Page:United States Statutes at Large Volume 104 Part 2.djvu/906

 104 STAT. 1388-498 PUBLIC LAW 101-508 —NOV. 5, 1990 by such other persons in the transaction (or series of transactions). Such transfer shall be treated as made in exchange for the consideration (if any) provided by such other persons for the acquisition of their interests in such property. "(3) TERM INTEREST. —The term 'term interest' means— "(A) a life interest in property, or "(B) an interest in property for a term of years. "(4) VALUATION RULE FOR CERTAIN TERM INTERESTS. — If the nonexercise of rights under a term interest in tangible property would not have a substantial effect on the valuation of the remainder interest in such property— "(A) subparagraph (A) of subsection (a)(2) shall not apply to such term interest, and "(B) the value of such term interest for purposes of applying subsection (a)(1) shall be the amount which the holder of the term interest establishes as the amount for which such interest could be sold to an unrelated third party. " (d) TREATMENT OF TRANSFERS OF INTERESTS IN PORTION OF TRUST.— In the CEise of a transfer of an income or remainder interest with respect to a specified portion of the property in a trust, only such portion shall be taken into account in applying this section to such transfer. "(e) MEMBER OF THE FAMILY.—For purposes of this section, the term 'member of the family' shall have the meaning given such term by section 2704(c)(2). "SEC. 2703. CERTAIN RIGHTS AND RESTRICTIONS DISREGARDED. "(a) GENERAL RULE. —For purposes of this subtitle, the value of any property shall be determined without regard to— "(1) any option, agreement, or other right to acquire or use the property at a price less than the fair market value of the property (without regard to such option, agreement, or right), or "(2) any restriction on the right to sell or use such property. "(b) EXCEPTIONS.— Subsection (a) shall not apply to any option, agreement, right, or restriction which meets each of the following requirements: "(1) It is a bona fide business arrangement. "(2) It is not a device to transfer such property to members of the decedent's family for less than full and adequate consideration in money or money's worth. "(3) Its terms are comparable to similar arrangements entered into by persons in an arms' length transaction. "SEC. 2704. TREATMENT OF CERTAIN LAPSING RIGHTS AND RESTRIC- TIONS. "(a) TREATMENT OF LAPSED VOTING OR LIQUIDATION RIGHTS.— "(1) IN GENERAL,—For purposes of this subtitle, if— "(A) there is a lapse of any voting or liquidation right in a corporation or partnership, and '(B) the individual holding such right immediately before the lapse and members of such individual's family hold, both before and sifter the lapse, control of the entity, such lapse shall be treated as a transfer by such individual by gift, or a transfer which is includible in the gross estate of the decedent, whichever is applicable, in the amount determined under paragraph (2).

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