2642(b) (relating to valuation rules, etc.) is amended to
read as follows:
‘‘(1) GIFTS FOR WHICH GIFT TAX RETURN FILED
OR DEEMED ALLOCATION MADE.—If the allocation of
the GST exemption to any transfers of property is
made on a gift tax return filed on or before the date
prescribed by section 6075(b) for such transfer or is
deemed to be made under section 2632 (b)(1) or
(c)(1)—
‘‘(A) the value of such property for purposes
of subsection (a) shall be its value as finally de-
termined for purposes of chapter 12 (within the
meaning of section 2001(f)(2)), or, in the case of
an allocation deemed to have been made at the
close of an estate tax inclusion period, its value
at the time of the close of the estate tax inclusion
period, and
‘‘(B) such allocation shall be effective on
and after the date of such transfer, or, in the
case of an allocation deemed to have been made
at the close of an estate tax inclusion period, on
and after the close of such estate tax inclusion
period.’’.
(b) TRANSFERS AT DEATH.—Subparagraph (A) of sec-
tion 2642(b)(2) is amended to read as follows:
‘‘(A) TRANSFERS AT DEATH.—If property is
transferred as a result of the death of the trans-
feror, the value of such property for purposes of
subsection (a) shall be its value as finally deter-
mined for purposes of chapter 11; except that, if
the requirements prescribed by the Secretary re-
specting allocation of post-death changes in value
are not met, the value of such property shall be
determined as of the time of the distribution con-
cerned.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to transfers subject to chapter 11 or 12
of the Internal Revenue Code of 1986 made after December
31, 2000.
SEC. 604. RELIEF PROVISIONS.
(a) IN GENERAL.—Section 2642 is amended by adding
at the end the following new subsection:
‘‘(g) RELIEF PROVISIONS.—
‘‘(1) RELIEF FROM LATE ELECTIONS.—
‘‘(A) IN GENERAL.—The Secretary shall by
regulation prescribe such circumstances and pro-
cedures under which extensions of time will be
granted to make—
‘‘(i) an allocation of GST exemption
described in paragraph (1) or (2) of sub-
section (b), and
‘‘(ii) an election under subsection
(b)(3) or (c)(5) of section 2632.
Such regulations shall include procedures for re-
questing comparable relief with respect to trans-
fers made before the date of the enactment of this
paragraph.
‘‘(B) BASIS FOR DETERMINATIONS.—In de-
termining whether to grant relief under this
paragraph, the Secretary shall take into account
all relevant circumstances, including evidence of
intent contained in the trust instrument or in-
strument of transfer and such other factors as the
Secretary deems relevant. For purposes of deter-
mining whether to grant relief under this para-
graph, the time for making the allocation (or
election) shall be treated as if not expressly pre-
scribed by statute.
‘‘(2) SUBSTANTIAL COMPLIANCE.—An allocation
of GST exemption under section 2632 that dem-
onstrates an intent to have the lowest possible inclu-
sion ratio with respect to a transfer or a trust shall
be deemed to be an allocation of so much of the trans-
feror’s unused GST exemption as produces the lowest
possible inclusion ratio. In determining whether there
has been substantial compliance, all relevant cir-
cumstances shall be taken into account, including evi-
dence of intent contained in the trust instrument or
instrument of transfer and such other factors as the
Secretary deems relevant.’’.
(b) EFFECTIVE DATES.—
(1) RELIEF
FROM
LATE
ELECTIONS.—Section
2642(g)(1) of the Internal Revenue Code of 1986 (as
added by subsection (a)) shall apply to requests pend-
ing on, or filed after, December 31, 2000.
(2) 
SUBSTANTIAL
COMPLIANCE.—Section
2642(g)(2) of such Code (as so added) shall apply to
transfers subject to chapter 11 or 12 of the Internal
Revenue Code of 1986 made after December 31, 2000.
No implication is intended with respect to the avail-
ability of relief from late elections or the application
of a rule of substantial compliance on or before such
date.
TITLE VII—EXTENSION OF TIME
FOR PAYMENT OF ESTATE TAX
SEC. 701. INCREASE IN NUMBER OF ALLOWABLE PARTNERS
AND SHAREHOLDERS IN CLOSELY HELD BUSI-
NESSES.
(a) IN GENERAL.—Paragraphs (1)(B)(ii), (1)(C)(ii),
and (9)(B)(iii)(I) of section 6166(b) (relating to definitions
and special rules) are each amended by striking ‘‘15’’ and
inserting ‘‘45’’.
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to estates of decedents dying after De-
cember 31, 2001.
Union Calendar No. 26
107TH CONGRESS
1ST SESSION
H. R. 8
[Report No. 107–37]
A BILL
To amend the Internal Revenue Code of 1986 to
phase out the estate and gift taxes over a 10-
year period, and for other purposes.
APRIL 3, 2001
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union,
and ordered to be printed