CERTAIN GENERATION-SKIPPING TRANSFERS.

SEC. 2006. CERTAIN GENERATION-SKIPPING TRANSFERS. (a) Imposition of Tax.— Subtitle B (relating to estate and. gift taxes) is amended by adding at the end thereof the following new chapter: “CHAPTER 13— TAX ON CERTAIN GENERATION-SKIPPING TRANSFERS “Subchapter A. Tax imposed. “Subchapter B. Definitions and special rules. “Subchapter C. Administration. “Subchapter A— Tax Imposed “Sec. 2601. Tax imposed. “Sec. 2602. Amount of lax. “Sec. 2603. Liability for tax. “SEC. 2601. TAX IMPOSED. “A tax is hereby imposed on every generation-skipping transfer in the amount determined under section 2602. “SEC. 2602. AMOUNT OF TAX. “(a) General Rule.— The amount of the tax imposed by section 2601 with respect to any transfer shall be the excess of— “(1) a tentative tax computed in accordance with the rate schedule set forth in section 2001 (c)(as in effect on the date of transfer) on the sum of— “(A) the fair market value of the property transferred determined as of the date of transfer (or in the case of an election under subsection (d), as of the applicable valuation date prescribed by section 2032), “(B) the aggregate fair market value (determined for purposes of this chapter) of all prior transfers of the deemed transferor to which this chapter applied, “(C) the amount of the adjusted taxable gifts (within the meaning of section 2001(b)) made by the deemed transferor before this transfer, and “(D) if the deemed transferor has died at the same time as, or before, this transfer, the taxable estate of the deemed transferor, over “(2) a tentative tax (similarly computed) on the sum of the amounts determined under subparagraphs (B), (C), and (D) of paragraph (1). “(b) Multiple Simultaneous Transfers.— If two or more transfers which are taxable under section 2601 and which have the same deemed transferor occur by reason of the same event, the tax imposed by section 2601 on each such transfer shall be the amount which bears the same ratio to— “(1) the amount of the tax which would be imposed by section 2601 if the aggregate of such transfers were a single transfer, as “(2) the fair market value of the property transferred in such transfer bears to the aggregate fair market value of all property transferred in such transfers. “(c) Deductions, Credits, Etc.— 90 STAT. 1880 “(1) General rule.— Except as otherwise provided in this subsection, no deduction, exclusion, exemption, or credit shall be allowed against the tax imposed by section 2601. “(2) Charitable deductions allowed.— The deduction under section 2055, 2106(a)(2), or 2522, whichever is appropriate, shall be allowed in determining the tax imposed by section 2601. “(3) Unused portion of unified credit.— If the generation-skipping transfer occurs at the same time as, oi‘ after, the death of the deemed transferor, then the portion of the credit under section 2010(a) (relating to unified credit) which exceeds the sum of— “(A) the tax imposed by section 2001, and “(B) the taxes theretofore imposed by section 2601 with respect to this deemed transferor, shall be allowed as a credit against the tax imposed by section 2601. The amount of the credit allowed by the preceding sentence shall not exceed the amount of the tax imposed by section 2601. “(4) Credit for tax on prior transfers.— The credit under section 2013 (relating to credit for tax on prior transfers) shall be allowed against the tax imposed by section 2601. For purposes of the preceding sentence, section 2013 shall be applied as if so much of the property subject to tax under section 2601 as is not taken into account for purposes of determining the credit allowable by section 2013 with respect to the estate of the deemed transferor passed from the transferor (as defined in section 2013) to the deemed transferor. “(5) Coordination with estate tax.— “(A) Adjustments to marital deduction.— If the generation-skipping transfer occurs at the same time as, or within 9 months after, the death of the deemed transferor, for purposes of section 2056 (relating to bequests, etc., to surviving spouse), the value of the gross estate of the deemed transferor shall be deemed to be increased by the amount of such transfer. “(B) Certain expenses attributable to generation-skip-ping transfer.— If the generation-skipping transfer occurs at the same time as, or after, the death of the deemed transferor, for purposes of this section, the amount taken into account with respect to such transfer shall be reduced— “(i) in the case of a taxable termination, by any item referred to in section 2053 or 2054 to the extent that a deduction would have been allowable under such section for such item if the amount of the trust had been includible in the deemed transferor’s gross estate and if the deemed transferor had died immediately before such transfer, or “(ii) in the case of a taxable distribution, by any expense incurred in connection with the determination, collection, or refund of the tax imposed by section 2601 on such transfer. “(C) Credit for state inheritance tax.— If the generation-skipping transfer occurs at the same time as, or after, the death of the deemed transferor, there shall be allowed as a credit against the tax imposed by section 2601 an amount equal to that portion of the estate, inheritance, legacy, or succession tax actually paid to any State or the District of Columbia in respect of any property included in the genera-90 STAT. 1881tion-skipping transfer, but only to the extent of the lesser of— “(i) that portion of such taxes which is levied on such transfer, or “(ii) the excess of the limitation applicable under section 2011 (b) if the adjusted taxable estate of the decedent had been increased by the amount of the transfer and all prior gene ration-skipping transfers to which this subparagraph applied which had the same deemed transferor, over the sum of the amount allowable as a credit under section 2011 with respect to the estate of the decedent plus the aggregate amounts allowable under this subparagraph with respect to such prior generation-skipping transfers. “(d) Alternate Valuation.— “(1) In general.— In the case of— “(A) 1 or more generation-skipping transfers from the same trust which have the same deemed transferor and which are taxable terminations occurring at the same time as the death of such deemed transferor; or “(B) 1 or more generation-skipping transfers from the same trust with different deemed transferors— “(i) which are taxable terminations occurring on the same day; and “(ii) which would, but for section 2613(b)(2), have occurred at the same time as the death of the individuals who are the deemed transferors with respect to the transfers; the trustee may elect to value all of the property transferred in such transfers in accordance with section 2032. “(2) Special holes.— If the trustee makes an election under paragraph (1) with respect, to any generation-skipping transfer, section 2032 shall be applied by taking into account (in lieu of the date of the decedent’s death) the following date: “(A) in the case of any gene ration-skip pin g transfer described in paragraph (1)(A), the date of the death of the deemed transferor described in such paragraph, or “(B) in the case of any generation-skipping transfer described in paragraph (1)(B), the date on which such transfer occurred. “(e) Transfers Within 3 Years of Death of Deemed Transferor.— Under regulations prescribed by the Secretary, the principles of section 2035 shall apply with respect to transfers made during the 3-year period ending on the date of the deemed transferor’s death. in the case of any transfer to which this subsection applies, the amount of the tax imposed by this chapter shall be determined as if the transfer occurred after the death of the deemed transferor and appropriate adjustments shall be made with respect to the amount of any prior transfer which is taken into account under subparagraph (B) or (C) of subsection (a)(1). “SEC. 2603. LIABILITY FOR TAX. “(a) Personal Liability.— “(1) In general.— If the tax imposed by section 2601 is not paid, when due then— “(A) except to the extent provided in paragraph (2), the trustee shall be personally liable for any portion of such tax which is attributable to a taxable termination, and 90 STAT. 1882 “(B) the distributee of the property shall be personally liable for such tax to the extent provided in paragraph (3). “(2) Limitation of personal liability of trustee who relies on certain information furnished by the secretary.— “(A) Information with respect to rates.— The trustee shall not be personally liable for any increase in the tax imposed by section 2601 which is attributable to the application to the transfer of rates of tax which exceeds the rates of tax furnished by the Secretary to the trustee as being the rates at which the transfer may reasonably be expected to be taxed. “(B) Amount of remaining exclusion.— The trustee shall not be personally liable for any increase in the tax imposed by section 2601 which is attributable to the fact that— “(i) the amount, furnished by the Secretary to the trustee as being the amount of the exclusion for a transfer to a grandchild of the grantor of the trust which may reasonably be expected to remain with respect to the deemed transferor, is less than “(ii) the amount of such exclusion remaining with respect to such deemed transferor. “(3) Limitation on personal liability of distributee.— The distributee of the property shall be personally liable for the tax imposed by section 2601 only to the extent of an amount equal to the fair market value (determined as of the time of the distribution) of the property received by the distributee in the distribution. “(b) Lien.— The tax imposed by section 2601 on any transfer shall be a hen on the property transferred until the tax is paid in full or becomes unenforceable by reason of lapse of time. “Subchapter B— Definitions and Special Rules “Sec. 2611. Generation-skipping transfer. “Sec. 2612. Deemed transferor. “Sec. 2613. Other definitions. “Sec. 2614. Special rules. “SEC. 2611. GENERATION-SKIPPING TRANSFER. “(a) Generation-Skipping Transfer Defined.— For purposes of this chapter, the terms ‘gene ration-skipping transfer’ and ‘transfer’ mean any taxable distribution or taxable termination with respect to a generation-skipping trust or trust equivalent. “(b) Generation-Skipping Trust.— For purposes of this chapter, the term ‘generation-skipping trust’ means any trust having younger generation beneficiaries (within the meaning of section 2613(c)(1)) who are assigned to more than one generation. “(c) Ascertainment of Generation.— For purposes of this chapter, the generation to which any person (other than the grantor) belongs shall be determined in accordance with the following rules: “(1) an individual who is a lineal descendent of a grandparent of the grantor shall be assigned to that generation which results from comparing the number of generations between the grandparent and such individual with the number of generations between the grandparent and the grantor, “(2) an individual who has been at any time married to a person described in paragraph (1) shall be assigned to the generation of the person so described and an individual who has been at any 90 STAT. 1883time married to the grantor shall be assigned to the grantor’s generation, “(3) a relationship by the half blood shall be treated as a relationship by the whole blood, “(4) a relationship by legal adoption shall be treated as a relationship by blood, “(5) an individual who is not assigned to a generation by reason of the foregoing paragraphs shall be assigned to a generation on the basis of the date of such individual’s birth, with— “(A) an individual born not more than 12(4 years after the date of the birth of the grantor assigned to the grantor’s generation, “(B) an individual born more than 12(4 years but not more than 37½ years after the date of the birth of the grantor assigned to the first generation younger than the grantor, and “(C) similar rules for a new generation every 25 years, “(6) an individual who, but for this paragraph, would be assigned to more than one generation shall be assigned to the youngest, such generation, and “(7) if any beneficiary of the trust is an estate or a trust, partnership, corporation, or other entity (other than an organization described in section 511(a)(2) and other than a charitable trust described in section 511(b)(2)), each individual having an indirect interest or power in the trust through such entity shall be treated as a beneficiary of the trust and shall be assigned to a generation under the foregoing provisions of this subsection. “(d) Generation-Skipping Trust Equivalent.— “(1) In general.— For purposes of this chapter, the term ‘generation-skipping trust equivalent’ means any arrangement which, although not a trust, has substantially the same effect as a generation-skipping trust. “(2) Examples of arrangements to which subsection relates.— Arrangements to be taken into account for purposes of determining whether or not paragraph (1) applies include (but are not limited to) arrangements involving life estates and remainders, estates for years, insurance and annuities, and split interests, “(3) References to trust include references to trust equivalents.— Any reference in this chapter in respect of a generation-skipping trust shall include the appropriate reference in respect of a generation-skipping trust equivalent. “SEC. 2612. DEEMED TRANSFEROR. “(a) General Rule.— For purposes of this chapter, the deemed transferor with respect to a transfer is— “(1) except as provided in paragraph (2), the parent of the transferee of the property who is more closely related to the grantor of the trust than the other parent of such transferee (or if neither parent is related to such grantor, the parent having a closer affinity to the grantor), or “(2) if the parent described in paragraph (1) is not a younger generation beneficiary of the trust, but 1 or more ancestors of the transferee is a younger generation beneficiary related by blood or adoption to the grantor of the trust, the youngest of such ancestors. “(b) Determination of Relationship.— For purposes of subsection (a), a parent related to the grantor of the trust by blood or adoption is more closely related than a parent related to such grantor by marriage. 90 STAT. 1884 “SEC. 2613. OTHER DEFINITIONS. “(a) Taxable Distribution.— For purposes of this chapter— “(1) In general.— The term ‘taxable distribution’ means any distribution which is not out of the income of the trust (within the meaning of section 643(b)) from a generation-skipping trust to any younger generation beneficiary who is assigned to a generation younger than the general ion assignment of any other person who is a younger generation beneficiary. For purposes of the preceding sentence, an individual who at no time has had anything other than a future interest or future power (or both) in the trust shall not be considered as a younger generation beneficiary. “(2) Source of distribution.— If, during the taxable year of the trust, there are distributions out of the income of the trust (within the meaning of section 643(b)) and out of other amounts, for purposes of paragraph (1) the distributions of such income shall be deemed to have been made to the beneficiaries (to the extent of the aggregate distributions made to each such beneficiary during such year) in descending order of generations, beginning with the beneficiaries assigned to the oldest generation. “(3) Payment of tax.— If any portion of the tax imposed by this chapter with respect to any transfer is paid out of the income or corpus of the trust, an amount equal to the portion so paid shall be deemed to be a generation-skipping transfer. “(4) Certain distributions excluded from tax.— The term ‘taxable distribution’ does not include— “(A) any transfer to the extent such transfer is to a grandchild of the grantor of the trust, and does not exceed the limitation provided by subsection (b)(6), and “(B) any transfer to the extent such transfer is subject to tax imposed by chapter 11 or 12. “(b) Taxable Termination.— For purposes of this chapter— “(1) In general.— The term ‘taxable termination’ means the termination (by death, lapse of time, exercise or nonexercise, or otherwise) of the interest or power in a generation-skipping trust of any younger generation beneficiary who is assigned to any generation older than the generation assignment of any other person who is a younger generation beneficiary of that trust. Such term does not include a termination of the interest or power of any person who at no time has had anything other than a future interest or future power (or both) in the trust. “(2) Time certain terminations deemed to occur.— “(A) Where 2 or more beneficiaries are assigned to same generation.— In any case where 2 or more younger generation beneficiaries of a trust are assigned to the same generation, except to the extent provided in regulations prescribed by the Secretary, the transfer constituting the termination with respect to each such beneficiary shall be treated as occurring at the time when the last such termination occurs. “(B) Same beneficiary has more than i interest or power.— In any case where a younger generation beneficiary of a trust has both an interest and a power, or more than 1 interest or power, in the trust, except to the extent provided in regulations prescribed by the Secretary, the termination with respect to each such interest or power shall be treated as occurring at the time when the last such termination occurs. “(C) Unusual order of termination.— “(i) In general.— If— 90 STAT. 1885 “(I) but for this subparagraph, there would have been a termination (determined after the application of subparagraphs (A) and (B)) of an interest or power of a younger generation beneficiary (hereinafter in this subparagraph referred to as the ‘younger beneficiary’), and “(II) at the time such termination would have occurred, a beneficiary (hereinafter in this subparagraph referred to as the ‘older beneficiary’) of the trust assigned to a higher generation than the generation of the younger beneficiary has a present interest or power in the trust, then, except to the extent provided in regulations prescribed by the Secretary, the transfer constituting the termination with respect to the younger beneficiary shall be treated as occurring at the time when the termination of the last present interest or power of the older beneficiary occurs. “(ii) Special rules.— If clause (i) applies with respect to any younger beneficiary— “(I) this chapter shall be applied first to the termination of the interest or power of the older beneficiary as if such termination occurred before the termination of the power or interest of the younger beneficiary; and “(II) the value of the property taken into account for purposes of determining the tax (if any) imposed by this chapter with respect to the termination of the interest or power of the younger beneficiary shall be reduced by the tax (if any) imposed by this chapter with respect to the termination of the interest or power of the older beneficiary. “(D) Special rule.— Subparagraphs (A) and (C) shall also apply where a person assigned to the same generation as, or a higher generation than, the person whose power or interest terminates has a present power or interest immediately after the termination and such power or interest arises as a result of such termination. “(3) Deemed transferees of certain terminations.— Where, at the time of any termination, it is not clear who will be the transferee of any portion of the property transferred, except to the extent provided in regulations prescribed by the Secretary, such portion shall be deemed transferred pro rata to all beneficiaries of the trust in accordance with the amount which each of them would receive under a maximum exercise of discretion on their behalf. For purposes of the preceding sentence, where it is not clear whether discretion will be exercised per stirpes or per capita, it shall be presumed that the discretion will be exercised per stirpes. “(4) Termination of power.— In the case of the termination of any power, the property transferred shall be deemed to be the property subject to the power immediately before the termination (determined without the application of paragraph (2)). “(5) Certain terminations excluded from tax.— The term ‘taxable termination’ does not include— “(A) any transfer to the extent such transfer is to a grandchild of the grantor of the trust and does not exceed the limitation provided by paragraph (6), and 90 STAT. 1886 “(B) any transfer to the extent such transfer is subject to a tax imposed by chapter 11 or 12. “(6) $250,000 limit on exclusion of transfers to grand children.— In the case of any deemed transferor, the maximum amount excluded from the terms ‘taxable distribution’ and ‘taxable termination’ by reason of provisions exempting from such terms transfers to the grandchildren of the grantor of the trust shall be $250,000. The preceding sentence shall be applied to transfers from one or more trusts in the order in which such transfers are made or deemed made. “(7) Coordination with subsection (a).— “(A) Terminations take precedence over distributions.— If— “(i) the death of an individual or any other occurrence is a taxable termination with respect to any property, and “(ii) such occurrence also requires the distribution of part or all of such property in a distribution which would (but for this subparagraph) be a taxable distribution, then a taxable distribution shall be deemed not to have occurred with respect to the portion described in clause (i). “(B) Certain prior transfers.— To the extent that— “(i) the deemed transferor in any prior transfer of the property of the trust being transferred in this transfer was assigned to the same generation as (or a lower generation than) the generation assignment of the deemed transferor in this transfer, “(ii) the transferee in such prior transfer was assigned to the same generation as (or a higher generation than) the generation assignment of the transferee in this transfer, and “(iii) such transfers do not have the effect of avoiding tax under this chapter with respect to any transfer, the terms Taxable termination’ and ‘taxable distribution’ do not include this later transfer. “(c) Younger Generation Beneficiary; Beneficiary.— For purposes of this chapter— “(1) Younger generation beneficiary.— The term ‘younger generation beneficiary’ means any beneficiary who is assigned to a generation younger than the grantor’s generation. “(2) Time for ascertaining younger generation beneficiaries.— A person is a younger generation beneficiary of a trust with respect to any transfer only if such person was a younger generation beneficiary of the trust immediately before the transfer (or, in the case of a series of related transfers, only if such person was a younger generation beneficiary of the trust immediately before the first of such transfers). “(3) Beneficiary.— The term ‘beneficiary’ means any person who has a present or future interest or power in the trust, “(d) Interest or Power.— For purposes of this chapter— “(1) Interest.— A person has an interest in a trust if such person— “(A) has a right to receive income or corpus from the trust, or “(B) is a permissible recipient of such income or corpus. “(2) Power.— The term ‘power’ means any power to establish or alter beneficial enjoyment of the corpus or income of the trust. 90 STAT. 1887 “(e) Limited Power To Appoint Among Lineal Descendants of Grantor Not Taken Into Account in Certain Cases.— For purposes of this chapter, if any individual does not have any present or future power in the trust other than a power to dispose of the corpus of the trust or the income therefrom to a beneficiary or a class of beneficiaries who are lineal descendants of the grantor assigned to a generation younger than the generation assignment of such individual, then such individual shall be treated as not having any power in the trust. “(f) Effect of Adoption.— For purposes of this chapter, a relationship by legal adoption shall be treated as a relationship by blood. “SEC. 2614. SPECIAL RULES. “(a) Basis Adjustment.— If property is transferred to any person pursuant to a generation-skipping transfer which occurs before the death of the deemed transferor, the basis of such property in the hands of the transferee shall be increased (but not above the fair market value of such property) by an amount equal to that portion of the tax imposed by section 2601 with respect to the transfer winch is attributable to the excess of the fair market value of such property over its adjusted basis immediately before the transfer. If property is transferred in a generation-skipping transfer subject to tax under this chapter which occurs at the same time as, or after, the death of the deemed transferor, the basis of such property shall be adjusted in a manner similar to the manner provided by section 1023 without regard to subsection (d) thereof (relating to basis of property passing from a decedent dying after December 31, 1976). “(b) Nonresidents Not Citizens of the United States.— If the deemed transferor of any transfer is, at the time of the transfer, a nonresident not a citizen of the United States and— “(1) if the deemed transferor is alive at the time of the transfer, there shall be taken into account only property which would be taken into account for purposes of chapter 12, or “(2) if the deemed transferor has died at the same time as, or before, the transfer, there shall be taken into account only property which would be taken into account for purposes of chapter 11. “(c) Disclaimers.— “For provisions relating to the effect of a qualified disclaimer for purposes of this chapter, see section 2518. “Subchapter C— Administration “Sec. 2621. Administration. “Sec. 2622. Regulations. “SEC. 2621. ADMINISTRATION. “(a) General Rule— Insofar as applicable and not inconsistent with the provisions of this chapter— “(1) if the deemed transferor is not alive at the time of the transfer, all provisions of subtitle F (including penalties) applicable to chapter 11 or section 2001 are hereby made applicable in respect of this chapter or section 2601, as the case may be, and “(2) if the deemed transferor is alive at the time of the transfer, all provisions of subtitle F (including penalties) applicable to chapter 12 or section 2501 are hereby made applicable in respect of this chapter or section 2601, as the case may be. “(b) Sections 6166 and 6166A Not Applicable.— For purposes of this chapter, sections 6166 and 6166A (relating to extensions of time 90 STAT. 1888for payment of estate tax where estate consists largely of interest in closely held business) shall not apply. “(c) Return Requirements.— “(1) In General.— The Secretary shall prescribe by regulations the person who is required to make the return with respect to the tax imposed by this chapter and the time by which any such return must be filed. To the extent practicable, such regulations shall provide that— “(A) the person who is required to make such return shall be— “(i) in the case of a taxable distribution, the distributee, or “(ii) in the case of a taxable termination, the trustee; and “(B) the return shall be filed— “(i) in the case of a generation-skipping transfer occurring before the death of the deemed transferor, on or before the 90th day after the close of the taxable year of the trust in which such transfer occurred, or “(ii) in the case of a generation-skipping transfer occurring at the same time as, or after, the death of the deemed transferor, on or before the 90th day after the last day prescribed by law (including extensions) for filing the return of tax under chapter 11 with respect to the estate of the deemed transferor (or if later, the day which is 9 months after the day on which such generation-skip ping transfer occurred). “(2) Information returns.— The Secretary may by regulations require the trustee to furnish the Secretary with such information as he determines to be necessary for purposes of this chapter. “SEC. 2622. REGULATIONS. “The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this chapter, including regulations providing the extent to which substantially separate and independent shares of different beneficiaries in the trust shall be treated as separate trusts.” (b) Technical, Clerical, and Conforming Changes.— (1) Clerical change.—The table of chapters for subtitle B is amended by adding at the end thereof the following new item: “Chapter 13. Tax on certain generation-skipping transfers.” (2) Credit for tax on prior transfers.— Section 2013 (relating to credit for tax on prior transfers) is amended by adding at the end thereof the following new subsection: “(g) Treatment of Tax Imposed on Certain Generation-Skipping Transfers.— If any property was transferred to the decedent in a transfer which is taxable under section 2601 (relating to tax imposed on gene ration-skip ping transfers) and if the deemed transferor (as defined in section 2612) is not alive at the time of such transfer, for purposes of this section— “(1) such property shall be deemed to have passed to the decedent from the deemed transferor; “(2) the tax payable under section 2601 on such transfer shall be treated as a Federal estate tax payable with respect to the estate of the deemed transferor; and 90 STAT. 1889 “(3) the amount of the taxable estate of the deemed transferor shall be increased by the value of such property as determined for purposes of the tax imposed by section 2601 on the transfer.” (3) Income in respect of a decedent.— Subsection (c) of section 691 (relating to deduction for estate tax) is amended by adding at the encl thereof the following new paragraph: “(3) Special rule for generation-skipping transfers.— For purposes of this section— “(A) the tax imposed by section 2601 or any State inheritance tax described in section 2602(c)(5)(C) on any generation-skipping transfer shall be treated as a tax imposed by section 2001 on the estate of the deemed transferor (as defined in section 2612 (a); “(B) any property transferred in such a transfer shall be treated as if it were included in the gross estate of the deemed transferor at the value of such property taken into account for purposes of the tax imposed by section 2601; and “(C) under regulations prescribed by the secretary, any item of gross income subject to the tax imposed under section 2601 shall be treated as income described in subsection (a) if such item is not properly includible in the gross income of the trust on or before the date of the generation-skipping transfer (within the meaning of section 2611(a)) and if such transfer occurs at or after the death of the deemed tranferor (as so defined).” (4) Special rules for generation-skipping transfers.— Section 303 is amended by adding at the end thereof the following new subsection: “(d) Special Rules for Generation-Skipping Transfers.— Under regulations prescribed by the Secretary, where stock in a corporation is subject to tax under section 2601 as a result of a generation-skipping transfer (within the meaning of section 2611(a)), which occurs at or after the death of the deemed transferor (within the meaning of section 2612)— “(1) the stock shall be deemed to be included in the gross estate of the deemed transferor; “(2) taxes of the kind referred to in subsection (a)(1) which are imposed because of the generation-skipping transfer shall be treated as imposed because of the deemed transferor’s death (and for this purpose the tax imposed by section 2601 shall be treated as an estate tax); “(3) the period of distribution shall be measured from the date of the generation-skipping transfer; and “(4) the relationship of stock to the decedent’s estate shall be measured with reference solely to the amount of the generation-skipping transfer.” (c) Effective Dates.— (1) In general.— Except as provided in paragraph (2), the amendments made by this section shall apply to any generation-skipping transfer (within the meaning of section 2611(a) of the Internal Revenue Code of 1954) made after April 30, 1976. (2) Exceptions.— The amendments made by this section shall not apply to any generation-skipping transfer— (A) under a trust which was irrevocable on April 30, 1976, but only to the extent that the transfer is not made out of corpus added to the trust after April 30, 1976, or 90 STAT. 1890 (B) in the case of a decedent dying before January 1, 1982, pursuant to a will (or revocable trust) which was in existence on April 30, 1976, and was not amended at any time after that date in any respect which will result in the creation of, or increasing the amount of, any generation-skipping transfer. For purposes of subparagraph (B), if the decedent on April 30, 1976, was under a mental disability to change the disposition of his property, the period set forth in such subparagraph shall not expire before the date which is 2 years after the date on which he first regains his competence to dispose of such property. (3) Trust equivalents.— For purposes of paragraph (2), in the case of a trust equivalent within the meaning of subsection (d) of section 2611 of the Internal Revenue Code of 1954, the provisions of such subsection (d) shall apply.