What is the GSTT or Generation Skipping Transfer Tax? It’s a confusing tax that your estate planning attorney better have explained to you. Even an innocent gift to a grandchild can create this tax. The tax is basically a double tax on gifts that try to “skip” a generation. There are ways to set it up to avoid this double tax so make sure your trust is set up correctly. I have pasted the actual tax laws below in case you read “greek.” Otherwise contact me and let’s make sure your estate plan is set up properly to avoid this double taxation upon death! -John
-CITE-
26 USC CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
-HEAD-
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
-MISC1-
Subchapter Sec.(!1)
A. Tax imposed 2601
B. Generation-skipping transfers 2611
C. Taxable amount 2621
D. GST exemption 2631
E. Applicable rate; inclusion ratio 2641
F. Other definitions and special rules 2651
G. Administration 2661
AMENDMENTS
1986 – Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986,
100 Stat. 2717, struck out “CERTAIN” after “TAX ON” in chapter
heading, substituted “Generation-skipping transfers” for
“Definitions and special rules” in item for subchapter B and
“Taxable amount” for “Administration” in item for subchapter C, and
added items for subchapters D, E, and F.
-FOOTNOTE-
(!1) Section numbers editorially supplied.
-End-
-CITE-
26 USC Subchapter A – Tax Imposed 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter A – Tax Imposed
-HEAD-
SUBCHAPTER A – TAX IMPOSED
-MISC1-
Sec.
2601. Tax imposed.
2602. Amount of tax.
2603. Liability for tax.
2604. Credit for certain State taxes.
-STATAMEND-
AMENDMENT OF ANALYSIS
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note set out
under section 2011 of this title.
-MISC2-
AMENDMENTS
2004 – Pub. L. 108-311, title IV, Sec. 408(a)(21), Oct. 4, 2004,
118 Stat. 1192, added item 2604.
2001 – Pub. L. 107-16, title V, Sec. 532(c)(15), (d), title IX,
Sec. 901, June 7, 2001, 115 Stat. 75, 150, temporarily struck out
item 2604 “Credit for certain State taxes”. See Effective and
Termination Dates of 2001 Amendment note set out under section 2011
of this title.
1986 – Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986,
100 Stat. 2717, in amending analysis of subchapter A generally,
added item 2604.
-End-
-CITE-
26 USC Sec. 2601 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter A – Tax Imposed
-HEAD-
Sec. 2601. Tax imposed
-STATUTE-
A tax is hereby imposed on every generation-skipping transfer
(within the meaning of subchapter B).
-SOURCE-
(Added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4, 1976, 90
Stat. 1879; amended Pub. L. 99-514, title XIV, Sec. 1431(a), Oct.
22, 1986, 100 Stat. 2718.)
-MISC1-
AMENDMENTS
1986 – Pub. L. 99-514 amended section generally, substituting
“(within the meaning of subchapter B)” for “in the amount
determined under section 2602″.
EFFECTIVE DATE OF 1986 AMENDMENT
Section 1433 of Pub. L. 99-514, as amended by Pub. L. 100-647,
title I, Sec. 1014(h)(1)-(3)(A), (4), Nov. 10, 1988, 102 Stat.
3567, 3568, provided that:
“(a) General Rule. – Except as provided in subsection (b), the
amendments made by this subtitle [subtitle D (Secs. 1431-1433) of
title XIV of Pub. L. 99-514, amending chapter 13 of this title,
enacting section 2515 of this title, and amending sections 164,
303, 691, 2013, 2032, and 6166 of this title] shall apply to any
generation-skipping transfer (within the meaning of section 2611 of
the Internal Revenue Code of 1986) made after the date of the
enactment of this Act [Oct. 22, 1986].
“(b) Special Rules. -
“(1) Treatment of certain inter vivos transfers made after
september 25, 1985. – For purposes of subsection (a) (and chapter
13 of the Internal Revenue Code of 1986 as amended by this part),
any inter vivos transfer after September 25, 1985, and on or
before the date of the enactment of this Act [Oct. 22, 1986]
shall be treated as if it were made on the 1st day after the date
of enactment of this Act.
“(2) Exceptions. – The amendments made by this subtitle shall
not apply to -
“(A) any generation-skipping transfer under a trust which was
irrevocable on September 25, 1985, but only to the extent that
such transfer is not made out of corpus added to the trust
after September 25, 1985 (or out of income attributable to
corpus so added),
“(B) any generation-skipping transfer under a will or
revocable trust executed before the date of the enactment of
this Act [Oct. 22, 1986] if the decedent dies before January 1,
1987, and
“(C) any generation-skipping transfer -
“(i) under a trust to the extent such trust consists of
property included in the gross estate of a decedent (other
than property transferred by the decedent during his life
after the date of the enactment of this Act [Oct. 22, 1986]),
or reinvestments thereof, or
“(ii) which is a direct skip which occurs by reason of the
death of any decedent;
but only if such decedent was, on the date of the enactment of
this Act [Oct. 22, 1986], under a mental disability to change the
disposition of his property and did not regain his competence to
dispose of such property before the date of his death.
“(3) Treatment of certain transfers to grandchildren. -
“(A) In general. – For purposes of chapter 13 of the Internal
Revenue Code of 1986, the term ‘direct skip’ shall not include
any transfer before January 1, 1990, from a transferor to a
grandchild of the transferor to the extent the aggregate
transfers from such transferor to such grandchild do not exceed
$2,000,000.
“(B) Treatment of transfers in trust. – For purposes of
subparagraph (A), a transfer in trust for the benefit of a
grandchild shall be treated as a transfer to such grandchild if
(and only if) -
“(i) during the life of the grandchild, no portion of the
corpus or income of the trust may be distributed to (or for
the benefit of) any person other than such grandchild,
“(ii) the assets of the trust will be includible in the
gross estate of the grandchild if the grandchild dies before
the trust is terminated, and
“(iii) all of the income of the trust for periods after the
grandchild has attained age 21 will be distributed to (or for
the benefit of) such grandchild not less frequently than
annually.
“(C) Coordination with section 2653(a) of the 1986 code. – In
the case of any transfer which would be a generation-skipping
transfer but for subparagraph (A), the rules of section 2653(a)
of the Internal Revenue Code of 1986 shall apply as if such
transfer were a generation-skipping transfer.
“(D) Coordination with taxable terminations and taxable
distributions. – For purposes of chapter 13 of the Internal
Revenue Code of 1986, the terms ‘taxable termination’ and
‘taxable distribution’ shall not include any transfer which
would be a direct skip but for subparagraph (A).
“(4) Definitions. – Terms used in this section shall have the
same respective meanings as when used in chapter 13 of the
Internal Revenue Code of 1986; except that section 2612(c)(2) of
such Code shall not apply in determining whether an individual is
a grandchild of the transferor.
“(c) Repeal of Existing Tax on Generation-Skipping Transfers. -
“(1) In general. – In the case of any tax imposed by chapter 13
of the Internal Revenue Code of 1954 [now 1986] (as in effect on
the day before the date of the enactment of this Act [Oct. 22,
1986]), such tax (including interest, additions to tax, and
additional amounts) shall not be assessed and if assessed, the
assessment shall be abated, and if collected, shall be credited
or refunded (with interest) as an overpayment.
“(2) Waiver of statute of limitations. – If on the date of the
enactment of this Act [Oct. 22, 1986] (or at any time within 1
year after such date of enactment) refund or credit of any
overpayment of tax resulting from the application of paragraph
(1) is barred by any law or rule of law, refund or credit of such
overpayment shall, nevertheless, be made or allowed if claim
therefore [sic] is filed before the date 1 year after the date of
the enactment of this Act.
“(d) Election for Certain Transfers Benefiting Grandchild. -
“(1) In general. – For purposes of chapter 13 of the Internal
Revenue Code of 1986 (as amended by this Act) and subsection (b)
of this section, any transfer in trust for the benefit of a
grandchild of a transferor shall be treated as a direct skip to
such grandchild if -
“(A) the transfer occurs before the date of enactment of this
Act [Oct. 22, 1986],
“(B) the transfer would be a direct skip to a grandchild
except for the fact that the trust instrument provides that, if
the grandchild dies before vesting of the interest transferred,
the interest is transferred to the grandchild’s heir (rather
than the grandchild’s estate), and
“(C) an election under this subsection applies to such
transfer.
Any transfer treated as a direct skip by reason of the preceding
sentence shall be subject to Federal estate tax on the
grandchild’s death in the same manner as if the contingent gift
over had been to the grandchild’s estate.
“(2) Election. – An election under paragraph (1) shall be made
at such time and in such manner as the Secretary of the Treasury
or his delegate may prescribe.
Unless the grandchild otherwise directs by will, the estate of such
grandchild shall be entitled to recover from the person receiving
the property on the death of the grandchild any increase in Federal
estate tax on the estate of the grandchild by reason of the
preceding sentence.”
[Pub. L. 101-508, title XI, Sec. 11703(c)(3), Nov. 5, 1990, 104
Stat. 1388-517, provided that: "Subparagraph (C) of section
1433(b)(2) of the Tax Reform Act of 1986 [Pub. L. 99-514, set out
above] shall not exempt any generation-skipping transfer from the
amendments made by subtitle D of title XVI of such Act [probably
means subtitle D (Secs. 1431-1433) of title XIV of Pub. L. 99-514,
amending chapter 13 of this title, enacting section 2515 of this
title, and amending sections 164, 303, 691, 2013, 2032, and 6166 of
this title] to the extent such transfer is attributable to property
transferred by gift or by reason of the death of another person to
the decedent (or trust) referred to in such subparagraph after
August 3, 1990.”]
[Section 1014(h)(3)(B) of Pub. L. 100-647 provided that: "Clause
(iii) of section 1443(b)(3)(B) [1433(b)(3)(B)] of the Reform Act
[Pub. L. 99-514, set out above] (as amended by subparagraph (A))
shall apply only to transfers after June 10, 1987.”]
[Section 1014(h)(5) of Pub. L. 100-647 provided that:
"Subparagraph (C) of section 1433(b)(2) of the Reform Act [Pub. L.
99-514, set out above] shall not exempt any direct skip from the
amendments made by subtitle D of title XIV of the Reform Act [Pub.
L. 99-514, amending chapter 13 of this title, enacting section 2515
of this title, and amending sections 164, 303, 691, 2013, 2032, and
6166 of this title] if -
["(A) such direct skip results from the application of section
2044 of the 1986 Code, and
["(B) such direct skip is attributable to property transferred
to the trust after October 21, 1988."]
EFFECTIVE DATE
Section 2006(c) of Pub. L. 94-455, as amended by Pub. L. 95-600,
title VII, Sec. 702(n)(1), Nov. 6, 1978, 92 Stat. 2935; Pub. L. 97-
34, title IV, Sec. 428, Aug. 13, 1981, 95 Stat. 319; Pub. L. 99-
514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
“(1) In general. – Except as provided in paragraph (2), the
amendments made by this section [enacting this chapter and amending
sections 303, 691, and 2013 of this title] shall apply to any
generation-skipping transfer (within the meaning of section 2611(a)
of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]) made
after June 11, 1976.
“(2) Exceptions. – The amendments made by this section shall not
apply to any generation-skipping transfer -
“(A) under a trust which was irrevocable on June 11, 1976, but
only to the extent that the transfer is not made out of corpus
added to the trust after June 11, 1976, or
“(B) in the case of a decedent dying before January 1, 1983,
pursuant to a will (or revocable trust) which was in existence on
June 11, 1976, and was not amended at any time after that date in
any respect which will result in the creation of, or increasing
the amount of, any generation-skipping transfer.
For purposes of subparagraph (B), if the decedent on June 11, 1976,
was under a mental disability to change the disposition of his
property, the period set forth in such subparagraph shall not
expire before the date which is 2 years after the date on which he
first regains his competence to dispose of such property.
“(3) Trust equivalents. – For purposes of paragraph (2), in the
case of a trust equivalent within the meaning of subsection (d) of
section 2611 of the Internal Revenue Code of 1986, the provisions
of such subsection (d) shall apply.”
[Amendment of section 2006(c) of Pub. L. 94-455, set out above,
by section 702(n)(1) of Pub. L. 95-600, effective Oct. 4, 1976, see
section 702(n)(5) of Pub. L. 95-600, set out as an Effective Date
of 1978 Amendment note under section 2613 of this title.]
-End-
-CITE-
26 USC Sec. 2602 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter A – Tax Imposed
-HEAD-
Sec. 2602. Amount of tax
-STATUTE-
The amount of the tax imposed by section 2601 is -
(1) the taxable amount (determined under subchapter C),
multiplied by
(2) the applicable rate (determined under subchapter E).
-SOURCE-
(Added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4, 1976, 90
Stat. 1879; amended Pub. L. 95-600, title VII, Sec. 702(h)(2),
(n)(4), Nov. 6, 1978, 92 Stat. 2931, 2936; Pub. L. 97-34, title IV,
Sec. 403(a)(2)(B), Aug. 13, 1981, 95 Stat. 301; Pub. L. 99-514,
title XIV, Sec. 1431(a), Oct. 22, 1986, 100 Stat. 2718.)
-MISC1-
AMENDMENTS
1986 – Pub. L. 99-514 amended section generally, substituting
provisions that amount of tax imposed by section 2601 is the
taxable amount (determined under subchapter C), multiplied by the
applicable rate (determined under subchapter E) for former
provisions which set out in detail the calculations and formulae
for determining amount of tax imposed by section 2601.
1981 – Subsec. (c)(5). Pub. L. 97-34 redesignated subpars. (B)
and (C) as (A) and (B), respectively, and struck out former subpar.
(A) relating to adjustments to marital deduction and providing that
if the generation-skipping transfer occurs at the same time as, or
within 9 months after, the death of the deemed transferor, for
purposes of section 2056, relating to bequests, etc., to surviving
spouse, the value of the gross estate of the deemed transferor
shall be deemed to be increased by the amount of such transfer.
1978 – Subsec. (a)(1)(C). Pub. L. 95-600, Sec. 702(h)(2),
inserted “, as modified by section 2001(e)” after “within the
meaning of section 2001(b)”.
Subsec. (d)(1)(A). Pub. L. 95-600, Sec. 702(n)(4)(A), inserted
“(or at the same time as the death of a beneficiary of the trust
assigned to a higher generation than such deemed transferor)” after
“such deemed transferor”.
Subsec. (d)(2)(A). Pub. L. 95-600, Sec. 702(n)(4)(B), inserted
“(or beneficiary)” after “the deemed transferor”.
EFFECTIVE DATE OF 1986 AMENDMENT
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97-34 applicable to estates of decedents
dying after Dec. 31, 1981, but inapplicable under certain
conditions under will executed before date which is 30 days after
Aug. 13, 1981, or under trust created by such date, see section
403(e) of Pub. L. 97-34, set out as a note under section 2056 of
this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Amendment by section 702(h)(2) of Pub. L. 95-600 applicable to
estates of decedents dying after Dec. 31, 1976, except that such
amendment shall not apply to transfers made before Jan. 1, 1977,
see section 702(h)(3) of Pub. L. 95-600, set out as a note under
section 2001 of this title.
Amendment by section 702(n)(4) of Pub. L. 95-600 effective as if
included in this chapter as added by section 2006 of Pub. L. 94-
455, see section 702(n)(5) of Pub. L. 95-600, set out as a note
under section 2613 of this title.
-End-
-CITE-
26 USC Sec. 2603 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter A – Tax Imposed
-HEAD-
Sec. 2603. Liability for tax
-STATUTE-
(a) Personal liability
(1) Taxable distributions
In the case of a taxable distribution, the tax imposed by
section 2601 shall be paid by the transferee.
(2) Taxable termination
In the case of a taxable termination or a direct skip from a
trust, the tax shall be paid by the trustee.
(3) Direct skip
In the case of a direct skip (other than a direct skip from a
trust), the tax shall be paid by the transferor.
(b) Source of tax
Unless otherwise directed pursuant to the governing instrument by
specific reference to the tax imposed by this chapter, the tax
imposed by this chapter on a generation-skipping transfer shall be
charged to the property constituting such transfer.
(c) Cross reference
For provisions making estate and gift tax provisions with
respect to transferee liability, liens, and related matters
applicable to the tax imposed by section 2601, see section
2661.
-SOURCE-
(Added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4, 1976, 90
Stat. 1881; amended Pub. L. 99-514, title XIV, Sec. 1431(a), Oct.
22, 1986, 100 Stat. 2718.)
-MISC1-
AMENDMENTS
1986 – Pub. L. 99-514 amended section generally, substituting tax
liability provisions consisting of language placing liability,
under different circumstances, on the transferee, the trustee, or
the transferor, the source of the tax, and a cross reference to
section 2661 for former provisions which covered the question of
liability for tax with language covering the trustee and the
distributee, the limitation on personal liability of the trustee
who relied on certain information furnished by the Secretary, the
limitation on personal liability of distributee, and the lien on
property transferred until the tax was paid in full or became
unenforceable by reason of lapse of time.
EFFECTIVE DATE OF 1986 AMENDMENT
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
-End-
-CITE-
26 USC Sec. 2604 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter A – Tax Imposed
-HEAD-
Sec. 2604. Credit for certain State taxes
-STATUTE-
(a) General rule
If a generation-skipping transfer (other than a direct skip)
occurs at the same time as and as a result of the death of an
individual, a credit against the tax imposed by section 2601 shall
be allowed in an amount equal to the generation-skipping transfer
tax actually paid to any State in respect to any property included
in the generation-skipping transfer.
(b) Limitation
The aggregate amount allowed as a credit under this section with
respect to any transfer shall not exceed 5 percent of the amount of
the tax imposed by section 2601 on such transfer.
(c) Termination
This section shall not apply to the generation-skipping transfers
after December 31, 2004.
-SOURCE-
(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100
Stat. 2718; amended Pub. L. 107-16, title V, Sec. 532(c)(10), June
7, 2001, 115 Stat. 75.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-MISC1-
AMENDMENTS
2001 – Subsec. (c). Pub. L. 107-16, Secs. 532(c)(10), 901,
temporarily added subsec. (c). See Effective and Termination Dates
of 2001 Amendment note below.
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Amendment by Pub. L. 107-16 applicable to estates of decedents
dying, and generation-skipping transfers, after Dec. 31, 2004, see
section 532(d) of Pub. L. 107-16, set out as a note under section
2011 of this title.
Amendment by Pub. L. 107-16 inapplicable to estates of decedents
dying, gifts made, or generation skipping transfers, after Dec. 31,
2012, and the Internal Revenue Code of 1986 to be applied and
administered to such estates, gifts, and transfers as if such
amendment had never been enacted, see section 901 of Pub. L. 107-
16, set out as a note under section 1 of this title.
EFFECTIVE DATE
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
-End-
-CITE-
26 USC Subchapter B – Generation-Skipping Transfers 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter B – Generation-Skipping Transfers
-HEAD-
SUBCHAPTER B – GENERATION-SKIPPING TRANSFERS
-MISC1-
Sec.
2611. Generation-skipping transfer defined.
2612. Taxable termination; taxable distribution; direct
skip.
2613. Skip person and non-skip person defined.
AMENDMENTS
1986 – Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986,
100 Stat. 2718, substituted “Generation-Skipping Transfers” for
“Definitions and Special Rules” in subchapter heading, substituted
“Generation-skipping transfer defined” for “Generation-skipping
transfer” in item 2611, “Taxable termination; taxable distribution;
direct skip” for “Deemed transferor” in item 2612, and “Skip person
and non-skip person defined” for “Other definitions” in item 2613,
and struck out item 2614 “Special rules”.
-End-
-CITE-
26 USC Sec. 2611 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter B – Generation-Skipping Transfers
-HEAD-
Sec. 2611. Generation-skipping transfer defined
-STATUTE-
(a) In general
For purposes of this chapter, the term “generation-skipping
transfer” means -
(1) a taxable distribution,
(2) a taxable termination, and
(3) a direct skip.
(b) Certain transfers excluded
The term “generation-skipping transfer” does not include -
(1) any transfer which, if made inter vivos by an individual,
would not be treated as a taxable gift by reason of section
2503(e) (relating to exclusion of certain transfers for
educational or medical expenses), and
(2) any transfer to the extent -
(A) the property transferred was subject to a prior tax
imposed under this chapter,
(B) the transferee in the prior transfer was assigned to the
same generation as (or a lower generation than) the generation
assignment of the transferee in this transfer, and
(C) such transfers do not have the effect of avoiding tax
under this chapter with respect to any transfer.
-SOURCE-
(Added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4, 1976, 90
Stat. 1882; amended Pub. L. 99-514, title XIV, Sec. 1431(a), Oct.
22, 1986, 100 Stat. 2718; Pub. L. 100-647, title I, Secs.
1014(g)(1), (2), 1018(u)(43), Nov. 10, 1988, 102 Stat. 3562, 3592.)
-MISC1-
AMENDMENTS
1988 – Subsec. (a). Pub. L. 100-647, Secs. 1014(g)(1),
1018(u)(43), substituted “generation-skipping transfer” for
“generation-skipping transfers” and “means” for “mean”.
Subsec. (b). Pub. L. 100-647, Sec. 1014(g)(2), redesignated pars.
(2) and (3) as (1) and (2), respectively, and struck out former
par. (1) which read as follows: “any transfer (other than a direct
skip) from a trust, to the extent such transfer is subject to a tax
imposed by chapter 11 or 12 with respect to a person in the 1st
generation below that of the grantor, and”.
1986 – Pub. L. 99-514 amended section generally, substituting
provisions defining “generation-skipping transfers” and what that
term does not include, for former provisions which defined
“generation-skipping transfer”, “transfer”, and “generation-
skipping trust”, contained provisions to be used in determining
the ascertainment of generation, and provided for a generation-
skipping trust equivalent.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
-End-
-CITE-
26 USC Sec. 2612 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter B – Generation-Skipping Transfers
-HEAD-
Sec. 2612. Taxable termination; taxable distribution; direct skip
-STATUTE-
(a) Taxable termination
(1) General rule
For purposes of this chapter, the term “taxable termination”
means the termination (by death, lapse of time, release of power,
or otherwise) of an interest in property held in a trust unless -
(A) immediately after such termination, a non-skip person has
an interest in such property, or
(B) at no time after such termination may a distribution
(including distributions on termination) be made from such
trust to a skip person.
(2) Certain partial terminations treated as taxable
If, upon the termination of an interest in property held in
trust by reason of the death of a lineal descendant of the
transferor, a specified portion of the trust’s assets are
distributed to 1 or more skip persons (or 1 or more trusts for
the exclusive benefit of such persons), such termination shall
constitute a taxable termination with respect to such portion of
the trust property.
(b) Taxable distribution
For purposes of this chapter, the term “taxable distribution”
means any distribution from a trust to a skip person (other than a
taxable termination or a direct skip).
(c) Direct skip
For purposes of this chapter -
(1) In general
The term “direct skip” means a transfer subject to a tax
imposed by chapter 11 or 12 of an interest in property to a skip
person.
(2) Look-thru rules not to apply
Solely for purposes of determining whether any transfer to a
trust is a direct skip, the rules of section 2651(f)(2) shall not
apply.
-SOURCE-
(Added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4, 1976, 90
Stat. 1883; amended Pub. L. 99-514, title XIV, Sec. 1431(a), Oct.
22, 1986, 100 Stat. 2719; Pub. L. 100-647, title I, Sec.
1014(g)(5)(B), (7), (15), Nov. 10, 1988, 102 Stat. 3564-3566; Pub.
L. 105-34, title V, Sec. 511(b), Aug. 5, 1997, 111 Stat. 861.)
-MISC1-
AMENDMENTS
1997 – Subsec. (c)(2). Pub. L. 105-34, Sec. 511(b)(2),
substituted “section 2651(f)(2)” for “section 2651(e)(2)”.
Pub. L. 105-34, Sec. 511(b)(1), redesignated par. (3) as (2) and
struck out heading and text of former par. (2). Text read as
follows: “For purposes of determining whether any transfer is a
direct skip, if -
“(A) an individual is a grandchild of the transferor (or the
transferor’s spouse or former spouse), and
“(B) as of the time of the transfer, the parent of such
individual who is a lineal descendant of the transferor (or the
transferor’s spouse or former spouse) is dead,
such individual shall be treated as if such individual were a child
of the transferor and all of that grandchild’s children shall be
treated as if they were grandchildren of the transferor. In the
case of lineal descendants below a grandchild, the preceding
sentence may be reapplied. If any transfer of property to a trust
would be a direct skip but for this paragraph, any generation
assignment under this paragraph shall apply also for purposes of
applying this chapter to transfers from the portion of the trust
attributable to such property.”
Subsec. (c)(3). Pub. L. 105-34, Sec. 511(b)(1), redesignated par.
(3) as (2).
1988 – Subsec. (a)(2). Pub. L. 100-647, Sec. 1014(g)(15), amended
par. (2) generally. Prior to amendment, par. (2) read as follows:
“If, upon the termination of an interest in property held in a
trust, a specified portion of the trust assets are distributed to
skip persons who are lineal descendants of the holder of such
interest (or to 1 or more trusts for the exclusive benefit of such
persons), such termination shall constitute a taxable termination
with respect to such portion of the trust property.”
Subsec. (c)(2). Pub. L. 100-647, Sec. 1014(g)(7), in closing
provisions, inserted at end “If any transfer of property to a trust
would be a direct skip but for this paragraph, any generation
assignment under this paragraph shall apply also for purposes of
applying this chapter to transfers from the portion of the trust
attributable to such property.”
Subsec. (c)(3). Pub. L. 100-647, Sec. 1014(g)(5)(B), added par.
(3).
1986 – Pub. L. 99-514 amended section generally, substituting
provisions covering definition and application of “taxable
termination”, “taxable distribution”, and “direct skip” for former
provisions which indicated who the “deemed transferor” would be for
purposes of this chapter and that, for purposes of determining the
person deemed the transferor, a parent related to the grantor of a
trust by blood or adoption was to be deemed more closely related
than a parent related to a grantor by marriage.
EFFECTIVE DATE OF 1997 AMENDMENT
Section 511(c) of Pub. L. 105-34 provided that: “The amendments
made by this section [amending this section and section 2651 of
this title] shall apply to terminations, distributions, and
transfers occurring after December 31, 1997.”
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
-End-
-CITE-
26 USC Sec. 2613 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter B – Generation-Skipping Transfers
-HEAD-
Sec. 2613. Skip person and non-skip person defined
-STATUTE-
(a) Skip person
For purposes of this chapter, the term “skip person” means -
(1) a natural person assigned to a generation which is 2 or
more generations below the generation assignment of the
transferor, or
(2) a trust -
(A) if all interests in such trust are held by skip persons,
or
(B) if -
(i) there is no person holding an interest in such trust,
and
(ii) at no time after such transfer may a distribution
(including distributions on termination) be made from such
trust to a nonskip person.
(b) Non-skip person
For purposes of this chapter, the term “non-skip person” means
any person who is not a skip person.
-SOURCE-
(Added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4, 1976, 90
Stat. 1884; amended Pub. L. 95-600, title VII, Sec. 702(n)(2), (3),
Nov. 6, 1978, 92 Stat. 2935, 2936; Pub. L. 96-222, title I, Sec.
107(a)(2)(B), Apr. 1, 1980, 94 Stat. 222; Pub. L. 99-514, title
XIV, Sec. 1431(a), Oct. 22, 1986, 100 Stat. 2720; Pub. L. 100-647,
title I, Sec. 1014(g)(5)(A), Nov. 10, 1988, 102 Stat. 3564.)
-MISC1-
AMENDMENTS
1988 – Subsec. (a)(1). Pub. L. 100-647 inserted “natural” before
“person”.
1986 – Pub. L. 99-514 amended section generally, substituting
definitions of “skip person” and “non-skip person” for former
provisions which defined and applied the terms “taxable
distribution”, “taxable termination”, “younger generation
beneficiary”, and “related or subordinate trustee”.
1980 – Subsec. (e)(2)(A)(i). Pub. L. 96-222, Sec.
107(a)(2)(B)(i), inserted “(other than as a potential appointee
under a power of appointment held by another)” after “trust”.
Subsec. (e)(2)(B). Pub. L. 96-222, Sec. 107(a)(2)(B)(ii),
redesignated cls. (iii) to (v) as (iv) to (vi), added cl. (iii),
and struck out cl. (vi) which related to an employee of a
corporation in which the grantor or any beneficiary of the trust is
an executive.
1978 – Subsec. (b)(2)(B). Pub. L. 95-600, Sec. 702(n)(3),
substituted “a present interest and a present power” for “an
interest and a power” and “present interest or present power” for
“interest or power” wherever appearing.
Subsec. (e). Pub. L. 95-600, Sec. 702(n)(2), inserted provisions
relating to powers of independent trustees and definition of a
related or subordinate trustee.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
EFFECTIVE DATE OF 1980 AMENDMENT
Amendment by Pub. L. 96-222 effective, except as otherwise
provided, as if it had been included in the provisions of the
Revenue Act of 1978, Pub. L. 95-600, to which such amendment
relates, see section 201 of Pub. L. 96-222, set out as a note under
section 32 of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Section 702(n)(5) of Pub. L. 95-600, as amended by Pub. L. 99-
514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
“(A) Except as provided in subparagraph (B), the amendments made
by this subsection [amending this section, section 2602 of this
title, and provisions set out as a note under section 2601 of this
title] shall take effect as if included in chapter 13 of the
Internal Revenue Code of 1986 [formerly I.R.C. 1954] as added by
section 2006 of the Tax Reform Act of 1976 [Pub. L. 94-455, title
XX, Sec. 2006, Oct. 4, 1976, 90 Stat. 1879].
“(B) The amendment made by paragraph (1) [amending provisions set
out as a note under section 2601 of this title] shall take effect
on October 4, 1976.”
-End-
-CITE-
26 USC Sec. 2614 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter B – Generation-Skipping Transfers
-HEAD-
[Sec. 2614. Omitted]
-COD-
CODIFICATION
Section, added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4,
1976, 90 Stat. 1887; amended Pub. L. 95-600, title VII, Sec.
702(c)(1)(B), Nov. 6, 1978, 92 Stat. 2926; Pub. L. 96-223, title
IV, Sec. 401(c)(3), Apr. 2, 1980, 94 Stat. 300, related to special
rules for generation-skipping transfers, prior to the general
revision of this chapter by Pub. L. 99-514, Sec. 1431(a).
-End-
-CITE-
26 USC Subchapter C – Taxable Amount 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter C – Taxable Amount
-HEAD-
SUBCHAPTER C – TAXABLE AMOUNT
-MISC1-
Sec.
2621. Taxable amount in case of taxable distribution.
2622. Taxable amount in case of taxable termination.
2623. Taxable amount in case of direct skip.
2624. Valuation.
AMENDMENTS
1986 – Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986,
100 Stat. 2720, substituted “Taxable Amount” for “Administration”
in subchapter heading, substituted “Taxable amount in case of
taxable distribution” for “Administration” in item 2621 and
“Taxable amount in case of taxable termination” for “Regulations”
in item 2622, and added items 2623 and 2624.
-End-
-CITE-
26 USC Sec. 2621 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter C – Taxable Amount
-HEAD-
Sec. 2621. Taxable amount in case of taxable distribution
-STATUTE-
(a) In general
For purposes of this chapter, the taxable amount in the case of
any taxable distribution shall be -
(1) the value of the property received by the transferee,
reduced by
(2) any expense incurred by the transferee in connection with
the determination, collection, or refund of the tax imposed by
this chapter with respect to such distribution.
(b) Payment of GST tax treated as taxable distribution
For purposes of this chapter, if any of the tax imposed by this
chapter with respect to any taxable distribution is paid out of the
trust, an amount equal to the portion so paid shall be treated as a
taxable distribution.
-SOURCE-
(Added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4, 1976, 90
Stat. 1887; amended Pub. L. 97-34, title IV, Sec. 422(e)(4), Aug.
13, 1981, 95 Stat. 316; Pub. L. 99-514, title XIV, Sec. 1431(a),
Oct. 22, 1986, 100 Stat. 2720.)
-MISC1-
AMENDMENTS
1986 – Pub. L. 99-514 amended section generally, substituting
provisions relating to taxable amount in case of a taxable
distribution for former provisions which related generally to
administration of this chapter. See section 2661 of this title.
1981 – Subsec. (b). Pub. L. 97-34 substituted “Section 6166″ for
“Sections 6166 and 6166A” in heading and “section 6166 (relating to
extension of time” for “sections 6166 and 6166A (relating to
extensions of time” in text.
EFFECTIVE DATE OF 1986 AMENDMENT
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97-34 applicable to estates of decedents
dying after Dec. 31, 1981, see section 422(f)(1) of Pub. L. 97-34,
set out as a note under section 6166 of this title.
-End-
-CITE-
26 USC Sec. 2622 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter C – Taxable Amount
-HEAD-
Sec. 2622. Taxable amount in case of taxable termination
-STATUTE-
(a) In general
For purposes of this chapter, the taxable amount in the case of a
taxable termination shall be -
(1) the value of all property with respect to which the taxable
termination has occurred, reduced by
(2) any deduction allowed under subsection (b).
(b) Deduction for certain expenses
For purposes of subsection (a), there shall be allowed a
deduction similar to the deduction allowed by section 2053
(relating to expenses, indebtedness, and taxes) for amounts
attributable to the property with respect to which the taxable
termination has occurred.
-SOURCE-
(Added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4, 1976, 90
Stat. 1888; amended Pub. L. 99-514, title XIV, Sec. 1431(a), Oct.
22, 1986, 100 Stat. 2720.)
-MISC1-
AMENDMENTS
1986 – Pub. L. 99-514 amended section generally, substituting
provisions relating to taxable amount in case of a taxable
termination for former provisions which authorized the Secretary to
promulgate regulations. See section 2663 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
-End-
-CITE-
26 USC Sec. 2623 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter C – Taxable Amount
-HEAD-
Sec. 2623. Taxable amount in case of direct skip
-STATUTE-
For purposes of this chapter, the taxable amount in the case of a
direct skip shall be the value of the property received by the
transferee.
-SOURCE-
(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100
Stat. 2721.)
-MISC1-
EFFECTIVE DATE
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
-End-
-CITE-
26 USC Sec. 2624 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter C – Taxable Amount
-HEAD-
Sec. 2624. Valuation
-STATUTE-
(a) General rule
Except as otherwise provided in this chapter, property shall be
valued as of the time of the generation-skipping transfer.
(b) Alternate valuation and special use valuation elections apply
to certain direct skips
In the case of any direct skip of property which is included in
the transferor’s gross estate, the value of such property for
purposes of this chapter shall be the same as its value for
purposes of chapter 11 (determined with regard to sections 2032 and
2032A).
(c) Alternate valuation election permitted in the case of taxable
terminations occurring at death
If 1 or more taxable terminations with respect to the same trust
occur at the same time as and as a result of the death of an
individual, an election may be made to value all of the property
included in such terminations in accordance with section 2032.
(d) Reduction for consideration provided by transferee
For purposes of this chapter, the value of the property
transferred shall be reduced by the amount of any consideration
provided by the transferee.
-SOURCE-
(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100
Stat. 2721.)
-MISC1-
EFFECTIVE DATE
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
-End-
-CITE-
26 USC Subchapter D – GST Exemption 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter D – GST Exemption
-HEAD-
SUBCHAPTER D – GST EXEMPTION
-MISC1-
Sec.
2631. GST exemption.
2632. Special rules for allocation of GST exemption.
-End-
-CITE-
26 USC Sec. 2631 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter D – GST Exemption
-HEAD-
Sec. 2631. GST exemption
-STATUTE-
(a) General rule
For purposes of determining the inclusion ratio, every individual
shall be allowed a GST exemption amount which may be allocated by
such individual (or his executor) to any property with respect to
which such individual is the transferor.
(b) Allocations irrevocable
Any allocation under subsection (a), once made, shall be
irrevocable.
(c) GST exemption amount
For purposes of subsection (a), the GST exemption amount for any
calendar year shall be equal to the basic exclusion amount under
section 2010(c) for such calendar year.
-SOURCE-
(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100
Stat. 2721; amended Pub. L. 105-34, title V, Sec. 501(d), Aug. 5,
1997, 111 Stat. 846; Pub. L. 105-206, title VI, Sec. 6007(a)(1),
July 22, 1998, 112 Stat. 806; Pub. L. 107-16, title V, Sec. 521(c),
June 7, 2001, 115 Stat. 72; Pub. L. 111-312, title III, Sec.
303(b)(2), Dec. 17, 2010, 124 Stat. 3303.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by section 304 of Pub. L. 111-312,
see Effective and Termination Dates of 2010 Amendment note below.
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-MISC1-
AMENDMENTS
2010 – Subsec. (c). Pub. L. 111-312, Secs. 303(b)(2), 304,
temporarily substituted “the basic exclusion amount” for “the
applicable exclusion amount”. See Effective and Termination Dates
of 2010 Amendment note below.
2001 – Subsec. (a). Pub. L. 107-16, Secs. 521(c)(1), 901,
temporarily substituted “amount” for “of $1,000,000″. See Effective
and Termination Dates of 2001 Amendment note below.
Subsec. (c). Pub. L. 107-16, Secs. 521(c)(2), 901, temporarily
amended heading and text of subsec. (c) generally, substituting
provisions relating to the GST exemption amount for any calendar
year for provisions which related to inflation adjustment of the
$1,000,000 amount contained in subsec. (a) in the case of any
calendar year after 1998 and applicability of any increase for any
such calendar year. See Effective and Termination Dates of 2001
Amendment note below.
1998 – Subsec. (c). Pub. L. 105-206 reenacted heading without
change and amended text generally. Prior to amendment, text read as
follows: “In the case of an individual who dies in any calendar
year after 1998, the $1,000,000 amount contained in subsection (a)
shall be increased by an amount equal to -
“(1) $1,000,000, multiplied by
“(2) the cost-of-living adjustment determined under section
1(f)(3) for such calendar year by substituting ‘calendar year
1997′ for ‘calendar year 1992′ in subparagraph (B) thereof.
If any amount as adjusted under the preceding sentence is not a
multiple of $10,000, such amount shall be rounded to the next
lowest multiple of $10,000.”
1997 – Subsec. (c). Pub. L. 105-34 added subsec. (c).
EFFECTIVE AND TERMINATION DATES OF 2010 AMENDMENT
Amendment by Pub. L. 111-312 applicable to generation-skipping
transfers after Dec. 31, 2010, see section 303(c)(2) of Pub. L. 111-
312, set out as a note under section 2010 of this title.
Section 901 of Pub. L. 107-16 applicable to amendments by section
303(b)(2) of Pub. L. 111-312, see section 304 of Pub. L. 111-312,
set out as a note under section 121 of this title.
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Amendment by Pub. L. 107-16 applicable to estates of decedents
dying, and generation-skipping transfers, after Dec. 31, 2003, see
section 521(e)(3) of Pub. L. 107-16, set out as a note under
section 2010 of this title.
Amendment by Pub. L. 107-16 inapplicable to estates of decedents
dying, gifts made, or generation skipping transfers, after Dec. 31,
2012, and the Internal Revenue Code of 1986 to be applied and
administered to such estates, gifts, and transfers as if such
amendment had never been enacted, see section 901 of Pub. L. 107-
16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-206 effective, except as otherwise
provided, as if included in the provisions of the Taxpayer Relief
Act of 1997, Pub. L. 105-34, to which such amendment relates, see
section 6024 of Pub. L. 105-206, set out as a note under section 1
of this title.
EFFECTIVE DATE
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
-End-
-CITE-
26 USC Sec. 2632 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter D – GST Exemption
-HEAD-
Sec. 2632. Special rules for allocation of GST exemption
-STATUTE-
(a) Time and manner of allocation
(1) Time
Any allocation by an individual of his GST exemption under
section 2631(a) may be made at any time on or before the date
prescribed for filing the estate tax return for such individual’s
estate (determined with regard to extensions), regardless of
whether such a return is required to be filed.
(2) Manner
The Secretary shall prescribe by forms or regulations the
manner in which any allocation referred to in paragraph (1) is to
be made.
(b) Deemed allocation to certain lifetime direct skips
(1) In general
If any individual makes a direct skip during his lifetime, any
unused portion of such individual’s GST exemption shall be
allocated to the property transferred to the extent necessary to
make the inclusion ratio for such property zero. If the amount of
the direct skip exceeds such unused portion, the entire unused
portion shall be allocated to the property transferred.
(2) Unused portion
For purposes of paragraph (1), the unused portion of an
individual’s GST exemption is that portion of such exemption
which has not previously been allocated by such individual (or
treated as allocated under paragraph (1) or subsection (c)(1)).
(3) Subsection not to apply in certain cases
An individual may elect to have this subsection not apply to a
transfer.
(c) Deemed allocation to certain lifetime transfers to GST trusts
(1) In general
If any individual makes an indirect skip during such
individual’s lifetime, any unused portion of such individual’s
GST exemption shall be allocated to the property transferred to
the extent necessary to make the inclusion ratio for such
property zero. If the amount of the indirect skip exceeds such
unused portion, the entire unused portion shall be allocated to
the property transferred.
(2) Unused portion
For purposes of paragraph (1), the unused portion of an
individual’s GST exemption is that portion of such exemption
which has not previously been -
(A) allocated by such individual,
(B) treated as allocated under subsection (b) with respect to
a direct skip occurring during or before the calendar year in
which the indirect skip is made, or
(C) treated as allocated under paragraph (1) with respect to
a prior indirect skip.
(3) Definitions
(A) Indirect skip
For purposes of this subsection, the term “indirect skip”
means any transfer of property (other than a direct skip)
subject to the tax imposed by chapter 12 made to a GST trust.
(B) GST trust
The term “GST trust” means a trust that could have a
generation-skipping transfer with respect to the transferor
unless -
(i) the trust instrument provides that more than 25 percent
of the trust corpus must be distributed to or may be
withdrawn by one or more individuals who are non-skip persons
-
(I) before the date that the individual attains age 46,
(II) on or before one or more dates specified in the
trust instrument that will occur before the date that such
individual attains age 46, or
(III) upon the occurrence of an event that, in accordance
with regulations prescribed by the Secretary, may
reasonably be expected to occur before the date that such
individual attains age 46,
(ii) the trust instrument provides that more than 25
percent of the trust corpus must be distributed to or may be
withdrawn by one or more individuals who are non-skip persons
and who are living on the date of death of another person
identified in the instrument (by name or by class) who is
more than 10 years older than such individuals,
(iii) the trust instrument provides that, if one or more
individuals who are non-skip persons die on or before a date
or event described in clause (i) or (ii), more than 25
percent of the trust corpus either must be distributed to the
estate or estates of one or more of such individuals or is
subject to a general power of appointment exercisable by one
or more of such individuals,
(iv) the trust is a trust any portion of which would be
included in the gross estate of a non-skip person (other than
the transferor) if such person died immediately after the
transfer,
(v) the trust is a charitable lead annuity trust (within
the meaning of section 2642(e)(3)(A)) or a charitable
remainder annuity trust or a charitable remainder unitrust
(within the meaning of section 664(d)), or
(vi) the trust is a trust with respect to which a deduction
was allowed under section 2522 for the amount of an interest
in the form of the right to receive annual payments of a
fixed percentage of the net fair market value of the trust
property (determined yearly) and which is required to pay
principal to a non-skip person if such person is alive when
the yearly payments for which the deduction was allowed
terminate.
For purposes of this subparagraph, the value of transferred
property shall not be considered to be includible in the gross
estate of a non-skip person or subject to a right of withdrawal
by reason of such person holding a right to withdraw so much of
such property as does not exceed the amount referred to in
section 2503(b) with respect to any transferor, and it shall be
assumed that powers of appointment held by non-skip persons
will not be exercised.
(4) Automatic allocations to certain GST trusts
For purposes of this subsection, an indirect skip to which
section 2642(f) applies shall be deemed to have been made only at
the close of the estate tax inclusion period. The fair market
value of such transfer shall be the fair market value of the
trust property at the close of the estate tax inclusion period.
(5) Applicability and effect
(A) In general
An individual -
(i) may elect to have this subsection not apply to -
(I) an indirect skip, or
(II) any or all transfers made by such individual to a
particular trust, and
(ii) may elect to treat any trust as a GST trust for
purposes of this subsection with respect to any or all
transfers made by such individual to such trust.
(B) Elections
(i) Elections with respect to indirect skips
An election under subparagraph (A)(i)(I) shall be deemed to
be timely if filed on a timely filed gift tax return for the
calendar year in which the transfer was made or deemed to
have been made pursuant to paragraph (4) or on such later
date or dates as may be prescribed by the Secretary.
(ii) Other elections
An election under clause (i)(II) or (ii) of subparagraph
(A) may be made on a timely filed gift tax return for the
calendar year for which the election is to become effective.
(d) Retroactive allocations
(1) In general
If -
(A) a non-skip person has an interest or a future interest in
a trust to which any transfer has been made,
(B) such person -
(i) is a lineal descendant of a grandparent of the
transferor or of a grandparent of the transferor’s spouse or
former spouse, and
(ii) is assigned to a generation below the generation
assignment of the transferor, and
(C) such person predeceases the transferor,
then the transferor may make an allocation of any of such
transferor’s unused GST exemption to any previous transfer or
transfers to the trust on a chronological basis.
(2) Special rules
If the allocation under paragraph (1) by the transferor is made
on a gift tax return filed on or before the date prescribed by
section 6075(b) for gifts made within the calendar year within
which the non-skip person’s death occurred -
(A) the value of such transfer or transfers for purposes of
section 2642(a) shall be determined as if such allocation had
been made on a timely filed gift tax return for each calendar
year within which each transfer was made,
(B) such allocation shall be effective immediately before
such death, and
(C) the amount of the transferor’s unused GST exemption
available to be allocated shall be determined immediately
before such death.
(3) Future interest
For purposes of this subsection, a person has a future interest
in a trust if the trust may permit income or corpus to be paid to
such person on a date or dates in the future.
(e) Allocation of unused GST exemption
(1) In general
Any portion of an individual’s GST exemption which has not been
allocated within the time prescribed by subsection (a) shall be
deemed to be allocated as follows -
(A) first, to property which is the subject of a direct skip
occurring at such individual’s death, and
(B) second, to trusts with respect to which such individual
is the transferor and from which a taxable distribution or a
taxable termination might occur at or after such individual’s
death.
(2) Allocation within categories
(A) In general
The allocation under paragraph (1) shall be made among the
properties described in subparagraph (A) thereof and the trusts
described in subparagraph (B) thereof, as the case may be, in
proportion to the respective amounts (at the time of
allocation) of the nonexempt portions of such properties or
trusts.
(B) Nonexempt portion
For purposes of subparagraph (A), the term “nonexempt
portion” means the value (at the time of allocation) of the
property or trust, multiplied by the inclusion ratio with
respect to such property or trust.
-SOURCE-
(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100
Stat. 2721; amended Pub. L. 100-647, title I, Sec. 1014(g)(16),
Nov. 10, 1988, 102 Stat. 3566; Pub. L. 107-16, title V, Sec.
561(a), (b), June 7, 2001, 115 Stat. 86, 89.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-MISC1-
AMENDMENTS
2001 – Subsec. (b)(2). Pub. L. 107-16, Secs. 561(b), 901,
temporarily substituted “or subsection (c)(1)” for “with respect to
a prior direct skip”. See Effective and Termination Dates of 2001
Amendment note below.
Subsecs. (c) to (e). Pub. L. 107-16, Secs. 561(a), 901,
temporarily added subsecs. (c) and (d) and redesignated former
subsec. (c) as (e). See Effective and Termination Dates of 2001
Amendment note below.
1988 – Subsec. (b)(2). Pub. L. 100-647 substituted “paragraph (1)
with respect to a prior direct skip)” for “paragraph (1)) with
respect to a prior direct skip”.
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Pub. L. 107-16, title V, Sec. 561(c), June 7, 2001, 115 Stat. 89,
provided that:
“(1) Deemed allocation. – Section 2632(c) of the Internal Revenue
Code of 1986 (as added by subsection (a)), and the amendment made
by subsection (b) [amending this section], shall apply to transfers
subject to chapter 11 or 12 made after December 31, 2000, and to
estate tax inclusion periods ending after December 31, 2000.
“(2) Retroactive allocations. – Section 2632(d) of the Internal
Revenue Code of 1986 (as added by subsection (a)) shall apply to
deaths of non-skip persons occurring after December 31, 2000.”
Amendment by Pub. L. 107-16 inapplicable to estates of decedents
dying, gifts made, or generation skipping transfers, after Dec. 31,
2012, and the Internal Revenue Code of 1986 to be applied and
administered to such estates, gifts, and transfers as if such
amendment had never been enacted, see section 901 of Pub. L. 107-
16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
-End-
-CITE-
26 USC Subchapter E – Applicable Rate; Inclusion Ratio 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter E – Applicable Rate; Inclusion Ratio
-HEAD-
SUBCHAPTER E – APPLICABLE RATE; INCLUSION RATIO
-MISC1-
Sec.
2641. Applicable rate.
2642. Inclusion ratio.
-End-
-CITE-
26 USC Sec. 2641 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter E – Applicable Rate; Inclusion Ratio
-HEAD-
Sec. 2641. Applicable rate
-STATUTE-
(a) General rule
For purposes of this chapter, the term “applicable rate” means,
with respect to any generation-skipping transfer, the product of -
(1) the maximum Federal estate tax rate, and
(2) the inclusion ratio with respect to the transfer.
(b) Maximum Federal estate tax rate
For purposes of subsection (a), the term “maximum Federal estate
tax rate” means the maximum rate imposed by section 2001 on the
estates of decedents dying at the time of the taxable distribution,
taxable termination, or direct skip, as the case may be.
-SOURCE-
(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100
Stat. 2722.)
-MISC1-
EFFECTIVE DATE
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
MODIFICATION OF GENERATION-SKIPPING TRANSFER TAX
Pub. L. 111-312, title III, Sec. 302(c), Dec. 17, 2010, 124 Stat.
3302, provided that: “In the case of any generation-skipping
transfer made after December 31, 2009, and before January 1, 2011,
the applicable rate determined under section 2641(a) of the
Internal Revenue Code of 1986 shall be zero.”
-End-
-CITE-
26 USC Sec. 2642 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter E – Applicable Rate; Inclusion Ratio
-HEAD-
Sec. 2642. Inclusion ratio
-STATUTE-
(a) Inclusion ratio defined
For purposes of this chapter -
(1) In general
Except as otherwise provided in this section, the inclusion
ratio with respect to any property transferred in a generation-
skipping transfer shall be the excess (if any) of 1 over -
(A) except as provided in subparagraph (B), the applicable
fraction determined for the trust from which such transfer is
made, or
(B) in the case of a direct skip, the applicable fraction
determined for such skip.
(2) Applicable fraction
For purposes of paragraph (1), the applicable fraction is a
fraction -
(A) the numerator of which is the amount of the GST exemption
allocated to the trust (or in the case of a direct skip,
allocated to the property transferred in such skip), and
(B) the denominator of which is -
(i) the value of the property transferred to the trust (or
involved in the direct skip), reduced by
(ii) the sum of -
(I) any Federal estate tax or State death tax actually
recovered from the trust attributable to such property, and
(II) any charitable deduction allowed under section 2055
or 2522 with respect to such property.
(3) Severing of trusts
(A) In general
If a trust is severed in a qualified severance, the trusts
resulting from such severance shall be treated as separate
trusts thereafter for purposes of this chapter.
(B) Qualified severance
For purposes of subparagraph (A) -
(i) In general
The term “qualified severance” means the division of a
single trust and the creation (by any means available under
the governing instrument or under local law) of two or more
trusts if -
(I) the single trust was divided on a fractional basis,
and
(II) the terms of the new trusts, in the aggregate,
provide for the same succession of interests of
beneficiaries as are provided in the original trust.
(ii) Trusts with inclusion ratio greater than zero
If a trust has an inclusion ratio of greater than zero and
less than 1, a severance is a qualified severance only if the
single trust is divided into two trusts, one of which
receives a fractional share of the total value of all trust
assets equal to the applicable fraction of the single trust
immediately before the severance. In such case, the trust
receiving such fractional share shall have an inclusion ratio
of zero and the other trust shall have an inclusion ratio of
1.
(iii) Regulations
The term “qualified severance” includes any other severance
permitted under regulations prescribed by the Secretary.
(C) Timing and manner of severances
A severance pursuant to this paragraph may be made at any
time. The Secretary shall prescribe by forms or regulations the
manner in which the qualified severance shall be reported to
the Secretary.
(b) Valuation rules, etc.
Except as provided in subsection (f) -
(1) Gifts for which gift tax return filed or deemed allocation
made
If the allocation of the GST exemption to any transfers of
property is made on a gift tax return filed on or before the date
prescribed by section 6075(b) for such transfer or is deemed to
be made under section 2632(b)(1) or (c)(1) -
(A) the value of such property for purposes of subsection (a)
shall be its value as finally determined for purposes of
chapter 12 (within the meaning of section 2001(f)(2)), or, in
the case of an allocation deemed to have been made at the close
of an estate tax inclusion period, its value at the time of the
close of the estate tax inclusion period, and
(B) such allocation shall be effective on and after the date
of such transfer, or, in the case of an allocation deemed to
have been made at the close of an estate tax inclusion period,
on and after the close of such estate tax inclusion period.
(2) Transfers and allocations at or after death
(A) Transfers at death
If property is transferred as a result of the death of the
transferor, the value of such property for purposes of
subsection (a) shall be its value as finally determined for
purposes of chapter 11; except that, if the requirements
prescribed by the Secretary respecting allocation of post-death
changes in value are not met, the value of such property shall
be determined as of the time of the distribution concerned.
(B) Allocations to property transferred at death of transferor
Any allocation to property transferred as a result of the
death of the transferor shall be effective on and after the
date of the death of the transferor.
(3) Allocations to inter vivos transfers not made on timely filed
gift tax return
If any allocation of the GST exemption to any property not
transferred as a result of the death of the transferor is not
made on a gift tax return filed on or before the date prescribed
by section 6075(b) and is not deemed to be made under section
2632(b)(1) -
(A) the value of such property for purposes of subsection (a)
shall be determined as of the time such allocation is filed
with the Secretary, and
(B) such allocation shall be effective on and after the date
on which such allocation is filed with the Secretary.
(4) QTIP trusts
If the value of property is included in the estate of a spouse
by virtue of section 2044, and if such spouse is treated as the
transferor of such property under section 2652(a), the value of
such property for purposes of subsection (a) shall be its value
for purposes of chapter 11 in the estate of such spouse.
(c) Treatment of certain direct skips which are nontaxable gifts
(1) In general
In the case of a direct skip which is a nontaxable gift, the
inclusion ratio shall be zero.
(2) Exception for certain transfers in trust
Paragraph (1) shall not apply to any transfer to a trust for
the benefit of an individual unless -
(A) during the life of such individual, no portion of the
corpus or income of the trust may be distributed to (or for the
benefit of) any person other than such individual, and
(B) if the trust does not terminate before the individual
dies, the assets of such trust will be includible in the gross
estate of such individual.
Rules similar to the rules of section 2652(c)(3) shall apply for
purposes of subparagraph (A).
(3) Nontaxable gift
For purposes of this subsection, the term “nontaxable gift”
means any transfer of property to the extent such transfer is not
treated as a taxable gift by reason of -
(A) section 2503(b) (taking into account the application of
section 2513), or
(B) section 2503(e).
(d) Special rules where more than 1 transfer made to trust
(1) In general
If a transfer of property is made to a trust in existence
before such transfer, the applicable fraction for such trust
shall be recomputed as of the time of such transfer in the manner
provided in paragraph (2).
(2) Applicable fraction
In the case of any such transfer, the recomputed applicable
fraction is a fraction -
(A) the numerator of which is the sum of -
(i) the amount of the GST exemption allocated to property
involved in such transfer, plus
(ii) the nontax portion of such trust immediately before
such transfer, and
(B) the denominator of which is the sum of -
(i) the value of the property involved in such transfer
reduced by the sum of -
(I) any Federal estate tax or State death tax actually
recovered from the trust attributable to such property, and
(II) any charitable deduction allowed under section 2055
or 2522 with respect to such property, and
(ii) the value of all of the property in the trust
(immediately before such transfer).
(3) Nontax portion
For purposes of paragraph (2), the term “nontax portion” means
the product of -
(A) the value of all of the property in the trust, and
(B) the applicable fraction in effect for such trust.
(4) Similar recomputation in case of certain late allocations
If -
(A) any allocation of the GST exemption to property
transferred to a trust is not made on a timely filed gift tax
return required by section 6019, and
(B) there was a previous allocation with respect to property
transferred to such trust,
the applicable fraction for such trust shall be recomputed as of
the time of such allocation under rules similar to the rules of
paragraph (2).
(e) Special rules for charitable lead annuity trusts
(1) In general
For purposes of determining the inclusion ratio for any
charitable lead annuity trust, the applicable fraction shall be a
fraction -
(A) the numerator of which is the adjusted GST exemption, and
(B) the denominator of which is the value of all of the
property in such trust immediately after the termination of the
charitable lead annuity.
(2) Adjusted GST exemption
For purposes of paragraph (1), the adjusted GST exemption is an
amount equal to the GST exemption allocated to the trust
increased by interest determined -
(A) at the interest rate used in determining the amount of
the deduction under section 2055 or 2522 (as the case may be)
for the charitable lead annuity, and
(B) for the actual period of the charitable lead annuity.
(3) Definitions
For purposes of this subsection -
(A) Charitable lead annuity trust
The term “charitable lead annuity trust” means any trust in
which there is a charitable lead annuity.
(B) Charitable lead annuity
The term “charitable lead annuity” means any interest in the
form of a guaranteed annuity with respect to which a deduction
was allowed under section 2055 or 2522 (as the case may be).
(4) Coordination with subsection (d)
Under regulations, appropriate adjustments shall be made in the
application of subsection (d) to take into account the provisions
of this subsection.
(f) Special rules for certain inter vivos transfers
Except as provided in regulations -
(1) In general
For purposes of determining the inclusion ratio, if -
(A) an individual makes an inter vivos transfer of property,
and
(B) the value of such property would be includible in the
gross estate of such individual under chapter 11 if such
individual died immediately after making such transfer (other
than by reason of section 2035),
any allocation of GST exemption to such property shall not be
made before the close of the estate tax inclusion period (and the
value of such property shall be determined under paragraph (2)).
If such transfer is a direct skip, such skip shall be treated as
occurring as of the close of the estate tax inclusion period.
(2) Valuation
In the case of any property to which paragraph (1) applies, the
value of such property shall be -
(A) if such property is includible in the gross estate of the
transferor (other than by reason of section 2035), its value
for purposes of chapter 11, or
(B) if subparagraph (A) does not apply, its value as of the
close of the estate tax inclusion period (or, if any allocation
of GST exemption to such property is not made on a timely filed
gift tax return for the calendar year in which such period
ends, its value as of the time such allocation is filed with
the Secretary).
(3) Estate tax inclusion period
For purposes of this subsection, the term “estate tax inclusion
period” means any period after the transfer described in
paragraph (1) during which the value of the property involved in
such transfer would be includible in the gross estate of the
transferor under chapter 11 if he died. Such period shall in no
event extend beyond the earlier of -
(A) the date on which there is a generation-skipping transfer
with respect to such property, or
(B) the date of the death of the transferor.
(4) Treatment of spouse
Except as provided in regulations, any reference in this
subsection to an individual or transferor shall be treated as
including a reference to the spouse of such individual or
transferor.
(5) Coordination with subsection (d)
Under regulations, appropriate adjustments shall be made in the
application of subsection (d) to take into account the provisions
of this subsection.
(g) Relief provisions
(1) Relief from late elections
(A) In general
The Secretary shall by regulation prescribe such
circumstances and procedures under which extensions of time
will be granted to make -
(i) an allocation of GST exemption described in paragraph
(1) or (2) of subsection (b), and
(ii) an election under subsection (b)(3) or (c)(5) of
section 2632.
Such regulations shall include procedures for requesting
comparable relief with respect to transfers made before the
date of the enactment of this paragraph.
(B) Basis for determinations
In determining whether to grant relief under this paragraph,
the Secretary shall take into account all relevant
circumstances, including evidence of intent contained in the
trust instrument or instrument of transfer and such other
factors as the Secretary deems relevant. For purposes of
determining whether to grant relief under this paragraph, the
time for making the allocation (or election) shall be treated
as if not expressly prescribed by statute.
(2) Substantial compliance
An allocation of GST exemption under section 2632 that
demonstrates an intent to have the lowest possible inclusion
ratio with respect to a transfer or a trust shall be deemed to be
an allocation of so much of the transferor’s unused GST exemption
as produces the lowest possible inclusion ratio. In determining
whether there has been substantial compliance, all relevant
circumstances shall be taken into account, including evidence of
intent contained in the trust instrument or instrument of
transfer and such other factors as the Secretary deems relevant.
-SOURCE-
(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100
Stat. 2722; amended Pub. L. 100-647, title I, Sec. 1014(g)(3)(A),
(4), (17)(A), (B), (18), Nov. 10, 1988, 102 Stat. 3563, 3566, 3567;
Pub. L. 101-239, title VII, Sec. 7811(j)(4), Dec. 19, 1989, 103
Stat. 2411; Pub. L. 101-508, title XI, Secs. 11703(c)(1), (2),
11704(a)(17), (36), Nov. 5, 1990, 104 Stat. 1388-517, 1388-519;
Pub. L. 107-16, title V, Secs. 562(a), 563(a), (b), 564(a), June 7,
2001, 115 Stat. 89-91.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-MISC1-
AMENDMENTS
2001 – Subsec. (a)(3). Pub. L. 107-16, Secs. 562(a), 901,
temporarily added par. (3). See Effective and Termination Dates of
2001 Amendment note below.
Subsec. (b)(1). Pub. L. 107-16, Secs. 563(a), 901, temporarily
reenacted heading without change and amended text of par. (1)
generally. Prior to amendment, text read as follows: “If the
allocation of the GST exemption to any property is made on a gift
tax return filed on or before the date prescribed by section
6075(b) or is deemed to be made under section 2632(b)(1) -
“(A) the value of such property for purposes of subsection (a)
shall be its value for purposes of chapter 12, and
“(B) such allocation shall be effective on and after the date
of such transfer.”
See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (b)(2)(A). Pub. L. 107-16, Secs. 563(b), 901, temporarily
reenacted heading without change and amended text of subpar. (A)
generally. Prior to amendment, text read as follows: “If property
is transferred as a result of the death of the transferor, the
value of such property for purposes of subsection (a) shall be its
value for purposes of chapter 11; except that, if the requirements
prescribed by the Secretary respecting allocation of post-death
changes in value are not met, the value of such property shall be
determined as of the time of the distribution concerned.” See
Effective and Termination Dates of 2001 Amendment note below.
Subsec. (g). Pub. L. 107-16, Secs. 564(a), 901, temporarily added
subsec. (g). See Effective and Termination Dates of 2001 Amendment
note below.
1990 – Subsec. (b)(3). Pub. L. 101-508, Sec. 11704(a)(36),
amended Pub. L. 100-647, Sec. 1014(g)(4)(F)(ii). See 1988 Amendment
note below.
Subsec. (c)(2). Pub. L. 101-508, Sec. 11703(c)(2), inserted at
end: “Rules similar to the rules of section 2652(c)(3) shall apply
for purposes of subparagraph (A).”
Subsec. (c)(2)(B). Pub. L. 101-508, Sec. 11703(c)(1), substituted
“the trust does not terminate before the individual dies” for “such
individual dies before the trust is terminated”.
Subsec. (d)(2)(B)(i)(I). Pub. L. 101-508, Sec. 11704(a)(17),
substituted “State” for “state”.
1989 – Subsec. (b)(1), (3). Pub. L. 101-239 substituted “a gift
tax return filed on or before the date prescribed by section
6075(b)” for “a timely filed gift tax return required by section
6019″ in introductory provisions.
1988 – Subsec. (a)(2). Pub. L. 100-647, Sec. 1014(g)(4)(B),
struck out at end “Except as provided in paragraphs (3) and (4) of
subsection (b), the value determined under subparagraph (B)(i)
shall be of the property as of the time of the transfer to the
trust (or the direct skip).”
Subsec. (b). Pub. L. 100-647, Sec. 1014(g)(4)(D), inserted
“Except as provided in subsection (f) – ” as introductory
provision.
Subsec. (b)(2)(A). Pub. L. 100-647, Sec. 1014(g)(4)(C), inserted
before period at end “; except that, if the requirements prescribed
by the Secretary respecting allocation of post-death changes in
value are not met, the value of such property shall be determined
as of the time of the distribution concerned.”
Subsec. (b)(2)(B). Pub. L. 100-647, Sec. 1014(g)(4)(E),
substituted “to property transferred at death” for “at or after
death” in heading and “to property transferred as a result of the
death of the transferor” for “at or after the death of the
transferor” in text.
Subsec. (b)(3). Pub. L. 100-647, Sec. 1014(g)(4)(F)(ii), as
amended by Pub. L. 101-508, Sec. 11704(a)(36), substituted
“Allocations to inter vivos transfers” for “Inter vivos
allocations” in heading.
Pub. L. 100-647, Sec. 1014(g)(4)(F)(i), substituted “to any
property not transferred as a result of the death of the transferor
is” for “to any property is made during the life of the transferor
but is”.
Subsec. (c). Pub. L. 100-647, Sec. 1014(g)(17)(A), inserted
“direct skips which are” in heading and amended text generally.
Prior to amendment, text read as follows:
“(1) Direct skips. – In the case of any direct skip which is a
nontaxable gift, the inclusion ratio shall be zero.
“(2) Treatment of nontaxable gifts made to trusts. -
“(A) In general. – Except as provided in subparagraph (B), any
nontaxable gift which is not a direct skip and which is made to a
trust shall not be taken into account under subsection (a)(2)(B).
“(B) Determination of 1st transfer to trust. – In the case of
any nontaxable gift referred to in subparagraph (A) which is the
1st transfer to the trust, the inclusion ratio for such trust
shall be zero.
“(3) Nontaxable gift. – For purposes of this section, the term
‘nontaxable gift’ means any transfer of property to the extent such
transfer is not treated as a taxable gift by reason of -
“(A) section 2503(b) (taking into account the application of
section 2513), or
“(B) section 2503(e).”
Subsec. (d)(1). Pub. L. 100-647, Sec. 1014(g)(17)(B), struck out
“(other than a nontaxable gift)” after “transfer of property”.
Subsec. (d)(2)(B)(i). Pub. L. 100-647, Sec. 1014(g)(18), amended
cl. (i) generally. Prior to amendment, cl. (i) read as follows:
“the value of the property involved in such transfer, reduced by
any charitable deduction allowed under section 2055 or 2522 with
respect to such property, and”.
Subsec. (e). Pub. L. 100-647, Sec. 1014(g)(3)(A), added subsec.
(e).
Subsec. (f). Pub. L. 100-647, Sec. 1014(g)(4)(A), added subsec.
(f).
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Pub. L. 107-16, title V, Sec. 562(b), June 7, 2001, 115 Stat. 90,
provided that: “The amendment made by this section [amending this
section] shall apply to severances after December 31, 2000.”
Pub. L. 107-16, title V, Sec. 563(c), June 7, 2001, 115 Stat. 91,
provided that: “The amendments made by this section [amending this
section] shall apply to transfers subject to chapter 11 or 12 of
the Internal Revenue Code of 1986 made after December 31, 2000.”
Pub. L. 107-16, title V, Sec. 564(b), June 7, 2001, 115 Stat. 91,
provided that:
“(1) Relief from late elections. – Section 2642(g)(1) of the
Internal Revenue Code of 1986 (as added by subsection (a)) shall
apply to requests pending on, or filed after, December 31, 2000.
“(2) Substantial compliance. – Section 2642(g)(2) of such Code
(as so added) shall apply to transfers subject to chapter 11 or 12
of the Internal Revenue Code of 1986 made after December 31, 2000.
No implication is intended with respect to the availability of
relief from late elections or the application of a rule of
substantial compliance on or before such date.”
Amendment by Pub. L. 107-16 inapplicable to estates of decedents
dying, gifts made, or generation skipping transfers, after Dec. 31,
2012, and the Internal Revenue Code of 1986 to be applied and
administered to such estates, gifts, and transfers as if such
amendment had never been enacted, see section 901 of Pub. L. 107-
16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Section 11703(c)(4) of Pub. L. 101-508 provided that: “The
amendments made by paragraphs (1) and (2) [amending this section]
shall apply to transfers after March 31, 1988.”
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by Pub. L. 101-239 effective, except as otherwise
provided, as if included in the provision of the Technical and
Miscellaneous Revenue Act of 1988, Pub. L. 100-647, to which such
amendment relates, see section 7817 of Pub. L. 101-239, set out as
a note under section 1 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Section 1014(g)(3)(B) of Pub. L. 100-647 provided that: “The
amendment made by subparagraph (A) [amending this section] shall
apply for purposes of determining the inclusion ratio with respect
to property transferred after October 13, 1987.”
Section 1014(g)(17)(C) of Pub. L. 100-647 provided that: “The
amendments made by this paragraph [amending this section] shall
apply to transfers after March 31, 1988.”
Amendment by section 1014(g)(4), (18) of Pub. L. 100-647
effective, except as otherwise provided, as if included in the
provision of the Tax Reform Act of 1986, Pub. L. 99-514, to which
such amendment relates, see section 1019(a) of Pub. L. 100-647, set
out as a note under section 1 of this title.
EFFECTIVE DATE
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
-End-
-CITE-
26 USC Subchapter F – Other Definitions and Special Rules 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter F – Other Definitions and Special Rules
-HEAD-
SUBCHAPTER F – OTHER DEFINITIONS AND SPECIAL RULES
-MISC1-
Sec.
2651. Generation assignment.
2652. Other definitions.
2653. Taxation of multiple skips.
2654. Special rules.
-End-
-CITE-
26 USC Sec. 2651 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter F – Other Definitions and Special Rules
-HEAD-
Sec. 2651. Generation assignment
-STATUTE-
(a) In general
For purposes of this chapter, the generation to which any person
(other than the transferor) belongs shall be determined in
accordance with the rules set forth in this section.
(b) Lineal descendants
(1) In general
An individual who is a lineal descendant of a grandparent of
the transferor shall be assigned to that generation which results
from comparing the number of generations between the grandparent
and such individual with the number of generations between the
grandparent and the transferor.
(2) On spouse’s side
An individual who is a lineal descendant of a grandparent of a
spouse (or former spouse) of the transferor (other than such
spouse) shall be assigned to that generation which results from
comparing the number of generations between such grandparent and
such individual with the number of generations between such
grandparent and such spouse.
(3) Treatment of legal adoptions, etc.
For purposes of this subsection -
(A) Legal adoptions
A relationship by legal adoption shall be treated as a
relationship by blood.
(B) Relationships by half-blood
A relationship by the half-blood shall be treated as a
relationship of the whole-blood.
(c) Marital relationship
(1) Marriage to transferor
An individual who has been married at any time to the
transferor shall be assigned to the transferor’s generation.
(2) Marriage to other lineal descendants
An individual who has been married at any time to an individual
described in subsection (b) shall be assigned to the generation
of the individual so described.
(d) Persons who are not lineal descendants
An individual who is not assigned to a generation by reason of
the foregoing provisions of this section shall be assigned to a
generation on the basis of the date of such individual’s birth with
-
(1) an individual born not more than 12 1/2 years after the
date of the birth of the transferor assigned to the transferor’s
generation,
(2) an individual born more than 12 1/2 years but not more
than 37 1/2 years after the date of the birth of the transferor
assigned to the first generation younger than the transferor, and
(3) similar rules for a new generation every 25 years.
(e) Special rule for persons with a deceased parent
(1) In general
For purposes of determining whether any transfer is a
generation-skipping transfer, if -
(A) an individual is a descendant of a parent of the
transferor (or the transferor’s spouse or former spouse), and
(B) such individual’s parent who is a lineal descendant of
the parent of the transferor (or the transferor’s spouse or
former spouse) is dead at the time the transfer (from which an
interest of such individual is established or derived) is
subject to a tax imposed by chapter 11 or 12 upon the
transferor (and if there shall be more than 1 such time, then
at the earliest such time),
such individual shall be treated as if such individual were a
member of the generation which is 1 generation below the lower of
the transferor’s generation or the generation assignment of the
youngest living ancestor of such individual who is also a
descendant of the parent of the transferor (or the transferor’s
spouse or former spouse), and the generation assignment of any
descendant of such individual shall be adjusted accordingly.
(2) Limited application of subsection to collateral heirs
This subsection shall not apply with respect to a transfer to
any individual who is not a lineal descendant of the transferor
(or the transferor’s spouse or former spouse) if, at the time of
the transfer, such transferor has any living lineal descendant.
(f) Other special rules
(1) Individuals assigned to more than 1 generation
Except as provided in regulations, an individual who, but for
this subsection, would be assigned to more than 1 generation
shall be assigned to the youngest such generation.
(2) Interests through entities
Except as provided in paragraph (3), if an estate, trust,
partnership, corporation, or other entity has an interest in
property, each individual having a beneficial interest in such
entity shall be treated as having an interest in such property
and shall be assigned to a generation under the foregoing
provisions of this subsection.
(3) Treatment of certain charitable organizations and
governmental entities
Any -
(A) organization described in section 511(a)(2),
(B) charitable trust described in section 511(b)(2), and
(C) governmental entity,
shall be assigned to the transferor’s generation.
-SOURCE-
(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100
Stat. 2725; amended Pub. L. 100-647, title I, Sec. 1014(g)(11),
(19), Nov. 10, 1988, 102 Stat. 3565, 3567; Pub. L. 105-34, title V,
Sec. 511(a), Aug. 5, 1997, 111 Stat. 860.)
-MISC1-
AMENDMENTS
1997 – Subsecs. (e), (f). Pub. L. 105-34 added subsec. (e) and
redesignated former subsec. (e) as (f).
1988 – Subsec. (b)(2). Pub. L. 100-647, Sec. 1014(g)(19),
inserted “(or former spouse)” after “a spouse”.
Subsec. (e)(3). Pub. L. 100-647, Sec. 1014(g)(11), amended par.
(3) generally, including governmental entities among the
organizations to be assigned to transferor’s generation.
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by Pub. L. 105-34 applicable to terminations,
distributions, and transfers occurring after Dec. 31, 1997, see
section 511(c) of Pub. L. 105-34, set out as a note under section
2612 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
-End-
-CITE-
26 USC Sec. 2652 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter F – Other Definitions and Special Rules
-HEAD-
Sec. 2652. Other definitions
-STATUTE-
(a) Transferor
For purposes of this chapter -
(1) In general
Except as provided in this subsection or section 2653(a), the
term “transferor” means -
(A) in the case of any property subject to the tax imposed by
chapter 11, the decedent, and
(B) in the case of any property subject to the tax imposed by
chapter 12, the donor.
An individual shall be treated as transferring any property with
respect to which such individual is the transferor.
(2) Gift-splitting by married couples
If, under section 2513, one-half of a gift is treated as made
by an individual and one-half of such gift is treated as made by
the spouse of such individual, such gift shall be so treated for
purposes of this chapter.
(3) Special election for qualified terminable interest property
In the case of -
(A) any trust with respect to which a deduction is allowed to
the decedent under section 2056 by reason of subsection (b)(7)
thereof, and
(B) any trust with respect to which a deduction to the donor
spouse is allowed under section 2523 by reason of subsection
(f) thereof,
the estate of the decedent or the donor spouse, as the case may
be, may elect to treat all of the property in such trust for
purposes of this chapter as if the election to be treated as
qualified terminable interest property had not been made.
(b) Trust and trustee
(1) Trust
The term “trust” includes any arrangement (other than an
estate) which, although not a trust, has substantially the same
effect as a trust.
(2) Trustee
In the case of an arrangement which is not a trust but which is
treated as a trust under this subsection, the term “trustee”
shall mean the person in actual or constructive possession of the
property subject to such arrangement.
(3) Examples
Arrangements to which this subsection applies include
arrangements involving life estates and remainders, estates for
years, and insurance and annuity contracts.
(c) Interest
(1) In general
A person has an interest in property held in trust if (at the
time the determination is made) such person -
(A) has a right (other than a future right) to receive income
or corpus from the trust,
(B) is a permissible current recipient of income or corpus
from the trust and is not described in section 2055(a), or
(C) is described in section 2055(a) and the trust is -
(i) a charitable remainder annuity trust,
(ii) a charitable remainder unitrust within the meaning of
section 664, or
(iii) a pooled income fund within the meaning of section
642(c)(5).
(2) Certain interests disregarded
For purposes of paragraph (1), an interest which is used
primarily to postpone or avoid any tax imposed by this chapter
shall be disregarded.
(3) Certain support obligations disregarded
The fact that income or corpus of the trust may be used to
satisfy an obligation of support arising under State law shall be
disregarded in determining whether a person has an interest in
the trust, if -
(A) such use is discretionary, or
(B) such use is pursuant to the provisions of any State law
substantially equivalent to the Uniform Gifts to Minors Act.
(d) Executor
For purposes of this chapter, the term “executor” has the meaning
given such term by section 2203.
-SOURCE-
(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100
Stat. 2726; amended Pub. L. 100-647, title I, Sec. 1014(g)(6), (8),
(9), (14), (20), Nov. 10, 1988, 102 Stat. 3565-3567; Pub. L. 105-
34, title XIII, Sec. 1305(b), Aug. 5, 1997, 111 Stat. 1040; Pub.
L. 105-206, title VI, Sec. 6013(a)(3), (4)(A), July 22, 1998, 112
Stat. 819.)
-MISC1-
AMENDMENTS
1998 – Subsec. (b)(1). Pub. L. 105-206, Sec. 6013(a)(4)(A),
struck out at end “Such term shall not include any trust during any
period the trust is treated as part of an estate under section
645.”
Pub. L. 105-206, Sec. 6013(a)(3), substituted “section 645″ for
“section 646″.
1997 – Subsec. (b)(1). Pub. L. 105-34 inserted at end “Such term
shall not include any trust during any period the trust is treated
as part of an estate under section 646.”
1988 – Subsec. (a)(1). Pub. L. 100-647, Sec. 1014(g)(9),
substituted “any property” for “a transfer of a kind” in subpars.
(A) and (B) and inserted at end “An individual shall be treated as
transferring any property with respect to which such individual is
the transferor.”
Subsec. (a)(3). Pub. L. 100-647, Sec. 1014(g)(14), substituted
“any trust” for “any property” in subpars. (A) and (B) and “may
elect to treat all of the property in such trust” for “may elect to
treat such property” in closing provisions.
Subsec. (c)(2). Pub. L. 100-647, Sec. 1014(g)(8), struck out
“nominal” before “interests” in heading and substituted “any tax”
for “the tax” in text.
Subsec. (c)(3). Pub. L. 100-647, Sec. 1014(g)(6), added par. (3).
Subsec. (d). Pub. L. 100-647, Sec. 1014(g)(20), added subsec.
(d).
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-206 effective, except as otherwise
provided, as if included in the provisions of the Taxpayer Relief
Act of 1997, Pub. L. 105-34, to which such amendment relates, see
section 6024 of Pub. L. 105-206, set out as a note under section 1
of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by Pub. L. 105-34 applicable with respect to estates of
decedents dying after Aug. 5, 1997, see section 1305(d) of Pub. L.
105-34, set out as an Effective Date note under section 645 of this
title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
-End-
-CITE-
26 USC Sec. 2653 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter F – Other Definitions and Special Rules
-HEAD-
Sec. 2653. Taxation of multiple skips
-STATUTE-
(a) General rule
For purposes of this chapter, if -
(1) there is a generation-skipping transfer of any property,
and
(2) immediately after such transfer such property is held in
trust,
for purposes of applying this chapter (other than section 2651) to
subsequent transfers from the portion of such trust attributable to
such property, the trust will be treated as if the transferor of
such property were assigned to the first generation above the
highest generation of any person who has an interest in such trust
immediately after the transfer.
(b) Trust retains inclusion ratio
(1) In general
Except as provided in paragraph (2), the provisions of
subsection (a) shall not affect the inclusion ratio determined
with respect to any trust. Under regulations prescribed by the
Secretary, notwithstanding the preceding sentence, proper
adjustment shall be made to the inclusion ratio with respect to
such trust to take into account any tax under this chapter borne
by such trust which is imposed by this chapter on the transfer
described in subsection (a).
(2) Special rule for pour-over trust
(A) In general
If the generation-skipping transfer referred to in subsection
(a) involves the transfer of property from 1 trust to another
trust (hereinafter in this paragraph referred to as the “pour-
over trust”), the inclusion ratio for the pour-over trust
shall be determined by treating the nontax portion of such
distribution as if it were a part of a GST exemption allocated
to such trust.
(B) Nontax portion
For purposes of subparagraph (A), the nontax portion of any
distribution is the amount of such distribution multiplied by
the applicable fraction which applies to such distribution.
-SOURCE-
(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100
Stat. 2727.)
-MISC1-
EFFECTIVE DATE
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
-End-
-CITE-
26 USC Sec. 2654 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter F – Other Definitions and Special Rules
-HEAD-
Sec. 2654. Special rules
-STATUTE-
(a) Basis adjustment
(1) In general
Except as provided in paragraph (2), if property is transferred
in a generation-skipping transfer, the basis of such property
shall be increased (but not above the fair market value of such
property) by an amount equal to that portion of the tax imposed
by section 2601 (computed without regard to section 2604) with
respect to the transfer which is attributable to the excess of
the fair market value of such property over its adjusted basis
immediately before the transfer. The preceding shall be applied
after any basis adjustment under section 1015 with respect to the
transfer.
(2) Certain transfers at death
If property is transferred in a taxable termination which
occurs at the same time as and as a result of the death of an
individual, the basis of such property shall be adjusted in a
manner similar to the manner provided under section 1014(a);
except that, if the inclusion ratio with respect to such property
is less than 1, any increase or decrease in basis shall be
limited by multiplying such increase or decrease (as the case may
be) by the inclusion ratio.
(b) Certain trusts treated as separate trusts
For purposes of this chapter -
(1) the portions of a trust attributable to transfers from
different transferors shall be treated as separate trusts, and
(2) substantially separate and independent shares of different
beneficiaries in a trust shall be treated as separate trusts.
Except as provided in the preceding sentence, nothing in this
chapter shall be construed as authorizing a single trust to be
treated as 2 or more trusts. For purposes of this subsection, a
trust shall be treated as part of an estate during any period that
the trust is so treated under section 645.
(c) Disclaimers
For provisions relating to the effect of a qualified
disclaimer for purposes of this chapter, see section 2518.
(d) Limitation on personal liability of trustee
A trustee shall not be personally liable for any increase in the
tax imposed by section 2601 which is attributable to the fact that -
(1) section 2642(c) (relating to exemption of certain
nontaxable gifts) does not apply to a transfer to the trust which
was made during the life of the transferor and for which a gift
tax return was not filed, or
(2) the inclusion ratio with respect to the trust is greater
than the amount of such ratio as computed on the basis of the
return on which was made (or was deemed made) an allocation of
the GST exemption to property transferred to such trust.
The preceding sentence shall not apply if the trustee has knowledge
of facts sufficient reasonably to conclude that a gift tax return
was required to be filed or that the inclusion ratio was erroneous.
-SOURCE-
(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100
Stat. 2727; amended Pub. L. 100-647, title I, Sec. 1014(g)(12),
(13), Nov. 10, 1988, 102 Stat. 3565, 3566; Pub. L. 101-239, title
VII, Sec. 7811(j)(2), Dec. 19, 1989, 103 Stat. 2411; Pub. L. 105-
206, title VI, Sec. 6013(a)(4)(B), July 22, 1998, 112 Stat. 819.)
-MISC1-
AMENDMENTS
1998 – Subsec. (b). Pub. L. 105-206 inserted at end “For purposes
of this subsection, a trust shall be treated as part of an estate
during any period that the trust is so treated under section 645.”
1989 – Subsec. (a)(1). Pub. L. 101-239 inserted at end “The
preceding shall be applied after any basis adjustment under section
1015 with respect to the transfer.”
1988 – Subsec. (a)(2). Pub. L. 100-647, Sec. 1014(g)(12),
inserted “or decrease” after “any increase” and “or decrease (as
the case may be)” after “such increase”.
Subsec. (b). Pub. L. 100-647, Sec. 1014(g)(13), substituted
“Certain trusts” for “Separate shares” in heading and amended text
generally. Prior to amendment, text read as follows: “Substantially
separate and independent shares of different beneficiaries in a
trust shall be treated as separate trusts.”
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-206 effective, except as otherwise
provided, as if included in the provisions of the Taxpayer Relief
Act of 1997, Pub. L. 105-34, to which such amendment relates (see
section 1305 of Pub. L. 105-34), see section 6024 of Pub. L. 105-
206, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by Pub. L. 101-239 effective, except as otherwise
provided, as if included in the provision of the Technical and
Miscellaneous Revenue Act of 1988, Pub. L. 100-647, to which such
amendment relates, see section 7817 of Pub. L. 101-239, set out as
a note under section 1 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
-End-
-CITE-
26 USC Subchapter G – Administration 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter G – Administration
-HEAD-
SUBCHAPTER G – ADMINISTRATION
-MISC1-
Sec.
2661. Administration.
2662. Return requirements.
2663. Regulations.
[2664. Repealed.]
-STATAMEND-
AMENDMENT OF ANALYSIS
For termination of amendment by section 304 of Pub. L. 111-312,
see Effective and Termination Dates of 2010 Amendment note set out
under section 121 of this title.
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note set out
under section 1 of this title.
-MISC2-
AMENDMENTS
2010 – Pub. L. 111-312, title III, Secs. 301(a), 304, Dec. 17,
2010, 124 Stat. 3300, 3304, temporarily amended analysis to read as
if amendment by Pub. L. 107-16, Sec. 501(c)(2), had never been
enacted. See 2001 Amendment note below.
2001 – Pub. L. 107-16, title V, Sec. 501(c)(2), title IX, Sec.
901, June 7, 2001, 115 Stat. 69, 150, temporarily added item 2664
“Termination”.
-End-
-CITE-
26 USC Sec. 2661 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter G – Administration
-HEAD-
Sec. 2661. Administration
-STATUTE-
Insofar as applicable and not inconsistent with the provisions of
this chapter -
(1) except as provided in paragraph (2), all provisions of
subtitle F (including penalties) applicable to the gift tax, to
chapter 12, or to section 2501, are hereby made applicable in
respect of the generation-skipping transfer tax, this chapter, or
section 2601, as the case may be, and
(2) in the case of a generation-skipping transfer occurring at
the same time as and as a result of the death of an individual,
all provisions of subtitle F (including penalties) applicable to
the estate tax, to chapter 11, or to section 2001 are hereby made
applicable in respect of the generation-skipping transfer tax,
this chapter, or section 2601 (as the case may be).
-SOURCE-
(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100
Stat. 2728.)
-MISC1-
EFFECTIVE DATE
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
-End-
-CITE-
26 USC Sec. 2662 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter G – Administration
-HEAD-
Sec. 2662. Return requirements
-STATUTE-
(a) In general
The Secretary shall prescribe by regulations the person who is
required to make the return with respect to the tax imposed by this
chapter and the time by which any such return must be filed. To the
extent practicable, such regulations shall provide that -
(1) the person who is required to make such return shall be the
person liable under section 2603(a) for payment of such tax, and
(2) the return shall be filed -
(A) in the case of a direct skip (other than from a trust),
on or before the date on which an estate or gift tax return is
required to be filed with respect to the transfer, and
(B) in all other cases, on or before the 15th day of the 4th
month after the close of the taxable year of the person
required to make such return in which such transfer occurs.
(b) Information returns
The Secretary may by regulations require a return to be filed
containing such information as he determines to be necessary for
purposes of this chapter.
-SOURCE-
(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100
Stat. 2728.)
-MISC1-
EFFECTIVE DATE
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
EXTENSION OF TIME FOR FILING RETURN
Pub. L. 111-312, title III, Sec. 301(d)(2), Dec. 17, 2010, 124
Stat. 3300, provided that: “In the case of any generation-skipping
transfer made after December 31, 2009, and before the date of the
enactment of this Act [Dec. 17, 2010], the due date for filing any
return under section 2662 of the Internal Revenue Code of 1986
(including any election required to be made on such a return) shall
not be earlier than the date which is 9 months after the date of
the enactment of this Act.”
-End-
-CITE-
26 USC Sec. 2663 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter G – Administration
-HEAD-
Sec. 2663. Regulations
-STATUTE-
The Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of this chapter,
including -
(1) such regulations as may be necessary to coordinate the
provisions of this chapter with the recapture tax imposed under
section 2032A(c),
(2) regulations (consistent with the principles of chapters 11
and 12) providing for the application of this chapter in the case
of transferors who are nonresidents not citizens of the United
States, and
(3) regulations providing for such adjustments as may be
necessary to the application of this chapter in the case of any
arrangement which, although not a trust, is treated as a trust
under section 2652(b).
-SOURCE-
(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100
Stat. 2729; amended Pub. L. 100-647, title I, Sec. 1014(g)(10),
Nov. 10, 1988, 102 Stat. 3565.)
-MISC1-
AMENDMENTS
1988 – Par. (3). Pub. L. 100-647 added par. (3).
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE
Section applicable to generation-skipping transfers (within the
meaning of section 2611 of this title) made after Oct. 22, 1986,
except as otherwise provided, see section 1433 of Pub. L. 99-514,
set out as a note under section 2601 of this title.
-End-
-CITE-
26 USC Sec. 2664 01/07/2011
-EXPCITE-
TITLE 26 – INTERNAL REVENUE CODE
Subtitle B – Estate and Gift Taxes
CHAPTER 13 – TAX ON GENERATION-SKIPPING TRANSFERS
Subchapter G – Administration
-HEAD-
Sec. 2664. Repealed.
-MISC1-
[Sec. 2664. Repealed. Pub. L. 111-312, title III, Sec. 301(a), Dec.
17, 2010, 124 Stat. 3300].
Section, added Pub. L. 107-16, title V, Sec. 501(b), June 7,
2001, 115 Stat. 69, related to termination of applicability of
chapter to generation-skipping transfers after Dec. 31, 2009.
-STATAMEND-
TERMINATION OF REPEAL
For termination of repeal of section by section 304 of Pub. L.
111-312, see Effective and Termination Dates of Repeal note below.
TERMINATION OF SECTION
For termination of section by section 901 of Pub. L. 107-16, see
Effective and Termination Dates note below.
-MISC1-
EFFECTIVE AND TERMINATION DATES OF REPEAL
Repeal of section applicable to estates of decedents dying, and
transfers made after Dec. 31, 2009, except as otherwise provided,
see section 301(e) of Pub. L. 111-312, set out as an Effective and
Termination Dates of 2010 Amendment note under section 121 of this
title.
Section 901 of Pub. L. 107-16 applicable to repeal by section
301(a) of Pub. L. 111-312, see section 304 of Pub. L. 111-312, set
out as an Effective and Termination Dates of 2010 Amendment note
under section 121 of this title.
EFFECTIVE AND TERMINATION DATES
Section applicable to the estates of decedents dying, and
generation-skipping transfers, after December 31, 2009, see section
501(d) of Pub. L. 107-16, set out as a note under section 2210 of
this title.
Section inapplicable to estates of decedents dying, gifts made,
or generation skipping transfers, after Dec. 31, 2012, and the
Internal Revenue Code of 1986 to be applied and administered to
such estates, gifts, and transfers as if it had never been enacted,
see section 901 of Pub. L. 107-16, set out as a note under section
1 of this title.
-End-
