A bill to amend section 7447 of the Internal Revenue Code of 1954 with respect to the revocation of an election to receive retired pay as a judge of the Tax Court.
PL 95-472 (H.R.8811), enacted 10/17/1978

92 STAT. 1332 
PUBLIC LAW 95-472—OCT. 17, 1978 
Public Law 95-472 
95th Congress 
An Act 
Oct. 17, 1978 
rjo amend section 7447 of the Internal Revenue Code of 1954 with respect to 
[H.R. 8811] 
tlie revocation of an election to receive retired pay as a judge of the Tax 
Court. 
Be it enacted hy the Senate and House of Representatives of the 
U.S. Tax Court, 
United States of America in Congress assembled^ That section 7447 
judges' 
of the Internal Kevenue Code of 1954 (relating to retirement of Tax 
^oTviKr^iIli 
Court judges) is amended by adding at the end thereof the following 
26 UbC 7447. 
^^^ subsection: 
"(i) REVOCATION or ELECTION To RECEIVE RETIRED PAT.— 
"(1) I N GENERAL.—Notwithstanding subsection (e)(2), an 
individual who has filed an election to receive retired pay under 
subsection (d) may revoke such election at any time before the 
first day on which retired pay (or compensation under subsection 
(c) in lieu of retired pay) would (but for such revocation) 
begin to accrue with respect to such individual. 
"(2) MANNER or REVOKING.—Any revocation under this sub-
section shall be made by filing a notice thereof in writing with 
the Civil Service Commission. The Civil Service Commission shall 
transmit to the chief judge a copy of each notice filed under this 
subsection. 
"(3) EFFECT OF REVOCATION.—In the case of any revocation 
under this subsection— 
"(A) for purposes of this section, the individual shall be 
treated as not having filed an election to receive retired pay 
under subsection (d), 
26 use 7448. 
"(B) for purposes of section 7448— 
"(i) the individual shall be treated as not having filed 
an election under section 7448(b), and 
"(ii) section 7448(g) shall not apply, and the amount 
credited to such individual's account (together with 
interest at 4 percent per annum to December 31, 1947, 
and 3 percent per annum thereafter, compounded on 
December 31 of each year to the date on which the revo-
cation is filed) shall be returned to such individual, 
"(C) no credit shall be allowed for any service as a judge 
of the Tax Court unless with respect to such service either 
there has been deducted and withheld the amount required 
by the civil service retirement laws or there has been 
deposited in the Civil Service Retirement and Disability 
Fund an amount equal to the amount so required, with 
interest, 
"(D) the Tax Court shall deposit in the Civil Service 
Retirement and Disability Fund an amount equal to the 
additional amount it would have contributed to such Fund 
but for the election under subsection (e), and 
"(E) if subparagraph (D) is complied with, service on 
... 
the Tax Court shall be treated as service with respect to 
*' 
which deductions and contributions had been made during 
the period of service." 
26 use 7447 
SEC. 2. (a) The amendment made by the first section of this Act shall 
note. 
PUBLIC LAW 95-472—OCT. 17, 1978 
92 STAT. 1333 
apply with respect to revocations made after the date of the enactment 
of this Act. 
(b) Any individual who elects to revoke under section 7447 (i) of 26 USC 7447. 
the Internal Revenue Code of 1954 within one year after the date of 
enactment of this Act shall be treated as having the requisite current 
service for purposes of redepositing funds in the Civil Service Retire-
ment and Disability Fund and for purposes of reviving creditable 
service under subchapter I I I of chapter 83 of title 5 of the United ^ USC 8331. 
States Code. 
SEC. 3. TREATMENT OF GROUP LEGAL SERVICE PLAN CONTRIBUTIONS 
FOR PURPOSES OF UNEMPLOYMENT AND SOCIAL SECURITY 
TAXES. 
(a) Section 3306(b) of the Internal Revenue Code of 1954 (relating 26 USC 3306. 
to the definition of wages for purposes of the Federal Unemployment 
Tax Act) is amended— 
(1) by striking out "or" at the end of paragraph (10); 
(2) by striking out the period at the end of paragraph (11) 
and inserting in lieu thereof "; or"; and 
(3) by adding at the end thereof the following new paragraph: 
"(12) any contribution, payment, or service, provided by an 
employer which may be excluded from the gross income of an 
employee, his spouse, or his dependents, under the provisions of 
section 120 (relating to amounts received under qualified group 26 USC 120. 
legal services plans).". 
(b) Section 3121(a) of such Code (relating to the definition of 26 USC 3121. 
wages for purposes of the Federal Insurance Contributions Act) 26 USC 3101 et 
is amended— 
^^1-
(1) by striking out "or" at the end of paragraph (15); 
(2) by striking out the period at the end of paragraph (16) 
and inserting in lieu thereof "; or"; and 
(3) by adding at the end thereof the following new paragraph; 
"(17) any contribution, payment, or service provided by an 
employer which may be excluded from the gross income of an 
employee, his spouse, or his dependents, under the provisions of 
section 120 (relating to amounts received under qualified group 
legal services plans).". 
(c) Section 209 of the Social Security Act is amended— 
42 USC 409. 
(1) by striking out "or" at the end of subsection (n) ; 
(2) by striking out the period at the end of subsection (o) 
and inserting in lieu thereof "; or"; and 
(3) by inserting after subsection (o) and before the sentence 
beginning with "For purposes of this title, in the case of domestic 
service" the following new subsection: 
"(p) Any contribution, payment, or service, provided by an 
employer which may be excluded from the gross income of an 
employee, his spouse, or his dependents, under the provisions of sec-
tion 120 of the Internal Revenue Code of 1954 (relating to amounts 
received under qualified group legal services plans).". 
(d) The amendments made by this section shall apply with respect 26 USC 3121 
to taxable years beginning after December 31, 1976. 
°ot«-
92 STAT. 1334 
PUBLIC LAW 95-472—OCT. 17, 1978 
SEC. 4. INVOLUNTARY CONVERSION OF SPECIALLY VALUED FARM, 
ETC., REAL PROPERTY. 
26 use 2032A. 
(a) I N GENERAL.—Section 2032A of the Internal Eevenue Code of 
1954 (relating to valuation of certain farm, etc., real property) is 
amended by adding at the end the following new subsection: 
"(h) 
SPECIAL RULES FOR INVOLUNTARY CONVERSIONS OF QUALIFIED 
. 
REAL PROPERTY.— 
"(1) TREATMENT OF CONVERTED PROPERTY.— 
"(A) I N GENERAL.—If there is an involuntary conversion 
of an interest in qualified real property and the qualified 
heir makes an election under this subsection— 
" (i) no tax shall be imposed by subsection (c) on such 
'•' ' . 
conversion if the cost of the qualified replacement prop-
erty equals or exceeds the amount realized on such con-
version, or 
"(ii) if clause (i) does not apply, the amount of the 
; 
tax imposed by subsection (c) on such conversion shall 
be the amount determined under subparagraph ( B ) . 
" ( B ) AMOUNT or TAX WHERE THERE IS NOT COMPLETE REIN-
VESTMENT.—The amount determined under this subpara-
graph with respect to any involuntary conversion is the 
amount of the tax which (but for this subsection) would 
' 
• ^ 
have been imposed on such conversion reduced by an amount 
which-
i) bears the same ratio to such tax, as 
i) the cost of the qualified replacement property 
*
>
*
: 
bears to the amount realized on the conversion. 
" (2) TREATMENT OF REPLACEMENT PROPERTY.—For purposes of 
subsection (c) — 
" ( A ) any qualified replacement property shall be treated 
in the same manner as if it were a j)ortion of the interest in 
qualified real property which was involuntarily converted, 
except that with respect to such qualified 
replacement 
property— 
"(i) the 15-year period under paragraph (1) of sub-
section (c) shall be extended by any period, beyond the 
26 use 1033. 
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, and 
"(li) the phaseout period under paragraph (3) of 
subsection (c) shall be appropriately adjusted to take into 
account the extension referred to in clause (i), 
" ( B ) any tax imposed by subsection (c) on the involun-
tary conversion shall be treated as a tax imposed on a partial 
disposition, and 
"(C) paragraph (7) of subsection (c) shall be applied— 
" (i) by not taking into account periods after the invol-
untanr conversion and before the acquisition of the 
r 
qualified replacement property, and 
"(ii) by treating material participation with respect 
to the converted property as material participation with 
respect to the qualified replacement property. 
"(3) DEFINITIONS AND SPECIAL RULES.—For purposes of this 
subsection— 
«(i) 
"(ii) 
PUBLIC LAW 95-472—OCT. 17, 1978 
92 STAT. 1335 
' " ( A ) 
INVOLUNTARY CONVERSION.—The term 'involuntary 
conversion' means a compulsory or involuntary conversion 
within the meaning of section 1033. 
26 USC 1033. 
" ( B ) QUALIFIED REPLACEMENT PROPERTY.—The term 'quali-
fied replacement property' means— 
"(i) in the case of an involuntary conversion described 
in section 1033(a) (1), any real property into which the 
qualified real property is converted, or 
' * h. 
" (ii) in the case of an involuntary conversion described 
in section 1033(a)(2), any real property purchased by 
the qualified heir during the period specified in section 
1033(a) (2) (B) for purposes of replacing the qualified 
real property. 
Such term only includes property which is to be used for the 
qualified use set forth in subparagraph (A) or (B) of subsection 
(b) (2) under which the qualified real property qualified under 
subsection (a). 
"(4) CERTAIN RULES MADE APPLICABLE.—The rules of the last 
sentence of section 1033(a)(2)(A) shall apply for purposes of 
paragraph (3) (B) (ii). 
"(5) ELECTION.—Any election under this subsection shall be 
made at such time and in such manner as the Secretary may by 
regulations prescribe.", 
(b) ADJUSTMENT OF BASIS.—Section 1016 of such Code (relating 26 USC 1016. 
to adjustments to basis) is amended by redesignating subsection (c) 
as subsection (d) and by inserting after subsection (b) the following 
new subsection: 
"(c) INCREASE IN BASIS IN THE CASE OF CERTAIN 
INVOLUNTARY 
CONVERSIONS.— 
"(1) I N GENERAL.^If there is a complusory or involuntary 
conversion (within the meaning of section 1033) of any property 
the basis of which is determined under section 1023 and an addi- 26 USC 1023. 
tional estate tax is imposed on such conversion under section 
2032A(c), then the adjusted basis of such property shall be 26 USC 2032A., 
increased by an amount which bears the same ratio to such tax 
with respect to the conversion of that property as— 
" ( A ) the net appreciation in value of such property, bears 
to 
" ( B ) the excess of— 
"(i) the value of such property for purposes of chap-
ter 11 as determined with respect to the estate of the 26 USC 2001. 
decedent without regard to section 2032A; over 
"(ii) the value of such property for purposes of chap-
ter 11 as determined with respect to the estate of the 
decedent with regard to section 2032A. 
"(2) N E T APPRECIATION I N VALUE.—For purposes of this sub-
section, the net appreciation in value of any property shall be 
determined in accordance with section 1023(f) (2) except that— 
" ( A ) the adjusted basis taken into account shall be in-
creased by any adjustment under section 1023, 
" ( B ) the fair market value of such property shall be 
determined without regard to section 2032A, and 
"(C) any net appreciation in value in excess of the amount 
determined under paragraph (1) (B) shall be disregarded. 
"(3) T I M E ADJUSTMENT MADE.—^Any adjustment under para-
92 STAT. 1336 
PUBLIC LAW 95-472—OCT. 17, 1978 
graph (1) shall be deemed to have occurred immediately before 
me compulsory or involuntary conversion.". 
26 use 2032A. 
(c) CoiTFORMiNG AMENDMENT.—Paragraph (1) of section 2032 
A(f) of such Code (relating to period of limitations) is amended by 
inserting " (or if later in the case of an involuntary conversion to which 
an election under subsection (h) applies, 3 years from the date the 
Secretary is notified of the replacement of the converted property or 
of an intention not to replace)" immediately before ", and". 
(d) EFFECTIVE DATE.—^The 
»ply to involuntary conversic 
Approved October 17, 1978. 
26 use 1016 
(d) EFFECTIVE DATE.—^The amendments made by this section shall 
note. 
apply to involuntary conversions after December 31, 1976. 
' . ( • 
LEGISLATIVE HISTORY: 
HOUSE REPORT No. 95-744 (Comm. on Ways and Means). 
SENATE REPORT No. 95-1113 (Comm. on Finance). 
CONGRESSIONAL RECORD, Vol. 124 (1978): 
Jan. 24, considered and passed House. 
Aug. 23, considered and passed Senate, amended. 
fi Sept. 19, House concurred in Senate amendments with amendments. 
Sept. 28, Senate concurred in House amendments.