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Before 1977, section 2040 merely provided for a contribution
rule to determine inclusion in the gross estate of a joint
tenant. The 1976 amendment provided in section 2040(b)(1) for a
50-percent inclusion rule for "qualified joint interests" (as
defined in section 2040(b)(2)), with the new rule being
applicable to "joint interests created after December 31, 1976."
Joint interests created before January 1, 1977, were still
subject to the contribution rule of section 2040(a). In 1981,
the definition of a "qualified joint interest" contained in
section 2040(b)(2) was changed, effective for "the estates of
decedents dying after December 31, 1981." The effective date of
the operational provision of section 2040(b)(1), however, was not
changed. The question is whether the 1981 amendment to the
definition of "qualified joint interests" in section 2040(b)(2)
somehow modified the effective date provision of section
2040(b)(1).
This issue was addressed in Gallenstein v. United States,
975 F.2d 286 (6th Cir. 1992). That case involved the same
relevant facts and the identical legal issue, namely, the income
tax basis of property held in joint tenancy with right of
survivorship upon the death of the taxpayer's spouse. In 1955,
Mrs. Gallenstein and her husband purchased real property as joint
tenants with right of survivorship. The entire purchase price
derived from Mr. Gallenstein's earnings. Upon her husband's
death in 1987, Mrs. Gallenstein became the sole owner of the
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