Page:United States Statutes at Large Volume 102 Part 4.djvu/597

 PUBLIC LAW 100-647—NOV. 10, 1988

102 STAT. 3567

(C) The amendments made by this paragraph shall apply to 26 USC 2642 transfers after March 31, 1988. note. (18) Clause (i) of section 2642(d)(2)(B) of the 1986 Code is amended to read as follows: "(i) the value of the property involved in such transfer reduced by the sum of— "(I) any Federal estate tax or state death tax actually recovered from the trust attributable to such property, and "(II) any charitable deduction allowed under section 2055 or 2522 with respect to such property, and". (19) Paragraph (2) of section 2651(b) of the 1986 Code is amended by striking out "a spouse of the transferor" and inserting in lieu thereof "a spouse (or former spouse) of the transferor". (20) Section 2652 of the 1986 Code is amended by adding at the end thereof the following new subsection: "(d) Executor.—For purposes of this chapter, the term 'executor' has the meaning given such term by section 2203." (h) AMENDMENTS RELATED TO SECTION 1433 OF THE REFORM ACT.—

(1) Subsection (a) of section 1433 of the Reform Act is amended 26 USC 2601 by striking out "this part" and inserting in lieu thereof "this note, subtitle". (2) Paragraph (2) of section 1433(b) of the Reform Act is amended— (A) by striking out "this part" in the material preceding subparagraph (A) and inserting in lieu thereof "this subtitle", (B) by inserting before the comma at the end of subparagraph (A) the following: "(or out of income attributable to corpus so added)", and (C) by inserting "or revocable trust" after "a will" in subparagraph (B). (3)(A) Subsection (b) of section 1433 of the Reform Act is amended by striking out paragraph (3) and inserting in lieu thereof the following new paragraphs: "(3) TREATMENT OF CERTAIN TRANSFERS TO GRANDCHILDREN.—

"(A) IN GENERAL.—For purposes of chapter 13 of the Internal Revenue Code of 1986, the term 'direct skip' shall not include any transfer before January 1, 1990, from a transferor to a grandchild of the transferor to the extent the aggregate transfers from such transferor to such grandchild do not exceed $2,000,000. "(B) TREATMENT OF TRANSFERS IN TRUST.—For purposes of subparagraph (A), a transfer in trust for the benefit of a grandchild shall be treated as a transfer to such grandchild if (and only if)— "(i) during the life of the grandchild, no portion of the corpus or income of the trust may be distributed to (or for the benefit of) any person other than such grandchild, "(ii) the assets of the trust will be includible in the gross estate of the grandchild if the grandchild dies before the trust is terminated, and "(iii) all of the income of the trust for periods gifter the grandchild has attained age 21 will be distributed

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