Page:United States Statutes at Large Volume 94 Part 1.djvu/350

 94 STAT. 300 26 USC 1016.

PUBLIC LAW 96-223—APR. 2, 1980 (1) Subsection (c) of section 1016 (relating to increase in basis in case of certain involuntary conversions) is amended to read as follows: "(c) INCREASE IN BASIS IN THE CASE OF CERTAIN INVOLUNTARY CONVERSIONS.— "(1) IN GENERAL,—If—

26 USC 1033. 26 USC 2032A.

26 USC 1040.

"(A) there is a compulsory or involuntary conversion (within the meaning of section 1033) of any property, and "(B) an additional estate tax is imposed on such conversion under section 2032A(c), then the adjusted basis of such property shall be increased by the amount of such tax. "(2) TIME ADJUSTMENT MADE.—Any adjustment under paragraph (1) shall be deemed to have occurred immediately before the compulsory or involuntary conversion.". (2)(A) Section 1040 (relating to satisfaction of a pecuniary bequest) is amended to read as follows: "SEC. 1040. USE OF FARM, ETC., REAL PROPERTY TO SATISFY PECUNIARY BEQUEST. "(a) GENERAL RULE.—If the executor of the estate of any decedent satisfies the right of a qualified heir (within the meaning of section 2032A(e)(l)) to receive a pecuniary bequest with property with respect to which an election was made under section 2032A, 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 (determined without regard to section 2032A). "(b) SIMILAR RULE FOR CERTAIN TRUSTS.—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 qualified heir has a right 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 right with property with respect to which an election was made under section 2032A. "(c) BASIS OF PROPERTY ACQUIRED IN EXCHANGE DESCRIBED IN SUBSECTION (a) OR (b).—The basis of property acquired in an exchange

26 USC 2614.

26 USC 1014

^°^26 USC 2203.

with respect to which gain realized is not recognized by reason of subsection (a) or (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." (B) The item relating to section 1040 in the table of sections for part III of subchapter O of chapter 1 is amended to read as follows: "Sec. 1040. Use of farm, etc., real property to satisfy pecuniary bequest." (3) The second sentence of section 2614(a) (relating to special rules for generation-skipping transfers) is amended to read as follows: "If property is transferred in a generation-skipping transfer subject to tax under this chapter which occurs at the same time as, or after, the death of the deemed transferor, the basis of such property shall be adjusted in a manner similar to the manner provided under section 1014(a)." (d) ELECTION OF CARRYOVER BASIS RULES BY CERTAIN ESTATES.—

Notwithstanding any other provision of law, in the case of a decedent dying after December 31, 1976, and before November 7, 1978, the executor (within the meaning of section 2203 of the Internal Revenue Code of 1954) of such decedent's estate may irrevocably elect, within

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