Modifications of gift tax

(a) Computation of gift tax Subsection (a) of section 2502 of the Internal Revenue Code of 1986 is amended to read as follows: (a) Computation of tax (1) In general The tax imposed by section 2501 for each calendar year shall be an amount equal to the excess of— (A) a tentative tax, computed under paragraph (2), on the aggregate sum of the taxable gifts for such calendar year and for each of the preceding calendar periods, over (B) a tentative tax, computed under paragraph (2), on the aggregate sum of the taxable gifts for each of the preceding calendar periods. (2) Rate schedule If the amount with respect to which the tentative tax to be computed is: The tentative tax is: Not over $10,000 18% of such amount. Over $10,000 but not over $20,000 $1,800, plus 20% of the excess over $10,000. Over $20,000 but not over $40,000 $3,800, plus 22% of the excess over $20,000. Over $40,000 but not over $60,000 $8,200, plus 24% of the excess over $40,000. Over $60,000 but not over $80,000 $13,000, plus 26% of the excess over $60,000. Over $80,000 but not over $100,000 $18,200, plus 28% of the excess over $80,000. Over $100,000 but not over $150,000 $23,800, plus 30% of the excess over $100,000. Over $150,000 but not over $250,000 $38,800, plus 32% of the excess over $150,000. Over $250,000 but not over $500,000 $70,800, plus 34% of the excess over $250,000. Over $500,000 $155,800, plus 35% of the excess over $500,000.. (b) Treatment of Certain Transfers in Trust Section 2511 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: (c) Treatment of Certain Transfers in Trust Notwithstanding any other provision of this section and except as provided in regulations, a transfer in trust shall be treated as a taxable gift under section 2503, unless the trust is treated as wholly owned by the donor or the donor’s spouse under subpart E of part I of subchapter J of chapter 1.. (c) Lifetime gift exemption (1) In general Paragraph (1) of section 2505(a) of the Internal Revenue Code of 1986 is amended to read as follows: (1) the amount of the tentative tax which would be determined under the rate schedule set forth in section 2502(a)(2) if the amount with respect to which such tentative tax is to be computed were $10,000,000, reduced by. (2) Inflation adjustment Section 2505 of such Code is amended by adding at the end the following new subsection: (d) Inflation adjustment (1) In general In the case of any calendar year after 2011, the dollar amount in subsection (a)(1) shall be increased by an amount equal to— (A) such dollar amount, multiplied by (B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting calendar year 2010 for calendar year 2016 in subparagraph (A)(ii) thereof. (2) Rounding If any amount as adjusted under paragraph (1) is not a multiple of $10,000, such amount shall be rounded to the nearest multiple of $10,000.. (d) Conforming amendments (1) Section 2505(a) of such Code is amended by striking the last sentence. (2) The heading for section 2505 of such Code is amended by striking Unified. (3) The item in the table of sections for subchapter A of chapter 12 of such Code relating to section 2505 is amended to read as follows: Sec. 2505. Credit against gift tax.. (e) Effective date The amendments made by this section shall apply to gifts made on or after the date of the enactment of this Act. (f) Transition rule (1) In general For purposes of applying sections 1015(d), 2502, and 2505 of the Internal Revenue Code of 1986, the calendar year in which this Act is enacted shall be treated as 2 separate calendar years one of which ends on the day before the date of the enactment of this Act and the other of which begins on such date of enactment. (2) Application of section 2504(b) For purposes of applying section 2504(b) of the Internal Revenue Code of 1986, the calendar year in which this Act is enacted shall be treated as one preceding calendar period.