102 STAT. 3566
PUBLIC LAW 100-647—NOV. 10, 1988 (B) by striking out "such increase" and inserting in lieu thereof "such increase or decrease (as the case may be)". (13) Subsection (b) of section 2654 of the 1986 Code is amended to read as follows: "(b) CERTAIN TRUSTS TREATED AS SEPARATE TRUSTS.—For purposes
of this chapter— "(1) the portions of a trust attributable to transfers from different transferors shall be treated as separate trusts, and "(2) substantially separate and independent shares of different beneficiaries in a trust shall be treated as separate trusts. Except as provided in the preceding sentence, nothing in this chapter shall be construed as authorizing a single trust to be treated as 2 or more trusts." (14) Paragraph (3) of section 2652(a) of the 1986 Code is amended— (A) by striking out "any property" in subparagraphs (A) and (B) and inserting in lieu thereof "any trust", and (B) by striking out "may elect to treat such property" and inserting in lieu thereof "may elect to treat all of the DroDerty in such trust" (15) Paragraph (2) of section 2612(a) of the 1986 Code is amended to read as follows: "(2) CERTAIN PARTIAL TERMINATIONS TREATED AS TAXABLE.—If,
upon the termination of an interest in property held in trust by reason of the death of a lineal descendant of the transferor, a specified portion of the trust's assets are distributed to 1 or more skip persons (or 1 or more trusts for the exclusive benefit of such persons), such termination shall constitute a taxable termination with respect to such portion of the trust property." (16) Paragraph (2) of section 2632(b) of the 1986 Code is amended by striking out "paragraph (D) with respect to a prior direct s l d p ' and inserting in lieu thereof "paragraph (1) with respect to a prior direct skip)". (17XA) Subsection (c) of section 2642 of the 1986 Code is amended to read as follows: "(c) TREATMENT OF CERTAIN DIRECT SKIPS WHICH ARE NONTAXABLE GIFTS.—
"(1) IN GENERAL.—In the case of a direct skip which is a nontaxable gift, the inclusion ratio shall be zero. "(2) EXCEPTION FOR CERTAIN TRANSFERS IN TRUST.—Paragraph
(1) shall not apply to any transfer to a trust for the benefit of an individual unless— "(A) during the life of such individual, no portion of the corpus or income of the trust may be distributed to (or for the benefit of) any person other than such individual, and "(B) if such individual dies before the trust is terminated, the assets of such trust will be includible in the gross estate of such individual. "(3) NONTAXABLE GIFT.—For purposes of this subsection, the term 'nontaxable gift' means any transfer of property to the extent such transfer is not treated as a taxable gift by reason of— "(A) section 2503(b) (taking into account the application of section 2513), or "(B) section 2503(e)." (B) Paragraph (1) of section 2642(d) of the 1986 Code is amended by striking out "(other than a nontaxable gift)".
�
