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—

66

(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 days, 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 "1-year 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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I think the tax imposition is essential to ultimately eliminate the use of leaded gasolines as rapidly as possible.

Mr. WATTS. There are certain cars that need leaded gas to run.

The increased price is not going to affect that fellow if he cannot use the other type of gasoline.

Mr. NOLAN. As has been pointed out in the testimony, the 1971 and subsequent year automobiles are bing built to operate on a 91 octane fuel. A 91 octane fuel can be produced today in substantial quantity from existing gasoline stocks but it costs somewhat more to produce. We are attempting to develop here a kind of economic equalizer so it will not be cheaper to produce a leaded gasoline than it will be to produce a low lead or unleaded gasoline.

Since the cars that are being produced to operate on the lower octane gasoline could operate just as well on higher octane leaded gas, unless we do so, people will simply use the cheaper type of leaded gasoline. The benefits of having newer automobiles which can operate as well on unleaded gasoline would be lost unless we do so.

In addition to a regulatory approach we have to build in an economic equalizer that in effect eliminates this cost differential from the two different types of gasoline. By doing that we will also encourage gasoline refineries to develop a larger quantity of low lead or unleaded gasoline from their existing stocks.

Also we will to some extent increase the differential in price between premium grade and regular grade since premium grade uses more lead. Many people who are using premium grade today don't need it, so by increasing that differential as a result of the fact that the premium grade contains more lead, we will dissuade more people from using an unnecessarily high lead content gasoline in their automobiles.

Dr. HEFFNER. I think in referring to your original phrasing of that question, that all of us have attempted to emphasize the fact that we do not believe- we have no evidence to believe that we have a serious health crisis on our hands at this point and that therefore we must immediately eliminate any lead use.

We believe it is only prudent to begin a technique of reducing lead content for health purposes. We believe the tax is what is necessary to begin that gradual reduction. We are just a little too close to the levels at which there are physiological and health problems from blood level content of lead.

Mr. TRAIN. May I underline what Mr. Nolan said a moment ago? It is my understanding that the low lead or no lead fuels now being marketed are not selling and this is true even in Los Angeles where certainly there has been widespread public education as to the environmental impact of automobile emissions and where the public is highly sensitive to this particular problem.

I think the only explanation one can give to this is the continuing existence of a price differential that makes it advantageous to the consumer pricewise to buy leaded gasolines.

We are firmly of the opinion that this tax is the only feasible way at this time to remove that differential and to make it equally advantageous to the consumer to buy the nonleaded, or low-leaded gas.

If

Mr. WATTS. I assume today practically all of the refineries use lead. you put the tax on lead and they adjust their prices to increase the price on the lower grade fuels as you call them today and do not do away with lead additives they would come out the same.

You put the tax on the lead end of it where they have heavy lead. Then where they use only very little lead, they could raise the price of that gasoline as much as they raise the price of the leaded one. That way they would not have to raise the price of the leaded gasoline very much. Could the tax prevent that?

Mr. TRAIN. I think that Treasury could perhaps address itself better to this question than I, but it is our belief that competitive forces will prevent that happening.

We already have companies trying to market successfully low-lead gasoline. It is certainly to their advantage to take full advantage of the price differential that this tax will bring into effect.

So that is the answer to that question, Mr. Watts. Competition will prevent that happening.

Mr. WATTS. Does diesel fuel have lead in it?

Mr. TRAIN. No, sir.

Mr. WATTS. It smells bad anyway. But it does not have any lead in it?

Mr. TRAIN. That is right.

Mr. WATTS. On this estate tax business, of course you have under present law 15 months after the man dies within which to file an estate tax return and you pay the tax on the value of the assets within 12 months.

Mr. NOLAN. The tax is based on the value of the estate at the date of the decedent's death or the date 12 months after death.

Mr. WATTS. Not at the lowest price during the 12-month period. Mr. NOLAN. That is right.

Mr. WATTS. You seek to reduce that by the recommendation of the American Bar Association and the American Bankers Association to 9 months.

Mr. NOLAN. We would require the filing of the return 9 months after death instead of 15 and we would change the alternate valuation date from 12 months to 6 months after death so you could value on the date of death or 6 months after death.

Mr. WATTS. But you pay your taxes 9 months after death?
Mr. NOLAN. That is right.

Mr. WATTS. And have you given any consideration to the problem that a man's business or estate may consist of a large business or something of that kind. Certainly I can recognize, having settled a number of estates, not many large ones but a number of them, that forcing the property on the market too quickly sometimes can have a serious effect on the price that it brings. This could correspondingly have a serious effect on the amount of revenue you might get out of that estate if you force that property on the market at bargain prices. Have you given any thought then to any proviso that under certain circumstances the Treasury Department or State tax department could grant an estate a longer period of time to pay the tax under certain circumstances?

Mr. NOLAN. There are already such provisions in the estate tax laws.

Mr. WATTS. What are they?

Mr. NOLAN. In cases where hardship exists, a 6-month extension may be granted. Upon a showing of undue hardship, a period up to 10 years for payment of the tax may be granted, and there are even some cases where a 10-year extension is granted automatically.

We think the liquidity problems exist under present law and the problems in the case you propose would exist as much as 15 months after death as 9 months after death; we don't think we are increasing the liquidity problem to any substantial extent by requiring the filing of the return and the payment of the tax 9 months after death rather than 15.

However, we do recognize there are some problems in the present provisions for extensions of time and we anticipate that we will make some recommendations to liberalize some of the liquidity provisions to this committee next year when we make other recommendations in the estate and gift tax area.

If it were felt necessary to make some liberalization at this time, we could, for example, recommend to you that the 6-month period which is almost automatically granted if hardship is shown could be extended to 12 months.

That would give the executor of an illiquid estate the same amount of time to pay the tax after this reduction in time from 15 months to 9 months as he would have under present law. That is to say, under present law, he would have 15 months until payment is required and he would get a 6-month extension so he would have 21 months. We would be perfectly agreeable, if he files a return 9 months after death, to extend the 6 months to 12 months, so he would also have 21 months in that case.

I think we are prepared to make recommendations on the extension of time provisions, but we think perhaps the only one that is necessary now is changing the 5-month extension to 12 months.

Mr. WATTS. I don't see any sense, myself, of biting at this a number of times when you can bite at it once and get a lot done. I don't agree that there isn't much difference between 9 and 12 months. If you make the extension easy to accomplish, that might be an answer. But it has been my experience in dealing with taxes, and I have not dealt with them too much, that any time you try to get any relief in the field of taxation it is never easy to acquire it. If you are going to make it easy, that is fine.

Mr. NOLAN. I have learned from long experience to respect your judgment and views. If you feel this is a problem, we certainly would be willing to take up with the committee the possibility of making some liberalization in these rules at the present time.

Mr. WATTS. In my opinion, this is certainly a problem if the estate. is a large estate that consists mainly of a large number of shares of some pretty good sized corporation. These would have to be forced on the market and the people who would normally buy that stock might be willing to wait the situation out. I don't know what the problems will be, but I think it is certainly something which should be examined by this committee before we reduce the period from 15 months.

Mr. NOLAN. We are thoroughly open-minded on this question. I feel sure we can find some basis for dealing with the problem that concerns you.

Mr. WATTS. Thank you, Mr. Chairman.

The CHAIRMAN. Mr. Byrnes will inquire.

Mr. BYRNES. Just following that one step further, it should be pointed out that when you give an extension, interest has to run from the end of the sixth month, really.