Page:United States Statutes at Large Volume 90 Part 2.djvu/421

 PUBLIC LAW 94-455—OCT. 4, 1976 '

90 STAT. 18819

"(3) the amount of the taxable estate of the deemed transferor shall be increased by the value of such property as determined for purposes of the tax imposed by section 2601 on the transfer." (3) INCOME IN RESPECT OF A DECEDENT.—Subsection (c) of section 691 (relating to deduction for estate tax) is amended by 26 USC 691. adding at the end thereof the following new paragraph: "(3)

SPECIAL RULE FOR GENERATION-SKIPPING TRANSFERS.—For

purposes of this section— "(A) the tax imposed by section 2601 or any State inheritance tax described in section 2602(c)(5)(C) on any generation-skipping transfer shall be treated as a tax imposed by section 2001 on the estate of the deemed transferor (as defined Ante, p. 1846. = in section 2612(a); "(B) any property transferred in such a transfer shall be treated as if it were included in the gross estate of the deemed transferor at the value of such property taken into account for purposes of the tax imposed by section 2601; and "(C) under regulations prescribed by the secretary, any item of gross income subject to the tax imposed under section 2601 shall be treated as income described in subsec' tion (a) if such item is not properly includible in the gross income of the trust on or before the date of the generation• '*' skipping transfer (within the meaning of section 2611(a)) and if such transfer occurs at or after the death of the deemed tranferor (as so defined)." (4)

SPECIAL RULES FOR GENERATION-SKIPPING TRANSFERS.—

Section 303 is amended by adding at the end thereof the following 26 USC 303, new subsection: " (d) SPECIAL RULES FOR GENERATION-SKIPPING TRANSFERS.—Under

regulations prescribed by the Secretary, where stock in a corporation is subject to tax under section 2601 as a result of a generation-skipping transfer (within the meaning of section 2611(a)), which occurs at or after the death of the deemed transferor (within the meaning of section 2612)— "(1) the stock shall be deemed to be included in the gross estate of the deemed transferor; "(2) taxes of the kind referred to in subsection (a)(1) which are imposed because of the generation-skipping transfer shall be treated as imposed because of the deemed transferor's death (and for this purpose the tax imposed by section 2601 shall be treated as an estate tax); "(3) the period of distribution shall be measured from the date of the generation-skipping transfer; and "(4) the relationship of stock to the decedent's estate shall be measured with reference solely to the amount of the generationskipping transfer." (c) EFFECTIVE DATES.—

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26 USC 2601

(1) IN GENERAL.—Except as provided in paragraph (2), the note. amendments made by this section shall apply to any generationskipping transfer (within the meaning of section 2611(a) of the Internal Revenue Code of 1954) made after April 30, 1976. (2) EXCEPTIONS.—The amendments made by this section shall not apply to any generation-skipping transfer— (A) under a trust which was irrevocable on April 30, 1976, but only to the extent that the transfer is not made out of corpus added to the trust after April 30, 1976, or

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