Page:United States Statutes at Large Volume 101 Part 2.djvu/1226

 101 STAT. 1330-432

PUBLIC LAW 100-203—DEC. 22, 1987

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26 USC 2036 "°*®

any of the foregoing. For purposes of the preceding sentence, a relationship by legal adoption shall be treated as a relationship by blood. "(C) TREATMENT OF SPOUSE.—An individual and such individual's spouse shall be treated as 1 person. -fe "(4) COORDINATION WITH SECTION 2035.—For purposes of apply^ ing section 2035, any transfer of the retained interest referred ^ in the transferred property referred to in paragraph (1). ' ' "(5) COORDINATION WITH SECTION 2043.—In lieu of applying V section 2043, appropriate adjustments shall be made for the value of the retained interest." ^^^ flj) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply with respect to estates of decedents dying after December 31, 1987, but only in the case of property transferred after December 17, 1987.
 * to in paragraph (1) shall be treated as a transfer of an interest

PART II—ESTATE TAX PROVISIONS RELATING TO EMPLOYEE STOCK OWNERSHIP PLANS «>i

gg(, JP4J, CONGRESSIONAL CLARIFICATION OF ESTATE TAX DEDUCTION FOR SALES OF EMPLOYER SECURITIES.

(a) INTENT OF CONGRESS IN ENACTING SECTION 2057 OF THE INTERNAL REVENUE CODE OF 1986.—Section 2057 (relating to sales of employer securities to employee stock ownership plans or workerowned cooperatives) is amended by redesignating subsections (d), (e), and (f) as subsections (e), (f), and (g), respectively, and by inserting after subsection (c) the following new subsection: "(d) QUALIFIED PROCEEDS FROM QUALIFIED SALES.—

"(1) IN GENERAL.—For purposes of this section, the proceeds of a sale of employer securities by an executor to an employee » stock ownership plan or an eligible worker-owned cooperative ' shall not be treated as qualified proceeds from a qualified sale unless— "(A) the decedent directly owned the securities immediately before death, and "(B) after the sale, the employer securities— " "(i) are allocated to participants, or '^ "(ii) are held for future allocation in connection with— ^- "(I) an exempt loan under the rules of section 4975, or "(II) a transfer of assets under the rules of '*'•'' section 4980(c)(3).

"(2) No SUBSTITUTION PERMITTED.—For purposes of paragraph

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(I)(B), except in the case of a bona fide business transaction (e.g., a substitution of employer securities in connection with a merger of employers), employer securities shall not be treated as allocated or held for future allocation to the extent that such securities are allocated or held for future allocation in substitution of other employer securities that had been allocated or held for future allocation." >

'** Copy read "interest."

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