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S. 3773 (111th): Tax Hike Prevention Act of 2010


The text of the bill below is as of Sep 14, 2010 (Placed on Calendar in the Senate). The bill was not enacted into law.


II

Calendar No. 562

111th CONGRESS

2d Session

S. 3773

IN THE SENATE OF THE UNITED STATES

September 13, 2010

(for himself, Mr. Grassley, Mr. Kyl, Mr. McCain, Mr. Cochran, Mr. Graham, Mr. Roberts, Mr. Cornyn, Mr. Inhofe, Mr. Ensign, Mr. Isakson, Mr. Brownback, Mr. Enzi, Mr. Crapo, Mr. Burr, Mr. Vitter, Mr. Wicker, Mr. Chambliss, Mr. Bond, Mrs. Hutchison, Mr. Hatch, Mr. Bennett, Mr. Risch, and Mr. Shelby) introduced the following bill; which was read the first time

September 14, 2010

Read the second time and placed on the calendar

A BILL

To permanently extend the 2001 and 2003 tax relief provisions and to provide permanent AMT relief and estate tax relief, and for other purposes.

1.

Short title

This Act may be cited as the Tax Hike Prevention Act of 2010.

I

Permanent tax relief

101.

2001 tax relief made permanent

Title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 is repealed.

102.

2003 tax relief made permanent

Section 303 of the Jobs and Growth Tax Relief Reconciliation Act of 2003 is repealed.

103.

Technical and conforming amendments

The Secretary of the Treasury or the Secretary’s delegate shall not later than 90 days after the date of the enactment of this Act, submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a draft of any technical and conforming changes in the Internal Revenue Code of 1986 which are necessary to reflect throughout such Code the purposes of the provisions of, and amendments made by, this Act.

II

Permanent individual AMT relief

201.

Permanent individual AMT relief

(a)

Modification of alternative minimum tax exemption amount

(1)

In general

Paragraph (1) of section 55(d) of the Internal Revenue Code of 1986 (relating to exemption amount) is amended to read as follows:

(1)

Exemption amount for taxpayers other than corporations

In the case of a taxpayer other than a corporation, the term exemption amount means—

(A)

the dollar amount for taxable years beginning in the calendar year as specified in the table contained in paragraph (4)(A) in the case of—

(i)

a joint return, or

(ii)

a surviving spouse,

(B)

the dollar amount for taxable years beginning in the calendar year as specified in the table contained in paragraph (4)(B) in the case of an individual who—

(i)

is not a married individual, and

(ii)

is not a surviving spouse,

(C)

50 percent of the dollar amount applicable under paragraph (1)(A) in the case of a married individual who files a separate return, and

(D)

$22,500 in the case of an estate or trust.

For purposes of this paragraph, the term surviving spouse has the meaning given to such term by section 2(a), and marital status shall be determined under section 7703.

.

(2)

Specified exemption amounts

Section 55(d) of such Code is amended by adding at the end the following new paragraph:

(4)

Specified exemption amounts

(A)

Taxpayers described in paragraph (1)(A)

For purposes of paragraph (1))(A)—

For taxable years beginning in—The exemption amount is:
2010$72,450
2011$74,450
2012$78,250
2013$81,450
2014$85,050
2015$88,650
2016$92,650
2017$96,550
2018$100,950
2019$105,150
2020$109,950.
(B)

Taxpayers described in paragraph (1)(B)

For purposes of paragraph (1))(B)—

For taxable years beginning in—The exemption amount is:
2010$47,450
2011$48,450
2012$50,350
2013$51,950
2014$53,750
2015$55,550
2016$57,550
2017$59,500
2018$61,700
2019$63,800
2020$66,200.

.

(b)

Alternative minimum tax relief for nonrefundable credits

(1)

In general

Subsection (a) of section 26 of the Internal Revenue Code of 1986 is amended to read as follows:

(a)

Limitation based on amount of tax

The aggregate amount of credits allowed by this subpart for the taxable year shall not exceed the sum of—

(1)

the taxpayer's regular tax liability for the taxable year reduced by the foreign tax credit allowable under section 27(a), and

(2)

the tax imposed by section 55(a) for the taxable year.

.

(2)

Conforming amendments

(A)

Adoption credit

(i)

Section 23(b) of such Code is amended by striking paragraph (4).

(ii)

Section 23(c) of such Code is amended by striking paragraphs (1) and (2) and inserting the following:

(1)

In general

If the credit allowable under subsection (a) for any taxable year exceeds the limitation imposed by section 26(a) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section and sections 25D and 1400C), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year.

.

(iii)

Section 23(c) of such Code is amended by redesignating paragraph (3) as paragraph (2).

(B)

Child tax credit

(i)

Section 24(b) of such Code is amended by striking paragraph (3).

(ii)

Section 24(d)(1) of such Code is amended—

(I)

by striking section 26(a)(2) or subsection (b)(3), as the case may be, each place it appears in subparagraphs (A) and (B) and inserting section 26(a), and

(II)

by striking section 26(a)(2) or subsection (b)(3), as the case may be in the second last sentence and inserting section 26(a).

(C)

Credit for interest on certain home mortgages

Section 25(e)(1)(C) of such Code is amended to read as follows:

(C)

Applicable tax limit

For purposes of this paragraph, the term applicable tax limit means the limitation imposed by section 26(a) for the taxable year reduced by the sum of the credits allowable under this subpart (other than this section and sections 23, 25D, and 1400C).

.

(D)

Savers' credit

Section 25B of such Code is amended by striking subsection (g).

(E)

Residential energy efficient property

Section 25D(c) of such Code is amended to read as follows:

(c)

Carryforward of unused credit

If the credit allowable under subsection (a) exceeds the limitation imposed by section 26(a) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year.

.

(F)

Certain plug-in electric vehicles

Section 30(c)(2) of such Code is amended to read as follows:

(2)

Personal credit

For purposes of this title, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year.

.

(G)

Alternative motor vehicle credit

Section 30B(g)(2) of such Code is amended to read as follows:

(2)

Personal credit

For purposes of this title, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year.

.

(H)

New qualified plug-in electric vehicle credit

Section 30D(c)(2) of such Code is amended to read as follows:

(2)

Personal credit

For purposes of this title, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year.

.

(I)

Cross references

Section 55(c)(3) of such Code is amended by striking 26(a), 30C(d)(2), and inserting 30C(d)(2).

(J)

Foreign tax credit

Section 904 of such Code is amended by striking subsection (i) and by redesignating subsections (j) , (k), and (l) as subsections (i), (j), and (k), respectively.

(K)

First-time home buyer credit for the District of Columbia

Section 1400C(d) of such Code is amended to read as follows:

(d)

Carryforward of unused credit

If the credit allowable under subsection (a) exceeds the limitation imposed by section 26(a) for such taxable year reduced by the sum of the credits allowable under subpart A of part IV of subchapter A (other than this section and section 25D), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year.

.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2009.

III

Permanent estate tax relief

301.

Application of estate, generation-skipping transfer, and gift taxes after 2009

(a)

In general

The following provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001, and the amendments made by such provisions, are repealed on and after January 1, 2010, with respect to decedents dying on and after such date, and on and after January 1, 2011, with respect to gifts made and generation-skipping transfers on and after such date:

(1)

Subtitles A and E of title V.

(2)

Subsection (d), and so much of subsection (f)(3) as relates to subsection (d), of section 511.

(3)

Paragraph (2) of subsection (b), and paragraph (2) of subsection (e), of section 521.

Except in the case of an election under section 404, the Internal Revenue Code of 1986 shall be applied as if such provisions and amendments had never been enacted.
(b)

Conforming amendment

Subsection (c) of section 2511 of the Internal Revenue Code of 1986 is repealed on and after January 1, 2011, with respect to gifts made on and after such date.

302.

Treatment of unified credit and maximum estate tax rate 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 section _01, is amended by striking (determined as if the applicable exclusion amount were $1,000,000).

(b)

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.

(B)

Inflation adjustment

In the case of any decedent dying in a calendar year after 2010, the dollar 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.

.

(c)

Maximum estate tax rate equal to 35 percent

(1)

In general

Subsection (c) of section 2001 of the Internal Revenue Code of 1986 (relating to imposition and rate of tax) is amended—

(A)

by striking Over $500,000 and all that follows in the table contained in paragraph (1) and insert the following:

Over $500,000$79,300, plus 35 percent of the excess of such amount over $500,000.

,

(B)

by striking (1) In general.—, and

(C)

by striking paragraph (2).

(2)

Conforming amendment

Paragraphs (1) and (2) of section 2102(b) of such Code are amended to read as follows:

(1)

In general

A credit in an amount that would be determined under section 2010 as the applicable credit amount if the applicable exclusion amount were $60,000 shall be allowed against the tax imposed by section 2101.

(2)

Residents of possessions of the united states

In the case of a decedent who is considered to be a nonresident not a citizen of the United States under section 2209, the credit allowed under this subsection shall not be less than the proportion of the amount that would be determined under section 2010 as the applicable credit amount if the applicable exclusion amount were $175,000 which the value of that part of the decedent's gross estate which at the time of the decedent's death is situated in the United States bears to the value of the decedent's entire gross estate, wherever situated.

.

(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 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.

.

(e)

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.

303.

Unified credit increased by unused unified credit of deceased spouse

(a)

In general

Section 2010(c) of the Internal Revenue Code of 1986, as amended by section 302(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 $5,000,000.

(B)

Inflation adjustment

In the case of any decedent dying in a calendar year after 2010, the dollar 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.
(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 computed with respect to each deceased spouse 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 basic 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) of the Internal Revenue Code of 1986, as amended by section 302(a), is amended to read as follows:

(1)

the applicable credit amount in effect 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) of such Code is amended by striking the applicable exclusion amount and inserting the basic exclusion amount.

(3)

Section 6018(a)(1) of such Code 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.

304.

Special election for decedents dying in 2010

In the case of any decedent dying in 2010, the executor of the estate of such decedent may elect to apply the Internal Revenue Code of 1986 without regard to the provisions of, and the amendments made by, this title (other than this section). Such election shall be made at such time and in such manner as the Secretary of the Treasury shall provide.

September 14, 2010

Read the second time and placed on the calendar