Page:United States Statutes at Large Volume 90 Part 2.djvu/110

 90 STAT. 1578

PUBLIC LAW 94-455—OCT. 4, 1976 year do not exceed the income of the trust for such year, there shall be n o accumulation distribution for such year." (d)

26 USC 669. 26 USC 665.

R E P E A L OF SPECIAL CAPITAL G A I N T H R O W B A C K. —

(1) Section 669 (relating to treatment of capital gain deemed distributed in preceding years) is hereby repealed. (2) Paragraph (1) of section 665(e) (defining preceding taxable year) is amended— (A) by striking out subparagraph (C), (B) by inserting " o r " a t the end of subparagraph (A), and (C) by striking o u t ", or" at the end of subparagraph (B) and inserting in lieu thereof "; and". (3) Section 665 (definitions applicable to subpart D) is amended by striking out subsections (f) and (g). (e) SPECIAL RULE FOR G A I N ON PROPERTY TRANSFERRED TO T R U S T AT L E S S T H A N F A I R M A R K E T V A L U E. —

26 USC 644.

(1) I n GENERAL.—Subpart A of part I of subchapter J of chapter 1 (relating to general rules for taxation of estates and trusts) is amended by adding at the end thereof the following new section: "SEC. 644. SPECIAL RULE FOR GAIN ON PROPERTY TRANSFERRED TO TRUST AT LESS THAN FAIR MARKET VALUE. "(a)

IMPOSITION OF T A X. — " (1) IN GENERAL.—If—

" (A) a t r u s t (or another trust to which the property is distributed) sells or exchanges property at a gain not more than 2 years after the date of the initial transfer of the property in trust by the transferor, and " (B) the fair market value of such property at the time of the initial transfer in trust by the transferor exceeds the adjusted basis of such property immediately after such transfer, there is hereby imposed a tax determined in accordance with paragraph (2) on the includible gain realized 021 such sale or exchange. " (2) A M O U N T OF TAX.—The amount of the tax imposed by paragraph (1) on any includible gain realized on the sale or exchange of any property shall be equal to the sum of— " (A) the excess of— " (i) the tax which would have been imposed under this chapter for the taxable year of the transferor in which the sale or exchange of such property occurs h a d the amount of the includible gain realized on such sale or exchange, reduced by any deductions properly allocable to such gain, been included in the gross income of the transferor for such taxable year, over " ( i i) the tax actually imposed under this chapter for such taxable year on the transferor, plus " (B) if such sale or exchange occurs in a taxable year of the transferor which begins after the beginning of the taxable year of the trust in which such sale or exchange occurs, an amount equal to the amount determined under subparagraph (A) multiplied by the annual rate established under section 6621. "(3)

TAXABLE YEAR FOR W H I C H TAX IMPOSED.—The tax imposed

by paragraph (1) shall be imposed for the taxable year of the trust which begins with or within the taxable year of the transferor in which the sale or exchange occurs.

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