Page:United States Statutes at Large Volume 90 Part 2.djvu/409

 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1877

(5) R E P E A L OF SECTION 1246(e).—Section 1246 ( r e l a t i n g to g a i n

26 USC 1246.

on foreign investment company stock) is amended by striking out subsection (e) and by redesignating subsections (f) and (g) as subsections (e) and (f), respectively. (b) NONRECOGNITION OF G A I N W H E R E CERTAIN APPRECIATED CARRYOVER B A S I S PROPERTY I s U S E D I N S A T I S F ACTION OF A P E C U N I A R Y

R E Q U E S T. — Part III of subchapter O of chapter 1 (relating to common nontaxable exchanges) is amended by a d d i n g a t the end thereof the following new section: "SEC. 1040. USE OF CERTAIN APPRECIATED CARRYOVER BASIS PROP- 26 USC 1040. ERTY TO SATISFY PECUNIARY REQUEST. " (a) GENERAL RULE. — I f the executor of the estate of any decedent

satisfies the r i g h t of any person to receive a pecuniary bequest with appreciated carryover basis property (as defined i n section 1023(f) -Ante, p. 1872. (5)), then gain on such exchange shall be recognized to the estate only to the extent that, on the date of such exchange, the fair market value of such property exceeds the value of such property for purposes of chapter 11. "(b)

S I M I L A R RULE FOR CERTAIN T R U S T S. — To the extent provided

in regulations prescribed by the Secretary, a rule similar to the rule provided in subsection (a) shall apply where— " (1) by reason of the death of the decedent, a person has a r i g h t to receive from a trust a specific dollar amount which is the equivalent of a pecuniary bequest, and " (2) the trustee of the trust satisfies such r i g h t with carryover basis property to which section 1023 applies. " (c) B A S I S OF PROPERTY ACQUIRED IN E X C H A N G E DESCRIBED I N S U B -

SECTION (a) OR (b). — The basis of property acquired in a n exchange with respect to which gain realized is not recognized by reason of SUDsection (a) o r (b) shall be the basis of such property immediately before the exchange, increased by the amount of the gain recognized to the estate or trust on the exchange." (c) L I M I T A T I O N OF INCREASE I N B A S I S FOR G I F T T A X P A I D TO T H A T PORTION OF G I F T T A X ATTRIBUTABLE TO N E T APPRECIATION I N V A L U E. —

Subsection (d) of section 1015 (relating to increased basis for gift tax 26 USC 1015. p a i d) is amended by a d d i n g a t the end thereof the following new paragraph: "(6)

S P E C I A L RULE FOR G I F T S M A D E A F T E R DECEMBER 31, 1976. —

(A) IN GENERAL.—In the case of any gift made after December 31, 1976, the increase in basis provided by this subsection with respect to any gift for the gift tax paid under chapter 12 shall be an amount (not i n excess of the amount of tax so p a i d) which bears the same ratio to the amount of tax so p a i d as— " (i) the n e t appreciation in value of the gift, bears to " ( i i) the amount of the gift. " (B) N E T APPRECIATION.—For purposes of paragraph (1), the n e t appreciation in value of any gift is the amount by which the fair market value of the gift exceeds the donor's adjusted basis immediately before the gift." (d)

INFORMATION REQUIREMENT. —

(1) IN GENERAL.—Subpart A of part III of subchapter A of chapter 61 (relating to information concerning persons subject to special provisions) is amended by inserting after section 6039 the following new section:

�