Subchapter A—Tax Imposed
Editorial Notes
Amendments
2014—Pub. L. 113–295, div. A, title II, §221(a)(95)(B)(i), Dec. 19, 2014, 128 Stat. 4051, which directed amendment of subchapter A of chapter 13 of this title by striking out item 2604 in the table of sections for "such subpart", was executed by striking out item 2604 "Credit for certain State taxes" in the table of sections for this subchapter, to reflect the probable intent of Congress.
2004—Pub. L. 108–311, title IV, §408(a)(21), Oct. 4, 2004, 118 Stat. 1192, added item 2604.
2001—Pub. L. 107–16, title V, §532(c)(15), June 7, 2001, 115 Stat. 75, struck out item 2604 "Credit for certain State taxes".
1986—Pub. L. 99–514, title XIV, §1431(a), Oct. 22, 1986, 100 Stat. 2717, in amending analysis of subchapter A generally, added item 2604.
§2601. Tax imposed
A tax is hereby imposed on every generation-skipping transfer (within the meaning of subchapter B).
(Added Pub. L. 94–455, title XX, §2006(a), Oct. 4, 1976, 90 Stat. 1879; amended Pub. L. 99–514, title XIV, §1431(a), Oct. 22, 1986, 100 Stat. 2718.)
Editorial Notes
Amendments
1986—Pub. L. 99–514 amended section generally, substituting "(within the meaning of subchapter B)" for "in the amount determined under section 2602".
Statutory Notes and Related Subsidiaries
Effective Date of 1986 Amendment
Pub. L. 99–514, title XIV, §1433, Oct. 22, 1986, 100 Stat. 2731, as amended by Pub. L. 100–647, title I, §1014(h)(1)–(3)(A), (4), Nov. 10, 1988, 102 Stat. 3567, 3568, provided that:
"(a) General Rule.—Except as provided in subsection (b), the amendments made by this subtitle [subtitle D (§§1431–1433) of title XIV of Pub. L. 99–514, amending chapter 13 of this title, enacting section 2515 of this title, and amending sections 164, 303, 691, 2013, 2032, and 6166 of this title] shall apply to any generation-skipping transfer (within the meaning of section 2611 of the Internal Revenue Code of 1986) made after the date of the enactment of this Act [Oct. 22, 1986].
"(b) Special Rules.—
"(1) Treatment of certain inter vivos transfers made after september 25, 1985.—For purposes of subsection (a) (and chapter 13 of the Internal Revenue Code of 1986 as amended by this part), any inter vivos transfer after September 25, 1985, and on or before the date of the enactment of this Act [Oct. 22, 1986] shall be treated as if it were made on the 1st day after the date of enactment of this Act.
"(2) Exceptions.—The amendments made by this subtitle shall not apply to—
"(A) any generation-skipping transfer under a trust which was irrevocable on September 25, 1985, but only to the extent that such transfer is not made out of corpus added to the trust after September 25, 1985 (or out of income attributable to corpus so added),
"(B) any generation-skipping transfer under a will or revocable trust executed before the date of the enactment of this Act [Oct. 22, 1986] if the decedent dies before January 1, 1987, and
"(C) any generation-skipping transfer—
"(i) under a trust to the extent such trust consists of property included in the gross estate of a decedent (other than property transferred by the decedent during his life after the date of the enactment of this Act [Oct. 22, 1986]), or reinvestments thereof, or
"(ii) which is a direct skip which occurs by reason of the death of any decedent;
but only if such decedent was, on the date of the enactment of this Act [Oct. 22, 1986], under a mental disability to change the disposition of his property and did not regain his competence to dispose of such property before the date of his death.
"(3) Treatment of certain transfers to grandchildren.—
"(A) In general.—For purposes of chapter 13 of the Internal Revenue Code of 1986, the term 'direct skip' shall not include any transfer before January 1, 1990, from a transferor to a grandchild of the transferor to the extent the aggregate transfers from such transferor to such grandchild do not exceed $2,000,000.
"(B) Treatment of transfers in trust.—For purposes of subparagraph (A), a transfer in trust for the benefit of a grandchild shall be treated as a transfer to such grandchild if (and only if)—
"(i) during the life of the grandchild, no portion of the corpus or income of the trust may be distributed to (or for the benefit of) any person other than such grandchild,
"(ii) the assets of the trust will be includible in the gross estate of the grandchild if the grandchild dies before the trust is terminated, and
"(iii) all of the income of the trust for periods after the grandchild has attained age 21 will be distributed to (or for the benefit of) such grandchild not less frequently than annually.
"(C) Coordination with section 2653(a) of the 1986 code.—In the case of any transfer which would be a generation-skipping transfer but for subparagraph (A), the rules of section 2653(a) of the Internal Revenue Code of 1986 shall apply as if such transfer were a generation-skipping transfer.
"(D) Coordination with taxable terminations and taxable distributions.—For purposes of chapter 13 of the Internal Revenue Code of 1986, the terms 'taxable termination' and 'taxable distribution' shall not include any transfer which would be a direct skip but for subparagraph (A).
"(4) Definitions.—Terms used in this section shall have the same respective meanings as when used in chapter 13 of the Internal Revenue Code of 1986; except that section 2612(c)(2) of such Code shall not apply in determining whether an individual is a grandchild of the transferor.
"(c) Repeal of Existing Tax on Generation-Skipping Transfers.—
"(1) In general.—In the case of any tax imposed by chapter 13 of the Internal Revenue Code of 1954 [now 1986] (as in effect on the day before the date of the enactment of this Act [Oct. 22, 1986]), such tax (including interest, additions to tax, and additional amounts) shall not be assessed and if assessed, the assessment shall be abated, and if collected, shall be credited or refunded (with interest) as an overpayment.
"(2) Waiver of statute of limitations.—If on the date of the enactment of this Act [Oct. 22, 1986] (or at any time within 1 year after such date of enactment) refund or credit of any overpayment of tax resulting from the application of paragraph (1) is barred by any law or rule of law, refund or credit of such overpayment shall, nevertheless, be made or allowed if claim therefore [sic] is filed before the date 1 year after the date of the enactment of this Act.
"(d) Election for Certain Transfers Benefiting Grandchild.—
"(1) In general.—For purposes of chapter 13 of the Internal Revenue Code of 1986 (as amended by this Act) and subsection (b) of this section, any transfer in trust for the benefit of a grandchild of a transferor shall be treated as a direct skip to such grandchild if—
"(A) the transfer occurs before the date of enactment of this Act [Oct. 22, 1986],
"(B) the transfer would be a direct skip to a grandchild except for the fact that the trust instrument provides that, if the grandchild dies before vesting of the interest transferred, the interest is transferred to the grandchild's heir (rather than the grandchild's estate), and
"(C) an election under this subsection applies to such transfer.
Any transfer treated as a direct skip by reason of the preceding sentence shall be subject to Federal estate tax on the grandchild's death in the same manner as if the contingent gift over had been to the grandchild's estate.
"(2) Election.—An election under paragraph (1) shall be made at such time and in such manner as the Secretary of the Treasury or his delegate may prescribe.
Unless the grandchild otherwise directs by will, the estate of such grandchild shall be entitled to recover from the person receiving the property on the death of the grandchild any increase in Federal estate tax on the estate of the grandchild by reason of the preceding sentence."
[Pub. L. 101–508, title XI, §11703(c)(3), Nov. 5, 1990, 104 Stat. 1388–517, provided that: "Subparagraph (C) of section 1433(b)(2) of the Tax Reform Act of 1986 [Pub. L. 99–514, set out above] shall not exempt any generation-skipping transfer from the amendments made by subtitle D of title XVI of such Act [probably means subtitle D (§§1431–1433) of title XIV of Pub. L. 99–514, amending chapter 13 of this title, enacting section 2515 of this title, and amending sections 164, 303, 691, 2013, 2032, and 6166 of this title] to the extent such transfer is attributable to property transferred by gift or by reason of the death of another person to the decedent (or trust) referred to in such subparagraph after August 3, 1990."]
[Pub. L. 100–647, title I, §1014(h)(3)(B), Nov. 10, 1988, 102 Stat. 3568, provided that: "Clause (iii) of section 1443(b)(3)(B) [1433(b)(3)(B)] of the Reform Act [Pub. L. 99–514, set out above] (as amended by subparagraph (A)) shall apply only to transfers after June 10, 1987."]
[Pub. L. 100–647, title I, §1014(h)(5), Nov. 10, 1988, 102 Stat. 3568, provided that: "Subparagraph (C) of section 1433(b)(2) of the Reform Act [Pub. L. 99–514, set out above] shall not exempt any direct skip from the amendments made by subtitle D of title XIV of the Reform Act [Pub. L. 99–514, amending chapter 13 of this title, enacting section 2515 of this title, and amending sections 164, 303, 691, 2013, 2032, and 6166 of this title] if—
["(A) such direct skip results from the application of section 2044 of the 1986 Code, and
["(B) such direct skip is attributable to property transferred to the trust after October 21, 1988."]
Effective Date
Pub. L. 94–455, title XX, §2006(c), Oct. 4, 1976, 90 Stat. 1889, as amended by Pub. L. 95–600, title VII, §702(n)(1), Nov. 6, 1978, 92 Stat. 2935; Pub. L. 97–34, title IV, §428, Aug. 13, 1981, 95 Stat. 319; Pub. L. 99–514, §2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) In general.—Except as provided in paragraph (2), the amendments made by this section [enacting this chapter and amending sections 303, 691, and 2013 of this title] shall apply to any generation-skipping transfer (within the meaning of section 2611(a) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]) made after June 11, 1976.
"(2) Exceptions.—The amendments made by this section shall not apply to any generation-skipping transfer—
"(A) under a trust which was irrevocable on June 11, 1976, but only to the extent that the transfer is not made out of corpus added to the trust after June 11, 1976, or
"(B) in the case of a decedent dying before January 1, 1983, pursuant to a will (or revocable trust) which was in existence on June 11, 1976, and was not amended at any time after that date in any respect which will result in the creation of, or increasing the amount of, any generation-skipping transfer.
For purposes of subparagraph (B), if the decedent on June 11, 1976, was under a mental disability to change the disposition of his property, the period set forth in such subparagraph shall not expire before the date which is 2 years after the date on which he first regains his competence to dispose of such property.
"(3) Trust equivalents.—For purposes of paragraph (2), in the case of a trust equivalent within the meaning of subsection (d) of section 2611 of the Internal Revenue Code of 1986, the provisions of such subsection (d) shall apply."
[Amendment of section 2006(c) of Pub. L. 94–455, set out above, by section 702(n)(1) of Pub. L. 95–600, effective Oct. 4, 1976, see section 702(n)(5) of Pub. L. 95–600, set out as an Effective Date of 1978 Amendment note under section 2613 of this title.]
§2602. Amount of tax
The amount of the tax imposed by section 2601 is—
(1) the taxable amount (determined under subchapter C), multiplied by
(2) the applicable rate (determined under subchapter E).
(Added Pub. L. 94–455, title XX, §2006(a), Oct. 4, 1976, 90 Stat. 1879; amended Pub. L. 95–600, title VII, §702(h)(2), (n)(4), Nov. 6, 1978, 92 Stat. 2931, 2936; Pub. L. 97–34, title IV, §403(a)(2)(B), Aug. 13, 1981, 95 Stat. 301; Pub. L. 99–514, title XIV, §1431(a), Oct. 22, 1986, 100 Stat. 2718.)
Editorial Notes
Amendments
1986—Pub. L. 99–514 amended section generally, substituting provisions that amount of tax imposed by section 2601 is the taxable amount (determined under subchapter C), multiplied by the applicable rate (determined under subchapter E) for former provisions which set out in detail the calculations and formulae for determining amount of tax imposed by section 2601.
1981—Subsec. (c)(5). Pub. L. 97–34 redesignated subpars. (B) and (C) as (A) and (B), respectively, and struck out former subpar. (A) relating to adjustments to marital deduction and providing that if the generation-skipping transfer occurs at the same time as, or within 9 months after, the death of the deemed transferor, for purposes of section 2056, relating to bequests, etc., to surviving spouse, the value of the gross estate of the deemed transferor shall be deemed to be increased by the amount of such transfer.
1978—Subsec. (a)(1)(C). Pub. L. 95–600, §702(h)(2), inserted ", as modified by section 2001(e)" after "within the meaning of section 2001(b)".
Subsec. (d)(1)(A). Pub. L. 95–600, §702(n)(4)(A), inserted "(or at the same time as the death of a beneficiary of the trust assigned to a higher generation than such deemed transferor)" after "such deemed transferor".
Subsec. (d)(2)(A). Pub. L. 95–600, §702(n)(4)(B), inserted "(or beneficiary)" after "the deemed transferor".
Statutory Notes and Related Subsidiaries
Effective Date of 1986 Amendment
Section applicable to generation-skipping transfers (within the meaning of section 2611 of this title) made after Oct. 22, 1986, except as otherwise provided, see section 1433 of Pub. L. 99–514, set out as a note under section 2601 of this title.
Effective Date of 1981 Amendment
Amendment by Pub. L. 97–34 applicable to estates of decedents dying after Dec. 31, 1981, but inapplicable under certain conditions under will executed before date which is 30 days after Aug. 13, 1981, or under trust created by such date, see section 403(e) of Pub. L. 97–34, set out as a note under section 2056 of this title.
Effective Date of 1978 Amendment
Amendment by section 702(h)(2) of Pub. L. 95–600 applicable to estates of decedents dying after Dec. 31, 1976, except that such amendment shall not apply to transfers made before Jan. 1, 1977, see section 702(h)(3) of Pub. L. 95–600, set out as a note under section 2001 of this title.
Amendment by section 702(n)(4) of Pub. L. 95–600 effective as if included in this chapter as added by section 2006 of Pub. L. 94–455, see section 702(n)(5) of Pub. L. 95–600, set out as a note under section 2613 of this title.
§2603. Liability for tax
(a) Personal liability
(1) Taxable distributions
In the case of a taxable distribution, the tax imposed by section 2601 shall be paid by the transferee.
(2) Taxable termination
In the case of a taxable termination or a direct skip from a trust, the tax shall be paid by the trustee.
(3) Direct skip
In the case of a direct skip (other than a direct skip from a trust), the tax shall be paid by the transferor.
(b) Source of tax
Unless otherwise directed pursuant to the governing instrument by specific reference to the tax imposed by this chapter, the tax imposed by this chapter on a generation-skipping transfer shall be charged to the property constituting such transfer.
(c) Cross reference
For provisions making estate and gift tax provisions with respect to transferee liability, liens, and related matters applicable to the tax imposed by section 2601, see section 2661.
(Added Pub. L. 94–455, title XX, §2006(a), Oct. 4, 1976, 90 Stat. 1881; amended Pub. L. 99–514, title XIV, §1431(a), Oct. 22, 1986, 100 Stat. 2718.)
Editorial Notes
Amendments
1986—Pub. L. 99–514 amended section generally, substituting tax liability provisions consisting of language placing liability, under different circumstances, on the transferee, the trustee, or the transferor, the source of the tax, and a cross reference to section 2661 for former provisions which covered the question of liability for tax with language covering the trustee and the distributee, the limitation on personal liability of the trustee who relied on certain information furnished by the Secretary, the limitation on personal liability of distributee, and the lien on property transferred until the tax was paid in full or became unenforceable by reason of lapse of time.
Statutory Notes and Related Subsidiaries
Effective Date of 1986 Amendment
Section applicable to generation-skipping transfers (within the meaning of section 2611 of this title) made after Oct. 22, 1986, except as otherwise provided, see section 1433 of Pub. L. 99–514, set out as a note under section 2601 of this title.
Section, added Pub. L. 99–514, title XIV, §1431(a), Oct. 22, 1986, 100 Stat. 2718; amended Pub. L. 107–16, title V, §532(c)(10), June 7, 2001, 115 Stat. 75, related to credit for certain State generation-skipping transfer taxes.
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as an Effective Date of 2014 Amendment note under section 1 of this title.