UNIFIED RATE SCHEDULE FOR ESTATE AND GIFT TAXES; UNIFIED CREDIT IN LIEU OF SPECIFIC EXEMPTIONS.

SEC. 2001. UNIFIED RATE SCHEDULE FOR ESTATE AND GIFT TAXES; UNIFIED CREDIT IN LIEU OF SPECIFIC EXEMPTIONS. (a) Changes in Estate Tax.— (1) Imposition of Tax; Rate Schedule.— Section 2001 (relating to rate of tax) is amended to read as follows: “SEC. 2001. IMPOSITION AND RATE OF TAX. “(a) Imposition.— A tax is hereby imposed on the transfer of the taxable estate of every decedent who is a citizen or resident of the United States. “(b) Computation of Tax.— The tax imposed by this section shall be the amount equal to the excess (if any) of— “(1) a tentative tax computed in accordance with the rate schedule set forth in subsection (c) on the sum of— 90 STAT. 1847 “(A) the amount of the taxable estate, and “(B) the amount of the adjusted taxable gifts, over “(2) the aggregate amount of tax payable under chapter 12 with respect to gifts made by the decedent after December 31, 1976. For purposes of paragraph (1)(B), the term ‘adjusted taxable gifts’ means the total amount of the taxable gifts (within the meaning of section 2503) made by the decedent after December 31, 1976, other than gifts which are includible in the gross estate of the decedent. “(c) Rate Schedule.— “If the amount with respect to which the tentative tax to be computed is: The tentative tax is: Not over $10,000 18 percent of such amount Over $10,000 but not over $20,000 $1,800, plus 20 percent of the excess of such amount over $10,000. Over $20,000 but not over $40,000 $3,800, plus 22 percent of the excess of such amount over $20,000. Over $40,000 but not over $60,000 $8,200, plus 24 percent of the excess of such amount over $40,000. Over $60,000 but not over $80,000 $13,000, plus 26 percent of the excess of such amount over $60,000. Over $80,000 but not over $100,000 $18,200, plus 28 percent of the excess of such amount over $80,000. Over $100,000 but. not over $150,000 $23,800, plus 30 percent of the excess of such amount over $100,000. Over $150,000 but not over $250,000 $38,800. plus 32 percent of the excess of such amount over $150,000. Over $250,000 but not over $500,000 $70,800. plus 31 percent of the excess of such amount over $250,000. Over $500,000 but not over $750,000 $155,800, plus 37 percent of the excess of such amount over $500,000. Over $750,000 but not over $1,000,000 $248,300, plus 39 percent of the excess of such amount over $750,000. Over $1,000,000 but not over $1,250,000 $345,800 plus 41 percent of the excess of such amount over $1,000,000. Over $1,250,000 but not over $1,500,000 $448,300, plus 43 percent of the excess of such amount over $1,250,000. Over $1,500,000 but not over $2,000,000 $555,800. plus 45 percent of the excess of such amount over $1,500,000. Over $2,000,000 but not over $2,500,000 $780,800, plus 49 percent of the excess of such amount over $2,000,000, Over $2,500,000 but not over $3,000,000 $1,025,800, plus 53 percent of the excess of such amount over $2,500,000. Over $3,000,000 but not over $3,500,000 $1,290,800. plus 57 percent of the excess of such amount over $3,000,000. Over $3,500,000 but not over $4,000,000 $1,575,800, plus 61 percent of the excess of such amount over $3,500,000. Over $4,000,000 but not over $4,500,000 $1,880,800, plus 65 percent over the excess of such amount over $4,000,000. Over $4,500,000 but not over $5,000,000 $2,205,800, plus 69 percent of the excess of such amount over $4,500,000. Over $5,000,000 $2,550,800, pins 70 percent of the excess of such amount over $5,000,000. “(d) Adjustment for Gift Tax Paid by Spouse.— For purposes of subsection (b)(2),if— “(1) the decedent was the donor of any gift one-half of which was considered under section 2513 as made by the decedent’s spouse, and “(2) the amount of such gift is includible in the gross estate of the decedent, any tax payable by the spouse under chapter 12 on such gift (as determined under section 2012(d)) shall be treated as a tax payable with respect to a gift made by the decedent.” 90 STAT. 1848 (2) Allowance of unified credit.— Part-II of subchapter A of chapter 11 (relating to credits against the estate tax) is amended by inserting before section 2011 the following new section: “SEC. 2010. UNIFIED CREDIT AGAINST ESTATE TAX. “(a) General Rule.— A credit of $47,000 shall be allowed to the estate of every decedent, against the tax imposed by section 2001. “(b) Phase-in of $47,000 credit.— “In the case of decedents dying in: Subsection (a) shall be applied by substituting for ‘$47,000’ the following amount: 1977 $30, 000 1978 34, 000 1979 38, 000 1980 42, 500 “(c) Adjustment to Credit for Certain Gifts Made Before 1977.— The amount of the credit allowable under subsection (a) shall be reduced by an amount equal to 20 percent of the aggregate amount allowed as a specific exemption under section 2521 (as in effect before its repeal by the Tax Reform Act of 1976) with respect to gifts made by the decedent after September 8, 1976. “(d) Limitation Based on Amount of Tax.— The amount of the credit allowed by subsection (a) shall not exceed the amount of the tax imposed by section 2001.” (3) Termination of credit for gut tax.— Section 2012 (relating to credit for gift tax) is amended by adding at the end thereof the following new subsection: “(e) Section Inapplicable to Gifts Made After December 31, 1976.— No credit shall be allowed under this section with respect to the amount of any tax paid under chapter 12 on any gift made after December 31, 1976.” (4) Repeal of specific exemption.— Section 2052 (relating to exemption for purposes of the estate tax) is hereby repealed. (5) Adjustments for gifts made within 3 tears of death.— Section 2035 (relating to transactions in contemplation of death) is amended to read as follows: “SEC. 2035. ADJUSTMENTS FOR GIFTS MADE WITHIN 3 YEARS OF DECEDENTS DEATH. “(a) Inclusion of Gifts Made by Decedent.— Except, as provided in subsection (b), the value of the gross estate shall include the value of all property to the extent of any interest-therein of which the decedent has at any time made a transfer, by trust or otherwise, during the 3-year period ending on the date of the decedent’s death. “(b) Exceptions.— Subsection (a) shall not apply to— “(1) any bona fide sale for an adequate and full consideration in money or money’s worth, and “(2) any gift, excludable in computing taxable gifts by reason of section 2503(b) (relating to $3,000 annual exclusion for purposes of the gift tax) determined without regard to section 2513 (a). “(c) Inclusion of Gift Tax on Certain Gifts Made During 3 Years Before Decedent’s Death.— The amount of the gross estate (determined without regard to this subsection) shall be increased by the amount of any tax paid under chapter 12 by the decedent or his estate on any gift made by the decedent or his spouse after Decem-90 STAT. 1849ber 31, 1976, and dining the 3-year period ending on the date of the decedent’s death.” (b) Changes in Gift Tax.— (1) Rate of tax.— Subsection (a) of section 2502 (relating to rate of gift tax) is amended to read as follows: “(a) Computation of Tax.— The tax imposed by section 2501 for each calendar quarter shall be an amount equal to the excess of— “(1) a tentative tax, computed in accordance with the rate schedule set forth in section 2001(c), on the aggregate sum of the taxable gifts for such calendar quarter and for each of the preceding calendar years and calendar quarters, over “(2) a tentative tax, computed in accordance with such rate schedule, on the aggregate sum of the taxable gifts for each of the preceding calendar years and calendar quarters.” (2) Unified credit.— Subchapter A of chapter 12 (relating to determination of gift, tax liability) is amended by adding at the end thereof the following new section: “SEC. 2505. UNIFIED CREDIT AGAINST GIFT TAX. “(a) General Rule.— In the case of a citizen or resident of the United States, there shall be allowed as a credit against the tax imposed by section 2501 for each calendar quarter an amount equal to— “(1) $47,000, reduced by “(2) the sum of the amounts allowable as a credit to the individual under this section for all preceding calendar quarters. “(b) Phase-in of $47,000 Credit.— “In the case of gifts made: Subsection (a)(1) shall be applied by substituting for ‘$47,000’ the following amount: After December 31, 1976, and before July 1, 1977 $6, 000 After June 30, 1977, and before January 1, 1978 $30, 000 After December 31, 1977, and before January 1, 1979 $34, 000 After December 31, 1978, and before January 1, 1980 $38, 000 After December 31, 1979, and before January 1, 1981 $42, 500 “(c) Adjustment to Credit for Certain Gifts Made Before 1977.— The amount allowable under subsection (a) shall be reduced by an amount equal to 20 percent of the aggregate amount allowed as a specific exemption under section 2521 (as in effect before its repeal by the Tax Reform Act of 1976) with respect to gifts made by the individual after September 8, 1976. “(d) Limitation Based on Amount of Tax.— The amount of the credit allowed under subsection (a) for any calendar quarter shall not exceed the amount of the tax imposed by section 2501 for such calendar quarter.” (3) Repeal of specific exemption.— Section 2521 (relating to specific exemption in the case of the gift tax) is hereby repealed. (c) Technical, Clerical, and Conforming Changes.— (1) Changes in estate tax.— (A) Credit’ for state death taxes.— Section 2011 (relating to credit for State death taxes) is amended— (i) by striking out “taxable estate” each place it appears in subsection (b)(including the heading to the table) and inserting in lieu thereof “adjusted taxable estate”; (ii) by adding at the end of subsection (b) the following new sentence; 90 STAT. 1850 “For purposes of this section, the term ‘adjusted taxable estate’ means the taxable estate reduced by $60,000.”, (iii) by striking out “taxable estate” each place it appears in subsection (e) and inserting in lieu thereof “adjusted taxable estate”; and (iv) by adding at the end thereof the following new subsection: “(f) Limitation Based on Amount of Tax.— The credit provided by this section shall not exceed the amount of the tax imposed by section 2001, reduced by the amount of the unified credit provided by section 2010.” (B) Credit for gift tax.— Subsection (a) of section 2012 (relating to credit for gift tax) is amended by striking out “provided by section 2011” and inserting in lieu thereof “provided by section 2011 and the unified credit provided by section 2010”. (C) Credit for tax on prior transfers.— (i) The first sentence of section 2013(b) is amended by striking out “and increased by the exemption provided for by section 2052 or section 2106(a)(3), or the corresponding provisions of prior laws, in determining the taxable est ate of the transferor for purposes of the estate tax”. (ii) Subparagraph (A) of section 2013(e)(1) is amended to read as follows: “(A) the estate tax imposed by section 2001 or section 2101 (after deducting the credits provided for in sections 2010, 2011, 2012, and 2014) computed without regard to this section, exceeds”. (D) Rate of tax in case of nonresidents not citizens.— Section 2101 (relating to tax imposed in the case of estates of nonresidents not citizens) is amended to read as follows: “SEC. 2101. TAX IMPOSED. “(a) Imposition.— Except as provided in section 2107, a tax is hereby imposed on the transfer of the taxable estate (determined as provided in section 2106) of every decedent nonresident not a citizen of the United States. “(b) Computation of Tax.— The tax imposed by this section shall be the amount equal to the excess (if any) of— “(1) a tentative tax computed in accordance with the rate schedule set forth in subsection (d) on the sum of— “(A) the amount of the taxable estate, and “(B) the amount of the adjusted taxable gifts, over “(2) a tentative tax computed in accordance with the rate schedule set forth in subsection (d) on the amount of the adjusted taxable gifts. “(c) Adjustments for Taxable Gifts.— “(1) Adjusted taxable gifts defined.— For purposes of this section, the term ‘adjusted taxable gifts’ means the total amount of the taxable gifts (within the meaning of section 2503 as modified by section 2511) made by the decedent after December 31, 1976, other than gifts which are includible in the gross estate of the decedent. “(2) Adjustment for certain gift tax.— For purposes of this section, the rules of section 2001 (d) shall apply. 90 STAT. 1851 “(d) Rate Schedule.— “If the amount with respect to which the tentative tax to be computed is: The tentative tax is: Not over $100,000 6% of such amount. Over $100,000 but not over $500,000 $6,000, plus 12% of excess over $100,000. Over $500,000 but not over $1,000,000 $54,000, plus 18% of excess over $500,000, Over $1,000,000 but not over $2,000.000 $144,000, plus 24% of excess over $1,000,000. Over 2,000,000 $384,000, plus 30% of excess over $2,000,000.” (E) Credit in case of estate of nonresidents not citizens.— (i) Section 2102 (relating to credits against tax in ease of estates of nonresidents not citizens) is amended by adding at the end thereof the following new subsection: “(c) Unified Credit.— “(1) In general.— A. credit of $3,600 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 under this subsection shall be the greater of— “(A) $3,600, or “(B) that proportion of $15,075 which the value of that part of the decedent’s gross estate which at the time of his death is situated in the United States bears to the value of his entire gross estate wherever situated. “(3) Phase-in of paragraph (2)(b) amount.— In the case of a decedent dying before 1981, paragraph (2)(B) shall be applied— “(A) in the case of a decedent dying during 1977, by substituting‘$8,480’ for ‘$15,075’, “(B) in the case of a decedent dying during 1978, by substituting ‘$10,080’ for ‘$15,075’, “(C) in the case of a decedent dying during 1979, by substituting ‘$11.680’ for ‘$15,075’, and “(D) in the case of a decedent dying during 1980, by substituting ‘$13,388’ for ‘$15,075’. “(4) Limitation based on amount of tax.— The credit allowed under this subsection shall not exceed the amount of the tax imposed by section 2101. “(5) Application of other credits.— For purposes of subsection (a), sections 2011 to 2013, inclusive, shall be applied as if the credit allowed under this subsection were allowed under section 2010.” (ii) Subsection (c) of section 2107 (relating to expatriation to avoid tax) is amended to read as follows: “(c) Credits.— “(1) Unified credit.— “(A) In general.— A credit of $13,000 shall be allowed against the tax imposed by subsection (a). “(B) Limitation based on amount of tax.— The credit allowed under this paragraph shall not exceed the amount of the tax imposed by subsection (a). “(2) Other credits.— The tax imposed by subsection (a) shall be credited with the amounts determined in accordance with sub-90 STAT. 1852sections (a) and (b) of section 2102. For purposes of subsection (a) of section 2102, sections 2011 to 2013, inclusive, shall be applied as if the credit allowed under paragraph (1) were allowed under section 2010.” (F) Repeal of specific exemption.— Paragraph (3) of section 2106(a) (relating to specific exemption in ease of decedents nonresidents not citizens) is hereby repealed. (G) Credit for foreign death taxes.— Paragraph (2) of section 2014(b) (relating to limitations on credit) is amended by striking out “sections 2011 and 2012” and inserting in lieu thereof “sections 2010, 2011, and 2012”. (H) Liability of life insurance beneficiaries.— The first sentence of section 2206 (relating to liability of life insurance beneficiaries) is amended by striking out “the sum of the taxable estate and the amount of the exemption allowed in computing the taxable estate, determined under section 2051” and inserting in lieu thereof “the taxable estate”. (I) Liability’ of recipients of certain property.— The first sentence of section 2207 (relating to liability of recipient of property over which decedent had power of appointment) is amended by striking out “the sum of the taxable estate and the amount of the exemption allowed in computing the taxable estate, determined under section 2052, or section 2106(a), as the case may be” and inserting in lieu thereof “the taxable estate”. (J) Return by executor.— Subsection (a) of section 6018 (relating to estate tax returns by executor) is amended— (i) by striking out “$60,000” in paragraph (1) and inserting in lieu thereof “$175,000”; (ii) by striking out “$30,000” in paragraph (2) and inserting in lieu thereof “$60,000”; and (iii) by adding at the end thereof the following new paragraphs: “(3) Phase-in of filing requirement amount.— In the case of a decedent dying before 1981, paragraph (1) shall be applied— “(A) in the case of a decedent dying during 1977, by substituting ‘$120,000’ for ‘$175,000’, “(B) in the case of a decedent dying during 1978, by substituting ‘$134,000’ for ‘$175,000’, ~ “(C) in the case of a decedent dying during 1979, by substituting ‘$147,000’ for ‘$175,000’, and “(D) in the case of a decedent dying during 1980, by substituting‘$161,000’for‘$175,000’. “(4) Adjustment for certain gifts.— The amount applicable under paragraph (1) and the amount set forth in paragraph (2) shall each be reduced (but not below zero) by the sum of— “(A) the amount of the adjusted taxable gifts (within the meaning of section 2001(b)) made by the decedent after December 31, 1976, plus “(B) the aggregate amount allowed as a specific exemption under section 2521 (as in effect before its repeal by the Tax Reform Act of 1976) with respect to gifts made by the decedent after September 8, 1976.” (K) Revocable transfers.— (i) Paragraph (1) of section 2038(a) (relating to revocable transfers) is amended by striking out “in con-90 STAT. 1853templation of decedent’s death” and inserting in lieu thereof “during the 3-year period ending on the date of the decedent’s death”. (ii) Paragraph (2) of section 2038(a) (relating to revocable transfer) is amended by striking out “in contemplation of his death” and inserting in lieu thereof “during the 3-year period ending on the date of the decedent’s death”. (L) Property within the united states.— Subsection (b) of section 2104 (relating to revocable transfers and transfers in contemplation of death) is amended by striking out “and Transfers in Contemplation of Death” in the subsection heading and inserting in lieu thereof “and Transfers Within 3 Years or Death”. (M) Prior interests.— Section 2044 (relating to prior interests) is amended by striking out “specifically provided therein” and inserting in lieu thereof “specifically provided bylaw”. (N) Clerical amendments.— (i) The item relating to section 2001 in the table of sections for part I of subchapter A of chapter If is amended to read as follows: “Sec. 2001. Imposition and rate of tax.” (ii) The table of sections for part II of subchapter A of chapter 11 is amended by inserting before the item relating to section 2011 the following new item: “Sec. 2010. Unified credit against estate tax.” (iii) The table of sections for part III of subchapter A of chapter 11 is amended by striking out the item relating to section 2035 and inserting in lieu thereof the following new item: “Sec. 2035. Adjustments for gifts made within 3 years of decedent’s death.” (iv) The table of sections for part. IV of subchapter A of chapter 11 is amended by striking out the item relating to section 2052. (2) Changes in gift tax.— (A) Taxable gifts for preceding years and quarters.— Subsection (a) of section 2504 (relating to taxable gifts for preceding years and quarters) is amended by striking out “except that” and all that follows and inserting in lieu thereof “except that the specific exemption in the amount, if any, allowable under section 2521 (as in effect before its repeal by the Tax Reform Act of 1976) shall be applied in nil computations in respect of calendar years or calendar quarters ending before January 1, 1977, for purposes of computing the tax for any calendar quarter.” (B) Clerical amendments.— (i) The table of sections for subchapter A of chapter 12 is amended by adding at the end thereof the following new item: “Sec. 2505. Unified credit against gift tax.” (ii) The table of sections for subchapter C of chapter 12 is amended by striking out the item relating to section 2521. 90 STAT. 1854 (d) Effective Dates.— (1) The amendments made by subsections (a) and (c)(1) shall apply to the estates of decedents dying after December 31, 1976; except that the amendments made by subsection (a)(5) and subparagraphs (K) and (L) of subsection (c)(1) shall not apply to transfers made before January 1, 1977, (2) The amendments made by subsections (b) and (c)(2) shall apply to gifts made after December 31, 1976.