CREDIT FOR STATE DEATH TAXES REPLACED WITH DEDUCTION FOR SUCH TAXES.

SEC. 532. CREDIT FOR STATE DEATH TAXES REPLACED WITH DEDUCTION FOR SUCH TAXES. (a) Repeal of Credit.—Section 2011 (relating to credit for State death taxes) is amended by adding at the end the following new subsection: “(g) Termination.—This section shall not apply to the estates of decedents dying after December 31, 2004.”. (b) Deduction for State Death Taxes.—Part IV of subchapter A of chapter 11 is amended by adding at the end the following new section: “SEC. 2058. STATE DEATH TAXES. “(a) Allowance of Deduction.—For purposes of the tax imposed by section 2001, the value of the taxable estate shall be determined by deducting from the value of the gross estate the amount of any estate, inheritance, legacy, or succession taxes actually paid to any State or the District of Columbia, in respect of any property included in the gross estate (not including any such taxes paid with respect to the estate of a person other than the decedent). “(b) Period of Limitations.—The deduction allowed by this section shall include only such taxes as were actually paid and deduction therefor claimed before the later of— “(1) 4 years after the filing of the return required by section 6018, or “(2) if— “(A) a petition for redetermination of a deficiency has been filed with the Tax Court within the time prescribed in section 6213(a), the expiration of 60 days after the decision of the Tax Court becomes final, “(B) an extension of time has been granted under section 6161 or 6166 for payment of the tax shown on the return, or of a deficiency, the date of the expiration of the period of the extension, or “(C) a claim for refund or credit of an overpayment of tax imposed by this chapter has been filed within the time prescribed in section 6511, the latest of the expiration of— “(i) 60 days from the date of mailing by certified mail or registered mail by the Secretary to the taxpayer of a notice of the disallowance of any part of such claim, “(ii) 60 days after a decision by any court of competent jurisdiction becomes final with respect to a timely suit instituted upon such claim, or “(iii) 2 years after a notice of the waiver of disallowance is filed under section 6532(a)(3). Notwithstanding sections 6511 and 6512, refund based on the deduction may be made if the claim for refund is filed within the period provided in the preceding sentence. Any such refund shall be made without interest.”. (c) Conforming Amendments.—115 STAT. 74 (1) Subsection (a) of section 2012 is amended by striking “the credit for State death taxes provided by section 2011 and”. (2) Subparagraph (A) of section 2013(c)(1) is amended by Striking “2011,”. (3) Paragraph (2) of section 2014(b) is amended by striking “, 2011,”. (4) Sections 2015 and 2016 are each amended by striking “2011 or”. (5) Subsection (d) of section 2053 is amended to read as follows: “(d) Certain Foreign Death Taxes.— “(1) In general.—Notwithstanding the provisions of subsection (c)(1)(B), for purposes of the tax imposed by section 2001, the value of the taxable estate may be determined, if the executor so elects before the expiration of the period of limitation for assessment provided in section 6501, by deducting from the value of the gross estate the amount (as determined in accordance with regulations prescribed by the Secretary) of any estate, succession, legacy, or inheritance tax imposed by and actually paid to any foreign country, in respect of any property situated within such foreign country and included in the gross estate of a citizen or resident of the United States, upon a transfer by the decedent for public, charitable, or religious uses described in section 2055. The determination under this paragraph of the country within which property is situated shall be made in accordance with the rules applicable under subchapter B (sec. 2101 and following) in determining whether property is situated within or without the United States. Any election under this paragraph shall be exercised in accordance with regulations prescribed by the Secretary. “(2) Condition for allowance of deduction.—No deduction shall be allowed under paragraph (1) for a foreign death tax specified therein unless the decrease in the tax imposed by section 2001 which results from the deduction provided in paragraph (1) will inure solely for the benefit of the public, charitable, or religious transferees described in section 2055 or section 2106(a)(2). In any case where the tax imposed by section 2001 is equitably apportioned among all the transferees of property included in the gross estate, including those described in sections 2055 and 2106(a)(2) (taking into account any exemptions, credits, or deductions allowed by this chapter), in determining such decrease, there shall be disregarded any decrease in the Federal estate tax which any transferees other than those described in sections 2055 and 2106(a)(2) are required to pay. “(3) Effect on credit for foreign death taxes of deduction under this subsection.— “(A) Election.—An election under this subsection shall be deemed a waiver of the right to claim a credit, against the Federal estate tax, under a death tax convention with any foreign country for any tax or portion thereof in respect of which a deduction is taken under this subsection. “(B) Cross reference.— “See section 2014(f) for the effect of a deduction taken under this paragraph on the credit for foreign death taxes.”. (6) Subparagraph (A) of section 2056A(b)(10) is amended—115 STAT. 75 (A) by striking “2011,”, and (B) by inserting “2058,” after “2056,” (7)(A) Subsection (a) of section 2102 is amended to read as follows: “(a) In General.—The tax imposed by section 2101 shall be credited with the amounts determined in accordance with sections 2012 and 2013 (relating to gift tax and tax on prior transfers).”. (B) Section 2102 is amended by striking subsection (b) and by redesignating subsection (c) as subsection (b). (C) Section 2102(b)(5) (as redesignated by subparagraph (B)) and section 2107(c)(3) are each amended by striking “2011 to 2013, inclusive,” and inserting “2012 and 2013”. (8) Subsection (a) of section 2106 is amended by adding at the end the following new paragraph: “(4) State death taxes.—The amount which bears the same ratio to the State death taxes as the value of the property, as determined for purposes of this chapter, upon which State death taxes were paid and which is included in the gross estate under section 2103 bears to the value of the total gross estate under section 2103. For purposes of this paragraph, the term ‘State death taxes’ means the taxes described in section 2011(a).”. (9) Section 2201 is amended— (A) by striking “as defined in section 2011(d)”, and (B) by adding at the end the following new flush sentence: “For purposes of this section, the additional estate tax is the difference between the tax imposed by section 2001 or 2101 and the amount equal to 125 percent of the maximum credit provided by section 2011(b), as in effect before its repeal by the Economic Growth and Tax Relief Reconciliation Act of 2001.”. (10) Section 2604 (relating to credit for certain State taxes) is amended by adding at the end the following new subsection: “(c) Termination.—This section shall not apply to the generation-skipping transfers after December 31, 2004.”. (11) Paragraph (2) of section 6511(i) is amended by striking “2011(c), 2014(b),” and inserting “2014(b)”. (12) Subsection (c) of section 6612 is amended by striking “section 2011(c) (relating to refunds due to credit for State taxes),”. (13) The table of sections for part II of subchapter A of chapter 11 is amended by striking the item relating to section 2011. (14) The table of sections for part IV of subchapter A of chapter 11 is amended by adding at the end the following new item: “Sec. 2058. State death taxes.”. (15) The table of sections for subchapter A of chapter 13 is amended by striking the item relating to section 2604. (d) Effective Date.—The amendments made by this section shall apply to estates of decedents dying, and generation-skipping transfers, after December 31, 2004.115 STAT. 76