[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5023 Introduced in House (IH)]
103d CONGRESS
2d Session
H. R. 5023
To amend the Internal Revenue Code of 1986 to reduce the lowest rate of
income tax imposed on taxpayers other than corporations from 15 percent
to 12.5 percent, to provide for a carryover basis of property acquired
from a decedent, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 12, 1994
Mr. Owens 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 lowest rate of
income tax imposed on taxpayers other than corporations from 15 percent
to 12.5 percent, to provide for a carryover basis of property acquired
from a decedent, 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.
This Act may be cited as the ``Citizens' Tax Relief Act of 1994''.
SEC. 2. REDUCTION OF LOWEST RATE OF INCOME TAX IMPOSED ON TAXPAYERS
OTHER THAN CORPORATIONS.
(a) In General.--Each of the tables contained in subsections (a),
(b), (c), (d), and (e) of section 1 of the Internal Revenue Code of
1986 is amended by striking ``15%'' and inserting ``12.5%''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 1994.
(c) Section 15 Not To Apply.--The amendment made by subsection (a)
shall not be treated as a change in the rate of a tax imposed by
chapter 1 of the Internal Revenue Code of 1986 for purposes of section
15 of such Code.
SEC. 3. REPEAL OF INCREASE IN BASIS OF PROPERTY ACQUIRED FROM A
DECEDENT.
(a) In General.--Section 1014 of the Internal Revenue Code of 1986
(relating to basis of property acquired from a decedent) is hereby
repealed.
(b) Basis To Be Determined Under Rules Applicable to Gifts.--
Section 1015 of such Code (relating to basis of property acquired by
gifts and transfers in trusts) is amended by adding at the end the
following new subsection:
``(f) Property Acquired From or Passing From a Decedent.--
``(1) In general.--Property acquired from a decedent dying
after December 31, 1994, or passed from such a decedent shall
be treated for purposes of subsection (a) as acquired by gift
for purposes of this section.
``(2) Property acquired from a decedent.--Section 1014(b)
(as in effect on the day before the date of the enactment of
the Citizens' Tax Relief Act of 1994) shall apply for purposes
of whether property is considered to have been acquired from or
to have passed from the decedent.
``(3) Increase in basis for estate tax paid.--
``(A) In general.--The basis of any property which
this subsection applies shall be the basis determined
under subsection (a) increased by the portion of the
aggregate death tax adjustment which is allocated to
the property pursuant to this paragraph.
``(B) Limitation.--The death tax adjustment for any
property shall not exceed--
``(i) the net appreciation in such
property, multiplied by
``(ii) the Federal marginal estate tax
rate.
``(C) Net appreciation.--For purposes of this
paragraph, the net appreciation in value of any
property is the amount by which--
``(i) the fair market value of such
property, exceeds
``(ii) the initial basis of such property
increased by the minimum basis adjustment of
such property.
``(4) Aggregate death tax adjustment.--In the case of any
estate--
``(A) In general.--The aggregate death tax
adjustment is the product of--
``(i) the aggregate net appreciation of all
properties which have net appreciation, and
``(ii) the Federal marginal estate tax
rate.
``(B) Limitation.--The amount taken into account
under subparagraph (A)(i) shall not exceed the taxable
estate.
``(C) Federal marginal estate tax rate.--The term
`Federal marginal estate tax rate' means the highest
rate in the rate schedule set forth in section
2001(c)--
``(i) which is used in determining the
tentative tax under section 2001(b)(1) with
respect to the estate of the decedent, and
``(ii) the amount subject to which is at
least $50,000.
In no event shall the Federal marginal estate tax rate
be less than 30 percent.
``(5) Allocation rules.--The executor shall allocate the
adjustments under this subsection among the properties on the
return of the tax imposed by chapter 11.''.
(c) Conforming Amendments.--
(1) The table of sections for part II of subchapter O of
chapter 1 of such Code is amended by striking the item relating
to section 1014.
(2) The heading of section 1015 of such Code is amended to
read as follows:
``SEC. 1015. BASIS OF PROPERTY ACQUIRED BY GIFT, FROM A DECEDENT, OR
TRANSFERRED IN TRUST.''.
(3) The table of sections for part II of subchapter O of
chapter 1 of such Code is amended by striking the item relating
to section 1015 and inserting the following new item:
``Sec. 1015. Basis of property acquired
by gift, from a decedent, or
transferred in trust.''.
(d) Effective Date.--The amendments made by this section shall
apply to decedents dying after December 31, 1994.
SEC. 4. PHASEIN OF CAPITAL GAINS TAX ON INHERITED PROPERTY.
(a) In General.--Subsection (h) of section 1 of the Internal
Revenue Code of 1986 (relating to maximum capital gains rate) is
amended to read as follows:
``(h) Maximum Capital Gains Rate.--
``(1) In general.--If a taxpayer has a net capital gain for
any taxable year, then the tax imposed by this section shall
not exceed the sum of--
``(A) a tax computed at the rates and in the same
manner as if this subsection had not been enacted on
the greater of--
``(i) taxable income reduced by the amount
of the net capital gain, or
``(ii) the amount of taxable income taxed
at a rate below 28 percent, plus
``(B) a tax equal to the sum of--
``(i) the applicable percentage of so much
of such net capital gain as is attributable to
property acquired by the taxpayer from a
decedent dying after December 31, 1994 (or
passed to the taxpayer from such a decedent),
and
``(ii) 28 percent of the amount of the
taxable income in excess of the sum of the
amount determined under subparagraph (A) and
the net capital gain described in clause (i) of
this subparagraph.
``(2) Applicable percentage.--For purposes of paragraph
(1), the term `applicable percentage' means--
``(A) 10 percent in the case of taxable years
beginning after December 31, 1993, and before January
1, 1996,
``(B) 15 percent in the case of taxable years
beginning during 1996,
``(C) 20 percent in the case of taxable years
beginning during 1997, and
``(D) 25 percent in the case of taxable years
beginning during 1998.
``(3) Election to mark-to-market property acquired from a
decedent.--If the taxpayer elects this paragraph with respect
to any property described in paragraph (1)(B)(i), such property
shall be treated as sold (for its fair market value as of the
first day of the taxpayer year) and any gain or loss shall be
treated as received or accrued on such day.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years ending after December 31, 1994.
SEC. 5. ADDITIONAL EXCLUSION OF GAIN ON SALE OF PRINCIPAL RESIDENCE
ACQUIRED FROM A DECEDENT.
(a) In General.--Subsection (d) of section 121 of the Internal
Revenue Code of 1986 (relating to one-time exclusion of gain from sale
of principal residence by individual who has attained age 55) is
amended by adding at the end the following new paragraph:
``(10) Special rules for residence acquired from
decedent.--
``(A) In general.--In the case of a residence which
was acquired by the taxpayer from a decedent dying
after December 31, 1994, or to whom such residence
passed from such a decedent (within the meaning of
section 1015(f)(2))--
``(i) subsection (a)(1) shall not apply,
and
``(ii) the requirement of subsection (a)(2)
shall be treated as met if the decedent
satisfied such requirement as of the date of
death or the taxpayer satisfies such
requirement.
``(B) Additional election.--Any election under this
section with respect to any residence to which
subparagraph (A) applies shall not be taken into
account in determining whether any other election may
be made under this section.''.
(b) Effective Date.--The amendment made by this section shall apply
to sales and exchanges after December 31, 1994, in taxable years ending
after such date.
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