Death Tax Elimination Act of 2001

Death Tax Elimination Act of 2001 - Title I: Repeal of Estate, Gift, and Generation-Skipping Taxes - Amends the Internal Revenue Code to repeal, effective January 1, 2011, subtitle B (relating to estate and gift taxes and generation-skipping taxes).

Title II: Reductions of Estate and Gift Tax Rates Prior to Repeal - Phases in reductions prior to repeal.

Title III: Unified Credit Replaced with Unified Exemption Amount - Replaces the unified credit against estate and gift taxes with a unified exemption amount.

Title IV: Carryover Basis at Death; Other Changes Taking Effect with Repeal - Repeals, effective January 1, 2011, current provisions relating to the basis of property acquired from a decedent.

Provides, as a general rule, with respect to property acquired from a decedent dying on January 1, 2011, or later that: (1) property shall be treated as transferred by gift; and (2) the basis of the person acquiring the property shall be the lesser of the adjusted basis of the decedent or the fair market value of the property at the date of the decedent's death. Provides for increases in basis on certain property.

Replaces current subpart C (Estate and Gift Tax Returns) provisions with new subpart C provisions (Returns Relating to Transfers During Life or at Death). Requires specified information to be reported concerning non-cash assets over $1.3 million transferred at death and certain gifts exceeding $25,000. Prescribes penalties for failure to report such information.

Makes the exclusion of gain on the sale of a principal residence available to heirs in certain cases.

Revises current provisions concerning the transfer of certain farm, etc., real property to provide, as a general rule, that if the executor of the estate of any decedent satisfies the right of any person to receive a pecuniary bequest with appreciated property, then gain on such exchange shall be recognized to the estate only to the extent that, on the date of such exchange, the fair market value of such property exceeds such value on the date of death. Provides a similar rule for certain trusts.

Title V: Conservation Easements - Doubles, from 25 to 50 miles, the distance within which qualified conservation easements must be located from a metropolitan area, national park, or wilderness area and increases, from 10 to 25 miles, the distance which such easements must be from an Urban National Forest.

Title VI: Modifications of Generation-Skipping Tax - Amends provisions concerning the special rules for allocation of the generation-skipping tax (GST) exemption to provide, as a general rule, that: (1) if any individual makes an indirect skip during such individual's lifetime, any unused portion of such individual's GST exemption shall be allocated to the property transferred to the extent necessary to make the inclusion ratio for such property zero; and (2) if the amount of the indirect skip exceeds such unused portion, the entire unused portion shall be allocated to the property transferred.

Declares that, if a trust is severed in a qualified severance, the trusts resulting from such severance shall be treated as separate trusts thereafter.

Revises valuation rules for gifts for which a gift tax return was filed or deemed allocation made. Provides that, if an allocation of the GST exemption to any transfers of property is deemed to have been made at the close of an estate tax inclusion period, the value of the property shall be its value at such time.

Directs the Secretary of the Treasury to prescribe circumstances and procedures under which extensions of time will be granted to make an allocation of GST exemption or an election not to apply specified allocation requirements to certain lifetime direct skips, indirect skips, or transfers to a particular trust.

Title VII: Extension of Time for Payment of Estate Tax - Increases the permissible number of partners or shareholders in a closely held business for purposes of eligibility for an extension of estate tax payments.