Page:United States Statutes at Large Volume 104 Part 2.djvu/899

This page needs to be proofread.

PUBLIC LAW 101-508—NOV. 5, 1990 104 STAT. 1388-491 (c) EFFECTIVE DATE. —The simendments made by this section shall 26 USC 2036 apply in the case of property transferred after December 17, 1987. note. SEC. 11602. SPECIAL VALUATION RULES. (a) IN GENERAL.— Subtitle B is amended by adding at the end thereof the following new chapter: "CHAPTER 14—SPECIAL VALUATION RULES "Sec. 2701. Special valuation rules in case of transfers of certain interests in corporations or partnerships. "Sec. 2702. Special valuation rules in case of transfers of interests in trusts. "Sec. 2703. Certain rights and restrictions disregarded. "Sec. 2704. Treatment of certain lapsing rights and restrictions. "SEC. 2701. SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF CER- TAIN INTERESTS IN CORPORATIONS OR PARTNERSHIPS. "(a) VALUATION RULES.— "(1) IN GENERAL. —Solely for purposes of determining whether a transfer of an interest in a corporation or partnership to (or for the benefit of) a member of the transferor's family is a gift (and the value of such transfer), the value of any right— "(A) which is described in subparagraph (A) or (B) of subsection (b)(l), and "(B) which is with respect to any applicable retained interest that is held by the transferor or an applicable family member immediately after the transfer, shall be determined under paragraph (3). This paragraph shall not apply to the transfer of any interest for which market quotations are readily available (as of the date of transfer) on an established securities market. "(2) EXCEPTIONS FOR MARKETABLE RETAINED INTERESTS, ETC. — Paragraph (1) shall not apply to any right with respect to an applicable retained interest if— "(A) market quotations are readily available (as of the date of the transfer) for such interest on an established securities market, "(B) such interest is of the same class as the transferred interest, or "(C) such interest is proportionally the same as the trsinsferred interest, without regard to nonlapsing differences in voting power (or, for a partnership, nonlapsing differences with respect to management and limitations on liability). Subparagraph (C) shall not apply to any interest in a partnership if the transferor or an applicable family member has the right to alter the liability of the transferee of the transferred property. Except as provided by the Secretary, any difference described in subparagraph (C) which lapses by reason of any Federal or State law shall be treated as a nonlapsing difference for purposes of such subparagraph. " (3) VALUATION OF RIGHTS TO WHICH PARAGRAPH (i) APPLIES.— "(A) IN GENERAL.— The value of any right described in paragraph (1), other than a distribution right which consists of a right to receive a qualified payment, shall be treated as being zero. " (B) VALUATION OF QUALIFIED PAYMENTS. —I f —