Page:United States Statutes at Large Volume 100 Part 3.djvu/915

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PUBLIC LAW 99-000—MMMM. DD, 1986

PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2723

"(B) in the case of a direct skip, the applicable fraction determined for such skip. "(2) APPLICABLE FRACTION.—For purposes of paragraph (1), the

applicable fraction is a fraction— "(A) the numerator of which is the amount of the GST exemption allocated to the trust (or in the case of a direct skip, allocated to the property transferred in such skip), and "(B) the denominator of which is— "(i) the value of the property transferred to the trust (or involved in the direct skip), reduced by "(ii) the sum of— "(I) any Federal estate tax or State death tax actually recovered from the trust attributable to such property, and "(II) any charitable deduction allowed under section 2055 or 2522 with respect to such property. Except as provided in paragraphs (3) and (4) of subsection (b), the value determined under subparagraph (B)(i) shall be of the property as of the time of the transfer to the trust (or the direct skip). "(b) VALUATION RULES, ETC.— "(1) GIFTS FOR WHICH GIFT TAX RETURN FILED OR DEEMED

ALLOCATION MADE.—If the allocation of the GST exemption to any property is made on a timely filed gift tax return required by section 6019 or is deemed to be made under section 2632(b)(1)— "(A) the value of such property for purposes of subsection (a) shall be its value for purposes of chapter 12, and "(B) such allocation shall be effective on and after the date of such transfer. "(2) TRANSFERS AND ALLOCATIONS AT OR AFTER DEATH.— "(A) TRANSFERS AT DEATH.—If property is transferred

as a result of the death of the transferor, the value of such property for purposes of subsection (a) shall be its value for purposes of chapter 11. "(B) ALLOCATIONS AT OR AFTER DEATH OF TRANSFEROR.—

Any allocation at or after the death of the transferor shall be effective on and after the date of the death of the transferor. "(3) INTER VIVOS ALLOCATIONS NOT MADE ON TIMELY FILED GIFT

TAX RETURN.—If any allocation of the GST exemption to any property is made during the life of the transferor but is not made on a timely filed gift tax return required by section 6019 and is not deemed to be made under section 2632(b)(l)— "(A) the value of such property for purposes of subsection (a) shall be determined as of the time such allocation is filed with the Secretary, and "(B) such allocation shall be effective on and after the date on which such allocation is filed with the Secretary. "(4) QTIP TRUSTS.—If the value of property is included in the estate of a spouse by virtue of section 2044, and if such spouse is treated as the transferor of such property under section 2652(a), the value of such property for purposes of subsection (a) shall be its value for purposes of chapter 11 in the estate of such spouse. "(c) TREATMENT OF CERTAIN NONTAXABLE GIFTS.— "(1) DIRECT SKIPS.—In the case of any direct

skip which is a

nontaxable gift, the inclusion ratio shall be zero. "(2) TREATMENT OF NONTAXABLE GIFTS MADE TO TRUSTS.—