104 STAT. 1388-492 PUBLIC LAW 101-508 —NOV. 5, 1990 "(i) any applicable retained interest confers a distribution right which consists of the right to a qualified payment, and "(ii) there are 1 or more liquidation, put, call, or conversion rights with respect to such interest, the value of all such rights shall be determined as if each liquidation, put, call, or conversion right were exercised in the manner resulting in the lowest value being determined for ail such rights. "(4) MINIMUM VALUATION OF JUNIOR EQUITY. — "(A) IN GENERAL. — In the case of a transfer described in paragraph (1) of a junior equity interest in a corporation or partnership, such interest shall in no event be valued at an amount less than the value which would be determined if the total value of all of the junior equity interests in the entity were equal to 10 percent of the sum of— "(i) the total value of all of the equity interests in such entity, plus "(ii) the total amount of indebtedness of such entity to the transferor (or an applicable family member). "(B) DEFINITIONS.—For purposes of this paragraph— "(i) JUNIOR EQUITY INTEREST. —The term 'junior equity interest' means common stock or, in the case of a partnership, any partnership interest under which the rights as to income and capital are junior to the rights of all other classes of equity interests. "(ii) EQUITY INTEREST. —The term 'equity interest' means stock or any interest as a partner, as the case may be. "(b) APPLICABLE RETAINED INTERESTS. —For purposes of this section— "(1) IN GENERAL.—The term 'applicable retained interest' means any interest in an entity with respect to which there is— "(A) a distribution right, but only if, immediately before the transfer described in subsection (a)(1), the transferor and applicable family members hold (after application of subsection (e)(3)) control of the entity, or "(B) a liquidation, put, call, or conversion right. "(2) CONTROL.— For purposes of paragraph (1)— "(A) CORPORATIONS. —In the case of a corporation, the term 'control' means the holding of at least 50 percent (by vote or value) of the stock of the corporation. "(B) PARTNERSHIPS.—In the case of a partnership, the term 'control' means— "(i) the holding of at least 50 percent of the capital or profits interests in the partnership, or "(ii) in the case of a limited partnership, the holding of any interest as a general partner. "(c) DISTRIBUTION AND OTHER RIGHTS; QUALIFIED PAYMENTS.—For purposes of this section— " (1) DISTRIBUTION RIGHT. — "(A) IN GENERAL.—The term 'distribution right' means— "(i) a right to distributions from a corporation with respect to its stock, and "(ii) a right to distributions from a partnership with respect to a partner's interest in the partnership.
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