PUBLIC LAW 98-369—JULY 18, 1984
98 STAT. 597
ant to a plan of reorganization of ownership interest under a contract which took effect on March 29, 1984, and which was executed on or before March 31, 1984, but only if all the exchanges contemplated by the reorganization plan are completed on or before December 31, 1984. SEC. 78. ELIMINATION OF BASIS STRIPS UNDER SECTION 734(b). (a) GENERAL RULE.—Subsection (b) of section 734 is amended by 26 USC 734. adding at the end thereof the following new sentence: "Paragraph (I)(B) shall not apply to any distributed property which is an interest in another partnership with respect to which the election provided in section 754 is not in effect." (b) EFFECTIVE DATE.—The amendment made by subsection (a) 26 USC 734 note. shall apply to distributions after March 1, 1984, in taxable years ending after such date. SEC. 79. OVERRULING OF RAPHAN CASE.
(a) GENERAL RULE.—Section 752 of the Internal Revenue Code of 26 USC 752 note. 1954 (and the regulations prescribed thereunder) shall be applied without regard to the result reached in the case of Raphan vs the United States, 3 CI. Ct. 457 (1983). (b) REGULATIONS.—In amending the regulations prescribed under section 752 of such Code to reflect subsection (a), the Secretary of the Treasury or his delegate shall prescribe regulations relating to liabilities, including the treatment of guarantees, assumptions, inH;$;4U; demnity agreements, and similar arrangements.
Subtitle F—Trust Provisions SEC. 81. TREATMENT OF PROPERTY DISTRIBUTED IN KIND. (a) GENERAL RULE.—Section 643 (relating to definitions applicable 26 USC 643. to subchapters A, B, C, and D) is amended by adding at the end Post, p. 975. thereof the following new subsection: "(d) TREATMENT OF PROPERTY DISTRIBUTED IN KIND.—
"(1) BASIS OF BENEFICIARY.—The basis of any property re-
ceived by a beneficiary in a distribution from an estate or trust shall be— -ac-ri s t a OH'}^>k "(A) the adjusted basis of such property in the hands of the estate or trust immediately before the distribution, adjusted for '(B) any gain or loss recognized to the estate or trust on the distribution. "(2) AMOUNT OF DISTRIBUTION.—In the case of any distribution of property (other than cash), the amount taken into account under sections 661(a)(2) and 662(a)(2) shall be the lesser of— . -i ' r.i. "(A) the basis of such property in the hands of the beneficiary (as determined under paragraph (1)), or iis*i "(B) the fair market value of such property. "(3) ELECTION TO RECOGNIZE GAIN.—
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"(A) IN GENERAL.—In the case of any distribution of property (other than cash) to which an election under this paragraph applies— "(i) paragraph (2) shall not apply, "(ii) gain or loss shall be recognized by the estate or trust in the same manner as if such property had been sold to the distributee at its fair market value, and
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