Capital Gains and Estate Tax Relief Act of 2007 - Makes permanent the reduction in capital gains tax rates (from 20 to 15%) enacted by the Jobs and Growth Tax Relief and Reconciliation Act of 2003.
Amends the Internal Revenue Code to: (1) restore the unified credit against gift tax liability; (2) provide for annual increases in the estate tax exclusion amount between 2010 and 2015 and establish a permanent exclusion amount of $5 million for 2015 and thereafter; (3) provide for an inflation adjustment to the estate tax exclusion amount after 2015; (4) reduce estate tax rate brackets; and (5) allow a surviving spouse to use the unused unified estate tax credit of a deceased spouse.
[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3170 Introduced in House (IH)]
110th CONGRESS
1st Session
H. R. 3170
To make permanent the individual income tax rates for capital gains,
and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 24, 2007
Mr. Mitchell (for himself and Mr. Shays) introduced the following bill;
which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To make permanent the individual income tax rates for capital gains,
and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Capital Gains and Estate Tax Relief
Act of 2007''.
SEC. 2. INDIVIDUAL INCOME TAX RATES FOR CAPITAL GAINS MADE PERMANENT.
Section 303 of the Jobs and Growth Tax Relief Reconciliation Act of
2003 is amended by striking ``this title'' and inserting ``section
302''.
SEC. 3. REFORM AND EXTENSION OF ESTATE TAX AFTER 2009.
(a) Restoration of Unified Credit Against Gift Tax.--Paragraph (1)
of section 2505(a) of the Internal Revenue Code of 1986 (relating to
general rule for unified credit against gift tax), after the
application of subsection (g), is amended by striking ``(determined as
if the applicable exclusion amount were $1,000,000)''.
(b) Exclusion Equivalent of Unified Credit Increased to
$5,000,000.--Subsection (c) of section 2010 of such Code (relating to
unified credit against estate tax) is amended to read as follows:
``(c) Applicable Credit Amount.--
``(1) In general.--For purposes of this section, the
applicable credit amount is 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 the applicable exclusion
amount.
``(2) Applicable exclusion amount.--
``(A) In general.--For purposes of this subsection,
the applicable exclusion amount is as follows:
``(i) For calendar year 2010, $3,750,000.
``(ii) For calendar year 2011, $4,000,000.
``(iii) For calendar year 2012, $4,250,000.
``(iv) For calendar year 2013, $4,500,000.
``(v) For calendar year 2014, $4,750,000.
``(vi) For calendar year 2015 and
thereafter, $5,000,000.
``(B) Inflation adjustment.--In the case of any
decedent dying in a calendar year after 2015, the
$5,000,000 amount in subparagraph (A)(vi) shall be
increased by an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for such
calendar year by substituting `calendar year
2014' for `calendar year 1992' in subparagraph
(B) thereof.
If any amount as adjusted under the preceding
sentence is not a multiple of $50,000, such
amount shall be rounded to the nearest multiple
of $50,000.''.
(c) Rate Schedule.--
(1) In general.--Subsection (c) of section 2001 of such
Code (relating to rate schedule) is amended to read as follows:
``(c) Rate Schedule.--
``(1) In general.--The tentative tax is equal to the sum
of--
``(A) the product of the rate specified in section
1(h)(1)(C) in effect on the date of the decedent's
death multiplied by so much of the sum described in
subsection (b)(1) as does not exceed $25,000,000, and
``(B) twice the rate specified in section
1(h)(1)(C) in effect on the date of the decedent's
death of so much of the sum described in subsection
(b)(1) as exceeds $25,000,000.
``(2) Inflation adjustment.--In the case of any decedent
dying in a calendar year after 2015, each $25,000,000 amount in
subparagraphs (A) and (B) of paragraph (1) shall be increased
by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for such calendar year by
substituting `calendar year 2014' for `calendar year
1992' in subparagraph (B) thereof.
If any amount as adjusted under the preceding sentence
is not a multiple of $50,000, such amount shall be
rounded to the nearest multiple of $50,000.''.
(2) Conforming amendment.--Section 2502(a) of such Code
(relating to computation of tax), after the application of
subsection (g), is amended by adding at the end the following
flush sentence:
``In computing the tentative tax under section 2001(c) for purposes of
this subsection, `the last day of the calendar year in which the gift
was made' shall be substituted for `the date of the decedent's death'
each place it appears in such section.''.
(d) Modifications of Estate and Gift Taxes To Reflect Differences
in Unified Credit Resulting From Different Tax Rates.--
(1) Estate tax.--
(A) In general.--Section 2001(b)(2) of such Code
(relating to computation of tax) is amended by striking
``if the provisions of subsection (c) (as in effect at
the decedent's death)'' and inserting ``if the
modifications described in subsection (g)''.
(B) Modifications.--Section 2001 of such Code is
amended by adding at the end the following new
subsection:
``(g) Modifications to Gift Tax Payable To Reflect Different Tax
Rates.--For purposes of applying subsection (b)(2) with respect to 1 or
more gifts, the rates of tax under subsection (c) in effect on the date
of the decedent's death shall, in lieu of the rates of tax in effect at
the time of such gifts, be used both to compute--
``(1) the tax imposed by chapter 12 with respect to such
gifts, and
``(2) the credit allowed against such tax under section
2505, including in computing--
``(A) the applicable credit amount under section
2505(a)(1), and
``(B) the sum of the amounts allowed as a credit
for all preceding periods under section 2505(a)(2).
For purposes of paragraph (2)(A), the applicable credit amount
for any calendar year before 1998 is the amount which would be
determined under section 2010(c) if the applicable exclusion
amount were the dollar amount under section 6018(a)(1) for such
year.''.
(2) Gift tax.--Section 2505(a) of such Code (relating to
unified credit against gift tax), after the application of
subsection (g), is amended by adding at the end the following
new flush sentence:
``For purposes of applying paragraph (2) for any calendar year, the
rate schedule under section 2001(c) used in computing the applicable
credit amount under paragraph (1) for such calendar year shall, in lieu
of the rates of tax in effect for preceding calendar periods, be used
in determining the amounts allowable as a credit under this section for
all preceding calendar periods.''.
(e) Repeal of Deduction for State Death Taxes.--
(1) In general.--Section 2058 of such Code (relating to
State death taxes) is amended by adding at the end the
following:
``(c) Termination.--This section shall not apply to the estates of
decedents dying after December 31, 2009.''.
(2) Conforming amendment.--Section 2106(a)(4) of such Code
is amended by adding at the end the following new sentence:
``This paragraph shall not apply to the estates of decedents
dying after December 31, 2009.''.
(f) Effective Date.--The amendments made by this section shall
apply to estates of decedents dying, generation-skipping transfers, and
gifts made, after December 31, 2009.
(g) Additional Modifications to Estate Tax.--
(1) In general.--The following provisions of the Economic
Growth and Tax Relief Reconciliation Act of 2001, and the
amendments made by such provisions, are hereby repealed:
(A) Subtitles A and E of title V.
(B) Subsection (d), and so much of subsection
(f)(3) as relates to subsection (d), of section 511.
(C) Paragraph (2) of subsection (b), and paragraph
(2) of subsection (e), of section 521.
The Internal Revenue Code of 1986 shall be applied as if such
provisions and amendments had never been enacted.
(2) Sunset not to apply.--Section 901 of the Economic
Growth and Tax Relief Reconciliation Act of 2001 shall not
apply to title V (other than subtitles F, G, and H thereof) of
such Act.
(3) Repeal of deadwood.--
(A) Sections 2011, 2057, and 2604 of the Internal
Revenue Code of 1986 are hereby repealed.
(B) The table of sections for part II of subchapter
A of chapter 11 of such Code is amended by striking the
item relating to section 2011.
(C) 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.
(D) The table of sections for subchapter A of
chapter 13 of such Code is amended by striking the item
relating to section 2604.
SEC. 4. UNIFIED CREDIT INCREASED BY UNUSED UNIFIED CREDIT OF DECEASED
SPOUSE.
(a) In General.--Subsection (c) of section 2010 of the Internal
Revenue Code of 1986 (defining applicable credit amount), as amended by
section 3(b), is amended by striking paragraph (2) and inserting the
following new paragraphs:
``(2) Applicable exclusion amount.--For purposes of this
subsection, the applicable exclusion amount is the sum of--
``(A) the basic exclusion amount, and
``(B) in the case of a surviving spouse, the
aggregate deceased spousal unused exclusion amount.
``(3) Basic exclusion amount.--
``(A) In general.--For purposes of this subsection,
the basic exclusion amount is as follows:
``(i) For calendar year 2010, $3,750,000.
``(ii) For calendar year 2011, $4,000,000.
``(iii) For calendar year 2012, $4,250,000.
``(iv) For calendar year 2013, $4,500,000.
``(v) For calendar year 2014, $4,750,000.
``(vi) For calendar year 2015 and
thereafter, $5,000,000.
``(B) Inflation adjustment.--In the case of any
decedent dying in a calendar year after 2015, the
$5,000,000 amount in subparagraph (A)(vi) shall be
increased by an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for such
calendar year by substituting `calendar year
2014' for `calendar year 1992' in subparagraph
(B) thereof.
If any amount as adjusted under the preceding
sentence is not a multiple of $50,000, such
amount shall be rounded to the nearest multiple
of $50,000.
``(4) Aggregate deceased spousal unused exclusion amount.--
For purposes of this subsection, the term `aggregate deceased
spousal unused exclusion amount' means the lesser of--
``(A) the basic exclusion amount, or
``(B) the sum of the deceased spousal unused
exclusion amounts of the surviving spouse.
``(5) Deceased spousal unused exclusion amount.--For
purposes of this subsection, the term `deceased spousal unused
exclusion amount' means, with respect to the surviving spouse
of any deceased spouse dying after December 31, 2009, the
excess (if any) of--
``(A) the applicable exclusion amount of the
deceased spouse, over
``(B) the amount with respect to which the
tentative tax is determined under section 2001(b)(1) on
the estate of such deceased spouse.
``(6) Special rules.--
``(A) Election required.--A deceased spousal unused
exclusion amount may not be taken into account by a
surviving spouse under paragraph (5) unless the
executor of the estate of the deceased spouse files an
estate tax return on which such amount is computed and
makes an election on such return that such amount may
be so taken into account. Such election, once made,
shall be irrevocable. No election may be made under
this subparagraph if such return is filed after the
time prescribed by law (including extensions) for
filing such return.
``(B) Examination of prior returns after expiration
of period of limitations with respect to deceased
spousal unused exclusion amount.--Notwithstanding any
period of limitation in section 6501, after the time
has expired under section 6501 within which a tax may
be assessed under chapter 11 or 12 with respect to a
deceased spousal unused exclusion amount, the Secretary
may examine a return of the deceased spouse to make
determinations with respect to such amount for purposes
of carrying out this subsection.
``(7) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
this subsection.''.
(b) Conforming Amendments.--
(1) Paragraph (1) of section 2505(a), as amended by section
3, is amended to read as follows:
``(1) the applicable credit amount under section 2010(c)
which would apply if the donor died as of the end of the
calendar year, reduced by''.
(2) Section 2631(c) is amended by striking ``the applicable
exclusion amount'' and inserting ``the basic exclusion
amount''.
(3) Section 6018(a)(1), after the application of section
101(g), is amended by striking ``applicable exclusion amount''
and inserting ``basic exclusion amount''.
(c) Effective Date.--The amendments made by this section shall
apply to estates of decedents dying, generation-skipping transfers, and
gifts made, after December 31, 2009.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
Sponsor introductory remarks on measure. (CR E1618)
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