Subchapter A—Estates of Citizens or Residents
PART I—TAX IMPOSED
Editorial Notes
Amendments
1976—
§2001. Imposition and rate of tax
(a) Imposition
A tax is hereby imposed on the transfer of the taxable estate of every decedent who is a citizen or resident of the United States.
(b) Computation of tax
The tax imposed by this section shall be the amount equal to the excess (if any) of—
(1) a tentative tax computed under subsection (c) on the sum of—
(A) the amount of the taxable estate, and
(B) the amount of the adjusted taxable gifts, over
(2) the aggregate amount of tax which would have been payable under
For purposes of paragraph (1)(B), the term "adjusted taxable gifts" means the total amount of the taxable gifts (within the meaning of section 2503) made by the decedent after December 31, 1976, other than gifts which are includible in the gross estate of the decedent.
(c) Rate schedule
| If the amount with respect to which the tentative tax to be computed is: | The tentative tax is: |
|---|---|
| Not over $10,000 | 18 percent of such amount. |
| Over $10,000 but not over $20,000 | $1,800, plus 20 percent of the excess of such amount over $10,000. |
| Over $20,000 but not over $40,000 | $3,800, plus 22 percent of the excess of such amount over $20,000. |
| Over $40,000 but not over $60,000 | $8,200 plus 24 percent of the excess of such amount over $40,000. |
| Over $60,000 but not over $80,000 | $13,000, plus 26 percent of the excess of such amount over $60,000. |
| Over $80,000 but not over $100,000 | $18,200, plus 28 percent of the excess of such amount over $80,000. |
| Over $100,000 but not over $150,000 | $23,800, plus 30 percent of the excess of such amount over $100,000. |
| Over $150,000 but not over $250,000 | $38,800, plus 32 percent of the excess of such amount over $150,000. |
| Over $250,000 but not over $500,000 | $70,800, plus 34 percent of the excess of such amount over $250,000. |
| Over $500,000 but not over $750,000 | $155,800, plus 37 percent of the excess of such amount over $500,000. |
| Over $750,000 but not over $1,000,000 | $248,300, plus 39 percent of the excess of such amount over $750,000. |
| Over $1,000,000 | $345,800, plus 40 percent of the excess of such amount over $1,000,000. |
(d) Adjustment for gift tax paid by spouse
For purposes of subsection (b)(2), if—
(1) the decedent was the donor of any gift one-half of which was considered under section 2513 as made by the decedent's spouse, and
(2) the amount of such gift is includible in the gross estate of the decedent,
any tax payable by the spouse under
(e) Coordination of sections 2513 and 2035
If—
(1) the decedent's spouse was the donor of any gift one-half of which was considered under section 2513 as made by the decedent, and
(2) the amount of such gift is includible in the gross estate of the decedent's spouse by reason of section 2035,
such gift shall not be included in the adjusted taxable gifts of the decedent for purposes of subsection (b)(1)(B), and the aggregate amount determined under subsection (b)(2) shall be reduced by the amount (if any) determined under subsection (d) which was treated as a tax payable by the decedent's spouse with respect to such gift.
(f) Valuation of gifts
(1) In general
If the time has expired under section 6501 within which a tax may be assessed under
(A) the transfer of property by gift made during a preceding calendar period (as defined in section 2502(b)); or
(B) an increase in taxable gifts required under section 2701(d),
the value thereof shall, for purposes of computing the tax under this chapter, be the value as finally determined for purposes of
(2) Final determination
For purposes of paragraph (1), a value shall be treated as finally determined for purposes of
(A) the value is shown on a return under such chapter and such value is not contested by the Secretary before the expiration of the time referred to in paragraph (1) with respect to such return;
(B) in a case not described in subparagraph (A), the value is specified by the Secretary and such value is not timely contested by the taxpayer; or
(C) the value is determined by a court or pursuant to a settlement agreement with the Secretary.
For purposes of subparagraph (A), the value of an item shall be treated as shown on a return if the item is disclosed in the return, or in a statement attached to the return, in a manner adequate to apprise the Secretary of the nature of such item.
(g) Modifications to tax payable
(1) Modifications to gift tax payable to reflect different tax rates
For purposes of applying subsection (b)(2) with respect to 1 or more gifts, the rates of tax under subsection (c) in effect at the decedent's death shall, in lieu of the rates of tax in effect at the time of such gifts, be used both to compute—
(A) the tax imposed by
(B) the credit allowed against such tax under section 2505, including in computing—
(i) the applicable credit amount under section 2505(a)(1), and
(ii) the sum of the amounts allowed as a credit for all preceding periods under section 2505(a)(2).
(2) Modifications to estate tax payable to reflect different basic exclusion amounts
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out this section with respect to any difference between—
(A) the basic exclusion amount under section 2010(c)(3) applicable at the time of the decedent's death, and
(B) the basic exclusion amount under such section applicable with respect to any gifts made by the decedent.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
2017—Subsec. (g).
"(1) the tax imposed by
"(2) the credit allowed against such tax under section 2505, including in computing—
"(A) the applicable credit amount under section 2505(a)(1), and
"(B) the sum of the amounts allowed as a credit for all preceding periods under section 2505(a)(2)."
2013—Subsec. (c).
2010—Subsec. (b)(2).
Subsec. (c).
Subsec. (g).
2001—Subsec. (c)(1).
Subsec. (c)(2).
1998—Subsec. (f).
"(1) the time has expired within which a tax may be assessed under
"(2) the value of such gift is shown on the return for such preceding calendar period or is disclosed in such return, or in a statement attached to the return, in a manner adequate to apprise the Secretary of the nature of such gift,
the value of such gift shall, for purposes of computing the tax under this chapter, be the value of such gift as finally determined for purposes of
Subsec. (f)(2).
1997—Subsec. (c)(2).
Subsec. (f).
1993—Subsec. (c)(1).
Subsec. (c)(2), (3).
1987—Subsec. (b)(1).
Subsec. (b)(2).
Subsec. (c)(2)(A).
Subsec. (c)(2)(D).
Subsec. (c)(3).
1984—Subsec. (c)(2)(A), (D).
1981—Subsec. (b)(2).
Subsec. (c).
1978—Subsec. (e).
1976—
Statutory Notes and Related Subsidiaries
Effective Date of 2017 Amendment
Effective Date of 2013 Amendment
"(A)
"(B)
Effective Date of 2010 Amendment
Effective Date of 2001 Amendment
"(1)
"(2)
Effective Date of 1998 Amendments
Amendment by
Amendment by
Effective Date of 1997 Amendment
Effective Date of 1993 Amendment
Effective Date of 1987 Amendment
Effective Date of 1984 Amendment
Effective Date of 1981 Amendment
Effective Date of 1978 Amendment
Effective Date of 1976 Amendment
Short Title
Special Election With Respect to Estates of Decedents Dying in 2010
Clarification of Treatment of Certain Exemptions for Purposes of Federal Estate and Gift Taxes
"(a)
"(b)
"(1)
"(2)
"(3)
Reports With Transfers of Public Housing Bonds
"(a)
"(b)
§2002. Liability for payment
The tax imposed by this chapter shall be paid by the executor.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1989—
1984—
Statutory Notes and Related Subsidiaries
Effective Date of 1989 Amendment
Effective Date of 1984 Amendment
PART II—CREDITS AGAINST TAX
Editorial Notes
Amendments
2014—
2004—
2001—
1976—
§2010. Unified credit against estate tax
(a) General rule
A credit of the applicable credit amount shall be allowed to the estate of every decedent against the tax imposed by section 2001.
(b) Adjustment to credit for certain gifts made before 1977
The amount of the credit allowable under subsection (a) shall be reduced by an amount equal to 20 percent of the aggregate amount allowed as a specific exemption under section 2521 (as in effect before its repeal by the Tax Reform Act of 1976) with respect to gifts made by the decedent after September 8, 1976.
(c) Applicable credit amount
(1) In general
For purposes of this section, the applicable credit amount is the amount of the tentative tax which would be determined under section 2001(c) if the amount with respect to which such tentative tax is to be computed were equal to the applicable exclusion amount.
(2) Applicable exclusion amount
For purposes of this subsection, the applicable exclusion amount is the sum of—
(A) the basic exclusion amount, and
(B) in the case of a surviving spouse, the deceased spousal unused exclusion amount.
(3) Basic exclusion amount
(A) In general
For purposes of this subsection, the basic exclusion amount is $5,000,000.
(B) Inflation adjustment
In the case of any decedent dying in a calendar year after 2011, the dollar amount in subparagraph (A) shall be increased by an amount equal to—
(i) such dollar amount, multiplied by
(ii) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting "calendar year 2010" for "calendar year 2016" in subparagraph (A)(ii) thereof.
If any amount as adjusted under the preceding sentence is not a multiple of $10,000, such amount shall be rounded to the nearest multiple of $10,000.
(C) Increase in basic exclusion amount
In the case of estates of decedents dying or gifts made after December 31, 2017, and before January 1, 2026, subparagraph (A) shall be applied by substituting "$10,000,000" for "$5,000,000".
(4) Deceased spousal unused exclusion amount
For purposes of this subsection, with respect to a surviving spouse of a deceased spouse dying after December 31, 2010, the term "deceased spousal unused exclusion amount" means the lesser of—
(A) the basic exclusion amount, or
(B) the excess of—
(i) the applicable exclusion amount of the last such deceased spouse of such surviving spouse, over
(ii) the amount with respect to which the tentative tax is determined under section 2001(b)(1) on the estate of such deceased spouse.
(5) Special rules
(A) Election required
A deceased spousal unused exclusion amount may not be taken into account by a surviving spouse under paragraph (2) unless the executor of the estate of the deceased spouse files an estate tax return on which such amount is computed and makes an election on such return that such amount may be so taken into account. Such election, once made, shall be irrevocable. No election may be made under this subparagraph if such return is filed after the time prescribed by law (including extensions) for filing such return.
(B) Examination of prior returns after expiration of period of limitations with respect to deceased spousal unused exclusion amount
Notwithstanding any period of limitation in section 6501, after the time has expired under section 6501 within which a tax may be assessed under
(6) Regulations
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out this subsection.
(d) Limitation based on amount of tax
The amount of the credit allowed by subsection (a) shall not exceed the amount of the tax imposed by section 2001.
(Added
Inflation Adjusted Items for Certain Years
For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under
Editorial Notes
References in Text
The Tax Reform Act of 1976, referred to in subsec. (b), is
Amendments
2017—Subsec. (c)(3)(B)(ii).
Subsec. (c)(3)(C).
2013—Subsec. (c)(4)(B)(i).
2010—Subsec. (c).
Subsec. (c)(2) to (6).
"(A)
"(B)
"(i) such dollar amount, multiplied by
"(ii) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting 'calendar year 2010' 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 nearest multiple of $10,000."
2001—Subsec. (c).
1997—Subsec. (a).
Subsecs. (c), (d).
1990—Subsecs. (b) to (d).
1981—Subsec. (a).
Subsec. (b).
Statutory Notes and Related Subsidiaries
Effective Date of 2017 Amendment
Amendment by section 11002(d)(1)(CC) of
Amendment by section 11061(a) of
Effective Date of 2013 Amendment
Amendment by
Effective Date of 2010 Amendment
Amendment by section 302(a)(1) of
"(1)
"(2)
Effective Date of 2001 Amendment
"(1)
"(2)
"(3)
Effective Date of 1997 Amendment
Amendment by
Effective Date of 1981 Amendment
Savings Provision
For provisions that nothing in amendment by
[§2011. Repealed. Pub. L. 113–295, div. A, title II, §221(a)(95)(A)(i), Dec. 19, 2014, 128 Stat. 4051 ]
Section, act Aug. 16, 1954, ch. 736,
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of
§2012. Credit for gift tax
(a) In general
If a tax on a gift has been paid under
(b) Valuation reductions
In applying, with respect to any gift, the ratio stated in subsection (a), the value at the time of the gift or at the time of the death, referred to in such ratio, shall be reduced—
(1) by such amount as will properly reflect the amount of such gift which was excluded in determining (for purposes of section 2503(a)), or of corresponding provisions of prior laws, the total amount of gifts made during the calendar quarter (or calendar year if the gift was made before January 1, 1971) in which the gift was made;
(2) if a deduction with respect to such gift is allowed under section 2056(a) (relating to marital deduction), then by the amount of such value, reduced as provided in paragraph (1); and
(3) if a deduction with respect to such gift is allowed under sections 2055 or 2106(a)(2) (relating to charitable deduction), then by the amount of such value, reduced as provided in paragraph (1) of this subsection.
(c) Where gift considered made one-half by spouse
Where the decedent was the donor of the gift but, under the provisions of section 2513, or corresponding provisions of prior laws, the gift was considered as made one-half by his spouse—
(1) the term "the amount of the tax paid on a gift under
(2) in applying, with respect to such gift, the ratio stated in subsection (a), the value at the time of the gift or at the time of the death, referred to in such ratio, includes such value with respect to each half of such gift, each such value being reduced as provided in paragraph (1) of subsection (b).
(d) Computation of amount of gift tax paid
(1) Amount of tax
For purposes of subsection (a), the amount of tax paid on a gift under
(2) Amount of gift
For purposes of paragraph (1), the "amount of such gift" shall be the amount included with respect to such gift in determining (for the purposes of section 2503(a), or of corresponding provisions of prior laws) the total amount of gifts made during such quarter or year, reduced by the amount of any deduction allowed with respect to such gift under section 2522, or under corresponding provisions of prior laws (relating to charitable deduction), or under section 2523 (relating to marital deduction).
(e) Section inapplicable to gifts made after December 31, 1976
No credit shall be allowed under this section with respect to the amount of any tax paid under
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
2001—Subsec. (a).
1981—Subsec. (b)(2).
1976—Subsec. (a).
Subsec. (b).
Subsec. (c).
Subsec. (d).
Subsec. (e).
1970—Subsec. (b)(1).
Subsec. (d).
Subsec. (d)(1).
Statutory Notes and Related Subsidiaries
Effective Date of 2001 Amendment
Effective Date of 1981 Amendment
Amendment by
Effective Date of 1976 Amendment
Amendment by section 2001(a)(3), (c)(1)(B) of
Effective Date of 1970 Amendment
Amendment by
§2013. Credit for tax on prior transfers
(a) General rule
The tax imposed by section 2001 shall be credited with all or a part of the amount of the Federal estate tax paid with respect to the transfer of property (including property passing as a result of the exercise or non-exercise of a power of appointment) to the decedent by or from a person (herein designated as a "transferor") who died within 10 years before, or within 2 years after, the decedent's death. If the transferor died within 2 years of the death of the decedent, the credit shall be the amount determined under subsections (b) and (c). If the transferor predeceased the decedent by more than 2 years, the credit shall be the following percentage of the amount so determined—
(1) 80 percent, if within the third or fourth years preceding the decedent's death;
(2) 60 percent, if within the fifth or sixth years preceding the decedent's death;
(3) 40 percent, if within the seventh or eighth years preceding the decedent's death; and
(4) 20 percent, if within the ninth or tenth years preceding the decedent's death.
(b) Computation of credit
Subject to the limitation prescribed in subsection (c), the credit provided by this section shall be an amount which bears the same ratio to the estate tax paid (adjusted as indicated hereinafter) with respect to the estate of the transferor as the value of the property transferred bears to the taxable estate of the transferor (determined for purposes of the estate tax) decreased by any death taxes paid with respect to such estate. For purposes of the preceding sentence, the estate tax paid shall be the Federal estate tax paid increased by any credits allowed against such estate tax under section 2012, or corresponding provisions of prior laws, on account of gift tax, and for any credits allowed against such estate tax under this section on account of prior transfers where the transferor acquired property from a person who died within 10 years before the death of the decedent.
(c) Limitation on credit
(1) In general
The credit provided in this section shall not exceed the amount by which—
(A) the estate tax imposed by section 2001 or section 2101 (after deducting the credits provided for in sections 2010, 2012, and 2014) computed without regard to this section, exceeds
(B) such tax computed by excluding from the decedent's gross estate the value of such property transferred and, if applicable, by making the adjustment hereinafter indicated.
If any deduction is otherwise allowable under section 2055 or section 2106(a)(2) (relating to charitable deduction) then, for the purpose of the computation indicated in subparagraph (B), the amount of such deduction shall be reduced by that part of such deduction which the value of such property transferred bears to the decedent's entire gross estate reduced by the deductions allowed under sections 2053 and 2054, or section 2106(a)(1) (relating to deduction for expenses, losses, etc.). For purposes of this section, the value of such property transferred shall be the value as provided for in subsection (d) of this section.
(2) Two or more transferors
If the credit provided in this section relates to property received from 2 or more transferors, the limitation provided in paragraph (1) of this subsection shall be computed by aggregating the value of the property so transferred to the decedent. The aggregate limitation so determined shall be apportioned in accordance with the value of the property transferred to the decedent by each transferor.
(d) Valuation of property transferred
The value of property transferred to the decedent shall be the value used for the purpose of determining the Federal estate tax liability of the estate of the transferor but—
(1) there shall be taken into account the effect of the tax imposed by section 2001 or 2101, or any estate, succession, legacy, or inheritance tax, on the net value to the decedent of such property;
(2) where such property is encumbered in any manner, or where the decedent incurs any obligation imposed by the transferor with respect to such property, such encumbrance or obligation shall be taken into account in the same manner as if the amount of a gift to the decedent of such property was being determined; and
(3) if the decedent was the spouse of the transferor at the time of the transferor's death, the net value of the property transferred to the decedent shall be reduced by the amount allowed under section 2056 (relating to marital deductions), as a deduction from the gross estate of the transferor.
(e) Property defined
For purposes of this section, the term "property" includes any beneficial interest in property, including a general power of appointment (as defined in section 2041).
(f) Treatment of additional tax imposed under section 2032A
If section 2032A applies to any property included in the gross estate of the transferor and an additional tax is imposed with respect to such property under section 2032A(c) before the date which is 2 years after the date of the decedent's death, for purposes of this section—
(1) the additional tax imposed by section 2032A(c) shall be treated as a Federal estate tax payable with respect to the estate of the transferor; and
(2) the value of such property and the amount of the taxable estate of the transferor shall be determined as if section 2032A did not apply with respect to such property.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
2001—Subsec. (c)(1)(A).
1997—Subsec. (g).
1988—Subsec. (g).
1986—Subsec. (g).
1976—Subsec. (b).
Subsec. (c)(1)(A).
Subsec. (d)(3).
Subsec. (f).
Subsec. (g).
Statutory Notes and Related Subsidiaries
Effective Date of 2001 Amendment
Amendment by
Effective Date of 1997 Amendment
Amendment by
Effective Date of 1988 Amendment
Amendment by
Effective Date of 1986 Amendment
Amendment by
Effective Date of 1976 Amendment
Amendment by section 1902(a)(2) of
§2014. Credit for foreign death taxes
(a) In general
The tax imposed by section 2001 shall be credited with the amount of any estate, inheritance, legacy, or succession taxes actually paid to any foreign country in respect of any property situated within such foreign country and included in the gross estate (not including any such taxes paid with respect to the estate of a person other than the decedent). The determination of the country within which property is situated shall be made in accordance with the rules applicable under subchapter B (sec. 2101 and following) in determining whether property is situated within or without the United States.
(b) Limitations on credit
The credit provided in this section with respect to such taxes paid to any foreign country—
(1) shall not, with respect to any such tax, exceed an amount which bears the same ratio to the amount of such tax actually paid to such foreign country as the value of property which is—
(A) situated within such foreign country,
(B) subjected to such tax, and
(C) included in the gross estate
bears to the value of all property subjected to such tax; and
(2) shall not, with respect to all such taxes, exceed an amount which bears the same ratio to the tax imposed by section 2001 (after deducting from such tax the credits provided by sections 2010 and 2012) as the value of property which is—
(A) situated within such foreign country,
(B) subjected to the taxes of such foreign country, and
(C) included in the gross estate
bears to the value of the entire gross estate reduced by the aggregate amount of the deductions allowed under sections 2055 and 2056.
(c) Valuation of property
(1) The values referred to in the ratio stated in subsection (b)(1) are the values determined for purposes of the tax imposed by such foreign country.
(2) The values referred to in the ratio stated in subsection (b)(2) are the values determined under this chapter; but, in applying such ratio, the value of any property described in subparagraphs (A), (B), and (C) thereof shall be reduced by such amount as will properly reflect, in accordance with regulations prescribed by the Secretary, the deductions allowed in respect of such property under sections 2055 and 2056 (relating to charitable and marital deductions).
(d) Proof of credit
The credit provided in this section shall be allowed only if the taxpayer establishes to the satisfaction of the Secretary—
(1) the amount of taxes actually paid to the foreign country,
(2) the amount and date of each payment thereof,
(3) the description and value of the property in respect of which such taxes are imposed, and
(4) all other information necessary for the verification and computation of the credit.
(e) Period of limitation
The credit provided in this section shall be allowed only for such taxes as were actually paid and credit therefor claimed within 4 years after the filing of the return required by section 6018, except that—
(1) If a petition for redetermination of a deficiency has been filed with the Tax Court within the time prescribed in section 6213(a), then within such 4-year period or before the expiration of 60 days after the decision of the Tax Court becomes final.
(2) If, under section 6161, an extension of time has been granted for payment of the tax shown on the return, or of a deficiency, then within such 4-year period or before the date of the expiration of the period of the extension.
Refund based on such credit may (despite the provisions of sections 6511 and 6512) be made if claim therefor is filed within the period above provided. Any such refund shall be made without interest.
(f) Additional limitation in cases involving a deduction under section 2053(d)
In any case where a deduction is allowed under section 2053(d) for an estate, succession, legacy, or inheritance tax imposed by and actually paid to any foreign country upon a transfer by the decedent for public, charitable, or religious uses described in section 2055, the property described in subparagraphs (A), (B), and (C) of paragraphs (1) and (2) of subsection (b) of this section shall not include any property in respect of which such deduction is allowed under section 2053(d).
(g) Possession of United States deemed a foreign country
For purposes of the credits authorized by this section, each possession of the United States shall be deemed to be a foreign country.
(h) Similar credit required for certain alien residents
Whenever the President finds that—
(1) a foreign country, in imposing estate, inheritance, legacy, or succession taxes, does not allow to citizens of the United States resident in such foreign country at the time of death a credit similar to the credit allowed under subsection (a),
(2) such foreign country, when requested by the United States to do so has not acted to provide such a similar credit in the case of citizens of the United States resident in such foreign country at the time of death, and
(3) it is in the public interest to allow the credit under subsection (a) in the case of citizens or subjects of such foreign country only if it allows such a similar credit in the case of citizens of the United States resident in such foreign country at the time of death,
the President shall proclaim that, in the case of citizens or subjects of such foreign country dying while the proclamation remains in effect, the credit under subsection (a) shall be allowed only if such foreign country allows such a similar credit in the case of citizens of the United States resident in such foreign country at the time of death.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
2001—Subsec. (b)(2).
1976—Subsec. (b)(2).
Subsecs. (c), (d).
1966—Subsec. (a).
Subsec. (h).
1959—Subsecs. (f), (g).
1958—Subsec. (f).
Statutory Notes and Related Subsidiaries
Effective Date of 2001 Amendment
Amendment by
Effective Date of 1966 Amendment
Amendment by
Effective Date of 1959 Amendment
Amendment by
Effective Date of 1958 Amendment
§2015. Credit for death taxes on remainders
Where an election is made under section 6163(a) to postpone payment of the tax imposed by section 2001, or 2101, such part of any estate, inheritance, legacy, or succession taxes allowable as a credit under section 2014, as is attributable to a reversionary or remainder interest may be allowed as a credit against the tax attributable to such interest, subject to the limitations on the amount of the credit contained in such sections, if such part is paid, and credit therefor claimed, at any time before the expiration of the time for payment of the tax imposed by section 2001 or 2101 as postponed and extended under section 6163.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
2001—
1958—
Statutory Notes and Related Subsidiaries
Effective Date of 2001 Amendment
Amendment by
Effective Date of 1958 Amendment
§2016. Recovery of taxes claimed as credit
If any tax claimed as a credit under section 2014 is recovered from any foreign country, the executor, or any other person or persons recovering such amount, shall give notice of such recovery to the Secretary at such time and in such manner as may be required by regulations prescribed by him, and the Secretary shall (despite the provisions of section 6501) redetermine the amount of the tax under this chapter and the amount, if any, of the tax due on such redetermination, shall be paid by the executor or such person or persons, as the case may be, on notice and demand. No interest shall be assessed or collected on any amount of tax due on any redetermination by the Secretary resulting from a refund to the executor of tax claimed as a credit under section 2014, for any period before the receipt of such refund, except to the extent interest was paid by the foreign country on such refund.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
2002—
2001—
1976—
Statutory Notes and Related Subsidiaries
Effective Date of 2002 Amendment
Amendment by
Effective Date of 2001 Amendment
Amendment by
Effective Date of 1976 Amendment
Amendment by section 1902(a)(12)(C) of
PART III—GROSS ESTATE
Editorial Notes
Amendments
1998—
1997—
1981—
1976—
§2031. Definition of gross estate
(a) General
The value of the gross estate of the decedent shall be determined by including to the extent provided for in this part, the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated.
(b) Valuation of unlisted stock and securities
In the case of stock and securities of a corporation the value of which, by reason of their not being listed on an exchange and by reason of the absence of sales thereof, cannot be determined with reference to bid and asked prices or with reference to sales prices, the value thereof shall be determined by taking into consideration, in addition to all other factors, the value of stock or securities of corporations engaged in the same or a similar line of business which are listed on an exchange.
(c) Estate tax with respect to land subject to a qualified conservation easement
(1) In general
If the executor makes the election described in paragraph (6), then, except as otherwise provided in this subsection, there shall be excluded from the gross estate the lesser of—
(A) the applicable percentage of the value of land subject to a qualified conservation easement, reduced by the amount of any deduction under section 2055(f) with respect to such land, or
(B) $500,000.
(2) Applicable percentage
For purposes of paragraph (1), the term "applicable percentage" means 40 percent reduced (but not below zero) by 2 percentage points for each percentage point (or fraction thereof) by which the value of the qualified conservation easement is less than 30 percent of the value of the land (determined without regard to the value of such easement and reduced by the value of any retained development right (as defined in paragraph (5))). The values taken into account under the preceding sentence shall be such values as of the date of the contribution referred to in paragraph (8)(B).
[(3) Repealed. Pub. L. 113–295, div. A, title II, §221(a)(96), Dec. 19, 2014, 128 Stat. 4051 ]
(4) Treatment of certain indebtedness
(A) In general
The exclusion provided in paragraph (1) shall not apply to the extent that the land is debt-financed property.
(B) Definitions
For purposes of this paragraph—
(i) Debt-financed property
The term "debt-financed property" means any property with respect to which there is an acquisition indebtedness (as defined in clause (ii)) on the date of the decedent's death.
(ii) Acquisition indebtedness
The term "acquisition indebtedness" means, with respect to debt-financed property, the unpaid amount of—
(I) the indebtedness incurred by the donor in acquiring such property,
(II) the indebtedness incurred before the acquisition of such property if such indebtedness would not have been incurred but for such acquisition,
(III) the indebtedness incurred after the acquisition of such property if such indebtedness would not have been incurred but for such acquisition and the incurrence of such indebtedness was reasonably foreseeable at the time of such acquisition, and
(IV) the extension, renewal, or refinancing of an acquisition indebtedness.
(5) Treatment of retained development right
(A) In general
Paragraph (1) shall not apply to the value of any development right retained by the donor in the conveyance of a qualified conservation easement.
(B) Termination of retained development right
If every person in being who has an interest (whether or not in possession) in the land executes an agreement to extinguish permanently some or all of any development rights (as defined in subparagraph (D)) retained by the donor on or before the date for filing the return of the tax imposed by section 2001, then any tax imposed by section 2001 shall be reduced accordingly. Such agreement shall be filed with the return of the tax imposed by section 2001. The agreement shall be in such form as the Secretary shall prescribe.
(C) Additional tax
Any failure to implement the agreement described in subparagraph (B) not later than the earlier of—
(i) the date which is 2 years after the date of the decedent's death, or
(ii) the date of the sale of such land subject to the qualified conservation easement,
shall result in the imposition of an additional tax in the amount of the tax which would have been due on the retained development rights subject to such agreement. Such additional tax shall be due and payable on the last day of the 6th month following such date.
(D) Development right defined
For purposes of this paragraph, the term "development right" means any right to use the land subject to the qualified conservation easement in which such right is retained for any commercial purpose which is not subordinate to and directly supportive of the use of such land as a farm for farming purposes (within the meaning of section 2032A(e)(5)).
(6) Election
The election under this subsection shall be made on or before the due date (including extensions) for filing the return of tax imposed by section 2001 and shall be made on such return. Such an election, once made, shall be irrevocable.
(7) Calculation of estate tax due
An executor making the election described in paragraph (6) shall, for purposes of calculating the amount of tax imposed by section 2001, include the value of any development right (as defined in paragraph (5)) retained by the donor in the conveyance of such qualified conservation easement. The computation of tax on any retained development right prescribed in this paragraph shall be done in such manner and on such forms as the Secretary shall prescribe.
(8) Definitions
For purposes of this subsection—
(A) Land subject to a qualified conservation easement
The term "land subject to a qualified conservation easement" means land—
(i) which is located in the United States or any possession of the United States,
(ii) which was owned by the decedent or a member of the decedent's family at all times during the 3-year period ending on the date of the decedent's death, and
(iii) with respect to which a qualified conservation easement has been made by an individual described in subparagraph (C), as of the date of the election described in paragraph (6).
(B) Qualified conservation easement
The term "qualified conservation easement" means a qualified conservation contribution (as defined in section 170(h)(1)) of a qualified real property interest (as defined in section 170(h)(2)(C)), except that clause (iv) of section 170(h)(4)(A) shall not apply, and the restriction on the use of such interest described in section 170(h)(2)(C) shall include a prohibition on more than a de minimis use for a commercial recreational activity.
(C) Individual described
An individual is described in this subparagraph if such individual is—
(i) the decedent,
(ii) a member of the decedent's family,
(iii) the executor of the decedent's estate, or
(iv) the trustee of a trust the corpus of which includes the land to be subject to the qualified conservation easement.
(D) Member of family
The term "member of the decedent's family" means any member of the family (as defined in section 2032A(e)(2)) of the decedent.
(9) Treatment of easements granted after death
In any case in which the qualified conservation easement is granted after the date of the decedent's death and on or before the due date (including extensions) for filing the return of tax imposed by section 2001, the deduction under section 2055(f) with respect to such easement shall be allowed to the estate but only if no charitable deduction is allowed under
(10) Application of this section to interests in partnerships, corporations, and trusts
This section shall apply to an interest in a partnership, corporation, or trust if at least 30 percent of the entity is owned (directly or indirectly) by the decedent, as determined under the rules described in section 2057(e)(3) (as in effect before its repeal).
(d) Cross reference
For executor's right to be furnished on request a statement regarding any valuation made by the Secretary within the gross estate, see section 7517.
(Aug. 16, 1954, ch. 736,
Editorial Notes
References in Text
Section 2057, referred to in subsec. (c)(10), was repealed by
Amendments
2018—Subsec. (c)(1)(B).
Subsec. (c)(2).
2014—Subsec. (c)(1).
Subsec. (c)(3).
Subsec. (c)(10).
2001—Subsec. (c)(2).
Subsec. (c)(8)(A)(i).
"(I) in or within 25 miles of an area which, on the date of the decedent's death, is a metropolitan area (as defined by the Office of Management and Budget),
"(II) in or within 25 miles of an area which, on the date of the decedent's death, is a national park or wilderness area designated as part of the National Wilderness Preservation System (unless it is determined by the Secretary that land in or within 25 miles of such a park or wilderness area is not under significant development pressure), or
"(III) in or within 10 miles of an area which, on the date of the decedent's death, is an Urban National Forest (as designated by the Forest Service),".
1998—Subsec. (c)(6).
Subsec. (c)(9).
Subsec. (c)(10).
1997—Subsecs. (c), (d).
1976—Subsec. (c).
1962—Subsec. (a).
Statutory Notes and Related Subsidiaries
Effective Date of 2014 Amendment
Amendment by
Effective Date of 2001 Amendment
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1997 Amendment
Amendment by
Effective Date of 1962 Amendment
"(1) Except as provided in paragraph (2), the amendments made by subsection (a) [amending this section and
"(2) In the case of a decedent dying after the date of the enactment of this Act [Oct. 16, 1962] and before July 1, 1964, the value of real property situated outside of the United States shall not be included in the gross estate (as defined in section 2031(a)) of the decedent—
"(A) under section 2033, 2034, 2035(a), 2036(a), 2037(a), or 2038(a) to the extent the real property, or the decedent's interest in it, was acquired by the decedent before February 1, 1962;
"(B) under section 2040 to the extent such property or interest was acquired by the decedent before February 1, 1962, or was held by the decedent and the survivor in a joint tenancy or tenancy by the entirety before February 1, 1962; or
"(C) under section 2041(a) to the extent that before February 1, 1962, such property or interest was subject to a general power of appointment (as defined in section 2041) possessed by the decedent.
In the case of real property, or an interest therein, situated outside of the United States (including a general power of appointment in respect of such property or interest, and including property held by the decedent and the survivor in a joint tenancy or tenancy by the entirety) which was acquired by the decedent after January 31, 1962, by gift within the meaning of section 2511, or from a prior decedent by devise or inheritance, or by reason of death, form of ownership, or other conditions (including the exercise or nonexercise of a power of appointment), for purposes of this paragraph such property or interest therein shall be deemed to have been acquired by the decedent before February 1, 1962, if before that date the donor or prior decedent had acquired the property or his interest therein or had possessed a power of appointment in respect of the property or interest."
§2032. Alternate valuation
(a) General
The value of the gross estate may be determined, if the executor so elects, by valuing all the property included in the gross estate as follows:
(1) In the case of property distributed, sold, exchanged, or otherwise disposed of, within 6 months after the decedent's death such property shall be valued as of the date of distribution, sale, exchange, or other disposition.
(2) In the case of property not distributed, sold, exchanged, or otherwise disposed of, within 6 months after the decedent's death such property shall be valued as of the date 6 months after the decedent's death.
(3) Any interest or estate which is affected by mere lapse of time shall be included at its value as of the time of death (instead of the later date) with adjustment for any difference in its value as of the later date not due to mere lapse of time.
(b) Special rules
No deduction under this chapter of any item shall be allowed if allowance for such items is in effect given by the alternate valuation provided by this section. Wherever in any other subsection or section of this chapter reference is made to the value of property at the time of the decedent's death, such reference shall be deemed to refer to the value of such property used in determining the value of the gross estate. In case of an election made by the executor under this section, then—
(1) for purposes of the charitable deduction under section 2055 or 2106(a)(2), any bequest, legacy, devise, or transfer enumerated therein, and
(2) for the purpose of the marital deduction under section 2056, any interest in property passing to the surviving spouse,
shall be valued as of the date of the decedent's death with adjustment for any difference in value (not due to mere lapse of time or the occurrence or nonoccurrence of a contingency) of the property as of the date 6 months after the decedent's death (substituting, in the case of property distributed by the executor or trustee, or sold, exchanged, or otherwise disposed of, during such 6-month period, the date thereof).
(c) Election must decrease gross estate and estate tax
No election may be made under this section with respect to an estate unless such election will decrease—
(1) the value of the gross estate, and
(2) the sum of the tax imposed by this chapter and the tax imposed by
(d) Election
(1) In general
The election provided for in this section shall be made by the executor on the return of the tax imposed by this chapter. Such election, once made, shall be irrevocable.
(2) Exception
No election may be made under this section if such return is filed more than 1 year after the time prescribed by law (including extensions) for filing such return.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1986—Subsec. (c)(2).
1984—Subsec. (c).
Subsec. (d).
1970—
Statutory Notes and Related Subsidiaries
Effective Date of 1986 Amendment
Amendment by
Effective Date of 1984 Amendment
"(1)
"(2)
"(A) a credit or refund of the tax imposed by
"(B) the election under section 2032 of the Internal Revenue Code of 1986 would have met the requirements of such section (as amended by this section and section 1023) had the decedent died after the date of enactment of this Act, and
"(C) a claim for credit or refund of such tax with respect to such estate is filed not later than the 90th day after the date of the enactment of this Act,
then such election shall be treated as a valid election under such section 2032. The statutory period for the assessment of any deficiency which is attributable to an election under this paragraph shall not expire before the close of the 2-year period beginning on the date of the enactment of this Act."
Effective Date of 1970 Amendment
§2032A. Valuation of certain farm, etc., real property
(a) Value based on use under which property qualifies
(1) General rule
If—
(A) the decedent was (at the time of his death) a citizen or resident of the United States, and
(B) the executor elects the application of this section and files the agreement referred to in subsection (d)(2),
then, for purposes of this chapter, the value of qualified real property shall be its value for the use under which it qualifies, under subsection (b), as qualified real property.
(2) Limitation on aggregate reduction in fair market value
The aggregate decrease in the value of qualified real property taken into account for purposes of this chapter which results from the application of paragraph (1) with respect to any decedent shall not exceed $750,000.
(3) Inflation adjustment
In the case of estates of decedents dying in a calendar year after 1998, the $750,000 amount contained in paragraph (2) shall be increased by an amount equal to—
(A) $750,000, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting "calendar year 1997" for "calendar year 2016" in subparagraph (A)(ii) 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.
(b) Qualified real property
(1) In general
For purposes of this section, the term "qualified real property" means real property located in the United States which was acquired from or passed from the decedent to a qualified heir of the decedent and which, on the date of the decedent's death, was being used for a qualified use by the decedent or a member of the decedent's family, but only if—
(A) 50 percent or more of the adjusted value of the gross estate consists of the adjusted value of real or personal property which—
(i) on the date of the decedent's death, was being used for a qualified use by the decedent or a member of the decedent's family, and
(ii) was acquired from or passed from the decedent to a qualified heir of the decedent.
(B) 25 percent or more of the adjusted value of the gross estate consists of the adjusted value of real property which meets the requirements of subparagraphs (A)(ii) and (C),
(C) during the 8-year period ending on the date of the decedent's death there have been periods aggregating 5 years or more during which—
(i) such real property was owned by the decedent or a member of the decedent's family and used for a qualified use by the decedent or a member of the decedent's family, and
(ii) there was material participation by the decedent or a member of the decedent's family in the operation of the farm or other business, and
(D) such real property is designated in the agreement referred to in subsection (d)(2).
(2) Qualified use
For purposes of this section, the term "qualified use" means the devotion of the property to any of the following:
(A) use as a farm for farming purposes, or
(B) use in a trade or business other than the trade or business of farming.
(3) Adjusted value
For purposes of paragraph (1), the term "adjusted value" means—
(A) in the case of the gross estate, the value of the gross estate for purposes of this chapter (determined without regard to this section), reduced by any amounts allowable as a deduction under paragraph (4) of section 2053(a), or
(B) in the case of any real or personal property, the value of such property for purposes of this chapter (determined without regard to this section), reduced by any amounts allowable as a deduction in respect of such property under paragraph (4) of section 2053(a).
(4) Decedents who are retired or disabled
(A) In general
If, on the date of the decedent's death, the requirements of paragraph (1)(C)(ii) with respect to the decedent for any property are not met, and the decedent—
(i) was receiving old-age benefits under title II of the Social Security Act for a continuous period ending on such date, or
(ii) was disabled for a continuous period ending on such date,
then paragraph (1)(C)(ii) shall be applied with respect to such property by substituting "the date on which the longer of such continuous periods began" for "the date of the decedent's death" in paragraph (1)(C).
(B) Disabled defined
For purposes of subparagraph (A), an individual shall be disabled if such individual has a mental or physical impairment which renders him unable to materially participate in the operation of the farm or other business.
(C) Coordination with recapture
For purposes of subsection (c)(6)(B)(i), if the requirements of paragraph (1)(C)(ii) are met with respect to any decedent by reason of subparagraph (A), the period ending on the date on which the continuous period taken into account under subparagraph (A) began shall be treated as the period immediately before the decedent's death.
(5) Special rules for surviving spouses
(A) In general
If property is qualified real property with respect to a decedent (hereinafter in this paragraph referred to as the "first decedent") and such property was acquired from or passed from the first decedent to the surviving spouse of the first decedent, for purposes of applying this subsection and subsection (c) in the case of the estate of such surviving spouse, active management of the farm or other business by the surviving spouse shall be treated as material participation by such surviving spouse in the operation of such farm or business.
(B) Special rule
For the purposes of subparagraph (A), the determination of whether property is qualified real property with respect to the first decedent shall be made without regard to subparagraph (D) of paragraph (1) and without regard to whether an election under this section was made.
(C) Coordination with paragraph (4)
In any case in which to do so will enable the requirements of paragraph (1)(C)(ii) to be met with respect to the surviving spouse, this subsection and subsection (c) shall be applied by taking into account any application of paragraph (4).
(c) Tax treatment of dispositions and failures to use for qualified use
(1) Imposition of additional estate tax
If, within 10 years after the decedent's death and before the death of the qualified heir—
(A) the qualified heir disposes of any interest in qualified real property (other than by a disposition to a member of his family), or
(B) the qualified heir ceases to use for the qualified use the qualified real property which was acquired (or passed) from the decedent,
then, there is hereby imposed an additional estate tax.
(2) Amount of additional tax
(A) In general
The amount of the additional tax imposed by paragraph (1) with respect to any interest shall be the amount equal to the lesser of—
(i) the adjusted tax difference attributable to such interest, or
(ii) the excess of the amount realized with respect to the interest (or, in any case other than a sale or exchange at arm's length, the fair market value of the interest) over the value of the interest determined under subsection (a).
(B) Adjusted tax difference attributable to interest
For purposes of subparagraph (A), the adjusted tax difference attributable to an interest is the amount which bears the same ratio to the adjusted tax difference with respect to the estate (determined under subparagraph (C)) as—
(i) the excess of the value of such interest for purposes of this chapter (determined without regard to subsection (a)) over the value of such interest determined under subsection (a), bears to
(ii) a similar excess determined for all qualified real property.
(C) Adjusted tax difference with respect to the estate
For purposes of subparagraph (B), the term "adjusted tax difference with respect to the estate" means the excess of what would have been the estate tax liability but for subsection (a) over the estate tax liability. For purposes of this subparagraph, the term "estate tax liability" means the tax imposed by section 2001 reduced by the credits allowable against such tax.
(D) Partial dispositions
For purposes of this paragraph, where the qualified heir disposes of a portion of the interest acquired by (or passing to) such heir (or a predecessor qualified heir) or there is a cessation of use of such a portion—
(i) the value determined under subsection (a) taken into account under subparagraph (A)(ii) with respect to such portion shall be its pro rata share of such value of such interest, and
(ii) the adjusted tax difference attributable to the interest taken into account with respect to the transaction involving the second or any succeeding portion shall be reduced by the amount of the tax imposed by this subsection with respect to all prior transactions involving portions of such interest.
(E) Special rule for disposition of timber
In the case of qualified woodland to which an election under subsection (e)(13)(A) applies, if the qualified heir disposes of (or severs) any standing timber on such qualified woodland—
(i) such disposition (or severance) shall be treated as a disposition of a portion of the interest of the qualified heir in such property, and
(ii) the amount of the additional tax imposed by paragraph (1) with respect to such disposition shall be an amount equal to the lesser of—
(I) the amount realized on such disposition (or, in any case other than a sale or exchange at arm's length, the fair market value of the portion of the interest disposed or severed), or
(II) the amount of additional tax determined under this paragraph (without regard to this subparagraph) if the entire interest of the qualified heir in the qualified woodland had been disposed of, less the sum of the amount of the additional tax imposed with respect to all prior transactions involving such woodland to which this subparagraph applied.
For purposes of the preceding sentence, the disposition of a right to sever shall be treated as the disposition of the standing timber. The amount of additional tax imposed under paragraph (1) in any case in which a qualified heir disposes of his entire interest in the qualified woodland shall be reduced by any amount determined under this subparagraph with respect to such woodland.
(3) Only 1 additional tax imposed with respect to any 1 portion
In the case of an interest acquired from (or passing from) any decedent, if subparagraph (A) or (B) of paragraph (1) applies to any portion of an interest, subparagraph (B) or (A), as the case may be, of paragraph (1) shall not apply with respect to the same portion of such interest.
(4) Due date
The additional tax imposed by this subsection shall become due and payable on the day which is 6 months after the date of the disposition or cessation referred to in paragraph (1).
(5) Liability for tax; furnishing of bond
The qualified heir shall be personally liable for the additional tax imposed by this subsection with respect to his interest unless the heir has furnished bond which meets the requirements of subsection (e)(11).
(6) Cessation of qualified use
For purposes of paragraph (1)(B), real property shall cease to be used for the qualified use if—
(A) such property ceases to be used for the qualified use set forth in subparagraph (A) or (B) of subsection (b)(2) under which the property qualified under subsection (b), or
(B) during any period of 8 years ending after the date of the decedent's death and before the date of the death of the qualified heir, there had been periods aggregating more than 3 years during which—
(i) in the case of periods during which the property was held by the decedent, there was no material participation by the decedent or any member of his family in the operation of the farm or other business, and
(ii) in the case of periods during which the property was held by any qualified heir, there was no material participation by such qualified heir or any member of his family in the operation of the farm or other business.
(7) Special rules
(A) No tax if use begins within 2 years
If the date on which the qualified heir begins to use the qualified real property (hereinafter in this subparagraph referred to as the commencement date) is before the date 2 years after the decedent's death—
(i) no tax shall be imposed under paragraph (1) by reason of the failure by the qualified heir to so use such property before the commencement date, and
(ii) the 10-year period under paragraph (1) shall be extended by the period after the decedent's death and before the commencement date.
(B) Active management by eligible qualified heir treated as material participation
For purposes of paragraph (6)(B)(ii), the active management of a farm or other business by—
(i) an eligible qualified heir, or
(ii) a fiduciary of an eligible qualified heir described in clause (ii) or (iii) of subparagraph (C),
shall be treated as material participation by such eligible qualified heir in the operation of such farm or business. In the case of an eligible qualified heir described in clause (ii), (iii), or (iv) of subparagraph (C), the preceding sentence shall apply only during periods during which such heir meets the requirements of such clause.
(C) Eligible qualified heir
For purposes of this paragraph, the term "eligible qualified heir" means a qualified heir who—
(i) is the surviving spouse of the decedent,
(ii) has not attained the age of 21,
(iii) is disabled (within the meaning of subsection (b)(4)(B)), or
(iv) is a student.
(D) Student
For purposes of subparagraph (C), an individual shall be treated as a student with respect to periods during any calendar year if (and only if) such individual is a student (within the meaning of section 152(f)(2)) for such calendar year.
(E) Certain rents treated as qualified use
For purposes of this subsection, a surviving spouse or lineal descendant of the decedent shall not be treated as failing to use qualified real property in a qualified use solely because such spouse or descendant rents such property to a member of the family of such spouse or descendant on a net cash basis. For purposes of the preceding sentence, a legally adopted child of an individual shall be treated as the child of such individual by blood.
(8) Qualified conservation contribution is not a disposition
A qualified conservation contribution (as defined in section 170(h)) by gift or otherwise shall not be deemed a disposition under subsection (c)(1)(A).
(d) Election; agreement
(1) Election
The election under this section shall be made on the return of the tax imposed by section 2001. Such election shall be made in such manner as the Secretary shall by regulations prescribe. Such an election, once made, shall be irrevocable.
(2) Agreement
The agreement referred to in this paragraph is a written agreement signed by each person in being who has an interest (whether or not in possession) in any property designated in such agreement consenting to the application of subsection (c) with respect to such property.
(3) Modification of election and agreement to be permitted
The Secretary shall prescribe procedures which provide that in any case in which the executor makes an election under paragraph (1) (and submits the agreement referred to in paragraph (2)) within the time prescribed therefor, but—
(A) the notice of election, as filed, does not contain all required information, or
(B) signatures of 1 or more persons required to enter into the agreement described in paragraph (2) are not included on the agreement as filed, or the agreement does not contain all required information,
the executor will have a reasonable period of time (not exceeding 90 days) after notification of such failures to provide such information or signatures.
(e) Definitions; special rules
For purposes of this section—
(1) Qualified heir
The term "qualified heir" means, with respect to any property, a member of the decedent's family who acquired such property (or to whom such property passed) from the decedent. If a qualified heir disposes of any interest in qualified real property to any member of his family, such member shall thereafter be treated as the qualified heir with respect to such interest.
(2) Member of family
The term "member of the family" means, with respect to any individual, only—
(A) an ancestor of such individual,
(B) the spouse of such individual,
(C) a lineal descendant of such individual, of such individual's spouse, or of a parent of such individual, or
(D) the spouse of any lineal descendant described in subparagraph (C).
For purposes of the preceding sentence, a legally adopted child of an individual shall be treated as the child of such individual by blood.
(3) Certain real property included
In the case of real property which meets the requirements of subparagraph (C) of subsection (b)(1), residential buildings and related improvements on such real property occupied on a regular basis by the owner or lessee of such real property or by persons employed by such owner or lessee for the purpose of operating or maintaining such real property, and roads, buildings, and other structures and improvements functionally related to the qualified use shall be treated as real property devoted to the qualified use.
(4) Farm
The term "farm" includes stock, dairy, poultry, fruit, furbearing animal, and truck farms, plantations, ranches, nurseries, ranges, greenhouses or other similar structures used primarily for the raising of agricultural or horticultural commodities, and orchards and woodlands.
(5) Farming purposes
The term "farming purposes" means—
(A) cultivating the soil or raising or harvesting any agricultural or horticultural commodity (including the raising, shearing, feeding, caring for, training, and management of animals) on a farm;
(B) handling, drying, packing, grading, or storing on a farm any agricultural or horticultural commodity in its unmanufactured state, but only if the owner, tenant, or operator of the farm regularly produces more than one-half of the commodity so treated; and
(C)(i) the planting, cultivating, caring for, or cutting of trees, or
(ii) the preparation (other than milling) of trees for market.
(6) Material participation
Material participation shall be determined in a manner similar to the manner used for purposes of paragraph (1) of section 1402(a) (relating to net earnings from self-employment).
(7) Method of valuing farms
(A) In general
Except as provided in subparagraph (B), the value of a farm for farming purposes shall be determined by dividing—
(i) the excess of the average annual gross cash rental for comparable land used for farming purposes and located in the locality of such farm over the average annual State and local real estate taxes for such comparable land, by
(ii) the average annual effective interest rate for all new Federal Land Bank loans.
For purposes of the preceding sentence, each average annual computation shall be made on the basis of the 5 most recent calendar years ending before the date of the decedent's death.
(B) Value based on net share rental in certain cases
(i) In general
If there is no comparable land from which the average annual gross cash rental may be determined but there is comparable land from which the average net share rental may be determined, subparagraph (A)(i) shall be applied by substituting "average annual net share rental" for "average annual gross cash rental".
(ii) Net share rental
For purposes of this paragraph, the term "net share rental" means the excess of—
(I) the value of the produce received by the lessor of the land on which such produce is grown, over
(II) the cash operating expenses of growing such produce which, under the lease, are paid by the lessor.
(C) Exception
The formula provided by subparagraph (A) shall not be used—
(i) where it is established that there is no comparable land from which the average annual gross cash rental may be determined, or
(ii) where the executor elects to have the value of the farm for farming purposes determined and that there is no comparable land from which the average net share rental may be determined under paragraph (8).
(8) Method of valuing closely held business interests, etc.
In any case to which paragraph (7)(A) does not apply, the following factors shall apply in determining the value of any qualified real property:
(A) The capitalization of income which the property can be expected to yield for farming or closely held business purposes over a reasonable period of time under prudent management using traditional cropping patterns for the area, taking into account soil capacity, terrain configuration, and similar factors,
(B) The capitalization of the fair rental value of the land for farm land or closely held business purposes,
(C) Assessed land values in a State which provides a differential or use value assessment law for farmland or closely held business,
(D) Comparable sales of other farm or closely held business land in the same geographical area far enough removed from a metropolitan or resort area so that nonagricultural use is not a significant factor in the sales price, and
(E) Any other factor which fairly values the farm or closely held business value of the property.
(9) Property acquired from decedent
Property shall be considered to have been acquired from or to have passed from the decedent if—
(A) such property is so considered under section 1014(b) (relating to basis of property acquired from a decedent),
(B) such property is acquired by any person from the estate, or
(C) such property is acquired by any person from a trust (to the extent such property is includible in the gross estate of the decedent).
(10) Community property
If the decedent and his surviving spouse at any time held qualified real property as community property, the interest of the surviving spouse in such property shall be taken into account under this section to the extent necessary to provide a result under this section with respect to such property which is consistent with the result which would have obtained under this section if such property had not been community property.
(11) Bond in lieu of personal liability
If the qualified heir makes written application to the Secretary for determination of the maximum amount of the additional tax which may be imposed by subsection (c) with respect to the qualified heir's interest, the Secretary (as soon as possible, and in any event within 1 year after the making of such application) shall notify the heir of such maximum amount. The qualified heir, on furnishing a bond in such amount and for such period as may be required, shall be discharged from personal liability for any additional tax imposed by subsection (c) and shall be entitled to a receipt or writing showing such discharge.
(12) Active management
The term "active management" means the making of the management decisions of a business (other than the daily operating decisions).
(13) Special rules for woodlands
(A) In general
In the case of any qualified woodland with respect to which the executor elects to have this subparagraph apply, trees growing on such woodland shall not be treated as a crop.
(B) Qualified woodland
The term "qualified woodland" means any real property which—
(i) is used in timber operations, and
(ii) is an identifiable area of land such as an acre or other area for which records are normally maintained in conducting timber operations.
(C) Timber operations
The term "timber operations" means—
(i) the planting, cultivating, caring for, or cutting of trees, or
(ii) the preparation (other than milling) of trees for market.
(D) Election
An election under subparagraph (A) shall be made on the return of the tax imposed by section 2001. Such election shall be made in such manner as the Secretary shall by regulations prescribe. Such an election, once made, shall be irrevocable.
(14) Treatment of replacement property acquired in section 1031 or 1033 transactions
(A) In general
In the case of any qualified replacement property, any period during which there was ownership, qualified use, or material participation with respect to the replaced property by the decedent or any member of his family shall be treated as a period during which there was such ownership, use, or material participation (as the case may be) with respect to the qualified replacement property.
(B) Limitation
Subparagraph (A) shall not apply to the extent that the fair market value of the qualified replacement property (as of the date of its acquisition) exceeds the fair market value of the replaced property (as of the date of its disposition).
(C) Definitions
For purposes of this paragraph—
(i) Qualified replacement property
The term "qualified replacement property" means any real property which is—
(I) acquired in an exchange which qualifies under section 1031, or
(II) the acquisition of which results in the nonrecognition of gain under section 1033.
Such term shall only include property which is used for the same qualified use as the replaced property was being used before the exchange.
(ii) Replaced property
The term "replaced property" means—
(I) the property transferred in the exchange which qualifies under section 1031, or
(II) the property compulsorily or involuntarily converted (within the meaning of section 1033).
(f) Statute of limitations
If qualified real property is disposed of or ceases to be used for a qualified use, then—
(1) the statutory period for the assessment of any additional tax under subsection (c) attributable to such disposition or cessation shall not expire before the expiration of 3 years from the date the Secretary is notified (in such manner as the Secretary may by regulations prescribe) of such disposition or cessation (or if later in the case of an involuntary conversion or exchange to which subsection (h) or (i) applies, 3 years from the date the Secretary is notified of the replacement of the converted property or of an intention not to replace or of the exchange of property), and
(2) such additional tax may be assessed before the expiration of such 3-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment.
(g) Application of this section and section 6324B to interests in partnerships, corporations, and trusts
The Secretary shall prescribe regulations setting forth the application of this section and section 6324B in the case of an interest in a partnership, corporation, or trust which, with respect to the decedent, is an interest in a closely held business (within the meaning of paragraph (1) of section 6166(b)). For purposes of the preceding sentence, an interest in a discretionary trust all the beneficiaries of which are qualified heirs shall be treated as a present interest.
(h) Special rules for involuntary conversions of qualified real property
(1) Treatment of converted property
(A) In general
If there is an involuntary conversion of an interest in qualified real property—
(i) no tax shall be imposed by subsection (c) on such conversion if the cost of the qualified replacement property equals or exceeds the amount realized on such conversion, or
(ii) if clause (i) does not apply, the amount of the tax imposed by subsection (c) on such conversion shall be the amount determined under subparagraph (B).
(B) Amount of tax where there is not complete reinvestment
The amount determined under this subparagraph with respect to any involuntary conversion is the amount of the tax which (but for this subsection) would have been imposed on such conversion reduced by an amount which—
(i) bears the same ratio to such tax, as
(ii) the cost of the qualified replacement property bears to the amount realized on the conversion.
(2) Treatment of replacement property
For purposes of subsection (c)—
(A) any qualified replacement property shall be treated in the same manner as if it were a portion of the interest in qualified real property which was involuntarily converted; except that with respect to such qualified replacement property the 10-year period under paragraph (1) of subsection (c) shall be extended by any period, beyond the 2-year period referred to in section 1033(a)(2)(B)(i), during which the qualified heir was allowed to replace the qualified real property,
(B) any tax imposed by subsection (c) on the involuntary conversion shall be treated as a tax imposed on a partial disposition, and
(C) paragraph (6) of subsection (c) shall be applied—
(i) by not taking into account periods after the involuntary conversion and before the acquisition of the qualified replacement property, and
(ii) by treating material participation with respect to the converted property as material participation with respect to the qualified replacement property.
(3) Definitions and special rules
For purposes of this subsection—
(A) Involuntary conversion
The term "involuntary conversion" means a compulsory or involuntary conversion within the meaning of section 1033.
(B) Qualified replacement property
The term "qualified replacement property" means—
(i) in the case of an involuntary conversion described in section 1033(a)(1), any real property into which the qualified real property is converted, or
(ii) in the case of an involuntary conversion described in section 1033(a)(2), any real property purchased by the qualified heir during the period specified in section 1033(a)(2)(B) for purposes of replacing the qualified real property.
Such term only includes property which is to be used for the qualified use set forth in subparagraph (A) or (B) of subsection (b)(2) under which the qualified real property qualified under subsection (a).
(4) Certain rules made applicable
The rules of the last sentence of section 1033(a)(2)(A) shall apply for purposes of paragraph (3)(B)(ii).
(i) Exchanges of qualified real property
(1) Treatment of property exchanged
(A) Exchanges solely for qualified exchange property
If an interest in qualified real property is exchanged solely for an interest in qualified exchange property in a transaction which qualifies under section 1031, no tax shall be imposed by subsection (c) by reason of such exchange.
(B) Exchanges where other property received
If an interest in qualified real property is exchanged for an interest in qualified exchange property and other property in a transaction which qualifies under section 1031, the amount of the tax imposed by subsection (c) by reason of such exchange shall be the amount of tax which (but for this subparagraph) would have been imposed on such exchange under subsection (c)(1), reduced by an amount which—
(i) bears the same ratio to such tax, as
(ii) the fair market value of the qualified exchange property bears to the fair market value of the qualified real property exchanged.
For purposes of clause (ii) of the preceding sentence, fair market value shall be determined as of the time of the exchange.
(2) Treatment of qualified exchange property
For purposes of subsection (c)—
(A) any interest in qualified exchange property shall be treated in the same manner as if it were a portion of the interest in qualified real property which was exchanged,
(B) any tax imposed by subsection (c) by reason of the exchange shall be treated as a tax imposed on a partial disposition, and
(C) paragraph (6) of subsection (c) shall be applied by treating material participation with respect to the exchanged property as material participation with respect to the qualified exchange property.
(3) Qualified exchange property
For purposes of this subsection, the term "qualified exchange property" means real property which is to be used for the qualified use set forth in subparagraph (A) or (B) of subsection (b)(2) under which the real property exchanged therefor originally qualified under subsection (a).
(Added
Inflation Adjusted Items for Certain Years
For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under
Editorial Notes
References in Text
The Social Security Act, referred to in subsec. (b)(4)(A)(i), is act Aug. 14, 1935, ch. 531,
Amendments
2017—Subsec. (a)(3)(B).
2004—Subsec. (c)(7)(D).
1997—Subsec. (a)(3).
Subsec. (b)(5)(A).
Subsec. (c)(7)(E).
Subsec. (c)(8).
Subsec. (d)(3).
"(A) the executor makes an election under paragraph (1) within the time prescribed for filing such election, and
"(B) substantially complies with the regulations prescribed by the Secretary with respect to such election, but—
"(i) the notice of election, as filed, does not contain all required information, or
"(ii) signatures of 1 or more persons required to enter into the agreement described in paragraph (2) are not included on the agreement as filed, or the agreement does not contain all required information,
the executor will have a reasonable period of time (not exceeding 90 days) after notification of such failures to provide such information or agreements."
1990—Subsec. (a)(2).
1988—Subsec. (b)(5)(A).
1986—Subsec. (c)(7)(D).
1984—Subsec. (d)(3).
1983—Subsec. (b)(5)(C).
Subsec. (i)(1)(B)(ii).
Subsec. (i)(3).
1981—Subsec. (a)(2).
Subsec. (b)(1).
Subsec. (b)(4), (5).
Subsec. (c)(1).
Subsec. (c)(2)(E).
Subsec. (c)(3).
Subsec. (c)(4), (5).
Subsec. (c)(6).
Subsec. (c)(7).
Subsec. (d)(1).
Subsec. (e)(2).
Subsec. (e)(7).
Subsec. (e)(9).
Subsec. (e)(12).
Subsec. (e)(13), (14).
Subsec. (f)(1).
Subsec. (g).
Subsec. (h)(1)(A).
Subsec. (h)(2)(A).
Subsec. (h)(2)(C).
Subsec. (h)(5).
Subsec. (i).
1978—Subsec. (b)(1).
Subsec. (c)(6).
Subsec. (e)(9).
Subsec. (e)(10).
Subsec. (e)(11).
Subsec. (f)(1).
Subsec. (h).
Statutory Notes and Related Subsidiaries
Effective Date of 2017 Amendment
Amendment by
Effective Date of 2004 Amendment
Amendment by
Effective Date of 1997 Amendment
Amendment by section 501(b) of
Amendment by section 508(c) of
Effective Date of 1988 Amendment
"(1)
"(2)
Effective Date of 1986 Amendment
Amendment by
Effective Date of 1984 Amendment
"(1)
"(2)
Effective Date of 1983 Amendment
Amendment by
Effective Date of 1981 Amendment
"(1)
"(2)
"(3)
"(4)
"(5)
"(A)
"(B)
"(C)
"(D)
Effective Date of 1978 Amendment
Amendment of section by
Effective Date
Savings Provision
For provisions that nothing in amendment by
Waiver of Statute of Limitation for Taxes on Certain Farm Valuations
Information Necessary for Valid Special Use Valuation Election
"(a)
"(1) made an election under section 2032A of the Internal Revenue Code of 1954 [now 1986] on the return of tax imposed by section 2001 of such Code, and
"(2) provided substantially all the information with respect to such election required on such return of tax,
such election shall be a valid election for purposes of section 2032A of such Code.
"(b)
"(c)
"(1) the return of tax imposed by section 2001 of the Internal Revenue Code of 1954 [now 1986], and
"(2) the period during which a claim for credit or refund may be timely filed.
"(d)
"(1) a Federal estate tax return was filed on October 30, 1984, electing current use valuation, and
"(2) the agreement required under section 2032A was filed on November 9, 1984."
Land Diverted Under 1983 Payment-in-Kind Program
Land diverted from production of agricultural commodities under a 1983 payment-in-kind program to be treated, for purposes of this section, as used during the 1983 crop year by qualified taxpayers in the active conduct of the trade or business of farming, with qualified taxpayers who materially participate in the diversion and devotion to conservation uses under a 1983 payment-in-kind program to be treated as materially participating in the operation of such land during the 1983 crop year, see section 3 of
§2033. Property in which the decedent had an interest
The value of the gross estate shall include the value of all property to the extent of the interest therein of the decedent at the time of his death.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1962—
Statutory Notes and Related Subsidiaries
Effective Date of 1962 Amendment
Amendment by
[§2033A. Renumbered §2057]
§2034. Dower or curtesy interests
The value of the gross estate shall include the value of all property to the extent of any interest therein of the surviving spouse, existing at the time of the decedent's death as dower or curtesy, or by virtue of a statute creating an estate in lieu of dower or curtesy.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1962—
Statutory Notes and Related Subsidiaries
Effective Date of 1962 Amendment
Amendment by
§2035. Adjustments for certain gifts made within 3 years of decedent's death
(a) Inclusion of certain property in gross estate
If—
(1) the decedent made a transfer (by trust or otherwise) of an interest in any property, or relinquished a power with respect to any property, during the 3-year period ending on the date of the decedent's death, and
(2) the value of such property (or an interest therein) would have been included in the decedent's gross estate under section 2036, 2037, 2038, or 2042 if such transferred interest or relinquished power had been retained by the decedent on the date of his death,
the value of the gross estate shall include the value of any property (or interest therein) which would have been so included.
(b) Inclusion of gift tax on gifts made during 3 years before decedent's death
The amount of the gross estate (determined without regard to this subsection) shall be increased by the amount of any tax paid under
(c) Other rules relating to transfers within 3 years of death
(1) In general
For purposes of—
(A) section 303(b) (relating to distributions in redemption of stock to pay death taxes),
(B) section 2032A (relating to special valuation of certain farms, etc., real property), and
(C) subchapter C of
the value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer, by trust or otherwise, during the 3-year period ending on the date of the decedent's death.
(2) Coordination with section 6166
An estate shall be treated as meeting the 35 percent of adjusted gross estate requirement of section 6166(a)(1) only if the estate meets such requirement both with and without the application of subsection (a).
(3) Marital and small transfers
Paragraph (1) shall not apply to any transfer (other than a transfer with respect to a life insurance policy) made during a calendar year to any donee if the decedent was not required by section 6019 (other than by reason of section 6019(2)) to file any gift tax return for such year with respect to transfers to such donee.
(d) Exception
Subsection (a) and paragraph (1) of subsection (c) shall not apply to any bona fide sale for an adequate and full consideration in money or money's worth.
(e) Treatment of certain transfers from revocable trusts
For purposes of this section and section 2038, any transfer from any portion of a trust during any period that such portion was treated under section 676 as owned by the decedent by reason of a power in the grantor (determined without regard to section 672(e)) shall be treated as a transfer made directly by the decedent.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
2000—Subsec. (c)(2).
Subsec. (d).
1997—
1983—Subsec. (b)(2).
Subsec. (d)(2).
Subsec. (d)(3)(C), (D).
Subsec. (d)(4).
1981—Subsec. (b)(2).
Subsec. (d).
1978—Subsec. (b).
1976—
1962—Subsec. (a).
Statutory Notes and Related Subsidiaries
Effective Date of 1997 Amendment
Effective Date of 1983 Amendment
Amendment by
Effective Date of 1981 Amendment
Amendment by section 403(b)(3)(B) of
Effective Date of 1978 Amendment
Effective Date of 1976 Amendment
Amendment by
Effective Date of 1962 Amendment
Amendment by
Transfers Made by Decedent During 1977; Election Available to Executor On or Before Due Date for Filing Estate Tax Return
"(i) If the executor elects the benefits of this subparagraph with respect to any estate, section 2035(b) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (relating to adjustments for gifts made within 3 years of decedent's death) shall be applied with respect to transfers made by the decedent during 1977 as if paragraph (2) of such section 2035(b) read as follows:
" '(2) to any gift to a donee made during 1977 to the extent of the amount of such gift which was excludable in computing taxable gifts by reason of section 2503(b) (relating to $3,000 annual exclusion for purposes of the gift tax) determined without regard to section 2513(a).'
"(ii) The election under clause (i) with respect to any estate shall be made on or before the later of—
"(I) the due date for filing the estate tax return, or
"(II) the day which is 120 days after the date of the enactment of this Act [Apr. 1, 1980]."
§2036. Transfers with retained life estate
(a) General rule
The value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money's worth), by trust or otherwise, under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death—
(1) the possession or enjoyment of, or the right to the income from, the property, or
(2) the right, either alone or in conjunction with any person, to designate the persons who shall possess or enjoy the property or the income therefrom.
(b) Voting rights
(1) In general
For purposes of subsection (a)(1), the retention of the right to vote (directly or indirectly) shares of stock of a controlled corporation shall be considered to be a retention of the enjoyment of transferred property.
(2) Controlled corporation
For purposes of paragraph (1), a corporation shall be treated as a controlled corporation if, at any time after the transfer of the property and during the 3-year period ending on the date of the decedent's death, the decedent owned (with the application of section 318), or had the right (either alone or in conjunction with any person) to vote, stock possessing at least 20 percent of the total combined voting power of all classes of stock.
(3) Coordination with section 2035
For purposes of applying section 2035 with respect to paragraph (1), the relinquishment or cessation of voting rights shall be treated as a transfer of property made by the decedent.
(c) Limitation on application of general rule
This section shall not apply to a transfer made before March 4, 1931; nor to a transfer made after March 3, 1931, and before June 7, 1932, unless the property transferred would have been includible in the decedent's gross estate by reason of the amendatory language of the joint resolution of March 3, 1931 (
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1990—Subsecs. (c), (d).
1988—Subsec. (c)(1)(B).
Subsec. (c)(2).
Subsec. (c)(3)(C).
Subsec. (c)(4).
Subsec. (c)(5).
Subsec. (c)(6).
Subsec. (c)(7), (8).
1987—Subsecs. (c), (d).
1978—Subsec. (a).
Subsecs. (b), (c).
1976—Subsec. (a).
1962—Subsec. (a).
Statutory Notes and Related Subsidiaries
Effective Date of 1990 Amendment
Effective Date of 1988 Amendment
"(1)
"(2)
"(3)
"(4)
"(A) during such period, such actions are taken as are necessary to have such section 2036(c)(1) not apply to such transaction (and any such interest), or
"(B) the original transferor and his spouse on January 1, 1990 (or, if earlier, the date of the original transferor's death), does not hold any interest in the enterprise involved.
"(5)
"(A) any failure to exercise a right of conversion,
"(B) any failure to pay dividends, and
"(c) [sic] failures to exercise other rights specified in regulations,
shall not be treated as a subsequent transfer."
Effective Date of 1987 Amendment
Effective Date of 1978 Amendment
Effective Date of 1976 Amendment
Effective Date of 1962 Amendment
Amendment by
§2037. Transfers taking effect at death
(a) General rule
The value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time after September 7, 1916, made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money's worth), by trust or otherwise, if—
(1) possession or enjoyment of the property can, through ownership of such interest, be obtained only by surviving the decedent, and
(2) the decedent has retained a reversionary interest in the property (but in the case of a transfer made before October 8, 1949, only if such reversionary interest arose by the express terms of the instrument of transfer), and the value of such reversionary interest immediately before the death of the decedent exceeds 5 percent of the value of such property.
(b) Special rules
For purposes of this section, the term "reversionary interest" includes a possibility that property transferred by the decedent—
(1) may return to him or his estate, or
(2) may be subject to a power of disposition by him,
but such term does not include a possibility that the income alone from such property may return to him or become subject to a power of disposition by him. The value of a reversionary interest immediately before the death of the decedent shall be determined (without regard to the fact of the decedent's death) by usual methods of valuation, including the use of tables of mortality and actuarial principles, under regulations prescribed by the Secretary. In determining the value of a possibility that property may be subject to a power of disposition by the decedent, such possibility shall be valued as if it were a possibility that such property may return to the decedent or his estate. Notwithstanding the foregoing, an interest so transferred shall not be included in the decedent's gross estate under this section if possession or enjoyment of the property could have been obtained by any beneficiary during the decedent's life through the exercise of a general power of appointment (as defined in section 2041) which in fact was exercisable immediately before the decedent's death.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1976—Subsec. (b).
1962—Subsec. (a).
Statutory Notes and Related Subsidiaries
Effective Date of 1962 Amendment
Amendment by
§2038. Revocable transfers
(a) In general
The value of the gross estate shall include the value of all property—
(1) Transfers after June 22, 1936
To the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money's worth), by trust or otherwise, where the enjoyment thereof was subject at the date of his death to any change through the exercise of a power (in whatever capacity exercisable) by the decedent alone or by the decedent in conjunction with any other person (without regard to when or from what source the decedent acquired such power), to alter, amend, revoke, or terminate, or where any such power is relinquished during the 3 year period ending on the date of the decedent's death.
(2) Transfers on or before June 22, 1936
To the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money's worth), by trust or otherwise, where the enjoyment thereof was subject at the date of his death to any change through the exercise of a power, either by the decedent alone or in conjunction with any person, to alter, amend, or revoke, or where the decedent relinquished any such power during the 3 year period ending on the date of the decedent's death. Except in the case of transfers made after June 22, 1936, no interest of the decedent of which he has made a transfer shall be included in the gross estate under paragraph (1) unless it is includible under this paragraph.
(b) Date of existence of power
For purposes of this section, the power to alter, amend, revoke, or terminate shall be considered to exist on the date of the decedent's death even though the exercise of the power is subject to a precedent giving of notice or even though the alteration, amendment, revocation, or termination takes effect only on the expiration of a stated period after the exercise of the power, whether or not on or before the date of the decedent's death notice has been given or the power has been exercised. In such cases proper adjustment shall be made representing the interests which would have been excluded from the power if the decedent had lived, and for such purpose, if the notice has not been given or the power has not been exercised on or before the date of his death, such notice shall be considered to have been given, or the power exercised, on the date of his death.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1976—Subsec. (a)(1).
Subsec. (a)(2).
Subsec. (c).
1962—Subsec. (a).
1959—Subsec. (c).
Statutory Notes and Related Subsidiaries
Effective Date of 1976 Amendment
Amendment by section 1902(a)(3) of
Amendment by section 2001(c)(1)(K)(i), (ii) of
Effective Date of 1962 Amendment
Amendment by
Effective Date of 1959 Amendment
§2039. Annuities
(a) General
The gross estate shall include the value of an annuity or other payment receivable by any beneficiary by reason of surviving the decedent under any form of contract or agreement entered into after March 3, 1931 (other than as insurance under policies on the life of the decedent), if, under such contract or agreement, an annuity or other payment was payable to the decedent, or the decedent possessed the right to receive such annuity or payment, either alone or in conjunction with another for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death.
(b) Amount includible
Subsection (a) shall apply to only such part of the value of the annuity or other payment receivable under such contract or agreement as is proportionate to that part of the purchase price therefor contributed by the decedent. For purposes of this section, any contribution by the decedent's employer or former employer to the purchase price of such contract or agreement (whether or not to an employee's trust or fund forming part of a pension, annuity, retirement, bonus or profit sharing plan) shall be considered to be contributed by the decedent if made by reason of his employment.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1986—Subsec. (c).
Subsec. (e).
1984—Subsec. (c).
Subsec. (d).
Subsec. (e).
Subsecs. (f), (g).
1983—Subsec. (f)(1).
Subsec. (f)(2).
1982—Subsec. (c).
Subsec. (e).
Subsec. (g).
1981—Subsec. (c).
Subsec. (e).
1980—Subsec. (f)(2).
1978—Subsec. (c).
Subsec. (e).
Subsec. (f).
1976—Subsec. (c).
Subsec. (e).
1974—Subsec. (c).
1972—Subsec. (d).
1969—Subsec. (c)(3).
1966—Subsec. (c).
1962—Subsec. (c).
1958—Subsec. (c)(2).
Subsec. (c)(3) and closing sentences.
Statutory Notes and Related Subsidiaries
Effective Date of 1986 Amendment
Amendment by section 1848(d) of
Effective Date of 1984 Amendment
Amendment by section 491(d)(34) of
"(1)
"(2)
"(A) was a participant in any plan who was in pay status on December 31, 1984, and
"(B) irrevocably elected the form of the benefit before the date of the enactment of this Act [July 18, 1984].
"(4)
"(A) separated from service before January 1, 1985, with respect to paragraph (2), or January 1, 1983, with respect to section 245(c) of the Tax Equity and Fiscal Responsibility Act of 1982, and
"(B) meets the requirements of such paragraph or such section other than the requirement that there be an irrevocable election, and that the individual be in pay status,
shall be treated as having made an irrevocable election and as being in pay status within the time prescribed with respect to a form of benefit if such individual does not change such form of benefit before death."
Effective Date of 1983 Amendment
Amendment by
Effective Date of 1982 Amendment
Effective Date of 1981 Amendment
Amendment by section 311(d)(1), (h)(4) of
Amendment by section 313(b)(3) of
Effective Date of 1980 Amendment
Amendment by
Effective Date of 1978 Amendment
Amendment by section 156(c)(4) of
Effective Date of 1976 Amendment
Effective Date of 1974 Amendment
Amendment by
Effective Date of 1972 Amendment
Effective Date of 1969 Amendment
Amendment by
Effective Date of 1966 Amendment
Effective Date of 1962 Amendment
Amendment by
Effective Date of 1958 Amendment
Amendment by section 23(e) of
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101–1147 and 1171–1177] or title XVIII [§§1800–1899A] of
§2040. Joint interests
(a) General rule
The value of the gross estate shall include the value of all property to the extent of the interest therein held as joint tenants with right of survivorship by the decedent and any other person, or as tenants by the entirety by the decedent and spouse, or deposited, with any person carrying on the banking business, in their joint names and payable to either or the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have been received or acquired by the latter from the decedent for less than an adequate and full consideration in money or money's worth: Provided, That where such property or any part thereof, or part of the consideration with which such property was acquired, is shown to have been at any time acquired by such other person from the decedent for less than an adequate and full consideration in money or money's worth, there shall be excepted only such part of the value of such property as is proportionate to the consideration furnished by such other person: Provided further, That where any property has been acquired by gift, bequest, devise, or inheritance, as a tenancy by the entirety by the decedent and spouse, then to the extent of one-half of the value thereof, or, where so acquired by the decedent and any other person as joint tenants with right of survivorship and their interests are not otherwise specified or fixed by law, then to the extent of the value of a fractional part to be determined by dividing the value of the property by the number of joint tenants with right of survivorship.
(b) Certain joint interests of husband and wife
(1) Interests of spouse excluded from gross estate
Notwithstanding subsection (a), in the case of any qualified joint interest, the value included in the gross estate with respect to such interest by reason of this section is one-half of the value of such qualified joint interest.
(2) Qualified joint interest defined
For purposes of paragraph (1), the term "qualified joint interest" means any interest in property held by the decedent and the decedent's spouse as—
(A) tenants by the entirety, or
(B) joint tenants with right of survivorship, but only if the decedent and the spouse of the decedent are the only joint tenants.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1981—Subsec. (a).
Subsec. (b)(2).
Subsecs. (c) to (e).
1980—Subsec. (c)(1).
Subsec. (c)(2)(C).
1978—Subsec. (c).
Subsecs. (d), (e).
1976—
1962—
Statutory Notes and Related Subsidiaries
Effective Date of 1981 Amendment
Amendment by
Effective Date of 1980 Amendment
Amendment by
Effective Date of 1978 Amendment
Effective Date of 1976 Amendment
Effective Date of 1962 Amendment
Amendment by
Consideration Given Before July 14, 1988 by Decedent to Noncitizen Spouse Treated as Originally Belonging to Spouse
§2041. Powers of appointment
(a) In general
The value of the gross estate shall include the value of all property—
(1) Powers of appointment created on or before October 21, 1942
To the extent of any property with respect to which a general power of appointment created on or before October 21, 1942, is exercised by the decedent—
(A) by will, or
(B) by a disposition which is of such nature that if it were a transfer of property owned by the decedent, such property would be includible in the decedent's gross estate under sections 2035 to 2038, inclusive;
but the failure to exercise such a power or the complete release of such a power shall not be deemed an exercise thereof. If a general power of appointment created on or before October 21, 1942, has been partially released so that it is no longer a general power of appointment, the exercise of such power shall not be deemed to be the exercise of a general power of appointment if—
(i) such partial release occurred before November 1, 1951, or
(ii) the donee of such power was under a legal disability to release such power on October 21, 1942, and such partial release occurred not later than 6 months after the termination of such legal disability.
(2) Powers created after October 21, 1942
To the extent of any property with respect to which the decedent has at the time of his death a general power of appointment created after October 21, 1942, or with respect to which the decedent has at any time exercised or released such a power of appointment by a disposition which is of such nature that if it were a transfer of property owned by the decedent, such property would be includible in the decedent's gross estate under sections 2035 to 2038, inclusive. For purposes of this paragraph (2), the power of appointment shall be considered to exist on the date of the decedent's death even though the exercise of the power is subject to a precedent giving of notice or even though the exercise of the power takes effect only on the expiration of a stated period after its exercise, whether or not on or before the date of the decedent's death notice has been given or the power has been exercised.
(3) Creation of another power in certain cases
To the extent of any property with respect to which the decedent—
(A) by will, or
(B) by a disposition which is of such nature that if it were a transfer of property owned by the decedent such property would be includible in the decedent's gross estate under section 2035, 2036, or 2037,
exercises a power of appointment created after October 21, 1942, by creating another power of appointment which under the applicable local law can be validly exercised so as to postpone the vesting of any estate or interest in such property, or suspend the absolute ownership or power of alienation of such property, for a period ascertainable without regard to the date of the creation of the first power.
(b) Definitions
For purposes of subsection (a)—
(1) General power of appointment
The term "general power of appointment" means a power which is exercisable in favor of the decedent, his estate, his creditors, or the creditors of his estate; except that—
(A) A power to consume, invade, or appropriate property for the benefit of the decedent which is limited by an ascertainable standard relating to the health, education, support, or maintenance of the decedent shall not be deemed a general power of appointment.
(B) A power of appointment created on or before October 21, 1942, which is exercisable by the decedent only in conjunction with another person shall not be deemed a general power of appointment.
(C) In the case of a power of appointment created after October 21, 1942, which is exercisable by the decedent only in conjunction with another person—
(i) If the power is not exercisable by the decedent except in conjunction with the creator of the power—such power shall not be deemed a general power of appointment.
(ii) If the power is not exercisable by the decedent except in conjunction with a person having a substantial interest in the property, subject to the power, which is adverse to exercise of the power in favor of the decedent—such power shall not be deemed a general power of appointment. For the purposes of this clause a person who, after the death of the decedent, may be possessed of a power of appointment (with respect to the property subject to the decedent's power) which he may exercise in his own favor shall be deemed as having an interest in the property and such interest shall be deemed adverse to such exercise of the decedent's power.
(iii) If (after the application of clauses (i) and (ii)) the power is a general power of appointment and is exercisable in favor of such other person—such power shall be deemed a general power of appointment only in respect of a fractional part of the property subject to such power, such part to be determined by dividing the value of such property by the number of such persons (including the decedent) in favor of whom such power is exercisable.
For purposes of clauses (ii) and (iii), a power shall be deemed to be exercisable in favor of a person if it is exercisable in favor of such person, his estate, his creditors, or the creditors of his estate.
(2) Lapse of power
The lapse of a power of appointment created after October 21, 1942, during the life of the individual possessing the power shall be considered a release of such power. The preceding sentence shall apply with respect to the lapse of powers during any calendar year only to the extent that the property, which could have been appointed by exercise of such lapsed powers, exceeded in value, at the time of such lapse, the greater of the following amounts:
(A) $5,000, or
(B) 5 percent of the aggregate value, at the time of such lapse, of the assets out of which, or the proceeds of which, the exercise of the lapsed powers could have been satisfied.
(3) Date of creation of power
For purposes of this section, a power of appointment created by a will executed on or before October 21, 1942, shall be considered a power created on or before such date if the person executing such will dies before July 1, 1949, without having republished such will, by codicil or otherwise, after October 21, 1942.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1976—Subsec. (a)(2).
1962—Subsec. (a).
Statutory Notes and Related Subsidiaries
Effective Date of 1976 Amendment
Amendment by
Effective Date of 1962 Amendment
Amendment by
§2042. Proceeds of life insurance
The value of the gross estate shall include the value of all property—
(1) Receivable by the executor
To the extent of the amount receivable by the executor as insurance under policies on the life of the decedent.
(2) Receivable by other beneficiaries
To the extent of the amount receivable by all other beneficiaries as insurance under policies on the life of the decedent with respect to which the decedent possessed at his death any of the incidents of ownership, exercisable either alone or in conjunction with any other person. For purposes of the preceding sentence, the term "incident of ownership" includes a reversionary interest (whether arising by the express terms of the policy or other instrument or by operation of law) only if the value of such reversionary interest exceeded 5 percent of the value of the policy immediately before the death of the decedent. As used in this paragraph, the term "reversionary interest" includes a possibility that the policy, or the proceeds of the policy, may return to the decedent or his estate, or may be subject to a power of disposition by him. The value of a reversionary interest at any time shall be determined (without regard to the fact of the decedent's death) by usual methods of valuation, including the use of tables of mortality and actuarial principles, pursuant to regulations prescribed by the Secretary. In determining the value of a possibility that the policy or proceeds thereof may be subject to a power of disposition by the decedent, such possibility shall be valued as if it were a possibility that such policy or proceeds may return to the decedent or his estate.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1976—
§2043. Transfers for insufficient consideration
(a) In general
If any one of the transfers, trusts, interests, rights, or powers enumerated and described in sections 2035 to 2038, inclusive, and section 2041 is made, created, exercised, or relinquished for a consideration in money or money's worth, but is not a bona fide sale for an adequate and full consideration in money or money's worth, there shall be included in the gross estate only the excess of the fair market value at the time of death of the property otherwise to be included on account of such transaction, over the value of the consideration received therefor by the decedent.
(b) Marital rights not treated as consideration
(1) In general
For purposes of this chapter, a relinquishment or promised relinquishment of dower or curtesy, or of a statutory estate created in lieu of dower or curtesy, or of other marital rights in the decedent's property or estate, shall not be considered to any extent a consideration "in money or money's worth".
(2) Exception
For purposes of section 2053 (relating to expenses, indebtedness, and taxes), a transfer of property which satisfies the requirements of paragraph (1) of section 2516 (relating to certain property settlements) shall be considered to be made for an adequate and full consideration in money or money's worth.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1984—Subsec. (b).
Statutory Notes and Related Subsidiaries
Effective Date of 1984 Amendment
§2044. Certain property for which marital deduction was previously allowed
(a) General rule
The value of the gross estate shall include the value of any property to which this section applies in which the decedent had a qualifying income interest for life.
(b) Property to which this section applies
This section applies to any property if—
(1) a deduction was allowed with respect to the transfer of such property to the decedent—
(A) under section 2056 by reason of subsection (b)(7) thereof, or
(B) under section 2523 by reason of subsection (f) thereof, and
(2) section 2519 (relating to dispositions of certain life estates) did not apply with respect to a disposition by the decedent of part or all of such property.
(c) Property treated as having passed from decedent
For purposes of this chapter and
(Added
Editorial Notes
Prior Provisions
A prior section 2044 was renumbered
Amendments
1983—Subsec. (c).
Statutory Notes and Related Subsidiaries
Effective Date of 1983 Amendment
Amendment by
Effective Date
Section applicable to estates of decedents dying after Dec. 31, 1981, see section 403(e) of
§2045. Prior interests
Except as otherwise specifically provided by law, sections 2034 to 2042, inclusive, shall apply to the transfers, trusts, estates, interests, rights, powers, and relinquishment of powers, as severally enumerated and described therein, whenever made, created, arising, existing, exercised, or relinquished.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Prior Provisions
A prior section 2045 was renumbered
Amendments
1976—
Statutory Notes and Related Subsidiaries
Effective Date of 1976 Amendment
Amendment by
§2046. Disclaimers
For provisions relating to the effect of a qualified disclaimer for purposes of this chapter, see section 2518.
(Added
Statutory Notes and Related Subsidiaries
Effective Date
Section applicable to transfers creating an interest in person disclaiming made after Dec. 31, 1976, see section 2009(e)(2) of
PART IV—TAXABLE ESTATE
Editorial Notes
Amendments
2014—
2001—
1998—
1990—
1989—
1988—
1986—
1981—
1976—
§2051. Definition of taxable estate
For purposes of the tax imposed by section 2001, the value of the taxable estate shall be determined by deducting from the value of the gross estate the deductions provided for in this part.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1978—
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
[§2052. Repealed. Pub. L. 94–455, title XX, §2001(a)(4), Oct. 4, 1976, 90 Stat. 1848 ]
Section, act Aug. 16, 1954, ch. 736,
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal applicable to estates of decedents dying after Dec. 31, 1976, see section 2001(d)(1) of
§2053. Expenses, indebtedness, and taxes
(a) General rule
For purposes of the tax imposed by section 2001, the value of the taxable estate shall be determined by deducting from the value of the gross estate such amounts—
(1) for funeral expenses,
(2) for administration expenses,
(3) for claims against the estate, and
(4) for unpaid mortgages on, or any indebtedness in respect of, property where the value of the decedent's interest therein, undiminished by such mortgage or indebtedness, is included in the value of the gross estate,
as are allowable by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered.
(b) Other administration expenses
Subject to the limitations in paragraph (1) of subsection (c), there shall be deducted in determining the taxable estate amounts representing expenses incurred in administering property not subject to claims which is included in the gross estate to the same extent such amounts would be allowable as a deduction under subsection (a) if such property were subject to claims, and such amounts are paid before the expiration of the period of limitation for assessment provided in section 6501.
(c) Limitations
(1) Limitations applicable to subsections (a) and (b)
(A) Consideration for claims
The deduction allowed by this section in the case of claims against the estate, unpaid mortgages, or any indebtedness shall, when founded on a promise or agreement, be limited to the extent that they were contracted bona fide and for an adequate and full consideration in money or money's worth; except that in any case in which any such claim is founded on a promise or agreement of the decedent to make a contribution or gift to or for the use of any donee described in section 2055 for the purposes specified therein, the deduction for such claims shall not be so limited, but shall be limited to the extent that it would be allowable as a deduction under section 2055 if such promise or agreement constituted a bequest.
(B) Certain taxes
Any income taxes on income received after the death of the decedent, or property taxes not accrued before his death, or any estate, succession, legacy, or inheritance taxes, shall not be deductible under this section.
(C) Certain claims by remaindermen
No deduction shall be allowed under this section for a claim against the estate by a remainderman relating to any property described in section 2044.
(D) Section 6166 interest
No deduction shall be allowed under this section for any interest payable under section 6601 on any unpaid portion of the tax imposed by section 2001 for the period during which an extension of time for payment of such tax is in effect under section 6166.
(2) Limitations applicable only to subsection (a)
In the case of the amounts described in subsection (a), there shall be disallowed the amount by which the deductions specified therein exceed the value, at the time of the decedent's death, of property subject to claims, except to the extent that such deductions represent amounts paid before the date prescribed for the filing of the estate tax return. For purposes of this section, the term "property subject to claims" means property includible in the gross estate of the decedent which, or the avails of which, would under the applicable law, bear the burden of the payment of such deductions in the final adjustment and settlement of the estate, except that the value of the property shall be reduced by the amount of the deduction under section 2054 attributable to such property.
(d) Certain foreign death taxes
(1) In general
Notwithstanding the provisions of subsection (c)(1)(B), for purposes of the tax imposed by section 2001, the value of the taxable estate may be determined, if the executor so elects before the expiration of the period of limitation for assessment provided in section 6501, by deducting from the value of the gross estate the amount (as determined in accordance with regulations prescribed by the Secretary) of any estate, succession, legacy, or inheritance tax imposed by and actually paid to any foreign country, in respect of any property situated within such foreign country and included in the gross estate of a citizen or resident of the United States, upon a transfer by the decedent for public, charitable, or religious uses described in section 2055. The determination under this paragraph of the country within which property is situated shall be made in accordance with the rules applicable under subchapter B (sec. 2101 and following) in determining whether property is situated within or without the United States. Any election under this paragraph shall be exercised in accordance with regulations prescribed by the Secretary.
(2) Condition for allowance of deduction
No deduction shall be allowed under paragraph (1) for a foreign death tax specified therein unless the decrease in the tax imposed by section 2001 which results from the deduction provided in paragraph (1) will inure solely for the benefit of the public, charitable, or religious transferees described in section 2055 or section 2106(a)(2). In any case where the tax imposed by section 2001 is equitably apportioned among all the transferees of property included in the gross estate, including those described in sections 2055 and 2106(a)(2) (taking into account any exemptions, credits, or deductions allowed by this chapter), in determining such decrease, there shall be disregarded any decrease in the Federal estate tax which any transferees other than those described in sections 2055 and 2106(a)(2) are required to pay.
(3) Effect on credit for foreign death taxes of deduction under this subsection
(A) Election
An election under this subsection shall be deemed a waiver of the right to claim a credit, against the Federal estate tax, under a death tax convention with any foreign country for any tax or portion thereof in respect of which a deduction is taken under this subsection.
(B) Cross reference
See section 2014(f) for the effect of a deduction taken under this paragraph on the credit for foreign death taxes.
(e) Marital rights
For provisions treating certain relinquishments of marital rights as consideration in money or money's worth, see section 2043(b)(2).
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
2002—Subsec. (d)(3)(B).
2001—Subsec. (d).
1997—Subsec. (c)(1)(B).
Subsec. (c)(1)(D).
1988—Subsec. (c)(1)(B).
1984—Subsec. (c)(1)(C).
Subsec. (e).
1976—Subsec. (d)(1).
1959—Subsec. (d).
1958—Subsec. (d)(1).
1956—Subsecs. (d), (e). Act Feb. 20, 1956, added subsec. (d) and redesignated former subsec. (d) as (e).
Statutory Notes and Related Subsidiaries
Effective Date of 2002 Amendment
"(1)
"(A) dying on or after September 11, 2001; and
"(B) in the case of individuals dying as a result of the April 19, 1995, terrorist attack, dying on or after April 19, 1995.
"(2)
Effective Date of 2001 Amendment
Amendment by
Effective Date of 1997 Amendment
Amendment by section 503(b)(1) of
Amendment by section 1073(b)(3) of
Effective Date of 1988 Amendment
Amendment by
Effective Date of 1984 Amendment
Amendment by section 425(a)(2) of
Effective Date of 1976 Amendment
Amendment by section 1902(a)(12)(B) of
Effective Date of 1959 Amendment
Effective Date of 1958 Amendment
Amendment by
Effective Date of 1956 Amendment
Act Feb. 20, 1956, ch. 63, §4,
§2054. Losses
For purposes of the tax imposed by section 2001, the value of the taxable estate shall be determined by deducting from the value of the gross estate losses incurred during the settlement of estates arising from fires, storms, shipwrecks, or other casualties, or from theft, when such losses are not compensated for by insurance or otherwise.
(Aug. 16, 1954, ch. 736,
§2055. Transfers for public, charitable, and religious uses
(a) In general
For purposes of the tax imposed by section 2001, the value of the taxable estate shall be determined by deducting from the value of the gross estate the amount of all bequests, legacies, devises, or transfers—
(1) to or for the use of the United States, any State, any political subdivision thereof, or the District of Columbia, for exclusively public purposes;
(2) to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, which is not disqualified for tax exemption under section 501(c)(3) by reason of attempting to influence legislation, and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office;
(3) to a trustee or trustees, or a fraternal society, order, or association operating under the lodge system, but only if such contributions or gifts are to be used by such trustee or trustees, or by such fraternal society, order, or association, exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, such trust, fraternal society, order, or association would not be disqualified for tax exemption under section 501(c)(3) by reason of attempting to influence legislation, and such trustee or trustees, or such fraternal society, order, or association, does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office;
(4) to or for the use of any veterans' organization incorporated by Act of Congress, or of its departments or local chapters or posts, no part of the net earnings of which inures to the benefit of any private shareholder or individual; or
(5) to an employee stock ownership plan if such transfer qualifies as a qualified gratuitous transfer of qualified employer securities within the meaning of section 664(g).
For purposes of this subsection, the complete termination before the date prescribed for the filing of the estate tax return of a power to consume, invade, or appropriate property for the benefit of an individual before such power has been exercised by reason of the death of such individual or for any other reason shall be considered and deemed to be a qualified disclaimer with the same full force and effect as though he had filed such qualified disclaimer. Rules similar to the rules of section 501(j) shall apply for purposes of paragraph (2).
(b) Powers of appointment
Property includible in the decedent's gross estate under section 2041 (relating to powers of appointment) received by a donee described in this section shall, for purposes of this section, be considered a bequest of such decedent.
(c) Death taxes payable out of bequests
If the tax imposed by section 2001, or any estate, succession, legacy, or inheritance taxes, are, either by the terms of the will, by the law of the jurisdiction under which the estate is administered, or by the law of the jurisdiction imposing the particular tax, payable in whole or in part out of the bequests, legacies, or devises otherwise deductible under this section, then the amount deductible under this section shall be the amount of such bequests, legacies, or devises reduced by the amount of such taxes.
(d) Limitation on deduction
The amount of the deduction under this section for any transfer shall not exceed the value of the transferred property required to be included in the gross estate.
(e) Disallowance of deductions in certain cases
(1) No deduction shall be allowed under this section for a transfer to or for the use of an organization or trust described in section 508(d) or 4948(c)(4) subject to the conditions specified in such sections.
(2) Where an interest in property (other than an interest described in section 170(f)(3)(B)) passes or has passed from the decedent to a person, or for a use, described in subsection (a), and an interest (other than an interest which is extinguished upon the decedent's death) in the same property passes or has passed (for less than an adequate and full consideration in money or money's worth) from the decedent to a person, or for a use, not described in subsection (a), no deduction shall be allowed under this section for the interest which passes or has passed to the person, or for the use, described in subsection (a) unless—
(A) in the case of a remainder interest, such interest is in a trust which is a charitable remainder annuity trust or a charitable remainder unitrust (described in section 664) or a pooled income fund (described in section 642(c)(5)), or
(B) in the case of any other interest, such interest is in the form of a guaranteed annuity or is a fixed percentage distributed yearly of the fair market value of the property (to be determined yearly).
(3)
(A)
(B)
(i) any difference between—
(I) the actuarial value (determined as of the date of the decedent's death) of the qualified interest, and
(II) the actuarial value (as so determined) of the reformable interest,
does not exceed 5 percent of the actuarial value (as so determined) of the reformable interest,
(ii) in the case of—
(I) a charitable remainder interest, the nonremainder interest (before and after the qualified reformation) terminated at the same time, or
(II) any other interest, the reformable interest and the qualified interest are for the same period, and
(iii) such change is effective as of the date of the decedent's death.
A nonremainder interest (before reformation) for a term of years in excess of 20 years shall be treated as satisfying subclause (I) of clause (ii) if such interest (after reformation) is for a term of 20 years.
(C)
(i)
(ii)
(iii)
(I) if an estate tax return is required to be filed, the last date (including extensions) for filing such return, or
(II) if no estate tax return is required to be filed, the last date (including extensions) for filing the income tax return for the 1st taxable year for which such a return is required to be filed by the trust.
(iv)
(D)
(E)
(F)
(G)
(H)
(I)
(i) to meet the requirements of section 170(f)(3)(B) (relating to remainder interests in personal residence or farm, etc.), or
(ii) to meet the requirements of section 642(c)(5).
(J)
(i) declared null and void ab initio, or
(ii) changed by reformation, amendment, or otherwise to meet such requirement by reducing the payout rate or the duration (or both) of any noncharitable beneficiary's interest to the extent necessary to satisfy such requirement,
pursuant to a proceeding that is commenced within the period required in subparagraph (C)(iii). In a case described in clause (i), no deduction shall be allowed under this title for any transfer to the trust and any transactions entered into by the trust prior to being declared void shall be treated as entered into by the transferor.
(4)
(A)
(B)
(C)
(D)
(5)
(A) the sponsoring organization (as defined in section 4966(d)(1)) with respect to such donor advised fund is not—
(i) described in paragraph (3) or (4) of subsection (a), or
(ii) a type III supporting organization (as defined in section 4943(f)(5)(A)) which is not a functionally integrated type III supporting organization (as defined in section 4943(f)(5)(B)), and
(B) the taxpayer obtains a contemporaneous written acknowledgment (determined under rules similar to the rules of section 170(f)(8)(C)) from the sponsoring organization (as so defined) of such donor advised fund that such organization has exclusive legal control over the assets contributed.
(f) Special rule for irrevocable transfers of easements in real property
A deduction shall be allowed under subsection (a) in respect of any transfer of a qualified real property interest (as defined in section 170(h)(2)(C)) which meets the requirements of section 170(h) (without regard to paragraph (4)(A) thereof).
(g) Cross references
(1) For option as to time for valuation for purpose of deduction under this section, see section 2032.
(2) For treatment of certain organizations providing child care, see section 501(k).
(3) For exemption of gifts and bequests to or for the benefit of Library of Congress, see section 5 of the Act of March 3, 1925, as amended (
(4) For treatment of gifts and bequests for the benefit of the Naval Historical Center as gifts or bequests to or for the use of the United States, see
(5) For treatment of gifts and bequests to or for the benefit of National Park Foundation as gifts or bequests to or for the use of the United States, see section 8 of the Act of December 18, 1967 (
(6) For treatment of gifts, devises, or bequests accepted by the Secretary of State, the Director of the International Communication Agency, or the Director of the United States International Development Cooperation Agency as gifts, devises, or bequests to or for the use of the United States, see section 25 of the State Department Basic Authorities Act of 1956.
(7) For treatment of gifts or bequests of money accepted by the Attorney General for credit to "Commissary Funds, Federal Prisons," as gifts or bequests to or for the use of the United States, see
(8) For payment of tax on gifts and bequests of United States obligations to the United States, see
(9) For treatment of gifts and bequests for benefit of the Naval Academy as gifts or bequests to or for the use of the United States, see
(10) For treatment of gifts and bequests for benefit of the Naval Academy Museum as gifts or bequests to or for the use of the United States, see
(11) For exemption of gifts and bequests received by National Archives Trust Fund Board, see
(12) For treatment of gifts and bequests to or for the use of Indian tribal governments (or their subdivisions), see section 7871.
(Aug. 16, 1954, ch. 736,
Editorial Notes
References in Text
Section 25 of the State Department Basic Authorities Act of 1956, referred to in subsec. (g)(6), is classified to
Codification
Sections 1218(b) and 1234(b) of
Amendments
2018—Subsec. (e)(3)(G).
Subsec. (g)(4).
Subsec. (g)(9).
Subsec. (g)(10).
2007—Subsecs. (g), (h).
"(1)
"(A) the fair market value of the property at the time of the initial fractional contribution, or
"(B) the fair market value of the property at the time of the additional contribution.
"(2)
"(A)
"(B)
2006—Subsec. (e)(5).
Subsecs. (g), (h).
1997—Subsec. (a)(5).
Subsec. (e)(3)(G).
Subsec. (e)(3)(J).
1996—Subsec. (g)(4).
1987—Subsec. (a)(2), (3).
1986—Subsecs. (f), (g).
1984—Subsec. (e)(3).
Subsec. (f)(2).
1983—Subsec. (f)(11).
1982—Subsec. (a).
Subsec. (f)(6).
Subsec. (f)(7).
1981—Subsec. (e)(4).
1980—Subsec. (e)(3).
Subsec. (f)(5).
1978—Subsec. (e)(3).
1976—Subsec. (a).
Subsec. (b).
Subsec. (e)(2).
Subsec. (e)(3).
Subsec. (f).
1974—Subsec. (e)(3).
1970—Subsec. (b)(2)(C).
1969—Subsec. (a)(2).
Subsec. (a)(3).
Subsec. (e).
1958—Subsec. (e).
1956—Subsec. (b). Act Aug. 6, 1956, designated existing provisions as par. (1) and added par. (2).
Statutory Notes and Related Subsidiaries
Change of Name
International Communication Agency, and Director thereof, redesignated United States Information Agency, and Director thereof, by section 303 of
Effective Date of 2018 Amendment
Amendment by
Effective Date of 2007 Amendment
Amendment by
Effective Date of 2006 Amendment
Amendment by section 1218(b) of
Amendment by section 1234(b) of
Effective Date of 1997 Amendment
Amendment by section 1089(b)(3), (5) of
Amendment by section 1530(c)(7) of
Effective Date of 1987 Amendment
Amendment by
Effective Date of 1986 Amendment
Effective Date of 1984 Amendment
"(1)
"(2)
"(3)
"(A)
"(B)
Amendment by section 1032(b)(2) of
Effective Date of 1983 Amendment
For effective date of amendment by
Effective Date of 1982 Amendment
Amendment by
Effective Date of 1981 Amendment
Effective Date of 1980 Amendments
Amendment by
Amendment by
Extension of 1978 Amendment; Charitable Lead Trusts and Charitable Remainder Trusts in Case of Income and Gift Taxes
Effective Date of 1978 Amendment; Charitable Lead Trusts and Charitable Remainder Trusts in Case of Income and Gift Taxes
"(1)
"(2)
"(A) insofar as it relates to section 170 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] shall apply to transfers in trust and contributions made after July 31, 1969, and
"(B) insofar as it relates to section 2522 of the Internal Revenue Code of 1986 shall apply to transfers made after December 31, 1969."
Effective Date of 1976 Amendment
Amendment by section 1307(d)(1)(B)(ii), (C) of
Amendment by section 1313(b)(2) of
Amendment by section 1902(a)(4), (12)(A) of
Amendment by section 2009(b)(4)(B), (C) of
Amendment by section 2124(e)(2) of
Effective Date of 1974 Amendment
Effective Date of 1970 Amendment
Amendment by
Effective Date of 1969 Amendment
Amendment by section 201(d)(1) of
Amendment by section 201(d)(4)(A) of
Effective Date of 1956 Amendment
Act Aug. 6, 1956, ch. 1020, §3,
Transfer of Functions
United States International Development Cooperation Agency (other than Agency for International Development and Overseas Private Investment Corporation) abolished and functions and authorities transferred, see
For transfer of functions, personnel, assets, and liabilities of the Overseas Private Investment Corporation to the United States International Development Finance Corporation and treatment of related references, see
Special Donations
Charitable Lead Trusts and Charitable Remainder Trusts in Case of Income and Gift Taxes
Extension of Period for Filing Claim for Refund
§2056. Bequests, etc., to surviving spouse
(a) Allowance of marital deduction
For purposes of the tax imposed by section 2001, the value of the taxable estate shall, except as limited by subsection (b), be determined by deducting from the value of the gross estate an amount equal to the value of any interest in property which passes or has passed from the decedent to his surviving spouse, but only to the extent that such interest is included in determining the value of the gross estate.
(b) Limitation in the case of life estate or other terminable interest
(1) General rule
Where, on the lapse of time, on the occurrence of an event or contingency, or on the failure of an event or contingency to occur, an interest passing to the surviving spouse will terminate or fail, no deduction shall be allowed under this section with respect to such interest—
(A) if an interest in such property passes or has passed (for less than an adequate and full consideration in money or money's worth) from the decedent to any person other than such surviving spouse (or the estate of such spouse); and
(B) if by reason of such passing such person (or his heirs or assigns) may possess or enjoy any part of such property after such termination or failure of the interest so passing to the surviving spouse;
and no deduction shall be allowed with respect to such interest (even if such deduction is not disallowed under subparagraphs (A) and (B))—
(C) if such interest is to be acquired for the surviving spouse, pursuant to directions of the decedent, by his executor or by the trustee of a trust.
For purposes of this paragraph, an interest shall not be considered as an interest which will terminate or fail merely because it is the ownership of a bond, note, or similar contractual obligation, the discharge of which would not have the effect of an annuity for life or for a term.
(2) Interest in unidentified assets
Where the assets (included in the decedent's gross estate) out of which, or the proceeds of which, an interest passing to the surviving spouse may be satisfied include a particular asset or assets with respect to which no deduction would be allowed if such asset or assets passed from the decedent to such spouse, then the value of such interest passing to such spouse shall, for purposes of subsection (a), be reduced by the aggregate value of such particular assets.
(3) Interest of spouse conditional on survival for limited period
For purposes of this subsection, an interest passing to the surviving spouse shall not be considered as an interest which will terminate or fail on the death of such spouse if—
(A) such death will cause a termination or failure of such interest only if it occurs within a period not exceeding 6 months after the decedent's death, or only if it occurs as a result of a common disaster resulting in the death of the decedent and the surviving spouse, or only if it occurs in the case of either such event; and
(B) such termination or failure does not in fact occur.
(4) Valuation of interest passing to surviving spouse
In determining for purposes of subsection (a) the value of any interest in property passing to the surviving spouse for which a deduction is allowed by this section—
(A) there shall be taken into account the effect which the tax imposed by section 2001, or any estate, succession, legacy, or inheritance tax, has on the net value to the surviving spouse of such interest; and
(B) where such interest or property is encumbered in any manner, or where the surviving spouse incurs any obligation imposed by the decedent with respect to the passing of such interest, such encumbrance or obligation shall be taken into account in the same manner as if the amount of a gift to such spouse of such interest were being determined.
(5) Life estate with power of appointment in surviving spouse
In the case of an interest in property passing from the decedent, if his surviving spouse is entitled for life to all the income from the entire interest, or all the income from a specific portion thereof, payable annually or at more frequent intervals, with power in the surviving spouse to appoint the entire interest, or such specific portion (exercisable in favor of such surviving spouse, or of the estate of such surviving spouse, or in favor of either, whether or not in each case the power is exercisable in favor of others), and with no power in any other person to appoint any part of the interest, or such specific portion, to any person other than the surviving spouse—
(A) the interest or such portion thereof so passing shall, for purposes of subsection (a), be considered as passing to the surviving spouse, and
(B) no part of the interest so passing shall, for purposes of paragraph (1)(A), be considered as passing to any person other than the surviving spouse.
This paragraph shall apply only if such power in the surviving spouse to appoint the entire interest, or such specific portion thereof, whether exercisable by will or during life, is exercisable by such spouse alone and in all events.
(6) Life insurance or annuity payments with power of appointment in surviving spouse
In the case of an interest in property passing from the decedent consisting of proceeds under a life insurance, endowment, or annuity contract, if under the terms of the contract such proceeds are payable in installments or are held by the insurer subject to an agreement to pay interest thereon (whether the proceeds, on the termination of any interest payments, are payable in a lump sum or in annual or more frequent installments), and such installment or interest payments are payable annually or at more frequent intervals, commencing not later than 13 months after the decedent's death, and all amounts, or a specific portion of all such amounts, payable during the life of the surviving spouse are payable only to such spouse, and such spouse has the power to appoint all amounts, or such specific portion, payable under such contract (exercisable in favor of such surviving spouse, or of the estate of such surviving spouse, or in favor of either, whether or not in each case the power is exercisable in favor of others), with no power in any other person to appoint such amounts to any person other than the surviving spouse—
(A) such amounts shall, for purposes of subsection (a), be considered as passing to the surviving spouse, and
(B) no part of such amounts shall, for purposes of paragraph (1)(A), be considered as passing to any person other than the surviving spouse.
This paragraph shall apply only if, under the terms of the contract, such power in the surviving spouse to appoint such amounts, whether exercisable by will or during life, is exercisable by such spouse alone and in all events.
(7) Election with respect to life estate for surviving spouse
(A) In general
In the case of qualified terminable interest property—
(i) for purposes of subsection (a), such property shall be treated as passing to the surviving spouse, and
(ii) for purposes of paragraph (1)(A), no part of such property shall be treated as passing to any person other than the surviving spouse.
(B) Qualified terminable interest property defined
For purposes of this paragraph—
(i) In general
The term "qualified terminable interest property" means property—
(I) which passes from the decedent,
(II) in which the surviving spouse has a qualifying income interest for life, and
(III) to which an election under this paragraph applies.
(ii) Qualifying income interest for life
The surviving spouse has a qualifying income interest for life if—
(I) the surviving spouse is entitled to all the income from the property, payable annually or at more frequent intervals, or has a usufruct interest for life in the property, and
(II) no person has a power to appoint any part of the property to any person other than the surviving spouse.
Subclause (II) shall not apply to a power exercisable only at or after the death of the surviving spouse. To the extent provided in regulations, an annuity shall be treated in a manner similar to an income interest in property (regardless of whether the property from which the annuity is payable can be separately identified).
(iii) Property includes interest therein
The term "property" includes an interest in property.
(iv) Specific portion treated as separate property
A specific portion of property shall be treated as separate property.
(v) Election
An election under this paragraph with respect to any property shall be made by the executor on the return of tax imposed by section 2001. Such an election, once made, shall be irrevocable.
(C) Treatment of survivor annuities
In the case of an annuity included in the gross estate of the decedent under section 2039 (or, in the case of an interest in an annuity arising under the community property laws of a State, included in the gross estate of the decedent under section 2033) where only the surviving spouse has the right to receive payments before the death of such surviving spouse—
(i) the interest of such surviving spouse shall be treated as a qualifying income interest for life, and
(ii) the executor shall be treated as having made an election under this subsection with respect to such annuity unless the executor otherwise elects on the return of tax imposed by section 2001.
An election under clause (ii), once made, shall be irrevocable.
(8) Special rule for charitable remainder trusts
(A) In general
If the surviving spouse of the decedent is the only beneficiary of a qualified charitable remainder trust who is not a charitable beneficiary nor an ESOP beneficiary, paragraph (1) shall not apply to any interest in such trust which passes or has passed from the decedent to such surviving spouse.
(B) Definitions
For purposes of subparagraph (A)—
(i) Charitable beneficiary
The term "charitable beneficiary" means any beneficiary which is an organization described in section 170(c).
(ii) ESOP beneficiary
The term "ESOP beneficiary" means any beneficiary which is an employee stock ownership plan (as defined in section 4975(e)(7)) that holds a remainder interest in qualified employer securities (as defined in section 664(g)(4)) to be transferred to such plan in a qualified gratuitous transfer (as defined in section 664(g)(1)).
(iii) Qualified charitable remainder trust
The term "qualified charitable remainder trust" means a charitable remainder annuity trust or a charitable remainder unitrust (described in section 664).
(9) Denial of double deduction
Nothing in this section or any other provision of this chapter shall allow the value of any interest in property to be deducted under this chapter more than once with respect to the same decedent.
(10) Specific portion
For purposes of paragraphs (5), (6), and (7)(B)(iv), the term "specific portion" only includes a portion determined on a fractional or percentage basis.
(c) Definition
For purposes of this section, an interest in property shall be considered as passing from the decedent to any person if and only if—
(1) such interest is bequeathed or devised to such person by the decedent;
(2) such interest is inherited by such person from the decedent;
(3) such interest is the dower or curtesy interest (or statutory interest in lieu thereof) of such person as surviving spouse of the decedent;
(4) such interest has been transferred to such person by the decedent at any time;
(5) such interest was, at the time of the decedent's death, held by such person and the decedent (or by them and any other person) in joint ownership with right of survivorship;
(6) the decedent had a power (either alone or in conjunction with any person) to appoint such interest and if he appoints or has appointed such interest to such person, or if such person takes such interest in default on the release or nonexercise of such power; or
(7) such interest consists of proceeds of insurance on the life of the decedent receivable by such person.
Except as provided in paragraph (5) or (6) of subsection (b), where at the time of the decedent's death it is not possible to ascertain the particular person or persons to whom an interest in property may pass from the decedent, such interest shall, for purposes of subparagraphs (A) and (B) of subsection (b)(1), be considered as passing from the decedent to a person other than the surviving spouse.
(d) Disallowance of marital deduction where surviving spouse not United States citizen
(1) In general
Except as provided in paragraph (2), if the surviving spouse of the decedent is not a citizen of the United States—
(A) no deduction shall be allowed under subsection (a), and
(B) section 2040(b) shall not apply.
(2) Marital deduction allowed for certain transfers in trust
(A) In general
Paragraph (1) shall not apply to any property passing to the surviving spouse in a qualified domestic trust.
(B) Special rule
If any property passes from the decedent to the surviving spouse of the decedent, for purposes of subparagraph (A), such property shall be treated as passing to such spouse in a qualified domestic trust if—
(i) such property is transferred to such a trust before the date on which the return of the tax imposed by this chapter is made, or
(ii) such property is irrevocably assigned to such a trust under an irrevocable assignment made on or before such date which is enforceable under local law.
(3) Allowance of credit to certain spouses
If—
(A) property passes to the surviving spouse of the decedent (hereinafter in this paragraph referred to as the "first decedent"),
(B) without regard to this subsection, a deduction would be allowable under subsection (a) with respect to such property, and
(C) such surviving spouse dies and the estate of such surviving spouse is subject to the tax imposed by this chapter,
the Federal estate tax paid (or treated as paid under section 2056A(b)(7)) by the first decedent with respect to such property shall be allowed as a credit under section 2013 to the estate of such surviving spouse and the amount of such credit shall be determined under such section without regard to when the first decedent died and without regard to subsection (d)(3) of such section.
(4) Special rule where resident spouse becomes citizen
Paragraph (1) shall not apply if—
(A) the surviving spouse of the decedent becomes a citizen of the United States before the day on which the return of the tax imposed by this chapter is made, and
(B) such spouse was a resident of the United States at all times after the date of the death of the decedent and before becoming a citizen of the United States.
(5) Reformations permitted
(A) In general
In the case of any property with respect to which a deduction would be allowable under subsection (a) but for this subsection, the determination of whether a trust is a qualified domestic trust shall be made—
(i) as of the date on which the return of the tax imposed by this chapter is made, or
(ii) if a judicial proceeding is commenced on or before the due date (determined with regard to extensions) for filing such return to change such trust into a trust which is a qualified domestic trust, as of the time when the changes pursuant to such proceeding are made.
(B) Statute of limitations
If a judicial proceeding described in subparagraph (A)(ii) is commenced with respect to any trust, the period for assessing any deficiency of tax attributable to any failure of such trust to be a qualified domestic trust shall not expire before the date 1 year after the date on which the Secretary is notified that the trust has been changed pursuant to such judicial proceeding or that such proceeding has been terminated.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1997—Subsec. (b)(7)(C).
Subsec. (b)(8).
"(8)
"(A)
"(B)
"(i)
"(ii)
1992—Subsec. (b)(10).
1990—Subsec. (d)(3).
Subsec. (d)(4), (5).
1989—Subsec. (b)(7)(C).
Subsec. (d)(2)(B).
Subsec. (d)(3).
Subsec. (d)(4).
1988—Subsec. (b)(7)(C).
Subsec. (d).
1984—Subsec. (b)(7)(B)(ii)(I).
1983—Subsec. (b)(7)(B)(ii).
Subsec. (b)(9).
1981—Subsec. (a).
Subsec. (b)(7), (8).
Subsecs. (c), (d).
1978—Subsec. (c)(1)(B).
1976—Subsec. (a).
Subsec. (c)(1).
Subsec. (c)(2)(B).
Subsecs. (d), (e).
1966—Subsec. (d)(2).
Statutory Notes and Related Subsidiaries
Effective Date of 1997 Amendment
Amendment by section 1530(c)(8) of
Effective Date of 1992 Amendment
"(1)
"(A)
"(B)
"(i) the decedent dies on or before the date 3 years after such date of enactment, or
"(ii) the decedent was, on such date of enactment, 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.
The preceding sentence shall not apply if such will (or revocable trust) is amended at any time after such date of enactment in any respect which will increase the amount of the interest which so passes or alters the terms of the transfer by which the interest so passes.
"(2)
Effective Date of 1990 Amendment
Amendment by section 11701(l)(1) of
Amendment by section 11702(g)(5) of
Effective Date of 1989 Amendment
Amendment by
Effective Date of 1988 Amendment
"(1)
"(A) the amendment made by subsection (a) [amending this section] shall apply with respect to decedents dying after December 31, 1981, and
"(B) the amendment made by subsection (b) [amending
"(2)
"(3)
Effective Date of 1984 Amendment
Amendment by
Effective Date of 1983 Amendment
Amendment by
Effective Date of 1981 Amendment
"(1) Except as otherwise provided in this subsection, the amendments made by this section [enacting
"(2) The amendments made by paragraphs (1), (2), and (3)(A) of subsection (b) [amending
"(3) If—
"(A) the decedent dies after December 31, 1981,
"(B) by reason of the death of the decedent property passes from the decedent or is acquired from the decedent under a will executed before the date which is 30 days after the date of the enactment of this Act [Aug. 13, 1981], or a trust created before such date, which contains a formula expressly providing that the spouse is to receive the maximum amount of property qualifying for the marital deduction allowable by Federal law,
"(C) the formula referred to in subparagraph (B) was not amended to refer specifically to an unlimited marital deduction at any time after the date which is 30 days after the date of enactment of this Act [Aug. 13, 1981], and before the death of the decedent, and
"(D) the State does not enact a statute applicable to such estate which construes this type of formula as referring to the marital deduction allowable by Federal law as amended by subsection (a),
then the amendment made by subsection (a) shall not apply to the estate of such decedent."
Effective Date of 1978 Amendment
Effective Date of 1976 Amendment
Amendment by section 1902(a)(12)(A) of
"(1)(A) Except as provided in subparagraph (B), the amendment made by subsection (a) [amending this section] shall apply with respect to the estates of decedents dying after December 31, 1976.
"(B) If—
"(i) the decedent dies after December 31, 1976, and before January 1, 1979,
"(ii) by reason of the death of the decedent property passes from the decedent or is acquired from the decedent under a will executed before January 1, 1977, or a trust created before such date, which contains a formula expressly providing that the spouse is to receive the maximum amount of property qualifying for the marital deduction allowable by Federal law,
"(iii) the formula referred to in clause (ii) was not amended at any time after December 31, 1976, and before the death of the decedent, and
"(iv) the State does not enact a statute applicable to such estate which construes this type of formula as referring to the marital deduction allowable by Federal law as amended by subsection (a),
then the amendment made by subsection (a) shall not apply to the estate of such decedent."
Amendment by section 2009(b)(4)(D), (E) of
Effective Date of 1966 Amendment
Commencement of Judicial Proceeding To Reform Trust
Application of Amendments by Section 5033 of Pub. L. 100–647 to Estates of, or Gifts by, Noncitizen and Nonresident Individuals
Disclaimer of Interest Arising From Estates of Persons Dying Before Oct. 4, 1966, Having Estate Tax Return Filing Date On or After Jan. 1, 1965
§2056A. Qualified domestic trust
(a) Qualified domestic trust defined
For purposes of this section and section 2056(d), the term "qualified domestic trust" means, with respect to any decedent, any trust if—
(1) the trust instrument—
(A) except as provided in regulations prescribed by the Secretary, requires that at least 1 trustee of the trust be an individual citizen of the United States or a domestic corporation, and
(B) provides that no distribution (other than a distribution of income) may be made from the trust unless a trustee who is an individual citizen of the United States or a domestic corporation has the right to withhold from such distribution the tax imposed by this section on such distribution,
(2) such trust meets such requirements as the Secretary may by regulations prescribe to ensure the collection of any tax imposed by subsection (b), and
(3) an election under this section by the executor of the decedent applies to such trust.
(b) Tax treatment of trust
(1) Imposition of estate tax
There is hereby imposed an estate tax on—
(A) any distribution before the date of the death of the surviving spouse from a qualified domestic trust, and
(B) the value of the property remaining in a qualified domestic trust on the date of the death of the surviving spouse.
(2) Amount of tax
(A) In general
In the case of any taxable event, the amount of the estate tax imposed by paragraph (1) shall be the amount equal to—
(i) the tax which would have been imposed under section 2001 on the estate of the decedent if the taxable estate of the decedent had been increased by the sum of—
(I) the amount involved in such taxable event, plus
(II) the aggregate amount involved in previous taxable events with respect to qualified domestic trusts of such decedent, reduced by
(ii) the tax which would have been imposed under section 2001 on the estate of the decedent if the taxable estate of the decedent had been increased by the amount referred to in clause (i)(II).
(B) Tentative tax where tax of decedent not finally determined
(i) In general
If the tax imposed on the estate of the decedent under section 2001 is not finally determined before the taxable event, the amount of the tax imposed by paragraph (1) on such event shall be determined by using the highest rate of tax in effect under section 2001 as of the date of the decedent's death.
(ii) Refund of excess when tax finally determined
If—
(I) the amount of the tax determined under clause (i), exceeds
(II) the tax determined under subparagraph (A) on the basis of the final determination of the tax imposed by section 2001 on the estate of the decedent,
such excess shall be allowed as a credit or refund (with interest) if claim therefor is filed not later than 1 year after the date of such final determination.
(C) Special rule where decedent has more than 1 qualified domestic trust
If there is more than 1 qualified domestic trust with respect to any decedent, the amount of the tax imposed by paragraph (1) with respect to such trusts shall be determined by using the highest rate of tax in effect under section 2001 as of the date of the decedent's death (and the provisions of paragraph (3)(B) shall not apply) unless, pursuant to a designation made by the decedent's executor, there is 1 person—
(i) who is an individual citizen of the United States or a domestic corporation and is responsible for filing all returns of tax imposed under paragraph (1) with respect to such trusts and for paying all tax so imposed, and
(ii) who meets such requirements as the Secretary may by regulations prescribe.
(3) Certain lifetime distributions exempt from tax
(A) Income distributions
No tax shall be imposed by paragraph (1)(A) on any distribution of income to the surviving spouse.
(B) Hardship exemption
No tax shall be imposed by paragraph (1)(A) on any distribution to the surviving spouse on account of hardship.
(4) Tax where trust ceases to qualify
If any qualified domestic trust ceases to meet the requirements of paragraphs (1) and (2) of subsection (a), the tax imposed by paragraph (1) shall apply as if the surviving spouse died on the date of such cessation.
(5) Due date
(A) Tax on distributions
The estate tax imposed by paragraph (1)(A) shall be due and payable on the 15th day of the 4th month following the calendar year in which the taxable event occurs; except that the estate tax imposed by paragraph (1)(A) on distributions during the calendar year in which the surviving spouse dies shall be due and payable not later than the date on which the estate tax imposed by paragraph (1)(B) is due and payable.
(B) Tax at death of spouse
The estate tax imposed by paragraph (1)(B) shall be due and payable on the date 9 months after the date of such death.
(6) Liability for tax
Each trustee shall be personally liable for the amount of the tax imposed by paragraph (1). Rules similar to the rules of section 2204 shall apply for purposes of the preceding sentence.
(7) Treatment of tax
For purposes of section 2056(d), any tax paid under paragraph (1) shall be treated as a tax paid under section 2001 with respect to the estate of the decedent.
(8) Lien for tax
For purposes of section 6324, any tax imposed by paragraph (1) shall be treated as an estate tax imposed under this chapter with respect to a decedent dying on the date of the taxable event (and the property involved shall be treated as the gross estate of such decedent).
(9) Taxable event
The term "taxable event" means the event resulting in tax being imposed under paragraph (1).
(10) Certain benefits allowed
(A) In general
If any property remaining in the qualified domestic trust on the date of the death of the surviving spouse is includible in the gross estate of such spouse for purposes of this chapter (or would be includible if such spouse were a citizen or resident of the United States), any benefit which is allowable (or would be allowable if such spouse were a citizen or resident of the United States) with respect to such property to the estate of such spouse under section 2014, 2032, 2032A, 2055, 2056, 2058, or 6166 shall be allowed for purposes of the tax imposed by paragraph (1)(B).
(B) Section 303
If the estate of the surviving spouse meets the requirements of section 303 with respect to any property described in subparagraph (A), for purposes of section 303, the tax imposed by paragraph (1)(B) with respect to such property shall be treated as a Federal estate tax payable with respect to the estate of the surviving spouse.
(C) Section 6161(a)(2)
The provisions of section 6161(a)(2) shall apply with respect to the tax imposed by paragraph (1)(B), and the reference in such section to the executor shall be treated as a reference to the trustees of the trust.
(11) Special rule where distribution tax paid out of trust
For purposes of this subsection, if any portion of the tax imposed by paragraph (1)(A) with respect to any distribution is paid out of the trust, an amount equal to the portion so paid shall be treated as a distribution described in paragraph (1)(A).
(12) Special rule where spouse becomes citizen
If the surviving spouse of the decedent becomes a citizen of the United States and if—
(A) such spouse was a resident of the United States at all times after the date of the death of the decedent and before such spouse becomes a citizen of the United States,
(B) no tax was imposed by paragraph (1)(A) with respect to any distribution before such spouse becomes such a citizen, or
(C) such spouse elects—
(i) to treat any distribution on which tax was imposed by paragraph (1)(A) as a taxable gift made by such spouse for purposes of—
(I) section 2001, and
(II) determining the amount of the tax imposed by section 2501 on actual taxable gifts made by such spouse during the year in which the spouse becomes a citizen or any subsequent year, and
(ii) to treat any reduction in the tax imposed by paragraph (1)(A) by reason of the credit allowable under section 2010 with respect to the decedent as a credit allowable to such surviving spouse under section 2505 for purposes of determining the amount of the credit allowable under section 2505 with respect to taxable gifts made by the surviving spouse during the year in which the spouse becomes a citizen or any subsequent year,
paragraph (1)(A) shall not apply to any distributions after such spouse becomes such a citizen (and paragraph (1)(B) shall not apply).
(13) Coordination with section 1015
For purposes of section 1015, any distribution on which tax is imposed by paragraph (1)(A) shall be treated as a transfer by gift, and any tax paid under paragraph (1)(A) shall be treated as a gift tax.
(14) Coordination with terminable interest rules
Any interest in a qualified domestic trust shall not be treated as failing to meet the requirements of paragraph (5) or (7) of section 2056(b) merely by reason of any provision of the trust instrument permitting the withholding from any distribution of an amount to pay the tax imposed by paragraph (1) on such distribution.
(15) No tax on certain distributions
No tax shall be imposed by paragraph (1) on any distribution to the surviving spouse to the extent such distribution is to reimburse such surviving spouse for any tax imposed by subtitle A on any item of income of the trust to which such surviving spouse is not entitled under the terms of the trust.
(c) Definitions
For purposes of this section—
(1) Property includes interest therein
The term "property" includes an interest in property.
(2) Income
Except as provided in regulations, the term "income" has the meaning given to such term by section 643(b).
(3) Trust
To the extent provided in regulations prescribed by the Secretary, the term "trust" includes other arrangements which have substantially the same effect as a trust.
(d) Election
An election under this section with respect to any trust shall be made by the executor on the return of the tax imposed by section 2001. Such an election, once made, shall be irrevocable. No election may be made under this section on any return if such return is filed more than one year after the time prescribed by law (including extensions) for filing such return.
(e) Regulations
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section, including regulations under which there may be treated as a qualified domestic trust any annuity or other payment which is includible in the decedent's gross estate and is by its terms payable for life or a term of years.
(Added
Editorial Notes
Amendments
2001—Subsec. (b)(10)(A).
1997—Subsec. (a)(1)(A).
Subsec. (c)(3).
1990—Subsec. (a)(1).
Subsec. (b)(2)(B)(ii).
Subsec. (b)(10)(A).
Subsec. (b)(14), (15).
Subsec. (d).
1989—Subsec. (a)(1).
Subsec. (a)(2) to (4).
Subsec. (b)(1)(A).
Subsec. (b)(2)(B)(ii).
Subsec. (b)(2)(C).
Subsec. (b)(3).
Subsec. (b)(4).
Subsec. (b)(5).
Subsec. (b)(6) to (9).
Subsec. (b)(10) to (13).
Subsec. (c)(2).
Subsec. (e).
Statutory Notes and Related Subsidiaries
Effective Date of 2001 Amendment
Amendment by
Effective Date of 1997 Amendment
Effective Date of 1990 Amendment
Amendment by section 11702(g)(2), (4) of
Effective Date of 1989 Amendment
Amendment by
Effective Date
Section applicable to estates of decedents dying after Nov. 10, 1988, see section 5033(d)(1) of
Transitional Rule
"(a)
"(b)
Application of Amendments by Section 5033 of Pub. L. 100–647 to Estates of, or Gifts by, Noncitizen and Nonresident Individuals
For provisions directing that in the case of the estate of, or gift by, an individual who was not a citizen or resident of the United States but was a resident of a foreign country with which the United States has a tax treaty with respect to estate, inheritance, or gift taxes, this section shall not apply to the extent such section would be inconsistent with the provisions of such treaty relating to estate, inheritance, or gift tax marital deductions, but that in the case of the estate of an individual dying before the date 3 years after Dec. 19, 1989, or a gift by an individual before the date 3 years after Dec. 19, 1989, the requirement of the preceding provision that the individual not be a citizen or resident of the United States shall not apply, see section 7815(d)(14) of
[§2057. Repealed. Pub. L. 113–295, div. A, title II, §221(a)(97)(A), Dec. 19, 2014, 128 Stat. 4051 ]
Section, added
A prior section 2057, added
Another prior section 2057, added
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of
§2058. State death taxes
(a) Allowance of deduction
For purposes of the tax imposed by section 2001, the value of the taxable estate shall be determined by deducting from the value of the gross estate the amount of any estate, inheritance, legacy, or succession taxes actually paid to any State or the District of Columbia, in respect of any property included in the gross estate (not including any such taxes paid with respect to the estate of a person other than the decedent).
(b) Period of limitations
The deduction allowed by this section shall include only such taxes as were actually paid and deduction therefor claimed before the later of—
(1) 4 years after the filing of the return required by section 6018, or
(2) if—
(A) a petition for redetermination of a deficiency has been filed with the Tax Court within the time prescribed in section 6213(a), the expiration of 60 days after the decision of the Tax Court becomes final,
(B) an extension of time has been granted under section 6161 or 6166 for payment of the tax shown on the return, or of a deficiency, the date of the expiration of the period of the extension, or
(C) a claim for refund or credit of an overpayment of tax imposed by this chapter has been filed within the time prescribed in section 6511, the latest of the expiration of—
(i) 60 days from the date of mailing by certified mail or registered mail by the Secretary to the taxpayer of a notice of the disallowance of any part of such claim,
(ii) 60 days after a decision by any court of competent jurisdiction becomes final with respect to a timely suit instituted upon such claim, or
(iii) 2 years after a notice of the waiver of disallowance is filed under section 6532(a)(3).
Notwithstanding sections 6511 and 6512, refund based on the deduction may be made if the claim for refund is filed within the period provided in the preceding sentence. Any such refund shall be made without interest.
(Added
Statutory Notes and Related Subsidiaries
Effective Date
Section applicable to estates of decedents dying, and generation-skipping transfers, after Dec. 31, 2004, see section 532(d) of