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“(a) COMPUTATION OF TAX.—The tax imposed by section 2501 for each calendar quarter shall be an amount equal to the excess of

(1) a tax, computed in accordance with the rate schedule set forth in this subsection, on the aggregate sum of the taxable gifts for such calendar quarter and for each of the preceding calendar years and calendar quarters,

"(2) a tax, computed in accordance with such rate schedule, on the aggregate sum of the taxable gifts for each of the preceding calendar years and calendar quarters.”

(B) Subsection (b) of section 2502 (relating to definition of calendar

year) is amended to read as follows: “(b) CALENDAR QUARTER.—Wherever used in this title in connection with the gift tax imposed under Chapter 12, the term 'calendar quarter' includes only the first calendar quarter of the calendar year 1971 and succeeding calendar quarters.”

(C) Subsection (c) of section 2502 (relating to definition of preceding

calendar years) is amended to read as follows: "(c) PRECEDING CALENDAR YEARS AND QUARTERS.

“(1) The term 'preceding calendar years' means calendar years 1932 and 1970 and all calendar years intervening between calendar year 1932 and calendar year 1970. The term 'calendar year 1932' includes only the portion of such year after June 6, 1932.

“(2) The term 'preceding calendar quarters' means the first calendar quarter of calendar year 1971 and all calendar quarters intervening between such calendar quarter and the calendar quarter for which the tax is being computed.” (3) Section 2503.

(A) Subsection (a) of section 2503 (relating to taxable gifts) is

amended to read as follows: (a) GENERAL DEFINITION.-The term 'taxable gifts' means, in the case of gifts made after December 31, 1970, the total amount of gifts made during the calendar quarter, less the deductions provided in subchapter C (sec. 2521 and following). In the case of gifts made before January 1, 1971, such term means the total amount of gifts made during the calendar year, less the deductions provided in subchapter C.”

(B) The heading and first sentence of subsection (b) of section 2503

(relating to taxable gifts) is amended to read as follows: "(b) ExclusIONS FROM GIFTS.-In computing taxable gifts for the calendar quarter, in the case of gifts (other than gifts of future interests in property) made to any person by the donor during the calendar year 1971 and subsequent calendar years, $3,000 of such gifts to such person less the aggregate of the amounts of such gifts to such person during all preceding calendar quarters of the calendar year shall not, for purposes of subsection (a), be included in the total amount of gifts made during such quarter.”.

(4) Section 2504. Section 2504 (relating to taxable gifts for preceding years) is amended to read as follows: "Sec. 2504. Taxable gifts for Preceding Years.

“(a) IN GENERAL.-In computing taxable gifts for preceding calendar years or calendar quarters for the purpose of computing the tax for any calendar quarter, there shall be treated as gifts such transfers as were considered to be gifts under the gift tax laws applicable to the years or calendar quarters in which the transfers were made and there shall be allowed such deductions as were provided for under such laws, except that the specific exemption in the amount, if any, allowable under section 2521 shall be applied in all computations in respect of previous calendar years or calendar quarters for the purpose of computing the tax for any calendar year or calendar quarter."

"(b) ExcLUSIONS FROM GIFTS For PRECEDING YEARS.—In the case of gifts made to any person by the donor during preceding calendar years and calendar quarters, the amount excluded, if any, by the provisions of gift tax laws applicable to the years and calendar quarters in which the gifts were made shall not, for purposes of subsection (a), be included in the total amount of the gifts made during such years and calendar quarters.

"(c) VALUATION OF CERTAIN GIFTS For PRECEDING CALENDAR YEARS OR QUARTERS.-If the time has expired within which a tax may be assessed under this chapter or under corresponding provisions of prior laws, on the transfer of property by gift made during a preceding calendar year or calendar quarter, as defined in section 2502 (c), if a tax under this chapter or under corresponding provisions of prior laws has been assessed or paid for such preceding calendar

year or calendar quarter, the value of such gift made in such preceding calendar year or calendar quarter shall, for purposes of computing the tax under this chapter for any calendar quarter, be the value of such gift which was used in computing the tax for the last preceding calendar year or calendar quarter, for which a tax under this chapter or under corresponding provisions of prior laws was assessed or paid.

“(d) Net Gifts.—The term “net gifts' as used in corresponding provisions o prior laws shall be read as 'taxable gifts' for purposes of this chapter." (b) AMENDMENTS TO SUBCHAPTER B OF CHAPTER 12.

(1) Section 2512.–Subsection (b) of section 2512 (relating to valuation of gifts) is amended by deleting “calendar year” and inserting in lieu thereof "calendar quarter”. (2) Section 2513.

(A) Section 2513 (relating to gifts by husband or wife to third party) is amended by deleting “calendar year” each place it appears and inserting in lieu thereof “calendar quarter”.

(B) Subparagraph (A) of subsection (b) (2) of section 2513 is amended to read as follows:

“(A) the consent may not be signified after the last day of the fir month following the close of such calendar quarter, unless before such last day no return has been filed for such calendar quarter by either spouse, in which case the consent may not be signified after a return for such calendar quarter is filed by either spouse;".

(C) Subparagraph (B) of subsection (b) (2) of section 2513 is amended by deleting “such year" and inserting in lieu thereof "such calendar quarter”. (D) Subsection (c) of section 2513 is amended

(i) by deleting “15th day of April following the close of such year” and inserting in lieu thereof “last day of the first month following the close of such calendar quarter”, and

(ii) by deleting “such 15th day" each place it appears and inserting in lieu thereof such last day". (W) Subsection (d) of section 2.313 is amended by deleting such year" and inserting in lieu thereof “such calendar quarter": (3) Section 2515.-Subsection (c) of section 2515 (relating to tenancies by the entirety) is amended by deleting “calendar year” and inserting in lieu

thereof “calendar quarter”. (c) Amendments to Subchapter C of Chapter 12.

(1) Section 2521.-Section 2521 (relating to specific exemption) is amended to read as follows: "SEC. 2521. Specific Exemption.

“In computing taxable gifts for a calendar quarter, there shall be allowed as a deduction in the case of a citizen or resident an exemption of $30,000, less the aggregate of the amounts claimed and allowed as a specific exemption in the computation of gift taxes for the calendar year 1932 and all calendar years and calendar quarters intervening between that calendar year and the calendar quarter for which the tax is being computed under the laws applicable to such years or calendar quarters.”

(2) Section 2522.--Section 2522 (relating to charitable and similar gifts) is amended by deleting “year” each place it appears and inserting in lieu thereof “quarter”.

(3) Section 2523.-Subsection (a) of section 2523 (relating to gifts to a spouse) is amended by deleting "year" each place it appears and inserting

in lieu thereof “quarter”. (d) MISCELLANEOUS AMENDMENTS.-

(1) Paragraph (2) of subsection (d) of section 1015 (relating to increased basis for gift tax paid) is amended

(A) by deleting “calendar year” the first time it appears therein and inserting in lieu thereof "calendar quarter (or calendar year if the gift was made before January 1, 1971)”, and

(B) by deleting “calendar year" every other place it appears therein and inserting in lieu thereof "calendar quarter or year”. (2) Section 2012.

(A) Paragraph (1) of subsection (b) of section 2012 (relating to credit for gift tax) and paragraph (1) of subsection (d) of such section are cach amended by deleting “the year” and inserting in lieu thereof “the calendar quarter (or calendar year if the gift was made before January 1, 1971)”.

(B) Subsection (d) of section 2012 is amended by deleting “such year” each place it appears therein and inserting in lieu thereof "such quarter

or year”. (3) Section 6019 (relating to gift tax returns) is amended by deleting "year" each place it appears and inserting in lieu thereof “quarter”.

(4) Subsection (b) of section 6075 (relating to time for filing gift tax returns) is amended to read as follows: (b) GIFT Tax RETURNS.-Returns made under section 6019 (relating to gift taxes) shall be filed on or before the last day of the first month following the close of the calendar quarter.”

(5) Paragraph (1) of subsection (c) of section 6212 (relating to notice of deficiency) is amended by deleting "calendar year” and inserting in lieu thereof "calendar quarter”.

(6) Subsection (b) of section 6214 (relating to determination by Tax Court) is amended to read as follows: **(b) JURISDICTION OVER OTHER YEARS OR QUARTERS.—The Tax Court in redetermining a deficiency of income tax for any taxable year or of gift tax for any calendar year or calendar quarter shall consider such facts with relation to the taxes for other years or calendar quarters as may be necessary correctly to redetermine the amount of such deficiency, but in so doing shall have no jurisdiction to determine whether or not the tax for any other year or calendar quarter has been overpaid or underpaid."

(7) Subsection (b) of section 6324 (relating to lien for gift tax) is amended by deleting “calendar year” and inserting in lieu thereof “period for which the return was filed”.

(8) Paragraph (2) of section 6501 (e) (relating to limitations on assessment and collection) is amended by deleting “during the year” and inserting in lieu thereof "during the period for which the return was filed”.

(9) Section 6512 (relating to limitations in case of petition to Tax Court) is amended by deleting the same calendar year" each place it appears therein und inserting in lieu thereof “the same calendar year or calendar quarter". (e) EFFECTIVE DATE.—The amendments made by this section shall be effective with regard to gifts made after December 31, 1970. SEC. 3. ESTATE TAX.

(a) ALTERNATE VALUATION.-Section 2032 (relating to alternate valuation) is amended

(1) by deleting “1 year” each place it appears and inserting in lieu thereof "6 months”, and

(2) by deleting “1-year” and inserting in lieu thereof "6-month”. (b) TIME FOR Filing ESTATE TAX RETURNS.-Subsection (a) of section 6075 (relating to time for filing estate tax returns) is amended by deleting “15 months” and inserting in lieu thereof “9 months”.

(c) CERTAIN BEQUESTS SUBJECT POWER APPOINTMENT.- Section 20.55(b)(2)(C) is amended by deleting “1 year" and inserting in lieu thereof “6 months”. (d) DISCHARGE OF FIDUCIARY FROM PERSONAL Liability.

(1) Section 2204 (relating to discharge of executor from personal liability) is amended

(A) by striking out "Executor" in the heading of such section and inserting in lieu thereof “Fiduciary”;

(B) by striking out “If the executor: and inserting in lieu thereof (a) General Rule.--If the executor''; (C) by amending the last sentence thereof to read as follows:

“The executor, on payment of the amount of which he is notified and for which the time for payment is not extended under section 6161, 6163, or 6166, and on furnishing any bond which may be required under section 6165 for any amount for which the time for payment is extended, shall be discharged from personal liability for any deficiency in tax thereafter found to be due and shall be entitled to a receipt or writing showing such discharge.”

(D) by adding at the end thereof the following new subsection: “(b) Fiduciary Other Than the Executor.-If a fiduciary (not including a fiduciary holding property included in the gross estate of a nonresident decedent) other than the executor makes written application to the Secretary or his delegate

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for determination of the amount of any estate tax for which the fiduciary may be personally liable under section 6324 or otherwise, and for discharge from personal liability therefor, the Secretary or his delegate upon the discharge of the executor from personal liability under subsection (a), or upon the expiration of 6 months after the making of such application by the fiduciary, if later, shall notify the fiduciary (1) of the amount of such tax for which it has been determined the fiduciary is liable, or (2) that it has been determined that the fiduciary is not liable for any such tax. Such application shall be accompanied by a copy of the instrument, if any, under which such fiduciary is acting, a description of the property held by the fiduciary, and such other information for purposes of carrying out the provisions of this section as the Secretary or his delegate may require by regulations. On payment of the amount of such tax for which it has been determined the fiduciary is liable and for which the time for payment has not been extended under sction 6161, 6163, or 6166, and upon furnishing any bond which may be required under section 6165 for any amount for which the time for payment has been extended, or upon receipt by him of notification of a determination that he is not liable for any such tax, the fiduciary shall be discharged from personal liability for any deficiency in such tax thereafter found to be due and shall be entitled to a receipt or writing evidencing such discharge.

(3) Sections 6040(2), 6314(c) (2), 6324(a)(3), and 6504 (9) are each amended by deleting "executor” each place it appears in the heading or body of such sections and inserting in lieu thereof "fiduciary”.

(4) The table of sections for subchapter C of chapter 11 is amended by striking out “Discharge of executor” and inserting in lieu thereof "Discharge

of fiduciary”. (d) HOLDING PERIOD OF PROPERTY.-Section 1223 (relating to holding period of property) is amended by redesignating paragraph (11) as paragraph (12) and inserting after paragraph (10) the following:

"(11) In the case of a person acquiring property from a decedent or to whom property passed from a decedent (within the meaning of section 1014(b)), if

“(A) such property was included in such decedent's gross estate,

“(B) the basis of such property in the hands of such person is determined under section 1014, and

“(C) such property is sold or exchanged by the person within 6

months after the decedent's death, such person shall be considered to have held such property for more than

6 months." (e) PLACE FOR FILING RETURNS.

(1) Paragraph (3) of section 6091 (b) (relating to place for filing returns or other documents) is amended to read as follows: “(3) ESTATE TAX RETURNS.

(A) General rule.- Except as provided in subparagraph (B), returns of estate tax required under section 6018 shall be made to the Secretary or his delegate

“(i) in the internal revenue district in which was the domicile of the decedent at the time of his death, or

“(ii) at a service center serving the internal revenue district referred to in clause (i), as the Secretary or his delegate may by

regulations designate. “(B) EXCEPTION.-If the domicile of the decedent was not in an internal revenue district, or if he had no domicile, the estate tax return required under section 6018 shall be made at such place as the Secretary

or his delegate may by regulations designate.” (2) Paragraph (4) of section 6091 (b) is amended to read as follows: “(4) HAND-CARRIED RETURNS.—Notwithstanding paragraph (1), (2), or (3), a return to which paragraph (1) (A), (2) (A), or (3) (A) would apply, but for this paragraph, which is made to the Secretary or his delegate by handcarrying shall, under regulations prescribed by the Secretary or his delegate, be made in the internal revenue district referred to in paragraph (1) (A) (i),

(2) (A) (i), or (3) (A) (i), as the case may be.” (f) EFFECTIVE DATE.

(1) GENERAL RULE.—The amendments made by this section shall apply to estates of decedents dying after September 30, 1970.

(2) Decedents dying after March 31, 1970, and before October 1, 1970.In the case of estates of decedents dying after March 31, 1970, and before October 1, 1970

(A) Returns made under section 6018(a) of the Internal Revenue Code of 1954 (relating to estate taxes) shall be filed on or before June 15, 1971, or within 9 months after the date of the decedent's death, if later.

(B) The term “1 year”, as it appears in section 2032 of the Internal Revenue Code of 1954 before the enactment of this act, shall be deemed to be the length of time, expressed in months and dars, beginning with the date of the decedent's death and ending on March 15, 1971, or the length of time expressed in months and days existing between the decedent's death and the date occurring 6 months after the date of the decedent's death, if longer. The term “l-vear period”, as it appears in section 2032(b) before the enactment of this Act, shall be deemed to

refer to such period. The CHAIRMAN. Mr. Watts will inquire.

Mr. Watts. I would like to know if lead in gasoline is potentially as hazardous as you all have expressed and is really dangerous to the public, why do we go the tax route to try to correct the situation?

If it is going to kill everybody the way you all testified, and I am not saying I agree with you, but if that is the case, it would seem to me that direct action should be taken.

Secretary KENNEDY. We of course contemplate double action: One, the tax to phase in the change over a period which would provide an orderly transition to low lead and no lead, and then, of course, regulations which would eliminate lead.

This would be over a period of time.

Mr. WATTS. What I had in mind or what I thought you might have in mind anyway would be to set up an upper limit on the content in lead in a fuel and give the companies a reasonable number of years to reach that limit if that is what you claim again you hope to do with the tax.

I don't see any difference in doing it directly or indirectly by the tax.

Secretary KENNEDY. We have the revenue item which will bring in $1.1 billion in revenue at a time it is needed. This amount will phase out as lead disappears from gasoline.

Mr. Watts. Which is your principal interest to raise more revenue or to get rid of pollution?

Secretary KENNEDY. Both.

Mr. VENEMAN. Mr. Watts, we actually have a dual force here. One is the regulatory powers incorporated in the Clean Air Act which would give the Department of Health, Education, and Welfare the authority to eliminate additives to fuels which are detrimental to human health.

Mr. WATTS. Is that in this proposed bill?

Mr. VENEMAN. It would not be in this particular bill but it is in the Clean Air Act that is presently before the Senate. It has passed the House.

The other side of the coin is we cannot anticipate we are going to get rid of all of the leaded gasoline for several years. We still have vehicles on the highway that require it.

All of our testimony indicates beginning with the 1971 model year, here the engines are being developed where they will function without leaded gasoline. By using the regulatory powers that would be given the Department of Health, Education, and Welfare and using the tax so there would be economic disincentive to buy leaded gasoline, I think the combination would discourage the purchase of leaded gasoline.

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