••*l^^fc PUBLIC LAW 105-34—AUG. 5, 1997 111 STAT. 853 (b) DISALLOWANCE OF INTEREST DEDUCTION.— (1) ESTATE TAX. —Paragraph (1) of section 2053(c) is amended by adding at the end the following new subparagraph: "(D) SECTION eiee INTEREST. —No deduction shall be allowed under this section for any interest payable under section 6601 on any unpaid portion of the tax imposed by section 2001 for the period during which an extension of time for payment of such tax is in effect under section 6166.". (2) INCOME TAX.— (A) Section 163 is amended by redesignating subsection (k) as subsection (1) and by inserting after subsection (j) the following new subsection: "(k) SECTION eiee INTEREST.— No deduction shall be allowed under this section for any interest payable under section 6601 on any unpaid portion of the tax imposed by section 2001 for the period during which an extension of time for payment of such tax is in effect under section 6166.". (B) Subparagraph (E) of section 163(h)(2) is amended by striking "or 6166" and all that follows and inserting a period. (c) CONFORMING AMENDMENTS. — (1) Paragraphs (7)(A)(iii) and (8)(A)(iii) of section 6166(b) are amended by striking "4-percent" each place it appears (including the heading) and inserting "2-percent". (2) Paragraph (4) of section 660l(j), as redesignated by section 501(e), is amended by striking "4-percent" each place it appears and inserting "2-percent". (3) The subsection heading for section 660l(j) is amended by striking "4-PERCENT" and inserting "2-PERCENT". (d) EFFECTIVE DATE. — 26 USC 163 note. (1) IN GENERAL.— The amendments made by this section shall apply to estates of decedents dying after December 31, 1997. (2) ELECTION,—In the case of the estate of any decedent dying before January 1, 1998, with respect to which there is an election under section 6166 of the Internal Revenue Code of 1986, the executor of the estate may elect to have the amendments made by this section apply with respect to installments due after the effective date of the election; except that the 2-percent portion of such installments shall be equal to the amount which would be the 4-percent portion of such installments without regard to such election. Such an election shall be made before January 1, 1999 in the manner prescribed by the Secretary of the Treasury and, once made, is irrevocable. SEC. 504. EXTENSION OF TREATMENT OF CERTAIN RENTS UNDER SEC- TION 2032A TO LINEAL DESCENDANTS. (a) GENERAL RULE.—Paragraph (7) of section 2032A(c) (relating to special rules for tax treatment of dispositions and failures to use for qualified use) is amended by adding at the end the following new subparagraph: "(E) CERTAIN RENTS TREATED AS QUALIFIED USE.— For purposes of this subsection, a surviving spouse or lineal descendant of the decedent shall not be treated as failing to use qualified real property in a qualified use solely because such spouse or descendant rents such property
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