PUBLIC LAW 98-369—JULY 18, 1984 ic
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98 STAT. 1027
governing instrument by reformation, amendment, construction, or otherwise which changes a reformable interest into a qualified interest but only if— "(i) any difference between— "(I) the actuarial value (determined as of the date of the decedent's death) of the qualified interest, and "(II) the actuarial value (as so determined) of the reformable interest, does not exceed 5 percent of the actuarial value (as so determined) of the reformable interest, "(ii) in the case of— "(I) a charitable remainder interest, the nonremainder interest (before and after the qualified reformation) terminated at the same time, or "(II) any other interest, the reformable interest and the qualified interest are for the same period, and "(iii) such change is effective as of the date of the decedent's death. A nonremainder interest (before reformation) for a term of years in excess of 20 years shall be treated as satisfying subclause (I) of clause (ii) if such interest (after reformation) is for a term of 20 years. "(C) REFORMABLE INTEREST.—For purposes of this paragraph— "(i) IN GENERAL.—The term 'reformable interest' means any interest for which a deduction would be allowable under subsection (a) at the time of the decedent's death but for paragraph (2). "(ii)
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BENEFICIARY'S INTEREST MUST BE FIXED.—The
term 'reformable interest' does not include any interest unless, before the remainder vests in possession, all payments to persons other than an organization described in subsection (a) are expressed either in specified dollar amounts or a fixed percentage of the fair market value of the property. For purposes of determining whether all such payments are expressed as a fixed percentage of the fair market value of the property, section 664(d)(3) shall be taken into account. "(iii) SPECIAL RULE WHERE TIMELY COMMENCEMENT OF REFORMATION.—Clause (ii) shall not apply to any interest if a judicial proceeding is commenced to change such interest into a qualified interest not later than the 90th day after— "(I) if an estate tax return is required to be filed, the last date (including extensions) for filing such return, or "(II) if no estate tax return is required to be filed, the last date (including extensions) for filing the income tax return for the 1st taxable year for which such a return is required to be filed by the trust. "(iv) SPECIAL RULE FOR WILL EXECUTED BEFORE JANU-
ARY 1, 1979, ETC.—In the case of any interest passing under a will executed before January 1, 1979, or under
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