MODIFICATIONS TO ESTATE, GIFT, AND GENERATION-SKIPPING TRANSFER TAXES.

SEC. 302. MODIFICATIONS TO ESTATE, GIFT, AND GENERATION-SKIPPING TRANSFER TAXES.(a) Modifications to Estate Tax.—(1) $5,000,000 applicable exclusion amount.—Subsection (c) of section 2010 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 2011, 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 2010’ 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.”.(2) Maximum estate tax rate equal to 35 percent.—Subsection (c) of section 2001 is amended—(A) by striking “Over $500,000” and all that follows in the table contained in paragraph (1) and inserting the following: “Over $500,000$155,800, plus 35 percent of the excess of such amount over $500,000.”, (B) by striking “(1) In general.—”, and(C) by striking paragraph (2).(b) Modifications to Gift Tax.—(1) Restoration of unified credit against gift tax.—(A) In general.—Paragraph (1) of section 2505(a), after the application of section 301(b), is amended by striking “(determined as if the applicable exclusion amount were $1,000,000)”.(B) Effective date.—The amendment made by this paragraph shall apply to gifts made after December 31, 2010.(2) Modification of gift tax rate.—On and after January 1, 2011, subsection (a) of section 2502 is amended to read as such subsection would read if section 511(d) of the Economic Growth and Tax Relief Reconciliation Act of 2001 had never been enacted.124 STAT. 3302(c) Modification of Generation-skipping Transfer Tax.—In the case of any generation-skipping transfer made after December 31, 2009, and before January 1, 2011, the applicable rate determined under section 2641(a) of the Internal Revenue Code of 1986 shall be zero.(d) Modifications of Estate and Gift Taxes to Reflect Differences in Credit Resulting From Different Tax Rates.—(1) Estate tax.—(A) In general.—Section 2001(b)(2) 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 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).”.(2) Gift tax.—Section 2505(a) 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) Conforming Amendment.—Section 2511 is amended by striking subsection (c).(f) Effective Date.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to estates of decedents dying, generation-skipping transfers, and gifts made, after December 31, 2009.