Page:United States Statutes at Large Volume 120.djvu/1113

 120 STAT. 1082

26 USC 2522.

VerDate 14-DEC-2004

10:20 Jul 12, 2007

PUBLIC LAW 109–280—AUG. 17, 2006

‘‘(g) VALUATION OF SUBSEQUENT GIFTS.— ‘‘(1) IN GENERAL.—In the case of any additional contribution, the fair market value of such contribution shall be determined by using the lesser of— ‘‘(A) the fair market value of the property at the time of the initial fractional contribution, or ‘‘(B) the fair market value of the property at the time of the additional contribution. ‘‘(2) DEFINITIONS.—For purposes of this paragraph— ‘‘(A) ADDITIONAL CONTRIBUTION.—The term ‘additional contribution’ means a bequest, legacy, devise, or transfer described in subsection (a) of any interest in a property with respect to which the decedent had previously made an initial fractional contribution. ‘‘(B) INITIAL FRACTIONAL CONTRIBUTION.—The term ‘initial fractional contribution’ means, with respect to any decedent, any charitable contribution of an undivided portion of the decedent’s entire interest in any tangible personal property for which a deduction was allowed under section 170.’’. (c) GIFT TAX.—Section 2522 (relating to charitable and similar gifts) is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: ‘‘(e) SPECIAL RULES FOR FRACTIONAL GIFTS.— ‘‘(1) DENIAL OF DEDUCTION IN CERTAIN CASES.— ‘‘(A) IN GENERAL.—No deduction shall be allowed for a contribution of an undivided portion of a taxpayer’s entire interest in tangible personal property unless all interest in the property is held immediately before such contribution by— ‘‘(i) the taxpayer, or ‘‘(ii) the taxpayer and the donee. ‘‘(B) EXCEPTIONS.—The Secretary may, by regulation, provide for exceptions to subparagraph (A) in cases where all persons who hold an interest in the property make proportional contributions of an undivided portion of the entire interest held by such persons. ‘‘(2) VALUATION OF SUBSEQUENT GIFTS.—In the case of any additional contribution, the fair market value of such contribution shall be determined by using the lesser of— ‘‘(A) the fair market value of the property at the time of the initial fractional contribution, or ‘‘(B) the fair market value of the property at the time of the additional contribution. ‘‘(3) RECAPTURE OF DEDUCTION IN CERTAIN CASES; ADDITION TO TAX.— ‘‘(A) IN GENERAL.—The Secretary shall provide for the recapture of an amount equal to any deduction allowed under this section (plus interest) with respect to any contribution of an undivided portion of a taxpayer’s entire interest in tangible personal property— ‘‘(i) in any case in which the donor does not contribute all of the remaining interest in such property to the donee (or, if such donee is no longer in existence, to any person described in section 170(c)) before the earlier of—

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