< Back to H.R. 1674 (105th Congress, 1997–1998)

Text of the Death Tax and Legal Fee Relief Act of 1997

This bill was introduced on May 20, 1997, in a previous session of Congress, but was not enacted. The text of the bill below is as of May 20, 1997 (Introduced).

Source: GPO

HR 1674 IH

105th CONGRESS

1st Session

H. R. 1674

To amend the Internal Revenue Code of 1986 to increase the amount of the unified credit against estate and gift taxes and to increase the amount of estate tax deferral available to owners of small businesses.

IN THE HOUSE OF REPRESENTATIVES

May 20, 1997

Mr. SMITH of Michigan introduced the following bill; which was referred to the Committee on Ways and Means


A BILL

To amend the Internal Revenue Code of 1986 to increase the amount of the unified credit against estate and gift taxes and to increase the amount of estate tax deferral available to owners of small businesses.

    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 ‘Death Tax and Legal Fee Relief Act of 1997’.

SEC. 2. UNIFIED CREDIT INCREASED TO EQUIVALENT OF $1,200,000 EXCLUSION.

    (a) IN GENERAL- Subsection (a) of section 2010 of the Internal Revenue Code of 1986 (relating to unified credit against estate tax) is amended by striking ‘$192,800’ and inserting ‘the applicable credit amount’.

    (b) APPLICABLE CREDIT AMOUNT- Section 2010 of such Code is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection:

    ‘(c) APPLICABLE CREDIT AMOUNT- For purposes of this section--

      ‘(1) IN GENERAL- 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 determined in accordance with the following table:

‘In the case of estates of decedents

--The applicable

dying, and gifts made, during:

--exclusion amount is:

1998

--$750,000

      ‘(2) COST-OF-LIVING ADJUSTMENTS- In the case of any decedent dying, and gifts made, in a calendar year after 1998, the $750,000 amount set forth in paragraph (1) shall be increased by an amount equal to--

        ‘(A) $750,000, multiplied by

        ‘(B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting ‘calendar year 2002’ 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.’

    (c) UNIFIED GIFT TAX CREDIT- Paragraph (1) of section 2505(a) of such Code is amended by striking ‘$192,800’ and inserting ‘the applicable credit amount in effect under section 2010(c) for such calendar year’.

    (d) CONFORMING AMENDMENTS-

      (1) Paragraph (1) of section 6018(a) of such Code is amended by striking ‘$600,000’ and inserting ‘the applicable exclusion amount in effect under section 2010(c) (as adjusted under paragraph (2) thereof) for the calendar year which includes the date of death’.

      (2) Paragraph (2) of section 2001(c) of such Code is amended by striking ‘$21,040,000’ and inserting ‘the amount at which the average tax rate under this section is 55 percent’.

      (3) Subparagraph (A) of section 2102(c)(3) of such Code is amended by striking ‘$192,800’ and inserting ‘the applicable credit amount in effect under section 2010(c) for the calendar year which includes the date of death’.

    (e) EFFECTIVE DATE- The amendments made by this section shall apply to the estates of decedents dying, and gifts made, after December 31, 1997.

SEC. 3. INCREASE IN AMOUNT OF ESTATE TAX DEFERRAL AVAILABLE TO OWNERS OF SMALL BUSINESSES.

    (a) IN GENERAL- Subsection (a) of section 6166 of the Internal Revenue Code of 1986 (relating to extension of time for payment of estate tax where estate consists largely of interest in closely held business) is amended by adding at the end the following new paragraph:

      ‘(4) INTEREST NOT REQUIRED TO BE PAID IF CLOSELY HELD BUSINESS IS SMALL BUSINESS-

        ‘(A) IN GENERAL- In the case of an interest in a closely held business which is a small business at all times on or after the date of the enactment of this paragraph, no interest shall be required to be paid on any installment permitted made within five years of decedent’s death under this section to the extent the amount of such installment is attributable to such interest.

        ‘(B) SMALL BUSINESS- For purposes of subparagraph (A), the term ‘small business’ means any closely held business with aggregate gross assets (determined in accordance with section 1202(d)) which do not exceed $20,000,000.’

    (b) EFFECTIVE DATE- The amendment made by this section shall apply to estates of decedents dying after December 31, 1997.

SEC. 4. UNIFIED CREDIT INCREASED BY UNUSED UNIFIED CREDIT OF PREDECEASED SPOUSE.

    (a) IN GENERAL- Section 2010 of the Internal Revenue Code of 1986 (relating to unified credit against estate tax) is amended by redesignating subsections (b) and (c) as subsections (c) and (d), respectively, and by inserting after subsection (a) the following new subsection:

    ‘(b) INCREASE IN CREDIT FOR UNUSED UNIFIED CREDIT OF PREDECEASED SPOUSE-

      ‘(1) IN GENERAL- The amount of the credit allowable under subsection (a) shall be increased by the aggregate of the amounts of the unused predeceased spouse credit.

      ‘(2) UNUSED PREDECEASED SPOUSE CREDIT- For purposes of paragraph (1)--

        ‘(A) IN GENERAL- The term ‘unused predeceased spouse credit’ means, with respect to any predeceased spouse of the decedent, the amount equal to the excess of--

          ‘(i) the maximum amount allowable under subsection (a) to the estate of such spouse, over

          ‘(ii) the tax imposed by section 2001 reduced by the credits against such tax other than the credit allowed by this section.

        ‘(B) LIMITATION BASED ON CREDIT EQUIVALENT OF VALUE OF PROPERTY PASSING TO DECEDENT FROM PREDECEASED SPOUSE- The amount of the unused predeceased spouse credit with respect to any predeceased spouse shall not exceed the credit equivalent of the aggregate value of property acquired from or passing from (within the meaning of section 1014) the predeceased spouse to the decedent.

        ‘(C) CREDIT EQUIVALENT- For purposes of subparagraph (B), the credit equivalent 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 the tentative tax is to be computed were the aggregate value of the property referred to in subparagraph (B).

      ‘(3) LIMITATION ON AGGREGATE INCREASE WHERE MORE THAN 1 PREDECEASED SPOUSE- In no event may the amount of the increase under paragraph (1) exceed the dollar amount contained in subsection (a).

      ‘(4) PREDECEASED SPOUSE- For purposes of this subsection, the term ‘predeceased spouse’ means, with respect to the decedent, an individual who was married to the decedent on the date of such individual’s death.’

    (b) GIFT TAX- Section 2505 of such Code is amended by redesignating subsections (b) and (c) as subsections (c) and (d), respectively, and by inserting after subsection (a) the following new subsection:

    ‘(b) INCREASE IN CREDIT FOR UNUSED UNIFIED CREDIT OF PREDECEASED SPOUSE- Rules similar to the rules of section 2010(b) shall apply with respect to calendar years beginning after the date of death of any predeceased spouse of the donor.’

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to estates of decedents dying, and gifts made, after December 31, 1997.