
`(B) the exemption amount for the calendar year in which the decedent
died.
`(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 citizen of the United
States under section 2209, the exemption amount under this paragraph shall
be the greater of--
`(ii) that proportion of $175,000 which the value of that 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 wherever
situated.
`(i) COORDINATION WITH TREATIES- To the extent required under any
treaty obligation of the United States, the exemption amount allowed
under this paragraph 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 wherever situated.
For purposes of the preceding sentence, property shall not
be
treated as situated in the United States if such property is exempt from the
tax imposed 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 2521 (or a credit
has been allowed under section 2505 as in effect on the day before the
date of the enactment of the Rural America Prosperity Act of 2000) 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 2521 (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) Subsection (a) of section 2107 of such Code is amended by adding
at the end the following new paragraph:
`(3) LIMITATION ON EXEMPTION AMOUNT- Subparagraphs (B) and (C) of
section 2101(b)(3) shall not apply in applying section 2101 for purposes of
this section.'.
(B) Subsection (c) of section 2107 of such Code is amended--
(i) by striking paragraph (1) and by redesignating paragraphs (2) and
(3) as paragraphs (1) and (2), respectively, and
(ii) by striking the second sentence of paragraph (2) (as so
redesignated).
(10) Paragraph (1) of section 6018(a) of such Code is amended by
striking `the applicable exclusion amount in effect under section 2010(c)'
and inserting `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:
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