PUBLIC LAW 9 5 - 4 7 2 — O C T. 17, 1978 ' "(A)
INVOLUNTARY CONVERSION.—The term
92 STAT. 1 3 3 5 'involuntary
conversion' means a compulsory o r involuntary conversion within the meaning of section 1033. 26 USC 1033. " (B) QUALIFIED REPLACEMENT PROPERTY.—The term 'quali-
fied replacement property ' means— " (i) in the case of an involuntary conversion described in section 1033(a)(1), any real property into which the qualified real property is converted, or ' * h. " (ii) in the case of an involuntary conversion described in section 1 0 3 3 (a)(2), any real property purchased by the qualified heir during the period specified in section 1033(a)(2)(B) for purposes of replacing the qualified real property. Such term only includes property which is to be used for the qualified use set forth in subparagraph (A) or (B) of subsection (b)(2) under which the qualified real property qualified under subsection (a). " (4) CERTAIN RULES MADE APPLICABLE.—The rules of the last
sentence of section 1 0 3 3 (a)(2)(A) shall apply for purposes of paragraph (3)(B) ( i i). " (5) ELECTION.—Any election under this subsection shall be made a t such time and in such manner as the Secretary may by regulations prescribe.", (b) ADJUSTMENT OF BASIS.—Section 1016 of such Code (relating 26 USC 1016. to adjustments to basis) is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection: " (c) INCREASE I N BASIS I N THE CASE OF CERTAIN CONVERSIONS.—
INVOLUNTARY
" (1) IN GENERAL.If there is a complusory or involuntary conversion (within the meaning of section 1033) of any property the basis of which is determined under section 1023 and an addi- 26 USC 1023. tional estate tax is imposed on such conversion under section 2032A(c), then the adjusted basis of such property shall be 26 USC 2032A., increased by an amount which bears the same ratio to such tax with respect to the conversion of that property as— " (A) the net appreciation in value of such property, bears to " (B) the excess of— " (i) the value of such property for purposes of chapter 11 as determined with respect to the estate of the 26 USC 2001. decedent without regard to section 2032A; over " ( i i) the value of such property for purposes of chapter 11 as determined with respect to the estate of the decedent with regard to section 2032A. " (2) N E T APPRECIATION I N VALUE.—For purposes of t h i s sub-
section, the net appreciation i n value of any property shall be determined in accordance with section 1023(f)(2) except that— " (A) the adjusted basis taken into account shall be increased by any adjustment under section 1023, " (B) the fair market value of such property shall be determined without r e g a r d to section 2032A, and " (C) any net appreciation in value i n excess of the amount determined under paragraph (1)(B) shall be disregarded. "(3)
T I M E ADJUSTMENT MADE.—Any adjustment under p a r a -
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