later than Wednesday, April 11, 1990, to be followed by a formal written request to Robert J. Leonard, Chief Counsel, Committee on ways and Means, U.S. House of Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515. The Committee staff will notify by telephone those scheduled to appear as soon as possible after the filing deadline. Any questions concerning a scheduled appearance should be directed to the Committee [(202) 225-1721].

Persons and organizations having a common position are urged to make every effort to designate one spokesperson to represent them in order for the Committee to hear as many points of view as possible. Time for oral presentations will be strictly limited with the understanding that a more detailed statement may be included in the printed record of the hearing (see formatting requirements below). This process will afford more time for members to question witnesses. addition, witnesses may be grouped as panelists with strict time limitations for each panelist.

In

In order to assure the most productive use of the limited amount of time available to question hearing witnesses, all witnesses scheduled to appear before the Committee are required to submit 300 copies of their prepared statements to the Committee office, 1102 Longworth House Office Building, at least 24 hours in advance of their scheduled appearance. Failure to comply with this requirement may result in the witness being denied the opportunity to testify in person.

WRITTEN STATEMENTS IN LIEU OF PERSONAL APPEARANCE:

Persons submitting written statements for the printed record of the hearing should submit at least six (6) copies by the close of business, Tuesday, May 8, 1990, to Robert J. Leonard, Chief Counsel, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515. If those filing written statements for the record of the printed hearing wish to have their statements distributed to the press and the interested public, they may provide 200 additional copies for this purpose to the Committee office, 1102 Longworth House Office Building, before the hearing begins.

FORMATTING REQUIREMENTS:

Each statement presented for printing to the Committee by a witness, any written statement or exhibit submitted for the printed record or any written comments in response to a request for written comments must conform to the guidelines listed below. Any statement or exhibit not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committes..

1. All statements and any accompanying exhibits for printing must be typed in single space on legal-size paper and may not exceed a total of 10 pages.

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.

3. Statements must contain the name and capacity in which the witness will appear or, for written comments. the name and capacity of the person submitting the statement, as well as any clients or persons, or any organization for whom the witness appears or for whom the statement is submitted.

4. A supplemental sheet must accompany each statement listing the name, full address, a telephone number where the witness or the designated representative may be reached and a topical outline or summary of the comments and recommendations in the full statement. This supplemental sheet will not be included in the printed record.

The above restrictions and limitations apply only to material being submitted for printing. Statements and exhibits or supplementary material submitted solely for distribution to the Members, the press and public during the course of a public hearing. may be submitted in other forms.

[COMMITTEE PRINT]

DISCUSSION DRAFT

MARCH 22, 1990

This document is printed for discussion purposes only. It has not been reviewed by the Members of the Committee on Ways and Means.

1 PART

2

3 SEC.

4

—PROVISIONS RELATING TO ESTATE

FREEZES

REPEAL OF SECTION 2036(c).

(a) IN GENERAL.-Section 2036 (relating to transfers

5 with retained life estate) is amended by striking subsection (c)

6 and by redesignating subsection (d) as subsection (c).

(1) Section 2207B is hereby repealed.

7

(b) CONFORMING AMENDMENTS.

8

9

10

11

tion 2207B.

(2) The table of sections for subchapter C of chap

ter 11 is amended by striking the item relating to sec

12 (c) EFFECTIVE DATE.-The amendments made by this

13 section shall apply in the case of property transferred after 14 December 17, 1987.

15 SEC.

16

SPECIAL VALUATION RULES.

(a) IN GENERAL.-Subtitle B is amended by adding at

17 the end thereof the following new chapter:

J. 27-862-0——1

2

1 "CHAPTER 14-SPECIAL VALUATION RULES

"Sec. 2701. Special valuation rules in case of transfers of interests in

10-percent owned entities.

"Sec. 2702. Certain options, etc., disregarded.

"Sec. 2703. Definitions and special rules.

2 "SEC. 2701. SPECIAL VALUATION RULES IN CASE OF TRANS

3

4

5

FERS OF INTERESTS IN 10-PERCENT OWNED

ENTITIES.

"(a) TRANSFERS OF INTERESTS IN CERTAIN ENTI

6 TIES.

“(1) IN GENERAL.-Solely for purposes of determining whether a transfer of an interest in a 10-percent owned entity to a member of the transferor's

family is a gift (and the amount of such gift), the value

of any interest in such entity retained by the transferor

(or a member of the transferor's family other than the transferee) shall be determined as provided in paragraph (2).

"(2) VALUATION OF RETAINED INTERESTS.—

"(A) IN GENERAL.-The value of any retained interest which is not a right to receive qualified fixed payments and which is not described in subparagraph (C) shall be treated as being zero.

"(B) VALUATION OF QUALIFIED FIXED PAYMENTS. For purposes of determining the value of the right to receive qualified fixed pay

3

ments under any instrument, it shall be assumed

that

"(i) such qualified fixed payments will

be made as provided in such instrument, and

"(ii) if such instrument has no fixed termination date, payments under such instru

ment will be made in perpetuity.

Clause (ii) shall not apply in the case of an inter

est in a trust.

"(C) VALUATION

OF CERTAIN OTHER

RIGHTS.—The value of the following retained in

terests shall be determined without regard to this

section:

"(i) Any instrument of the same class as

the transferred interest.

"(ii) Voting rights.

"(iii) Any instrument none of the rights under which have a preference over any

rights under the transferred interest.

This subparagraph shall not apply in the case of a trust.

"(3) MINIMUM VALUATION OF JUNIOR

EQUITY.

"(A) IN GENERAL.-The application of paragraph (1) to any transfer of a junior equity inter

4

est in a corporation or partnership shall not result in such interest being valued at an amount less

than its proportionate share of 20 percent of the sum of

"(i) the total value of all of the equity interests in such entity, plus

"(ii) the total amount of indebtedness of

such entity to the transferor (or a member of the transferor's family).

"(B) DEFINITIONS.-For purposes of this

paragraph

"(i) JUNIOR EQUITY INTEREST.—The term 'junior equity interest' means common stock or, in the case of a partnership, any partnership interest which is not preferential.

"(ii) EQUITY INTEREST.-The term 'equity interest' means stock or any interest

as a partner, as the case may be.

"(4) SPECIAL RULES FOR TRUSTS.-This subsec

tion shall not apply to any transfer of an interest in a

trust if

"(A) such transfer would not constitute a gift if no consideration were received for such transfer, or