Page:United States Statutes at Large Volume 95.djvu/334

 95 STAT. 308

PUBLIC LAW 97-34—AUG. 13, 1981 shall be treated as material participation by such eligible qualified heir in the operation of such farm or business. In the case of an eligible qualified heir described in clause (ii), (iii), or (iv) of subparagraph (C), the preceding sentence shall apply only during periods during which such heir meets the requirements of such clause. "(C) EuGiBLE QUALIFiED HEIR.—For purposos of this paragraph, the term 'eligible qualified heir' means a qualified heir who— "(i) is the surviving spouse of the decedent, "(ii) has not attained the age of 21, "(iii) is disabled (within the meaning of subsection (b)(4)(B)), or "(iv) is a student. "(D) STUDENT.—For purposes of subparagraph (C), an individual shall be treated as a student with respect to periods during any calendar year if (and only if) such individual is a student (within the meaning of section 151(e)(4)) for such calendar year." (B) CONFORMING AMENDMENTS.—

26 USC 2032A.

Ante, p. 307.

(i) Subsection (e) of section 2032A (relating to definitions and special rules) is amended by adding at the end thereof the following new paragraph: "(12) ACTIVE MANAGEMENT.—The term 'active management' means the making of the management decisions of a business (other than the daily operating decisions)." (ii) Paragraph (6) of section 2032A(c) (as redesignated by paragraph (1)) is amended by striking out "3 years or more" and inserting in lieu thereof "more than 3 years", (d) EXCHANGE OF QUALIFIED REAL PROPERTY.—

(1) IN GENERAL.—Section 2032A (relating to valuation of certain farm, etc., real property) is amended by adding at the end thereof the following new subsection: "(i) EXCHANGES OF QUALIFIED REAL PROPERTY.— "(1) TREATMENT OF PROPERTY EXCHANGED.— "(A) EXCHANGES SOLELY FOR QUALIFIED EXCHANGE PROP-

ERTY.—If an interest in qualified real property is exchanged solely for an interest in qualified exchange property in a transaction which qualifies under section 1031, no tax shall be imposed by subsection (c) by resison of such exchange. "(B) EXCHANGES WHERE OTHER PROPERTY RECEIVED.—If an

interest in qualified real property is exchanged for an interest in qualified exchange property and other property in a transaction which qualifies under section 1031, the amount of the tax imposed by subsection (c) by reason of such exchange shall be the amount of tax which Obut for this subparagraph) would have been imposed on such exchange under subsection (c)(1), reduced by an amount which— "(i) bears the same ratio to such tax, as "(ii) the fair market value of the other property bears to the fair market value of the qualified real property exchanged. For purposes of clause (ii) of the preceding sentence, fair market value shall be determined as of the time of the exchange. "(2) TREATMENT OF QUALIFIED EXCHANGE PROPERTY.—For purposes of subsection (c)—

�