H.R. 1836: Economic Growth and Tax Relief Reconciliation Act of 2001

H.R. 1836: Economic Growth and Tax Relief Reconciliation Act of 2001

News story posted in Legislative on 30 May 2001| comments
audience: National Publication | last updated: 18 May 2011
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Summary

On May 26, 2001, Congress approved the Economic Growth and Tax Relief Reconciliation Act of 2001 (H.R. 1836), a $1.35 trillion 11-year tax cut, which President Bush is expected to sign. The bill provides, in part, for a reduction of the individual income tax rates and a phase-out and repeal of the Estate and Generation-Skipping Transfer Taxes. Noticeably absent from H.R. 1836 from an earlier version is the charitable IRA rollover provision and a fair market value deduction for donor-created artistic or literary works gifted to charity.

PGDC SUMMARY:

On May 26, 2001, Congress approved the Economic Growth and Tax Relief Reconciliation Act of 2001 (H.R. 1836), a $1.35 trillion 11-year tax cut that President Bush is expected to sign.

The bill provides, in part, for (i) a new individual income tax rate structure which lowers each existing tax bracket a full 1 percent in 2001, 2004 and 2006, and also creates a new 10 percent bracket for income currently taxed at 15 percent, (ii) various tax benefits relating to children, including an increase in the Child Tax Credit and an expansion of Adoption Tax Benefits (iii) marriage penalty relief, including an expansion of the 15 percent rate bracket for married couples filing joint returns, (iv) an increase in the alternative minimum tax exemption amount by $2,000 for single taxpayers and $4,000 for married taxpayers filing joint returns for 2001 through 2004, (v) changes to the rules relating to IRAs and qualified pension plans, including increased portability for plan participants and increased contribution limits and catch-up contributions to IRAs, (vi) an expansion of the availability of qualified conservation easements, and (vii) a gradual elimination of the overall limitation on itemized deductions for all taxpayers.

Under the Conference Agreement for H.R. 1836, with respect to the Estate Tax, in 2002, the 5 percent surtax and rates in excess of 50 percent are repealed and the unified credit exemption amount for both estate and gift tax purposes is increased to $1 million. The highest estate and gift tax rates will be gradually lowered (to 45 percent), and the estate and GST tax exemption (but not the gift tax exemption) will be gradually increased to $3.5 million through 2009. In 2010, the estate and GST taxes are repealed. The gift tax will be retained and the highest gift tax rate will be the top individual tax rate. A carryover basis structure will be instituted with certain exemption amounts.

Noticeably absent are various provisions to facilitate charitable giving which were included in a predecessor bill to H.R. 1836, such as, the charitable IRA rollover provision and allowing a fair market value deduction for donor-created artistic or literary works gifted to charity. However, the ultimate repeal of the itemized deduction limitation would prove favorable to charitable giving.

Notwithstanding the complexity of this bill, Congress scheduled the bill to expire (or sunset) at the end of 2010.

POINTS TO PONDER:

This PGDC Summary is by no means all-inclusive. Simply describing the bill's provisions is complex. It is clear, however, that the debate on the effect of the bill and its planning implications will rage on (once President Bush signs it into law).

To view the JCT Summary (15 pages), go here: x-50-01.pdf

To view the text of H.R. 1836 (291 pages), go here: h1836.pdf

To view the "plain English" version (258 pages), go here: som_1836.pdf

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