TREATMENT OF PORTIONS OF PROPERTY UNDER MARITAL DEDUCTION.

SEC. 1941. TREATMENT OF PORTIONS OF PROPERTY UNDER MARITAL DEDUCTION. (a) Estate Tax.— Subsection (b) of section 2056 (relating to limitation in case of life estate or other terminable interest) is amended by adding at the end thereof the following new paragraph: “(10) Specific portion.— For purposes of paragraphs (5), (6), and (7)(B)(iv), the term ‘specific portion’ only includes a portion determined on a fractional or percentage basis.” (b) Gift Tax.— (1) Subsection (e) of section 2523 is amended by adding at the end thereof the following new sentence: “For purposes of this subsection, the term ‘specific portion’ only includes a portion determined on a fractional or percentage basis.” (2) Paragraph (3) of section 2523(f) is amended by inserting before the period at the end thereof the following: “and the rules of section 2056(b)(10) shall apply”. (c) Effective Dates.— (1) Subsection(a).— (A) In general.— Except as provided in subparagraph (B), the amendment made by subsection (a) shall apply to the estates of decedents dying after the date of the enactment of this Act. (B) Exception.— The amendment made by subsection (a) shall not apply to any interest in property which passes (or has passed) to the surviving spouse of the decedent pursuant to a will (or revocable trust) in existence on the date of the enactment of this Act if— (i) the decedent dies on or before the date 3 years after such date of enactment, or (ii) the decedent was, on such date of enactment, under a mental disability to change the disposition of his property and did not regain his competence to dispose of such property before the date of his death. The preceding sentence shall not apply if such will (or revocable trust) is amended at any time after such date of enactment in any respect which will increase the amount of the interest which so passes or alters the terms of the transfer by which the interest so passes. (2) Subsection (b).—The amendments made by subsection (b) shall apply to gifts made after the date of the enactment of this Act.