S.Amdt. 4787

SA 4787. Mr. LEVIN submitted an amendment intended to be proposed to
amendment SA 4753 proposed by Mr. Reid (for himself and Mr. McConnell)
to the bill H.R. 4853, to amend the Internal Revenue Code of 1986 to
extend the funding and expenditure authority of the Airport and Airway
Trust Fund, to amend title 49, United States Code, to extend
authorizations for the airport improvement program, and for other
purposes; which was ordered to lie on the table; as follows:

At the appropriate place insert the following:

SEC. 302. MODIFICATIONS TO ESTATE, GIFT, AND GENERATION-
SKIPPING TRANSFER TAXES.

(a) Modifications to Estate Tax.--
(1) $3,500,000 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 $3,500,000.
``(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.''.
(2) Maximum estate tax rate equal to 45 percent.--
Subsection (c) of section 2001 is amended--
(A) by striking ``but not over $2,000,000'' in the table
contained in paragraph (1),
(B) by striking the last 2 items in such table,
(C) by striking ``(1) In general.--'', and
(D) 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.
(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
section, the amendments made by this section shall apply to
estates of decedents dying, generation-skipping transfers,
and gifts made, after December 31, 2009.

SEC. 303. APPLICABLE EXCLUSION AMOUNT INCREASED BY UNUSED
EXCLUSION AMOUNT OF DECEASED SPOUSE.

(a) In General.--Section 2010(c), as amended by section
302(a), 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 deceased
spousal unused exclusion amount.
``(3) Basic exclusion amount.--
``(A) In general.--For purposes of this subsection, the
basic exclusion amount is $3,500,000.
``(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) Deceased spousal unused exclusion amount.--For
purposes of this subsection, with respect to a surviving
spouse of a deceased spouse dying after December 31, 2010,
the term `deceased spousal unused exclusion amount' means the
lesser of--
``(A) the basic exclusion amount, or
``(B) the excess of--
``(i) the basic exclusion amount of the last such deceased
spouse of such surviving spouse, over
``(ii) the amount with respect to which the tentative tax
is determined under section 2001(b)(1) on the estate of such
deceased spouse.
``(5) Special rules.--
``(A) Election required.--A deceased spousal unused
exclusion amount may not be taken into account by a surviving
spouse under paragraph (2) 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

[[Page S8886]]

amount for purposes of carrying out this subsection.
``(6) 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), as amended by section
302(b)(1), 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) is amended by striking ``the applicable
exclusion amount'' and inserting ``the basic exclusion
amount''.
(3) Section 6018(a)(1) is amended by striking ``applicable
exclusion amount'' and inserting ``basic exclusion amount''.
(c) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to estates of
decedents dying and gifts made after December 31, 2010.
(2) Conforming amendment relating to generation-skipping
transfers.--The amendment made by subsection (b)(2) shall
apply to generation-skipping transfers after December 31,
2010.

SEC. 304. APPLICATION OF EGTRRA SUNSET TO THIS TITLE.

Section 901 of the Economic Growth and Tax Relief
Reconciliation Act of 2001 shall apply to the amendments made
by this title.
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