APPLICATION OF ESTATE AND GIFT TAXES IN POSSESSIONS.

SEC. 102. APPLICATION OF ESTATE AND GIFT TAXES IN POSSESSIONS. (a) Estate Tax.—Subchapter C of chapter 11 (relating to miscellaneous estate tax provisions) is amended by adding at the end thereof the following new’ section: “SEC. 2208. CERTAIN RESIDENTS OF POSSESSIONS CONSIDERED CITIZENS OF THE UNITED STATES. “A decedent who was a citizen of the United States and a resident of a possession thereof at the time of his death shall, for purposes of the tax imposed by this chapter, be considered a ‘citizen’ or the United States within the meaning of that term wherever used in this title unless he acquired his United States citizenship solely by reason of (1) his being a citizen of such possession of the United States, or (2) his birth or residence within such possession of the United States.” (b) Gift Tax.—Section 2501 (relating to imposition of gift tax) is amended by redesignating subsection (b) to be subsection (c) and by adding after subsection (a) the following new subsection: “(b) Certain Residents of Possessions Considered Citizens of the United States.—A donor who is a citizen of the United States and a resident of a possession thereof shall, for purposes of the tax imposed by this chapter, be considered a ‘citizen’ of the United States within the meaning of that term wherever used in this title unless he acquired his United States citizenship solely by reason of (1) his being a citizen of such possession of the United States, or (2) his birth or residence within such possession of the United States.” (c) Related Amendments.— (1) Section 2011 (a) (relating to the credit for estate, inheritance, legacy, or succession taxes) is amended by striking out “or any possession of the United States,”. (2) Section 2014 (relating to credit for foreign death taxes) is amended by adding at the end thereof the following new subsection: “(f) Possession of United States Deemed a Foreign Country.—For purposes of the credits authorized by this section, each possession of the United States shall be deemed to be a foreign country.” 72 Stat. 1675 (3) Section 2053 (d) (1) (relating to the deduction for estate, inheritance, legacy, or succession taxes paid in respect of a transfer for public, charitable, or religious uses) is amended by striking out “or any possession of the United States,”. (4) The table of sections for subchapter C of chapter 11 is amended by adding at the end thereof the following: “Sec. 2208. Certain residents of possessions considered citizens of the United States.” (d) Effective Date.—The amendments made by this section (other than by subsection (b)) shall apply to the estates of decedents dying after the date of the enactment of this Act. The amendment made by subsection (b) shall apply to gifts made after the date of the enactment of this Act.