HR 4042 IH
110th CONGRESS
1st Session
H. R. 4042
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.
IN THE HOUSE OF REPRESENTATIVES
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 Means
A BILL
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.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE.
(a) In General- This Act may be cited as the `Family Farm, Small Business,
and Home Tax Relief Act'.
(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.
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:
`(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. For purposes of the preceding sentence, the applicable
exclusion amount is $3,500,000.
`(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--
`(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 2006' for `calendar
year 1992' in subparagraph (B) thereof.
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.'.
(b) Effective Date- The amendment made by this section shall apply to
estates of decedents dying, and gifts made, after December 31, 2007.
SEC. 3. ACCELERATION OF REDUCTION IN MAXIMUM ESTATE TAX RATE.
(a) Maximum Estate Tax Rate-
(1) The table contained in paragraph (1) of section 2001(c) is amended
by striking the 2 highest brackets.
(2) Section 2001(c), as amended by paragraph (1), is amended by striking
`(1) IN GENERAL- ' and by striking paragraph (2).
(b) Effective Date- The amendments made by this section shall apply to
estates of decedents dying, and gifts made, after December 31, 2007.
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:
`(j) Application of Section- This section--
`(1) shall not apply to estates of decedents dying after December 31,
2003, and before January 1, 2008, but
`(2) shall apply to estates of decedents dying after December 31, 2007.'.
(1) IN GENERAL- Subsection (a) of section 2057 is amended--
(A) by striking `$675,000' in paragraph (2) and inserting `$8,000,000',
and
(B) by striking paragraph (3).
(2) COST-OF-LIVING ADJUSTMENT- Subsection (a) of section 2057 is amended
by adding at the end the following new paragraph:
`(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--
`(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 2006' 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) Effective Date- The amendments made by this section shall apply to
estates of decedents dying after December 31, 2007.
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'.
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:
`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--
`(1) such residence is included in determining the value of the gross
estate,
`(2) such residence is located in the United States, and
`(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).
`(1) IN GENERAL- The deduction allowed by this section shall not exceed
$2,000,000.
`(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--
`(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 2006' for `calendar
year 1992' in subparagraph (B) thereof.
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.
`(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).
`(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).'.
(b) Clerical Amendment- The table of sections for subchapter A of chapter
11 is amended by adding at the end the following new item:
`Sec. 2059. Principal residence.'.
(c) Effective Date- The amendments made by this section shall apply to
estates of decedents dying after December 31, 2007.
END
