104 STAT. 1388-496 PUBLIC LAW 101-508 —NOV. 5, 1990 subsection to distributions accumulating with respect to such interest after such taxable event. "(5) TRANSFER TO INCLUDE TERMINATION. — For purposes of this subsection, any termination of an interest shall be treated as a transfer. "(e) OTHER DEFINITIONS AND RULES. —For purposes of this section— "(1) MEMBER OF THE FAMILY.—The term 'member of the family' means, with respect to any transferor— "(A) the transferor's spouse, "(B) a lineal descendant of the transferor or the transferor's spouse, and "(C) the spouse of any such descendant. "(2) APPLICABLE FAMILY MEMBER. —The term 'applicable family member' means, with respect to any transferor— "(A) the transferor's spouse, "(B) an ancestor of the transferor or the transferor's spouse, and "(C) the spouse of any such ancestor. " (3) ATTRIBUTION RULES. — "(A) INDIRECT HOLDINGS AND TRANSFERS. — An individual shall be treated as holding any interest to the extent such interest is held indirectly by such individual through a corporation, partnership, trust, or other entity. If any individual is treated as holding any interest by reason of the preceding sentence, any transfer which results in such interest being treated as no longer held by such individual shall be treated as a transfer of such interest. "(B) CONTROL. —For purposes of subsections^^ (b)(1), an individual shall be treated as holding any interest held by i the individual's brothers, sisters, or lineal descendants. "(4) EFFECT OF ADOPTION. —A relationship by legal adoption shall be treated as a relationship by blood. "(5) CERTAIN CHANGES TREATED AS TRANSFERS. —Except as provided in regulations, a contribution to capital or a redemption, recapitalization, or other change in the capital structure of a corporation or partnership shall be treated as a transfer of an interest in such entity to which this section applies if the taxpayer or an applicable family member— "(A) receives an applicable retained interest in such entity pursuant to such contribution to capital or such redemption, recapitalization, or other change, or "(B) under regulations, otherwise holds, immediately after the transfer, an applicable retained interest in such entity. This paragraph shall not apply to any transaction (other than a contribution to capital) if the interests in the entity held by the transferor, applicable family members, and members of the transferor's family before and after the transaction are substantially identical. "(6) ADJUSTMENTS.— Under regulations prescribed by the Secretary, if there is any subsequent transfer, or inclusion in the gross estate, of any applicable retained interest which was valued under the rules of subsection (a), appropriate adjustments shall be made for purposes of chapter 11, 12, or 13 to reflect the increase in the amount of any prior taxable gift made by the transferor or decedent by reason of such valuation.
- ' So in original. Probably should be "subsection".