Page:United States Statutes at Large Volume 104 Part 2.djvu/903

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PUBLIC LAW 101-508 —NOV. 5, 1990 104 STAT. 1388-495 feror which are applicable retained interests of the same class, by "(ID the total number of shares in such corporation (as of such date) which are of the same class as the class described in subclause (I). A similar percentage shall be determined in the case of interests in a partnership. "(iii) DEFINITION.—For purposes of this subparagraph, the term 'equity interest' has the meaning given such term by subsection (a)(4)(B). "(C) GRACE PERIOD. — For purposes of subparagraph (A), any payment of any distribution during the 4-year period beginning on its due date shall be treated as having been made on such due date. "(3) TAXABLE EVENTS. —For purposes of this subsection— "(A) IN GENERAL.—The term 'taxable event' means any of the following: "(i) The death of the transferor if the applicable retained interest conferring the distribution right is includible in the estate of the transferor. "(ii) The transfer of such applicable retained interest. "(iii) At the election of the taxpayer, the payment of any qualified payment after the period described in paragraph (2)(C), but only with respect to the period ending on the date of such payment. "(B) EXCEPTION WHERE SPOUSE IS TRANSFEREE. — "(i) DEATHTIME TRANSFERS.— Subparagraph (A)(i) shall not apply to any interest includible in the gross estate of the transferor if a deduction with respect to such interest is allowable under section 2056 or 2106(a)(3). "(ii) LIFETIME TRANSFERS. —A transfer to the spouse of the transferor shall not be treated as a taxable event under subparagraph (A)(ii) if such transfer does not result in a taxable gift by reason of— "(I) any deduction allowed under section 2523, or "(II) consideration for the transfer provided by the spouse, "(iii) SPOUSE SUCCEEDS TO TREATMENT OF TRANS- FEROR. —I f an event is not treated as a taxable event by reason of this subparagraph, the transferee spouse or surviving spouse (as the case may be) shall be treated in the same manner as the transferor in applying this subsection with respect to the interest involved. "(4) SPECIAL RULES FOR APPLICABLE FAMILY MEMBERS. — " (A) FAMILY MEMBER TREATED IN SAME MANNER AS TRANS- FEROR.— For purposes of this subsection, an applicable family member shall be treated in the same manner as the transferor with respect to any distribution right retained by such family member to which subsection (a)(3)(B) applied. "(B) TRANSFER TO APPLICABLE FAMILY MEMBER. —In the case of a taxable event described in paragraph (3)(A)(ii) involving the transfer of an applicable retained interest to an applicable family member (other than the spouse of the transferor), the applicable family member shall be treated in the same manner as the transferor in applying this