107 STAT. 508 PUBLIC LAW 103-66 —AUG. 10, 1993 (7), respectively, and by inserting after paragraph (3) the following new paragraph: "(4) PORTFOLIO INTEREST NOT TO INCLUDE CERTAIN CONTIN- GENT INTEREST.— For purposes of this subsection, the term 'portfolio interest' shall not include any interest which is treated as not being portfolio interest under the rules of section 871(h)(4).' ' 26 USC 2105. (b) ESTATE TAX TREATMENT.—Subsection (h) of section 2105 is amended— (1) by striking 'Mhis subchapter in the material preceding paragraph (1) and. inserting "this subchapter, the following shall not be deemied property within the United States", and (2) by striking paragraph (3) and all that follows down through the period at the end thereof and inserting the following: "(3) debt obligations, if, without regard to whether a statement meeting the requirements of section 871(h)(5) has been received, any interest thereon would be eligible for the exemption from tax under section 871(h)(l) were such interest received by the decedent at the time of his death. Notwithstanding the preceding sentence, if any portion of the interest on an obligation referred to in paragraph (3) would not % be eligible for the exemption referred to in paragraph (3) by reason of section 871(h)(4) if the interest were received by the decedent at the time of his death, then an appropriate portion (as determined in a manner prescribed by the Secretary) of the value (as determined for purposes of this chapter) of such debt obligation shall be deemed property within the United States." (c) CONFORMING AMENDMENTS. — (1) Clause (ii) of section 871(h)(2)(B) is amended by striking paragraph (4)" and inserting "paragraph (5)". (2) Clause (ii) of section 881(c)(2)(B) is amended by striking "section 871(h)(4)" and inserting "section 871(h)(5)". (3) Paragraph (6) of section 881(c) (as redesignated by subsection (a)) is amended by striking "section 871(h)(5)" each place it appears and inserting "section 871(h)(6)". (4) Paragraph (9) of section 1441(c) is amended by striking "section 871(h)(3)" and inserting "section 871(h)(3) or (4)". (5) Subsection (a) of section 1442 is amended— (A) by striking "871(h)(3)" and inserting "871(h)(3) or (4)", and (B) by striking "881(c)(3)" and inserting "881(c)(3) or (4)". (d) EFFECTIVE DATE.—The amendments made by this section shall apply to interest received after December 31, 1993; except that the amendments made by subsection (b) shall apply to the estates of decedents dying after December 31, 1993. SEC. 13238. REGULATIONS DEALING WITH CONDUIT ARRANGEMENTS. Section 7701 is amended by redesignating subsection (1) as subsection (m) and by inserting after subsection (k) the following new subsection: "(1) REGULATIONS RELATING TO CONDUIT ARRANGEMENTS. — The Secretary may prescribe regulations recharacterizing any multipleparty financing transaction as a transaction directly among any 2 or more of such parties where the Secretary determines tiiat
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