PUBLIC LAW 100-647—NOV. 10, 1988
102 STAT. 3639
"(11) it is established to the satisfaction of the Secretary that such consideration originally belonged to such member and was never received or acquired (directly or indirectly) by such member from the transferor for less than full and adequate consideration in money or money's worth, paragraph (1) shall not apply to the applicable fraction of the portion of the enterprise which would (but for this subparagraph) have been included in the gross estate of the transferor by reason of this subsection (determined without regard to any reduction under paragraph (5) for the value of the retained interest), "(ii) APPLICABLE FRACTION.—For purposes of clause (i), the applicable fraction is a fraction— "(I) the numerator of which is the amount of the consideration referred to in clause (i), and "(II) the denominator of which is the value of the portion referred to in clause (i) immediately after the transfer described in paragraph (1). "(iii) SECTION 2043 NOT TO APPLY.—The provisions of this subparagraph shall be in lieu of any adjustment under section 2043." (2) Paragraph (5) of section 2036(c) of the 1986 Code is amended to read as follows: "(5) ADJUSTMENTS.—Appropriate adjustments shall be made in the amount included in the gross estate by reason of this subsection for the value of the retained interest, extraordinary distributions, and changes in the capital structure of the enterprise after the transfer described in paragraph (1). (h) EFFECTIVE DATE.—
26 USC 2036
(1) IN GENERAL.—Except as provided in this subsection, any note. amendment made by this section shall take effect as if included in the provisions of the Revenue Act of 1987 to which such amendment relates. (2) SUBSECTION (a).—The amendments made by subsection (a) shall apply in cases where the transfer referred to in section 2036(c)(l)(B) of the 1986 Code is on or after June 21, 1988. (3) SUBSECTION (f).—If an amount is included in the gross estate of a decedent under section 2036 of the 1986 Code other than solely by reason of section 2036(c) of the 1986 Code, the amendments made by subsection (f) shall apply to such amount only with respect to property transferred after the date of the enactment of this Act. (4) CORRECTION PERIOD.—If section 2036(c)(l) of the 1986 C!ode would (but for this paragraph) apply to any interest arising from a transaction entered into during the period beginning after December 17, 1987, and ending before January 1, 1990, such section shall not apply to such interest if^ (A) during such period, such actions are taken as are necessary to have such section 2036(c)(l) not apply to such transaction (and any such interest), or (B) the original transferor and his spouse on January 1, 1990 (or, if earlier, the date of the original transferor's death), does not hold any interest in the enterprise involved.
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