118 STAT. 1433 PUBLIC LAW 108–357—OCT. 22, 2004 Subtitle D—S Corporation Reform and Simplification SEC. 231. MEMBERS OF FAMILY TREATED AS 1 SHAREHOLDER. (a) IN GENERAL.—Paragraph (1) of section 1361(c) (relating to special rules for applying subsection (b)) is amended to read as follows: ‘‘(1) MEMBERS OF FAMILY TREATED AS 1 SHAREHOLDER.— ‘‘(A) IN GENERAL.—For purpose of subsection (b)(1)(A)— ‘‘(i) except as provided in clause (ii), a husband and wife (and their estates) shall be treated as 1 share holder, and ‘‘(ii) in the case of a family with respect to which an election is in effect under subparagraph (D), all members of the family shall be treated as 1 share holder. ‘‘(B) MEMBERS OF THE FAMILY.—For purpose of subparagraph (A)(ii)— ‘‘(i) IN GENERAL.—The term ‘members of the family’ means the common ancestor, lineal descendants of the common ancestor, and the spouses (or former spouses) of such lineal descendants or common ancestor. ‘‘(ii) COMMON ANCESTOR—For purposes of this paragraph, an individual shall not be considered a common ancestor if, as of the later of the effective date of this paragraph or the time the election under section 1362(a) is made, the individual is more than 6 generations removed from the youngest generation of shareholders who would (but for this clause) be members of the family. For purposes of the preceding sentence, a spouse (or former spouse) shall be treated as being of the same generation as the individual to which such spouse is (or was) married. ‘‘(C) EFFECT OF ADOPTION, ETC.—In determining whether any relationship specified in subparagraph (B) exists, the rules of section 152(b)(2) shall apply. ‘‘(D) ELECTION.—An election under subparagraph (A)(ii)— ‘‘(i) may, except as otherwise provided in regula tions prescribed by the Secretary, be made by any member of the family, and ‘‘(ii) shall remain in effect until terminated as pro vided in regulations prescribed by the Secretary.’’. (b) RELIEF FROM INADVERTENT INVALID ELECTION OR TERMI NATION.—Section 1362(f) (relating to inadvertent invalid elections or terminations), as amended by this Act, is amended— (1) by inserting ‘‘or section 1361(c)(1)(A)(ii)’’ after ‘‘section 1361(b)(3)(B)(ii),’’ in paragraph (1), and (2) by inserting ‘‘or section 1361(c)(1)(D)(iii)’’ after ‘‘section 1361(b)(3)(C),’’ in paragraph (1)(B). (c) EFFECTIVE DATES.— (1) SUBSECTION (a).—The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 2004. 26 USC 1361 note. Regulations. Applicability.
�
