100 STAT. 2712
PUBLIC LAW 99-514—OCT. 22, 1986
"SEC. 673. REVERSIONARY INTERESTS.
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"(a) GENERAL RULE.—The grantor shall be treated as the owner of any portion of a trust in which he has a reversionary interest in either the corpus or the income therefrom, if, as of the inception of that portion of the trust, the value of such interest exceeds 5 percent of the value of such portion. "(b) REVERSIONARY INTEREST TAKING EFFECT AT DEATH OF MINOR LINEAL DESCENDANT BENEFICIARY.—In the case of any beneficiary
who— "(1) is a lineal descendant of the grantor, and "(2) holds all of the present interests in any portion of a trust, the grantor shall not be treated under subsection (a) as the owner of such portion solely by reason of a reversionary interest in such portion which takes effect upon the death of such beneficiary before such beneficiary attains age 21." 0?) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 674(b) (relating to exceptions for certain powers) is amended— (A) by striking out "the expiration of a period" and inserting in lieu thereof "the occurrence of an event", (B) by striking out "the expiration of the period" and inserting in lieu thereof "the occurrence of the event", and (C) by striking out "EXPIRATION OF 10-YEAR PERIOD" in the heading thereof and inserting in lieu thereof "OCCURRENCE OF EVENT".
(2) Subsection (b) of section 676 (relating to power to revoke) is amended— (A) by striking out "the expiration of a period" and inserting in lieu thereof "the occurrence of an event", (B) by striking out "the expiration of such period" and inserting in lieu thereof "the occurrence of such event", and (C) by striking out "EXPIRATION OF 10-YEAR PERIOD" in the heading thereof and inserting in lieu thereof "OCCURRENCE OF EVENT".
(3) Subsection (a) of section 677 (relating to income for benefit of grantor) is amended— (A) by striking out "the expiration of a period" and inserting in lieu thereof "the occurrence of an event", and (B) by striking out "the expiration of the period" and inserting in lieu thereof "the occurrence of the event". (c) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section shall apply with respect to transfers in trust made after March 1, 1986. (2) TRANSFERS PURSUANT TO PROPERTY SETTLEMENT AGREE-
MENT.—The amendments made by this section shall not apply to any transfer in trust made after March 1, 1986, pursuant to a binding property settlement agreement entered into on or before March 1, 1986, which required the taxpayer to establish a grantor trust and for the transfer of a specified sum of money or property to the trust by the taxpayer. This paragraph shall apply only to the extent of the amount required to be transferred under the agreement described in the preceding sentence. .•.*.'•,..«*..« i„.,<,,-...:...
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