HR 4042 IHCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to reduce the estate tax for periods before its termination in 2010 by increasing the unified credit, lowering the maximum estate tax rate, restoring the exclusion for family-owned business interests, excluding the value of the decedent's principal residence, and for other purposes.CommentsClose CommentsPermalink

November 1, 2007

Mr. MCNERNEY (for himself, Mr. SPACE, and Mr. PAUL) introduced the following bill; which was referred to the Committee on Ways and MeansCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to reduce the estate tax for periods before its termination in 2010 by increasing the unified credit, lowering the maximum estate tax rate, restoring the exclusion for family-owned business interests, excluding the value of the decedent's principal residence, and for other purposes.CommentsClose CommentsPermalink

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE.

(a) In General- This Act may be cited as the `Family Farm, Small Business, and Home Tax Relief Act'.CommentsClose CommentsPermalink





(b) Amendment of 1986 Code- Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.CommentsClose CommentsPermalink

SEC. 2. ACCELERATION OF INCREASE IN UNIFIED CREDIT.

(a) In General- Subsection (c) of section 2010 (relating to unified credit against tax) is amended to read as follows:CommentsClose CommentsPermalink





`(c) Applicable Credit Amount-CommentsClose CommentsPermalink





`(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. For purposes of the preceding sentence, the applicable exclusion amount is $3,500,000.CommentsClose CommentsPermalink





`(2) COST-OF-LIVING ADJUSTMENT- In the case of any decedent dying in a calendar year after 2008, the $3,500,000 amount in paragraph (1) shall be increased by an amount equal to--CommentsClose CommentsPermalink





`(A) such dollar amount, multiplied byCommentsClose CommentsPermalink





`(B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting `calendar year 2006' for `calendar year 1992' in subparagraph (B) thereof.CommentsClose CommentsPermalink





If any amount as adjusted under the preceding sentence is not a multiple of $1,000, such amount shall be rounded to the nearest multiple of $1,000.'.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall apply to estates of decedents dying, and gifts made, after December 31, 2007.CommentsClose CommentsPermalink

SEC. 3. ACCELERATION OF REDUCTION IN MAXIMUM ESTATE TAX RATE.

(a) Maximum Estate Tax Rate-CommentsClose CommentsPermalink





(1) The table contained in paragraph (1) of section 2001(c) is amended by striking the 2 highest brackets.CommentsClose CommentsPermalink





(2) Section 2001(c), as amended by paragraph (1), is amended by striking `(1) IN GENERAL- ' and by striking paragraph (2).CommentsClose CommentsPermalink





(b) Effective Date- The amendments made by this section shall apply to estates of decedents dying, and gifts made, after December 31, 2007.CommentsClose CommentsPermalink

SEC. 4. RESTORATION OF, AND INCREASE IN, DEDUCTION FOR FAMILY-OWNED BUSINESS INTERESTS.

(a) Restoration- Subsection (j) of section 2057 (relating to termination) is amended to read as follows:CommentsClose CommentsPermalink





`(j) Application of Section- This section--CommentsClose CommentsPermalink





`(1) shall not apply to estates of decedents dying after December 31, 2003, and before January 1, 2008, butCommentsClose CommentsPermalink





`(2) shall apply to estates of decedents dying after December 31, 2007.'.CommentsClose CommentsPermalink





(b) Increase-CommentsClose CommentsPermalink





(1) IN GENERAL- Subsection (a) of section 2057 is amended--CommentsClose CommentsPermalink





(A) by striking `$675,000' in paragraph (2) and inserting `$8,000,000', andCommentsClose CommentsPermalink





(B) by striking paragraph (3).CommentsClose CommentsPermalink





(2) COST-OF-LIVING ADJUSTMENT- Subsection (a) of section 2057 is amended by adding at the end the following new paragraph:CommentsClose CommentsPermalink





`(3) COST-OF-LIVING ADJUSTMENT- In the case of any decedent dying in a calendar year after 2008, the $8,000,000 amount in paragraph (2) shall be increased by an amount equal to--CommentsClose CommentsPermalink





`(A) such dollar amount, multiplied byCommentsClose CommentsPermalink





`(B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting `calendar year 2006' for `calendar year 1992' in subparagraph (B) thereof.CommentsClose CommentsPermalink





If any amount as adjusted under the preceding sentence is not a multiple of $10,000, such amount shall be rounded to the nearest multiple of $10,000.'.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to estates of decedents dying after December 31, 2007.CommentsClose CommentsPermalink

SEC. 5. ACCELERATION OF REPEAL OF TAX ON GENERATION-SKIPPING TRANSFERS.

Section 2664 (relating to termination) is amended by striking `December 31, 2009' and inserting `December 31, 2007'.CommentsClose CommentsPermalink

SEC. 6. EXCLUSION FROM GROSS ESTATE OF VALUE OF PRINCIPAL RESIDENCE.

(a) In General- Subchapter A of chapter 11 is amended by adding at the end the following new section:CommentsClose CommentsPermalink

`SEC. 2059. PRINCIPAL RESIDENCE.

`(a) In General- For purposes of the tax imposed by section 2001, in the case of a decedent who was (at the date of the decedent's death) a citizen or resident of the United States, the value of the taxable estate shall be determined by deducting from the value of the gross estate the adjusted value of any residence if--CommentsClose CommentsPermalink





`(1) such residence is included in determining the value of the gross estate,CommentsClose CommentsPermalink





`(2) such residence is located in the United States, andCommentsClose CommentsPermalink





`(3) during the 8-year period ending on the date of the decedent's death, there have been periods aggregating 5 years during which such residence was owned by the decedent or a member of the decedent's family and used by the decedent or such a member as their principal residence (within the meaning of section 121).CommentsClose CommentsPermalink





`(b) Limitation-CommentsClose CommentsPermalink





`(1) IN GENERAL- The deduction allowed by this section shall not exceed $2,000,000.CommentsClose CommentsPermalink





`(2) COST-OF-LIVING ADJUSTMENT- In the case of any decedent dying in a calendar year after 2008, the $2,000,000 amount in paragraph (1) shall be increased by an amount equal to--CommentsClose CommentsPermalink





`(A) such dollar amount, multiplied byCommentsClose CommentsPermalink





`(B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting `calendar year 2006' for `calendar year 1992' in subparagraph (B) thereof.CommentsClose CommentsPermalink





If any amount as adjusted under the preceding sentence is not a multiple of $1,000, such amount shall be rounded to the nearest multiple of $1,000.CommentsClose CommentsPermalink





`(c) Adjusted Value- For purposes of this section, the adjusted value of property is the value of such property for purposes of this chapter, reduced by amounts allowable as a deduction in respect to such property under paragraph (4) of section 2053(a).CommentsClose CommentsPermalink





`(d) Qualified Heir; Member of the Family- For purposes of this section, the terms `qualified heir' and `member of the family' have the respective meanings given to such terms by section 2032A(e).'.CommentsClose CommentsPermalink





(b) Clerical Amendment- The table of sections for subchapter A of chapter 11 is amended by adding at the end the following new item:CommentsClose CommentsPermalink





`Sec. 2059. Principal residence.'.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to estates of decedents dying after December 31, 2007.CommentsClose CommentsPermalink