HR 601 — Estate Tax Rate Reduction Act

(a) Imposition A tax is hereby imposed on the transfer of the taxable estate of every decedent who is a citizen or resident of the United States. (b) Computation of tax The tax imposed by this section shall be the amount equal to the excess (if any) of— (1) a tentative tax computed under subsection (c) 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 which would have been payable under chapter 12 with respect to gifts made by the decedent after December 31, 1976, if the modifications described in subsection (g) had been applicable at the time of such 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. (c) Rate schedule If the amount with  respect to which the  tentative tax to be  computed is: The tentative tax is: Not over $10,000 18 percent of such amount. Over $10,000 but not over $20,000 $1,800, plus 20 percent of the excess of such amount over $10,000. Over $20,000 but not over $40,000 $3,800, plus 22 percent of the excess of such amount over $20,000. Over $40,000 but not over $60,000 $8,200 plus 24 percent of the excess of such amount over $40,000. Over $60,000 but not over $80,000 $13,000, plus 26 percent of the excess of such amount over $60,000. Over $80,000 but not over $100,000 $18,200, plus 28 percent of the excess of such amount over $80,000. Over $100,000 but not over $150,000 $23,800, plus 30 percent of the excess of such amount over $100,000. Over $150,000 but not over $250,000 $38,800, plus 32 percent of the excess of such amount over $150,000. Over $250,000 but not over $500,000 $70,800, plus 34 percent of the excess of such amount over $250,000. Over $500,000 but not over $750,000 $155,800, plus 37 percent of the excess of such amount over $500,000. Over $750,000 but not over $1,000,000 $248,300, plus 39 percent of the excess of such amount over $750,000. Over $1,000,000 $345,800, plus 40 percent of the excess of such amount over $1,000,000. (d) Adjustment for gift tax paid by spouse For purposes of subsection (b)(2), if— (1) the decedent was the donor of any gift one-half of which was considered under section 2513 as made by the decedent’s spouse, and (2) the amount of such gift is includible in the gross estate of the decedent, any tax payable by the spouse under chapter 12 on such gift (as determined under section 2012(d)) shall be treated as a tax payable with respect to a gift made by the decedent. (e) Coordination of sections 2513 and 2035 If— (1) the decedent’s spouse was the donor of any gift one-half of which was considered under section 2513 as made by the decedent, and (2) the amount of such gift is includible in the gross estate of the decedent’s spouse by reason of section 2035, such gift shall not be included in the adjusted taxable gifts of the decedent for purposes of subsection (b)(1)(B), and the aggregate amount determined under subsection (b)(2) shall be reduced by the amount (if any) determined under subsection (d) which was treated as a tax payable by the decedent’s spouse with respect to such gift. (f) Valuation of gifts (1) In general If the time has expired under section 6501 within which a tax may be assessed under chapter 12 (or under corresponding provisions of prior laws) on— (A) the transfer of property by gift made during a preceding calendar period (as defined in section 2502(b)); or (B) an increase in taxable gifts required under section 2701(d), the value thereof shall, for purposes of computing the tax under this chapter, be the value as finally determined for purposes of chapter 12. (2) Final determination For purposes of paragraph (1), a value shall be treated as finally determined for purposes of chapter 12 if— (A) the value is shown on a return under such ch...

(a) Qualified domestic trust defined For purposes of this section and section 2056(d), the term “qualified domestic trust” means, with respect to any decedent, any trust if— (1) the trust instrument— (A) except as provided in regulations prescribed by the Secretary, requires that at least 1 trustee of the trust be an individual citizen of the United States or a domestic corporation, and (B) provides that no distribution (other than a distribution of income) may be made from the trust unless a trustee who is an individual citizen of the United States or a domestic corporation has the right to withhold from such distribution the tax imposed by this section on such distribution, (2) such trust meets such requirements as the Secretary may by regulations prescribe to ensure the collection of any tax imposed by subsection (b), and (3) an election under this section by the executor of the decedent applies to such trust. (b) Tax treatment of trust (1) Imposition of estate tax There is hereby imposed an estate tax on— (A) any distribution before the date of the death of the surviving spouse from a qualified domestic trust, and (B) the value of the property remaining in a qualified domestic trust on the date of the death of the surviving spouse. (2) Amount of tax (A) In general In the case of any taxable event, the amount of the estate tax imposed by paragraph (1) shall be the amount equal to— (i) the tax which would have been imposed under section 2001 on the estate of the decedent if the taxable estate of the decedent had been increased by the sum of— (I) the amount involved in such taxable event, plus (II) the aggregate amount involved in previous taxable events with respect to qualified domestic trusts of such decedent, reduced by (ii) the tax which would have been imposed under section 2001 on the estate of the decedent if the taxable estate of the decedent had been increased by the amount referred to in clause (i)(II). (B) Tentative tax where tax of decedent not finally determined (i) In general If the tax imposed on the estate of the decedent under section 2001 is not finally determined before the taxable event, the amount of the tax imposed by paragraph (1) on such event shall be determined by using the highest rate of tax in effect under section 2001 as of the date of the decedent’s death. (ii) Refund of excess when tax finally determined If— (I) the amount of the tax determined under clause (i), exceeds (II) the tax determined under subparagraph (A) on the basis of the final determination of the tax imposed by section 2001 on the estate of the decedent,  such excess shall be allowed as a credit or refund (with interest) if claim therefor is filed not later than 1 year after the date of such final determination. (C) Special rule where decedent has more than 1 qualified domestic trust If there is more than 1 qualified domestic trust with respect to any decedent, the amount of the tax imposed by paragraph (1) with respect to such trusts shall be determined by using the highest rate of tax in effect under section 2001 as of the date of the decedent’s death (and the provisions of paragraph (3)(B) shall not apply) unless, pursuant to a designation made by the decedent’s executor, there is 1 person— (i) who is an individual citizen of the United States or a domestic corporation and is responsible for filing all returns of tax imposed under paragraph (1) with respect to such trusts and for paying all tax so imposed, and (ii) who meets such requirements as the Secretary may by regulations prescribe. (3) Certain lifetime distributions exempt from tax (A) Income distributions No tax shall be imposed by paragraph (1)(A) on any distribution of income to the surviving spouse. (B) Hardship exemption No tax shall be imposed by paragraph (1)(A) on any distribution to the surviving spouse on account of hardship. (4) Tax where trust ceases to qualify If any qualified domestic trust ceases to meet the requirements of paragraphs (1) and (2) of ...

(a) Treatment of expatriates A tax computed in accordance with the table contained in section 2001 is hereby imposed on the transfer of the taxable estate, determined as provided in section 2106, of every decedent nonresident not a citizen of the United States if the date of death occurs during a taxable year with respect to which the decedent is subject to tax under section 877(b). (b) Gross estate For purposes of the tax imposed by subsection (a), the value of the gross estate of every decedent to whom subsection (a) applies shall be determined as provided in section 2103, except that— (1) if such decedent owned (within the meaning of section 958(a)) at the time of his death 10 percent or more of the total combined voting power of all classes of stock entitled to vote of a foreign corporation, and (2) if such decedent owned (within the meaning of section 958(a)), or is considered to have owned (by applying the ownership rules of section 958(b)), at the time of his death, more than 50 percent of— (A) the total combined voting power of all classes of stock entitled to vote of such corporation, or (B) the total value of the stock of such corporation, then that proportion of the fair market value of the stock of such foreign corporation owned (within the meaning of section 958(a)) by such decedent at the time of his death, which the fair market value of any assets owned by such foreign corporation and situated in the United States, at the time of his death, bears to the total fair market value of all assets owned by such foreign corporation at the time of his death, shall be included in the gross estate of such decedent. For purposes of the preceding sentence, a decedent shall be treated as owning stock of a foreign corporation at the time of his death if, at the time of a transfer, by trust or otherwise, within the meaning of sections 2035 to 2038, inclusive, he owned such stock. (c) Credits (1) Unified credit (A) In general A credit of $13,000 shall be allowed against the tax imposed by subsection (a). (B) Limitation based on amount of tax The credit allowed under this paragraph shall not exceed the amount of the tax imposed by subsection (a). (2) Credit for foreign death taxes (A) In general The tax imposed by subsection (a) shall be credited with the amount of any estate, inheritance, legacy, or succession taxes actually paid to any foreign country in respect of any property which is included in the gross estate solely by reason of subsection (b). (B) Limitation on credit The credit allowed by subparagraph (A) for such taxes paid to a foreign country shall not exceed the lesser of— (i) the amount which bears the same ratio to the amount of such taxes actually paid to such foreign country as the value of the property subjected to such taxes by such foreign country and included in the gross estate solely by reason of subsection (b) bears to the value of all property subjected to such taxes by such foreign country, or (ii) such property’s proportionate share of the excess of— (I) the tax imposed by subsection (a), over (II) the tax which would be imposed by section 2101 but for this section. (C) Proportionate share In the case of property which is included in the gross estate solely by reason of subsection (b), such property’s proportionate share is the percentage which the value of such property bears to the total value of all property included in the gross estate solely by reason of subsection (b). (3) Other credits The tax imposed by subsection (a) shall be credited with the amounts determined in accordance with subsections (a) and (b) of section 2102. For purposes of subsection (a) of section 2102, sections 2012 and 2013 shall be applied as if the credit allowed under paragraph (1) were allowed under section 2010. (d) Burden of proof If the Secretary establishes that it is reasonable to believe that an individual’s loss of United States citizenship would, but for this section, result in a substantial reduction in the est...

(a) In general Unless the executor elects not to have this section apply, in applying sections 2001 and 2101 to the estate of a qualified decedent, the rate schedule set forth in subsection (c) shall be deemed to be the rate schedule set forth in section 2001(c). (b) Qualified decedent For purposes of this section, the term “qualified decedent” means— (1) any citizen or resident of the United States dying while in active service of the Armed Forces of the United States, if such decedent— (A) was killed in action while serving in a combat zone, as determined under section 112(c), or (B) died as a result of wounds, disease, or injury suffered while serving in a combat zone (as determined under section 112(c)), and while in the line of duty, by reason of a hazard to which such decedent was subjected as an incident of such service, (2) any specified terrorist victim (as defined in section 692(d)(4)), and (3) any astronaut whose death occurs in the line of duty. (c) Rate schedule If the amount with respect to which the tentative tax to be computed is: The tentative tax is: Not over $150,000 1 percent of the amount by which such amount exceeds $100,000. Over $150,000 but not over $200,000 $500 plus 2 percent of the excess over $150,000. Over $200,000 but not over $300,000 $1,500 plus 3 percent of the excess over $200,000. Over $300,000 but not over $500,000 $4,500 plus 4 percent of the excess over $300,000. Over $500,000 but not over $700,000 $12,500 plus 5 percent of the excess over $500,000. Over $700,000 but not over $900,000 $22,500 plus 6 percent of the excess over $700,000. Over $900,000 but not over $1,100,000 $34,500 plus 7 percent of the excess over $900,000. Over $1,100,000 but not over $1,600,000 $48,500 plus 8 percent of the excess over $1,100,000. Over $1,600,000 but not over $2,100,000 $88,500 plus 9 percent of the excess over $1,600,000. Over $2,100,000 but not over $2,600,000 $133,500 plus 10 percent of the excess over $2,100,000. Over $2,600,000 but not over $3,100,000 $183,500 plus 11 percent of the excess over $2,600,000. Over $3,100,000 but not over $3,600,000 $238,500 plus 12 percent of the excess over $3,100,000. Over $3,600,000 but not over $4,100,000 $298,500 plus 13 percent of the excess over $3,600,000. Over $4,100,000 but not over $5,100,000 $363,500 plus 14 percent of the excess over $4,100,000. Over $5,100,000 but not over $6,100,000 $503,500 plus 15 percent of the excess over $5,100,000. Over $6,100,000 but not over $7,100,000 $653,500 plus 16 percent of the excess over $6,100,000. Over $7,100,000 but not over $8,100,000 $813,500 plus 17 percent of the excess over $7,100,000. Over $8,100,000 but not over $9,100,000 $983,500 plus 18 percent of the excess over $8,100,000. Over $9,100,000 but not over $10,100,000 $1,163,500 plus 19 percent of the excess over $9,100,000. Over $10,100,000 $1,353,500 plus 20 percent of the excess over $10,100,000. (d) Determination of unified credit In the case of an estate to which this section applies, subsection (a) shall not apply in determining the credit under section 2010.

(a) General rule For purposes of this chapter, the term “applicable rate” means, with respect to any generation-skipping transfer, the product of— (1) the maximum Federal estate tax rate, and (2) the inclusion ratio with respect to the transfer. (b) Maximum Federal estate tax rate For purposes of subsection (a), the term “maximum Federal estate tax rate” means the maximum rate imposed by section 2001 on the estates of decedents dying at the time of the taxable distribution, taxable termination, or direct skip, as the case may be.

(a) In general If, during any calendar year, any United States citizen or resident receives any covered gift or bequest, there is hereby imposed a tax equal to the product of— (1) the highest rate of tax specified in the table contained in section 2001(c) as in effect on the date of such receipt, and (2) the value of such covered gift or bequest. (b) Tax to be paid by recipient The tax imposed by subsection (a) on any covered gift or bequest shall be paid by the person receiving such gift or bequest. (c) Exception for certain gifts Subsection (a) shall apply only to the extent that the value of covered gifts and bequests received by any person during the calendar year exceeds the dollar amount in effect under section 2503(b) for such calendar year. (d) Tax reduced by foreign gift or estate tax The tax imposed by subsection (a) on any covered gift or bequest shall be reduced by the amount of any gift or estate tax paid to a foreign country with respect to such covered gift or bequest. (e) Covered gift or bequest (1) In general For purposes of this chapter, the term “covered gift or bequest” means— (A) any property acquired by gift directly or indirectly from an individual who, at the time of such acquisition, is a covered expatriate, and (B) any property acquired directly or indirectly by reason of the death of an individual who, immediately before such death, was a covered expatriate. (2) Exceptions for transfers otherwise subject to estate or gift tax Such term shall not include— (A) any property shown on a timely filed return of tax imposed by chapter 12 which is a taxable gift by the covered expatriate, and (B) any property included in the gross estate of the covered expatriate for purposes of chapter 11 and shown on a timely filed return of tax imposed by chapter 11 of the estate of the covered expatriate. (3) Exceptions for transfers to spouse or charity Such term shall not include any property with respect to which a deduction would be allowed under section 2055, 2056, 2522, or 2523, whichever is appropriate, if the decedent or donor were a United States person. (4) Transfers in trust (A) Domestic trusts In the case of a covered gift or bequest made to a domestic trust— (i) subsection (a) shall apply in the same manner as if such trust were a United States citizen, and (ii) the tax imposed by subsection (a) on such gift or bequest shall be paid by such trust. (B) Foreign trusts (i) In general In the case of a covered gift or bequest made to a foreign trust, subsection (a) shall apply to any distribution attributable to such gift or bequest from such trust (whether from income or corpus) to a United States citizen or resident in the same manner as if such distribution were a covered gift or bequest. (ii) Deduction for tax paid by recipient There shall be allowed as a deduction under section 164 the amount of tax imposed by this section which is paid or accrued by a United States citizen or resident by reason of a distribution from a foreign trust, but only to the extent such tax is imposed on the portion of such distribution which is included in the gross income of such citizen or resident. (iii) Election to be treated as domestic trust Solely for purposes of this section, a foreign trust may elect to be treated as a domestic trust. Such an election may be revoked with the consent of the Secretary. (f) Covered expatriate For purposes of this section, the term “covered expatriate” has the meaning given to such term by section 877A(g)(1).

(a) General rule If any amount of tax imposed by this title (whether required to be shown on a return, or to be paid by stamp or by some other method) is not paid on or before the last date prescribed for payment, interest on such amount at the underpayment rate established under section 6621 shall be paid for the period from such last date to the date paid. (b) Last date prescribed for payment For purposes of this section, the last date prescribed for payment of the tax shall be determined under chapter 62 with the application of the following rules: (1) Extensions of time disregarded The last date prescribed for payment shall be determined without regard to any extension of time for payment or any installment agreement entered into under section 6159. (2) Jeopardy The last date prescribed for payment shall be determined without regard to any notice and demand for payment issued, by reason of jeopardy (as provided in chapter 70), prior to the last date otherwise prescribed for such payment. (3) Accumulated earnings tax In the case of the tax imposed by section 531 for any taxable year, the last date prescribed for payment shall be deemed to be the due date (without regard to extensions) for the return of tax imposed by subtitle A for such taxable year. (4) Last date for payment not otherwise prescribed In the case of taxes payable by stamp and in all other cases in which the last date for payment is not otherwise prescribed, the last date for payment shall be deemed to be the date the liability for tax arises (and in no event shall be later than the date notice and demand for the tax is made by the Secretary). (c) Suspension of interest in certain income, estate, gift, and certain excise tax cases In the case of a deficiency as defined in section 6211 (relating to income, estate, gift, and certain excise taxes), if a waiver of restrictions under section 6213(d) on the assessment of such deficiency has been filed, and if notice and demand by the Secretary for payment of such deficiency is not made within 30 days after the filing of such waiver, interest shall not be imposed on such deficiency for the period beginning immediately after such 30th day and ending with the date of notice and demand and interest shall not be imposed during such period on any interest with respect to such deficiency for any prior period. (d) Income tax reduced by carryback or adjustment for certain unused deductions (1) Net operating loss or capital loss carryback If the amount of any tax imposed by subtitle A is reduced by reason of a carryback of a net operating loss or net capital loss, such reduction in tax shall not affect the computation of interest under this section for the period ending with the filing date for the taxable year in which the net operating loss or net capital loss arises. (2) Foreign tax credit carrybacks If any credit allowed for any taxable year is increased by reason of a carryback of tax paid or accrued to foreign countries or possessions of the United States, such increase shall not affect the computation of interest under this section for the period ending with the filing date for the taxable year in which such taxes were in fact paid or accrued, or, with respect to any portion of such credit carryback from a taxable year attributable to a net operating loss carryback or a capital loss carryback from a subsequent taxable year, such increase shall not affect the computation of interest under this section for the period ending with the filing date for such subsequent taxable year. (3) Certain credit carrybacks (A) In general If any credit allowed for any taxable year is increased by reason of a credit carryback, such increase shall not affect the computation of interest under this section for the period ending with the filing date for the taxable year in which the credit carryback arises, or, with respect to any portion of a credit carryback from a taxable year attributable to a net operating loss carryback, capital los...