PUBLIC LAW 105-34—AUG. 5, 1997 111 STAT. 1043 "(B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year, by substituting 'calendar year 1997' for 'calendar year 1992' in subparagraph (B) thereof. If any dollar amount after being increased under the preceding sentence is not a multiple of $100, such dollar amount shall be rounded to the nearest multiple of $100. "(d) APPLICATION OF RATE SCHEDULE. —Section 1(e) shall be applied to each qualified funeral trust by treating each beneficiary's interest in each such trust as a separate trust. "(e) TREATMENT OF AMOUNTS REFUNDED TO PURCHASER ON CANCELLATION.— No gain or loss shall be recognized to a purchaser of a contract described in subsection (b)(1) by reason of any payment from such trust to such purchaser by reason of cancellation of such contract. If any payment referred to in the preceding sentence consists of property other than money, the basis of such property in the hands of such purchaser shall be the same as the trust's basis in such property immediately before the payment. "(f) SIMPLIFIED REPORTING.— The Secretary may prescribe rules for simplified reporting of all trusts having a single trustee.". (b) CLERICAL AMENDMENT.— The table of sections for subpart F of part I of subchapter J of chapter 1 is amended by adding at the end the following new item: "Sec. 685. Treatment of funeral trusts.". (c) EFFECTIVE DATE. —The amendments made by this section 26 USC 685 note. shall apply to taxable years ending after the date of the enactment of this Act. SEC. 1310. ADJUSTMENTS FOR GIFTS WITHIN 3 YEARS OF DECEDENT'S DEATH. (a) GENERAL RULE. — Section 2035 is amended to read as follows: " SEC 2035. ADJUSTMENTS FOR CERTAIN GIFTS MADE WITHIN 3 YEARS OF DECEDENTS DEATH. "(a) INCLUSION OF CERTAIN PROPERTY IN GROSS ESTATE.— If — "(1) the decedent made a transfer (by trust or otherwise) of an interest in any property, or relinquished a power with respect to any property, during the 3-year period ending on the date of the decedent's death, and "(2) the value of such property (or an interest therein) would have been included in the decedent's gross estate under section 2036, 2037, 2038, or 2042 if such transferred interest or relinquished power had been retained by the decedent on the date of his death, the value of the gross estate shall include the value of any property (or interest therein) which would have been so included. "(b) INCLUSION OF GIFT TAX ON GIFTS MADE DURING 3 YEARS BEFORE DECEDENT'S DEATH. —The amount of the gross estate (determined without regard to this subsection) shall be increased by the amount of any tax paid under chapter 12 by the decedent or his estate on any gift made by the decedent or his spouse during the 3-year period ending on the date of the decedent's death. " (c) OTHER RULES RELATING TO TRANSFERS WITHIN 3 YEARS OF DEATH. — "(1) IN GENERAL.— For purposes of—
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