[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 531 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 531

 To amend the Internal Revenue Code of 1986 to limit the applicability 
                of the generation-skipping transfer tax.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 4, 1997

  Mr. Houghton (for himself and Mr. Matsui) introduced the following 
      bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to limit the applicability 
                of the generation-skipping transfer tax.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. LIMITATION ON APPLICABILITY OF GENERATION-SKIPPING TRANSFER 
              TAX.

    (a) In General.--Section 2651 (relating to generation assignment) 
is amended by redesignating subsection (e) as subsection (f), and by 
inserting after subsection (d) the following new subsection:
    ``(e) Special Rule for Persons With a Deceased Parent.--
            ``(1) In general.--For purposes of determining whether any 
        transfer is a generation-skipping transfer, if--
                    ``(A) an individual is a descendant of a parent of 
                the transferor (or the transferor's spouse or former 
                spouse), and
                    ``(B) such individual's parent who is a lineal 
                descendant of the parent of the transferor (or the 
                transferor's spouse or former spouse) is dead at the 
                time the transfer (from which an interest of such 
                individual is established or derived) is subject to a 
                tax imposed by chapter 11 or 12 upon the transferor 
                (and if there shall be more than 1 such time, then at 
                the earliest such time),
        such individual shall be treated as if such individual were a 
        member of the generation which is 1 generation below the lower 
        of the transferor's generation or the generation assignment of 
        the youngest living ancestor of such individual who is also a 
        descendant of the parent of the transferor (or the transferor's 
        spouse or former spouse), and the generation assignment of any 
        descendant of such individual shall be adjusted accordingly.
            ``(2) Limited application of subsection to collateral 
        heirs.--This subsection shall not apply with respect to a 
        transfer to any individual who is not a lineal descendant of 
        the transferor (or the transferor's spouse or former spouse) 
        if, at the time of the transfer, such transferor has any living 
        lineal descendant.''.
    (b) Conforming Amendments.--
            (1) Section 2612(c) of the Internal Revenue Code of 1986 
        (defining direct skip) is amended by striking paragraph (2) and 
        by redesignating paragraph (3) as paragraph (2).
            (2) Section 2612(c)(2) of such Code (as so redesignated) is 
        amended by striking ``section 2651(e)(2)'' and inserting 
        ``section 2651(f)(2)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to terminations, distributions, and transfers occurring after the 
date of enactment of this section.
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