104 STAT. 1388-494 PUBLIC LAW 101-508 —NOV. 5, 1990 such election to treat such payments as pa3anents which are not qualified payments. "(ii) ELECTION TO HAVE INTEREST TREATED AS QUAU- FiED PAYMENT.— A transferor or any applicable family member may elect to treat any distribution right as a qualified payment, to be paid in the amounts and at the times specified in such election. The preceding sentence shall apply only to the extent that the amounts and times so specified are not inconsistent with the underlying legal instrument giving rise to such right. "(iii) ELECTIONS IRREVOCABLE. —Any election under this subparagraph with respect to an interest shall, once made, be irrevocable. " (d) TRANSFER TAX TREATMENT OF CUMULATIVE BUT UNPAID DISTRIBUTIONS. — "(1) IN GENERAL. — If a taxable event occurs with respect to any distribution right to which subsection (a)(3)(B) applied, the following shall be increased by the amount determined under paragraph (2): "(A) The taxable estate of the transferor in the case of a taxable event described in paragraph (3)(A)(i). "(B) The taxable gifts of the transferor for the calendar year in which the taxable event occurs in the case of a taxable event described in paragraph (3)(A) (ii) or (iii). " (2) AMOUNT OF INCREASE.— "(A) IN GENERAL.—The amount of the increase determined under this paragraph shall be the excess (if any) of— "(i) the value of the qualified payments payable during the period beginning on the date of the transfer under subsection (a)(1) and ending on the date of the taxable event determined as if— "(I) all such payments were paid on the date payment was due, and (II) all such payments were reinvested by the transferor as of the date of pa3mtient at a yield equal to the discount rate used in determining the value of the applicable retained interest described in subsection (a)(1), over "(ii) the value of such payments paid during such period computed under clause (i) on the basis of the time when such payments were actually paid. " (B) LIMITATION ON AMOUNT OF INCREASE. — "(i) IN GENERAL.—The amount of the increase under subparagraph (A) shall not exceed the applicable percentage of the excess (if any) of— "(I) the value (determined as of the date of the taxable event) of all equity interests in the entity which are junior to the applicable retained interest, over "(II) the value of such interests (determined as of the date of the transfer to which subsection (a)(1) applied). "(ii) APPLICABLE PERCENTAGE. —For purposes of clause (i), the applicable percentage is the percentage determined by dividing— "(I) the number of shares in the corporation held (as of the date of the taxable event) by the trans-
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