103 STAT. 2416 PUBLIC LAW 101-239—DEC. 19, 1989 Gifts and property. Gifts and property. "(1) the trust instrument requires that at least 1 trustee of the trust be an individual citizen of the United States or a domestic corporation and that no distribution from the trust may be made without the approval of such a trustee,", and (ii) by striking paragraph (2) and redesignating para- graphs (3) and (4) as paragraphs (2) and (3), respectively. (B) Subsection (b) of section 2056A is amended by redesignat- ing paragraphs (3) through (8) as paragraphs (4) through (9), respectively, and by inserting after paragraph (2) the following new paragraph: "(3) CERTAIN LIFETIME DISTRIBUTIONS EXEMPT FROM TAX. — "(A) INCOME DISTRIBUTIONS. —No tax shall be imposed by paragraph (I)(A) on any distribution of income to the surviving spouse. "(B) HARDSHIP EXEMPTION.—NO tax shall be imposed by para- graph (I)(A) on any distribution to the surviving spouse on account of hardship." (C) Subparagraph (A) of section 2056A(b)(l) is amended" by striking ' other than a distribution of income required under subsection (a)(2)". (D) Paragraph (4) of section 2056A(b) (as redesignated by subparagraph (B)) is amended to read as follows: " (4) TAX WHERE TRUST CEASES TO QUALIFY.— If any qualified domestic trust ceases to meet the requirements of paragraphs (1) and (2) of subsection (a), the tax imposed by paragraph (1) shall apply as if the surviving spouse died on the date of such cessation. (8) Subsection (d) of section 2056 is amended by adding at the end the following new paragraph: "(4) REFORMATIONS PERMITTED. — "(A) IN GENERAL. — In the case of any property with re- spect to which a deduction would be allowable under subsection (a) but for this subsection, the determination of whether a trust is a qualified domestic trust shall be made— "(i) as of the date on which the return of the tax imposed by this chapter is made, or '(ii) if a judicial proceeding is commenced on or before the due date (determin^ with regard to exten- sions) for filing such return to change such trust into a trust which is a qualified domestic trust, as of the time when the changes pursuant to such proceeding are made. "(B) STATUTE OF LIMITATIONS. —If a judicial proceeding described in subparagraph (A)(ii) is commenced with respect to any trust, the period for assessing any deficiency of tax attributable to any failure of such trust to be a qualified domestic trust shall not expire before the date 1 year after the date on which the Secretary is notified that the trust has been changed pursuant to such judicial proceeding or that such proceeding has been terminated." (9) Subsection (b) of section 2056A is amended by adding at the end the following new paragraphs: "(10) CERTAIN BENEFITS ALLOWED. — "(A) IN GENERAL. —I f any property remaining in the qualified domestic trust on the date of the death of the surviving spouse is includible in the gross estate of such
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