[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 3626 Introduced in Senate (IS)]








109th CONGRESS
  2d Session
                                S. 3626

To amend the Internal Revenue Code of 1986 to provide estate tax relief 
                  and reform, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 29, 2006

 Ms. Landrieu introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to provide estate tax relief 
                  and reform, 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 ``Estate Tax Relief and Reform Act of 
2006''.

SEC. 2. ESTATE TAX RELIEF AND REFORM AFTER 2009.

    (a) Exclusion Equivalent of Unified Credit Equal to $5,000,000.--
Subsection (c) of section 2010 of the Internal Revenue Code of 1986 
(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 section 2001(c) if the amount 
        with respect to which such tentative tax is to be computed were 
        equal to the applicable exclusion amount.
            ``(2) Applicable exclusion amount.--
                    ``(A) In general.--For purposes of this subsection, 
                the applicable exclusion amount is $5,000,000, reduced 
                (but not below zero) by an amount equal to 5 percent of 
                so much of the amount with respect to which the 
                tentative tax is to be computed as exceeds 
                $100,000,000.
                    ``(B) Inflation adjustment.--In the case of any 
                decedent dying in a calendar year after 2010, the 
                $5,000,000 amount in subparagraph (A) 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 
                        2009' for `calendar year 1992' in subparagraph 
                        (B) thereof.
                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.''.
    (b) Flat Estate and Gift Tax Rates.--Subsection (c) of section 2001 
of the Internal Revenue Code of 1986 (relating to imposition and rate 
of tax) is amended to read as follows:
    ``(c) Tentative Tax.--The tentative tax is 35 percent of the amount 
with respect to which the tentative tax is to be computed.''.
    (c) Increase in Aggregate Reduction in Fair Market Value Allowed 
Under Special Use Valuation.--Section 2032A(a) of the Internal Revenue 
Code of 1986 (relating to value based on use under which property 
qualifies) is amended--
            (1) by striking ``$750,000'' each place it appears and 
        inserting ``$5,000,000'',
            (2) by striking ``after 1998'' in paragraph (3) and 
        inserting ``after 2010'', and
            (3) by striking ``1997'' in paragraph (3)(B) and inserting 
        ``2009''.
    (d) Tax Deduction for Family-Owned Business Interests.--
            (1) In general.--Section 2057(a) of the Internal Revenue 
        Code of 1986 (relating to deduction for family-owned business 
        interests) is amended--
                    (A) by striking ``$675,000'' in paragraph (2) and 
                inserting ``$2,500,000'', and
                    (B) by striking paragraph (3).
            (2) Permanent deduction.--Section 2057 of such Code is 
        amended by striking subsection (j).
    (e) 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 the Internal 
                Revenue Code of 1986 (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 at 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) is amended by adding at the 
        end the following new flush sentence:
``For purposes of applying paragraph (2) for any calendar year, the 
rates of tax in effect under section 2502(a)(2) 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.''.
    (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 to title v of egtrra.--Section 901 
        of the Economic Growth and Tax Relief Reconciliation Act of 
        2001 shall not apply to title V of such Act.
            (3) Repeal of deadwood.--
                    (A) Sections 2011 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 subchapter A of 
                chapter 13 of such Code is amended by striking the item 
                relating to section 2604.
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