PUBLIC LAW 95-600—NOV. 6, 1978
92 STAT. 2933
"(d) JOINT INTERESTS OF HUSBAND AND WIFE CREATED BEFORE
1977.—Under regulations prescribed by the Secretary— r "(1) IN GENERAL.—In the case of any joint interest created before January 1, 1977, which (if created after December 31, 1976) would have constituted a qualified joint interest under subsection (b)(2) (determined without regard to clause (ii) of subsection (b)(2)(B)), the donor may make an election under this subsection to have paragraph (1) of subsection (b) apply with respect to such joint interest. "(2) TIME FOR MAKING ELECTION.—An election under this subsection with respect to any property shall be made for the calendar quarter in 1977, 1978, or 1979 selected by the donor in a gift tax return filed within the time prescribed by law for filing a gift tax return for such quarter. Such an election may be made irrespective of whether or not the amount involved exceeds the exclusion provided by section 2503(b); but no election may be 26 USC 2503. made under this subsection after the death of the donor. "(3) TAX EFFECTS OF ELECTION.—In the case of any property with respect to which an election has been made under this subsection, for purposes of this title— "(A) the donor shall be treated as having made a gift at the close of the calendar quarter selected under paragraph (2), and "(B) the amount of the gift shall be determined under paragraph (4). "(4) AMOUNT OF GIFT.—For purposes of paragraph (3)(B), the amount of any gift is one-half of the amount— "(A) which bears the same ratio to the excess of (i) the value of the property on the date of the deemed making of the gift under paragraph (3)(A), over (ii) the value of such property on the date of the creation of the joint interest, as "(B) the excess of (i) the consideration furnished by the donor at the time of the creation of the joint interest, over (ii) the consideration furnished at such time by the donor's spouse, bears to the total consideration furnished by both spouses at such time. "(5) SPECIAL RULE FOR PARAGRAPH (4)(A).—For purposes of paragraph (4)(A)— "(A) in the case of real property, if the creation was not treated as a gift at the time of the creation, or "(B) in the case of personal property, if.the gift was required to be included on a gift tax return but was not so included, and the period of limitations on assessment under section 6501 has expired with respect to the tax (if any) on 26 USC 6501. such gift, then the value of the property on the date of the creation of the joint interest shall be treated as zero. "(6) SUBSTANTIAL IMPROVEMENTS.—For purposes of this subsection, a substantial improvement of any property shall be treated as the creation of a separate joint interest. "(e) TREATMENT OF CERTAIN POST-1976 TERMINATIONS.— "(1) IN GENERAL.—If—
"(A) before January 1, 1977, a husband and wife had a joint interest in property with right of survivorship, "(B) after December 31, 1976, such joint interest was terminated, and
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