the requirements described in paragraph (1)(A)(iii), and (ii) in any case where such property is not in the physical possession of the donee (other than in the case of art which is fragile or unwieldy) and used in a use which is related to a purpose or function constituting the basis for the donee organization's exemption under section 501 during any applicable period for a period of time which bears substantially the same ratio to 5 years as— (I) the percentage of the undivided interest of the donee in the property (determined on the day after such contribution was made), bears to (II) 100 percent. (B) Applicable period For purposes of subparagraph (A), the applicable period means— (i) the 5-year period beginning on the date of the later of the initial fractional contribution, and (ii) each subsequent 5-year period occurring during the 20-year period described in paragraph (1)(A)(iii)(II). . (b) Gift tax (1) Additional requirements for deduction Paragraph (1) of section 2522(e) of the Internal Revenue Code of 1986 is amended to read as follows: (1) Denial of deduction in certain cases (A) In general No deduction shall be allowed for a contribution of an undivided portion of a taxpayer's entire interest in tangible personal property unless— (i) all interests in the property are held immediately before such contribution by— (I) the taxpayer, or (II) the taxpayer and the donee, (ii) in the case of an initial fractional contribution, such contribution is an undivided portion of not less than 10 percent of all interests in the property, (iii) in the case of an initial fractional contribution, the contribution is made pursuant to a written binding contract which requires the donor— (I) to contribute not less than 20 percent of all interests in the property on or before the date that is 11 years after the date of the initial fractional contribution, and (II) to contribute all of the interests in such property to the donee (or if such donee is no longer in existence, to any person described in subsection (c)) on or