PUBLIC LAW 97-34—AUG. 13, 1981
95 STAT. 307
of such surviving spouse, active management of the farm or other business by the surviving spouse shall be treated as material participation by such surviving spouse in the operation of such farm or business. "(B) SPECIAL RULE.—For the purposes of subparagraph (A), the determination of whether property is qualified real property with respect to the first decedent shall be made without regard to subparagraph (D) of paragraph (1) and without regard to whether an election under this section was made.^' (c) DISPOSITIONS AND FAILURES TO U S E FOR QUALIFIED USE.— (1) 10-YEAR RECAPTURE PERIOD.—
(A) IN GENERAL.—Paragraph (1) of section 2032A(c) (relat- 26 USC 2032A. ing to tax treatment of dispositions and failures to use for qualified use) is amended by striking out "15 years" and inserting in lieu thereof "10 years". (B) CONFORMING AMENDMENTS.—
(i) Subsection (c) of section 2032A is amended by striking out paragraph (3) and redesignating paragraphs (4) through (7) as paragraphs (3) through (6), respectively. (ii) Subparagraph (A) of paragraph (2) of section 2032A(h) (relating to treatment of replacement property) is amended by striking out all that follows "involuntarily converted" and inserting in lieu thereof the following: "; except that with respect to such qualified replacement property the 10-year period under paragraph (1) of subsection (c) shall be extended by any period, beyond the 2-year period referred to in section 1033(a)(2)(B)(i), during which the qualified heir was allowed to replace the qualified real property,". (iii) Subparagraph (C) of such paragraph (2) is amended by striking out "(7)" and inserting in lieu thereof "(6)"^. (2) CESSATION OF QUALIFIED USE.—
(A) IN GENERAL.—Subsection (c) of section 2032A is amended by adding at the end thereof the following new paragraph: "(7) SPECIAL RULES.— "(A) No TAX IF USE BEGINS WITHIN 2 YEARS.—If the date on
which the qualified heir begins to use the qualified real property (hereinafter in this subparagraph referred to as the commencement date) is before the date 2 years after the decedent's death— "(i) no tax shall be imposed under paragraph (1) by reason of the failure by the qualified heir to so use such property before the commencement date, and "(ii) the 10-year period under paragraph (1) shall be extended by the period after the decedent's death and before the commencement date. "(B) ACTIVE MANAGEMENT BY ELIGIBLE QUALIFIED HEIR TREATED AS MATERIAL PARTICIPATION.—For purposes of para-
graph (6)(B)(ii), the active management of a farm or other business by— "(i) an eligible qualified heir, or "(ii) a fiduciary of an eligible qualified heir described in clause (ii) or (iii) of subparagraph (C),
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