Page:United States Statutes at Large Volume 92 Part 3.djvu/295

 PUBLIC LAW 95-600—NOV. 6, 1978

92 STAT. 2927

(B) CONFORMING AMENDMENT.—Paragraph (3) of section

1023(g) (relating to decedent's basis unknown) is amended by 26 USC 1023. striking out "to the person acquiring such property from the decedent" and inserting in lieu thereof "and cannot be reasonably ascertained". (3) TREATMENT OF INDEBTEDNESS.—

(A) IN GENERAL.—Paragraph (1) of section 1023(g) (defining fair market value) is amended by inserting "(without regard to whether there is a mortgage on, or indebtedness in respect of, the property)" after "chapter 11". 26 USC 2001 et (B) TECHNICAL AMENDMENT.—Subsection (g) of section •^e?1023 (relating to other special rules and definitions) is amended by striking out paragraph (4). (4) ONLY ONE FRESH START WITH RESPECT TO CARRYOVER BASIS PROPERTY HELD ON DECEMBER 31, 1976.—Subsection (h) of section

1023 (relating to adjustment to basis for December 31, 1976, fair 26 USC 1023. market value) is amended by adding at the end thereof the following new paragraph: "(4) ONLY ONE FRESH START.—There shall be no increase in

basis under this subsection by reason of the death of any decedent if the adjusted basis of the property in the hands of such decedent reflects the adjusted beisis of property which was carryover basis property with respect to a prior decedent." (5) AUTOMATIC LONG-TERM STATUS FOR GAINS AND LOSSES ON

CARRYOVER BASIS PROPERTY.—Subparagraph (A) of section 1223(11) is amended by inserting "or 1023" after "section 1014". 26 USC 1223, (6) CLARIFICATION THAT ADJUSTED BASIS IS INCREASED FOR STATE 1023, 1014. ESTATE TAXES.—

(A) Subsection (c) of section 1023 (relating to increase in 26 USC 1023. basis for Federal and State estate taxes attributable to ^ appreciation) is amended to read as follows: "(c) INCREASE IN BASIS FOR FEDERAL AND STATE ESTATE TAXES ATTRIBUTABLE T APPRECIATION.— O "(1) FEDERAL ESTATE TAXES.—The basis of appreciated carry-

over basis property (determined after any adjustment under subsection (h)) which is subject to the tax imposed by section 2001 26 USC 2001. or 2101 in the hands of the person acquiring it from the decedent 26 USC 2101. shall be increased by an amount which bears the same ratio to the Federal estate taxes as— "(A) the net appreciation in value of such property, bears to "(B) the fair market value of all property which is subject to the tax imposed by section 2001 or 2101. 26 USC 2001, "(2) STATE ESTATE TAXES.—The basis of appreciated carryover 2101. basis property (determined after any adjustment under subsection (h)) which is subject to State estate taxes in the hands of the person acquiring it from the decedent shall be increased by an amount which bears the same ratio to the State estate taxes as— "(A) the net appreciation in value of such property, bears to "(B) the fair market value of all property which is subject to the State estate taxes." (B) The second sentence of paragraph (2) of section 1023(f) 26 USC 1023. (defining net appreciation) is amended by striking out "For purposes of subsection (d)," and inserting in lieu thereof "For purposes of paragraph (2) of subsection (c), such adjusted basis shall be increased by the amount of any adjustment

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