119
death) a nonresident not a citizen of the United
States—
‘‘(A) subsections (a)(3) and (b)(4) shall
not apply,
‘‘(B) there shall be no section 1022 adjust-
ment other than the death tax adjustment, and
‘‘(C) in applying subsection (c)(6)(C)—
‘‘(i) the reference to section 2001(c)
shall be treated as referring to section
2101(d),
‘‘(ii) 
the 
reference 
to 
section
2001(b)(1) shall be treated as referring to
section 2101(b)(1), and
‘‘(iii) 6 percent shall be substituted
for 30 percent.
‘‘(f) SPECIAL RULE WHERE PROPERTY SOLD TO
FUND DEATH TAXES.—
‘‘(1) IN GENERAL.—If the executor elects the
benefits of this subsection, subsection (c)(5)(B) shall
not apply to carryover basis property—
‘‘(A) which is a capital asset or property
described in section 1231 in the hands of the
estate or the person acquiring the property
from the decedent, and
120
‘‘(B) is sold or exchanged by the estate or
such person on or before the 30th day after the
initial basis finality date.
‘‘(2) LIMITATION.—The fair market value of all
assets to which the election under this subsection
applies shall not exceed the sum of the items set
forth in paragraphs (1) and (2) of section 303(a).
‘‘(3) ELECTION
REQUIREMENTS.—An election
under this subsection may be made only:
‘‘(A) TIME.—On or before the 30th day
after the initial basis finality date.
‘‘(B) IF CLOSELY HELD INTEREST.—If the
executor may make an election under section
6166.
‘‘(g) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary to carry out the pur-
poses of this section.’’
(b) TERMINATION
OF APPLICATION
OF SECTION
1014, ETC.—
(1) Section 1014 (relating to basis of property
acquired from a decedent) is amended by adding at
the end thereof the following new subsection:
‘‘(f) DECEDENTS DYING AFTER DECEMBER 31,
1996.—In the case of a decedent dying after December
121
31, 1996, this section shall not apply to property for which
a carryover basis is provided by section 1022.’’
(2) Subsection (a) of section 1016 (relating to
adjustments to basis) is amended by striking ‘‘and’’
at the end of paragraph (23), by striking the period
at the end of paragraph (24) and inserting ‘‘; and’’,
and by adding at the end thereof the following new
paragraph:
‘‘(25) to the extent provided in section 1022
(relating to carryover basis for certain property ac-
quired from a decedent dying after December 31,
1996).’’
(c) NONRECOGNITION OF GAIN, ETC. WHERE CER-
TAIN APPRECIATED CARRYOVER BASIS PROPERTY IS
USED IN SATISFACTION OF A PECUNIARY BEQUEST.—
(1) NONRECOGNITION OF GAIN.—
(A) IN GENERAL.—Part III of subchapter
O of chapter 1 (relating to common nontaxable
exchanges) is amended by adding at the end
thereof the following new section:
‘‘SEC. 1043. USE OF CERTAIN APPRECIATED CARRYOVER
BASIS PROPERTY TO SATISFY PECUNIARY
BEQUEST.
‘‘(a) GENERAL RULE.—If the executor of the estate
of any decedent satisfies the right of any person to receive
122
a pecuniary bequest with appreciated carryover basis prop-
erty, then gain on such exchange shall be recognized to
the estate only to the extent that, on the date of such ex-
change, the fair market value of such property exceeds the
value of such property for purposes of chapter 11.
‘‘(b) SIMILAR RULE FOR CERTAIN TRUSTS.—To the
extent provided in regulations prescribed by the Secretary,
a rule similar to the rule provided in subsection (a) shall
apply where—
‘‘(1) by reason of the death of the decedent, a
person has a right to receive from a trust a specific
dollar amount which is the equivalent of a pecuniary
bequest, and
‘‘(2) the trustee of the trust satisfies such right
with carryover basis property to which section 1022
applies.
‘‘(c) BASIS OF PROPERTY ACQUIRED IN EXCHANGE
DESCRIBED IN SUBSECTION (a) OR (b).—The basis of
property acquired in an exchange with respect to which
gain realized is not recognized by reason of subsection (a)
or (b) shall be the basis of such property immediately be-
fore the exchange, increased by the amount of the gain
recognized to the estate or trust on the exchange.’’
123
(B) CLERICAL AMENDMENT.—The table of
sections for such part III is amended by adding
at the end thereof the following new item:
‘‘Sec. 1043. Use of certain appreciated carryover basis property
to satisfy pecuniary bequest.’’
(2) LIMITATION ON RECAPTURE RULES IN CASE
OF CARRYOVER BASIS PROPERTY TRANSFERRED TO
SATISFY PECUNIARY BEQUEST.—
(A) AMENDMENT OF SECTION 1245.—Sub-
section (b) of section 1245 (relating to excep-
tions and limitations) is amended by adding at
the end thereof the following new paragraph:
‘‘(9) TRANSFERS OF CARRYOVER BASIS PROP-
ERTY TO SATISFY PECUNIARY BEQUEST.—If prop-
erty is disposed of and gain (determined without re-
gard to this section) is not recognized in whole or
in part under section 1043, then the amount of gain
taken into account by the transferor under sub-
section (a)(1) shall not exceed the amount of gain
recognized to the transferor on such disposition (de-
termined without regard to this section).’’
(B) AMENDMENT TO SECTION 1250.—Sub-
section (d) of section 1250 (relating to excep-
tions and limitations) is amended by adding at
the end thereof the following new paragraph:
124
‘‘(11) TRANSFERS OF CARRYOVER BASIS PROP-
ERTY TO SATISFY PECUNIARY BEQUEST.—If prop-
erty is disposed of and gain (determined without re-
gard to this section) is not recognized in whole or
in part under section 1043, then the amount of gain
taken into account by the transferor under sub-
section (a) shall not exceed the amount of gain rec-
ognized to the transferor on such disposition (deter-
mined without regard to this section).’’
(d) PROCEDURE FOR BINDING DETERMINATION OF
INITIAL BASIS.—
(1) IN GENERAL.—Part IV of subchapter C of
chapter 76 (relating to declaratory judgments) is
amended by adding at the end thereof the following
new section:
‘‘SEC. 7479. PROCEDURE FOR BINDING DETERMINATION
OF INITIAL BASIS OF CARRYOVER BASIS
PROPERTY.
‘‘(a) ADMINISTRATIVE AUDIT.—
‘‘(1) DESIGNATION BY EXECUTOR.—An execu-
tor may request the Secretary to audit the initial
basis of any carryover basis property which is shown
on the return of the tax imposed by chapter 11. Any
such request shall be made on such return.