by reason of being the designated beneficiary of such account at the death of the account beneficiary, such long-term care account shall be treated as if the spouse were the account beneficiary. (B) Other cases (i) In general If, by reason of the death of the account beneficiary, any person acquires the account beneficiary’s interest in a long-term care account in a case to which subparagraph (A) does not apply— (I) such account shall cease to be a long-term care account as of the date of death, and (II) an amount equal to the fair market value of the assets in such account on such date shall be includible if such person is not the estate of such beneficiary, in such person’s gross income for the taxable year which includes such date, or if such person is the estate of such beneficiary, in such beneficiary’s gross income for the last taxable year of such beneficiary. (ii) Special rules (I) Reduction of inclusion for predeath expenses The amount includible in gross income under clause (i) by any person (other than the estate) shall be reduced by the amount of qualified long-term care expenses which were incurred by the decedent before the date of the decedent’s death and paid by such person within 1 year after such date. (II) Deduction for estate taxes An appropriate deduction shall be allowed under section 691(c) to any person (other than the decedent or the decedent’s spouse) with respect to amounts included in gross income under clause (i) by such person. (c) Definitions For purposes of this subsection— (1) Account beneficiary The term account beneficiary means, with respect to a long-term care account, the individual on whose behalf such account was established. (2) Long-term care account The term long-term care account means a trust created or organized in the United States as a long-term care account, but only if the written governing instrument creating the trust meets the following requirements: (A) No contribution will be accepted unless it is in cash and in consideration of the sale or assignment of any