-11-
which spouse furnished the consideration to acquire the jointly
held property.8 TRA 76 sec. 2002(d)(3), 90 Stat. 1856, provided
an effective date for the new 50-percent inclusion rule of
section 2040(b), making it applicable to "joint interests created
after December 31, 1976."9
Congress amended section 2040 again in 1978, with the
addition of subsections (c), (d), and (e). Revenue Act of 1978,
Pub. L. 95-600, secs. 511(a) and 702(k)(2), 92 Stat. 2763, 2881,
2932. Essentially, these subsections provided a mechanism
whereby an election could be made to treat joint interests
created prior to 1977 as "qualified joint interests" subject to
the 50-percent inclusion rule of section 2040(b).10
8By way of a "clerical amendment", sec. 2002(c)(3) of the
Tax Reform Act of 1976 (TRA 76), Pub. L. 94-455, 90 Stat. 1520,
1856, redesignated the original sec. 2040 as new subsection
2040(a), making it the general inclusion rule for all joint
interests other than "qualified joint interests".
9Although the effective date was not codified in the U.S.
Code, it was enacted as a section of the public law that was
subsequently codified at sec. 2040 and, accordingly, has the
force of law. See Patten v. United States, 116 F.3d 1029, 1033
n.3 (4th Cir. 1997).
10Sec. 2040(c) provided for an election to exclude a portion
of the value of jointly owned property used for farming or any
other trade or business based on the material participation of
the decedent's spouse in the activity. Sec. 2040(d) provided an
election to treat joint interests created before 1977 as
"qualified joint interests". Instead of severing and re-creating
the pre-1977 joint interest, a husband and wife could file a gift
tax return reporting a "deemed" gift (resulting from a "deemed"
severance and re-creation of the joint interest). Finally, sec.
2040(e) provided that if a pre-1977 joint interest was actually
severed and re-created by deed, it would nonetheless not be
(continued...)
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