PUBLIC LAW 94-455, 90 STAT. 1846, TAX REFORM ACT of 1976, TITLE XX-
ESTATE AND GIFT TAXES.
94th CONGRESS, H.R. 10612
OCTOBER 4, 1976
SEC. 2001. UNIFIED RATE SCHECUDE FOR ESTATE AND
GIFT TAXES
UNIFIED CREDIT IN LIEU OF SPECIFIC EXEMPTIONS.
(a) Changes in Estate Tax.--,
(1) Imposition of Tax; Rate Schedule.--Section 2001
// 26 USC 2001. //
(relating to rate of tax) is amended to read as follows:
" SEC. 2001. IMPOSITION AND RATE OF TAX.
"(a) Imposition.--A tax is hereby imposed on the transfer of the
taxable estate of every decedent who is a citizen or resident of the
United States.
"(b) Computation of Tax.--The tax imposed by this section shall be
the amount equal to the excess (if any) of--,
"(1) a tentative tax computed in accordance with the rate
schedule set forth in subsection (c) on the sum of--, "(A) the
amount of the taxable estate, and
"(B) the amount of the adjusted taxable gifts, over
"(2) the aggregate amount of tax payable under chapter 12
// 26 USC 2501. //
with respect to gifts made by the decedent after December 31,
1976.
For purposes of paragraph (1) (B), the term 'adjusted taxable gifts'
means the toatl amount of the taxable gifts (within the meaning of
section 2503) made by the decedent after December 31, 1976, other than
gifts which are included in the gross estate of the decedent.
"(c) Rate Schedule.--,
" If the amount with respect to which the The tentative is:
tentative tax to be computed is:
Not over $10,000 18 percent of such amount.
Over $10,000 but not over $20,000 $1,800, plus 20 percent of
the excess
of such amount over
$10,000.
Over $20,000 but not over $40,000 $3,800, plus 22 percent of
the excess
of such amount over
$20,000.
Over $40,000 but not over $60,000 $8,200, plus 24 percent of
the excess
of such amount over
$40,000.
Over 60,000 but not over $80,000 $13,000, plus 26 percent of
the excess
of such amount over
$60,000.
Over $80,000 but not over $100,000 $18,200, plus 28 percent of
the excess
of such amount over
$80,000.
Over $100,000 but not over $150,000 $23,800, plus 30 percent of
the excess34 percent of the
of such amount over
$100,000.
Over $150,000 but not over $250,000 $38,800, plus 32 percent of
the excess
of such amount over
$150,000.
Over $250,000 but not over $500,000 $70,800, plus 34 percent of
the excess
of such amount over
$250,000.
Over $500,000 but not over $750,000 $155,800, plus 37 percent
of the excess
of such amount over
$500,000.
Over $750,000 but not over $1,000,000 $248,300, plus 39 percent
of the excess
of such amount over
$750,000.
Over $1,000,000 but not over $1,250,000 $345,800 plus 41 percent of
the excess
of such amount over
$1,000,000.
Over $1,250,000 but not over $1,500,000 $448,300, plus 43 percent
of the excess
of such amount over
$1,250,000.
Over $1,500,000 but not over $2,000,000 $555,800, plus 45 percent
of the excess
of such amount over
$1,500,000.
Over $i,000,000 but not over $i,500,000 $780,800, plus 49 percent
of the excess
of such amount over
$2,000,000.
Over $2,500,000 but not over $3,000,000 $1,025,800, plus 53 percent
of the excess
of such amount over
$2,500,000.
Over $3,000,000 but not over $3,500,000 $1,290,800, plus 57 percent
of the excess
of such amount over
$3,000,000.
Over $3,500,000 but not over $4,000,000 $1,575,800, plus 61 percent
of the excesse gross
of the amount over
$3,500,000.
Over $4,000,000 but not over $4,500,000 $1,880,800, plus 65 percent
over the excess payable
of such amount over
$4,000,000.
Over $4,500,000 but not over $5,000,000 $2,205,800, plus 69
percent of the excess
of such amount over
$4,500,000.
Over $5,000,000 $2,550,800, plus 70 percent
of the excess
of such amount over
$5,000,000.
"(d) Adjustment for Gift Tax Paid by Spouse.--For purposes of
subsection (b) (2), if--,
"(1) the decedent was the donor of any gift one-half of which
was considered under section 2513 as made by the decedent's
spouse, and
"(2) the amount of such gift is includible in the gross estate
of the decedent,
any tax payable by the spouse under chapter 12 on such gift (as
determined under section 2012(d)) shall be treated as a tax payable with
respect to a gift made by the decedent."
(2) Allowance of unified credit.--Part II of subchapter A of
chapter 11 (relating to credits against the estate tax) is amended
by inserting before section 2011 the following new section:
" SEC. 2010.
// 26 USC 2010. //
UNIFIED CREDIT AGAINST ESTATE TAX.
"(a) General Rule.--A credit of $47,000 shall be allowed to the
estate of every decedent against the tax imposed by section 2001.
"(b) Phrase-in of $47,000 credit.--, Subsection (a) shall be
applied by substituting
for '$47,000' the following
" In the case of deccedents dying in: amount:
1977 $30,000
1978 $34,000
1979 $38,000
1980 $42,500
"(c) Adjustment to Credit for Certain Gifts Made Before 1977.--The
amount of the credit allowable under subsection (a) shall be reduced by
an amount equal to 20 percent of the aggregate amount allowed as a
specific exemption under section 2521 (as in effect before its repeal by
the Tax Reform Act of 1976) with respect to gifts made by the decedent
after September 8, 1976.
"(d) Limitation Based on Amount of Tax.--The amount of the credit
allowed by subsection (a) shall not exceed the amount of the tax imposed
by section 2001."
(3) Termination of credit for gift tax.--Section 2012
// 26 USC 2012. //
(relating to credit for gift tax) is amended by adding at the end
thereof the following new subsection:
"(e) Section Inapplicable to Gifts Made After December 31, 1976.-- No
credit shall be allowed under this section with respect to the amount of
any tax paid under chapter 12 on any gift made after December 31, 1976."
(4) Repeal of specific exemption.--Section 2052
// 26 USC 2052. //
(relating to exemption for purposes of the estate tax) is hereby
repealed.
(5) Adjustments for gifts made within 3 years of death.--,
Section 2035
// 26 USC 2035. //
(relating to transactions in contemplation of death) is amended to
read as follows:
" SEC. 2035. ADJUSTMENTS FOR GIFTS MADE WITHIN 3
YEARS OF
DECEDENT'S DEATH.
"(a) Inclusion of Gifts Made by Decedent.--Except as provided in
subsection (b), the value of the gross estate shall include the value of
all property to the extent of any interest therein of which the decedent
has at any time made a transfer, by trust or otherwise, during the
3-year period ending on the date of the decedent's death.
"(b) Exceptions.--Subsection (a) shall not apply to--,
"(1) any bona fide sale for an adequate and full consideration
in money or money's worth, and
"(2) any gift excludable in computing taxable gifts by reason
of section 2503(b) (relating to $3,000 annual exclusion for
purposes of the gift tax) determined without regard to section
2513 (a).
"(c) Inclusion of Gift Tax on Certain Gifts Made During 3 Years
Before Decedent's Death.--The amount of the gross estate (determined
without regard to this subsection) shall be increased by the amount of
any tax paid under chapter 12 by the decedent or his estate on any gift
made by the decedent or his spouse after December 31, 1976, and during
the 3-year period ending on the date of the decedent's death."
(b) Changes in Gift Tax.--,
(1) Rate of tax.--Subsection (a) of section 2502
// 26 USC 2502. //
(relating to rate of gift tax) is amended to read as follows:
"(a) Computation of Tax.--The tax imposed by section 2501 for each
calendar quarter shall be an amount equal to the excess of--,
"(1) a tentative tax, computed in accordance with the rate
schedule set forth in section 2001(c), on the aggregate sum of the
taxable gifts for such calendar quarter and for each of the
preceding calendar years and calendar quarters, over
"(2) a tentative tax, computed in accordance with such rate
schedule, on the aggregate sum of the taxable gifts for each of
the preceding calendar years and calendar quarters."
(2) Unified credit.--Subchapter A of chapter 12 (relating to
determination of gift tax liability) is amended by adding at the
end thereof the following new section:
" SEC. 2505.
// 25 USC 2505. //
UNIFIED CREDIT AGAINST GIFT TAX.
"(a) General Rule.--In the case of a citizen or resident of the
United States, there shall be allowed as a credit against the tax
imposed by section 2501 for each calendar quarter an amount equal to--,
"(1) $47,000, reduced by
"(2) the sum of the amounts allowable as a credit to the
individual under this section for all preceding calendar quarters.
"(b) Phase-in of $47,000 Credit.--, Subsection (a) (1) shall
be applied by
substituting for '$47,000'
the following
" In the case of gifts made: amount:
After December 31, 1976, and before July 1, 1977 $6,000
After June 30, 1977, and before January 1, 1978 $30,000
After December 31, 1977, and before January 1, 1979 $34,000
After December 31, 1978, and before January 1, 1980 $38,000
After December 31, 1979, and before January 1, 1981 $42,500
"(c) Adjustment to Credit for Certain Gifts Made Before 1977.--The
amount allowable under subsection (a) shall be reduced by an amount
equal to 20 percent of the aggregate amount allowed as a specific
exemption under section 2521 (as in effect before its repeal by the Tax
Reform Act of 1976) with respect to gifts made by the individual after
September 8, 1976.
"(d) Limitation Based on Amount of Tax.--The amount of the credit
allowed under subsection (a) for any calendar quarter shall not exceed
the amount of the tax imposed by section 2501 for such calendar
quarter."
(3) Repeal of specific exemption.--Section 2521
// 26 USC 2521. //
(relating to specific exemption in the case of the gift tax) is
hereby repealed.
(c) Technical, Clerical, and Conforming Changes.--,
(1) Changes in estate tax.--,
(A) Credit for state death taxes.--Section 2011
// 26 USC 2011. //
(relating to credit for State death taxes) is amended--,
(i) by striking out "taxable estate" each place it appears in
subsection (b) (including the heading to the table) and inserting
in lieu thereof "adjusted taxable estate";
(ii) by adding at the end of subsection (b) the following new
sentence:
" For purposes of this section, the term 'adjusted taxable estate' means
the taxable estate reduced by $60,000.",
(iii) by striking out "taxable estate" each place it appears in
subsection (e) and inserting in lieu thereof "adjusted taxable
estate"; and
(iv) by adding at the end thereof the following new subsection:
"(f) Limitation Based on Amount of Tax.--The credit provided by this
section shall not exceed the amount of the tax imposed by section 2001,
reduced by the amount of the unified credit provided by section 2010."
(B) Credit for gift tax.--Subsection (a) of section 2012
// 26 USC 2012. //
(relating to credit for gift tax) is amended by striking out
"provided by section 2011" and inserting in lieu thereof "provided
by section 2011 and the unified credit provided by section 2010".
"(C) Credit for tax on prior transfers.--,
(i) The first sentence of section 2013(b)
// 26 USC 2013. //
is amended by striking out "and increased by the exemption
provided for by section 2052 or section 2106(a) (3), or the
corresponding provisions of prior laws, in determining the taxable
estate of the transferor for purposes of the estate tax".
(ii) Subparagraph (A) of section 2013(e) (1) is amended to read
as follows:
"(A) the estate tax imposed by section 2001 or section 2101
(after deducting the credits provided for in sections 2010, 2011,
2012, and 2014) computed without regard to this section, exceeds".
(D) Rate of tax in case of nonresidents not citizens.--,
Section 2101 (relating to tax imposed in the case of estates of
nonresidents not citizens) is amended to read as follows:
" SEC. 2101. TAX IMPOSED.
"(a) Imposition.--Except as provided in section 2107, a tax is hereby
imposed on the transfer of the taxable estate (determined as provided in
section 2106) of every decedent nonresident not a citizen of the United
States.
"(b) Computation of Tax.--The tax imposed by this section shall be
the amount equal to the excess (if any) of--,
"(1) a tentative tax computed in accordance with the rate
schedule set forth in subsection (d) on the sum of--,
"(A) the amount of the taxable estate, and
"(B) the amount of the adjusted taxable gifts, over
"(2) a tentative tax computed in accordance with the rate
schedule set forth in subsection (d) on the amount of the adjusted
taxable gifts.
"(c) Adjustments for Taxable Gifts.--,
"(1) Adjusted taxable gifts defined.--For purposes of this
section, the term 'adjusted taxable gifts' means the total amount
of the taxable gifts (within the meaning of section 2503 as
modified by section 2511) made by the decedent after December 31,
1976, other than gifts which are includible in the gross estate of
the decedent.
"(2) Adjustment for certain gift tax.--For purposes of this
section, the rules of section 2001(d) shall apply.
"(d) Rate Schedule.--,
" If the amount with respect to which
the tentative tax to be computed is:
Not over $100,000 6% of such amount.
Over $100,000 but not over $500,000 $6,000, plus 12% of excess
over $100,000.
Over $500,000 but not over $1,000,000 $54,000, plus 18% of excess
over
$500,000.
Over $1,000,000 but not over $2,000,000 $144,000, plus 24% of
excess over
$1,000,000.
Over 2,000,000 $384,000, plus 30% of
excess over
$2,000,000."
(E) Credit in case of estate of nonresidents not citizens.--,
(i) Section 2102
// 26 USC 2102. //
(relating to credits against tax in case of estates of
nonresidents not citizens) is amended by adding at the end thereof
the following new subsection:
"(c) Unified Credit.--,
"(1) In general.--A credit of $3,600 shall be allowed against
the tax imposed by section 2101.
"(2) Residents of possessions of the united states.--In the
case of a decedent who is considered to be a 'nonresident not a
citizen of the United States' under section 2209, the credit under
this subsection shall be the greater of--,
"(A) $3,600, or
"(B) that proportion of $15,075 which the value of that part of
the decedent's gross estate which at the time of his death is
situated in the United States bears to the value of his entire
gross estate wherever situated.
"(3) Phase-in of paragraph (2) (B) amount.--In the case of a
decedent dying before 1981, paragraph (2) (B) shall be applied--,
"(A) in the case of a decedent dying during 1977, by
substituting '$8,480' for '$15,075',
"(B) in the case of a decedent dying during 1978, by
substituting '$10,080' for '$15,075',
"(C) in the case of a decedent dying during 1979, by
substituting '$11,680' for '$15,075', and
"(D) in the case of a decedent dying during 1980, by
substituting '$13,388' for '$15,075'.
"(4) Limitation based on amount of tax.--The credit allowed
under this subsection shall not exceed the amount of the tax
imposed by section 2101.
"(5) Application of other credits.--For purposes of subsection
(a), sections 2011 to 2013, inclusive, shall be applied as if the
credit allowed under this subsection were allowed under section
2010."
(ii) Subsection (c) of section 2107
// 26 USC 2107. //
(relating to expatriation to aviod tax) is amended to read as
follows:
"(c) Credits.--,
"(1) Unified credit.--,
"(A) In general.--A credit of $13,000 shall be allowed against
the tax imposed by subsection (a).
"(B) Limitation based on amount of tax.--The credit allowed
under this paragraph shall not exceed the amount of the tax
imposed by subsection (a).
"(2) Other credits.--The tax imposed by subsection (a) shall be
credited with the amounts determined in accordance with
subsections (a) and (b) of section 2102. For purposes of
subsection (a) of section 2102, sections 2011 to 2013, inclusive,
shall be applied as if the credit allowed under paragraph (1) were
allowed under section 2010."
(F) Repeal of specific exemption.--Paragraph (3) of section
2106(a)
// 26 USC 2106. //
(relating to specific exemption in case of decedents nonresidents
not citizens) is hereby repealed.
(G) Credit for foreign death taxes.--Paragraph (2) of section
2014(b)
// 26 USC 2014. //
(relating to limitations on credit) is amended by striking out
"sections 2011 and 2012" and inserting in lieu thereof "sections
2010, 2011, and 2012".
(H) Liability of life insurance beneficiaries.--The first
sentence of section 2206
// 26 USC 2206. //
(relating to liability of life insurance beneficiaries) is amended
by striking out "the sum of the taxable estate and the amount of
the exemption allowed in computing the taxable estate, determined
under section 2051" and inserting in lieu thereof "the taxable
estate".
(I) Liability of recipients of certain property.--The first
sentence of section 2207
// 26 USC 2207. //
(relating to liability of recipient of property over which
decedent had power of appointment) is amended by striking out "the
sum of the taxable estate and the amount of the exemption allowed
in computing the taxable estate, determined under section 2052, or
section 2106(a), as the case may be" and inserting in lieu thereof
"the taxable estate".
(J) Return by executor.--Subsection (a) of section 6018
// 26 USC 6018. //
(relating to estate tax returns by executor) is amended--,
(i) by striking out "$60,000" in paragraph (1) and inserting in
lieu thereof "$175,000";
(ii) by striking out "$30,000" in paragraph (2) and inserting
in lieu thereof "$60,000"; and
(iii) by adding at the end thereof the following new
paragraphs:
"(3) Phase-in filing requirement amount.--In the case of a
decedent dying before 1981, paragraph (1) shall be applied--,
"(A) in the case of a decedent dying during 1977, by
substituting '$120,000' for '$175,000',
"(B) in the case of a decedent dying during 1978, by
substituting '$134,000' for '$175,000',
"(C) in the case of a decedent dying during 1979, by
substituting '$147,000' for '$175,000', and
"(D) in the case of a decedent dying during 1980, by
substituting '$161,000' for '$175,000'.
"(4) Adjustment for certain gifts.--The amount applicable under
paragraph (1) and the amount set forth in paragraph (2) shall be
reduced (but not below zero) by the sum of--,
"(A) the amount of the adjusted taxable gifts (within the
meaning of section 2001(b)) made by the decedent after December
31, 1976, plus
"(B) the aggregate amount allowed as a specific exemption under
section 2521 (as in effect before its repeal by the Tax Reform Act
of 1976
// 19 USC 2101. //
with respect to gifts made by the decedent after September 8,
1976."
(K) Revocable transfers.--,
(i) Paragraph (1) of section 2038(a)
// 26 USC 2038. //
(relating to revocable transfers) is amended by striking out "in
comtemplation of decedent's death" and inserting in lieu thereof
"during the 3-year period ending on the date of the decedent's
death".
(ii) Paragraph (2) of section 2038(a)
// 26 USC 2038. //
(relating to revocable transfer) is amended by striking out "in
contemplation of his death" and inserting in lieu thereof "during
the 3-year period ending on the date of the decedent's death".
(L) Property within the united states.--Subsection (b) of
section 2104
// 26 USC 2104. //
(relating to revocable transfers and transfers in contemplation of
death) is amended by striking out "and Transfers in Contemplation
of Death" in the subsection heading and inserting in lieu thereof
"and Transfers Within 3 Years of Death".
(M) Prior interests.--Section 2044
// 26 USC 2044. //
(relating to prior interests) is amended by striking out
"specifically provided therein" and inserting in lieu thereof
"specifically provided by law".
(N) Clerical amendments.--,
(i) The item relating to section 2001 in the table of sections
for part I of subchapter A of chapter 11 is amended to read as
follows:
" Sec. 2001. Imposition and rate of tax."
(ii) The table of sections for part II of subchapter A of
chapter 11 is amended by inserting before the item relating to
section 2011 the following new item:
" Sec. 2010. Unified credit against estate tax."
(iii) The table of sections for part III of subchapter A of
chapter 11 is amended by striking out the item relating to section
2035 and inserting in lieu thereof the following new item:
" Sec. 2035. Adjustments for gifts made within 3 years of
decedent's death."
(iv) The table of sections for part IV of subchapter A of
chapter 11 is amended by striking out the item relating to section
2052.
(2) Changes in gift tax.--,
(A) Taxable gifts for preceding years and quarters.--,
Subsection (a) of section 2504
// 26 USC 2504. //
(relating to taxable gifts for preceding years and quarters) is
amended by striking out "except that" and all that follows and
inserting in lieu thereof "except that the specific exemption in
the amount, if any, allowable under section 2521 (as in effect
before its repeal by the Tax Reform Act of 1976) shall be applied
in all computations in respect of calendar years or calendar
quarters ending before January 1, 1977, for purposes of computing
the tax for any calendar quarter."
(B) Clerical amendments.--,
(i) The table of sections for subchapter A of chapter 12 is
amended by adding at the end thereof the following new item:
" Sec. 2505. Unified credit against gift tax."
(ii) The table of sections for subchapter C of chapter 12 is
amended by striking out the item relating to section 2521.
(d) Effective Dates.--,
(1) The amendments made by subsections (a) and (c) (1)
// 26 USC 2001 note. //
shall apply to the estates of decedents dying after December 31,
1976; except that the amendments made by subsection (a) (5) and
subparagraphs (K) and (L) of subsection (c) (1) shall not apply to
transfers made before January 1, 1977.
(2) The amendments made by subsections (b) and (c) (2)
// 26 USC 2502 note. //
shall apply to gifts made after December 31, 1976.
SEC. 2002. INCREASE IN LIMITATIONS ON MARITAL
DEDUCTIONS;
FRACTIONAL INTERESTS OF SPOUSE.
(a) Increase in Estate Tax Marital Deduction.--Paragraph (1) of
section 2056(c) // 26 USC 2056. // (relating to limitation on marital
deduction) is amended to read as follows:
"(1) Limitation.--,
"(A) In general.--The aggregate amount of the deductions
allowed under this section (computed without regard to this
subsection) shall not exceed the greater of--,
"(i) $250,000, or
"(ii) 50 percent of the value of the adjusted gross estate (as
defined in paragraph (2)).
"(B) Adjustment for certain gifts to spouse.--If a deduction is
allowed to the decedent under section 2523 with respect to any
gift made to his spouse after December 31, 1976, the limitation
provided by subparagraph (A) (determined without regard to this
subparagraph) shall be reduced (but not below zero) by the excess
(if any) of--,
"(i) the aggregate of the deductions allowed to the decedent
under section 2523 with respect to gifts made after December 31,
1976, over
"(ii) the aggregate of the deductions which would have been
allowable under section 2523 with respect to gifts made after
December 31, 1976, if the amount deductible under such section
with respect to any gift were 50 percent of its value.
"(C) Community property adjustment.--The $250,000 amount set
forth in subparagraph (A) (2) shall be reduced by the excess (if
any) of--,
"(i) the amount of the subtraction determined under clasuses
(i), (ii), and (iii) of paragraph (2) (B), over
"(ii) the excess of the aggregate of the deductions allowed
under sections 2053 and 2054 over the amount taken into account
with respect to such deductions under clause (iv) of paragraph (2)
(B)."
(b) Increase in Gift Tax Marital Deduction.--Subsection (a) of of
section 2523 // 26 USC 2523. // (relating to deduction for gift to
spouse) is amended to read as follows:
"(a) Allowance of Deduction.--,
"(1) In general.--Where a donor who is a citizen or resident
transfers during the calendar quarter by gift an interest in
property to a donee who at the time of the gift is the donor's
spouse, there shall be allowed as a deduction in computing taxable
gifts for the calendar quarter an amount with respect to such
interest equal to its value.
"(2) Limitation.--The aggregate of the deductions allowed under
paragraph (1) for any calendar quarter shall not exceed the sum
of--,
"(A) $100,000 reduced (but not below zero) by the aggregate of
the deductions allowed under this section for preceding calendar
quarters beginning after December 31, 1976; plus
"(B) 50 percent of the lesser of--,
"(i) the amount of the deducations allowable under paragraph
(1) for such calendar quarter (determined without regard to this
paragraph); or
"(ii) the amount (if any) by which the aggregate of the amounts
determined under clause (i) for the calendar quarter and for each
preceding claendar quarter beginning after December 31, 1976,
exceeds $200,000."
(c) Fractional Interest of Spouse.--,
(1) In general.--Section 2040
// 26 USC 2040. //
(relating to joint interests) is amended by adding at the end
thereof the following new subsection:
"(b) Certain Joint Interests of Husband and Wife.--,
"(1) Interests of spouse excluded from gross estate.--
Notwithstanding subsection (a), in the case of any qualified joint
interest, the value included in the gross estate with respect to
such interest by reason of this section is one-half of the value
of such qualified joint interest.
"(2) Qualified joint interest defined.--For purposes of
paragraph (1), the term 'qualified joint interest' means any
spouse as joint tenants or as tenants by the entirety, but only
if--,
"(A) such joint interest was created by the decedent, the
decedent's spouse, or both,
"(B) (i) in the case of personal property, the creation of such
joint interest constituted in whole or in part a gift for purposes
of chapter 12, or
"(ii) in the case of real property, an election under section
2515 applies with respect to the creation of such joint interest,
and
"(C) in the case of a joint tenancy, only the decedent and the
decedent's spouse are joint tenants."
(2) Amendment of related gift tax provision.--Subsection (c) of
section 2515
// 26 USC 2515. //
(relating to election with respect to tenancies by the entirety)
is amended to read as follows:
"(c) Exercise of Election.--,
"(1) In general.--The election provided by subsection (a) shall
be exercised by including such creation of a tenancy by the
entirety as a transfer by gift, to the extent such transfer
constitutes a gift (determined without regard to this section), in
the gift tax return of the donor for the calendar quarter in which
such tenancy by the entirety was created, filed within the time
prescribed by law, irrespective of whether or not the gift exceeds
the exclusion provided by section 2503(b).
"(2) Subsequent additions in value.--If the election provided
by subsection (a) has been made with respect to the creation of
any tenancy by the entirety, such election shall also apply to
each addition made to the value of such tenancy by the entirety.
"(3) Certain actuarial computatons not required.--In the case
of any election under subsection (a) with respect to any property,
the retained interest of each spouse shall be treated as one-half
of the value of their joint interest."
(3) Clerical amendment.--Section 2040
// 26 USC 2040. //
is amended by striking out " The value" and inserting in lieu
thereof the following:
"(a) General Rule.--The value".
(d) Effective Dates.--,
(1) (A) Except as provided in subparagraph (B),
// 26 USC 2056 note. //
the amendment made by subsection (a) shall apply with respect to
the estates of decedents dying after December 31, 1976.
(B) If--,
(i) the decedent dies after December 31, 1976, and before
January 1, 1979,
(ii) by reason of the death of the decedent property passes
from the decedent or is acquired from the decedent under a will
executed before January 1, 1977, or a trust created before such
date, which contains a formula expressly providing that the spouse
is to receive the maximum amount of property qualifying for the
mariatl deduction allowable by Federal law,
(iii) the formula referred to in clause (ii) was not amended at
any time after December 31, 1976, and before the death of the
decedent, and
(iv) the State does not enact a statute applicable to such
estate which construes this type of formula as referring to the
marital deduction allowable by Federal law as amended by
subsection (a), then the amendment made by subsection (a) shall
not apply to the estate of such decedent.
(2) The amendment made by subsection (b)
// 26 USC 2523 note. //
shall apply to gifts made after December 31, 1976.
(3) The amendments made by subsection (c)
// 26 USC 2040 note. //
shall apply to joint interests created after December 31, 1976.
SEC. 2003. VALUATION FOR PURPOSES OF THE FEDERAL
ESTATE TAX
OF CERTAIN REAL PROPERTY DEVOTED TO FARMING OR
CLOSELY HELD BUSINESSES.
(a) General Rule.--Part III of subchapter A of chapter uu (relating
to gross estate) is amended by inserting after section 2032 the
following new section:
" SEC. 2032 A.
// 26 USC 2032 A. //
VALUATION OF CERTAIN FARM, ECT., REAL PROPERTY.
"(a) Value Based on Use Under Which Property Which Property
Qualifies.--,
"(1) General rule.--If--,
"(A) the decedent was (at the time of his death) a citizen or
resident of the United States, and
"(B) the executor elects the application of this section and
files the agreement referred to in subsection (d) (2), then, for
purposes of this chapter, the value of qualified real property
shall be its value for the use under which it qualifies, under
subsection (b), as qualified real property.
"(2) Limitation.--The aggregate decrease in the value of
qualified real property taken into account for purposes of this
chapter which results from the application of paragraph (1) with
respect to any decedent shall not exceed $5000,000.
"(b) Qualified Real Property.--,
"(1) In general.--For purposes of this section, the term
'qualified real property' means real property located in the
United States which, on the date of the decedent's death, was
being used for a qualified use, but only if--,
"(A) 50 percent or more of the adjusted value of the gross
estate consists of the adjusted value of real or personal property
which--,
"(i) on the date of the decedent's death, was being used for a
qualified use, and
"(ii) was acquired from or passed from the decedent to a
qualified heir of the decedent.
"(B) 25 percent or more of the adjusted value of the gross
estate consists of the adjusted value of real property which meets
the requirements of subparagraphs (A) (ii) and (C),
"(C) during the 8-year period ending on the date of the
decedent's death there have been periods aggregating 5 years or
more during which--,
"(i) such real property was owned by the decedent or a member
of the decedent's family and used for a qualified use, and
"(ii) there was material participation by the decedent or a
member of the decedent's family in the operation of the farm or
other business, and
"(D) such real property is designated in the agreement referred
to in subsection (d) (2).
"(2) Qualified use.--For purposes of this section, the term
'qualified use' means the devotion of the property to any of the
following:
"(A) use as a farm for farming purposes, or
"(B) use in trade or business other than the trade or business
of farming.
"(3) Adjusted value.--For purposes of paragraph (1), the term
'adjusted value' means--,
"(A) in the case of the gross estate, the value of the gross
estate for purposes of this chapter (determined without regard to
this section), reduced by any amounts allowable as a deduction
under paragraph (4) of section 2053(a), or
"(B) in the case of any real or personal property the value of
such property for purposes of this chapter (determined without
regard to this section), reduced by any amounts allowable as a
deduction in respect of such property under paragraph (4) of
section 2053(a).
"(c) Tax Treatment of Dispositions and Failure To Use for Qualified
Use.--,
"(1) Imposition of additional estate tax.--If, within 15 years
after the decedent's death and before the death of the qualified
heir--,
"(A) the qualified heir disposes of any interest in qualified
real property (other than by a disposition to a member of his
family), or
"(B) the qualified heir ceases to use for the qualified use the
qualified real property which was acquired (or passed) from the
decedent, then, there is hereby imposed an additional estate tax.
"(2) Amount of additional tax.--,
"(A) In general.--The amount of the additional tax imposed by
paragraph (1) with respect to any interest shall be the amount
equal to the lesser of--,
"(i) the adjusted tax difference attributable to such interest,
or
"(ii) the excess of the amount realized with respect to the
interest (or, in any case other than a sale or exchange at arm's
length, the fair market value of the interest) over the value of
the interest determined under subsection (a).
"(B) Adjusted tax difference attributable to interest.--,
interest.--For purposes of subparagraph (A), the adjusted tax
difference attributable to an interest is the amount which bears
the same ratio to the adjusted tax difference with respect to the
estate (determined under subparagraph (C)) as--,
"(i) the excess of the value of such interest for purposes of
this chapter (determined without regard to subsection (a)) over
the value of such interest determined under subsection (a), bears
to
"(ii) a similar excess determined for all qualified real
property.
"(C) Adjusted tax differences with respect to the estate.-- For
purposes of subparagraph (B), the term 'adjusted tax difference
with respect to the estate' means the excess of what would habe
been the estate tax liability but for subsection (a) over the
estate tax liability. For purposes of this subparagraph, the term
'estate tax liability' means the tax imposed by section 2001
reduced by the credits allowable against such tax.
"(D) Partial dispositions.--For purposes of this paragraph,
where the qualified heir disposes of a portion of the interest
acquired by (or passing to) such heir (or a predecessor qualified
heir) or there is a cessation of use of such a portion--,
"(i) the value determined under subsection (a) taken into
account under subparagraph (A) (ii) with respect to such portion
shall be its pro rata share of such value of such interest, and
"(ii) the adjusted tax difference attributable to the interest
taken into account with respect to the transaction involving the
second or any succedding portion shall be reduced by the amount of
the tax imposed by this subsection with respect to all prior
transactions involving portions of such interest.
"(3) Phaseout of additional tax between 10th and 15th years.--
If the date of the disposition or cessation referred to in
paragraph (1) occurs more than 120 months and less than 180 months
after the date of the death of the decedent, the amount of the tax
imposed by this subsection shall be reduced (but not below zero)
by an amount determined by multiplying the amount of such tax
(determined without regard to this paragraph) by a fraction--,
"(A) the numerator of which is the number of full months after
such death in excess of 120, and
"(B) the denominator of which is 60.
"(4) Only 1 additional tax imposed with respect to any 1
portion.--In the case of an interest acquired from (or passing
from) any decedent, if subparagraph (A) or (B) of paragraph (1)
applies to any portion of an interest, subparagraph (B) or (A), as
the case may be, of paragraph (1) shall not apply with respect to
the same portion of such interest.
"(5) Due date.--The additional tax imposed by this subsection
shall become due and payable on the day which is 6 months after
the date of this disposition or cessation referred to in paragraph
(1).
"(6) Liability for tax.--The qualified heir shall be personally
liable for the additional tax imposed by this subsection with
respect to his interest.
"(7) Cessation of qualified use.--For pusposes of paragraph (1)
(B), real property shall cease to be used for the qualified use
if--,
"(A) such property ceases to be used for the qualified use set
forth in subparagraph (A) or (B) of subsection (b) (2) under which
the property qualified under subsection (b), or
"(B) during any period of 8 years ending after the date of the
decedent's death and before the date of the death of the qualified
heir, there had been periods aggregating 3 years or more during
which--,
"(i) in the case of periods during which the property was held
by the decedent, there was no material participation by the
decedent or any member of his family in the operation of the farm
or other business, and
"(ii) in the case of periods during which the property was held
by any qualified heir, there was no material participation by such
qualified heir or any member of his family in the operation of the
farm or other business.
"(d) Election; Agreement.--,
"(1) Election.--The election under this section shall be made
not later than the time prescribed by section 6075(a)
// 26 USC 6075. //
for filing the return of tax imposed by section 2001 (including
extensions thereof), and shall be made in such manner as the
Secretary shall by regulations prescribe.
"(2) Agreement.--The agreement referred to in this paragraph is
a written agreement signed by each person in being who has an
interest (whether or not in possession) in any property designated
in such agreement consenting to the application of subsection (c)
with respect to such property.
"(e) Definitions; Special Rules.--For purposes of this section--,
"(1) Qualified heir.--The term 'qualified heir' means, with
respect to any property, a member of the decedent's family who
acquired such property (or to whom such property passed) from the
decedent. If a qualified heir disposes of any interest in
qualified real property to any member of his family, such member
shall thereafter be treated as the qualified heir with respect to
such interest.
"(2) Member of family.--The term 'member of the family' means,
with respect to any individual, only such individual's ancestor or
lineal descendant, a lineal descendant of a grandparent of such
individual, the spouse of such individual, or the spouse of any
such descendant. For purposes of the preceding sentence, a
legally adopted child of an individual shall be treated as a child
of such individual by blood.
"(3) Certain real property included.--In the case of real
property which meets the requirements of subparagraph (C) of
subsection (b) (1), residential buildings and related improvements
on such real property occupied on a regular basis by the owner or
lessee of such real property or by persons employed by such owner
or lessee for the purpose of operating or maintaining such real
property, and roads, buildings, and other structures and
improvements functionally related to the qualified use shall be
treated as real property devoted to the qualified use.
"(4) Farm.--The term 'farm' includes stock, dairy, poultry,
fruit, furbearing animal, and truck farms, plantations, ranches,
nurseries, ranges, greenhouses or other similar structures used
primarily for the raising of agricultural or horticultural
commodities, and orchards and woodlands.
"(5) Farming purposes.--The term 'farming purposes' means--,
"(A) cultivating the soil or raising or harvesting any
agricultural or horticultural commodity (including the raising,
shearing, feeding, caring for, training, and management of
animals) on a farm;
"(B) handling, drying, packing, grading, or storing on a farm
any agriculture or horticultural commodity in its unmanufactured
state, but only if the owner, tenant, or operator of the farm
regularly produces more than one-half of the commodity so treated;
amd
"(C) (i) the planting, cultivating, caring for, or cutting of
trees, or
"(ii) the preparation (other than milling) of trees for market.
"(6) Material participation.--Material participation shall be
determined in a manner similar to the manner used for purposes of
paragraph (1) of section 1402(a)
// 26 USC 1402. //
(relating to net earnings from self-employment).
"(7) Method of valuing farms.--,
"(A) In general.--Except as provided in subparagraph (B), the
value of a farm for farming purposes shall be determined by
dividing--,
"(i) the excess of the average annual gross cash rental for
comparable land used for farming purposes and located in the
locality of such farm over the average annual State and local real
estate taxes for such comparable land, by
"(ii) the average annual effective interest rate for all new
Federal Land Bank loans. For purposes of the preceding sentence,
each average annual computation shall be made on the basis of the
5 most recent calendar years ending before the date of the
decednet's death.
"(B) Exception.--The formula provided by subparagraph (A) shall
not be used--,
"(i) where it is established that there is no comparable land
from which the average annual gross cash rental may be determined,
or
(ii) where the executor elects to have the value of the farm
for farming purposes determined under paragraph (8).
"(8) Method of valuing closely held business interests, ect.--
In any case to which paragraph (7) (A) does not apply, the
following factors shall apply in determining the value of any
qualified real property:
"(A) The capitalization of income which the property can be
expected to yield for farming or closely held business purposes
over a reasonable period of time under prudent management using
traditional cropping patterns for the area, taking into account
soil capacity, terrain configuration, and similar factors,
"(B) The capitalization of the fair rental value of the land
for farm land or closely held business purposes.
"(C) Assessed land values in a State which provides a
differential or use value assessment law for farmland or closely
held business,
"(D) Comparable sales of other farm or closely held business
land in the same geographical area far enough removed from a
metropolitan or resort area so that nonagricultural use is not a
significant factor in the sales price, and
"(E) Any other factor which fairly values the farm or closely
held business value of the property.
"(f) Statute of Limitations.--If qualified real property is disposed
of or ceases to be used for a qualified use, then--,
"(1) the statutory period for the assessment of any additional
tax under subsection (c) attributable to such disposition or
cessation shall not expire before the expiration of 3 years from
the date the Secretary is notified (in such manner as the
Secretary may by regulations prescribe) of such disposition or
cessation, and
"(2) such additional tax may be assessed before the expiration
of such 3-year period notwithstanding the provisions of any other
law or rule of law which would otherwise prevent such assessment.
"(g) Application of This Section and Section 6324 B to Interests in
Partnerships, Corporations, and Trusts.--The Secretary shall prescribe
regulations setting forth the application of this section and section
6324 B in the case of an interest in a partnership, corporation, or
trust which, with respect to the decedent, is an interest in a closely
held business (within the meaning of paragraph (1) of section 6166(
b))."
(b) Special Lein.--Subchapter C of chapter 64 (relating to lien for
taxes) is amended by inserting after section 6324 A the following new
section:
" SEC. 6324 B.
// 26 USC 6324 B. //
SPECIAL LEIN FOR ADDITIONAL ESTATE TAX
ATTRIBUTABLE
TO FARM, ECT., VALUATION.
"(a) General Rule.--In the case of any interest in qualified real
property (within the meaning of section 2032 A(b)), an amount equal to
the adjusted tax difference attributable to such interest (within the
meaning of section 2032 A(c) (2) (B)) shall be a lein in favor of the
United States on the property in which such interest exists.
"(b) Period on Lein.--The lein imposed by this section shall arise at
the time an election is filed under section 2032 A and shall continue
with respect to any interest in the qualified farm real property--,
"(1) until the liability for tax under subsection (c) of
section 2032 A with respect to such interest has been satisfied or
has become unenforceable by reason of lapse of time, or
"(2) until it is established to the satisfaction of the
Secretary that no further tax liability may arise under section
2032 A(c) with respect to such interest.
"(c) Certain Rules Made Applicable.--The rules set forth in
paragraphs (1), (3), and (4) of section 6324(d) shall apply with respect
to the lein imposed by this section as if it were a lien imposed by
section 6324 A.
"(d) Substitution of Security for Lein.--To the extent provided in
regulations prescribed by the Secretary, the furnishing of security may
be substituted for the lein imposed by this section."
(c) Credit for Tax on Prior Transfers.--Section 2013 // 26 USC 2013.
// (relating to credit for tax on prior transfers) is amended by adding
at the end thereof the following new subsection:
"(f) Treatment of Additional Tax Imposed Under Section 2032 A.--If
section 2032 A applies to any property included in the gross estate of
the transferor and an additional tax is imposed with respect to such
property under section 2032 A(c) before the date which is 2 years after
the date of the decedent's death, for purposes of this section--,
"(1) the additional tax imposed by section 2032 A(c) shall be
treated as a Federal estate tax payable with respect to the estate
of the transferor; and
"(2) the value of such property and the amount of the taxable
estate of the transferor shall be determined as if section 2032 A
did not apply with respect to such property."
(d) Clerical Amendments.--,
(1) The table of sections for part III of subchapter A of
chapter uu is amended by inserting after the item relating to
section 2032 the following new item:
" Sec. 2032 A. Valuation of certain farm, ect., real
property."
(2) The table of sections for subchapter C of chapter 64 is
amended by inserting after the item relating to section 6324 A the
following new item:
c Sec. 6324 B. Special lien for additional estate tax
attributable to farm, etc., valuation."
(e) // 26 USC 2032 A note. // Effective Date.--The amendments made
by this section shall apply to the estates of decedents dying after
December 31, 1976.
SEC. 2004. EXTENSION OF TIME FOR APYMENT OF
ESTATE TAX.
(a) General Rule.--Subchapter B of chapter 62 (relating to extensions
of time for payment of tax) is amended by redesignating section 6166 as
section 6166 A and by inserting after section 6165 the following new
section:
" SEC. 6166.
// 26 USC 6166. //
ALTERNATE EXTENSION OF TIME FOR PAYMENT OF
ESTATE TAX WHERE ESTATE CONSISTS LARGELY OF
INTEREST IN CLOSLEY HELD BUSINESS.
"(a) 5-Year Deferral; 10-Year Installment Payment.--,
"(1) In general.--If the value of an interest in a closely held
business which is included in determining the gross estate of a
decedent who was (at the date of his death) a cotozen or resident
of the United States exceeds 65 percent of the adjusted gross
estate, the executor may elect to pay part or all of the tax
imposed by section 2001 in 2 or more (but not exceeding 10) equal
installments.
"(2) Limitation.--The maximum amount of tax which may be paid
in installments under this subsection shall be an amount which
bear the same ratio to the tax imposed by section 2001 (reduced by
the credits against such tax) as--,
"(A) the closely held business amount, bears to
"(B) the amount of the adjusted gross estate.
"(3) Date for payment of installments.--If an election is made
under paragraph (1), the first installment shall be paid on or
before the date selected by the executor which is not more than 5
years after the date prescribed by section 6151(a)
// 26 USC 6151. //
for payment of the tax, and each succeeding installment shall be
paid on or before the date which is 1 year after the date
prescribed by this paragraph for payment of the preceding
installment.
"(4) Eligibility for election.--No election may be made under
this section by the executor of the estate of any decedent if an
election under section 6166 A applies with respect to the estate
of such decedent.
"(b) Definitions and Special Rules.--,
"(1) Interests in closely held business.--For purposes of this
section, the term 'interest in a closely held business' means--,
"(A) an interest as a proprietor in a trade or business carried
on as a proprietorship;
"(B) an interest as a partner in a partnership carrying on a
trade or business, if--,
"ni) 20 percent or more of the total capital interest in such
partnership is included in determing the gross estate of the
decedent, or
"(ii) such partnership had 15 or fewer partners; or
"(C) stock in a corporation carrying on a trade or business
if--,
"(i) 20 percent or more in value of the voting stock of such
corporation is included in determining the gross estate of the
decedent, or
"(ii) such corporation had 15 or fewer shareholders.
"(2) Rules for applying paragraph (1).--For purposes of
paragraph (2)--,
"(A) Time for testing.--Determinations shall be made as of the
time immediately before the decedent's death.
"(B) Certain interests held by husband and wife.--, Stock or a
partnership interest which--,
"(i) is community property of a husband and wife (or the income
from which is community income) under the applicable community
property law of a State, or
"(ii) is held by a husband and wife as joint tenants, tenants
by the entirety, or tenants in common, shall be treated as owned
by one shareholder or one partner, as the case may be.
"(C) Indirect ownerhsip.--Property owned, directly or
indirectly, by or for a corporation, partnership, estate, or trust
shall be considered as being owned proportionately by or for its
shareholders, partners, or benediciaries. For purposes of the
preceding sentence, a person shall be treated as a beneficiary of
any trust only if such person has a present interest in the trust.
"(3) Farmhouses and certain other structures taken into
account.--For purposes of the 65-percent requirement of subsection
(a) (1), an interest in a closely held business which is the
business of farming includes an interest in residential buildings
and related improvements on the farm which are occupied on a
regular basis by the owner or lessee of the farm or by persons
employed by such owner or lessee for purposes of operating or
maintaining the farm.
"(4) Value.--For purposes of this section, value shall be value
determined for purposes of chapter 11 (relating to estate tax).
"(5) Closely held business amount.--For purposes of this
section, the term 'closely held business amount' means the value
of the interest in a closely held business which qualifies under
subsection (a) (1).
"(6) Adjusted gross estate.--For purposes of this section, the
term, 'adjusted gross estate' means the value of the gross estate
reduced by the sum of the amounts allowable as a deduction under
section 2053 or 2054.
// 26 USC 2053, 2054. //
Such sum shall be determined on the basis of the facts and
circumstances in existence on the date (including extensions) for
filing the return of tax imposed by section 2001 (or, if earlier,
the date on which such return is filed).
"(c) Special Rule for Interests in 2 or More Closely Held
Businesses.--For purposes of this section, interests in 2 or more
closely held businesses, with respect to each of which there is included
in determining the value of the decedent's gross estate more than 20
percent of the total value of each such business, shall be treated as an
interest in a single closely held business. For purposes of the
20-percent requirement of the preceding sentence, an interest in a
closely held business which represents the surviving spouse's interest
in property held by the decedent and the surviving spouse as community
property or as joint tenants, tenants by the entirety, or tenants in
common shall be treated as having been included in determining the value
of the decedent's gross estate.
"(d) Election.--Any election under subsection (a) shall be made not
later than the time prescribed by section 6075(a) for filing the return
of tax imposed by section 2001 (including extensions thereof), and shall
be made in such manner as the Secretary shall by regulations prescribe.
If an election under subsection (a) is made, the provisions of this
subtitle shall apply as though the Secretary were extending the time for
payment of the tax.
"(e) Proration of Deficiency to Installments.--If an election is made
under subsection (a) to pay any part of the tax imposed by section 2001
in installments and a deficiency has been assessed, the deficiency shall
(subject to the limitation provided by subsection (a) (2)) be prorated
to the installments payable under subsection (a). The part of the
deficiency so prorated to any installment the date for payment of which
has not arrived shall be collected at the same time as, and as a part
of, such installment. The part of the deficiency so prorated to any
installment the date for payment of which has arrived shall be paid upon
notice and demand from the Secretary. This subsection shall not apply
if the deficiency is due to neglegence, to intentional disregard of
rules and regulations with intent to evade tax.
"(f) Time for Payment of Interests.--If the time for payment of any
amount of tax has been extended under this section--,
"(1) Interest for first 5 years.--Interest payable under
section 6601 of any unpaid protion of such amount attributable to
the first 5 years after the date prescribed by section 6151(a) for
payment of the tax shall be paid annually.
"(2) Interest for periods after first 5 years.--Interest
payable under section 6601 on any unpaid portion of such amount
attributable to any period after 5-year period referred to in
paragraph (1) shall be paid annually at the same time as, and as a
part of, each installment payment of the tax.
"(3) Interest in the case of certain deficiencies.--In the case
of a deficiency to which subsection (e) applies which is assessed
after the close of the 5-year period referred to in paragraph (1),
interest attributable to such 5-year period, and interest assigned
under paragraph (2) to any installment the date for payment of
which has arrived on or before the date of the assessment of the
deficiency, shall be paid upon notice and demand from the
Secretary.
"(4) Selection of shorter period.--If the executor has selected
a period shorter than 5 years under subsection (a) (3), such
shorter period shall be substituted for 5 years in paragraphs (1),
(2), and (3) of this subsection.
"(g) Acceleration of Payment.--,
"(1) Disposition of interest; withdrawal of funds from
business.--,
"(A) If--,
"(i) one-third or more in value of an interest in a clolesy
held business which qualifies under subsection (a) (1) is
distributed, sold, exchanged, or otherwise disposed of, or
"(ii) aggregate withdrawals of money and other property from
the trade or business, an interest in which qualifies under
subsection (a) (1), made with respect to such interest, equal or
exceed one-third of the value of such trade or business, then the
extension of time for payment of tax provided in subsection (a)
shall cease to apply, and any unpaid portion of the tax payable in
installments shall be paid upon notice and demand from the
Secretary.
"(B) In the case of a distribution in redemption of stock to
which section 303
// 26 USC 303. //
(or so much of section 304 as relates to section 303) applies--,
"(i) subparagraph (A) (i) does not apply with respect to the
stock redeemed; and for purposes of such subparagraph the
interest in the closely held business shall be considered to be
such interest reduced by the value of the stock redeemed, and
"(ii) subparagraph (A) (ii) does not apply with respect to
withdrawals of money and other property distributed; and for
purposes of such subparagraph the value of the trade or business
shall be considered to be such value reduced by the amount of
money and other property distributed. This subparagraph shall
apply only if, on or before the date prescribed by subsection (a)
(3) for the payment of the first installment which becomes due
after the date of the distribution (or, if earlier, on or before
the day which is 1 year after the date of the distribution), there
is paid an amount of the tax imposed by section 2001 not less than
the amount of money and other property distributed.
"(C) Subparagraph (A) (i) does not apply to an exchange of
stock pursuant to a plan of reorganization described in
subparagraph (D), (E), or (F) of section 368(a) (1) nor to an
exchange to which section 355 (or so much of section 356 as
relates to section 355) applies; but any stock received in such
an exchange shall be treated for purposes of subparagraph (A) (i)
as an interest qualifying under subsection (a) (1).
"(D) Subparagraph (A) (i) does not apply to a transfer of
property of the decedent to a person entitled by reason of the
decedent's death to receive such property under the decedent's
will, the applicable law of descent and distribution, or a trust
created by the decedent.
"(2) Undistributed income of estate.--,
"(A) If an election is made under this section and the estate
has undistributed net income for any taxable year ending on or
after the due date for the first installment, the executor shall,
on or before the date prescribed by law for filing the income tax
return for such taxable year (including extensions thereof), pay
an amount equal to such undistributed net income in liquidation of
the unpaid portion of the tax payable in installments.
"(B) For purposes of subparagraph (A), the undistributed net
income of the estate for any taxable year is the amount by which
the distributable net income of the estate for such taxable year
(as defined in section 643)
// 26 USC 643. //
exceeds the sum of--,
"(i) the amounts for such taxable year specified in paragraphs
(1) and (2) of section 661(a) (relating to deductions for
distributions, ect);
"(ii) the amount of tax imposed for the taxable year on the
estate under chapter 1; and
"(iii) the amount of the tax imposed by section 2001 (including
interest) paid by the executor during the taxable year (other than
any amount paid pursuant to this paragraph).
"(3) Failure to pay installments.--If any installment under
this section is not paid on or before the date fixed for its
payment by this section (including any extension of time for the
payment of such installment), the unpaid portion of the tax
payable in installments shall be paid upon notice and demand from
the Secretary. election in Case of Certain Deficiencies.--,
"(1) In general.--If--,
"(A) a deficiency in the tax imposed by section 2001 is
assessed,
"(B) the estate qualifies under subsection (a) (1), and
"(C) the executor has not made an election under subsection
(a), the executor may elect to pay the deficiency in installments.
This subsection shall not apply if the deficiency is due to
negligence, to intentional disregard of rules and regulations, or
to fraud with intent to evade tax.
"(2)) Time of election.--An election under this subsection
shall be made not later than 60 days after issuance of notice and
demand by the Secretary for payment of the deficiency, and shall
be made in such manner as the Secretary shall by regulations
prescribe.
"(3) Effect of election on payment.--If an election is made
under this subsection, the deficiency shall (subject to the
limitation provided by subsection (a) (2)) be prorated to the
installments which would have been due if an election had been
timely made under subsection (a) at the time the estate tax return
was filed. The part of the deficiency so prorated to any
installment the date for payment of which would have arrived shall
be paid at the time of the making of the election under this
subsection. The portion of the deficiency so prorated to
installments the date for payment of which would not have so
arrived shall be paid at the time such installments would have
been due if such an election had been made.
"(i) Regulations.--The Secretary shall prescribe such regulations as
may be necessary to the application of this section.
"(j) Cross References.--,
"(1) Security.--,
" For authority of the Secretary to require security in the
case of an extension under this section, see section 61659
"(2) Lein.--,
" For special lein (in lieu of bond) in the case of an
extension under this section, see section 6324 A.
"(3) Period of limitation.--,
" For extension of the period of limitation in the case of an
extension under this section, see section 6503(d).
"(4) Interest.--,
" For provisions relating to interest on tax payable in
installments under this section, see subsection (j) of section
6601." 4-Percent Interest Rate.--Section 6601
// 26 USC 6601. // (relating to interest on underpayment, nonpayment,
or extension of time for payment of tax) is amended by redesignating
subsection (j) as subsection (k) and by inserting after subsection (i)
the following new subsection:
"(j) 4-Percent Rate on Certain Portion of Estate Tax Extended Under
Section 6166.--,
"(1) In general.--If the time for payment of an amount of tax
imposed by chapter 11 is extended as provided in section 6166,
interest on the 4-percent portion of such amount shall (in lieu of
the annual rate provided by subsection (a)) be paid at the rate of
4 percent. For purposes of this subsection, the amount of any
deficiency which is prorated to installments payable under section
6166 shall be treated as an amount of tax payable in installments
under such section.
"(2) 4-Percent portion.--For purposes of this subsection, the
term '4-Percent portion' means the lesser of--,
"(A) $345,800 reduced by the amount of the credit allowable
under section 2010(a); or
"(B) the amount of the tax imposed by chapter 11 which is
extended as provided in section 6166.
"(3) Treatment of payments.--If the amount of tax imposed by
chapter 11 which is extended as provided in section 6166 exceeds
the 4-percent portion, any payment of a portion of such amount
shall, for purposes of computing interest for periods after such
payment, be treated as reducing the 4-percent portion by an amount
which bears the same ratio to the amount of such payment as the
amount of the 4-percent portion (determined without regard to this
paragraph) bears to the amount of the tax which is extended as
provided in section 6166."
(c) Reasonable Cause Substituted for Undue Hardship in Determining
Eligibility for Extensions of Payment of Estate Tax.--,
(1) Paragraph (2) of section 6161(a)
// 26 USC 6161. //
(relating to extension of time for paying estate tax) is amended
to read as follows:
"(2) Estate tax.--The Secretary may, for reasonable cause,
extend the time for payment of--,
"(A) any part of the amount determined by the executor as the
tax imposed by chapter 11, or
"(B) any part of any installment under section 6166 or 6166 A
(including any part of a deficiency prorated to any installment
under such section), for a reasonable period not in excess of 10
years from the date prescribed by section 6151(a) for payment of
the tax (or, in the case of an amount referred to in subparagraph
(B), if later, not beyond the date which is 12 months after the
due date for the last installment)."
(2) Subsection (b) of section 6161
// 26 USC 6161. //
(relating to extension of time for payment of certain
deficiencies) is amended to read as follows:
"(b) Amount Determined as Deficiency.--,
"(1) Income, gift, and certain other taxes.--Under regulations
prescribed by the Secretary, the Secretary may extend the time for
the payment of the amount determined as a deficiency of a tax
imposed by chapter 1, 12, 41, 42, 43, or 44 for a period not to
exceed 18 months from the date fixed for the payment of the
deficiency, and in exceptional cases, for a further period not to
exceed 12 months. An extension under this paragraph may be
granted only where it is shown to the satisfaction of the
Secretary that payment of a deficiency upon the date fixed for the
payment thereof will result in undue hardship to the taxpayer in
the case of a tax imposed by chapter 1, 41, 42, 43, or 44, or to
the donor in the case of a tax imposed by chapter 12.
"(2) Estate tax.--Under regulations prescribed by the
Secretary, the Secretary may, for reasonable cause, extend the
time for the payment of any deficiency of a tax imposed by chapter
11 for a reasonable period not to exceed 4 years from the date
otherwise fixed for the payment of the deficiency.
"(3) No extension for certain deficiencies.--No extension shall
be granted under this subsection for any deficiency if the
deficiency is due to negligence, to intentional disregard of rules
and regulations, or to fraud with intent to evade tax."
(3) Subsection (b) of section 6163
// 26 USC 6163. //
(relating to extension to prevent undue hardship in case of
reversionary or remainder interest) is amended to read as follows:
"(b) Extension for Reasonable Cause.--At the expriation of the period
of postponement provided for in subsection (a), the Secretary may, for
reasonable cause, extend the time for payment for a reasonable period or
periods not in excess of 3 years from the expiration of the period of
postponement provided in subsection (a)."
(4) Subsection (d) of section 6503
// 26 USC 6503. //
(relating to extensions of time for payment of estate tax) is
amended by striking out "section 6166" and inserting in lieu
thereof "section 6133, 6166, or 6166 A".
(d) Special Lien for State Tax Deferred Under Section 6166.--,
(1) In general.--Subchapter C of chapter 64 (relating to lien
for taxes) is amended by inserting after section 6324 the
following new section:
" SEC. 6324 A.
// 26 USC 6324 A. //
SPECIAL LEIN FOR ESTATE TAX DEFERRED Under
Section
6166 OR 6166 A.
"(a) Genral Rule.--In the case of any estate with respect to which an
election has been made under section 6166 or 6166 A, if the executor
makes an election under this section (at such time and in such manner as
the Secretary shall by regulations prescribe) and files the agreement
referred to in subsection (c), the deferred amount (plus any interest,
additional amount, addition to tax, assessable penalty, and costs
attributable to the deferred amount) shall be a lein in favor of the
United States on the section 6166 lien property.
"(b) Section 6166 Lien Property.--,
"(1) In general.--For purposes of this section, the term
'section 6166 lien property' means interests in real and other
property to the extent such interests--,
"(A) can be expected to survive the deferral period, and
"(B) are designated in the agreement referred to in subsection
(c).
"(2) Maximum value of required property.--The maximum value of
the property which the Secretary may require as section 6166 lien
property with respect to any estate shall be a value which is not
greater than the sum of--,
"(A) the deferred amount, and
"(B) the aggregate interest amount. For purposes of the
preceding sentence, the value of any property shall be determined
as of the date prescribed by section 6151
// 26 USC 6151. //
(a) for payment of the tax imposed by chapter 11 and shall be
determined by taking into account any encumbrance such as a lien
under section 6342 B.
"(3) Partial substitution of bond for lein.--If the value
required as section 6166 lien property pursuant to paragraph (2)
exceeds the value of the interest in property covered by the
agreement referred to in subsection (c), the Secretary may accept
bond in an amount equal to such excess conditioned on the payment
of the amount extended in accordance with the terms of such
extension.
"(c) Agreement.--The agreement referred to in this subsection is a
written agreement signed by each person in being who has an interest
(whether or not in possission) in any property designated in such
agreement--,
"(1) consenting to the creation of the lien under this section
with respect to such property, and
"(2) designating a responsible person who shall be the agent
for the beneficiaries of the estate and for the persons who have
consented to the creation of the lien in dealings with the
Secretary on matters arising under section 6166 or 6166 A or this
section.
"(d) Special Rules.--,
"(1) Requirement that lien be filed.--The lien imposed by this
section shall not be valid as against any purchaser, holder of a
security interest, mechanic's lein, or judgment lien creditor
until notice therof which meets the requirements of section 6323
(f) has been filed by the Secretary. Such notice shall not be
required to be refiled.
"(2) Period of lien.--The lien imposed by this section shall
arise at the time the executor is discharged from liability under
section 2201 (or, if earlier, at the time notice is filed pursuant
to paragraph (1)) and shall continue until the liability for the
deferred amount is satisfied or becomes unenforceable by reason of
lapse of time.
"(3) Priorities.--Even through notice of a lien imposed by this
section has been filed as provided in paragraph (1), such lien
shall not be valid--,
"(A) Real property tax and special assessment liens.--, To the
estent provided in section 6323(b) (6).
"(B) Real property subject to a mechanic's lein for repairs and
improvements.--In the case of any real property subject to a lien
for repair or improvement, as against a mechanic's lienor.
"(C) Real property construction or improvement financing
agreement.--As against any security interest set forth in
paragraph (3) of section 6323(c) (whether such security interest
came into existence before or after tax lein filing.)
Subparagraphs (B) and (C) shall not apply to any security interest
whcih came into existence after the date on which the Secretary
filed notice (in a manner similar to notice filed under section
6323(f) that payment of the deferred amount has been accelerated
under section 6166(g) or 6166 A(h).
"(4) Lien to be in lieu of section 6324 lien.--If there is a
lein under this section on any property with respect to any
estate, there shall not be any lien under section 6324 on such
property with respect to the same estate.
"(5) Additional lien property required in certain cases.--, If
at any time the value of the property covered by the agreement is
less than the unpaid portion of the deferred amount and the
aggregate interest amount, the Secretary may require the
additional of property to the agreement (but he may not require
under this paragraph that the value of the property covered by the
agreement exceed such unpaid portion). If property having the
required value is not added to the property covered by the
agreement (or of other security equal to the required value is not
furnished) within 90 days after notice and demand therefor by the
Secretary, the failure to comply with the preceding sentence shall
be treated as an act accelerating payment of the installments
under section 6166(g) or 6166a(h).
"(6) Lien to be in lieu of bond.--The Secretary may not require
under section 6165 the furnishing of any bond for the payment of
any tax to which an agreement which meets the requirements of
subsection (c) applies. ) Definitions.--For purposes of this
section--,
"(1) Deferred amount.--The term 'deferred amount' means the
aggregate amount deferred under section 6166 or 6166 A (determined
as of the date prescribed by section 6151(a) for payment of the
tax imposed by chapter 11).
"(2) Aggregate interest amount.--The term 'aggregate interest
amount' means the aggregate amount of interest which will be
payable over the deferral period with respect to the deferred
amount (determined as of the date prescribed by section 6151(a)
for payment of the tax imposed by chapter 11).
"(3) Deferral period.--The term 'deferral period' means the
period for which the payment of tax is deferred pursuant to the
election under section 6166 or 6166 A.
"(4) Application of definations in case of deficiencies.--In
the case of a deficiency, a seperate deferred amount, aggregate
interest amount, and deferral period shall be determined as of the
due date of the first installment after the deficiency is prorated
to installments under section 6166 or 6166 A."
(2) Discharge of executor from personal liability.--Section
2204
// 26 USC 2204. //
(relating to discharge of fiduciary from personal liability) is
amended by adding at the end thereof the following new subsection:
"(c) Special Lien Under Section 6324 A.--For purposes of the second
sentence of subsection (a) and the last sentence of subsection (b), an
agreement which meets the requirements of section 6324 A (relating to
special lien for estate tax deferred under section 6166 or 6166 A) shall
be treated as the furnishing of bond with respect to the amount for
which the time for payment has been extended under section 6166 or 6166
A."
(e) Amendments of Section 303.--,
(1) Extension of period for distribution.--Paragraph (1) of
section 303(b)
// 26 USC 303. //
(relating to distributions in redemption of stock to pay death
taxes) is amended by striking out "or" at the end of subparagraph
(A), by striking out the period at the end of subparagraph (B) and
inserting in lieu thereof ", or", and by adding at the end thereof
the following new subparagraph:
"(C) If an election has been made under section 6166 or 6166 A
and if the time prescribed by this subparagraph expires at a later
date than the time prescribed by subparagraph (B) of this
paragraph, within the time determined under section 6166 or 6166 A
for the payment of the installments."
(2) Relationship of stock to decedent's estate.--,
(A) Subparagraph (A) of section 303(b) (2) is amended to read
as follows:
"(A) In general.--Subsection (a) shall apply to a distribution
by a corporation only of the value (for Federal estate tax
purposes) of all the stock of such corporation which is included
in determining the value of the decedent's gross estate exceeds 50
percent of the excess of--,
"(i) the value of the gross estate of such decedent, over
(ii) the sum of the amounts allowable as a deduction under
section 2053 or 2054."
(B) The first sentence of subparagraph (B) of section 303 (b)
(2) is amended by striking out "the 35 percent and 50 percent
requirements" and inserting in lieu thereof "the 50 percent
requirement".
(3) Relationship of shareholder to estate tax.--Subsection (b)
of section 303 is amended by adding at the end thereof the
following new paragraphs:
"(3) Relationship of shareholder to estate tax.--Subsection (a)
shall apply to a distribution by a corporation only to the extent
that the interest of the shareholder is reduced directly (or
through a binding obligation to contribute) by any payment of an
amount described in paragraph (1) or (2) of subsection (a).
"(4) Additional requirements for distributions made more than 4
years after decedent's death.--In the case of amounts distributed
more than 4 years after the date of the decedent's death,
subsection (a) shall apply to a distribution by a corporation only
to the extent of the lesser of--,
"(A) the aggregate of the amounts referred to in paragraph (1)
or (2) of subsection (a) which remained unpaid immediately before
the distribution, or
"(B) the aggregate of the amounts referred to in paragraph (1)
or (2) of subsection (a) which are paid during the 1-year period
beginning on the date of such distribution."
(4) Stock with substituted basis.--Subsection (c) of section
303 (relating to stock with substituted basise is amended by
striking out "limitation specified in subsection (b) (1)" and
inserting in lieu thereof, "limitations specified in subsection
(b)". Technical, Clerical, and Conforming Changes.--,
(1) The table of sections for subchapter C of chapter 64 is
amended by inserting after the item relating to section 6324 the
following new item:
" Sec. 6342 A. Special lien for estate tax deferred under
section 6166 or 6166 A."
(2) Section 7403(a)
// 26 USC 7403. //
(relating to action to enforce lien or to subject property to
payment of tax) is amended by adding at the end thereof the
following new sentence: " For purposes of the preceding sentence,
any acceleration of payment under section 6166 (g) or 6166 A(h)
shall be treated as a neglect to pay tax."
(3) Paragraph (2) of section 2011(c)
// 26 USC 2011. //
(relating to credit for State death taxes) is amended by striking
out "section 6161" and inserting in lieu thereof "section 6161,
6166 or 6166 A".
(4) The last sentence of section 2204(b)
// 26 USC 2204. //
is amended by striking out "has not been extended under" and
inserting in lieu thereof "has been extended under".
(5) The table of sections for subchapter B of chapter 62 is
amended by striking out the item relating to section 6166 and
inserting in lieu thereof the following:
" Sec. 6166. Alternate extension of time for payment of estate
tax where estate consists largely of interest in closely held
business.
" Sec. 6166 A. Extension of time for payment of estate tax
where estate tax consists largely of interest in closely held
business.".
(6) Subsections (a) and (b) of section 2204 (relating to
discharge of fiduciary from personal liability) are as amended by
striking out "or 6166" and inserting in lieu thereof "6166 or 6166
A".
// 26 USC 6166 note. // Effective Date.--The amendments made by this
section shall apply to the estates of decedents dying after December 31,
1976.
SEC. 2005. CARRYOVER BASIS.
(a) General Rule.--,
(1) Amendment of section 1014.--Subsection (d) of section
// 1014 // 26 USC 1014. //
(relating to basis of property acquired from a decedent) is
amended to read as follows:
"(d) Decedents Dying After December 31, 1976.--In the case of a
decedent dying after December 31, 1976, the section shall not apply to
any property for which a crryover basis is provided by section 1023."
(2) Carryover basis.--Part II of subchapter O of chapter 1
(relating to basis rules of general application) is amended by
redesignating section 1023 as section 1024
// 26 USC 1024. //
and by inserting after section 1022 the following new section:
" SEC. 1023.
// 26 USC 1023. //
CARRYOVER BASIS FOR CERTAIN PROPERTY ACQUIRED
FROM A DECEDENT DYING AFTER DECEMBER 31, 1976.
"(a) General Rule.--,
"(1) Carryover basis.--Except as otherwise provided in this
section, the basis of carryover basis property acquired from a
decedent dying after December 31, 1976, in the hands of the person
so acquiring shall be the adjusted basis of the property
immediately before the death of the decedent, further adjusted as
provided in this section.
"(2) Loss on personal and household effects.--In the case of
any carryover basis property which, in the hands of the decedent,
was a personal or household effect, for purposes of determining
loss, the basis of such property in the hands of the person
acquiring such property from the decedent shall not exceed its
fair market value.
"(b) Carryover Basis Property Defined.--,
"(1) In general.--For purposes of this section, the term
'carryover basis property' means any property which is acquired
from or passed from a decedent (within the meaning of section
1014(b))
// 26 USC 1014. //
and which is not excluded pursuant to paragraph (2) or (3).
"(2) Certain property not carryover basis property.--The term
'carryover basis property' does not include--,
"(A) any item of gross income in respect of a decedent
described in section 691;
"(B) property described in section 2042 (relating to proceeds
of life insurance);
"(C) a joint and survivor annuity under which the surviving
annuitant is taxable under section 72, and payments and
distributions under a deferred compensation plan described in part
I of subchapter D of chapter 1 to the extent such payments and
distributions are taxable to the decedent's beneficiary under
chapter 1;
"(D) property included in the decedent's gross estate by reason
of section 2035, 2038, or 2041 which has been disposed of before
the decedent's death in a transaction in which gain or loss is
reconizable for purposes of chapter 1;
"(E) stock or a stock option passing from the decedent to the
extent income in respect of such stock or stock option is
includable in gross income under section 422(c) (1), 423(c), or
424(c) (1); and
"(F) property described in section 1014(b) (5).
"(3) $10,000 Xclusion for certain assets.--,
"(A) Exclusion.--The term 'carryover basis property' does not
include any asset--,
"(i) which, in the hands of the decendent, was a personal or
household effect, and
"(ii) with respect to which the executor has made an election
under this paragraph.
"(B) Limitation.--The fair market value of all assets
designated under this subsection with respect to any decedent
shall not exceed $10,000.
"(C) Election.--An election under this paragraph with respect
to any asset shall be made by the executor not later than the date
prescribed by section 6075(a) for filing the return of the tax
imposed by section 2001 or 2101 (including extensions thereof),
and shall be made in such manner as the Secretary shall by
regulations prescribe.
"(c) Increase in Basis for Federal and State Estate Taxes
Attributable to Appreciation.--The basis of appreciated carryover basis
property (determined after any adjustment under subsection (h)) which is
subject to the tax imposed by section 2001 or 2101 in the hands of the
person acquiring it from the decedent shall be increased by an amount
which bears the same ratio to the Federal and State estate taxes as--,
"(1) the net appreciation in value of such property, bear to
"(2) the fair market value of all property which is subject to
the tax imposed by section 2001 or 2101.
"(d) $60,000 Minimum for Bases of Carryover Basis Properties.--,
"(1) In general.--If $60,000 exceeds the aggregate bases (as
determined after any adjustment under subsection (h) or (c)) of
over basis property (after any adjustment under subsection (h) or
(c)) shall be increased by an amount which bears the same ratio to
the amount of such excess as--,
"(A) the net appreciation in value of such property, bears to
"(B) the net appreciation in value of all such property.
"(2) Special rule for personal or household effect.--For
purposes of paragraph (1), the bais of any property which is a
personal or household effect shall be treated as not greater than
the fair market value of such property.
"(3) Nonresident not citizen.--This subsection shall not apply
to any carryover basis property acquired from any decedent who was
(at the time of his death) a nonresident not a citizen of the
United States.
"(e) Further Increase in Basis for Certain State Succession Tax Paid
by Transferee of Property.--If--,
"(1) any person acquires appreciated carryover basis property
from a decedent, and
"(2) such person actually pays an amount of estate,
inheritance, legacy, or succession taxes with respect to such
property to any State or the District of Columbia for which the
estate is not liable. then the basis of such property (after any
adjustment under subsection (h), (c), or (d)) shall be increased
by an amount which bears the same ratio to the aggregate amount of
all such taxes paid by such person as--,
"(A) the net appreciation in value of such property, bears to
"(B) the fair market value of all property acquired by such
person which is subject to such taxes.
"(f) Special Rules and Definitions for Application of Subsections
(c), (d), and (e).--,
"(1) Fair market value limitation.--The adjustments under
subsections (c), (d), and (e) shall not oncrease the basis of
property above its fair market value.
"(2) Net appreciation.--For purposes of this section, the net
appreciation in value of such property exceeds the adjusted basis
of such property immediately before the death of the decedent (as
determined after any adjustment under subsection (h)). For
purposes of subsection (d), such adjusted basis shall be increased
by the amount of any adjustment under subsection (c), and, for
purposes of subsection (e), such adjusted basis shall be increased
by the amount of nay adjustment under subsection (c) or (d). "(3)
Federal and state estate taxes.--For purposes of subsection (c),
the term ' Federal and State estate taxes' means--,
"(A) the tax imposed by section 2001 or 2101, reduced by the
credits against such tax, and
"(B) any estate, inheritance, legacy, or succession taxes, for
which the estate is liable, actually paid by the estate to any
State of the District of Columbia.
"(4) Certain marital and charitable deduction property treated
as not subject to tax.--For purposes of subsections (c) and (e),
property shall be treated as not subject to a tax--,
"(A) with respect to the tax imposed by section 2001 or 2101,
to the extent that a deduction is allowable with respect to such
property under section 2055 or 2056 or under section 2106(a) (2),
// 26 USC 2055, 2056, 2106. //
and
"(B) with respect to State estate taxes and with respect to the
State taxes referred to in subsection (e) (2), to the extent that
such property is not subject to such taxes.
"(5) Appreciated carryover basis property.--For purposes of
this section, the term 'appreciated carryover basis property'
means any carryover basis property if the fair market value of
such property exceeds the adjusted basis of such property
immediately before the death of the decedent.
"(g) Other Special Rules and Definitions.--,
"(1) Fair market value.--For purposes of this section, when not
otherwise distinctly expressed, the term 'fair market value' means
value as determined under chapter 11.
"(2) Property passing from the decedent.--For purposes of this
section, property passing from the decedent shall be treated as
property acquired from the decedent.
"(3) Decedent's basis unknown.--If the facts necessary to
determine the basis (unadjusted) or carryover basis property
immediately before the death of the decedent are unknown to the
person acquiring such property from the decedent, such basis shall
be treated as being the fair market balue of such property as of
the date (or approximate date) at which such property was acquired
by the decedent or by the last preceding owner in whose hands it
did not have a basis determined in whole or in part by reference
to its basis in the hands of a prior holder.
"(4) Certain mortgages.--For purposes of subsections (c), (d),
and (e), if--,
"(A) there is an unpaid mortgage on, or indebtedness in respect
of, property,
"(B) such mortgage or indebtedness does not constitue a
liability of the estate, and
"(C) such property is included in the gross estate undiminished
by such mortgage or indebtedness. then the fair market value of
such property to be treated as included in the gross estate shall
be the fair market value of such property, diminished by such
mortgage or indebtedness.
"(h) Adjustment to Basis for December 31, 1976, Fair Market Value.--,
"(1) Marketable bonds and securities.--If the adjusted basis
immediately before the death of the decedent of any property which
is carryover basis property reflects the adjusted basis of any
marketable bond or security on December 31, 1976, and if the fair
market value of such bond or security on December 31, 1976,
exceeded its adjusted basis on such date, then, for purposes of
determining gain, the adjusted basis of such property shall be
increased by the amount of such excess.
"(2) Property other than marketable bonds and securities.--,
"(A) In general.--If--,
"(i) the adjusted basis immediately before the death of the
decedent of any property which is carryover basis property
reflects the adjusted basis on December 31, 1976, of any property
other than a marketable bond or security, and
"(ii) the value of such carryover basis property (as determined
with respect to the estate of the decedent without regard to
section 2032)
// 26 USC 2032. //
exceeds the adjusted basis of such property immediately before the
death of the decedent (determined without regard to this
subsection), then, for purposes of determining gain, the adjusted
basis of such property immediately before the death of the
decedent (determined without regard to this subsection) shall be
increased by the amount determined under subparagraph (B).
"(B) Amount of increase.--The amount of the increase under this
subparagraph for any property is the sum of--,
"(i) the excess referred to in subparagraph (A) (ii), reduced
by an amount equal to all adjustments for depreciation,
amortization, or depletion for the holding period of such
property, and then multiplied by the applicable fraction
determined under subparagraph (C), and
"(ii) the adjustments to basis for depreciation, amortization,
or depletion which are attributable to that portion of the holding
period for such property which occurs before January 1, 1977.
"(C) Applicable fraction.--For purposes of subparagraph (B)
(i), the term 'applicable fraction' means, with respect to any
property, a fraction--,
"(i) the numerator of which is the number of days in the
holding period with respect to such property which occurs before
January 1, 1977, and
"(ii) the denominator of which is the total number of days in
such holding period.
"(D) Substantial improvements.--Under regulations prescribed by
the Secretary, if there is a substantial improvement of any
property, such substantial improvement shall be treated as a
separate property for purposes of this paragraph.
"(E) Definitions.--For purposes of this paragraph--,
"(i) The term 'marketable bond or security' means any security
for which, as of December 1976, there was a market on a stock
exchange, in an over-the-counter market, or otherwise.
"ii) The term 'holding period' means, with respect to any
carryover basis property, the period during which the decedent
(or, if any other person held such property immediately before the
death of the decedent, such other person) held such property as
determined under section 1223; except that such period shall end
on the date of the decedent's death.
"(i) Regulations.--The Secretary shall prescribe such regulations as
may be necessary to carry out the purposes of this section."
(3) Amendment of section 1016.--Section 1016(a)
// 26 USC 1016. //
(relating to adjustments to basis) is amended by striking out the
period at the end thereof and by inserting in lieu thereof a
semicolon and by adding at the end thereof the following new
paragraph:
"(23) to the extent provided in section 1023, relating to
carryover basis for certain property acquired from a decedent
dying after December 31, 1976."
(4) Amendments of section 691.--,
(A) Section 691(c) (2) (A)
// 26 USC 691. //
(relating to deduction for estate tax in case of income in respect
of decedents) is amended to read as follows:
"(A) The term 'estate tax' means Federal and State estate taxes
(within the meaning of section 1023(f) (3))."
(B) Section 691(c) (2) (C) is amended to read as follows:
"(C) The estate tax attributable to such net value shall be an
amount which bears the same ratio to the estate tax as such net
value bears to the value of the gross estate."
(5) Repeal of section 1246(e).--Section 1246
// 26 USC 1246. //
(relating to gain 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 Gain Where Certain Appreciated Carryover Basis
Property Is Used in Satisfaction of a Pecuniary Request.--Part III of
subchapter O of chapter 1 (relating to common nontaxable exchanges) is
amended by adding at the end thereof the following new section:
" SEC. 1040.
// 26 USC 1040. //
USE OF CERTAIN APPRECIATED CARRYOVER BASIS
PROPERTY
TO SATISFY PECUNIARY REQUEST.
"(a) General Rule.--If the executioner of the estate of any decedent
satisfies the right of any person to receive a pecuniary bequest with
appreciated carryover basis property (as defined in section 1023(f)
(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) 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 person 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
carryover basis property to which section 1023 applies.
"(c) Basis of Property Acquired in Exchange Described in Subsection
(a) or (b).--The basis of property acquired in an exchange 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."
(c) Limitaion of Increase in Basis for Gift Tax Paid to that Portion
of Gift Tax Attributable to Net Appreciation in value.--, Subsection (d)
of section 1015 // 26 USC 1015. // (relating to increased basis for
gift tax paid) is amended by adding at the end thereof the following new
paragraph:
"(6) Special rule for gifts made after 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 1i shall
be an amount (not in excess of the amount of tax so paid) which
bears the same ratio to the amount of tax so paid as--,
"(i) the net appreciation in value of the gift, bears to
"(ii) the amount of the gift.
"(B) Net appreciation.--For purposes of paragraph (1), the net
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:
" SEC. 6039 A..
// 26 USC 6039 A. //
INFORMATION REGARDING CARRYOVER BASIS PROPERTY
ACQUIRED FROM A DECEDENT.
"(a) In General.--Every executor (as defined in section 2203) shall
furnish the Secretary such information with respect to carryover basis
property to which section 1023 applies as the Secretary may by
regulations prescribe.
"(b) Statements To Be Furnished to Persons Who Acquire propertyy From
a Decedent.--Every executor who is required to furnish information under
subsection (a) shall furnish in writing to each person acquiring an item
of such property from the decedent (or to whom the item passes from the
decedent) the adjusted basis of such item."
(2) Penalities.--Subchapter B of chapter 68 (relating to
assessable penalities) is amended by adding at the end thereof the
following new section:
" SEC. 6694.
// 26 USC 6694. //
FAILURE TO FILE INFORMATION WITH RESPECT TO
CARRYOVER
BASIS PROPERTY.
"(a) Information Required To Be Furnished To The Secretary.--Any
executor who fails to furnish information required under subsection (a)
of section 6039 A on the date prescribed therefor (determined with
regard to any extension of time for filing), unless it is shown that
such failure is due to reasonable cause and not to willful neglect,
shall pay a penalty of $100 for each such failure, but the total amount
imposed for all such failures shall not exceed $5,000.
"(b) Information Required To Be Furnished to Beneficiaries.--, Any
executor who fails to furnish in writing to each person described in
subsection (b) of section 6039 A the information required under such
subsection, unless it is shown thatsuch failure is due to reasonable
cause and not to willfil neglect, shall pay a penalty of $50 for each
such failure, but the total amount imposed for such failures shall not
exceed $2,500."
(e) Clerical Amendments.--,
(1) The table of sections for part II of subchapter O of
chapter 1 is amended by striking out the item relating to section
1023 and inserting in lieu thereof the following:
" Sec. 1023. Carryover basis for certain property acquired
from a decedent dying after December 31, 1976.
" Sec. 1024. Cross references."
(2) The table of sections for part III of subchapter O of
chapter 1 is amended by adding at the end thereof the following:
" Sec. 1040. Use of certain appreciate carryover basis
property to satisfy pecunicary bequest."
(3) The table of sections for part III of subchapter A of
chapter 61 is amended by inserting after the item telating to
section 6039 the following:
" Sec. 6039 A. Information regarding carryover basis property
acquired from a decedent."
(4) The table of sections for subchapter B of chapter 68 is
amended by adding at the end thereof the following:
" Sec. 6694. Failure to file information with respect to
carryover basis property."
(f) Effective Dates.--,
(1) Except as provided in paragraph (2),
// 26 USC 1023 note. //
the amendments made by this section shall apply in respect of
decedents dying after December 31, 1976.
(2) The amendment made by subsection (c)
// 26 USC 1023 note. //
shall apply to gifts made after December 31, 1976.
SEC. 2006. CERTAIN GENERATION- SKIPPING TRANSFERS.
(a) Imposition of Tax.--Subtitle B (relating to estate and gift
taxes) is amended by adding at the end thereof the following new
chapter:
" CHAPTER 13--TAX ON CERTAIN GENERATION- SKIPPING TRANSFERS
" SUBCHAPTER A. Tax imposed.
" SUBCHAPTER B. Definitions and special rules.
" SUBCHAPTER C. Administration.
" Subchapter A--Tax Imposed
"sec. 2601. Tax imposed.
" Sec. 2602. Amount of tax.
" Sec. 2603. Liability for tax.
" SEC. 2601.
// 26 USC 2601. //
TAX IMPOSED.
" A tax is hereby imposed on every generation-skipping transfer in
the amount determined under section 2602.
" SEC. 2602.
// 26 USC 2602. //
AMOUNT OF TAX.
"(a) General Rule.--The amount of the tax imposed by section 2601
with respect to any transfer shall be in the excess of--,
"(1) a tentative tax computed in accordance with the rate
schedule set forth in section 2001(c) (as in effect on the date of
transfer) on the sum of--,
"(A) the fair market value of the property transferred
determined as of the date of transfer (or in the case of an
election under subsection (d), as of the applicable valuation date
prescribed by section 2032),
"(B) the aggregate fair market value (determined for purposes
of this chapter) of all prior transfers of the deemed transferor
to which this chapter applies,
"(C) the amount of the adjusted taxable gifts (within the
meaning of section 2001 (b)) made by the deemed transteror before
this transfer, and
"(d) if the deemed transferor has died at the same time as, or
before, this transfer, the taxable estate of the deemed
transferor, over
"(2) a tentative tax (similarly computed) on the sum of the
amounts determined under subparagraphs (B), (C), and (D) of
paragraph (1).
"(b) Multiple Simultaneous Transfers.--If two or more transfers which
are taxable under section 2601 and which have the same deemed transferor
occur by reason of the same event, the tax imposed by section 2601 on
each such transfer shall be the amount which bears the same ratio to--,
"(1) the amount of the tax which would be imposed by section
2601 if the aggregate of such transfers were a single transfer, as
"(2) the fair market value of the property transferred in such
transfers bears to the aggregate fair market value of all property
transferred in such transfers.
"(c) Deductions, Credits, Etc.--,
"(1) General rule.--Except as otherwise provided in this subsection,
no deduction, exclusion, esemption, or credit shall be allowed against
the tax imposed by section 2601.
"(2) Charitable deductions allowed.--The deductions under section
2055, 2106(a) (2), or 2522 // 26 USC 2055, 2522. // whichever is
appropriate shall be allowed in determining the tax imposed by section
2601.
"(3) Unused portion of unified credit.--If the generation-skipping
transfer occurs at the time as, or after, the death of the deemed
transferor, then the portion of the credit under section 2010(a)
(relating to unified credit) which exceeds the sum of--,
"(A) the tax imposed by section 2001, and
"(B) the taxes theretofore imposed by section 2601 with respect
to this deemed transferor,
shall be allowed as a credit against the tax imposed by section 2601.
The amount of the credit allowed by the preceding sentence shall not
exceed the amount of the tax imposed by section 2601.
"(4) Credit for tax on prior transfers.--The credit under section
2013 (relating to credit for tax on prior transfers) shall be allowed
against the tax imposed by section 2601. For purposes of the preceding
sentence, section 2013 shall be applied as if so much of the property
subject to tax under section 2601 as is not taken into account for
purposes of determining the credit allowable by section 2013 with
respect to the estate of the deemed transferor passed from the
transferor (as defined in section 2013) to the deemed transferor.
"(5) Coordination with estate tax.--,
"(A) Adjustments to marital deduction.--If the
generation-skipping transfer occurs at the same time as, or within
9 months after, the death of the deemed transferor, for purposes
of section 2056 (relating to bequests, etc., to surviving spouse),
the value of the gross estate of the deemed transferor shall be
deemed to be increased by the amount of such transfer.
"(B) Certain expenses attributable to generation-skipping
transfer.--If the generation-skipping trnasfer occurs at the same
time as, or after, the death of the deemed transferor, for
purposes of this section, the amount taken into account with
respect to such transfer shall be reduced--,
"(i) in the case of a taxable termination, by any item referred
to in section 2053 or 2054 to the extent that a deduction would
have been allowable under such section for such item if the amount
of the trust had been includible in the deemed transferor's gross
estate and if the deemed transferor had died immediately before
such transfer, or
"(ii) in the case of a taxable distribution, by any expense
incurred in connection with the determination, collection, or
refund of the tax imposed by section 2601 on such transfer.
"(C) Credit for state inheritance tax.--If the
generation-skipping transfer occurs at the same time as, or after,
the death of the deemed transferor, there shall be allowed as a
credit against the tax imposed by section 2601 an amount equal to
that portion of the estate, inheritance, legacy, or succession tax
actually paid to any State or the District of Columbia in respect
of any property included in the generation-skipping transfer, but
only to the extent of the lesser of--,
"(i) that portion of such taxes which is levied on such
transfer, or
"(ii) the excess of the limitation applicable under section
2011 (b) if the adjusted taxable estate of the decedent had been
increased by the amount of the transfer and all prior
generation-skipping transfers to which this subparagraph applied
which had the same deemed transferor, over the sum of the amount
allowable as a credit under section 2011 with respect to the
estate of the decedent plus the aggregate amounts allowable under
this subparagraph with respect to such prior generation-skipping
transfers.
"(d) Alternate Valuation.--,
"(1) In general.--In the case of--,
"(A) 1 or more generation-skipping transfers from the same
trust which have the same deemed transferor and which are taxable
terminations occurring at the same time as the death of such
deemed transferor; or
"(B) 1 or more generation-skipping transfers from the same
trust with different deemed transferors--,
"(i) which are taxable terminations occurring on the same day;
and
"(ii) which would, but for section 2613(b) (2), have occurred
at the same time as the death of the individuals who are the
deemed transferors with respect to the transfers; the trustee may
elect to value all of the property transferred in such transfers
in accordance with section 2032.
"(2) Special rules.--If the trustee makes an election under
paragraph (1) with respect to any generation-skipping transfer,
section 2032 shall be applied by taking into account (in lieu of
the date of the decedent's death) the following date:
"(A) in the case of any generation-skipping transfer described
in paragraph (1) (A), the date of the death of the deemed
transferor described in such paragraph, or
"(B) in the case of any generation-skipping transfer described
in paragraph (1) (B), the date on which such transfer occurred.
"(e) Transfers Within 3 Years of Death of Deemed Transferor. --Under
regulations prescribed by the Secretary, the principles of section 2035
shall apply with respect to transfers made during the 3-year period
ending on the date of the deemed transferor's death. In the case of any
transfer to which this subsection applies, the amount of the tax imposed
by this chapter shall be determined as if the transfer occurred after
the death of the deemed transferor and appropriate adjustments shall be
made with respect to the amount of any prior transfer which is taken
into account under subparagraph (B) or (C) of subsection (a) (1).
" SEC. 26039
// 26 USC 2603. //
LIABILITY FOR TAX.
"(a) Personal Liability.--,
"(1) In general.--If the tax imposed by section 2601 is not
paid, when due then--,
"(A) except to the extent provided in paragraph (2), the
trustee shall be personally liable for any portion of such tax
which is attributable to a taxable termination, and
"(B) the distributee of the property shall be personally liable
for such tax to the extent provided in paragraph (3).
"(2) Limitation of personal liability of trustee who relies on
certain information furnished by the secretary.--,
"(A) Information with respect to rates.--The trustee shall not
be personally liable for any increase in the tax imposed by
section 2601 which is attributable to the application to the
transfer of rates of tax which esceeds the rates of tax furnished
by the Secretary to the trustee as being the rates at which the
transfer may reasonably be expected to be taxed
"(B) Amount of remaining exclusion.--The trustee shall not be
personally liable for any increase in the tax imposed by section
2601 which is attributable to the fact that--,
"(i) the amount furnished by the Secretary to the trustee as
being the amount of the exclusion for a transfer to a grandchild
of the grantor of the trust which may reasonably be expected to
remain with respect to the deemed transferor, is less than
"(ii) the amount of such exclusion remaining with respect to
such deemed transferor.
"(3) Limitation on personal liability of distributee.--The
distributee of the property shall be personally liable for the tax
imposed by section 2601 only to the extent of an amount equal to
the fair market value (determined as of the time of the
distribution) of the property received by the distributee in the
distribution.
"(b) Lien.--The tax imposed by section 2601 on any transfer shall be
in lien on the property transferred until the tax is paid in full or
becomes unenforceable by reason of lapse of time.
" Subchapter B--Definitions and Special Rules
" Sec. 2611. Generation-skipping transfer.
"sec. 2612. Deemed transferor.
"sec. 2613. Other definitions.
" Sec. 2614. Special rules.
" SEC. 2611.
// 26 USC 2611. //
GENERATION -SKIPPING TRANSFER.
"(a) Generation-Skipping Transfer Defined.--For purposes of this
chapter, the terms 'generation-skipping transfer' and 'transfer' mean
any taxable distribution or taxable termination with respect to a
generation-skipping trust or trust equivalent.
"(b) Generation-Skipping Trust.--For purposes of this chapter, the
term 'generation-skipping trust' means any trust having younger
generation beneficiaries (within the meaning of section 2613(c) (1)) who
are assigned to more than one generation.
"(c) Ascertainment of Generation.--For purposes of this chapter, the
generation to which any person (other than the grantor) belongs shall be
determined in accordance with the following rules:
"(1) an individual who is a lineal descendent of a grandparent
of the grantor shall be assigned to that generation which results
from comparing the number of generations between the grandparent
and such individual with the number of generations between the
grandparent and the grantor,
"(2) an individual who has been at any time married to a person
described in paragraph (1) shall be assigned to the generation of
the person so described and an individual who has been at any time
married to the grantor shall be assigned to the grantor's
generation,
"(3) a relationship by the half blood shall be treated as a
relationship by the whole blood,
"(4) a relationship by legal adoption shall be treated as a
relationship by blood,
"(5) an individual who is not assigned to a generation by
reason of the foregoing paragraphs shall be assigned to a
generation on the basis of the date of such individual's birth,
with--,
"(A) an individual born not more than 12.5 years after the date
of the birth of the grantor assigned to the grantor's generation,
"(B) an individual born more than 12.5 years but not more than
37.5 years after the date of the birth of the grantor assigned to
the first generation younger than the grantor, and
"(C) similar rules for a new generation every 25 years,
"(6) an individual who, but for this paragraph, would be
assigned to more than one generation shall be assigned to the
youngest such generation, and
"(7) if any beneficiary of the trust is an estate or a trust,
partnership, corporation, or other entity (other than an
organization described in section 511(a) (2) and other than a
charitable trust described in section 511 (b) (2)), each
individual having an indirect interest or power in the trust
through such entity shall be treated as a beneficiary of the trust
and shall be assigned to a generation under the foregoing
provisions of this subsection.
"(d) Generation-Skipping Trust Equivalent.--,
"(1) In general.--For purposes of this chapter, the term
'generation-skipping trust equivalent' means any arrangement
which, although not a trust, has substantially the same effect as
a generation-skipping trust.
"(2) Examples of arrangements to which subsection relates.--
Arrangements to be taken into account for purposes of determining
whether or not paragraph (1) applies include (but are not limited
to) arrangements involving life estates and remainders, estates
for years, insurance and annuities, and split interests.
"(3) References to trust include references to trust
equivalents. --Any reference in this chapter in respect of a
generation-skipping trust shall include the appropriate reference
in respect of a generation-skipping trust equivalent.
c SEC. 2612.
// 26 USC 2612. //
DEEMED TRANSFEROR.
"(a) General Rule.--For purposes of this chapter, the deemed
transferor with respect to a transfer is--,
"(1) except as provided in paragraph (2), the parent of the
transferee of the property who is more closely related to the
grantor of the trust than the other parent of such transferee (or
if neither parent is related to such grantor, the parent having a
closer affinity to the grantor), or
"(2) if the parent described in paragraph (1) is not a younger
generation beneficiary of the trust but 1 or more ancestors of the
transferee is a younger generation beneficiary related by blood or
adoption to the grantor of the trust, the youngest of such
ancestors.
"(b) Determination of Relationship.--For purposes of subsection (a),
a parent related to the grantor of the trust by blood or adoption is
more closely related than a parent related to such grantor by marriage.
" SEC. 2613.
// 26 USC 2613. //
OTHER DEFINITIONS.
"(a) Taxable Distribution.--For purposes of this chapter--,
"(1) In general.--Term 'taxable distribution' means any
distribution which is not out of the income of the trust (within
the meaning of section 643(b)) grom a generation-skipping trust to
any younger generation beneficiary who is assigned to a generation
younger than the generation assignment of any other person who is
a younger generation beneficiary. For purposes of the preceding
sentence, an individual who at no time has had anything other than
a future interest or future power (or both) in the trust shall not
be considered as a younger generation beneficiary.
"(2) Source of distribution.--If, during the taxable year of
the trust, there are distributions out of the income of the trust
(within the meaning of section 643(b)) and out of other amounts,
for purposes of paragraph (1) the distributions of such income
shall be deemed to have been made to the beneficiaries (to the
extent of the aggregate distributions made to each such
beneficiary during such year) in descending order of generations,
beginning with the beneficiaries assigned to the oldest
generation.
"(3) Payment of tax.--If any portion of the tax imposed by this
chapter with respect to any transfer is paid out of the income or
corpus of the trust, an amount equal to the portion so paid shall
be deemed to be a generation-skipping transfer.
"(4) Certain distributions excluded from tax.--The term
'taxable distribution' does not include--,
"(A) any transfer to the extent such transfer is to a
grandchild of the grantor of the trust and does not exceed the
limitation provided by subsection (b) (6), and
"(B) any transfer to the extent such transfer is subject to tax
imposed by chapter 11 or 12.
"(b) Taxable Termination.--For purposes of this chapter--,
"(1) In general.--The term 'taxable termination' means the
termination (by death, lapse of time, exercise or nonexercise, or
otherwise) of the interest or power in a generation-skipping trust
of any younger generation beneficiary who is assigned to any
generation older than the generation assignment of any other
person who is a younger generation beneficiary of that trust.
Such term does not include a termination of the interest or power
of any person who at no time has had anything other than a future
interest or future power (or both) in the trust.
"(2) Time certain terminations deemed to occur.--,
"(A) Where 2 or more beneficiaries are assigned to same
generation.--In any case where 2 or more younger generation
beneficiaries of a trust are assigned to the same generation,
except to the extent provided in regulations prescribed by the
Secretary, the transfer constituting the termination with respect
to each such beneficiary shall be treated as occurring at the time
when the last such termination occurs.
"(B) Same beneficiary has more than 1 interest or power.--In
any case where a younger generation beneficiary of a trust has
both an interest and a power, or more than 1 interest or power, in
the trust, except to the extent provided in regulations prescribed
by the Secretary, the termination with respect to each such
interest or power shall be treated as occurring at the time when
the last such termination occurs.
"(C) Unusual order of termination.--,
"(i) In general.--If--,
"(I) but for this subparagraph, there would have been a
termination (determined after the application of subparagraphs (A)
and (B)) of an interest or power of a younger generation
beneficiary (hereinafter in this subparagraph referred to as the
'younger beneficiary'), and
"(Ii) at the time such termination would have occurred, a
beneficiary (hereinafter in this subparagraph referred to as the
'older beneficiary') of the trust assigned to a higher generation
than the generation of the younger beneficiary has a present
interest or power in the trust. then, except to the extent
provided in regulations prescribed by the Secretary, the transfer
constituting the termination with respect to the younger
beneficiary shall be treated as occurring at the time when the
termination of the last present interest or power of the older
beneficiary occurs.
"(ii) Special rules.--If clause (i) applies with respect to any
younger beneficiary--,
"(I) this chapter shall be applied first to the termination of
the interest or power of the older beneficiary as if such
termination occurred before the termination of the power or
interest of the younger beneficiary; and
"(Ii) the value of the property taken into account for purposes
of determining the tax (if any) imposed by this chapter with
respect to the termination. of the interest or power of the
younger beneficiary shall be reduced by the tax (if any) imposed
by this chapter with respect to the termination of the interest or
power of the older beneficiary.
"(D) Special rule.--Subparagraphs (A) and (C) shall also apply
where a person assigned to the same generation as, or a higher
generation than, the person whose power or interest terminates has
a present power or interest immediately after the termination and
such power or interest arises as a result of such termination.
"(3) Deemed transferees of certain terminations.--Where, at the
time of any termination, it is not clear who will be the
transferee of any portion of the property transferred, except to
the extent provided in regulations prescribed by the Secretary,
such portion shall be deemed transferred pro rata to all
beneficiaries of the trust in accordance with the amount which
each of them would receive under a maximum exercise of discretion
on their behalf. For purposes of the preceding sentence, where it
is not clear whether discretion will be exercised per stirpes or
per capita, it shall be presumed that the discretion will be
exercised per stirpes.
"(4) Termination of power.--In the case of the termination of
any power, the property transferred shall be deemed to be the
property subject to the power immediately before the termination
(determined without the application of paragraph (2)).
"(5) Certain terminations excluded from tax.--The term 'taxable
termination' does not include--,
"(A) any transfer to the extent such transfer is to a
grandchild of the grantor of the trust and does not exceed the
limitation provided by paragraph (6), and
"(B) any transfer to the extent such transfer is subject to a
tax imposed by chapter 11 or 12.
// 26 USC 2001, 2501. //
"(6) $250,000 limit on exclusion of transfers to grandchildren.
--In the case of any deemed transferor, the maximum amount
excluded from the terms 'taxable distribution' and 'taxable
termination' by reason of provisions exempting from such terms
transfers to the grandchildren of the grantor of the trust shall
be $250,000. The preceding sentence shall be applied to transfers
from one or more trusts in the order in which such transfers are
made or deemed made.
"(7) Coordination with subsection (a).--,
"(A) Terminations take precedence over distributions. --If--,
"(i) the death of an individual or any other occurrence is a
taxable termination with respect to any property, and
"(ii) such occurrence also requires the distribution of part of
all of such property in a distribution which would (but for this
subparagraph) be a taxable distribution, then a taxable
distribution shall be deemed not to have occurred with respect to
the portion described in clause (i).
"(B) Certain prior transfers.--To the extent that--,
"(i) the deemed transferor in any prior transfer of the
property of the trust being transferred in this transfer was
assigned to the same generation as (or a lower generation than)
the generation assignment of the deemed transferor in this
transfer,
"(ii) the transferee in such prior transfer was assigned to the
same generation as (or a higher generation than) the generation
assignment of the transferee in this transfer, and
"(iii) such transfers do not have the effect of avoiding tax
under this chapter with respect to any transfer, the terms
'taxable termination' and 'taxable distribution' do not include
this later transfer.
"(c) Younger Generation Beneficiary; Beneficiary.--For purposes of
this chapter--,
"(1) Younger generation beneficiary.--The term 'younger
generation beneficiary' means any beneficiary who is assigned to a
generation younger than the grantor's generation.
"(2) Time for ascertaining younger generation beneficiaries.
--A person is a younger generation beneficiary of a trust with
respect to any transfer only if such person was a younger
generation beneficiary of the trust immediately before the
transfer (or, in the case of a series of related transfers, only
if such person was a younger generation beneficiary of the trust
immediately before the first of such transfers).
"(3) Beneficiary.--The term 'beneficiary' means any person who
has a present or future interest or power in the trust.
"(d) Interest or Power.--For purposes of this chapter--,
"(1) Interest.--A person has an interest in a trust if such
person--,
"(A) has a right to receive income or corpus from the trust, or
"(B) is a permissible recipient of such income or corpus.
"(2) Power.--The term 'power' means any power to establish or
later beneficial enjoyment of the corpus or income of the trust.
"(e) Limited Power To Appoint Amoung Lineal Descendants of Grantor
Not Taken Into Account in Certain Cases.--For purposes of this chapter,
if any individual does not have any present or future power in the trust
other than a power to dispose of the corpus of the trust or the income
therefrom to a beneficiary or a class of beneficiaries who are lineal
descendants of the grantor assigned to a generation younger than the
generation assignment of such individual, then such individual shall be
treated as not having any power in the trust.
"(f) Effect of Adoption.--For purposes of this chapter, a
relationship by legal adoption shall be treated as a relationship by
blood.
" SEC. 2614.
// 26 USC 26149 //
SPECIAL RULES.
"(a) Basis Adjustment.--If property is transferred to any person
pursuant to a generation-skipping transfer which occurs before the death
of the deemed transferor, the basis of such property in the hands of the
transferee shall be increased (but not above the fair market value of
such property) by an amount equal to that portion of the tax imposed by
section 2601 with respect to the transfer which is attributable to the
excess of the fair market value of such property over its adjusted basis
immediately before the transfer. 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 by section 1023 without regard to
subsection (d) thereof (relating to basis of property passing from a
decedent dying after December 31, 1976).
"(b) Nonresidents Not Citizens of the United States.--If the deemed
transferor of any transfer is, at the time of the transfer, a
nonresident not a citizen of the United States and--,
"(1) if the deemed transferof is alive at the time of the
transfer, there shall be taken into account only property which
would be taken into account for purposes of chapter 12,
// 26 USC 2501. //
or
"(2) if the deemed transferor has died at the same time as, or
before, the transfer, there shall be taken into account only
property which would be taken into account for purposes of chapter
11.
// 26 USC 2001. //
"(c) Disclaimers.--,
" For provisions relating to the effect of a qualified
disclaimer for purposes of this chapter, see section 2518.
" Subchapter C--Administration
" Sec. 2621. Administration. " Sec. 2622. Regulations
" SEC. 2621.
// 26 USC 2621. //
ADMINISTRATION.
"(a) General Rule.--Insofar as applicable and not inconsistent with
the provisions of this chapter--,
"(1) if the deemed transferor is not alive at the time of the
transfer, all provisions of subtitle F (including penalties)
applicable to chapter 11 or section 2001 are hereby made
applicable in respect of this chapter or section 2601, as the case
may be, and
"(2) if the deemed transferor is alive at the time of the
transfer, all provisions of subtitle F
// 26 USC 6001. //
(inclusing penalties) applicable to chapter 1i or section 2501 are
hereby made applicable in respect of this chapter or section 2601,
as the case may be.
"(b) Sections 6166 and 6166 A Not Applicable.--For purposes of this
chapter, sections 6166 and 6166 A (relating to extensions of time for
payment of estate tax where estate consists largely of interest in
closely held business) shall not apply.
"(c) Return Requirements.--,
"(1) In General.--The Secretary shall prescribe by regulations
the person who is required to make the return with respect to the
tax imposed by this chapter and the time by which any such return
must be files. To the extent practicable, such regulations shall
provide that--,
"(A) the person who is required to make such return shall be--,
"(i) in the case of a taxable distribution, the distributee, or
"(ii) in the case of a taxable termination, the trustee; and
"(B) the return shall be filed--,
"(i) in the case of a generation-skipping transfer occurring
before the death of the deemed transferor, on or before the 90th
day after the close of the taxable year of the trust in which such
transfer occurred, or
"(ii) in the case of a generation-skipping transfer occurring
at the same time as, or after, the death of the deemed transferor,
on or before the 90th day after the last day prescribed by law
(including extensions) for filing the return of tax under chapter
11 with respect to the estate of the deemed transferor (or if
later the day which is 9 months after the day on which such
generation-skipping transfer occurred).
"(2) Information returns.--The Secretary may by regulations
require the trustee to furnish the Secretary with such information
as he determines to be necessary for purposes of this chapter.
" SEC. 2622.
// 26 USC 2622. //
REGULATIONS.
" The Secretary shall prescribe such regulations as may be necessary
or appropriate to carry out the purposes of this chapter, including
regulations providing the extent to which substantially separate and
independent shares of different beneficiaries in the trust shall be
treated as separate trusts."
(b) Technical, Clerical, and Conforming Changes.--,
(1) Clerical change.--The table of chapters for subtitle B is
amended by adding at the end thereof the following new item:
" Chapter 13. Tax on certain generation-skipping
transfers."
(2) Credit for tax on prior transfers.--Section 2013
// 26 USC 2013. //
(relating to credit fro tax on prior transfers) is amended by
adding at the end thereof the following new subsection:
"(g) Treatment of Tax Imposed on Certain Generation-Skipping
Transfers.--If any property was transferred to the decedent in a
transfer which is taxable under section 2601 (relating to tax imposed on
generation-skipping transfers) and if the deemed transferor (as defined
in section 2612) is not alive at the time of such transfer, for purposes
of this section--,
"(1) such property shall be deemed to have passed to the
decedent from the deemed transferor;
"(2) the tax payable under section 2601 on such transfer shall
be treated as a Federal estate tax payable with respect to the
estate of the deemed transferor; and
"(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
// 26 USC 691. //
(relating to deduction for estate tax) is amended by 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 2601(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 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 subsection (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
// 26 USC 303. //
is amended by adding at the end thereof the following 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
generation-skipping transfer."
(c) // 26 Usc 2601 note. // Effective Dates.--,
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section apply to any generation-skipping
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
(B) in the case of a decedent dying before January 1, 1982,
pursuant to a will (or revocable trust) which was in existence on
April 30, 1976, and was not amended at any time after that date in
any respect which will result in the creation of, or increasing
the amount of, any generation-skipping transfer. For purposes of
subparagraph (B), if the decedent on April 30, 1976, was under a
mental disability to change the disposition of his property, the
period set forth in such subparagraph shall not expire before the
date which is 2 years after the date on which he first regains his
competence to dispose of such property.
(3) TRUST equivalents.--For purposes of paragraph (2), in the
case of a trust equivalent within the meaning of subsection (d) of
section 2611 of the Internal Revenue Code of 1954, the provisions
of such subsection (d) shall apply.
SEC. 2007. ORPHANS' EXCLUSION.
(a) General Rule.--Part IV of subchapter A of chapter 11 (relating to
taxable estate) is amended by adding at the end thereof the following
new section:
" SEC. 2057.
// 26 USC 2057. //
BEQUESTS, ECT., TO CERTAIN MINOR CHILDREN.
"(a) Allowance of Deduction.--For purposes of the tax imposed by
section 2001, if--,
"(1) the decedent does not have a surviving spouse, and
"(2) the decedent is survived by a minor child who, immediately
after the death of the decedent, has no known parent,
then the value of the taxable estate shall be determined by deducting
from the value of the gross estate an amount equal to the value of any
interest in property which passes or has passed from the decedent to
such child, but only to the extent that such interest is included in
determining the value of the gross estate.
"(b) Limitation.--The aggregate amount of the deductions allowed
under this section (computed without regard to this subsection) with
respect to interests in property passing to any minor child shall not
exceed an amount equal to $5,000 multiplied by the excess of 21 over the
age (in years) which such child has attained on the date of the
decedent's death.
"(c) Limitation in the Case of Life Estate or Other Terminable
Interest.--A deduction shall be allowed under this section with respect
to any interest in property passing to a minor child only to the extent
that a deduction would have been allowable under section 2056(b) if such
interest had passed to a surviving spouse of the decedent. For purposes
of this subsection, an interest shall not be treated as terminable
solely because the property will pass to another person if the child
dies before the youngest child of the decedent attains age 21.
"(d) Definations.--For purposes of this section--,
"(1) Minor child.--The term 'minor child' means any dhild of
the decedent who has not attined the age of 21 before the date of
the decedent's death.
"(2) Adopted children.--A relationship by legal adoption shall
be treated as replacing a relationship by blood.
"(3) Property passing from the decedent.--The determination of
whether an interest in property passes from the decedent to any
person shall be made in accordance with section 2056(d)."
(b) Clerical Amendment.--The table of sections for part IV of
subchapter A of chapter 11 is amended by adding at the end thereof
the following new item:
" Sec. 2057. Bequests, etc., to certain minor children."
(c) // 26 USC 2057 note. // Effective Date.--The amendments made by
this section shall apply to the estates of decedents dying after
December 31, 1976.
SEC. 2008. ADMINISTRATIVE CHANGES.
(a) Furnishing of Statement Explaining Estate or Gift Valuation.--,
(1) In general.--Chapter 77 (relating to miscellaneous
provisions) is amended by adding at the end thereof the following
new section:
" SEC. 7517.
// 26 USC 7517. //
FURNISHING ON REQUEST OF STATEMENT EXPLAINING
ESTATE OR GIFT VALUATION.
"(a) General Rule.--If the Secretary makes a determination or a
proposed determination of the value of an item of property for purposes
of the tax imposed under chapter 11, 12, or 13, // 26 USC 2001, 2501.
// he shall furnish, on the written request of the executor, donor, or
the person required to make the return of the tax imposed by chapter 13
(as the case may be), to such executor, donor, or person a written
statement containing the material required by subsection (b). Such
statement shall be furnished not later than 45 days after the later of
the date of such request or the date of such determination or proposed
determination.
"(b) Contents of Statement.--A statement required to be furnished
under subsection (a) with respect to the value of an item of property
shall--,
"(1) explain the basis on which the valuation was determined or
proposed,
"(2) set forth any computation used in arriving at such value,
and
"(3) contain a copy of any expert appraisal made by or for the
Secretary.
"(c) Effect of Statement.--Except to the extent otherwise provided by
law, the value determined or proposed by the Secretary with respect to
which a statement is furnished under this section, and the method used
in arriving at such value, shall not be binding on the Secretary."
(2) Conforming and clerical amendemnts.--,
(A) Section 2031
// 26 USC 2031. //
(defining gross estate) is amended by adding at the end thereof
the following new subsection:
"(c) Cross Reference.--,
" For executor's right to be furnished on request a statement
regarding any valuation made by the Secretary within the gross
estate, see section 7517."
(B) Section 2512
// 26 USC 2512. //
(relating to valuation of gifts) is amended by adding at the end
thereof the following new subsection:
"(c) Cross Reference.--,
" For individual's right to be furnished on request a statement
regarding any valuation made by the Secretary of a gift by that
individual, see section 7517."
(C) The table of sections for chapter 77 is amended by adding
at the end thereof the following:
" Sec. 7517. Furnishing on request of statement explaining
estate or gift valuation."
(b) Special Rule for Filing Returns Where Gifts in Calendar Quarter
Total $25,000 or Less.--Subsection (b) of section 6075 // 26 USC 6075.//
relating to gift tax returns) is amended to read as follows:
"(b) Gift Tax Returns.--,
"(1) General rule.--Except as provided in paragraph (2),
returns made under section 6019 (relating to gift taxes) shall be
filed on or before the 15th day of the second month following the
close of the calendar quarter.
"(2) Special rule where gifts in a calendar quarter total
$25,000 or less.--If the total amount of taxable gifts made by a
person during a calendar quarter is $25,000 or less, the return
under section 6019 for such quarter shall be filed on or before
the 15th day of the second month after--,
"(A) the close of the first subsequent calendar quarter in the
calendar year in which the sum of--,
"(i) the taxable gifts made during such subsequent quarters,
plus
"(ii) all other taxable gifts made during the calendar year and
for which a return has not yet been required to be filed under
this subsection, exceeds $25,000, or
"(B) if a return is not required to be filed under subparagraph
(A), the close of the fourth calendar quarter of the calendar
year.
"(3) Nonresidents not citizens of the united states.--In the
case of a nonresident not a citizen of the United States,
paragraph (2) shall be applied by substituting '$12,500' for
'$25,000' each place it appears."
(c) Public Index of Filed Tax Lines.--,
(1) Initial filing of notice.--,
(A) Section 6323(f)
// 26 USC 6323. //
(relating to filing of notice of lien) is amended by adding at the
end thereof the following new paragraph:
"(4) Index.--The notice of lien referred to in subsection (a)
shall not be treated as meeting the filing requirements under
paragraph (1) unless the fact of filing is entered and recorded in
a public index at the district office of the Internal Revenue
Service for the district in which the property subject to the lien
is situated."
(B) Paragraph (2) of section 6323(f) is amended by striking out
"paragraph (1)" and inserting in lieu thereof "paragraphs (1) and
(4)".
(2) Refiling of notice.--Section 6323(g) (2) (A) (relating to
refiling of notice of lien) is amended to read as follows:
"(A) if such notice of lien is refiled in the office in which
the prior notice of lien was filed and the fact of refiling is
entered and recorded in an index in accordance with subsection (f)
(4); and ".
(d) Effective Dates.--,
(1) The amendments made by subsection (a)
// 26 USC 7517 note. //
--,
(A) insofar as they relate to the tax imposed under chapter 11
of the Internal Revenue Code of 19548
// 26 USC 2001. //
shall apply to the estates of decedents dying after December 31,
1976, and
(B) insofar as they relate to the tax imposed under chapter 12
of such Code,
// 26 USC 2501. //
shall apply to gifts made after December 31, 1976.
(2) The amendments made by subsection (b)
// 26 USC 6075 note. //
shall apply to gifts made after December 31, 1976.
(3) The amendments made by subsection (c)
// 26 USC 6323 note. //
shall take effect--,
(A) in the case of liens filed before the date of the enactment
of this Act, on the 270th day after such date of enactment, or
(B) in the case of liens filed on or after the date of
enactment of this Act, on the 120th day after such date of
enactment.
SEC. 2009. MISCELLANEOUS PROVISIONS.
(a) Inclusion of Stock in Decedent's Estate Where Decedent Retained
Voting Rights.--Subsection (a) of section 2036 // 26 USC 2036. //
(relating to transfer with retained life estate) is amended by adding at
the end thereof the following new sentence: " For purposes of paragraph
(1), the retention of voting rights in retained stock shall be
considered to be a retention of the enjoyment of such stock."
(b) Disclaimers.--,
(1) Amendment of gift tax provisions.--Subchapter B of chapter
12 (relating to transfers for purposes of the gift tax) is amended
by adding at the end thereof the following new section:
" SEC. 2518.
// 26 USC 2518. //
DISCLAIMERS.
"(a) General Rule.--For purposes of this subtitle, if a person makes
a qualified disclaimer with respect to any interest in property, this
subtitle shall apply with respect to such interest as if the interest
had never been transferred to such person.
"(b) Qualified Disclaimer Defined.--For purposes of subsection (a),
the term 'qualified disclaimer' means an irrevocable and unqualified
refusal by a person to accept an interest in property but only if--,
"(1) such refusal is in writing,
"(2) such writing is received by the transferor of the
interest, his legal representative, or the holder of the legal
title to the property to which the interest relates not later than
the date which is 9 months after the later of--,
"(A) the day on which the transfer creating the interest in
such person is made, or
"(B) the day on which such person attains age 21,
"(3) such person has not accepted the interest or any of its
benefits, and
"(4) as a result of such refusal, the interest passes to a
person other than the person making the disclaimer (without any
direction on the part of the person making the disclaimer).
"(c) Other Rules.--For purposes of subsection (a)--,
"(1) Disclaimer of undivided portion of interest.--A disclaimer
with respect to an undivided portion of an interest which meets
the requirements of the preceding sentence shall be treated as a
qualified disclaimer of such portion of the interest.
"(2) Powers.--A power with respect to property shall be treated
as an interest in such property."
(2) Amendment of estate tax provisions.--Part III of subchapter
A of chapter 11 (relating to gross estate) is amended by adding at
the end thereof the following new section:
" SEC. 20459
// 26 USC 2045. //
DISCLAIMERS.
" For provisions relating to the effect of a qualified
disclaimer for purposes of this chapter, see section 2518."
(3) Clerical amendments.--,
(A) The table of sections for subchapter B of chapter 12 is
amended by adding at the end thereof the following:
" Sec. 2518. Disclaimers."
(B) The table of sections for part III of subchapter A of
chapter 11 is amended by adding at the end thereof the following:
" Sec. 2045. Disclaimers."
(4) Technical and conforming changes.--,
(A) Paragraph (2) of section 2041 (a)
// 26 USC 20419 //
(relating to release of general powers of appointment) is amended
by striking out the second sentence thereof.
(B) The first sentence of subsection (a) of section 2055
// 26 USC 2055. //
(relating to transfers for public, charitable, and religious uses)
is amended by striking out "(including the interest which falls
into any such bequest, legacy, devise, or transfer as a result of
an irrevocable disclaimer of a gequest, legacy, devise, transfer,
or power, if the disclaimer is made before the date prescribed for
the filing of the estate tax return)".
(C) The second sentence of subsection (a) of section 2055 is
amended--,
(i) by striking out "an irrevocable" and inserting in lieu
thereof "a qualified", and
(ii) by striking out "such irrevocable" and inserting in lieu
thereof "such qualified".
(D) Section 2056
// 26 USC 2056. //
(relating to bequests, etc., to surviving spouse) is amended by
striking out subsection (d) and by redesignating subsection (e) as
subsection (d).
(E) Subsection (a) of section 2056 is amended by striking out
"subsections (b), (c), and (d)" and inserting in lieu thereof
"subsections (b) and (c)".
(F) Subsection (b) of section 2514
// 26 USC 2514. //
(relating to powers of appointment for purposes of the gift tax)
is amended by striking out the second sentence thereof.
(c) Certain Retirement Benefits.--,
(1) Exclusion from gross estate of individual retirement
accounts, etc.--Section 2039
// 26 USC 2039. //
(relating to annuities) is amended by adding at the end thereof
the following new subsection:
"(e) Exclusion of Individual Retirement Accounts, Etc.
--Notwithstanding the provisions of this section or of any other
provision of law, there shall be excluded from the value of the gross
estate the value of an annuity receivable by any beneficiary (other than
the executor) under--,
"(1) an individual retirement account described in section
408(a),
"(2) an individual retirement annuity described in section
408(b), or
"(3) a retirement bond described in section 409(a).
If any payment to an account described in paragraph (1) or for an
annuity described in paragraph (2) or a bond described in paragraph (3)
was not allowable as a deduction under section 219 and was not a
rollover contribution described in section 402(a) (5), 403(a) (4), 408
(d) (3), or 409(b) (3) (C), the preceding sentence shall not apply to
that portion of the value of the amount receivable under such account,
annuity, or bond (as the case may be) which bears the same ratio to the
total value of the amount so receivable as the total amount which was
paid to or for such account, annuity, or bond and which was not
allowable as a deduction under section 219 and was not such a rollover
contribution bears to the total amount paid to or for such account,
annuity, or bond. For purposes of this subsection, the term 'annuity'
means an annuity contract or other arrangement providing for a series of
substantially equal periodic payments to be made to a beneficiary (other
than the executor) for his life or over a period extending for at least
36 months after the date of the decedent's death."
(2) Exclusion from gross estate of self-employed plans.--, The
fifth sentence of section 2039(c)
// 26 USC 2039. //
(relating to exemption of annuities under certain trusts and
plans) is amended to read as follows: " For purposes of this
subsection, contributions or payments on behalf of the decedent
while he was an employee within the meaning of section 401(c) (1)
made under a trust or plan described in paragraph (1) or (2)
shall, to the extent allowable as a deduction under section 404,
be considered to be made by a person other than the decedent and,
to the extent not so allowable, shall be considered to be made by
the decedent."
(3) Exclusion inapplicable in case of lump sum distributions.
--The first sentence of subsection (c) of section 2039 (relating
to exemption of annuities under certain trusts and plans) is
amended by striking out "other payment receivable by any
beneficiary" and inserting in lieu thereof "other payment (other
than a lump sum distribution described in section 402(e) (4),
determined without regad to the next to the last sentence of
section 402(e) (4) (A)) receivable by any beneficiary".
(4) Gift tax treatment of elections under certain retirement
plans.--,
(A) Individual retirement accounts, etc.--,
(i) Subsection (a) of section 2517
// 26 USC 2517. //
(relating to certain annuities under qualified plans) is amended
by striking out "or" at the end of paragraph (3), by striking out
the period at the end of paragraph (4) and inserting in lieu
thereof "; or", and by inserting after paragraph (4) the
following new paragraph:
"(5) an individual retirement account described in section 408
(a) an individual retirement annuity described in section 408 (b),
or a retirement bond described in section 409(a)."
(ii) Subsection (b) of section 2517 (relating to transfers
attributable to employee contributions) is amended by striking out
"other than paragraph (4)" and inserting in lieu thereof "other
than paragraphs (4) and (5)".
(iii) Subsection (c) of section 2517 (defining employee) is
amended by adding at the end thereof the following new setence: "
In the case of a retirement plan described in paragraph (5) of
subsection (a), such term means the individual for whose benefit
the plan was established."
(B) Self-employed plans.--The last sentence of section 2517(b)
(relating to transfers attributable to employee contributions) is
amended to read as follows: " For purposes of this subsection,
contributions or payments on behalf of an individual while he was
an employee within the meaning of section 401(c) (1) made under a
trust or plan described in paragraph (1) or (2) of subsection (a)
shall, to the extent allowable as a deduction under section 404,
be considered to be made by a person other than such individual
and, to the extent not so allowable, shall be considered to be
made by such individual."
(5) Gift tax treatment of certain community property.--,
Section 2517
// 26 USC 2517. // 5
(relating to certain annuities under qualified plans) is amended
by redesignating subsection (c) (as amended by paragraph (4) (A)
(iii)) as subsection (d) and by inserting after subsection (b) the
following new subsection:
"(c) Exemption of Certain Annuity Interests Created by Community
Property Laws.--Notwithstanding any other provision of law, in the case
of an employee on whose behalf contributions or payments are made--,
"(1) by his employer or former employer under a trust or plan
described in paragraph (1) or (2) of subsection (a), or toward the
purchase of a contract described in paragraph (3) of subsection
(a), which under subsection (b) are not considered as contributed
by the employee, or
"(2) by the employee to a retirement plan described in
paragraph (5) of subsection (a),
a transfer of benefits attributable to such contributions or payments
shall, for purposes of this chapter, not be considered as a transfer by
the spouse of the employee to the extent that the value of any interest
of such spouse in such contributions or payments or in such trust or
plan or such contract--,
"(A) is attributable to such contribution or payments, and
"(B) arises solely by reason of such spouse's interest in
community income under the community property laws of the State."
(d) Income Tax Treatment of Certain Expenses of Estate. --Section
642(g) // 26 USC 642. // (relating to disallowance of double
deductions) is amended by inserting after "shall not be allowed as a
deduction" the following: "(or as an offset against the sale price of
property in determining gain or loss)".
(e) Effective Dates.--,
(1) For subsection (a).
// 26 USC 2518 note. // --The amendment made by subsection
(a) shall apply to transfers made after June 22, 1976.
(2) For subsection (b).
d // 26 USC 2518 note. // d --The amendments made by subsection
(b) shall apply with respect to transfers creating an interest im
the person disclaiming made after December 31, 1976.
(3) For subsection (c).--,
// 26 USC 2039 note //
(A) The amendments made by paragraph (1), (2), and (3) of
subsection (c) shall apply to the estates of decedents dying after
December 31, 1976.
(B) The amendments made by paragraph (4) and (5) of subsection
(c)
// 26 USC 2517 note. //
shall apply to transfers made after December 31, 1976.
(4) For subsection (d).
// 26 USC 642 note. //
--The amendment made by subsection (d) shall apply to taxable
years ending after the date of the enactment of this Act.
SEC. 2010. CREDIT AGAINST CERTAIN ESTATE TAXES
(a) In General.--Subject to the provisions of subsections (b), (c),
and (d), credit against the tax imposed by chapter 11 of the Internal
Revenue Code of 1954 // 26 USC 2001. // (relating to estate tax) with
respect to the estate of La Vere Redfield shall be allowed by the
Secretary of the Treasury or his delegate for the conveyance of real
property located within the boundaries of the Toiyabe National Forest.
(b) Amount of Credit.--The amount treated as a credit shall be equal
to the fair market value of the real property transferred as of the
valuation date used for purposes of the tax imposed (an interest
thereon) by chapter 11 of the Internal Revenue Code of 1954.
(c) Deed Requirements.--The provisions of this section shall apply
only if the executrixes of the estate execute a deed (in accordance with
the laws of the State in which such real estate is situated)
transferring title to the United States which is satisfactory to the
Attorney General or his disignee.
(d) Acceptance as National Forest.--The provisions of this section
shall apply only if the real property transferred is accepted by the
Secretary of Agriculture and added ot the Toiyabe National Forest. The
lands shall be transferred to the Secretary of Agriculture without
reimbursement or payment from the Department of Agriculture.
(e) Interest.--Unless the Secretary of Agriculture determines and
certifies to the Secretary of the Treasury that there has been an
expenditious transfer of the real property under this section, no
interest payable with respect to the tax imposed by chapter 11 of the
Internal Revenue Code of 1954 shall be deemed to be waived by reason of
the provisions of this section for any period before the date of such
transfer.
(f) Effective Date.--The provisions of this section shall be
effective on the date of the enactment of this Act.
PUBLIC LAW 94-455, 90 STAT. 1764, TAX REFORM ACT OF 1976, TITLE
XIX-REPEAL AND REVISION OF OBSOLETE, RARELY USED, ETC., PROVISIONS OF
INTERNAL REVENUE CODE OF 1954
94th CONGRESS, H. R. 10612
COTOBER 4, 1976
SUBTITLE A--AMENDMENTS OF INTERNAL REVENUE CODE GENERALLY
SEC. 1901. AMENDMENTS OF SUBTITLE A; INCOME TAXES.
(a) In General.--,
(1) Amendment of section 2.--Subsection (c) of section 2
// 26 USC 2. //
(relating to certain married individuals living apart) is amended
to read as follows:
"(c) Certain Married Individuals Living Apart.--For purposes of this
part, an individual shall be treated as not married at the close of the
taxable year if such individual is so treated under the provisions of
section 143(b)."
(2) Repeal of section 35.--Section 35
// 26 USC 35. // (relating to partially
tax-exempt interest received by individuals) is repealed.
(3) Amendment of section 39.--Section 39
// 26 USC 39. //
(relating to certain uses of gasoline, special fuels, and
lubrecating oil) is amended by striking out subsections (b) and
(c) and inserting after subsection (a) the following new
subsection:
"(b) Exception.--Credit shall not be allowed under subsection (a) for
any amount payable under section 6421, 6424, or 6427, if a claim for
such amount is timely filed and, under section 6421(i), 6424(f), or
6427(f), is payable under such section."
(4) amendments of section 46.
(A) The second sentence of section 46(a)(4),
// 26 USC 46. //
as redesignated by this Act, is amended by striking out "section
408(e)" and inserting in lieu thereof "section 408(f)".
(B) Clause (iii) of section 46(c)(3)(B) (relating to public
utility property) is amended by striking out "47 U.S.C., sec.
222(a)(5)" and inserting in lieu thereof "47 U.S.C. 222(a)(5)".
(5) Amendments of section 48.--,
(A) Section 48(a)(2)(B)(vi)
// 26 USC 48. //
(rlating to section 38 property used outside the United States) is
amended by striking out";43 U.S.C., sec. 1331)" and inserting in
lieu thereof "(43 U.S.C. 1331))".
(B) Section 48(a)(2)(B)(viii) is amended by striking out "47
U.S.C., sec. 702" and inserting in lieu thereof "47 U.S.C. 702".
(6) Amendment of section 50 A.--The second sentence of section
50 A(a)(3)
// 26 USC 50 A. //
(relating to liability for tax) is amended by striking out
"section 408(e)" and inserting in lieu thereof "section 408(f)".
(7) Repeal of section 51.--Subchapter A of chapter 1
// 26 USC 51. //
is amended by striking out part V (relating to tax surcharge).
(8) Amendments of section 62.--Section 62
// 26 USC 62. //
(relating to definition of adjusted gross income) is amended by
redesignating paragraph (11), as added by the Act of October 26,
1974
(Public Law 93-483), as paragraph (12).
(9) Additional amendment of section 62.--Section 62 (12), as
redesignated by subparagraph (A) of this paragraph, is amended by
striking out "trade or business to the extent" and inserting in
lieu thereof "trade or business, to the extent".
(10) Definition of ordinary income.--Part 1 of subchapter B of
chapter 1
// 26 USC 61. //
(relating to definitions of gross income, adjusted gross income,
and taxable income) is amended by adding at the end thereof the
following new section:
" SEC. 64.
// 26 USC 64. //
ORDINARY INCOME DEFINED.
" For purposes of this subtitle, the term 'ordinary income' includes
any gain from the sale or exchange of property which is neither a
capital asset nor property described in section 1231(b). Any gain from
the sale or exchange of property which is treated or considered, under
other provisions of this subtitle, as 'ordinary income' shall be treated
as gain from the sale or exchange of property which is neither a capital
asset nor property described in section 1231(b)."
(11) Definition of ordinary loss.--Part I of subchapter B of
chapter 1
// 26 USC 61. //
(relating to definitions of gross income, adjusted gross income,
and taxable income) is amended by adding at the end thereof the
following new section:
" SEC. 65.
// 26 USC 65. //
ORDINARY LOSS DEFINED.
" For purposes of this subtitle, the term 'ordinary loss' includes
any loss from the sale or exchange of property which is not a capital
asset. Any loss from the sale or exchange of property which is treated
or considered, under other provisions of this subtitle, as 'ordinary
loss' shall be treated as loss from the sale or exchange of property
which is not a capital asset."
(12) Amendment of section 72.--Section 72(d)(1)
// 26 USC 72. //
(relating to employees' annuties) is amended by striking out
"(whether or not before January 1, 1954)" and by striking out
"(under this paragraph and prior income tax laws)".
(13) Additional amendment of section 72.--Section 72(m) (4)(A)
(relating to assignments or pledges) is amended by striking out
"an individual retirement amount" and inserting in lieu thereof
"an individual retirement account".
(14) Repeal of section 76.--Section 76
// USC 76. //
(relating to mortgages made or obligations issued by joint stock
land banks) is repealed.
(15) Amendment of section 83.--Section 83(b)(2)
// 26 USC 83. //
(relating to election to include the value of restricted property
in gross income) is amended by striking out "(or, if later, 30
days after the date of the enactment of the Tax Reform Act of
1969)".
// 26 USC 1 note. //
(16) Amendments of section 101.--Section 101
// 26 USC 101. //
is amended by striking out subsection (f) (relating to effective
date of section).
(17) Amendments of section 103.--,
(A) Section 103(a)
// 26 USC 103. //
(relating to tax-exempt interest), as amended by this Act, is
amended by inserting "and" at the end of paragraph (1), by
striking out paragraphs (2) and (3), and by redesignating
paragraph (4) as paragraph (2).
(B) Section 103
// 26 USC 103. //
is amended by striking out subsection (b) (relating to certain
exceptions) and by redesignating subsections (c), (d), (e), (f),
and (g) (as added by the Act) as subsections (b), (c), (d), (e),
and (f) respectively.
(C) Section 103(b)(1) (relating to industrial development
bonds), as redesignated by subparagraph (B) of this paragraph, is
amended by inserting "or (2)" after "(a)(1)".
(D) Section 103(c)(2)(A) (relating to definition of arbitrage
bonds), as redesignated by subparagraph (B) of this paragraph, is
amended by inserting "or (2)" after "(a)(2)".
(E) Section 103(e) (relating to certain cross references) as
redesignated by subpargraph (B) of this paragraph, is amended to
read as follows:
"(e) Cross References.--,
" For provisions relating to the taxable status of--,
"(1) Puerto Rican bonds, see section 3 of the Act of March 2,
1917, as amended (48 U.S.C. 745).
"(2) Virgin Islands insular and municipal bonds, see section 1
of the Act of October 27, 1919 (48 U.S.C. 1403).
"(3) Certain obligations issued under title I of the Housing
Act of 1949, see section 102(g) of title I of such Act (42 U.S.C.
1452(g))."
(18) Amendments of section 104.--,
(A) Section 104(a)(4)
// 26 USC 104. //
(relating to exclusion of compensation for injuries or sickness)
is amended by striking out "; 60 Stat. 1021". (B) Section
104(")(2) as redesignated by section 505 of this Act, is amended
to read as follows:
"(2) For exclusion of part of disability retirement pay from
the application of subsection (a)(4) of this section, see section
1403 of title 10, United States Code (relating to career
compensation laws)."
(19) Amendment of section 115.--Section 115
// 26 USC 115. //
(relating to income of States, municipalities, etc.) is amended to
read as follows:
" SEC. 115. INCOME OF STATES, MUNICIPALITIES, ETC.
" Gross income does not include--,
"(1) income derived from any public utility or the exercise of
any essential governmental function and accruing to a State or any
political subdivision thereof, or the District of Columbia; or
"(2) income accruing to the government of any possession of the
United States, or any political subdivision thereof."
(20) Amendment of section 116.--Subsection (a) of section 116
// 26 USC 116. //
(relating to partial exclusion of dividends received by
individuals) is amended by striking out " Effective with respect
to any taxable year ending after July 31, 1954, gross income" and
inserting in lieu thereof " Gross income".
(21) Amendment of section 124.--Section 124
// 26 USC 124. //
(relating to cross references to other Acts) is amended to read as
follows:
" SEC. 115. INCOME OF STATES, MUNICIPALITIES, ETC.
"(a) For exemption of--,
"(1) Adjustments of indebtedness under wage earners' plans, see
section 679 of the Bankruptcy Act (11 U.S.C. 1079).
"(2) Allowances and expenditures to meet losses sustained by
persons serving the United States abroad, due to appreciation of
foreign currencies, see section 5943 of title 5, United States
Code.
"(3) Amounts credited to the Maritime Administration under
section
9(b)(6) of the Merchant Ship Sales Act of 1946, see section
9(c)(1) of that Act (50 U.S.C. App. 1742).
"(4) Benefits under laws administered by the Veterans'
Administration, see section 3101 of title 38, United States Code.
"(5) Earnings of ship contractors deposited in special reserve
funds, see section 607(d) of the Merchant Marine Act, 1936 (46 U.
S.C. 1177).
"(6) Income derived from Federal Reserve banks, including
capital stock and surplus, see section 7 of the Federal Reserve
Act (12 U.S.C. 531).
"(7) Railroad retirement annuties and pensions, see section 12
of the Railroad Retirement Act of 1935 (45 U.S.C. 2281).
"(8) Railroad unemployment benefits, see section 2(e) of the
Railroad Unemployment Insurance Act (45 U.S.C. 352).
"(9) Special pensions of persons on Army and Navy medal of
honor rollc see 38 U.S.C. 562(a)-(c).
"(b) For extension of military income-tax-exemption benefits to
commissioned officers of Public Health Service in certain
circumstances, see section 212 of the Public Health Service Act
(42 U.S.C. 213)."
(22) Amendment of section 143.--Section 143
// 26 USC 143. //
(relating to determination of marital status) is amended by
striking out "this part" each place it appears and inserting in
lieu thereof "this part and part V".
(23) Amendment of seciton 151--Section 151(e)(4)
// 26 USC 151. //
(defining student and educational institution) is amended to read
as follows:
"(4) Student defined.--For purposes of paragraph (1)(B) (ii),
the term 'student' means an individual who during each of 5
calendar months during the calendar year in which the taxable year
of the taxpayer begins--,
"(A) is a full-time student at an educational organization
described in section 170(b)(1)(A)(ii); or
"(B) is a pursuing a full-time course of institutional on-farm
training under the supervision of an accredited agent of an
educational organization described in section 170(b)(1)(A)(ii) or
of a State or political subdivision of a State."
(24) Amendments of section 152.--,
(A) Section 152(a)
// 26 USC 152. //
(defining dependent) is amended--,
(i) by inserting "or" at the end of paragraph (8),
(ii) by striking out", or" at the end of paragraph (9) and
inserting in lieu thereof a period, and
(iii) by striking out paragraph (10).
(B) Section 152(b)(3) (relating to rules concerning the
definition of dependent) is amended to read as follows:
"(3) The term 'dependent' does not include any individual who
is not a citizen or national of the United States unless such
individual is a resident of the United States or of a country
contiguous to the United States. The preceding sentence shall not
exclude from the definition of 'dependent' any child of the
taxpayer legally adopted by him, if, for the taxable year of the
taxpayer, the child has as his principal place of abode the home
of the taxpayer and is a member of the taxpayer's household, and
if the taxpayer is a citizen or national of the United States."
(25) Amendments of section 164.--Section 164(d)(2)
// 26 USC 164. //
(relating to apportionment of taxes on real property between the
seller and purchaser) is amended by striking out subparagraphs (B)
and (C), and by redesignating subparagraph (D) as subparagraph
(B).
(26) Amendments of section 165.--Section 165
// 26 USC 165. //
(relating to deduction of losses) is amended by striking out
subsection (i) (relating to property confiscated by Cuba), and by
redesignating subsection (j) as subsection (i).
(27) Amendments of section 167.--,
n A) Section 167(d)
// 26 USC 167. //
(relating to agreement as to useful life for depreciation) is
amended by striking out "after the date of enactment of this
title" and inserting in lieu thereof "after August 16, 1954".
(B) Section 167(f)(2) (defining personal property is amended by
striking out "the date of the enactment of the Revenue Act of
1962" and inserting in lieu thereof "october 16, 1962".
(C) Section 167(1)(4)(A) (relating to election as to
increased-capacity property) is amended by striking out "within
180 days after the date of the enactment of this subparagraph" and
inserting in lieu thereof "before June 29, 1970,".
(28) Amendments of section 170.--,
(A)(i) Section 170
// 26 USC 170. //
(relating to charitable deductions) is amended by striking out
subsections (f)(6) and (g) (relating to unlimited charitable
deductions allowed for taxable years beginning before January 18
1975), and by redesignating subsections (h), (2), and (4) as
subsections (g), (h), and (i), respectively. (ii) Section 170(
b)(1) (relating to percentage limitations on deductions for
individuals) is amended by striking out subparagraph (C) (relating
to unlimited deductions), and by redesignating subparagraphs (D),
(E), and (F) as subparagraphs (C), (D), and (E), respectively.
(iii) Section 170(b)(1)(A)(vii) is amended by striking out
"subparagraph (E)" and inserting in lieu thereof "subparagraph
(D)".
(iv) Section 170(b)(1)(B)(ii) is amended by striking out
"subparagraph (D)" and inserting in lieu thereof "subparagraph
(C)".
(v) Section 170(c) (relating to definition of charitable
contribution) is amended by striking out in the last sentence
"subsection (h)" and inserting in lieu thereof "subsection (g)".
(vi) Section 170(e)(1)(B)(ii)(relating to certain contributions
of ordinary income and capital gain property) is amended by
striking out "subsection (b)(1)(E)" and inserting in lieu thereof
"subsection (b)(1)(D)".
(B) Section 170(d)(1)(A) (relating to carryover of excess
charitable contributions) is amended by striking out "(30 percent,
in the case of a contribution year beginning before January 1,
1970)".
(C) Section 170(h) (relating to disallowance of deductions in
certain cases), as redesignated by subparagraph (A)(i) of this
paragraph, is amended by striking out "64 Stat. 996;".
(D) Section 170(i) (relating to cross references), as
redesignated by subparagraph (A)(i) of this paragraph, is amended
to read as follows:
"(i) Other Cross References.--,
"(1) For charitable contributions of estates and trusts, see
section 642(c).
"(2) For nondeductibility of contributions by common trust
funds, see section 584.
"(3) For charitable contributions of partners, see section 7029
"(4) For charitable contributions of nonresident aliens, see
section 873.
"(5) For treatment of gifts for benefit of or use in connection
with the Naval Academy as gifts to or for use of the United
States, see section 6973 of title 10, United States Code.
"(6) For treatment of gifts accepted by the Secretary of State
under the Foreign Service Act of 1946 as gifts to or for the use
of the United States, see section 1021(e) of that Act (22 U.S.C.
809(e)).
"(n) For treatment of gifts of money accepted by the Attorney
General for credit to the ' Commissary Funds, Federal Prisons' as
gifts to or for the use of the United States, see section 2 of the
Act of May 15, 1952, as amended by the Act of July 9, 1952 (31
U.S.C. 725s-4)."
(29) Amendments of section 172.--,
(A)(i) Section 172(b)(2) nrelating to years to which loss may
be carried) is amended by striking out subparagraph (E).
(ii) Section 172(b)(3)
// 26 USC 172. //
is amended by striking out subparagraphs (E) and (F).
(B) Section 172(c) (relating to definition of net operating
loss) is amended by striking out "(for any taxable year ending
after December 31, 1953)".
(C)(i) Section 172 (relating to net operating loss deduction)
is amended by striking out subsections (f), (g), and (i), and by
redesignating subsections (h), (j), (k), and (l) as subsections
(f), (g), (h), and (i), respectively.
(ii) Section 172(b)(1)(C) (relating to regulated transportation
corporations) is amended by striking out "subsection (j)(1)" and
"subsection (j)", and inserting in lieu thereof "subsection
(g)(1)" and "subsection (g)", respectively.
(ii) Paragraphs (1)(D) and (3)(C)(i) of section 172 (b)
(relating to net operating loss carryovers and carrybacks) are
each amended by striking out "subsection (k)" and inserting in
lieu thereof "subsection (h)".
(iv) Section 172(b)(2) (relating amount of carrybacks and
carryovers) is amended by striking out "subsections (i) and (j)"
and inserting in lieu thereof "subsection (g)".
(D) Section 172(e) (relating to law applicable to computations)
is amended by striking out the last sentence.
(E) Section 172(g)(2) (relating to certain regulated
transportation corporations), as redesignated by subparagraph (C)
of this paragraph, is amended by striking out paragraph (4).
(30) Amendments of sections 174 and 175.
// 26 USC 174, 175. //
Section 174(a)(2) (A)(i) (relating to research and development
expenditures) and section 175(d)(1)(A) (relating to soil and water
conservation expenditures) are each amended by striking out "the
date on which this title is enacted," and inserting in lieu
thereof " August 16, 1954,".
(31) Repeal of section 187.--Section 187
// 26 USC 187. //
(relating to rapid amortization for certain coal mine safety
equipment) is repealed.
(32) Amendment of section 219.--Section 219(b)(2)(A) (iv)
// 26 USC 219. //
disqualifying governmental plan participants from contributing to
individual retirement accounts, etc.) is amended by striking out
"division" and inserting in lieu thereof "subdivision".
(33) Repeal of section 242.--Section 242
// 26 USC 242. //
(relating to partially tax-exempt interest received by
corporations) is repealed.
(34) Amedments of section 243.--,
(A) Section 243(a)
// USC 243. //
(relating to the dividends received deduction) is amended by
inserting after " Small Business Investment Act of 1958" the
following:"(15 U.S.C. 661 and following)".
(B) Section 243(b)(2)(A) (relating dividends received by a
member of an affiliated group) is amended by striking out "(except
that in the case of a taxable year of a member beginning in 1963
and ending in 1964, if the election is effective for the taxable
year of the common parent corporation which includes the last day
of such taxable year of such member, such election shall be
effective for such taxable year of such member, if such member
consents to such election with respect to such taxable year)".
(35) Amendment of section 24m.--Section 247(b)(2)
// 26 USC 247. //
(relating to preferred stock) is amended to read as follows:
"(2) Preferred stock.--,
"(A) In general--The term 'preferred stock' means stock issued
before October 1, 1942, which during the whole of the taxable year
(or the part of the taxable year after its issue) was stock the
dividends in respect of which were comulative, limited to the same
amount, and payable in preference to the payment of dividends on
other stock.
"(B) Certain stock issued on or after october 1, 1942.--, Stock
issued on or after October 1, 1942, shall be deemed for purposes
of this paragraph to have been issued before October 1, 1942, if
it was issued to refund or replace bonds or debentures issued
before October 18 1942, or to refund or replace other preferred
stock (including stock which is preferred stock by reason of this
subparagraph or subparagraph (D)), but only to the extent that the
par or stated value of the new stock does not exceed the par,
stated, or face value of the bonds or debentures issued before
October 1,1942, or the other preferred stock, which such new stock
is issued to refund or replace.
"(C) Determination under regulations--The determination of
whether stock was issued to refund or replace bonds or debentrues
issued before October 1, 1942, or to refund or replace other
preferred stock, shall be made under regulations prescribed by the
Secretary.
"(D) Issuance of stock.--For purposes of subparagraph (B),
issuance of stock includes issuance either by the same or another
corporation in a tracnsaction which is a reorganization (as
defined in section 368(a)), a transaction to which section 371
(relating to insolvency reorganizations) applies, or a trnsaction
subject to part VI of subchapter O (relating to exchanges in SEC
obedience orders), or the respectively corresponding provisions of
the Internal Revenue Code of 1939."
(36) Amendment of section 248.--Section 248(c)
// 26 USC 248. //
(relating to organizational expenditures) is amended by striking
out "the date of enactment of this title" and inserting in lieu
thereof " August 16, 1954".
(37) Amendment of section 265.--Section 265(2)
// 26 USC 265. //
(relating to tax-exempt interest) is amended by striking out
"(other than obligations of the United States issued after
September 24, 1917, and originally subscribed for by the
taxpayer)".
(38) Amendment of section 269.--Section 269
// 26 USC 269. //
(relating to acquisitions made to evade or avoid income tax) is
amended by striking out subsection (c) (relating to presumption in
the case of disproportionate purchase price).
(39) Amendment of section 275.--Section 275(a)(1)(C)
// 26 USC 275. //
relating to nondeductible taxes) is amended by striking out (",
and corresponding provisions of prior revenue laws".
(40) Amendments of section 281.--,
(A) Section 281(d)(A)
// 26 USC 281. //
(relating to definition of terminal railroad corporation) is
amended by inserting after " Interstate Commerce Act" the
following: "(49 U.S.C. 1 and following)".
(B) Section 281 (relating to terminal railroad corporations and
their sharegolders) is amended by striking out subsection (e)
(relating to taxable years ending before October 23, 1962) and by
redesignating subsection (f) as subsection (e).
(41) Amendment of section 301.--Section 301
// 26 USC 301. //
(relating to distributions of property) is amended by striking out
subsection (e) (relating to certain distributions by personal
service corporations).
(42) Amendments of section 311.--,
(A) Section 311(d)(1)
// 26 USC 311. //
(relating to appreciated property used to redeem stock) is amended
by striking out "then again shall be recognized" and inserting in
lieu thereof "then a gain shall be recognized".
(B)(i) Section 311(d)(2) (relating to exceptions and
limitations) is amended by striking out subparagraph (C) (relating
to certain distributions before December 1,1974) and by
redesignating subparagraphs (D), (E), (F), and (G) as
subparagraphs (C), (D), (E), and (F), respectively.
(ii) The amendments made by clause (i)
// 26 USC 311 note. //
shall apply only with respect to distributions after November 30,
1974.
(C) Section 311(d)(2)(C), as redesignated by subparagraph (B)
of this paragraph, is amended by striking out "26 Stat. 209;" and
"38 Stat. 730;".
(43) Amendments of section 312.--,
(A) Section 312(d)(1)
// 26 USC 312. //
(relating to certain distributions of stock and securities) is
amended by striking out "this Code" each place it appears and
inserting in lieu thereof "this title".
(B) Section 312 (relating to earnings and profits) is amended
by striking out subsection (h) (relating to personal service
corporations) and by redesignating subsections (i) and (j) as
subsections (h) and (i), respectively.
(C) Subsection (i) of section 312 (relating to distribution of
proceeds of certain loans), as redesignated by subparagraph (B) of
this paragraph, is amended to read as follows:
"(i) Distribution of Proceeds of Loan Insured by the United
States.--If a corporation distributes property with respect to its stock
and if, at the time of distribution--,
"(1) there is outstanding a loan to such corporation which was
made, guaranteed, orinsured by the United States (or by any agency
or instrumentality thereof), and
"(2) the amount of such loan so outstanding exceeds the
adjusted basis of the property constituting security for such
loan,
then the earnings and profits of the corporation shall be increased by
the amount of such excess, and (immediately after the distribution)
shall be decreased by the amount of such excess. For purposes of
paragraph (2), the adjusted basis of the property at the time of
distribution shall be determined without regard to any adjustment under
section 1016(a)(2) (relating to adjustment for depreciation, etc.). For
purposes of this subsection, a commitment to make, guarantee, or insure
a loan shall be treated as the making, guaranteeing, or insuring of a
loan."
(D) Section 312(j)(3)
// 26 USC 312. //
(relating to foreign investment companies), as redesignated by
subsection (b)(32)(B)(i), is amended to read as follows:
"(3) Partial liquidations and redemptions.--If a foreign
investment company (as defined in section 1246) distributes
amounts inpartial liquidation or in a redemption to which section
302(a) or 303 applies, the part of such distribution which is
properly chargeable to earning s and profits shall be an amount
which is not in excess of the ratable share of the earnings and
profits of the company accumulated after February 28, 1913,
attributable to the stock so redeemed."
(44) Amendment of section 333.--Section 333(a)(1)
// 26 USC 333. //
(relating to election as to recognition of gain in certain
liquidations) is amended by striking out "on or after June 22,
1954".
(45) Amendment of section 334.--Section 334(b)(2)(A)
// 26 USC 334. //
(relating to liquidation of subsidiary) is amended to read as
follows:
"(A) the distribution is pursuant to a plan of liquidation
adopted not more than 2 years after the date of the transaction
described in subparagraph (B) (or, in the case of a series of
transactions, the date of the last such transaction); and".
(46) Amendments of section 337.--,
(A) Section 337(a)
// 26 USC 337. //
(relating to nonrecognition of gain or loss on certain
liquidations) is amended to read as follows:
"(a) General Rule.--If, within the 12-month period beginning on the
date on which a corporation adopts a plan of complete liquidation, all
of the assets of the corporation are distributed in complete
liquidation, less assets retained to meet claims, then no gain or loss
shall be recognized to such corporation from the sale or exchange by it
of property within such 12-month period."
(B) The first sentence of section 337(d) (relating to certain
minority stockholders) is amended by striking out "on or after
January 1, 1958".
(47) Repeal of section 342.--Section 342
// 26 USC 342. //
(relating to the liquidation of certain foreign personal holding
companies) is repealed.
(48) Amendments of section 351.--, (A) Section 351(a)
// 26 USC 351 //
(relating to transfer to corporation controlled by transferor( is
amended by striking out "(including, in the case of transfers made
of or before
June 30, 1967, an investment company)".
(B) Section 351(d) (relating to application of June 30, 1967,
date) is amended to read as follows:
"(d) Exception.--This section shall not apply to a transfer of
property to an investment company."
(C)
// 26 USC 351 note. //
The amendments made by this paragraph shall take effect with
respect to transfers of property occurring after the date of the
enactment of this Act.
(49) Repeal of section 363.--Section 363
// 26 USC 363. //
(a cross reference to other sections) is repealed.
(50) Amendments of section 371.--Section 371(a)(1)
// 26 USC 371. //
(relating to certain reorganization exchanges by corporations) is
amended--,
(A) by striking out "49 Stat. 922;" and
(B) by striking out "(52 Stat. 883-905; 11 U.S.C., chapter 10)
or the corresponding provisions of prior law" and inserting in
lieu thereof "(11 U.S.C. 501 and following".
(51) Amendment of section 372.--Section 372(a)
// 26 USC 372. //
(relating to basis in connection with bankruptcy proceedings) is
amended by striking out "54
(52) Repeal of section 373.--Section 373
// 26 USC 373. //
(relating to nonrecognition of loss in certain railroad
reorganizations) is repealed.
(53) Amendment of section 374.--Section 374na)(1) (relating to
nonrecognition of gain or loss in certain railraod
reorganizations) is amended by striking out "49 Stat. 922;".
(54) Amendment of section 381.--Section 381(c)
// 26 USC 381. //
(relating to items carried over in certain corporate acquisitions)
is amended by striking out paragraph (20).
(55) Repeal of sections 391 through 395.--,
// 26 USC 391-395. //
Subchapter C of chapter 1 (relating to corporate distributions and
adjustments) is amended by striking out part VII (relating to
effective dates of subchapter C).
(56) Amendments of section 401.--,
(A) Paragraphs (12) and (13) of section 401(a)
// 26 USC 401. //
(relating to reuqirements for qualification) are each amended by
striking out "the date of the enactment of the Employee Retirement
Income Security Act of 1974" and inserting in lieu thereof "
September 2, 1974".
(B) Paragraph (15) of section 401 (a) is amended by striking
out "the date of the enactment of the Employee Retirement Income
Security Act of 1974"
// 29 USC 1001 note. //
and inserting in lieu thereof " September 2, 1974,".
(C) Paragraph (19) of section 401 (a) is amended by striking
out "enactment of the Employee Retirement Income Security Act of
1974" and inserting in lieu thereof " September 2, 1974".
(D) The last sentence of section 401 (a) is amended to read as
follows:
" Paragraphs (11), (12), (13), (14), (15), (19), and (20) shall apply
only in the case of a plan to whcih section juu (relating to minimum
vesting standards) applies without regard to subsection (e)(2) of such
section."
(57) Amendments of section 402.--,
(A) Section 402(a)(4)
// 26 USC 402. //
(relating to distributions made to non-resident alien individuals)
is amended by striking out "basic salary" each place it appears
therein and inserting in lieu thereof "basic pay", and by amending
the last sentence in such paragraph to read as follows: "in the
case of distributions under the civil service retirement laws, the
term 'basic pay' shall have the meaning provided in section
8331(3) of title 5, United States Code."
(B) Section 402 (relating to taxability of beneficiary of
employees' trusts) is amended by striking out subsection (d)
(relating to certain trust agreements made before October 21,
1942).
(C)(i) So much of the third sentence of section 402(e)(4) (A)
// 26 USC 402. //
(relating to fefinition of lump som distributions) as precedes " a
distribution of an annuity contract" is amended to read as
follows: " Except for purposes of subsection (a)(2) and section
403(a)(2),".
The amendment made by clause (i)
// 26 USC 402 note. //
shall apply with respect to distributions or payments made after
December 31, 1973, in taxable years beginning after such date.
(58) Amendment of section 403.--The last two sentences of
section 403(a)(4) relating to taxation of employee annuities) are
amended toread as follows: "for purposes of this title, a
transfer described in subparagraph (B)(i) shall be treated as a
rollover contribution described in section 408(d)(3).
Subparagraph (B)(ii) does not apply in the case of a transfer to
an employees' trust, or annuity plan if any part of a payment
described in subparagraph (A) is attributable to an annuity plan
under which the employee was an employee within the meaning of
section 401(c)(1) at the time contributions were made on his
behalf under the plan."
(59) Amendment of section 404.--Section 404
// 26 USC 404. //
(relating to deduction for contributions to pension plans,etc.) is
amended by striking out subsection (d) (relating to carryover of
pre-1954 unused deductions).
(60) Amendment of section 409.--Section 409(b)(3)(C)
// 26 USC 409. //
(relating to tax-free follovers of individual retirement bonds) is
amended by striking out "section 403(d)(3)." and inserting in lieu
thereof "section 408(d)(3)."
(61) Amendments of section 410.--,
(A) Subparagraphs (C) and (D) of section 413(a)(5)
// 26 USC 410. //
relating to breaks in service) anre each amended by striking out
"purposes of subsection (a)(1)" and inserting in lieu thereof
"purposes of paragraph (1)".
(B) Paragraph (1)(C) of section 410(c) (relating to application
of minimum participation standards) is amended by striking out
"the date of the enactment of the Employee Retirement Income
Security Act of 1974"
// 26 USC 1001 note. //
and inserting in lieu thereof "september 2, 1974,".
(C) Paragraph (2) of section 410(c) is amended by striking out
"the day before the date of the enactment of this section" and
inserting in lieu thereof " September 1, 1974".
(62) Amendments of section 411.--,
(A) Subsection (a) of section 411
// 26 USC 411. // (relating to minimum
vesting standards) is amended by striking out "subsection (a)(8)"
and inserting in lieu thereof "paragraph (8)".
(B) Subsection (a)(3)(D)(iii) of section 411 is amended--,
(i) by striking out "the date of the enactment of the Employee
Retirement Income Security Act of 1974" and "the date of the
enactment of such Act" and inserting in lieu thereof in both such
places"september 2, 1974", and
(ii) by striking out "the date of the enactment of the Act" and
inserting in lieu thereof "september 2, 1974,".
(C) The heading for subparagraph (C) of section 411 (a)(7) is
amended to read as follows:
"(c) Repayment of subpaagraph (b) distributions.--"
(D) Subsection (b)(1)(D)(i)and (e)(1)(C) of section 411 are
each amended by striking out "the date of the enactment of the
Employee Reitirement Income Security Act of 1974"
// 29 USC 1001 note. //
and inserting in lieu thereof "september 2, 1974".
(E) Subsection (e)(2) of section 411 is amended by striking out
"the date of the enactment of the Employee Retirement Income
Security Act of 1974"
// 26 USC 411. //
and inserting in lieu thereof " September 1, 1974".
(63) Amendments of section 412.--,
(A) Subsection (h) of section 412
// 26 USC 412. //
(relating to minimum funding standards) is amended by striking out
"the day before the date of the enactment of the Employee
Retirement Income Security Act of 1974" and inserting in lieu
thereof " September 1,1974".
(B) Subsection (h)(5) of section 412 is amended by striking out
"the date of the enactment of the Employee Retirement Income
Security Act of 1974" and inserting in lieu thereof " September 2,
1974".
(64) Amendments of section 414.--,
(A) The heading for section 414(f)
// 26 USC 414. //
(rlating to multi-employer plans) is amended to read as follows:
"(f) Multiemployer Plan.--"
(B) Section 414(l) (relating mergers and consolidations of
plans or transfers of plan assets) is amended by striking out "the
date of the enactment of the Employee Entirement Income Security
Act of 1974" and inserting in lieu thereof " September 2, 1974".
(65) Amendments of section 415.--,
(A) Section 415(b)(2)(A)
// 26 USC 415. //
(relating to adjustments for certain forms of benefits) is amended
by striking out "and 409(b)(3)(C)" and inserting in lieu thereof
"and 409(b)(3) (C))".
(B) Section 415(b)(2)(B) is amended by striking out "(as
defined in section 401(a)(1)(II)(III)" and inserting in lieu
thereof "(as defined in section 401(a)(11)(G) (ii))". (66)
Amendments of section 453.--,
(A) Section 453(c)(3)
// 26 USC 453. //
(relating to adjustment in tax for amounts previously taxed) is
amended by striking out "corresponding provisions of the Internal
Revenue Code of 1939" and inserting in lieu thereof "corresponding
provisions of the Internal Revenue Code of 1954".
(B) Section 453(d)(4)(B) (relating to liquidations to which
section 337 applies is amended by striking out "or section 617(
d)(1)" and inserting in lieu thereof", 617(d) (1)".
(67) Amendment of section 455.--Section 455(c)(3)(B)
// 26 USC 455. //
(relating to perpaid subscription income) is amended by striking
out "for his first taxable year (i) which begins after December
31, 1957, and (ii) in which he receives prepaid subscription
income in the trade or business" and inserting in lieu thereof
"for his forst taxable year in which he receives prepaid
subscription income in the trade or business".
(68) Amendment of section 456.--Section 456(c)(3)(B)
// 26 USC 456. //
(relating to election without consent with respect to treatment o
of prepaid dues) is amended by striking out "for its first taxable
year (i) which begins after December 31, 1960, and (ii)" and
inserting in lieu thereof "for its first taxable year".
(69) Amendments of section 461.--,
(A) Section 461(c)
// 26 USC 461. //
(relating to accrual of real property taxes) is amended by
striking out paragraph (2) and by redesignating paragraph (3) as
paragraph (2).
(B) Section 461(c)(2) (relating to elections without consent),
as redesignated by subparagraph (A), is amended by striking out
"his first taxable year which begins after December 31, 1953, and
ends after the date of enactment of this title in which the
taxpayer" and inserting in lieu thereof "his first taxable year in
which he".
(70) Amendments of section 481.--,
(A) Section 481(b)
// 26 USC 481. //
(relating to limitation on tax where substantial adjustments are
required by a change in accounting method) is amended by striking
out paragraphs (4), (5), and (6) (relating to pre-1954
adjustments).
(B) Section 481(b)(1) and (2) are each amended by striking
out", other than the amount of such adjustments to which paragraph
(4) or (5) applies," each place it appears.
(71) Amendments of section 508.--,
(A) Subsections (a) and (b) of section 508
// 26 USC 508. //
(relating to special rules relating to 501(c)(3) organizations)
are each amended by striking out the last sentence therein.
(B) Section 508(e)(2) (relating to special rules for existing
private foundations) is amended by striking out subparagraph (A)
(relating to taxable years beginning before 1972), by
redesignating subparagraphs (B) and (C) as subparagraphs (A) and
(B), respectively, and by striking out "(B)" in subparagraph (B)
(as so redesignated) and inserting in lieu thereof "(A) ".
(C) Section 508(d)(2)(A) (relating to disallowances of
deductions for certain charitable gifts or bequests) is amended by
striking out "(e)(2)(B) and (C)" and inserting in lieu thereof
"(e)(2)".
(72) Amendments of section 514.--,
(A) Section 514(c)(1)
// 26 USC 514. //
(relating to definition of acquisition indebtedness) is amended by
striking out the comma at the end of subparagraph (C) and all that
follows, and inserting in lieu thereof a period.
(B) Section 514 (relating to unrelated debt-financed income) is
amended by striking out subsection (f) (relating to definition of
business lease), by striking out subsection (g) (relating to
definition of business lease indebtedness), and by redesignating
subsection (h) as subsection (f).
(C) Section 514(b)(3)(C)(iii) (relating to definition of
debt-financed property) is amended to read as follows:
"(iii) shall not apply to property subject to a lease which is
a business lease (as defined in this section immediately before
the enactment of the Tax Reform Act of 1976)"
(D) Section 514(f) (relating to personal property leased with
real property), as redesignated by subparagraph (B) of this
paragraph, is amended by striking out "and the term premises'
include" and inserting in lieu thereof "includes".
(73) Amendments of section 534.--,
(A) Section 534(b)
// 26 USC 534. //
(relating to mailing notices of deficiency) is amended by striking
out the last sentence.
(B) Subsection (e) of section 534 (relating to effective date
of section) is repealed.
(74) Amendment of section 535.--Section 535(b)(1)
// 26 USC 535. //
(relating to adjustments in computing accumulated taxable income)
is amended by striking out "(other than the excess profits tax
imposed by subchapter E of chapter 2 of the Internal Revenue Code
of 1939 for taxable years beginning after December 31, 1940)".
(75) Amendments of section 537.--,
(A) Section 537(b)(2)
// 26 USC 537. //
(relating to definition of excess business holdings redemption
needs) is amended by striking out ", with respect to taxable years
of the corporation ending after May 26, 1969,".
(B) Section 537(b)(4) (relating to inferences as to prior
years) is amended by striking out "or (2)".
(76) Amendments of section 542.--,
(A) Section 542(a)(2)
// USC 542. //
(relating to definition of personal holding company) is amended by
striking out the last sentence.
(B) Section 542(b)(2) (relating to ineligible affiliated group)
is amended by striking out", other than an affiliated group of
railroad corporations the common parent of which would be eligible
to file a consolidated return under section 141 of the Internal
Revenue Code of 1939 prior to its amendment by the Revenue Act of
1942".
(C) Section 542(c)(2) (relating to financial institutions) is
amended by striking out "without regard to subparagraphs (D) and
(E) thereof".
(D) Section 542(c)(8) (relating to small business investment
companies) is amended by inserting after " Small Business
Investment Act of 1958" the following: "(15 U.S.C. 661 and
following)".
(77) Amendments of section 545.--,
(A) Section 545(b)(1)
// 26 USC 545. //
(relating to deduction of taxes in computing undistributed
persoanl holding company income) is amended--,
(i) in the first sentence, by striking out "(other than the
excess profits tax imposed by subchapter E of chapter 2 of the
Intgernal Revenue Code of 1939 for taxable years beginning after
December 31, 1940)"; and
(ii) by striking out the last two sentences (relating to
deduction of taxes).
(B) Section 545(b) (relating to adjustments in computing
undistributed personal holding company income) is amended by
striking out paragraph (7) 7relating to payment of indebtedness
incurred before 1934).
(C) Section 545(c)(2)(A) (relating to corporations to which
special adjustment applies) is amended by striking out "the date
of enactment of this subsection" and inserting in lieu thereof "
February 26, 1964".
(78) Amendment of section 547.--Section 547
// 26 USC 547. //
(relating to the deduction of deficiency dividends) is amended by
striking out subsection (h) (relating to the effective date).
(79) Amendment of section 551.--Section 551(c)
// 26 USC 551. //
(relating to foreign personal holding company income tax returns),
as redesignated by subsection (b)(1)(F) of this section, is
amended by striking out "taxable income, foreign personal holding
company," and inserting in lieu thereof "taxable income, foreign
personal holding company income,".
(80) Amendment of section 556.--The first sentence of section
556(b)(1)
// 26 USC 556. //
(relating to deduction of taxes in computing undistributed foreign
personal holding company income) is amended by striking out
"(other than the excess profits tax imposed by subchapter E of
chapter 2 of the Internal Revenue Code of 1939 for taxable years
beginning after December 1, 1940)".
(81) Amendment of section 564.--Section 564
// 26 USC 564. //
(relating to dividend carryovers) is amended by striking out
subsection (c) (relating to carryovers from pre-1954 years).
(82) Repeal of section 583.--Section 583
// 26 USC 583. //
(relating to deduction of dividends paid on certain preferred
stock by banks or trust companies) is repealed.
(83) Repeal of section 592.--Section 592
// 26 USC 592. //
(relating to the deduction by mutual savings banks for repayment
of certain loans) is repealed.
(84) Amendments of section 593.--,
(A) Section 593(b)(2)
// 26 USC 593. //
(relating to additions to bad debt reserves for mutual savings
banks, etc.) is amended by striking out, in the table in
subparagraph (A), the following:
"1969 --------------------------- 60 percent.
1970 ---------------------------- 57 percent.
1971 ---------------------------- 54 percent.
1972 ---------------------------- 51 percent.
1973 ---------------------------- 49 percent.
1974 ---------------------------- 47 percent.
1975 ---------------------------- 45 percent."
(B) Section 593(c) (relating to reserves for mutual savings
banks) is amended by striking out paragraphs (2), (3),
(4), and (5), by redesignating paragraph (6) as paragraph
(3), and by inserting immediately after paragraph (1) the
following:
"(2) Certain pre-1963 reserves.--Notwithstanding the second
sentence of paragraph (1), any amount allocated pursuant to
paragraph (5) (as in effect immediately before the enactment of
the Tax Reform Act of 1976) during a taxable year beginning before
January 1, 1977, to the reserve for losses on qualifying real
property loans out of the surplus, undivided profits, and bad debt
reserves (determined as of December 31, 1962) attributable to the
period before the first taxable year beginning after December 31,
1951, shall not be treated as a reserve for bad debts for any
purpose other than determining the amount referred to in
subsection (b)(1)(B), and for such purpose such amount shall be
treated as remaining in such reserve."
(C) Section 593 is amended by striking out subsection (d)
(relating to taxable years beginning in 1962 and ending in 1963),
and by redesignating subsections (e) and (f) as subsections (d)
and (e), respectively.
(D) Section 593(b)(2)(E)(i) is amended by striking out
"subsection (f)" and inserting in lieu thereof "subsection (e)".
(85) Real of section 601.--Subchapter H of chapter 1 relating
to banking in stitutions)
// 26 USC 601. //
is amended by striking out part III (relating to special deduction
for bank affiliates).
(86) Amendments of section 613 A.--,
(A) Section 613 A(b)(1)(C) C)
// 26 USC 613 A. //
(relating to exemption for certain domestic gas wells) is amended
by striking out "within the meaning of section 613(b)(1)(A)".
(B) Section 613 A(c)(6)(i) (relating to limitations on
percentage depletion in case of oil and gas wells) is amended by
striking out "determined with" and inserting in lieu thereof
"determined without".
(87) Amendments of section 614.--,
(A)(i) Section 614(c)
// 26 USC 614. //
(relating aggregation of mineral interests in mines) is amended by
striking out paragraph (4) (relating to special rule as to
exploration deductions prior to aggregation).
(ii) The amendment made by clause (i)
// 26 USC 614 note. //
shall apply with respect to elections to form aggregations of
operating mineral interests made under section 614(c)(1) of the
Internal Revenue Code of 1954 for taxable years beginning after
December 31, 1976.
(B) The third sentence of section 614(c)(2) (relating to
election to treat a single interest as more than one property) is
amended to read as follows: " A separate property so formed may,
under regulations prescribed by the Secretary, be included as a
part of an aggregation in accordance with paragraphs (1) and (3)."
(C) Section 614(c)(3) (relating to manner and scope of
election) is amended to read as follows:
"(3) Manner and scope of election.--The elections provided by
paragraphs (1) and (2) shall be dade, in accordance with
regulations prescribed by the Secretary, not later than the time
prescribed for filing the return (including extensions thereof)
for the first taxable year--,
"(A) in which, in the case of an election under paragraph (1),
any expenditure for development or operation in respect of the
separate operating mineral interest is made by the taxpayer after
the acquisition of such interest, or
"(B) in which, in the case of an election under paragraph (2),
expenditures for development or operation of more than one mine in
respect of a property are made by the taxpayer after the
acquisition of the property. An election made under paragraph (1)
or (2) for a taxable year shall be binding upon the taxpayer for
such year and all subsequent taxable years, except that the
Secretary may consent to a different treatment of any interest
with respect to which an election has been made."
(88) Repeal of section 615.--Section 615
// 26 USC 615. //
(relating to deduction of pre-1970 exploration expenses) is
repealed.
(89) Amendment of section 617.--Section 617(a)(2)(B)
// 26 USC 617. //
(relating to time and scope of election to deduct certain mining
exploration expenditures) is amended by striking out "may not be
revoked after the last day of the third month following the month
in which the final regulations issued under the authority of this
subsection are published in the Federal Register, unless" and
inserting in lieu thereof "may not be revoked unless".
(90) Repeal of section 632.--Section 632
// 26 USC 632. //
(relating to tax in case of sale of oil and gas properties) is
repealed.
(91) Amendment of section 691.--Section 691(c)(1)(B)
// 26 USC 691. //
(relating to deduction for estate tax) is amended by striking out
the last sentence.
(92) Amendment of section 692.--The heading of section 629
(relating to income taxes of members of Armed Forces who die in a
combat zone) is amended by striking out " ON" the first time it
appears in the section heading and inserting in lieu thereof "
OF".
(93) Amendment of section 751.--Section 751(c)
// 26 USC 751. //
(relating to unrealized receivables) is amended by striking out
"1254 (a), or 1250(a)," and inserting in lieu thereof "1245(a),
1250(a),".
(94) Repeal of section 771.--,
// 26 USC 771. //
Part IV of subchapter K of chapter 1 (relating to effective date
of subchapter K) is repealed.
(95) Amendments of section 802.--,
(A) Section (a)(1) (relating to tax imposed on life insurance
companies) is amended by striking out "beginning after December
31, 1957,".
(B) Section 802(a)(2) (relating to alternative tax in case of
capital gains) is amended by striking out "beginning after
December 31, 1961,".
(C) Section 802(a) is amended by striking out paragraph (3)
(relating to special rules for 1959 and 1960).
(96) Amendments of section 804.--,
(A) Section 804(a)
// 26 USC 804. //
is amended by striking out paragraph (6) (relating to certain
exceptions).
(B) Section 804(b)(2) (relating to short-term capital gains) is
amended by striking out " In the case of a taxable year beginning
after December 318 1958, the" and inserting in lieu thereof "
The".
(97) Amendments of section 805.--,
(A) Section 805(b)(3)(B)
// 26 USC 805. //
(relating to average earnings rate) is amended to read as follows:
"(B) Special rule.--For purposes of subparagraph (A), the
current earnings rate for any taxable year of any company which,
for such year, is an insurance company (but not a life insurance
company) shall be determined as if this part applied to such
company for such year."
(B) Section 805(b)(4)(B) (relating to basis of assets) is
amended by striking out "(determined without regard to fair market
value on December 31, 1958)".
(C) Section 805(d) (relating to pension plan reserves) is
amended to read as follows:
"(d) Pension Plan Reserves.--For purposes of this part, the term
'pension plan reserves' means that portion of the life insurance
reserves which is allocable to contracts
"(1) purchases under contracts entered into with trusts which
(as of the time the contracts were entered into) were deemed to be
(A) trusts described in section 401(a) and exempt from tax under
section 501(a), or (B) trusts exempt from tax under section 165 of
the Internal Revenue Code of 1939 or the corresponding provisions
of prior revenue laws:
"(2) purchases under contracts entered into under plans which
(as of the time the contracts were entered into) were deemed to be
plans described in section 403(a), or plans meeting the
requirements of paragraphs (3), (4), (5), and (6) of section 165(
a) of the Internal Revenue Code of 1939:
"(3) provided for employees of the life insurance company under
a plan which, for the taxable year, meets the requirements of
paragraphs (3), (4), (5), (6), (7), (8), (11), (12), (13), (14),
(15), (16), (19), and (20) of section 401(a);
"(4) purchases to provide retirement annuities for its
employees by an organization described in section 501(c)(3) which
was exempt from tax under section 501(a) or was an organization
exempt from tax under section 101 (6) of the Internal Revenue Code
of 1939 or the corresponding provisions of prior revenue laws, or
purchased to provide retirement annuities for employees described
in section 403(b)(1)(A)(ii) by an employer which is a State, a
political subdivision of a State, or an agency or instrumentality
of any one or more of the foregoing; or "(5) purchased under
contracts entered into with trusts which (at the time the
contracts were entered into) were individual retirement accounts
described in section 408(a) or under contracts entered into with
individual retirenment annuties described in section 408(b)."
(98) Amendments of section 809.--,
(A) Section 809(b)
// 26 USC 809. //
(relating to definition of gain and loss from operations) is
amended by striking out paragraph (4).
(B)(i) Section 809(d) (relating to life insurance company
deductions) is amended by striking out paragraph (11) relating to
mutualization distributions before 1963), and by redesignating
paragraph (12) as paragraph (11).
(ii) Section 809(e) is amended by striking out "subsection
(d)(12)" and inserting in lieu thereof "subsection (d)(11)".
(C) Section 809 (relating to computation of gain and loss from
operations) is amended by striking out subsection (g) (relating to
deduction for certain mutualization distributions before 1963).
(99) Amendment of section 812.--Section 812(b)(1)
// 26 USC 812. //
(relating to years to which operating losses of an insurance
company may be carried), other than the last sentence thereof, as
added by section 806(d)(1)(A) of this Act, is amended to read as
follows:
"(1) Years to which loss may be carried.--The loss from
operation for any taxable year (hereinafter in this section
referred to as the 'loss year') shall be--,
"(A) an operations loss carryback to each of the 3 taxable
years preceding the loss year,
"(B) an operations loss carryover to each of the 5 taxable
years following the loss year, and
"(C) subject to subsection (e), if the life insurance company
is a new company for the loss year, an operations loss carryover
to each of the 3 taxable years following the 5 taxable years
described in subparagraph (B)."
(100) Amendments of section 817.--Section 817
// 26 USC 817. //
(relating to rules applicable to certain gains and losses) is
amended by striking out subsection (c) (relating to treatment of
pre-1959 capital losses) and subsection (e) (relating to certain
1958 reinsurance transactions).
(101) Amendment of section 818.--Section 818
// 26 USC 818. //
(relating to life insurance accounting provisions) is amended by
striking out subsection (e) (relating to certain rules applicable
to taxable years 1957, 1958, and 1959), and by redesignating
subsections (f) and (g) as subsections (e) and (f), respectively.
(102) Amendments of section 819.--,
(A) The first sentence of section 819(a)(2)(A)
// 26 USC 819. //
(relating to definition of minimum figure for foreign life
insurance companies) is amended to read as follows: " The minimum
figure is the amount determined by multiplying the taxpayer's
total insurance liabilities on United States business by a
percentage for the taxable year to be determined and proclaimed by
the Secretary."
(B) The second sentence of section 819(a)(2)(A)
// 26 USC 819. //
is amended by striking out "under clause (ii)" and inserting in
lieu thereof "under the preceding sentence".
(C) Clause (i) of section 819(b)(2)(B) (relating to
distributions pursuant to certain mutualizations) is amended to
read as follows:
"(i) the minimum figure for 1958 determined under subsection
(a)(2)(A) computed by using a percentage of 9 percent in lieu of
the percentage determined and proclaimed by the Secrretary, or".
(103) Amendments of section 820.--,
(A) Section 820(c)
// 26 USC 820. //
(relating to optional treatment of certain reinsured policies) is
amended by striking out paragraph (6) (relating to reimbursement
for 1957 income taxes), and by redesignating paragraph (7) as
paragraph (6).
(B) The last sentence of section 820(c) is amended by striking
out "(5), and the rules prescribed under paragraph (7)" and
inserting in lieu thereof "and (5) and the rules prescribed under
paragraph (6)".
(104) Amendments of section 821.--,
(A) Section 821(a)
// 26 USC 821. //
(relating to imposition of tax on certain mutual insurance
companies) is amended by striking out "beginning after December
31, 1963,".
(B) Section 821(c)(1) (relating to alternative tax for certain
small insurance companies) is amended by striking out " In the
case of taxable years beginning after December 31, 1963, there is"
and inserting in lieu thereof " There is".
(C) Section 821 (relating to tax on certain mutual insurance
companies) is amended by striking out subsection (e) (relating to
1962 transitional rules) and by redesignating subsection (f) as
subsection (e).
(105) Amendments of section 822.--,
(A) Section 822(c)(5)
// 26 USC 822. //
(relating deduction of interest) is amended by striking out
"(other than obligations of the United States issued after
September 24, 1917, and originally subscribed for by the
taxpayer)".
(B) The last sentence of section 822(d)(2) (relating to
amortization of premium and accrual of discount) is amended by
striking out " For taxable years beginning after December 31,
1962, no accrual" and inserting in lieu thereof " No accrual".
(106) Amendments of section 825.--Section 825(g) (relating to
unused loss deduction of certain insurance companies) is amended
by striking out paragraph (1) and by redesignating paragraphs (2)
and (3) as paragraphs (1) and (2), respectively.
(107) Amendment of section 831.--Section 931(a) (relating to
tax on certain insurance companies) is amended by striking out "or
the taxable income" and inserting in lieu thereof "on the taxable
income."
(108) Amendments of section 832.--Paragraphs (1) and (6) of
section 832(b)
// 26 USC 832. //
(definitions relating to insurance company taxable income) are
each amended by striking out " Convention" and inserting in lieu
thereof " Association".
(109) Amendments of section 851.--,
(A) Section 851(a)(1)
// 26 USC 851. //
(relating to definition of regulated investment company) is
amended by striking out "54 Stat. 789;".
(B) Section 851(b)(1) (relating to regulated investment
companies) is amended by striking out "which began after December
31, 1941".
(110) Amendments of section 852.--,
(A) Subparagraph (C) of section 852(b)(3)
// 26 USC 852. //
(relating to method of taxation of regulated investment companies
and their shareholders) is amended by striking out the third
sentence.
(B) (i) Section 852(])(3)(D)(iii) is amended by striking out
"by 75 percent of so much of such amounts as equals the amount
subject to tax in accordance with section 1201 (a)(1)(A) and by 70
percent (72) percent in the case of a taxable year beginning after
December 31, 1969, and before January 1, 1971) of so much of such
amounts as equals the amount subject to tax in accordance with
section 1201(a) (1)(B) or (2)" and inserting in lieu thereof "by
70 percent of so much of such amounts as equals the amount subject
to tax in accordance with section 1201(a)".
(ii) The amendment made by clause (i)
// 26 USC 852 note. //
shall not be considered to affect the amount of any increase in
the basis of stock under the provisions of section 852(b)(3)(D)(
iii) of the Internal Revenue Code of 1954 which is based upon
amounts subject to tax under section 1201 of such Code in taxable
years beginning before January 1, 1975.
(C) Section 852(d) is amended by inserting after " Investment
Company Act of 1940" the following: "(15 U.S.C. 80a-1 and
following)".
(111) Amendments of section 856.--,
(A) Section 856(c)(1)
// 26 USC 856. //
(relating to real estate investment trusts) is amended by striking
out "which began after December 31, 1960".
(B) Section 856(c)(6)(D) (relating to defenition of other
terms) is amended by inserting after " Investment Company Act of
1940, as amended" the following: "(15 U.S.C. 80a-1 and
following)".
(112) Amendment of section 857.--,
// 26 USC 857. //
Section 857(b)(3)(C) (relating to the taxation of capital gains in
the case of real estate investment trusts) is amended by striking
out the last sentence.
(113) Amendments of section 864.--,
(A) Subsection (a) of section 864
// 26 USC 864. //
(definitions relating to determinations of sources of income) is
amended to read as follows:
"(a) Produced.--For purposes of this part, the term 'produced'
includes created, fabricated, manufactured, extracted, processed, cured,
or aged."
(B) Clauses (i) and (iii) of section 864(c)(4)(B) and
subparagraph (C) of section 864(c)(5) (relating to effectively
connected income) are each amended by striking out "sale" each
place it appears and inserting in lieu thereof "sale or exchange".
(C) Section 864(c)(4)(B)(iii) (relating to effectively
connected income) is amended by striking out "sold" and inserting
in lieu thereof "sold or exchanged".
(114) Amendment of section 905.--Section 905(b) (relating to
proof of foreign tax credits) is amended by striking out the last
sentence (relating to the treatment of certain royalty payments).
(115) Amendment of section 911.--Section 911(c)
// 26 USC 911. //
(relating to earned income from sources without the United States)
is amended by striking out paragraph (7) (relating to taxable
years ending in 19603, 1964, or 1965).
(116) Amendment of section 921.--Section 921
// 26 USC 921. //
(relating to definition of Western Hemisphere Trade Corporation)
is amended by striking out the last sentence (relating to taxable
years before 1954).
(117) Amendments of section 931.--Section 931
// 26 USC 931. //
(relating to income from sources within possession) is amended by
striking out subsection (h) (relating to certain persons taken as
prisoners of war while working in a possession), and by
redesignating subsection (i) as subsection (h). (118) Amendment
of section 934.--Section 934(b)
// 26 USC 934. //
(relating to gross income received by a corporation from the
Virgin Islands) is amended by striking out the last sentence.
(119) Amendment of section 9514.--Section 951(a)(1)
// 26 USC 951. //
(relating to treatment of subpart F income) is amended by striking
out "beginning after December 31, 1962".
(120) Repeal of section 972.--Section 972
// 26 USC 972. //
(relating to consolidation of export trade corporations) is
repealed.
(121) Amendment of section 1001.--Section 1001(c)
// 26 USC 1001. //
(relating to recognition of gain or loss) is amended to read as
follows:
"(c) Recognition of Gain or Loss.--Except as otherwise provided in
this subtitle, the entire amount of the gain or loss, determined under
this section, on the sale or exchange of property shall be recognized."
(122) Amendments of section 1015.--, (A) Subparagraph (A) of
section 1015(d)(1)
// 26 USC 1015. //
(relating to increased basis for gift tax paid) is amended by
striking out "the date of the enactment of the Technical
Amendments Act of 1958" and inserting in lieu thereof " September
2, 1958".
(B) Subparagraph (B) of section 1015(d)(1) is amended by
striking out "the date of the enactment of the Technical
Amendments Act of 1958" and inserting in lieu thereof " September
2, 1958,".
(123) Amendment of section 1016.--Section 1016(a)
// 26 USC 1016. //
(relating to adjustments to basis) is amended by striking out
paragraph (19).
(124) Amendment of section 1018.--Section 1018
// 26 USC 1018. //
(relating to adjustment of capital structure before September 22,
1938) is amended by striking out "54 Stat. 709:".
(125) Repeal of section 1020.--Section 1020
// 26 USC 1020. //
(relating to election in respect of depreciation allowed before
1952) is repealed. (126) Repeal of section 1022.--,
(A) Section 1022
// USC 1022. //
(relating to the basis of certain foreign personal holding company
stock) is repealed.
(B) The repeal made by subparagraph (A)
// 26 USC 1022 note. //
shall apply with respect to stock or securities acquired from a
decedent dying after the date of the enactment of this Act.
(127) Amendment of section 1024.--Section 1024
// 26 USC 1024. //
(containing cross references) is amended by striking out paragraph
(4).
(128) Amendments of section 1033.--,
(A) Section 1033 (a)
// 26 USC 1033. //
(relating to involuntary conversions) is amended by striking out
paragraph (2) and by redesignating paragraph (3) as paragraph (2).
(B) Section 1033(a)(2) (relating to conversion into money), as
redesignated by subparagraph (A) of this paragraph and as amended
by this Act, is amended--,
(i) by striking out " WHERE DISPOSITION OCCURRED AFTER 1950" in
the paragraph heading;
(ii) by striking out "(g)" each place it appears and inserting
in lieu thereof "(h)";
(iii) by striking out "and the disposition of the converted
property (as defined in paragraph (2)) occurred after December 31,
1950," in the text; and
(iv) by adding at the end thereof the following new
subparagraph:
"(D) Definitions.--For purposes of this paragraph--,
"(i) Control.--The term 'control' means the ownership of stock
possessing at least 80 percent of the total combined voting power
of all classes of stock entitled to vote and at least 80 percent
of the total number of shares of all other classes of stock of the
corporation.
"(ii) Disposition of the converted property.--The term
'disposition of the converted property' means the destruction,
theft, seizure, requisition, or condemnation of the converted
property, or the sale or exchange of such property under threat or
imminence of requisition or condemnation."
(C) Section 1033 (relating to involuntary conversions) is
amended by striking out subsection (b) (relating to ceratin
conversions occurring before 1954) and by redesignating
subsections (c), (d), (e), (f), (g), and (h), as subsections (b),
(c), (d), (e), (f), and (g), respectively.
(D) The first sentence of section 1033(b) (relating to basis of
a property acquired through involuntary conversions), as
redesignated by subparagraph (C) of this paragraph, is amended by
striking out "or (2)" and inserting in lieu thereof "or section
122(f)(2) of the Internal Revenue Code of 1939".
(E) Section 1033(f)(2) (relating to condemnation of real
property), as redesignated by subparagraph (C) of this paragraph,
is amended to read as follows:
"(2) Limitation.--Paragraph (1) shall not apply to the purchase
of stock in the acquisition of control of a corporation described
in subsection (a)(2)(A)."
(F) Section 1033(g)(4) (relating to condemnation of real
property), as amended by section 2140(a) of this Act, is amended
by striking out "(a)(3)(B)(i)" and inserting in lieu thereof
"(a)(2)(B)(i)". (129) Amendments of section 1034.--,
(A) Section 1034(a)
// 26 USC 1034. //
(relating to gain on sale of residence) is amended by striking out
"after December 31, 1953,".
(B) Section 1034(b) (defining adjusted sales price) is amended
by striking out paragraph (3) (relating to effective date of
subsection (b).
(C) Section 1034(d) (relating to certain limitations) is
amended by striking out "or section 112(n) of the Internal Revenue
Code of 1939".
(D) Section 1034(i)
// 26 USC 1034. //
(relating to involuntary conversions) is amended to read as
follows:
"(ii) Special Rule for Condemnation.--In the case of the seizure,
requisition, or condemnation of a residence, or the sale or exchange of
a residence under threat or imminence thereof, the provisions of this
section, in lieu of section 1033 (relating to involuntary conversions),
shall be applicable if the taxpayer so elects. If such election is
made, such seizure, requisition, or condemnation shall be treated as the
sale of the residence. Such election shall be made at such time and in
such manner as the Secretary shall prescribe by regulations."
(E) Section 1034(j) (relating to statute of limitations)
is amended by striking out "after December 31, 1950,".
(130) Amendment of section 1037.--Section 1037(b)(1)
// 26 USC 1037. //
(relating to certain exchanges of United States obligations) is
amended by striking out "section 1232(a)(2)(A)" and inserting in
lieu thereof "section 1232(a)(2)(B)".
(131) Amendment of section 1051.--Section 1051
// 26 USC 1051. //
(relating to property acquired before 1929 during affiliation) is
amended by striking out the last two sentences.
(132) Amendments of section 1081.--,
(A) Subsection (c) of section 1081
// 26 USC 1081. //
(relating to distributions required by the SEC) is amended to read
as follows:
"(c) Distribution of Stock or Securities Only.--If there is
distributed, in obedience to an order of the Securities and Exchange
Commission, to a shareholder in a corporation which is a registered
holding company or a majority-owned subsidiary company, stock or
securities (other than stock or securities which are nonexempt
property), without the surrender by such shareholder of stock or
securities in such corporation, no gain to the distributee from the
receipt of the stock or securities so distributed shall be recognized."
(B) Section 1081(f) (relating to conditions for application of
section) is amended by striking out " Except in the case of a
distribution described in subsection (c)(2), the provisions" and
inserting in lieu thereof " The provisions", and by striking out
"49 Stat. 820;".
(C) Section 1081(g) (relating to applicability of other
provisions) is amended by striking out " If a distribution
described in subsection (c)(2), or an" and inserting in lieu
thereof " If and", and by striking out the comma after "
Commission".
(133) Amendments of section 1083.--,
(A) Section 1083(a)
// 26 USC 1083. //
is amended by striking out "49 Stat. 820;".
(B) Section 1083(b) is amended by striking out "49 Stat.
804;".
(C) Section 1083(e)(4) is amended by striking out "49 Stat.
820;".
(134) Repeal of section 1111.--Part IV of subchapter O of
chapter 1
// 26 USC 1111. //
(relating to distributions pursuant to orders enforcing the
antitrust laws) is repealed.
(135) Amendments of section 1201.--,
(A) Section 1201(a)
// 26 USC 1201. //
(relating to the alternative tax on capital gain) is amended to
read as follows:
"(a) Corporations.--If for any taxable year a corporation has a net
capital gain, then, in lieu of the tax imposed by sections 11, 511,
821(a) or (c) and 831(a), there is hereby imposed a tax (if such tax is
less than the tax imposed by such sections) which shall consist of the
sum of--,
(1) a tax computed on the taxable income reduced by the amount
of the net capital gain, at the rates and in the manner as if this
subsection had not been enacted, plus
"(2) a tax of 30 percent of the net capital gain."
(B) Section 1201(c)
// 26 USC 1201. //
(relating to computation of alternative tax) is amended to read as
follows:
"(c) Computation of Tax Where Capital Gain Exceeds $50,000.-- The tax
computed for purposes of subsection (b)(3) shall be the amount by which
a tax determined under section 1 or 511 on an amount euqal to the
taxable income (but not less than 50 percent of the net capital gain)
for the taxable year exceeds a tax determined under section 1 or 511 on
an amount equal to the sum of (A) the amount subject to tax under
subsection (b)(1) plus (B) an amount equal to 50 percent of the sum
referred to in subsection (b)(2)(A)."
(C)(i) Section 1201 is amended by striking out subsection (d)
(defining subsection (d) gain) and by redesignating subsection (e)
as subsection (d).
(ii) Section 1201(b)(2)(A) (relating to alternative tax on
noncorporate taxpayers) is amended by striking out "the amount of
the subsection (d) gain" and inserting in lieu thereof "the sum of
the long-term capital gains for the taxable year, by not to exceed
$50,000 ($25,000 in the case of a married individual filing a
separate return)".
(iii) Section 1201(b)(3) is amended by striking out "the amount
of the subsection (d) gain" and inserting in lieu thereof "the sum
referred to in subparagraph (A)".
(136) Amendments of section 1222.--,
(A) Paragraph (9) of section 1222
// 26 USC 1222. //
(relating to definition of terms applicable to capital gains and
losses) is amended to read as follows:
"(9) Capital gain net income.--The term 'capital gain net
income' means the excess of the gains from sales or exchanges of
capital assets over the losses from such sales or exchanges."
(B) Paragraph (11) of section 1222 (relating to definition of
terms applicable to capital gains and losses) is amended to read
as follows:
"(11) Net capital gain.--The term 'net capital gain' means the
excess of the net long-term capital gain for the taxable year over
the net short-term capital loss for such year."
(137) Amendment of section 1233.--Section 1233(c)
// 26 USC 1233. //
(relating to certain options to sell) is amended by striking out
"the date of enactment of this title" and inserting in lieu
thereof " August 16, 1954".
(138) Amendment of section 1237.--Section 1237
// 26 USC 1237. //
(relating to real property subdivided for sale) is amended by
striking out subsection (d) (relating to effective date).
(139) Repeal of section 1240.--Section 1240
// 26 USC 1240. //
(relating to taxability to employee of certain termination
payments) is repealed.
(140) Amendment of section 1245.--Section 1245(b)(7)(B)
// 26 USC 1245. //
(relating to transgers to tax-exempt organization where property
will be used in unrelated business) is amended by striking out
"such organization acquiring such property,".
(141) Amendment of section 1246.--Section 1246(f)
// 26 USC 1246. //
(relating to gain on foreign investment company stock) is amended
by striking out "beginning after December 31, 1962".
(142) Amendment of section 1 311.--Paragraphs (2)(A), (2) (B),
and (3) of section 1311(b)
// 26 USC 1311. //
(relating to mitigation of effect of limitations) are each amended
by striking out " Tax Court".
(143) Repeal of section 1315.--Section 1315
// 26 USC 1315. //
(relating to effective date of part II of subchapter Q of chapter
1) is repealed.
(144) Repeal of section 1321.
// USC 1321. //
--Part III of subchapter Q of chapter 1 (relating to involuntary
liquidation of LIFO inventories) is repealed.
(145) Repeal of sections 1331 through 1337.--,
(A) Part IV of subchapter Q of chapter 1
// 26 USC 1331-1337. //
(relating to war loss recoveries) is repealed.
(B) The repeal by subparagraph (A)
// 26 USC 1331 note. //
shall apply with respect to war loss recoveries in taxable years
beginning after December 31, 1976.
7146) Amendment of section 1341.--Section 1341(b)(2)
// USC 1341. //
(relating to claim of right) is amended by striking out the last
sentence.
(147) Repeal of section 1342.--Section 1342
// 26 USC 1342. //
(relating to computation of tax on certain amounts recovered as a
result of a patent infringement suit) is repealed.
(148) Repeal of section 1346.--Section 1346
// 26 USC 1346. //
(relating to recovery of unconstitutional Federal taxes) is
repealed.
(149) Amendments of section 1372.--, (A) Section 1372(b)(1)
// 26 USC 1372. //
(relating to effect of election under subchapter S) is amended by
striking out "(other than the tax imposed by section 1378)" and
inserting in lieu thereof "(other than as provided by section 58(
d)(2) and by section 1378)".
(B) Section 1372(c) (relating to subchapter S elections by
small business corporations) is amended to read as follows:
"(c) Where and How Made.--An election under subsection (a) may time
furing the first month of such taxable year, or at any time during the
month preceding such first month. Such election shall be dering the
month preceding such first month. Such election shall be made in such
manner as the Secretary shall prescribe by regulations."
(C) Section 1372 is amended by striking out subsection (g)
(relating to certain elections for years beginning before 1961).
(150) Amendments of section 1374.--,
(A) Section 1374(b)
// 26 USC 1374. //
(relating to net operating losses of subchapter S corporations) is
amended by adding at the end thereof the following new sentence:
" The deduction allowed by this subsection shall, for purposes of
this chapter, be considered as a deduction attributable to a trade
or business carried on by the shareholder."
(B) Subsection (d) of section 1374 (relating to treatment of
net operating losses of subchapter S corporations) is repealed.
(151) Amendments of section 1375.--,
(A) The heading of subsection (b) of section 1375
// 26 USC 1375. //
is amended by striking out " Received Credit Not Allowed" and
inserting in lieu thereof " Not Treated as Such for Certain
Purposes".
(B) Section 1375(f) (relating to elections as to certain
distributions) is amended by striking out paragraph (3).
(152) Amendment of section 1378.--Section 1378(b)
// 26 USC 1378. //
(relating to the taxation of capital gain in the case of electing
small business corporations) is amended by striking out the last
sentence.
(153) Amendments of section 1388.--,
(A) Section 1388(c)(2)(B)(i)
// 26 USC 1388. //
(relating to patronage dividends) is amended by striking out "the
date of the enactment of the Revenue Act of 1962" and inserting in
lieu thereof " October 16, 1962".
(B) Section 1388(h)(2)(B)(i) (relating to per-unit retain
certificates) is amended by striking out "the date of the
enactment of this subsection" and inserting in lieu thereof "
November 13, 1966".
(154) Amendments of section 1401.--,
(A) Section 1401(a)
// 26 USC 1401. //
(relating to rate of tax on self-employment income) is amended to
read as follows:
"(a) Old-Age, Survivors, and Sisability Insurance.--In addition to
other taxes, there shall be imposed for each taxable year, on the
self-employment income of every individual, a tax equal to 7.0 percent
of the amount of the self-employment income for such taxable year."
(B) Section 1401(b) (relating to rate of tax on self-employment
income for hospital insurance) is amended by striking out
paragraphs (1) and (2) and by redesignating paragraphs (3), (4),
(5), and (6), as paragraphs (1), (2), (3) and (4), respectively.
(155) Amendments of section 1402.--,
(A) Paragraph (1) of section 1402(b)
// 26 USC 1402. //
(relating to definition of self-employment income) is amended to
read as follows:
"(1) that part of the net earnings from self-employment which
is in excess of (i) an amount equal to the contribution and
benefit base (as determined under section 230 of the Social
Security Act)
// 42 USC 430. //
which is effective for the calendar year in which such taxable
year begins, minus (ii) the amount of the wages paid to such
individual during such taxable years;or".
(B) Section 1402
// 26 USC 1402. //
amended by striking out subsection (g) (relating to treatment of
self-employment income for years prior to 1962), and by
redesignating subsections (h) and (i) as subsections (g) and (h),
respectively.
(C) Section 1402(g)(2) (relating to self-employment income of
members of certain religious faiths), as redesignated by
subparagraph (B) of this paragraph, is amended to read as follows:
"(2) Time for filing applications.--For purposes of this
subsection, an application must be filed on or before the time
prescribed for filing the return (including any extension thereof)
for the first taxable year for which the individual has
self-employment income (determined without regard to this
subsection or subsection (c)(6), except that an application filed
after such date but on or before the last day of the third
calendar month following the calendar month in which the taxpayer
is first notified in writing by the Secretary that a timely
application for an exemption from the tax imposed by this chapter
has not been filed by him shall be deemed to be filed timely."
(156) Repeal of section 1465.--Section 1465
// 26 USC 1465. //
(relating to definition of withholding agent) is repealed.
(157) Amendments of section 1481.--,
(A) Section 1481(a)(1)(A)
// 26 USC 1481. //
(relating to mitigation of effect of renegotiation of Government
contracts) is amended by striking out "within the meaning of the
Federal renogotiation act applicable to such transaction" and
inserting in lieu thereof "within the meaning of the Renegotiation
Act of 1951, as amended (50 U.S.C. App. 1211 and following".
(B) Section 1481(a)(1)
// 26 USC 1481. //
(relating to renegotiation) is amended by striking out
subparagraph (D).
(C) Subparagraphs (B) and (C) of section 1481(a)(1) are each
amended by striking out "applicable Federal renegotiation act" and
inserting in lieu thereof " Renegotiation Act of 1951, as
amended".
(158) Amendment of section 1551.--Section 1551(a) (relating to
disallowance of surtax exemption) is amended by striking out
"determined under subsection (d)" and inserting in lieu thereof
"determined under subsection (c)".
(159) Amendment of section 1552.
// 26 USC 1552. //
--The first sentence of section 1552(a) (relating to earnings and
profits of an affliated group) is amended by striking out
"beginning after December 31, 1953, and ending after the date of
enactment of this title,".
(b) Conforming and Clerical Amendments.--,
(1) Amendments conforming to repeal of sections 35 and 242.--,
(A) Section 36, as amended by this Act,
// 26 USC 36. //
is amended by striking out "sections 32 and 35" and inserting in
lieu thereof "section 32".
(B) Section 41(b)(2)
// 26 USC 41. //
is amended by striking out "section 35 (relating to partially
tax-exempt interest),".
(C) Section 46(a)(3) is amended by striking out subparagraph
(B), by inserting "and" at the end of subparagraph
(A), and by redesignating subparagraph (C) as
subparagraph (B).
(D) Section 50 A(a)(3)
// 26 USC 50 A. //
is amended by striking out subparagraph (B) and redesignating
subparagraphs (C), (D), and (E), as subparagraphs (B), (C), and
(D), respectively.
(E) (i) The heading of paragraph (1) of section 171(a)
// 26 USC 171. //
is amended to read "(1) Taxable Bonds.--".
(ii) The heading of paaragraph (2) of section 171(a) is amended
to read "(2) Tax-exempt bonds.--".
(iii) Section 171(a) is amended by striking out paragraph (3)
and by redesignating paragraph (4) as paragraph (3).
(iv) Section 171(b)(ii) is amended by striking out "subsection
(c)(1)(B)" and inserting in lieu thereof "subsection (a)(1)".
(v) So much of section 171(c) as precedes paragraph (2) is
amended to read as follows:
"(c) Esection as to Taxabel Bonds.--,
"(1) Eligibility to elect; bonds with respect to which
election permitted.--In the case of bonds the interest on which is
not excludible from gross income, this section shall apply only if
the taxpayer has so elected." (F)(i) Section 551
// 26 USC 551. //
is amended by striking out subsection (c), and by redesignating
subsections (d), (e), (f), and (g), as subsections (c), (d), (e),
and (f), respectively.
(ii) Section 1016(a)(13)
// 26 USC 1016. //
is amended by striking out "section 551(f)" and inserting in lieu
thereof "section 551(e)".
(G) Section 584(c)(2)
// 26 USC 584. //
is amended to read as follows:
"(2) Dividends received.--The proportionate share of each
participant in the amount of kividends received by the common
trust find and to which section 116 applies shall be considered
for purposes of such section as having been received by such
participant."
(H)(i) Section 642(a)
// 26 USC 642. //
is amended by striking out paragraph (1), and by redesignating
paragraphs (2) and (3)
as paragraphs (1) and (2), respectively.
(ii) Section 41(d) is amended by striking out "section
642(a)(3) "and inserting in lieu thereof "section 642(a) (2)".
(ii) Section 901(g)(3), as amended by this Act, is amended by
striking out "section 642(a)(2)" and inserting in lieu thereof
"section 642(a)(1)".
(I)(i) Section 702(a) is amended by striking out paragraph (7)
and by redesignating paragraphs (8) and (9) as paragraphs (7) and
(8), respectively.
(ii) Section 702(b) is amended by striking out "paragraphs (1)
through (8)" and inserting in lieu thereof "paragraphs (1) through
(7)".
(iii) Section 1402(a) is amended by striking out "702(a) (9)"
each place it appears and inserting in lieu thereof "702 (a)(8)".
(J)(i) Section 804(a) is amended by striking out paragraph (3),
and by redesignating paragraphs (4) and (5) as paragraphs (3) and
(4), respectively.
(ii) Section 243(b)(3)(C)(iii), as redesignated by paragraph
(21)(A) of this subsection, is amended by striking out "sections
804(a)(4)" and inserting in lieu thereof "sections 804(a)(3)".
(iii) Section 804(a)(2) is amended by striking out "paragraph
(5)" and inserting in lieu thereof "paragraph (4)", and by
striking out "paragraph (4)" and inserting in lieu thereof
"paragraph (3)".
(iv) Section 809(d)(10) is amended by striking out "section
804(a)(4)", and inserting in lieu thereof "section (a)(3)".
(v) Section 1561(a)(3) is amended by striking out "sections
804(a)(4)" inserting in lieu thereof "sections 804 (a)(3)".
(vi) Section 1564(a)(1)(C) is amended by striking out
"sections 804 (a) (4)" inserting in lieu thereof "sections 804
(a) (3)".
(K) Section 804 (a) (2) (A) is amended by striking out clause
(ii), by inserting "and" at the end of clause (i), and by
redesignating clause (iii) as clause (ii).
(L) (i) Section 809 (d) (8) (A) is amended by striking out
clause (ii), by inserting "and" at the end of clause (i), and by
redesignating clause (iii) as clause (ii).
(ii) Section 809 (d) (8) (B) is amended by striking out
"subparagraph (A) (iii)" and inserting in lieu thereof
"subparagraph (A) (ii)".
(M) Sections 804 (a) (1), 804 (a) (2), 809 (a) (1), 809(b)(1)
(A) and 809 (b) (2) (A) are each amended by striking out ",
partially tax-exempt interest,".
(N) Section 809 (e) is amended by striking out paragraph (6),
and by redesignating paragraph (7) as paragraph (6).
(O) Section 815 (b) (2) (A) (iii) is amended by striking out
"the deduction for partially tax-exempt interest provided by
section 242 (as modified by section 804 (a) (3) )," and by
striking out the comma after "809 (d) (8) (B))".
(P) Section 822 (c) (2)
// 26 USC 822. //
is amended by striking out "partially tax-exempt interest and".
(Q) Section 822 (c) (6) (A) is amended by striking out "or to
the deduction provided in section 242 for partially tax-exempt
interest".
(R) Section 822 (c) (7) is amended by striking out "partially
tax-exempt interest and to".
(S) Section 822 (d) (2) is amended by striking out ", the
deduction provided in subsection (c) (1), and the deduction
allowed by section 242 (relating to partially tax-exempt
interest)" and inserting in lieu thereof "and the deduction
provided in subsection (c) (1)".
(T) Section 832 (c) (5) (A) is amended by striking out "or to
the deductions provided in section 242 for partially tax-exempt
interest".
(U) Section 832 (c) (12) is amended by striking out "partially
tax-exempt interest and to".
(V) Sections 852 (b) (1) and 857 (b) (1) are each amended by
striking out the last sentence.
(W) Section 1244 (c) (1) (E) is amended by striking out
"sections 172, 242, 243" and inserting in lieu thereof "sections
172, 243".
(X) Section 1402 (a) is amended by striking out "(other than
interest described in section 35)".
(Y) Section 1503 (b) (3) is amended by striking out
subparagraph (C).
(Z) The table of sections for subpart A of part IV of
subchapter A of chapter 1 is amended by striking out the item
relating to section 35.
(AA) The table of sections for part VIII of subchapter B of
chapter 1 is amended by striking out the item relating to section
242.
(2) Amendment conforming to repeal of section 51.--The table of
parts for subchapter A of chapter 1 is amended by striking out the
item relating to part V.
(3) Amendments conforming to additions of sections 64 and
65.--,
(A) Paragraphs (1) (C), (5) (A), (6) (D), and (12) of section
341 (e)
// 26 USC 341. //
are each amended by striking out "gain from the sale or exchange
of property which is neither a capital asset nor property
described in section 1231 (b)" each place it appears and inserting
in lieu thereof "ordinary income".
(B) Section 483 (f) (3) is amended by striking out "no part of
any gain on such" and inserting in lieu thereof "all of the gain,
if any, on such" and by striking out "gain from the sale or
exchange of a cpaital asset or property described in section 1231"
and inserting in lieu thereof "ordinary income".
(C) Section 707 (b) (2) is amended by striking out "as gain
from the sale or exchange of property other than a capital asset"
and inserting in lieu thereof "as ordinary income".
(D) Paragraphs (1) and (2) of section 735 (a) are each amended
by striking out "gain or loss from the sale or exchange of
property other than a capital asset" and inserting in lieu thereof
"as ordinary income or as ordinary loss, as the case may be".
(E) Section 1236 (b)
// 26 USC 1236. //
is amended by striking out "loss from the sale or exchange of
property which is not a capital asset" and inserting in lieu
thereof "ordinary loss".
(F) Sections 1242 and 1243 are each amended by striking out "a
loss from the sale or exchange of property which is not a capital
asset" each place it appears and inserting in lieu thereof "an
ordinary loss".
(G) Section 1244 is amended by striking out "a loss from the
sale or exchange of an asset which is not a capital asset" each
place it appears and inserting in lieu htereof "an ordinary loss".
(H) Section 1248 (g) (3) (B), as redesignated by this Act, is
amended by striking out "gain from the sale of an asset which is
not a capital asset" and inserting "ordinary income".
(I) The following provisions are each amended by striking out
"gain from the sale or exchange of porperty which in not a capital
asset" each place it appears and inserting in lieu thereof
"ordinary income": sections 341 (a), 871 (a) (1) (C) (i) and
(ii), 881 (a) (3) (A) and (B), 996 (d) (1) and (2), 1037 (b) (1)
(A), 1232 (a) (2) (A) and (B), 1232 (c), 1246 (a), and 1385 (c)
(2) (C).
(J) The following provisions are each amended by striking out
"gain from the sale of property which is not a capital asset" and
inserting in lieu thereof "ordinary income": sections 306 (a) (1)
(A), 306 (a) (1) (B), and 306 (f). (K) The following provisions
are each amended by striking out "gain from the sale or exchange
of property which is neither a capital asset nor property
described in section 1231" each place it appears and inserting in
lieu thereof "ordinary income": sections 80 (c) (1), 163 (d) (3)
and (5), 613 (a), 617 (d) (1), 995 (b) (1) (C), 1238, 1245 (a)
(1), 1249 (a), 1250 (f) and (g), 1251 (b) (3) (B), (c) (1), and
(c) (2), and 1252 (a) (1).
(4) Clerical amendments conforming to additions of sections 64 and
65.--,
(A) The talbe of sections for part I of subchapter B of chapter
1 is amended by adding at the end thereof the following new items:
" Sec. 64. Ordinary income defined.
" Sec. 65. Ordinary loss defined."
(B) The heading for part I of subchapter B of chapter 1 is
amended by striking out " AND TAXABLE INCOME" and inserting in
lieu thereof " TAXABLE INCOME, ETC." ETC."
(C) The table of parts for subchapter B of chapter 1 is amended
by striking out "and taxable income." in the item relating to part
I and inserting in lieu thereof "taxable income, etc."
(5) Amendment conforming to repeal of section 76.--The table of
sections for part II of subchapter B of chapter 1 is amended by
striking out the item relating to section 76.
(6) Amendments conforming to amendment of section 103.--,
(A) Section 6049 (b) (2) (A)
// 26 USC 6049. //
is amended by striking out "section 103 (a) (1) or (3)" and
inserting in lieu thereof "section 103 (a)".
(B) Section 852 (a) (1) (B), as added by this Act, is amended
by striking out "section 103 (a) (1)" and inserting in lieu
thereof "section 103 (a)". (7) Amendments conforming to amendment
of section 143.--,
(A) (i) Part V of subchapter B of chapter 1 is amended by
striking out section 153
// 26 USC 153, 154. //
(relating to determination of marital status) and by redesignating
section 154 as section 153.
(iii) The table of sections for part V of subchapter B of
chapter 1 is amended by striking out the items relating to
sections 153 and 154 and inserting in lieu thereof the following:
" Sec. 153. Cross references."
(B) Section 152 (a) (.)
// USC 152. //
is amended by striking out "section 153" and inserting in lieu
thereof "section 143".
(C) Section 153,
// 26 USC 153. //
as redesignated by subparagraph (A) of this paragraph, is amended
by adding at the end thereof the following new paragraph:
"(5) For determination of marital status, see section 143."
(8) Amendments conforming to amendment of section 151.--,
(A) The following provisions are each amended by striking out
"educational institution (as defined in section 151 (e) (4) )"
each place it appears and inserting in lieu thereof "educational
organization described in section 170 (b) (1) (A) (ii)": sections
117 (a) (1) (A) 117 (b) (1), 117 (b) (2), 152 (d), 170 (g) (1) (B)
(redesignated by subsection (a) (28) (A) (i) of this section), and
403 (b) (1) (A) (ii).
// USC 117, 152, 170, 403. //
(B) Section 103 (c) (3) (A),
// 26 USC 103. //
as redesignated by subsection (a) (17) of this section, is amended
by striking out "educational institution (withing the meaning of
section 151 (e) (4) )" and inserting in lieu thereof "educational
organization described in section 170 (b) (1) (A) (ii)".
(C) Section 163 (b) (1)
// 26 USC 163. //
is amended by striking out "educational institution (as defined in
section 151 (e) (4) ) and which is provided for a student of such
institution" and inserting in lieu thereof "educational
organization described in section 170 (b) (1) (A) (ii) and which
is provided for a student of such organization".
(D) (i) Subparagraphs (A), (B), and (C) of section 415 (c) (4)
// 26 USC 415. //
are each amended by striking out "educational institution" each
place it appears and inserting in lieu thereof "educational
organization".
(ii) Subparagraph (D) (ii) of section 415 (c) (4) is amended to
read as follows:
"(ii) For purposes of this paragraph the term 'educational
organization' means an educational organization described in
section 170 (b) (1) (A) (ii)."
(iii) Section 415 (c) (4) is amended by striking out
"educational institutions" from the paragraph heading and
inserting in lieu thereof "educational organizations".
(E) Section 508 (c) (2) (A)
// 26 USC 508. //
is amended to read as follows:
"(a) educational organizations described in section 170 (b) (1)
(A) (ii), and".
(F) Section 512 (b) (15) (B),
// 26 USC 512. //
as redesignated by section 1951 (b) (8) (A) of this Act, is
amended by striking out "educational institution (as defined in
section 151 (e) (4))" and inserting in lieu thereof "educational
organization described in section 170 (b) (1) (A) (ii)".
(G) Section 1303 (d)
// 26 USC 1303. //
is amended by striking out "educational institution (as defined in
section 151 (e) (4) )" each place it appears and inserting in lieu
thereof "educational organization described in section 170 (b) (1)
(A) (ii)".
(H) Sections 4941 (d) (2) (G) (ii) and 4945 (g) (1)
// 26 USC 4941, 4945. //
each are amended by striking out "educational institution
sedcribed in section 151 (e) (4)" and inserting in lieu thereof
"educational organization described in section 170 (b) (1) (A)
(ii)".
(9) Amendments conforming to the amendments of section 152.--
Section 2 (b) (3) (B)
// 26 USC 2. //
is amended by striking out clause (ii), by adding "or" at the end
of clause (i), and by redesignating clause (iii) as clause (ii).
(10) Amendment conforming to the amendment of section 172.--,
(A) Section 374 (e) (2) is amended by striking out "section 172
(j)" and inserting in lieu thereof "172 (g)".
(B) Section 904 (f) (2) (B) (i) and 904 (f) (4) (B) (i), as
amended by this Act, are amended by striking out "section 172 (k)
(1)" and inserting in lieu thereof "section 172 (h)".
(11) Amendments conforming to repeal of section 187.--,
(A) Section 48 (a) (8)
// 26 USC 48. //
(relating to section 38 property) is amended by striking out
"187,".
(B) The table of sections for part VI of subchapter B of
chapter 1 is amended by striking out the item relating to section
187.
(C) Section 1082 (a) (B)
// 26 USC 1082. //
(relating to basis for determining gain or loss) is amended by
striking out "187,".
(D) Section 1245 (a) (2)
// 26 USC 1245. //
(relating to gain from dispositions of certain depreciable
property) is amended by striking out "187," each place it appears.
(12) Amendments conforming to the repeal of section 342.--,
(A) Section 551 (f),
// 26 USC 551. //
as redesignated by paragraph (1) (F) of this subsection, is
amended by striking out paragraph (3).
(B) The talbe of subparts for part II of subchapter C of
chapter 1 is amended by striking out the item relating to subpart
C and inserting in lieu thereof:
" Subpart C. Collapsible corporations."
(C) The table of sections for subpart C of part II of
subchapter C of chapter 1 is amended by striking out the item
relating to section 342.
(D) The heading of subpart C of part II of subchapter C of
chapter 1 is amended to read as follows:
" Subpart C--Collapsible Corporations".
(13) Amendments conforming to the repeal of section 363.--, The
table of sections for subpart C of part III of subchapter C of
chapter 1 is amended by striking out the item relating to section
363.
(14) Amendments conforming to the repeal of section 373.--,
(A) Section 372 (b) (1)
// 26 USC 372. //
is amended by striking out "373 (b) or".
(B) Section 374 (b)
// 26 USC 374. //
is amended to read as follows:
"(b) Basis.--,
"(1) Railroad corporations.--If the property of a railroad
corporation, as defined in section 77 (m) of the Bankruptcy Act
(11 U.S.C. 205(m)), was acquired after December 31, 1938, in
pursuance of an order of the court having jurisdiction of such
corporation--,
"(A) in a receivership proceeding, or
"(B) in a proceeding under section 77 of the Bankruptcy Act,
and the acquiring corporation is a railroad corporation (as
defined in section 77 (m) of the Bankruptcy Act) organized or made
use of to effectuate a plan of reorganization approved by the
court in such proceeding, the basis shall be the same as it would
be in the hands of the railroad corporation whose property was so
acquired, increased in the amount of gain recognized under
subsection (a) (2) to the transferor on such transfer.
"(2) Property acquired by street, suburban, or interurban
electric railway corporation.--If the property of any street,
suburban, or interurban electric railway corporation engaged as a
common carrier in the transportation of persons or property in
interstate commerce was acquired after December 31, 1934, in
pursuance of an order of the court having jurisdiction of such
corporation in a proceeding under section 77 of the Bankruptcy Act
(11 U.S.C. 501 and following), and the acquiring corporation is a
street, suburban, or interurban electric railway engaged as a
common carrier in the transportation of persons or property in
interstate commerce, organized or made use of to effectuate a plan
of reorganization approved by the court in such proceeding, then,
notwithstanding the provisions of section 270 of the Bankruptcy
Act (11 U.S.C. 670), the basis shall be the same as it would be in
the hands of the corporation whose property was so acquired."
(C) Section 374 (c) (3) is amended by striking out "subsection
(b)" and inserting in lieu thereof "subsection (b) (1)".
(D) Section 1232 (b) (2)
// 26 USC 1232. //
is amended by striking out "section 371, 373, or 374" and
inserting in lieu thereof "section 371 or 374".
(E) The table of sections for part IV of subchapter C of
chapter 1 is amended by striking out the item relating to section
373.
(15) Amendment conforming to repeal of sections 391 through
395.--The table of parts for subchapter C of chapter 1 is amended
by striking out the item relating to part VII.
(16) Amendment conforming to the amendments of section 481.--
Section 381 (c)
// 26 USC 381. //
is amended by striking out paragraph (21).
(17) Amendment conforming to the amendments of section 545.--
Section 381 (c) (15) is amended by striking out "subsections (b)
(7) and (c)" and inserting in lieu thereof "subsection (c)".
(18) Amendment conforming to the repeal of section 583.--, The
table of sections for part I of subchapter H of chapter 1
// 26 USC 592. //
is amended by striking out the item relating to section 592.
(20) Amendments conforming to the repeal of section 601.--,
(A) Section 535 (b)
// 26 USC 535. //
is amended by striking out paragraph (8).
(B) (i) Section 545 (b)
// 26 USC 545. //
is amended by striking out paragraph (6), and by redesignating
paragraph (8) as paragraph (6).
(ii) Section 545 (b) (2) is amended by striking out "paragraph
(8)" and inserting in lieu thereof "paragraph (6)".
(iii) Section 545 (c) (5) is amended by striking out
"subsection (b) (6)".
(C) The table of parts for subchapter H of chapter 1 is amended
by striking out the item relating to part III.
(21) Amendments conforming to the repeal of section 615.--
(A) (i) Section 243 (b) (3) (C)
// 26 USC 243. //
is amended--,
(I) by striking out clauses (ii) and (iii) and inserting in
lieu thereof the following:
"(ii) $400,000 limitation for certain exploration expenditures
under section 617 (h) (1),", and
(II) by redesignating clauses (iv) and (v) as clauses (iii) and
(iv), respectively.
(ii) Section 1564 (b) (2) (C)
// 26 USC 1564. //
is amended by striking out "section 243 (b) (3) (C) (v)" and
inserting in lieu thereof "243 (b) (3) (C) (iv)".
(B) Section 381 (c) (10)
// 26 USC 381. //
is amended to read as follows:
"(10) Treatment of certain mining development and exploration
expenses of distributor or transferor corporation.--, The
acquiring corporation shall be entitled to deduct, as if it were
the distributor or transferor corporation, expenses deferred under
section 616 (relating to certain development expenditures) if the
distributor or transferor corporation has so elected. For the
purpose of applying the limitation provided in section 617 (h),
if, for any taxable year, the distributor or transferor
corporation was allowed a deduction under section 617 (a), the
acquiring corporation shall be deemed to have been allowed such
deduction."
(C) Section 617 (h) (1)
// 26 USC 617. //
is amended by striking out "and section 615 (a) and the amounts
which are or have been treated as deferred expenses under section
615 (b)" and inserting in lieu thereof "and subsection (a) of
section 615 (as in effect before the enactment of the Tax Reform
Act of 1976)".
(D) Section 617 (h) (3) is amended to read as follows:
"(3) Application of paragraph (2) (B).--Paragraph (2) (B) shall
apply with respect to all amounts deducted before the latest such
transfer from the individual or corporation to the taxpayer.
Paragraph (2) (B) shall apply only if--,
"(A) the taxpayer acquired any mineral property from the
individual or corporation under circumstances which make paragraph
(7), (8), (11), (15), (17), (20), or (22) of section 113(a) of the
Internal Revenue Code of 1939 apply to such transfer; or
"(B) the taxpayer acquired any mineral property from the
individual or corporation under circumstances which amke section
334 (b), 362 (a) and (b), 372 (a), 374 (b) (1), 1051, or 1082
apply to such transfer."
(E) Section 617 is amended by adding at the end thereof the
following new subsection:
"(i) Certain Pre-1970 Exploration Expenditures.--If--,
"(1) the taxpayer receives mineral property in a transaction as
a result of which the basis of such property in the hands of the
transferee is determined by reference to the basis in the hands of
the transferor,
"(2) an election made by the transferor under subsection (e) of
section 615 (e) (as in effect before the enactment of the Tax
Reform Act of 1976) applied with respect to expenditures which
were made by him and which were properly chargeable to such
property, and
"(3) the taxpayer has made or makes an election under
subsection (a),
then in the application of this section with respect to the transferee,
the amounts allowed as deductions under such section 615 to the
transferor, which (but for the transferor's election) would be reflected
in the adjusted basis of such property in the hands of the transferee,
shall be treated as expenditures allowed as deductions under subsection
(a) to the transferor."
(F) Section 703 (b)
// 26 USC 703. //
is amended by striking out "under section 615 (relating to
pre-1970 exploration expenditures),".
(G) Section 1016 (a)
// USC 1016. //
is amended by striking out paragraph (10).
(H) The table of sections for part I of subchapter I of chapter
1 is amended by striking out the item relating to section 615.
(22) Amendments conforming to the repeal of section 632.--
(A) The talbe of sections for part III of subchapter I of
chapter 1 is amended by striking out the item relating to section
632.
(B) Section 5 (b)
// 26 USC 5. //
is amended by striking out paragraph (1).
(23) Amendment conforming to the repeal of section 771.--, The
table of parts for subchapter K of chapter 1 is amended by
striking out the item relating to part IV.
(24) Amendment conforming to the amendment of section 802.--
Section 815 (c) (3) (B)
// 26 USC 815. //
is amended by striking out "(determined without regard to section
802 (a) (3))".
(25) Amendment conforming to the amendment of section
812.--Section 844 (b) (2) // 26 USC 844. //
is amended by striking out "section 812 (b) (1) (A) (iii)" and
inserting in lieu thereof "section 812 (b) (1) (C)".
(26) Amendments conforming to the amendments of section 864.--,
(A) Paragraphs (5) and (6) of section 861 (a)
// 26 USC 861. //
(relating to items treated as income from within United States)
are each amended by striking out in the heading "sale" and
inserting in lieu thereof "sale or exchange", and by striking out
"sale" in the text and inserting in lieu thereof "sale or
exchange".
(B) Section 861 (e) (1) (relating to income from certain
aircraft and vessels) is amended by striking out "sale or other
didposition" and inserting in lieu thereof "sale, exchange, or
other disposition".
(C) Paragraphs (5) and (6) of section 862 (a)
// 26 USC 862. //
(relating to items treated as income from without the United
States) and paragraphs (2) and (3) of section 863 (b)
// 26 USC 863. //
(relating to sources of income) are each amended by striking out
"sale" and inserting in lieu thereof "sale or exchange".
(D) Paragraph (2) of section 863 (b)
// 26 USC 863. //
(relating to sources of income) is amended by striking out "sold"
each place it appears and inserting in lieu thereof "sold or
exchanged".
(27) Amendments conforming to the repeal of section 972.--,
(A) Section 970 (b) (1)
// 26 USC 970. //
(relating to inclusion of certain previously excluded amounts of
subpart F income) is amended by striking out "application of
section 972" and inserting in lieu thereof "treatment (under
section 972 as in effect before the date of the enactment of the
Tax Reform Act of 1976) of two or more controlled foreign
corporations which are export trade corporations as a single
controlled foreign corporation".
(B) The table of sections for subpart G of part III of
subchapter N of chapter 1 is amended by striking out the item
relating to section 972.
(28) Amendments conforming to the amendment of section 1001.--,
(A) Subsection (c) of section 331
// 26 USC 331. //
is amended to read as follows:
"(c) Cross Reference.--,
" For general rule for determination of the amount of gain or
loss recognized, see section 1001."
(B) (i) Section 100i
// 26 USC 1002. //
(relating to recognition of gain or loss) is repealed.
(ii) The talbe of sections for part I of subchapter O of
chapter 1 is amended by striking out the item relating to section
1002.
(29) Amendments conforming to the repeal of section 1020.--,
(A) The third sentence of subsection (a) of section 1016
// 26 USC 1016. //
is amended by striking out "under section 1020" and inserting in
lieu thereof "under section 1020 (as in effect before the date of
the enactment of the Tax Reform Act of 1976)".
(B) The table of sections for part II of subchapter O of
chapter 1 is amended by striking out the item relating to section
1020.
(30) Amendments conforming to the repeal of section 1022.--,
(A) Section 1016 (a)
// 26 USC 1016. //
is amended--,
(i) by striking out paragraph (21), and
(ii) by redesignating paragraphs (20) and (22) as paragraphs
(19) and (20), respectively.
(B) The amendment made by subparagraph (A) (i)
// 26 USC 1016 note. //
shall apply with respect to stock or securities acquired from a
decedent dying after the date of the enactment of this Act.
(C) The table of sections for part II of subchapter O of
chapter 1 is amended by striking out the item relating to section
1022.
(31) Amendments conforming to amendments of section 1033.--,
(A) Section 1250 (d) (4) (B)
// 26 USC 1250. //
is amended by striking out "1033 (a) (3) (A)" and inserting in
lieu thereof "1033 (a) (2) (A)".
(B) Section 1250 (d) (4) (C) and (D) are each amended by
striking out "1033 (a) (3)" and inserting in lieu thereof "1033
(a) (2)".
(C) Section 6212 (c) (2) (B)
// 26 USC 6212. //
is amended by striking out "1033 (a) (3) (C) and (D)" and
inserting in lieu thereof "1033 (a) (2) (C) and (D)".
(D) Section 6504 (4)
// 26 USC 6504. //
is amended by striking out "1033 (a) (3) (C) and (D)" and
inserting in lieu thereof "1033 (a) (2) (C) and (D)".
(E) Sections 1071 (b) and 1250 (d) (4) (D)
// 26 USC 1071, 1250. //
are each amended by striking out "1033 (c)" and inserting in lieu
thereof "1033 (b)".
(32) Amendments conforming to the repeal of section 1111.--,
(A) Section 301
// 26 USC 301. //
is amended by striking out subsection (f), and by redesignating
subsection (g) as subsection (e). (B) (i) Section 312
// 26 USC 312. //
is amended by striking out subsection (k), and by redesignating
subsections (1) and (m) as subsections (j) and (k), respectively.
(ii) Section 1246 (g)
// 26 USC 1246. //
is amended by striking out "312 (l)" and inserting in lieu thereof
"312 (j)".
(iii) Sections 964 (a) and 1248 (c) (1)
// 26 USC 964, 1248. //
are each amended by striking out "312 (m) (3)" and inserting in
lieu thereof "312 (k) (3)".
(iv) Subsection (d) of section 1377, as added by this Act, is
aminded by striking out "312 (m)" and inserting in lieu thereof
"312 (k)".
(C) Section 535 (b)
// 26 USC 535. //
is amended by striking out paragraphs (9) and (10).
(D) Section 543 (a) (1)
// 26 USC 543. //
is amended by inserting "and" at the end of subparagraph (A), and
by striking out subparagraphs (B) and (C) and inserting in lieu
thereof the following:
"(B) interest on amounts set aside in a reserve fund under
section 511 or 607 of the Merchant Marine Act, 1936 (46 U.S.C.
1161 or 1177)."
(E) Section 545 (b)
// 26 USC 545. //
is amended by striking out paragraphs (10) and (11).
(F) Section 553 (a) (1)
// 26 USC 553. //
is amended to read as follows:
"(1) Dividends, etc.--Dividends, interest, royalties, and
annuties."
(G) Section 556 (b)
// 26 USC 556. //
is amended by striking out paragraphs (7) and (8).
(H) Section 561 (b)
// 26 USC 561. //
is amended to read as follows:
"(b) Special Rules Applicable.--In determining the deduction for
dividends paid, the rules provided in section 562 (relating to rules
applicable in determining dividends eligible for dividends paid
deduction) and section 563 (relating to dividends paid after the close
of the taxable year) shall be applicable."
(I) The table of parts for subchapter O of chapter 1 is amended
by striking out the item relating to part IX.
(33) Amendments conforming to amendment of section 1222.--,
(A) Section 57 (a) (9) (A)
// 26 USC 57. //
is amended by striking out "the amount by which the net long-term
capital gain exceeds the net short-term capital loss" and
inserting in lieu thereof "the net capital gain".
(B) So much of the first sentence of section 57 (a) (9) (B) as
precedes "by a fraction" is amended to read as follows: " In the
case of a corporation having a net capital gain for the taxable
year, an amount equal to the product obtained by multiplying the
net capital gain".
(C) Section 527 (b) (2)
// 26 USC 527. //
is amended by striking out "net section 1201 gain" and inserting
in lieu thereof "net capital gain". (D) Sections 535 (b) (6) and
545 (b) (5)
// 26 USC 535, 545. //
are each amended--,
(1) by strikiing out from the paragraph heading " Long-term"
and inserting in lieu thereof " Net",
(2) by striking out from the text "the excess of the net
long-term capital gain for the taxabel year over the net
short-term capital loss for such year" each place it appears and
inserting in lieu thereof "the net capital gain for the taxable
year", and
(3) by striking out from the text "such excess" each place it
appears and inserting in lieu thereof "such net capital gain".
(E) Section 802 (a) (2)
// 26 USC 802. //
is amended--,
(i) by striking out "the net long-term capital gain of any life
insurance company exceeds the net short-term capital loss" and
inserting in lieu thereof "any life insurance company has a net
capital gain", and
(ii) by striking out "such excess" each place it appears and
inserting in lieu thereof "such net capital gain".
(F) Section 804 (a) (2)
// 26 USC 804. //
is amended by striking out "by which the net long-term capital
gain exceeds the net short-term capital loss" and inserting in
lieu thereof "of the net capital gain".
(G) Section 809 (b) (1) (B) and 809 (b) (2) (B)
// 26 USC 809. //
are each amended by striking out "by which the net long-term
capital gain exceeds the net short-term capital loss" and
inserting in lieu thereof "of the net capital gain".
(H) Section 815 (b) (2) (A) (ii)
// 26 USC 815. //
is amended by striking out "by which the net long-term capital
gain exceeds the net short-term capital loss" and inserting in
lieu thereof "of the net capital gain".
(I) Section 852 (b) (2) (A)
// 26 USC 852. //
is amended by striking out "the excess, if any, of the net
long-term capital gain over the net short-term capital loss" and
inserting in lieu thereof "the amount of the net capital gain, if
any".
(J) (i) Section 852 (b) (3) (A) is amended to read as follows:
"(A) Imposition of tax.--There is hereby imposed for each
taxable year in the case of every regulated investment company a
tax, determined as provided in section 1201 (a), on the excess, if
any, of the net capital gain over the deduction for dividends paid
(as defined in section 561) determined with reference to capital
gain dividends only."
(ii) The second sentence of section 852 (b) (3) (C) is amended
by striking out "excess of the net long-term capital gain over the
net short-term capital loss" each place it appears and inserting
in lieu thereof "net capital gain".
(K) The second sentence of section 857 (b) (3) (C)
// 26 USC 857. //
is amended by striking out "excess of the net long-term capital
gain over the net short-term capital loss" each place it appears
and inserting in lieu thereof "net capital gain".
(L) Section 1201 (b)
// 26 USC 1201. //
is amended by striking out "net section 1201 gain" each place it
appears and inserting in lieu thereof "net capital gain".
(M) The first sentence of section 1202 is amended to read as
follows: " If for any taxable year, a taxpayer other than a
corporation has a net capital gain, 50 percent of the amount of
the net capital gain shall be a deduction from gross income9"
(N) Sections 381 (c) (3) (C), 852 (d), 4940 (c) (1), and 4940
(c) (4)
// 26 USC 381, 852, 4940. //
are each amended by striking out "net capital gain" and inserting
in lieu thereof "capital gain net income".
(O) Section 1212 (a) (1)
// 26 USC 1212. //
is amended by striking out "net capital gain" each place it
appears and inserting in lieu thereof "capital gain net income",
and by striking out "net capital gains" and inserting in lieu
thereof "capital gain net income".
(P) Section 1247 (a) (1) (B)
// 26 USC 1247. //
is amended by striking out "the excess (determined as if such
corporation were a domestic corporation) of the net long-term
capital gain over the net short-term capital loss" and inserting
in lieu thereof "the amount (determined as if such corporation
were a domestic corporation) of the net capital gain".
(Q) (i) Section 1375 (a) (1)
// 26 USC 1375. //
is amended by striking out "the excess of the corporation's net
long-term capital gain over its short-term capital loss" and
inserting in lieu thereof "the corporation's net capital gain".
(ii) The second sentence of section 1375 (a) (1) is amended by
striking out "such excess" and inserting in lieu thereof "such net
capital gain".
(iii) Section 1375 (a) (3) isamended by striking out "the
excess of an electing small business corporation's net long-term
capital gain over its net short-term capital loss" and inserting
in lieu thereof "an electing small business corporation's net
capital gain".
(R) The following provisions are each amended by striking out
"the excess of the net long-term capital gain over the net
short-term capital loss," and inserting in lieu thereof "the net
capital gain": Sections 1247 (a) (2) (A) (i), 1247 (a) (2) (C),
1247 (d) (1) and (2), 1378 (a) (1), 1378 (b) (1), and 1378 (c)
(3).
// 26 USC 1247, 1378. //
(34) Amendment conforming to the repeal of section 1240.--, The
table of sections of part IV of subchapter P of chapter 1 is
amended by striking out the item relating to section 1240.
(35) Amendment conforming ti the repeal of section 1315--, The
table of sections for part II of subchapter Q of chapter 1 is
amended by striking out the item relating to section 1315.
(36) Amendments conforming to the repeal of section 1321.--,
(A) Section 472
// 26 USC 472. //
is amended by striking out subsection (f).
(B) Section 6422, as amended by this Act,
// 26 USC 6422. //
is amended by striking out paragraph (2), and by redesignating
paragraphs (3) through (13) as paragraphs (2) through (12),
respectively.
(C) Section 6504 is amended by striking out paragraph (1).
(D) Section 6515 is amended by striking out paragraph (1).
(E) The table of parts for subchapter Q of chapter 1 is amended
by striking out the item relating to part III.
(37) Amendments conforming to the repeal of sections 1331
through 1337.--,
(A) The third sentence of section 901 (a)
// 26 USC 901. //
is amended by striking out "under section 1333 (relating to war
loss recoveries) or".
(B) Section 936 (a) (2),
// 26 USC 936. //
as added by this Act, is amended--,
(i) by inserting "or" at the end of subparagraph (C), and
(ii) by striking out subparagraph (D).
(C) Section 6212 (c) (2)
// 26 USC 6212. //
is amended by striking out subparagraph (D).
(D) Section 6515
// 26 USC 6515. //
is amended by striking out paragraph (6).
(E) Section 6515, as amended by this Act, is amended by
striking out paragraph (2), and by redesignating paragraphs (3),
(4), (5), (6), (7), and (8) as paragraphs (1), (2), (3), (4), (5),
and (6) respectively.
(F) The table of parts for subchapter Q of chapter 1 is amended
by striking out the item relating to part IV.
(38) Amendment conforming to the repeal of section 1342.--, The
table of sections for part V of subchapter Q of chapter 1 is
amended by striking out the item relating to section 1342.
(39) Amendments conforming to the repeal of section 1346.--,
(A) The table of sections for part VI of subchapter Q of
chapter 1 is amended by striking out the item relating to section
1346.
(B) Section 6504 is amended by striking out paragraph (7).
(40) Amendment conforming to amendment of section 1372.--
Section 58 (k) (2)
// 26 USC 58. //
is amended by striking out ", notwithstanding the provisions of
section 1371 (b) (1),".
(41) Amendment conforming to the repeal of section 1465.--The
table of sections for subchapter C of chapter 3 is amended by
striking out the item relating to section 1465.
(c) Amendments to Provisions Referring to Territories.--,
(1) Section 37 (f) is amended by striking out "a Territory,".
(2) Sections 105 (e) (2), 273, and 454 (b) (2)
// 26 USC 105, 273, 454. //
are each amended by striking out ", a Territory,".
(3) Section 117 (b) (2) (A) (iv)
// 26 USC 117. //
is amended by striking out "a territory,".
(4) Section 162 (a)
// 26 USC 162. //
is amended by striking out "territory".
(5) Section 581
// 26 USC 581. //
is amended by striking out", of any State, or of any Territory"
and inserting in lieu thereof "or of any State", and by striking
out ", Territorial,".
(6) Section 801 (b) (3)
// 26 USC 801. //
is amended by striking out "or Territorial".
(7) Section 861 (a)
// 26 USC 861. //
is amended by striking out ", any Territory, any political
subdivision of a Territory,".
(8) Paragraphs (6) and (7) of section 1014 (b)
// 26 USC 1014. //
are each amended by striking out " Territory,".
(9) Section 1221 (5)
// 26 USC 1221. //
is amended by striking out "or Territory,".
(d) // 26 USC 2 note. // Effective Date.--Except as otherwise
expressly provided in this section, the amendments made by this section
shall apply with respect to taxable years beginning after December 31,
1976. The amendments amde by subsections (a) (29) and (b) (10) shall
apply with respect to taxable years ending after the date of the
enactment of this Act.
SEC. 1902, AMENDMENTS OF SUBTITLE B; ESTATE AND
GIFT TAXES.
(a) In General.--,
(1) Amendments of section 2012.--,
(A) Section 2012 (b)
// 26 USC 2012. //
(relating to credit for gift tax) is amended--,
(i) by striking out "(b) In applying," and inserting in lieu
thereof "(b) Valuation Reductions.--In applying,", and
(ii) by striking out in paragraphs (2) and (3) "deduction)
--then" and inserting in lieu thereof "deduction), then".
(B) Section 2012 (c) (relating to gift by spouse or third
party) is amended by striking out "(c) Where the decedent" and
inserting in lieu thereof "(c) Where Gift Considered Made One-Half
by Spouse.--Where the decedent".
(C) Section 2012 (d) (1) (relating to computation of amount of
gift tax) is amended by striking out "(d) (1) For purposes of" and
inserting in lieu thereof the following:
"(d) Computation of Amount of Gift Tax Paid.--,
"(1) Amount of tax.--For purposes of".
(D) Section 2012 (d) (2) (relating to credit for gift tax) is
amended by striking out "(2) For purposes" and inserting in lieu
thereof: "(2) Amount of gift.--For purposes".
(2) Amendments of section 2013.--Section 2013 (d) (3)
// 26 USC 2013. //
is amended by striking out ", or the corresponding provision of
prior law,".
(3) Amendment of section 2038.--Section 2038
// 26 USC 2038. //
(relating to revocable transfers) is amended by striking out
subsection (c) (relating to effect of disability in certain
cases).
(4) Amendments of section 2055.--,
(A) Section 2055 (b)
// 26 USC 2055. //
(relating to powers of appointment) is amended to read as follows:
"(b) Powers of Appointment.--Property includible in the decedent's
gross estate under section 2041 (relating to powers of appointment)
received by a donee described in this section shall, for purposes of
this section, be considered a bequest of such decedent."
(B) Section 2055 (f) (relating to cross references) is amended
to read as follows:
(f) Cross References.--,
"(1) For option as to time for valuation for purpose of
deduction under this section, see section 2032.
"(2) For exemption of gifts and bequests to or for the benefit
of Library of Congress, see section 5 of the Act of March 3, 1925,
as amended (2 U.S.C. 161).
"(3) For treatment of gifts and bequests for the benefit of the
Office of Naval Records and History as gifts or bequests to or for
the use of the United States, see section 7222 of title 10, United
States Code.
"(4) For treatment of gifts and bequests to or for the benefit
of National Park Foundation as gifts or bequests to or for the use
of the United States, see section 8 of the Act of December 18,
1967 (16 U.S.C. 191).
// 16 USC 19l. //
"(5) For treatment of gifts, devises, or bequests accepted by
the Secretary of State under the Foreign Service Act of 1946 as
gifts, devices, or bequests to or for the use of the United
States, see section 1021 (e) of that Act (22 U.S.C. 809 (e)).
"(6) For treatment of gifts or bequests of money accepted by
the Attorney General for credit to ' Commissary Funds, Federal
Prisons,' as gifts or bequests to or for the use of the United
States, see section 2 of the Act of May 15, 1952, as amended by
the Act of July 9, 1952 (31 U.S.C. 725s-4).
"(7) For payment of tax on gifts and bequests of United States
obligations to the United States, see section 24 of the Second
Liberty Bond Act (31 U.S.C. 757e).
"(8) For treatment of gifts and bequests for benefit of the
Naval Academy as gifts or bequests to or for the use of the United
States, see section 6973 of title 10, United States Code.
"(9) For treatment of gifts and bequests for benefit of the
Naval Academy Museum as gifts or bequests to or for the use of the
United States, see section 6974 of title 10, United States Code.
"(10) For exemption of gifts and bequests received by National
Archives Trust Fund Board, see section 2308 of title 44, United
States Code."
(5) Amendments of section 2106.--,
(A) Section 2106 (a) (2) (F)
// 26 USC 2106. //
(relating to cross references concerning the charitable deduction
for estate tax purposes) is amended to read as follows:
"(F) Cross References.--,
"(1) For option as to time for valuation for purposes of
deduction under this section, see section 2032.
"(2) For exemption of certain bequests for the benefit of the
United States and for rules of construction for certain bequests,
see section 2055(f)."
(B) Section 2106 (relating to taxable estate of nonresidents)
is amended by striking out subsection (c) (relating to treatment
of United States bonds).
(6) Amendment of sections 2107 and 2108.--Section 2107 (a)
(relating to estate tax on expatriates) and section 2108 (a)
// 26 USC 2107, 2108. //
(relating to application of pre-1967 estate tax provisions) are
each amended by striking out "the date of enactment of this
section" and inserting in lieu thereof " November 13, 1966".
(7) Amendment relating to section 2201.--,
(A) Section 6 (b) (1) of the Act of January 2, 1975 (Public Law
93--597; 88 Stat. 1950)
// 26 USC 2201. //
is amended by striking out " Section 2210" and inserting in lieu
thereof " Section 2201".
(B) The amendment made by subsection (A)
// 26 USC 2201 note. //
is effective July 1, 1973.
(8) Repeal of section 2202.--Section 2202
// 26 USC 2202. //
(relating to missionaries in foreign service) is repealed.
(9) Amendment of section 2204.--The last sentence of section
2204 (b)
// 26 USC 2204. //
(relating to the discharge from personal liability of a fiduciary
other than the executor) is amended by striking out "has not been"
and inserting in lieu thereof "has been".
(10) Amendment of section 2501.--Section 2501 (a) (1)
// 26 USC 2501. //
(relating to imposition of gift tax) is amended to read as
follows:
"(1) General rule.--A tax, computed as provided in section
2502, is hereby imposed for each calendar quarter on the transfer
of property by gift during such calendar quarter by any
individual, resident or nonresident."
(11) Amendment of section 2522.--Subsection (d) of section 2522
// 26 USC 2522. //
(relating to cross references) is amended to read as follows:
"(d) Cross Reference.--,
" For exemption of certain gifts to or for the benefit of the
United States and for rules of construction with respect to
certain gifts, see section 2055 (f)."
(12) Amendments to sections referring to territories.--,
(A) The following provisions are each amended by striking out "
Territory,": sections 2055 (a) (1), 2056 (c) (2) (B), and 2106
(a) (2) (A) (i).
// 26 USC 2055, 2056, 2106. //
(B) The following provisions are each amended by striking out
"or Territory": sections 2011 (a), 2011 (e), and 2053 (d).
// 26 USC 2011, 2053. //
(C) Section 2016
// 26 USC 2016. //
is amended by striking out " Territory or".
(D) Sections 2522 (a) (1) and 2522 (b) (1)
// 26 USC 2522. //
are each amended by striking out " Territory,".
(E) Section 2523 (f) (1)
// 26 USC 2523. //
is amended by striking out " Territory, or".
(b) Conforming and Clerical Amendments.--,
(1) Amendment conforming to repeal of section 2202.--The table
of sections for subchapter C of chapter 11 is amended by striking
out the item relating to section 2202.
(2) Amendments conforming to amendment of section 2055.--,
(A) Section 6503,
// 26 USC 6503. //
as amended by this Act, is amended by striking out subsection (e),
and by redesignating subsections (f), (g), (h), and (i) as
subsections (e), (f), (g), and (h), respectively.
(B) Section 6167 (h) (2)
// 26 USC 6167. //
is amended by striking out "section 6503 (f)" and inserting in
lieu thereof "section 6503 (e)".
(c) Effective Dates.--,
(1)
// 26 USC 2011 note. //
Estate tax amendments.--The amendments made by paragraphs (1)
through (10), and paragraphs (14) (A), (B), and (C), of subsection
(a), and by subsection (b) shall apply in the case of estates of
decedents dying after the date of the enactment of this Act, and
the amendment made by paragraph (11) of subsection (a) shall apply
in the case of estates of decedents dying after December 31, 1970.
(2) Gift tax amendments.--The amendments made by paragraphs
(12), (13), and (14) (D) and (E) of subsection (a) shall apply
with respect to gifts amde after December 31, 1976.
SEC. 1903. AMENDMENTS OF SUBTITLE C; EMPLOYMENT
TAXES.
(a) In General.--,
(1) Amendments of sections 3101 and 3111.--,
(A) Section 3101 (a)
// 26 USC 3101. //
(relating to rate of tax on employees for old-age, survivors, and
disability insurance) and section 3111 (a)
// 26 USC 3111. //
(relating to rate of tax on employers for such insurance) are each
amended by striking out paragraphs (1), (2), (3), and (4), and by
redesignating paragraphs (5) and (6) as paragraphs (1) and (2),
respectively.
(B) Section 3101 (b) (relating to rate of tax on employees for
hospital insurance) and section 3111 (b) (relating to rate of tax
on employers for such insurance) are each amended by striking out
paragraphs (1) and (2), and by redesignating paragraphs (3), (4),
(5), and (6) as paragraphs (1), (2), (3), and (4), respectively.
(2) Repeal of section 3113.--Section 3113
// 26 USC 3113. //
(relating to application of social security tax on District of
Columbia credit unions) is repealed.
(3) Amendments of section 3121.--,
(A) Section 3121 (b)
// 26 USC 3121. //
(relating to employment) is amended--,
(i) by striking out "performed after 1936 and prior to 1955
which was employment for purposes of subchapter A of chapter 9 of
the Internal Revenue Code of 1939 under the law applicable to the
period in which such service was performed, and any service, of
whatever
nature, performed after 1954" and inserting in lieu
thereof", of whatever nature, performed", and
(ii) by striking out", in the case of service performed after 1954,".
(B) Section 3121 (b) (1)
// 26 USC 3121. //
is amended by striking out "65 Stat. 119;".
(C) Section 3121 (b) (6) (B) (v) is amended by striking out "
Secretary of the Treasury" and inserting in lieu thereof "
Secretary of Transportation".
(D) Section 3121 (g) (3) (relating to agricultrual labor) is
amended by striking out "46 Stat. 1550, Secs. 3;".
(E) Section 3121 (k) (1) (relating to exemption of certain
organizations) is amended by striking out subparagraphs (F) and
(H) and by redesignating subparagraph (G) as subparagraph (F).
(F) Section 3121 (1) (2) (relating to employees of foreign
subsidiaries) is amended by striking out", but in no case prior to
January 1, 1955".
(G) Section 3121 (m) (1) (relating to service in the uniformed
services) is amended by striking out "after December 1956".
(4) Amendments of section 3122.--The last sentence of section 3122 //
26 USC 3122. // (relating to Federal service) is amended by striking
out " Secretary" each place it appears and inserting in lieu thereof "
Secretary of Transportation".
(5) Amendment of section 3125.--Section 3125 (c) // 26 USC 3125. //
(relating to returns in the case of Governmental employees in the
District of Columbia) is amended by striking out " Commissioners of the
District of Columbia or such agents as they may designate" and by
inserting in lieu thereof " Mayor of the District of Columbia or such
agents as he may designate".
(6) Amendment of section 3201.--Section 3201 // 26 USC 3201. //
(relating to rate of tax on railroad employees) is amended--,
(A) by striking out "of the Internal Revenue Code of 1954" each
place it appears;
(B) by striking out "of such Code";
(C) by striking out "after September 30, 1973, as is" and
inserting in lieu thereof "as is"; and
(D) by striking out "any month after September 30, 1973" and
inserting in lieu thereof "any month".
(7) Amendments of section 3202.--,
(A) The second sentence of section 3202 (a)
// 26 USC 3202. //
(relating to reduction of tax by railroad employer) is amended--,
(i) by striking out "after September 30,1973," each place it appears;
(ii) by striking out "after September 30, 1973 and the aggregate" and
inserting in lieu thereof "and the aggregate";
(iii) by striking out "of the Internal Revenue Code of 1954" each place
it appears; and
(iv) by inserting a comma immediately after "for any month" each place
it appears.
(B) Section 3202 (b) (relating to indemnification of employer)
is amended by striking out "made".
(8) Amendments of section 3211.--Section 322 (a) // 26 USC 3211. //
(relating to rate of tax on railroad employee representatives) is
amended--,
(A) by striking out "3111(a), 3111(b)" and inserting in lieu
thereof "3 11 (a), and 3111(b)";
(B) by striking out "of the Internal Revenue Code of 1954" each
place it appears;
(C) by striking out "rendered by him after September 30, 1973,"
and inserting in lieu thereof "rendered by him"; and
(D) by striking out "after September 30, 1973".
(9) Amendments of section 3221.--,
(A) The first sentence of section 3221 (a)
// 26 USC 3221. //
(relating to rate of tax on railroad employers) is amended--,
(i) by striking out "after September 30, 1973," each place it appears;
(ii) by striking out "after September 30, 1973; except
that" and inserting in lieu thereof ", except that";
(iii) by striking out "after September 30, 1973 of the aggregate" and
inserting in lieu thereof "of the aggregate";
(iv) by striking out "of the Internal Revenue Code of 1954" each place
it appears; and
(v) by inserting a comma before "the tax imposed".
(B) Section 3221 (b) (relating to rate of tax on railroad
employers) is amended to read as follows:
"(b) The rate of tax imposed by subsection (a) shall be increased by
the rate of tax imposed with respect to wages by section 3111(a) plus
the rate imposed by section 3111(b)."
(C) Section 3221 (c) (relating to additional railroad
retirement tax) is amended--,
(i) by striking out "(1) at the rate of 2 cents for the period
beginning November 1, 1966, and ending March 31, 1970, and (2)
commencing April 1, 1970," and
(ii) by striking out "commencing with the quarter beginning April 1,
1970".
(10) Amendments of section 3231.--,
(A) Section 3231 (a)
// 26 USC 3231. //
(defining employer) is amended by striking out "44 Stat. 577;".
(B) Section 3231 (b) (defining employee) is amended by striking
out "50 Stat. 312;".
(C) Section 3231 (c) (defining employee representative) is
amended by striking out "44 Stat. 577;".
(D) Section 3231 (d) (7) (defining service) is amended by
striking out "50 Stat. 308;".
(11) Amendments of section 3301.--Section 3301
// 26 USC 3301. //
(relating to Federal unemployment tax rate) is amended--,
(A) by striking out "the calendar year 1970 and each calendar
year thereafter" and inserting in lieu thereof "each calendar
year", and
(B) by striking out the last sentence.
(12) Amendments of section 3302.--,
(A) Section 3302 (a)
// 26 USC 3302. //
(relating to credits against tax) is amended by striking out
"(10-month period in the case of October 31, 1972)".
(B) Section 3302 (b) (relating to additional credit) is
amended--,
(i) by striking out "(10-month period in the case of October 31,
1972)", and
(ii) by striking out "12 or 10-month period, as the case may be," and
inserting in lieu thereof "12-month period".
(C) (i) Section 3302 (c)
// 26 USC 3302. //
(relating to limitation on credits against unemployment tax) is
amended by striking out paragraph (2) and the unnumbered paragraph
immediately following such paragraph (2) (relating to advances
made to a State unemployment account before September 13, 1960),
and by redesignating paragraphs (3) and (4) as paragraphs (2) and
(3), respectively.
(ii) Section 3302 (c) (2) (relating to advances made to a State
unemployment account after September 12, 1960), as redesignated by
clause (i) of this subparagraph, is amended by striking out "on or
after the date of the enactment of the Employment Security Act of
1960", and by striking out "paragraphs (1) and (2)" and inserting
in lieu thereof "paragraph (1)".
(iii) Section 3302 (c) (3) (relating to reductions with respect
to certain agreements under the Trade Act of 1974), as
redesignated by clause (i) of this subparagraph, is amended by
striking out "paragraphs (1), (2), and (3)" and inserting in lieu
thereof "paragraphs (1) and (2)".
(iv) Section 3302 (d) (3) (relating to effect of repayment of
advances) is amended by striking out "or (3)".
(v) Section 3302 (d) (4), (5), and (6) (relating to special
rules) are each amended by striking out "subsection (c) (3)" each
place it appears and inserting in lieu thereof "subsection (c)
(2)".
(vi) Section 3302 (d) (7) (relating to determination and
certification of percentages) is amended by striking out
"subsection (c) (3) (B) or (C)" and inserting in lieu thereof
"subsection (c) (2) (B) or (C)".
(D) Section 3302 (d) (relating to special rules for credits
against the unemployment tax) is amended by striking out paragraph
(8) (a cross reference).
(13) Amendments to section 3303.--Section 3303 (b)
// 26 USC 3303. //
(relating to certification with respect to additional credit
allowance) is amended--,
(A) by striking out "(10-month period in the case of October
31, 1972)" each place it appears,
(B) by striking out "12 or 10-month period, as the case may
be," each place it appears in paragraphs (1) and (2), and
inserting in lieu thereof "12-month period", and
(C) by striking out "12 or 10-month period, as the case may
be," in paragraph (3) and inserting in lieu thereof "12- month
period,".
(14) Amendments to section 3304.--, (A) Section 3304 (a) (3)
// 26 USC 3304. //
(relating to requirements) is amended by striking out "49 Stat.
640; 52 Stat. 1104, 1105;".
(B) Section 3304 (c) (relating to certification) is amended by
striking out "(10-month period in the case of October 31, 1972)".
(15) Amendments of section 3305.--,
(A) Section 3305 (g)
// 26 USC 3305. //
(relating to vessels operated by general agents of the United
States) is amended by striking out "on or after July 1, 1953,".
(B) Section 3305 (h)
// 26 USC 3305. //
(relating to certain contributions to States) is amended by
striking out "on or after July 1, 1953, and".
(C) Section 3305 (j) (relating to denial of credits in certain
cases) is amended by striking out "after December 31, 1971,".
(16) Amendments of section 3306.--,
(A) Section 3306 (c) (9)
// 26 USC 3306. //
(relating to the exclusion of service performed by certain
employees and employee representatives from the definition of
employment) is amended by striking out "52 Stat. 1094, 1095;".
(B) Section 3306 (c) (18) (relating to the exclusion of certain
service performed by nonresident aliens from the definition of
employment) is amended by inserting after the " Immigration and
Nationality Act, as amended" the following: "(8 U.S.C. 1101 (a)
(15) (F) or (J))".
(C) Section 3306 (f) (relating to the definition of an
unemployment fund) is amended by striking out "49 Stat. 640; 52
Stat. 1104, 1105;".
(D) Section 3306 (n) (relating to vessels operated by general
agents of the United States) is amended by striking out "on or
after July 1, 1953,".
(17) Amendment of section 3402.--Section 3402 (l) (3) (B)
// 26 USC 3402. //
(relating to marital status) is amended by striking out "section
2(b)" and inserting in lieu thereof "section 2 (a)".
(b) Amendment Conforming to the Repeal of Section 3113.--, The table
of sections for subchapter B of chapter 21 is amended by striking out
the item relating to section 3113.
(c) Amendments to Provision Referring to Territories.--Sections 3401
(c) and 3404 // 26 USC 3401, 3403. // are each amended by striking out
" Territory," each place it appears.
(d) Effective Dates.--The amendments made by this section // 26 USC
3101 note. // shall apply with respect to wages paid after December 31,
1976, except that the amendments made to chapter 22 of the Internal
Revenue Code of 1954 // 26 USC 3201. // shall apply with respect to
compensation paid for services rendered after December 31, 1976.
SEC. 1904. AMENDMENTS OF SUBTITLE D; MISCELLANEOUS EXCISE TAXES.
(a) In General.--,
(1) Amendments of chapter 31.--,
(A) So much of chapter 31 (relating to retailers excise taxes)
as precedes section 4041 is amended to read as follows:
" CHAPTER 31--SPECIAL FUELS
" Sec. 4041. Imposition of tax."
(B) Section 4041 (g)
// 26 USC 4041. //
(relating to exemptions from fuel taxes) is amended to read as
follows:
"(g) Other Exemptions.--Under regulations prescribed by the
Secretary, no tax shall be imposed under this section--,
"(1) on any liquid sold for use or used as supplies for vessels
or aircraft (within the meaning of section 4221 (d) (3) );
"(2) with respect to the sale of any liquid for the exclusive
use of any State, any political subdivision of a State, or the
District of Columbia, or with respect to the use by any of the
foregoing of any liquid as a fuel;
"(3) upon the sale of any liquid for export, or for shipment to
a possession of the United States, and in due course so exported
or shipped; and
"(4) with respect to the sale of any liquid to a nonprofit
educational organization for its exclusive use, or with respect to
the use by a nonprofit educational organization of any liquid as a
fuel.
For purpses of paragraph (4), the term 'nonprofit educational
organization' means an educational organization described in section 170
(b) (1) (A) (ii) which is exempt from income tax under section 501 (a).
The term also includes a school operated as an activity of an
organization described in section 501 (c) (3) which is exempt from
income tax under section 501 (a), if such school normally maintains a
regular faculty and curriculum and normally has a regularly enrolled
body of pupils or students in attendance at the place where its
educational activities are regularly carried on."
(C) Section 4041
// 26 USC 4041. //
(relating to tax on fuels) is amended by adding at the end thereof
the following new subsection:
"(i) Sales by United States, Etc.--The taxes imposed by this section
shall apply with respect to liquids sold at retail by the United States,
or by any agency or instrumentality of the United States, unless sales
by such agency or instrumentality are by statute specifically exempted
from such taxes."
(D) Chapter 31 is amended by striking out section 4042 (a cross
reference) and subchapter F
// 26 USC 4042, 4054--4058. //
(special provisions applicable to retailers taxes).
(2) Amendments of section 4216.--,
(A) Section 4216
// 26 USC 4216. //
(relating to definition of price) is amended by redesignating
subsections (c), (f), and (g) as subsections (d), (e), and (f),
respectively.
(B) Paragraphs (3), (4), and (5) of section 4216 (b) (relating
to constructive sales price) are each amended by striking out
"subsections (a) and (f)" each place it appears and inserting in
lieu thereof "subsections (a) and (e)".
(3) Amendment of section 4217.--Section 4217 (d)
// 26 USC 4217. //
(relating to lease treated as sale) is amended by striking out
paragraph (4) (relating to certain 1958 transitional rules).
(4) Repeal of section 4226.--Section 4226
// 26 USC 4226. //
(relating to floor-stock taxes imposed before 1967) is repealed.
(5) Amendment of section 4227.--Section 4227
// 26 USC 4227. //
(relating to cross references) is amended to read as follows:
" SEC. 4227. CROSS REFERENCE.
" For credit for taxes on tires and inner tubes, see section 6416 (c)."
(6) Amendment of section 4263.--Section 4253
// 26 USC 4253. //
(relating to exemptions from the tax on communications services)
is amended by adding at the end thereof the following new
subsections:
"(i) State and Local Governmental Exemption.--Under regulations
prescibed by the Secretary, no tax shall be imposed under section 4251
upon any payment received for services or facilities furnished to the
government of any State, or any political subdivision thereof, of the
District of Columbia.
"(j) Exemption for Nonprofit Educational Organizations.--, Under
regulations prescribed by the Secretary, no tax shall be imposed under
section 4251 on any amount paid by a nonprofit educational organization
for services or facilities furnished to such organization. For purposes
of this subsection, the term 'nonprofit educational organization' means
an educational organization described in section 170 (b) (1) (A) (ii)
which is exempt from income tax under section 501 (a). The term also
includes a school operated as an activity of an organization described
in section 501 (c) (3) which is exempt from income tax under section 501
(a), if such school normally maintains a regular faculty and curriculum
and normally has a regularly enrolled body of pupils or students in
attendance at the place where its educational activities are regularly
carried on."
(7) Amendments of section 4261.--,
(A) Subsections (a) and (b) of section 4261
// 26 USC 4261. //
(relating to
tax on transportation of persons by air) are each
amended by
striking out "which begins after June 30, 1970,".
(B) Section 4261 (c) is amended by striking out "and begins after June
30, 1970".
(8) Amendment of section 4271.--Section 4271 (a)
// 26 USC 4271. //
(relating to tax on transportation of property by air) is amended
by striking out "which begins after June 30, 1970,".
(9) Repeal of section 4292.--Section 4292
// 26 USC 4292. //
(relating to State and local governmnetal exemption from the tax
on communications services) is repealed.
(10) Repeal of section 4294.--Section 4294
// 26 USC 4394. //
(relating to exemption of nonprofit educational organizations from
the tax on communications services) is repealed.
(11) Repeal of section 4295.--Section 4295
// 26 USC 4295. //
(a cross reference) is repealed.
(12) Amendment of chapter 34.--Chapter 34 (relating to
documentary stamp taxes) is amended to read as follws:
" CHAPTER 34--POLICIES ISSUED BY FOREIGN INSURERS
" Sec. 4371. Imposition of tax.
" Sect. 4372. Definitions.
" Sec. 4373. Exemptions.
" Sec. 4374. Liability for tax.
" SEC. 4371. // 26 USC 4371. // IMPOSITION OF TAX.
" There is hereby imposed, on each policy of insurance, indemnity
bond, annuity contract, or policy of reinsurance issued by any foreign
insurer or reinsurer, a tax at the following rates:
"(1) Casualty insurance and indemnity bonds.--4 cents on each
dollar, or fractional part thereof, of the premium paid on the
policy of casualty insurance or the indemnity bond, if issued to
or for, or in the name of, an insured as defined in section 4372(
d);
"(2) Life insurance, sickness and accident policies, and
annuity contracts.--1 cent on each dollar, or fractional part
thereof, of the premium paid on the policy of life, sickness, or
accident insurance, or annuity contract, unless the insurer is
subject to tax under section 819; and
"(3) Reinsurance.--1 cent on each dollar, or fractional part
thereof, of the premium paid on the policy of reinsurance covering
any of the contracts taxable under paragraph (1) or (2).
" SEC. 4372. // 26 USC 4372. // DEFINITIONS.
"(a) Foreign Insurer or Reinsurer.--For purposes of section 4371, the
term 'foreign insurer or reinsurer' means an insurer or reinsurer who is
a nonresident alien individual, or a foreign partnership, or a foreign
corporation. The term includes a nonresident alien individual, foreign
partnership, or foreign corporation which shall become bound by an
obligation of the nature of an indemnity bond. The term does not
include a foreign government, or municipal or other corporation
exercising the taxing power.
"(b) Policy of Casualty Insurance.--For purposes of section 4371 (1),
the term 'policy of casualty insurance' means any policy (other than
life) or other instrument by whatever name called whereby a contract of
insurance is made, continued, or renewed.
"(c) Indemnity Bond.--For purposes of this chapter, the term
'indemnity bond' means any instrument by whatever name called whereby an
obligation of the nature of an indemnity, fidelity, or surety bond is
made, continued, or renewed. The term includes any bond for
indemnifying any person who shall have become bound or engaged as
surety, and any bond for the due execution or performance of any
contract, obligation, or requirement, or the duties of any office or
position, and to account for money received by virtue thereof, where a
premium is charged for the execution of such bond.
"(d) Insured.--For purposes of section 4371 (1), the term 'insured'
means--,
"(1) a domestic corporation or partnership, or an individual
resident of the United States, against, or with respect to,
hazards, risks, losses, or liabilities wholly or partly within the
United States, or
"(2) a foreign corporation, foreign partnership, or nonresident
individual, engaged in a trade or business within the United
States, against, or with respect to, hazards, risds, losses, or
liabilities within the United States.
"(e) Policy of Oife, Sickness, or Accident Insurance, or Annuity
Contract.--For purposes of section 4371 (2), the term 'policy of life,
sickness, or accident insurance, or annuity contract' means any policy
or other instrument by whatever name called whereby a contract of
insurance or an annuity contract is made, continued, or renewed with
respect to the life or hazards to the person of a citizen or resident of
the United States.
"(f) Policy of Reinsurance.--For purposes of section 4371 (3), the
term 'policy of reinsurance' means any policy or other instrument by
whatever name called whereby a contract of reinsurance is made,
continued, or renewed against, or with respect to, any of the hazards,
risks, losses, or liabilities covered by contracts taxable under
paragraph (1) or (2) of section 4371.
" SEC. 4373. // 26 USC 4373. // EXEMPTIONS.
" The tax imposed by section 4371 shall not apply to--,
"(1) Domestic agent.--Any policy, indemnity bond, or annuity
contract signed or countersigned by an officer or agent of the
insurer in a State, or in the District of Columbia, within which
such insurer is authorized to do business: or
"(2) Indemnity bond.--Any indemnity bond required to be filed
by any person to secure payment of any pension, allowance,
allotment, relief, or insurance by the United States, or to secure
a duplicate for, or the payment of, any bond, note, certificate of
indebtedness, war-saving certificate, warrant, or check, issued by
the United States.
" SEC. 4374. // 26 USC 4374. // LIABILITY FOR TAX.
" The tax imposed by this chapter shall be paid, on the basis of a
return, by any person who makes, signs, issues, or sells any of the
documents and instruments subject to the tax, or for whose use or
benefit the same are made, signed, issued, or sold. The United States
or any agency or instrumentality thereof shall not be liable for the
tax."
(13) Amendment of section 4493.--,
// 26 USC 4493. //
(A) Section 4493 (b) (1) (relating to certain persons engaged in
foreign air commerce) is amended by striking out "beginning on or after
July 1, 1973".
(B) Section 4493 (b) (2) is amended by striking out the last sentence.
(14) Amendment of chapter 37.--So much of chapter 37 as
precedes section 4501 (relating to tax on sugar) is amended to
read as follows:
" CHAPTER 37--SUGAR
" Sec. 4501. Imposition of tax.
" Sec. 4502. Definitions.
" Sec. 4503. Exemptions for sugar manufactured for home
consumption."
(15) Repeal of sections 4591 through 4597.--,
// 26 USC 4591--4597. //
Chapter 38 (relating to import taxes on oleomargarine) is
repealed.
(16) Repeal of sections 4801 through 4806.--,
// 26 USC 4801--4806. //
Subchapter B of chapter 39 (relating to tax on white phosphorus
matches) is repealed.
(17) Repeal of sections 4811 through 4826.--,
// 26 USC 4811--4826. //
Subchapter C of chapter 39 (relating to tax on unadulterated
butter) is repealed.
(18) Repeal of sections 4881 through 4886.--,
// 26 USC 4881--4886. //
Subchapter E of chapter 39 (relating to tax on circulation other
than of national banks) is repealed.
(19) Amendment of section 4901.--,
// 26 USC 4901. //
Section 4901 (relating to payment of occupational taxes) is
amended by striking out subsection (c).
(20) Amendment of section 4905.--,
// 26 USC 4905. //
Section 4905 (a) (relating to liability for occupational taxes in
case of death or change of location) is amended by striking out
"wife" and inserting in lieu thereof "spouse".
(21) Repeal of section 4911 through 4931.--,
// 26 USC 4911--4931. //
(A) chapter 41 (relating to interest equalization tax) is repealed.
(B) The repeal made by subparagraph (A)
// 26 USC 4911 note. //
shall apply
with respect to acquisitions of stock and debt
obligations
made after June 30, 1974.
(22) Amendments of section 4973.--,
(A) So much of section 4973 (a)
// 26 USC 4973. //
(relating to tax on excess
contributions) as follows "of any individual," in
paragraph
(3) thereof is amended to read as follows:
"there is imposed for each taxable year a tax in an amount equal
to 6 percent of the amount of the excess contributions to such
individual's accounts, annuities, or bonds (determined as of the
close of the taxable year). The amount of such tax for any
taxable year shall not exceed 6 percent of the value of the
account, annuity, or bond (determined as of the close of the
taxable year). In the case of an endowment contract described in
section 408 (b), the tax imposed by this section does not apply to
any amount allocable to life, health, accident, or other insurance
under such contract. The tax imposed by this subsection shall be
paid by such individual."
(B) Section 4973 (c)
// 26 USC 4973. //
is amended by striking out "subsection
(a) (3)" and inserting in lieu thereof "subsection (a)
(2)".
(b) Conforming and Clerical Amendments.--,
(1) Amendments conforming to amendment of chapter 31.--,
(A) Section 6416 (a) (1)
// 26 USC 6416. //
is amended by striking out
"(retailers taxes)" and inserting in lieu thereof
"(special
fuels)".
(B) Section 6416 (e) is amended by striking out "subchapter E of".
(2) Amendment conforming to amendment of section 4216.--
Section 6416 (b) (1) is amended by striking out "section 4216 (f)
(2) and (3)" and inserting in lieu thereof "section 4216 (e) (2)
and (3)".
(3) Amendment conforming to the repeal of section 4226.--, The
table of sections for subchapter G of chapter 32 is amended by
striking out the item relating to section 4226.
(4) Amendment conforming to the repeal of sections 4292, 4294,
and 4295.--The table of sections for subchapter E of chapter 33 is
amended by striking out the items relating to sections 4292, 4294,
and 4295.
(5) Amendments conforming to the amendment of chapter 34.--,
(A) Section 7270
// 26 USC 7270. //
is amended by striking out "the affixing
of stamps on insurance policies, etc." and inserting in
lieu
thereof "liability for tax on policies issued by
foreign
insurers".
(B) Section 6808
// 26 USC 6808. //
is amended by striking out paragraph
(4).
(6) Amendments conforming to the amendment of chapter 37.--,
(A) Section 7240
// 26 USC 7240. //
is amended by striking out "subchapter
A of".
(B) Section 7655 (a)
// 26 USC 7655. //
is amended--,
(i) by striking out " Subchapter A of chapter 37" in paragraph (5) and
inserting in lieu thereof " Chapter 37", and
(ii) by redesignating paragraph (5) as paragraph (3).
(7) Amendments conforming to repeal of sections 4591 through
4597.--,
(A) Section 6808
// 26 USC 6808. //
is amended by striking out paragraph
(7).
(B) (i) Section 7234
// 26 USC 7234. //
(relating to violations of laws concerning
oleomargarine or adulterated butter operations) is
repealed.
(ii) The table of sections for part II of subchapter A of chapter 75 is
amended by striking out the item relating to section 7234.
(C) (i) Section 7265
// 26 USC 7265. //
(relating to other offenses concerning
oleomargarine or adulterated butter operations) is
repealed.
(ii) The talbe of sections for subchapter B of chapter 75 is amended by
striking out the item relating to section 7265.
(D) Section 7611 (a), as redesignated by this Act, is amended by
striking out paragraph (1).
(E) The table of chapters for subtitle D is amended by striking out the
item relating to chapter 38.
(8) Amendments conforming to repeal of sections 4801 through
4806.--,
(A) Section 4905 (b)
// 26 USC 4905. //
is amended to read as follows:
"(b) Registration.--,
" For registration in case of wagering, see section 4412."
(B) Section 6808
// 26 USC 6808. //
is amended by striking out paragraph
(12).
(C) Section 7012
// 26 USC 7012. //
is amended by striking out subsection
(e).
(D) (i) Section 7239
// 26 USC 7239. //
(relating to violations of laws concerning
white phosphorus matches) is repealed.
(ii) The table of sections for part II of subchapter A of chapter 75 is
amended by striking out the item relating to section 7239.
(E) (i) Sections 7267 and 7274
// 26 USC 7267, 7274. //
(relating to offenses and
penalties concerning white phosphorus matches) are each
repealed.
(ii) The table of sections for subchapter B of chapter 75 is amended by
striking out the items relating to sections 7267 and 7274.
(F) Section 7272 (b)
// 26 USC 7272. //
is amended by striking out "4804
(d),".
(G) Section 7303
// 26 USC 7303. //
is amended by striking out paragraph
(6).
(H) (i) Part II of subchapter C of chapter 75
// 26 USC 7201. //
(relating
to provisions common to forfeitures) is amended by
striking
out section 7328 (relating to confiscation of white
phosphorus
matches), and by redesignating section 7329
// 26 USC 7328, 7329. //
(relating to cross
references) as section 7328.
(ii) The table of sections for part II of subchapter C of chapter 75 is
amended by striking out the last two items and inserting in lieu thereof
the following:
" Sec. 7328. Cross references."
(9) Amendments conforming to repeal of sections 4811 through
4826.--,
(A) Section 6808
// 26 USC 6808. //
(relating to cross references) is amended
by striking out paragraph (10).
(B) (i) Section 7235
// 26 USC 7235. //
(relating to violations of laws concerning
adulterated butter and process or renovated butter)
is repealed.
(ii) The table of sections for part II of subchapter A of chapter 75 is
amended by striking out the item relating to section 7235.
(C) (i) Section 7264
// 26 USC 7264. //
(relating to offenses concerning renovated
or adulterated butter) is repealed.
(ii) The table of sections for subchapter B of chapter 75 is amended by
striking out the item relating to section 7264.
(D) Section 7303
// 26 USC 7303. //
is amended by striking out paragraphs
(3), (4), and (5), and by redesignating paragraphs (7)
and
(8) as paragraphs (2) and (3), respectively.
(E) Section 7611 (a), as redesignated by this Act, is amended by
striking out paragraph (2), and by redesignating paragraphs (5) and (6)
as paragraphs (1) and (2), respectively.
(10) Amendments conforming to the repeal of sections 4911
through 4931.--,
(A) (i) (I) Section 263,
// 26 USC 263. //
as amended by this Act, is amended
by striking out subsections (a) (3) and (d) (relating
to
the
allowance of deductions for payment of interest
equalization
tax), and by redesignating subsections (e), (f), and
(g)
as
subsections (d), (e), and (f), respectively.
(II) Section 263 (d), as redesignated by clause (i) (I) of this
subparagraph, is amended by striking out "subsection (f)" and inserting
in lieu thereof "subsection (e)".
(ii) Section 6011
// 26 USC 6011. //
(relating to requirement of return, statement,
or list) is amended by striking out subsection (d)
(relating to interest equalization tax returns, etc.),
and by
redesignating subsections (e) and (f) as subsections
(c)
and
(d), respectively.
(iii) (I) Section 6076
// 26 USC 6076. //
(relating to time for filing interest
equalization tax returns) is repealed.
(II) The table of sections for part V of subchapter A of chapter 61 is
amended by striking out the item relating to section 6076.
(iv) Section 6611
// 26 USC 6611. //
(relating to interest on overpayments)
is amended by striking out subsection (h) (relating to
overpayments
of interest equalization tax) and by redesignating
subsection (i) as subsection (h).
(v) Section 6651
// 26 USC 6651. //
(relating to failure to file tax return
or to pay tax) is amended by striking out subsection
(e)
(relating to certain interest equalization tax
returns).
(vi) (I) Section 6680
// 26 USC 6680. //
(relating to failure to file interest
equalization tax returns) is repealed.
(II) The table of sections for subchapter B of chapter 68 is amended by
striking out the item relating to section 6680.
(vii) The amendments made by this subparagraph
// 26 USC 263 note. //
shall
apply with respect to acquisitions of stock or debt
obligations
made after June 30, 1974, except that the repeal of
paragraph
(2) of section 6011 (d) under clause (ii) shall apply
with
respect to loans and commitments made after such date.
(B) Section 861 (a) (1) (G)
// 26 USC 861. //
(relating to income from
sources within the United States) is amended--,
(i) by striking out "section 4912 (c)" and inserting in lieu thereof
"subsection (c) of section 4912 (as in effect before July 1, 1974)";
and
(ii) by striking out "section 4912 (c) (2)" and inserting in lieu
thereof "subsection (c) (2) of such section".
(C) The second sentence of section 1232 (b) (2)
// 26 USC 1232. //
(relating
to the definition of the issue price of bonds and other
evidences
of indebtedness) is amended by striking out "section
4911"
and inserting in lieu thereof "section 4911, as in
effect before
July 1, 1974".
(D) (i) Section 6681
// 26 USC 6681. //
(relating to false equalization tax
certificates) is repealed.
(ii) The table of sections for subchapter B of chapter 68 is amended by
striking out the item relating to section 6681.
(iii) The amendments made by this subparagraph
// 26 USC 6681 note. //
shall
apply with respect to actions occurring after June 30,
1974.
(E) (i) Section 6689
// 26 USC 6689. //
(relating to failure by certain foreign
issurers and obligors to comply with United States
investment
equalization tax requirements) is repealed.
(ii) The table of sections for subchapter B of chapter 68 is amended by
striking out the item relating to section 6689.
(iii) The amendments made by this subparagraph
// 26 USC 6689 note. //
shall
apply with respect to stock or debt obligations issued
after
June 30, 1974.
(F) (i) Section 7241
// 26 USC 7241. //
(relating to penalty for fraudulent
equalization tax certificates) is repealed.
(ii) The table of sections for part II of subchapter A of chapter 75 is
amended by striking out the item relating to section 7241.
(iii) The amendments made by this subparagraph
// 26 USC 7241 note. //
shall
apply with respect to statements and certificates
executed
after June 30, 1974.
(G) The table of chapters for subtitle D is amended by striking out the
item relating to chapter 41.
(c) Amendment to Provision Referring to Territories.--Section 4482
(c) (1) // 26 USC 4482. // is amended by striking out ", a Territory of
the United States,".
(d) Effective Date.--Except as otherwise provided in this section, //
26 USC 4041 note. // the amendments made by this section shall take
effect on the first day of the first month which begins more than 90
days after the date of the enactment of this Act.
SEC. 1905. AMENDMENTS OF SUBTITLE E; ALCOHOL, TOBACCO, AND CERTAIN
OTHER EXCISE TAXES.
(a) In General.--,
(1) Amendment of section 5005.--Section 5005 (c) (2)
// 26 USC 5005. //
(relating to transfers in bond of distilled spirits) is amended by
striking out the last two sentences and inserting in lieu thereof
the following: " Such relief from liability shall be effective
from the time of removal from the transferor's bonded premises, or
from the time of divestment of interest, whichever is later."
(2) Amendments of section 5008.--,
(A) Section 5008 (b) (1)
// 26 USC 5008. //
(relating to abatement, remission,
refund, and allowance for loss of destruction of
distilled
spirits) is amended by inserting immediately after "the
tax
imposed by this chapter" the following:"or by section
7652".
(B) Section 5008 (b) (2) is amended by striking out "the taxes imposed
under section 5001 (a) (1)" and all that follows and inserting in lieu
thereof the following: "the taxes imposed under section 5001 (a) (1),
under subpart B of this part, or under section 7652 on the spirits so
destroyed, to the proprietor of the distilled spirits plant who withdrew
the distilled spirits on payment or determination of tax."
(C) Subsections (c) (1) and (d) (1) of section 5008 are each amended by
inserting immediately after "under section 5001 (a) (1)" the
following:"or under section 7652".
(D) Section 5008 (d) (1) is amended by striking out", on or after July
1,1959,".
(3) Amendment of section 5009.--Section 5009 (b) (3)
// 26 USC 5009. //
is amended by striking out "46 Stat. 694;".
(4) Amendment of section 5025.--Section 5025 (j)
// 26 USC 5025. //
(relating to stabilization of distilled spirits) is amended by
striking out "the bottling of distilled spirits," and inserting in
lieu thereof "the bottling of distelled spirits, or preparatory to
exportation,".
(5) Amendment of section 5054.--Section 5054
// 26 USC 5054. //
(relating to determination and collection of tax on beer) is
amended by striking out subsection (c) (relating to stamps or
other devices as evidence of payment of tax) and by redesignating
subsection (d) as subsection (c).
(6) Amendments of section 5061.--,
(A) Section 5061 (a)
// 26 USC 5061. //
(relating to collections of alcohol
taxes) is amended by striking out the last sentence.
(B) Section 5061 (b) (relating to methods of collection) is amended to
read as follows:
"(b) Exceptions.--Notwithstanding the provisions of subsection (a),
any taxes imposed on, or amounts to be paid or collected in respect of,
distilled spirits, wines, rectified distilled spirits and wines, and
beer under--,
"(1) section 5001 (a), (6), or (7),
"(2) section 5006 (c) or (d),
"(3) section 5026 (a) (2),
"(4) section 5041 (d),
"(5) section 5043 (a) (3),
"(6) section 5054 (a) (3) or (4), or
"(7) section 5505 (a),
shall be immediately due and payable at the time provided by such
provisions (or if no specific time for payment is provided, at the time
the event referred to in such provision occurs). Such taxes and amounts
shall be assessed and collected by the Secretary on the basis of the
information available to him in the same manner as taxes payable by
return but with respect to which no return has been filed."
(C) Section 5061 (c) (relating to applicability of other
provisions of law) is amended to read as follows:
"(c) Import Duties.--The internal revenue taxes imposed by this part
shall be in addition to any import duties unless such duties are
specifically designated as being in lieu of internal revenue tax."
(7) Amendment of section 5113.--Section 5113 (f) (1)
// 26 USC 5113. //
(relating to retail dealers in liquors) is amended by striking out
"wines or beer" and inserting in lieu thereof "distilled spirits,
wines, or beer".
(8) Amendments of section 5117.--Section 5117
// 26 USC 5117. //
(relating to prohibited purchases by dealers) is amended by
redesignating subsection (b) as subsection (c) and by inserting
after subsection (a) the following new subsection:
"(b) Limited Retail Dealers.--A limited retail dealer may lawfully
purchase distilled spirits for resale from a retail dealer in liquors."
(9) Amendment of section 5121.--Section 5121 (c)
// 26 USC 5121. //
(relating to limited retail dealers) is amended to read as
follows:
"(c) Limited Retail Dealers.--Every limited retail dealer shall pay a
special tax of $4.50 for each calendar month in which sales are made as
such dealer; except that the special tax shall be $2.20 for each
calendar month in which only sales of beer or wine are made."
(10) Amendment of section 5122.--Section 5122 (c)
// 26 USC 5122. //
(relating to definition of limited retail dealer) is amended by
striking out "beer or wine" each place it appears and inserting in
lieu thereof "distilled spirits, wine, or beer".
(11) Amendment of section 5131.--Section 5131 (a)
// 26 USC 5131. //
(relating to eligibility for drawback) is amended by striking out
"produced in a domestic registered distillery or industrial
alcohol plant and withdrawn from bond, or using distilled spirits
withdrawn from the bonded premises of a distilled spirits plant,".
(12) Amendment of section 5142.--Section 5142 (c)
// 26 USC 5142. //
(relating to payment of occupational taxes) is amended to read as
follows:
"(c) How Paid.--,
"(1) Payment by return.--The special taxes imposed by this part
shall be paid on the basis of a return under such regulations as
the Secretary shall prescribe.
"(2) Stamp denoting payment of tax.--After receiving a properly
executed return and remittance of any special tax imposed by this
subpart, the Secretary shall issue to the taxpayer an appropriate
stamp as a receipt denoting payment of the tax. This paragraph
shall not apply in the case of a return covering liability for a
past period."
(13) Amendments of section 5171.--Section 5171 (b)
// 26 USC 5171. //
(relating to permits for operation of business as distillers,
etc.) is amended--,
(A) in paragraph (1), by striking out "49 Stat. 978;", and
(B) by striking out paragraph (3) (relating to continuance of business
after June 30, 1959, pending application for permit).
(14) Amendment of section 5174.--Section 5174 (a) (2) (A)
// 26 USC 5174. //
(relating to withdrawal bonds for distilled spirits) is amended by
striking out "such spirits" and inserting in lieu thereof
"distilled spirits from bond".
(15) Amendments of section 5232.--Section 5232 (a)
// 26 USC 5232. //
(relating to transfer of imported distilled spirits) is amended by
striking out "and the importer" and inserting in lieu thereof "and
the United States,".
(16) Amendment of section 5233.--Section 5233 (b) (4)
// 26 USC 5233. //
(relating to bottling requirements) is amended by striking out "49
Stat. 977;".
(17) Amendment of section 5234.--The first sentence of section
5234 (a) (2)
// 26 USC 5234. //
(relating to the mingling of distilled spirits) is amended by
striking out "8 years" and inserting in lieu thereof "20 years".
(18) Amendment of section 5314.--Section 5314 (a) (2)
// 26 USC 5314. //
(relating to application of certain provisions to Puerto Rico) is
amended by striking out "section 5001 (a) (4)" and inserting in
lieu thereof "section 5001 (a) (10)".
(19) Repeal of section 5315.--Section 5315
// 26 USC 5315. //
(relating to the status of certain distilled spirits on July 1,
1959) is repealed.
(20) Amendments of section 5368.--,
// 26 USC 5368. //
(A) The heading of section 5368 is amended to read as follows:
" SEC. 5368. GAUGING AND MARKING."
(B) Section 5368 (b) (relating to removal of wines) is amended
to read as follows:
"(b) Marking.--Wines shall be removed in such containers (including
vessels, vehicles, and pipelines) bearing such marks and labels,
evidencing compliance with this chapter, as the Secretary may by
regulations prescribe."
(21) Amendment of section 5392.--Section 5392 (f)
// 26 USC 5392. //
(defining own production) is amended by striking out "49 Stat.
990;".
(22) Amendments of section 5601.--Section 5601 (b)
// 26 USC 5601. //
(relating to presumptions in the case of criminal penalties) is
amended to read as follows:
"(b) Presumption.--Whenever on trial for violation of subsection (a)
(4) the defendant is shown to have been at the site or place where, and
at the time when, the business of a distiller or rectifier was so
engaged in or carried on, such presence of the defendant shall be deemed
sufficient evidence to authorize conviction, unless the defendant
explains such presence to the satisfaction of the jury (or of the court
when tried without jury)."
(23) Amendments of section 5685.--,
(A) Section 5685 (a)
// 26 USC 5685. //
(relating to penalty for possession
of devices for emitting gas, smoke, itc.) is amended by
striking
out "section 5848" and inserting in lieu thereof
"section 5845".
(B) Section 5685 (c) (relating to forfeiture of firearms, devices,
etc.) is amended by striking out "section 5862"
and
inserting in lieu thereof "section 5872".
(C) Section 5685 (d) (relating to the definition of machine gun) is
amended to read as follows:
"(d) Definition of Machine Gun.--As used in this section, the term
'machine gun' means a machinegun as defined in section 5845 (b)."
(24) Amendment of section 5701.--Section 5701 (e)
// 26 USC 5701. //
(relating to imported tobacco products, etc.) is amended by
striking out "such articles" and inserting in lieu thereof "such
articles, unless such import duties are imposed in lieu of
internal revenue tax".
(25) Amendments of section 5703.--,
(A) Section 5703 (a) (2)
// 26 USC 5703. //
(relating to transfer of liability
for tobacco taxes) is amended by adding at the end
thereof
the following new sentence: " All provisions of this
chapter
applicable to tobacco products and cigarette papers and
tubes
in bond shall be applicable to such articles returned
to
bond
upon withdrawal from the market or returned to bond
after
previous removal for a tax-exempt purpose."
(B) The second sentence of section 5703 (b) (relating to method of
payment of tobacco taxes) is amended by striking out", except that the
taxes shall continue to be paid by stamp until the Secretary or his
delegate provides, by regulations, for the payment of the taxes on the
basis of a return".
(C) Section 5703 is amended by striking out subsection (c) (relating to
stamps to evidence tobacco taxes) and by redesignating subsections (d)
and (e) as subsections (c) and (d), respectively.
(26) Amendments of section 5704.--Subsections (c) and (d) of
section 5704
// 26 USC 5704. //
(relating to exemptions from tobacco taxes) are each amended by
inserting after "to a manufacturer of tobacco porducts or
cigarette papers and tubes" the following: "or to the proprietor
of an export warehouse".
(27) Amendment of section 5712.--Section 5712
// 26 USC 5712. //
(relating to application for permit) is amended by striking out
the last sentence.
(28) Amendments of section 5723.--,
(A) The heading of section 5723
// 26 USC 5723. //
is amended by striking
out " NOTICES, and STAMPS" and inserting in lieu
thereof
" AND NOTICES".
(B) Section 5723 (b) (relating to marks, and so forth, on packages) is
amended to read as follows:
"(b) Marks, Labels, and Notices.--Every package of tobacco products
or cigarette papers or tubes shall, before removal, bear the marks,
labels, and notices, if any, that the Secretary by regulation
prescribes."
(b) Conforming and Clerical Amendments.--,
(1) Amendments conforming to amendment of section 5054.--,
(A) Section 5676
// 26 USC 5676. //
(relating to beer stamp penalties) is
repealed.
(B) The table of sections for part III of subchapter J of chapter 51 is
amended by striking out the item relating to section 5676.
(2) Amendments conforming to amendments of section 5061.--,
(A) Section 5007 (b) (1)
// 26 USC 5007. //
is amended by striking out the
second sentence.
(B) Section 5026 (b)
// 26 USC 5026. //
is amended by striking out " Except
as provided in subsection (a) (2), the taxes" and
inserting
in lieu thereof " The taxes".
(C) Section 5043 (b)
// 26 USC 5043. //
is amended by striking out " Except
as provided in subsection (a) (3), the taxes" and
inserting
in lieu thereof " The taxes".
(D) Section 5662
// 26 USC 5662. //
is amended by striking out "stamp,"
each place it appears.
(E) (i) Section 5689
// 26 USC 5689. //
(relating to penalty and forfeiture
for tampering with a stamp machine) is repealed.
(ii) The table of sections for part IV of subchapter J of chapter 51 is
amended by striking out the item relating to section 5689.
(iii) Section 5061
// 26 USC 5061. //
is amended by striking out subsection
(d).
(3) Amendments conforming to amendment of section 5142.--,
(A) (i) Section 5104
// 26 USC 5104. //
(relating to method of payment of
tax on stills) is repealed.
(ii) The table of sections for subpart C of part II of subchapter A of
chapter 51 is amended by striking out the item relating to section 5104.
(B) Section 5111 (a)
// 26 USC 5111. //
is amended by striking out the second
sentence.
(C) Section 5121 (a)
// 26 USC 5121. //
is amended by striking out the second
sentence.
(D) (i) Section 5144
// 26 USC 5144. //
(relating to supply of stamps) is
repealed.
(ii) The table of sections for subpart G of part II of subchapter A of
chapter 51 is amended by striking out the item relating to section 5144.
(E) Section 5148 (3)
// 26 USC 5148. //
is amended by striking out "penalties"
and inserting in lieu thereof "penalties, authority for
assessments,".
(4) Amendment conforming to the repeal of section 5315.--, The
table of sections for part III of subchapter E of chapter 51 is
amended by striking out the item relating to section 5315.
(5) Amendment conforming to the amendment of section 5368.--
The item relating to section 5368 in the table of sections for
part II of subchapter F of chapter 51 is amended to read as
follows:
" Sec. 5368. Gauging and marking."
(6) Amendments conforming to the amendment of section 5601.--,
(A) Section 5105 (b) (2)
// 26 USC 5105. //
is amended by striking out", 5601
(b) (1),".
(B) Section 5177 (b) (2)
// 26 USC 5177. //
is amended by striking out "5601
(b) (2)," and inserting in lieu thereof "5601 (b),".
(C) Section 5179 (b) (1)
// 26 USC 5179. //
is amended by striking out ", 5601
(b) (1),".
(D) Section 5222 (d)
// 26 USC 5222. //
is amended by striking out "5601(b)
(3), 5601 (b) (4),".
(E) Section 5505 (i)
// 26 USC 5505. //
is amended by striking out "5601 (b)
(1),".
(7) Amendments conforming to the amendment of section 5723.--,
(A) Paragraphs (2) and (3) of section 5751 (a)
// 26 USC 5751. //
are each
amended by striking out "notices, and stamps" and
inserting
in lieu thereof "and notices".
(B) (i) Section 5752 is amended to read as follows:
" SEC. 5752. // 26 USC 5752. // RESTRICTIONS RELATING TO MARKS,
NOTICES, AND PACKAGES.
" No person shall, with intent to defraud the United States, destroy,
obliterate, or detach any mark, label, or notice prescribed or
authorized, by this chapter or regulations thereunder, to appear on, or
be affixed to any package of tobacco products or cigarette papers or
tubes, before such package is emptied."
(ii) Section 5762 (a)
// 26 USC 5762. //
is amended by striking out paragraphs
(6), (7), (8), (9), (10), and (11) and inserting in
lieu
thereof
the following:
"(6) Destroying, obliterating, or detaching marks, labels, or
notices before packages are emptied.--Violates any provision of
section 5752;".
(iii) The item relating to section 5752 in the table of sections for
subchapter E of chapter 52 is amended to read as follows:
" Sec. 5752. Restrictions relating to marks, labels,
notices, and
packages."
(C) (i) Section 5763 (a) (2)
// 26 USC 5763. //
is amended by striking out
"notices, and stamps" and inserting in lieu thereof
"and
notices".
(ii) Section 5763 (b) is amended by striking out "internal revenue
stamps,".
(D) The item relating to section 5723 in the table of sections for
subchapter C of chapter 52 is amended to read as follows:
" Sec. 5723. Packages, marks, labels, and notices."
(c) Amendments to Provisions Referring to Territories.--,
(1) Section 5114 (b)
// 26 USC 5114. //
is amended by striking out "or Territory" each place it appears
and by striking out " Territories,".
(2) Section 5214 (a) (2)
// 26 USC 5214. //
is amended by striking out "or Territory" each place it appears.
(3) Section 5272 (b)
// 26 USC 5272. //
is amended by striking out "and Territories".
(4) Section 5362 (c) (9)
// 26 USC 5362. //
is amended by striking out "and Territories".
(5) Section 5551 (b) (2)
// 26 USC 5551. //
is amended by striking out " Territory, or".
(6) Section 5685 (a)
// 26 USC 5685. //
is amended by striking out " Territory or".
(d) Effective Date.--The amendments made by this section // 26 USC
5005 note. // shall take effect on the first day of the first month
which begins more than 90 days after the date of the enactment of the
Act.
SEC. 1906. AMENDMENTS OF SUBTITLE F; PORCEDURE AND ADMINISTRATION.
(a) In General.--, (1) Amendments of section 6013.--,
(A) Section 6013 (b) (2) (C)
// 26 USC 6013. //
(relating to petition to the Tax Court) is amended by striking out
"of the United States".
(B) The heading of section 6013 (d) is amended to read as
follows:
"(d) Special Rules.--".
(C) Section 6013 (d) (1) (relating to joint return after death
of one spouse) is amended by striking out "and" at the end of
subparagraph (A) and inserting in lieu thereof "or", and by
striking out "and" at the end of the subparagraph (B).
(2) Amendment of section 6015.--Section 6015
// 26 USC 6015. //
(relating to declaration of estimated tax by individuals) is
amended by striking out subsection (j) (relating to an effective
date provision).
(3) Amendment of section 6037.--Section 6037
// 26 USC 6037. //
(relating to returns of subchapter S corporations) is amended by
striking out "section 1371 (a) (2)" and inserting in lieu thereof
"section 1371 (b)".
(4) Amendment of section 6046.--Section 6046 (e)
// 26 USC 6046. //
(relating to information as to organization of foreign
corporation) is amended to read as follows:
"(e) Limitation.--No information shall be required to be furnished
under this section with respect to any foreign corporation unless such
information was required to be furnished under regulations which have
been in effect for at least 90 days before the date on which the United
States citizen, resident, or person becomes liable to file a return
required under subsection (a)."
(5) Amendment of section 6051.--Section 6051 (a)
// 26 USC 6051. //
(relating to information required to be furnished to employees) is
amended by striking out "and" where it appears at the end of
paragraph (6).
(6) Amendments of section 6065.--Section 6065
// 26 USC 6065. //
(relating to verification of returns) is amended by striking out
subsection (b) (relating to verification by oath), and by striking
out in subsection (a) the following: "(a) Penalties of
Perjury.--".
(7) Repeal of section 6105.--Section 6105
// 26 USC 6105. //
(relating to compilation of data for certain excess profits tax
cases) is repealed.
(8) Amendment of section 6111.--Section 6111
// 26 USC 6111. //
(relating to cross references), as redesignated by this Act, is
amended to read as follows:
" SEC. 6111. CROSS REFERENCE.
" For inspection of records, retruns, etc., concerning gasoline or
libricating oils, see section 4102."
(9) Amendment of section 6152.--Section 6152 (a) (1)
// 26 USC 6152. //
(relating to installment payments by corporations) is amended to
read as follows:
"(1) Corporations.--A corporation subject to the taxes imposed
by chapter 1 may
// 26 USC 1. //
may elect to pay the unpaid amount of such taxes in two equal
installments."
(10) Amendments of section 6154.--,
(A) Section 6154 (c) (1) (B)
// 26 USC 6154. //
(relating to definition of estimated tax) is amended--,
(i) by adding "and" after the comma at the end of clause (i), and
(ii) by striking out clauses (ii) and (iii) and inserting in lieu
thereof the following:
"(ii) in the case of a taxable year beginning before January 1,1977,
the amount of the corporation's temporary estimated tax exemption for
such year."
(B) Section 6154 (c) (2) (A) (ii) (relating to temporary
estimated tax payments) is amended by striking out "clauses (ii)
and (iii)" and inserting in lieu thereof "clause (ii)".
(C) Section 6154 (c) (2) (B) (relating to estimated tax) is
amended by striking out the following: "1968, 1969, 1970, 1971,
and 1972-----100 percent "1973---------------------------------80
percent "1974---------------------------------60 percent".
(D) Section 6154 (c) (relating to estimated tax) is amended by
striking out paragraph (3) (relating to transitional exemption for
taxable years beginning before 1972).
(11) Amendments of section 6157.--,
(A) Section 6157
// 26 USC 6157. //
(relating to payment of Federal unemployment tax) is amended by
striking out subsection (c) (relating to special rules for 1970
and 1971), and by redesignating subsection (d) as subsection (c).
(B) Section 6157 (a) is amended by striking