US (United States) Code. Title 26. Subtitle B: Estate and Gift Taxes. Chapter 13: Tax on generation-skipping

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-CITE-

26 USC CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

-HEAD-

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

-MISC1-

Subchapter Sec.(!1)

A. Tax imposed 2601

B. Generation-skipping transfers 2611

C. Taxable amount 2621

D. GST exemption 2631

E. Applicable rate; inclusion ratio 2641

F. Other definitions and special rules 2651

G. Administration 2661

AMENDMENTS

1986 - Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986,

100 Stat. 2717, struck out "CERTAIN" after "TAX ON" in chapter

heading, substituted "Generation-skipping transfers" for

"Definitions and special rules" in item for subchapter B and

"Taxable amount" for "Administration" in item for subchapter C, and

added items for subchapters D, E, and F.

-SECREF-

CHAPTER REFERRED TO IN OTHER SECTIONS

This chapter is referred to in sections 529, 667, 691, 2032,

2044, 2515, 2701, 7517 of this title.

-FOOTNOTE-

(!1) Section numbers editorially supplied.

-End-

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26 USC Subchapter A - Tax Imposed 01/06/03

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TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter A - Tax Imposed

-HEAD-

SUBCHAPTER A - TAX IMPOSED

-MISC1-

Sec.

2601. Tax imposed.

2602. Amount of tax.

2603. Liability for tax.

2604. Credit for certain State taxes.

AMENDMENTS

1986 - Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986,

100 Stat. 2717, in amending analysis of subchapter A generally,

added item 2604.

-End-

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26 USC Sec. 2601 01/06/03

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TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter A - Tax Imposed

-HEAD-

Sec. 2601. Tax imposed

-STATUTE-

A tax is hereby imposed on every generation-skipping transfer

(within the meaning of subchapter B).

-SOURCE-

(Added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4, 1976, 90

Stat. 1879; amended Pub. L. 99-514, title XIV, Sec. 1431(a), Oct.

22, 1986, 100 Stat. 2718.)

-MISC1-

AMENDMENTS

1986 - Pub. L. 99-514 amended section generally, substituting

"(within the meaning of subchapter B)" for "in the amount

determined under section 2602".

EFFECTIVE DATE OF 1986 AMENDMENT

Section 1433 of Pub. L. 99-514, as amended by Pub. L. 100-647,

title I, Sec. 1014(h)(1)-(3)(A), (4), Nov. 10, 1988, 102 Stat.

3567, 3568, provided that:

"(a) General Rule. - Except as provided in subsection (b), the

amendments made by this subtitle [subtitle D (Secs. 1431-1433) of

title XIV of Pub. L. 99-514, amending chapter 13 of this title,

enacting section 2515 of this title, and amending sections 164,

303, 691, 2013, 2032, and 6166 of this title] shall apply to any

generation-skipping transfer (within the meaning of section 2611 of

the Internal Revenue Code of 1986) made after the date of the

enactment of this Act [Oct. 22, 1986].

"(b) Special Rules. -

"(1) Treatment of certain inter vivos transfers made after

september 25, 1985. - For purposes of subsection (a) (and chapter

13 of the Internal Revenue Code of 1986 as amended by this part),

any inter vivos transfer after September 25, 1985, and on or

before the date of the enactment of this Act [Oct. 22, 1986]

shall be treated as if it were made on the 1st day after the date

of enactment of this Act.

"(2) Exceptions. - The amendments made by this subtitle shall

not apply to -

"(A) any generation-skipping transfer under a trust which was

irrevocable on September 25, 1985, but only to the extent that

such transfer is not made out of corpus added to the trust

after September 25, 1985 (or out of income attributable to

corpus so added),

"(B) any generation-skipping transfer under a will or

revocable trust executed before the date of the enactment of

this Act [Oct. 22, 1986] if the decedent dies before January 1,

1987, and

"(C) any generation-skipping transfer -

"(i) under a trust to the extent such trust consists of

property included in the gross estate of a decedent (other

than property transferred by the decedent during his life

after the date of the enactment of this Act [Oct. 22, 1986]),

or reinvestments thereof, or

"(ii) which is a direct skip which occurs by reason of the

death of any decedent;

but only if such decedent was, on the date of the enactment of

this Act [Oct. 22, 1986], under a mental disability to change the

disposition of his property and did not regain his competence to

dispose of such property before the date of his death.

"(3) Treatment of certain transfers to grandchildren. -

"(A) In general. - For purposes of chapter 13 of the Internal

Revenue Code of 1986, the term 'direct skip' shall not include

any transfer before January 1, 1990, from a transferor to a

grandchild of the transferor to the extent the aggregate

transfers from such transferor to such grandchild do not exceed

$2,000,000.

"(B) Treatment of transfers in trust. - For purposes of

subparagraph (A), a transfer in trust for the benefit of a

grandchild shall be treated as a transfer to such grandchild if

(and only if) -

"(i) during the life of the grandchild, no portion of the

corpus or income of the trust may be distributed to (or for

the benefit of) any person other than such grandchild,

"(ii) the assets of the trust will be includible in the

gross estate of the grandchild if the grandchild dies before

the trust is terminated, and

"(iii) all of the income of the trust for periods after the

grandchild has attained age 21 will be distributed to (or for

the benefit of) such grandchild not less frequently than

annually.

"(C) Coordination with section 2653(a) of the 1986 code. - In

the case of any transfer which would be a generation-skipping

transfer but for subparagraph (A), the rules of section 2653(a)

of the Internal Revenue Code of 1986 shall apply as if such

transfer were a generation-skipping transfer.

"(D) Coordination with taxable terminations and taxable

distributions. - For purposes of chapter 13 of the Internal

Revenue Code of 1986, the terms 'taxable termination' and

'taxable distribution' shall not include any transfer which

would be a direct skip but for subparagraph (A).

"(4) Definitions. - Terms used in this section shall have the

same respective meanings as when used in chapter 13 of the

Internal Revenue Code of 1986; except that section 2612(c)(2) of

such Code shall not apply in determining whether an individual is

a grandchild of the transferor.

"(c) Repeal of Existing Tax on Generation-Skipping Transfers. -

"(1) In general. - In the case of any tax imposed by chapter 13

of the Internal Revenue Code of 1954 [now 1986] (as in effect on

the day before the date of the enactment of this Act [Oct. 22,

1986]), such tax (including interest, additions to tax, and

additional amounts) shall not be assessed and if assessed, the

assessment shall be abated, and if collected, shall be credited

or refunded (with interest) as an overpayment.

"(2) Waiver of statute of limitations. - If on the date of the

enactment of this Act [Oct. 22, 1986] (or at any time within 1

year after such date of enactment) refund or credit of any

overpayment of tax resulting from the application of paragraph

(1) is barred by any law or rule of law, refund or credit of such

overpayment shall, nevertheless, be made or allowed if claim

therefore [sic] is filed before the date 1 year after the date of

the enactment of this Act.

"(d) Election for Certain Transfers Benefiting Grandchild. -

"(1) In general. - For purposes of chapter 13 of the Internal

Revenue Code of 1986 (as amended by this Act) and subsection (b)

of this section, any transfer in trust for the benefit of a

grandchild of a transferor shall be treated as a direct skip to

such grandchild if -

"(A) the transfer occurs before the date of enactment of this

Act [Oct. 22, 1986],

"(B) the transfer would be a direct skip to a grandchild

except for the fact that the trust instrument provides that, if

the grandchild dies before vesting of the interest transferred,

the interest is transferred to the grandchild's heir (rather

than the grandchild's estate), and

"(C) an election under this subsection applies to such

transfer.

Any transfer treated as a direct skip by reason of the preceding

sentence shall be subject to Federal estate tax on the

grandchild's death in the same manner as if the contingent gift

over had been to the grandchild's estate.

"(2) Election. - An election under paragraph (1) shall be made

at such time and in such manner as the Secretary of the Treasury

or his delegate may prescribe.

Unless the grandchild otherwise directs by will, the estate of such

grandchild shall be entitled to recover from the person receiving

the property on the death of the grandchild any increase in Federal

estate tax on the estate of the grandchild by reason of the

preceding sentence."

[Pub. L. 101-508, title XI, Sec. 11703(c)(3), Nov. 5, 1990, 104

Stat. 1388-517, provided that: "Subparagraph (C) of section

1433(b)(2) of the Tax Reform Act of 1986 [Pub. L. 99-514, set out

above] shall not exempt any generation-skipping transfer from the

amendments made by subtitle D of title XVI of such Act [probably

means subtitle D (Secs. 1431-1433) of title XIV of Pub. L. 99-514,

amending chapter 13 of this title, enacting section 2515 of this

title, and amending sections 164, 303, 691, 2013, 2032, and 6166 of

this title] to the extent such transfer is attributable to property

transferred by gift or by reason of the death of another person to

the decedent (or trust) referred to in such subparagraph after

August 3, 1990."]

[Section 1014(h)(3)(B) of Pub. L. 100-647 provided that: "Clause

(iii) of section 1443(b)(3)(B) [1433(b)(3)(B)] of the Reform Act

[Pub. L. 99-514, set out above] (as amended by subparagraph (A))

shall apply only to transfers after June 10, 1987."]

[Section 1014(h)(5) of Pub. L. 100-647 provided that:

"Subparagraph (C) of section 1433(b)(2) of the Reform Act [Pub. L.

99-514, set out above] shall not exempt any direct skip from the

amendments made by subtitle D of title XIV of the Reform Act [Pub.

L. 99-514, amending chapter 13 of this title, enacting section 2515

of this title, and amending sections 164, 303, 691, 2013, 2032, and

6166 of this title] if -

["(A) such direct skip results from the application of section

2044 of the 1986 Code, and

["(B) such direct skip is attributable to property transferred

to the trust after October 21, 1988."]

EFFECTIVE DATE

Section 2006(c) of Pub. L. 94-455, as amended by Pub. L. 95-600,

title VII, Sec. 702(n)(1), Nov. 6, 1978, 92 Stat. 2935; Pub. L.

97-34, title IV, Sec. 428, Aug. 13, 1981, 95 Stat. 319; Pub. L.

99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:

"(1) In general. - Except as provided in paragraph (2), the

amendments made by this section [enacting this chapter and amending

sections 303, 691, and 2013 of this title] shall apply to any

generation-skipping transfer (within the meaning of section 2611(a)

of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]) made

after June 11, 1976.

"(2) Exceptions. - The amendments made by this section shall not

apply to any generation-skipping transfer -

"(A) under a trust which was irrevocable on June 11, 1976, but

only to the extent that the transfer is not made out of corpus

added to the trust after June 11, 1976, or

"(B) in the case of a decedent dying before January 1, 1983,

pursuant to a will (or revocable trust) which was in existence on

June 11, 1976, and was not amended at any time after that date in

any respect which will result in the creation of, or increasing

the amount of, any generation-skipping transfer.

For purposes of subparagraph (B), if the decedent on June 11, 1976,

was under a mental disability to change the disposition of his

property, the period set forth in such subparagraph shall not

expire before the date which is 2 years after the date on which he

first regains his competence to dispose of such property.

"(3) Trust equivalents. - For purposes of paragraph (2), in the

case of a trust equivalent within the meaning of subsection (d) of

section 2611 of the Internal Revenue Code of 1986, the provisions

of such subsection (d) shall apply."

[Amendment of section 2006(c) of Pub. L. 94-455, set out above,

by section 702(n)(1) of Pub. L. 95-600, effective Oct. 4, 1976, see

section 702(n)(5) of Pub. L. 95-600, set out as an Effective Date

of 1978 Amendment note under section 2613 of this title.]

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 164, 303, 2602, 2603,

2604, 2654, 2661, 6166 of this title.

-End-

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26 USC Sec. 2602 01/06/03

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TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter A - Tax Imposed

-HEAD-

Sec. 2602. Amount of tax

-STATUTE-

The amount of the tax imposed by section 2601 is -

(1) the taxable amount (determined under subchapter C),

multiplied by

(2) the applicable rate (determined under subchapter E).

-SOURCE-

(Added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4, 1976, 90

Stat. 1879; amended Pub. L. 95-600, title VII, Sec. 702(h)(2),

(n)(4), Nov. 6, 1978, 92 Stat. 2931, 2936; Pub. L. 97-34, title IV,

Sec. 403(a)(2)(B), Aug. 13, 1981, 95 Stat. 301; Pub. L. 99-514,

title XIV, Sec. 1431(a), Oct. 22, 1986, 100 Stat. 2718.)

-MISC1-

AMENDMENTS

1986 - Pub. L. 99-514 amended section generally, substituting

provisions that amount of tax imposed by section 2601 is the

taxable amount (determined under subchapter C), multiplied by the

applicable rate (determined under subchapter E) for former

provisions which set out in detail the calculations and formulae

for determining amount of tax imposed by section 2601.

1981 - Subsec. (c)(5). Pub. L. 97-34 redesignated subpars. (B)

and (C) as (A) and (B), respectively, and struck out former subpar.

(A) relating to adjustments to marital deduction and providing that

if the generation-skipping transfer occurs at the same time as, or

within 9 months after, the death of the deemed transferor, for

purposes of section 2056, relating to bequests, etc., to surviving

spouse, the value of the gross estate of the deemed transferor

shall be deemed to be increased by the amount of such transfer.

1978 - Subsec. (a)(1)(C). Pub. L. 95-600, Sec. 702(h)(2),

inserted ", as modified by section 2001(e)" after "within the

meaning of section 2001(b)".

Subsec. (d)(1)(A). Pub. L. 95-600, Sec. 702(n)(4)(A), inserted

"(or at the same time as the death of a beneficiary of the trust

assigned to a higher generation than such deemed transferor)" after

"such deemed transferor".

Subsec. (d)(2)(A). Pub. L. 95-600, Sec. 702(n)(4)(B), inserted

"(or beneficiary)" after "the deemed transferor".

EFFECTIVE DATE OF 1986 AMENDMENT

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

EFFECTIVE DATE OF 1981 AMENDMENT

Amendment by Pub. L. 97-34 applicable to estates of decedents

dying after Dec. 31, 1981, but inapplicable under certain

conditions under will executed before date which is 30 days after

Aug. 13, 1981, or under trust created by such date, see section

403(e) of Pub. L. 97-34, set out as a note under section 2056 of

this title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by section 702(h)(2) of Pub. L. 95-600 applicable to

estates of decedents dying after Dec. 31, 1976, except that such

amendment shall not apply to transfers made before Jan. 1, 1977,

see section 702(h)(3) of Pub. L. 95-600, set out as a note under

section 2001 of this title.

Amendment by section 702(n)(4) of Pub. L. 95-600 effective as if

included in this chapter as added by section 2006 of Pub. L.

94-455, see section 702(n)(5) of Pub. L. 95-600, set out as a note

under section 2613 of this title.

-End-

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26 USC Sec. 2603 01/06/03

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TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter A - Tax Imposed

-HEAD-

Sec. 2603. Liability for tax

-STATUTE-

(a) Personal liability

(1) Taxable distributions

In the case of a taxable distribution, the tax imposed by

section 2601 shall be paid by the transferee.

(2) Taxable termination

In the case of a taxable termination or a direct skip from a

trust, the tax shall be paid by the trustee.

(3) Direct skip

In the case of a direct skip (other than a direct skip from a

trust), the tax shall be paid by the transferor.

(b) Source of tax

Unless otherwise directed pursuant to the governing instrument by

specific reference to the tax imposed by this chapter, the tax

imposed by this chapter on a generation-skipping transfer shall be

charged to the property constituting such transfer.

(c) Cross reference

For provisions making estate and gift tax provisions with

respect to transferee liability, liens, and related matters

applicable to the tax imposed by section 2601, see section

2661.

-SOURCE-

(Added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4, 1976, 90

Stat. 1881; amended Pub. L. 99-514, title XIV, Sec. 1431(a), Oct.

22, 1986, 100 Stat. 2718.)

-MISC1-

AMENDMENTS

1986 - Pub. L. 99-514 amended section generally, substituting tax

liability provisions consisting of language placing liability,

under different circumstances, on the transferee, the trustee, or

the transferor, the source of the tax, and a cross reference to

section 2661 for former provisions which covered the question of

liability for tax with language covering the trustee and the

distributee, the limitation on personal liability of the trustee

who relied on certain information furnished by the Secretary, the

limitation on personal liability of distributee, and the lien on

property transferred until the tax was paid in full or became

unenforceable by reason of lapse of time.

EFFECTIVE DATE OF 1986 AMENDMENT

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2662 of this title.

-End-

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26 USC Sec. 2604 01/06/03

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TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter A - Tax Imposed

-HEAD-

Sec. 2604. Credit for certain State taxes

-STATUTE-

(a) General rule

If a generation-skipping transfer (other than a direct skip)

occurs at the same time as and as a result of the death of an

individual, a credit against the tax imposed by section 2601 shall

be allowed in an amount equal to the generation-skipping transfer

tax actually paid to any State in respect to any property included

in the generation-skipping transfer.

(b) Limitation

The aggregate amount allowed as a credit under this section with

respect to any transfer shall not exceed 5 percent of the amount of

the tax imposed by section 2601 on such transfer.

-SOURCE-

(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100

Stat. 2718; amended Pub. L. 107-16, title V, Sec. 532(c)(10), June

7, 2001, 115 Stat. 75.)

-STATAMEND-

AMENDMENT OF SECTION

Pub. L. 107-16, title V, Sec. 532(c)(10), (d), title IX, Sec.

901, June 7, 2001, 115 Stat. 75, 150, provided that, applicable to

estates of decedents dying, and generation-skipping transfers,

after Dec. 31, 2004, this section is temporarily amended by adding

at the end the following new subsection:

(c) Termination

This section shall not apply to the generation-skipping transfers

after December 31, 2004.

See Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

Amendment by Pub. L. 107-16 applicable to estates of decedents

dying, and generation-skipping transfers, after Dec. 31, 2004, see

section 532(d) of Pub. L. 107-16, set out as a note under section

2011 of this title.

Amendment by Pub. L. 107-16 inapplicable to estates of decedents

dying, gifts made, or generation skipping transfers, after Dec. 31,

2010, and the Internal Revenue Code of 1986 to be applied and

administered to such estates, gifts, and transfers as if such

amendment had never been enacted, see section 901 of Pub. L.

107-16, set out as a note under section 1 of this title.

EFFECTIVE DATE

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 164, 2654 of this title.

-End-

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26 USC Subchapter B - Generation-Skipping Transfers 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter B - Generation-Skipping Transfers

-HEAD-

SUBCHAPTER B - GENERATION-SKIPPING TRANSFERS

-MISC1-

Sec.

2611. Generation-skipping transfer defined.

2612. Taxable termination; taxable distribution; direct

skip.

2613. Skip person and non-skip person defined.

AMENDMENTS

1986 - Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986,

100 Stat. 2718, substituted "Generation-Skipping Transfers" for

"Definitions and Special Rules" in subchapter heading, substituted

"Generation-skipping transfer defined" for "Generation-skipping

transfer" in item 2611, "Taxable termination; taxable distribution;

direct skip" for "Deemed transferor" in item 2612, and "Skip person

and non-skip person defined" for "Other definitions" in item 2613,

and struck out item 2614 "Special rules".

-SECREF-

SUBCHAPTER REFERRED TO IN OTHER SECTIONS

This subchapter is referred to in section 2601 of this title.

-End-

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26 USC Sec. 2611 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter B - Generation-Skipping Transfers

-HEAD-

Sec. 2611. Generation-skipping transfer defined

-STATUTE-

(a) In general

For purposes of this chapter, the term "generation-skipping

transfer" means -

(1) a taxable distribution,

(2) a taxable termination, and

(3) a direct skip.

(b) Certain transfers excluded

The term "generation-skipping transfer" does not include -

(1) any transfer which, if made inter vivos by an individual,

would not be treated as a taxable gift by reason of section

2503(e) (relating to exclusion of certain transfers for

educational or medical expenses), and

(2) any transfer to the extent -

(A) the property transferred was subject to a prior tax

imposed under this chapter,

(B) the transferee in the prior transfer was assigned to the

same generation as (or a lower generation than) the generation

assignment of the transferee in this transfer, and

(C) such transfers do not have the effect of avoiding tax

under this chapter with respect to any transfer.

-SOURCE-

(Added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4, 1976, 90

Stat. 1882; amended Pub. L. 99-514, title XIV, Sec. 1431(a), Oct.

22, 1986, 100 Stat. 2718; Pub. L. 100-647, title I, Secs.

1014(g)(1), (2), 1018(u)(43), Nov. 10, 1988, 102 Stat. 3562, 3592.)

-MISC1-

AMENDMENTS

1988 - Subsec. (a). Pub. L. 100-647, Secs. 1014(g)(1),

1018(u)(43), substituted "generation-skipping transfer" for

"generation-skipping transfers" and "means" for "mean".

Subsec. (b). Pub. L. 100-647, Sec. 1014(g)(2), redesignated pars.

(2) and (3) as (1) and (2), respectively, and struck out former

par. (1) which read as follows: "any transfer (other than a direct

skip) from a trust, to the extent such transfer is subject to a tax

imposed by chapter 11 or 12 with respect to a person in the 1st

generation below that of the grantor, and".

1986 - Pub. L. 99-514 amended section generally, substituting

provisions defining "generation-skipping transfers" and what that

term does not include, for former provisions which defined

"generation-skipping transfer", "transfer", and

"generation-skipping trust", contained provisions to be used in

determining the ascertainment of generation, and provided for a

generation-skipping trust equivalent.

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-647 effective, except as otherwise

provided, as if included in the provision of the Tax Reform Act of

1986, Pub. L. 99-514, to which such amendment relates, see section

1019(a) of Pub. L. 100-647, set out as a note under section 1 of

this title.

EFFECTIVE DATE OF 1986 AMENDMENT

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 303 of this title.

-End-

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26 USC Sec. 2612 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter B - Generation-Skipping Transfers

-HEAD-

Sec. 2612. Taxable termination; taxable distribution; direct skip

-STATUTE-

(a) Taxable termination

(1) General rule

For purposes of this chapter, the term "taxable termination"

means the termination (by death, lapse of time, release of power,

or otherwise) of an interest in property held in a trust unless -

(A) immediately after such termination, a non-skip person has

an interest in such property, or

(B) at no time after such termination may a distribution

(including distributions on termination) be made from such

trust to a skip person.

(2) Certain partial terminations treated as taxable

If, upon the termination of an interest in property held in

trust by reason of the death of a lineal descendant of the

transferor, a specified portion of the trust's assets are

distributed to 1 or more skip persons (or 1 or more trusts for

the exclusive benefit of such persons), such termination shall

constitute a taxable termination with respect to such portion of

the trust property.

(b) Taxable distribution

For purposes of this chapter, the term "taxable distribution"

means any distribution from a trust to a skip person (other than a

taxable termination or a direct skip).

(c) Direct skip

For purposes of this chapter -

(1) In general

The term "direct skip" means a transfer subject to a tax

imposed by chapter 11 or 12 of an interest in property to a skip

person.

(2) Look-thru rules not to apply

Solely for purposes of determining whether any transfer to a

trust is a direct skip, the rules of section 2651(f)(2) shall not

apply.

-SOURCE-

(Added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4, 1976, 90

Stat. 1883; amended Pub. L. 99-514, title XIV, Sec. 1431(a), Oct.

22, 1986, 100 Stat. 2719; Pub. L. 100-647, title I, Sec.

1014(g)(5)(B), (7), (15), Nov. 10, 1988, 102 Stat. 3564-3566; Pub.

L. 105-34, title V, Sec. 511(b), Aug. 5, 1997, 111 Stat. 861.)

-MISC1-

AMENDMENTS

1997 - Subsec. (c)(2). Pub. L. 105-34, Sec. 511(b)(2),

substituted "section 2651(f)(2)" for "section 2651(e)(2)".

Pub. L. 105-34, Sec. 511(b)(1), redesignated par. (3) as (2) and

struck out heading and text of former par. (2). Text read as

follows: "For purposes of determining whether any transfer is a

direct skip, if -

"(A) an individual is a grandchild of the transferor (or the

transferor's spouse or former spouse), and

"(B) as of the time of the transfer, the parent of such

individual who is a lineal descendant of the transferor (or the

transferor's spouse or former spouse) is dead,

such individual shall be treated as if such individual were a child

of the transferor and all of that grandchild's children shall be

treated as if they were grandchildren of the transferor. In the

case of lineal descendants below a grandchild, the preceding

sentence may be reapplied. If any transfer of property to a trust

would be a direct skip but for this paragraph, any generation

assignment under this paragraph shall apply also for purposes of

applying this chapter to transfers from the portion of the trust

attributable to such property."

Subsec. (c)(3). Pub. L. 105-34, Sec. 511(b)(1), redesignated par.

(3) as (2).

1988 - Subsec. (a)(2). Pub. L. 100-647, Sec. 1014(g)(15), amended

par. (2) generally. Prior to amendment, par. (2) read as follows:

"If, upon the termination of an interest in property held in a

trust, a specified portion of the trust assets are distributed to

skip persons who are lineal descendants of the holder of such

interest (or to 1 or more trusts for the exclusive benefit of such

persons), such termination shall constitute a taxable termination

with respect to such portion of the trust property."

Subsec. (c)(2). Pub. L. 100-647, Sec. 1014(g)(7), in closing

provisions, inserted at end "If any transfer of property to a trust

would be a direct skip but for this paragraph, any generation

assignment under this paragraph shall apply also for purposes of

applying this chapter to transfers from the portion of the trust

attributable to such property."

Subsec. (c)(3). Pub. L. 100-647, Sec. 1014(g)(5)(B), added par.

(3).

1986 - Pub. L. 99-514 amended section generally, substituting

provisions covering definition and application of "taxable

termination", "taxable distribution", and "direct skip" for former

provisions which indicated who the "deemed transferor" would be for

purposes of this chapter and that, for purposes of determining the

person deemed the transferor, a parent related to the grantor of a

trust by blood or adoption was to be deemed more closely related

than a parent related to a grantor by marriage.

EFFECTIVE DATE OF 1997 AMENDMENT

Section 511(c) of Pub. L. 105-34 provided that: "The amendments

made by this section [amending this section and section 2651 of

this title] shall apply to terminations, distributions, and

transfers occurring after December 31, 1997."

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-647 effective, except as otherwise

provided, as if included in the provision of the Tax Reform Act of

1986, Pub. L. 99-514, to which such amendment relates, see section

1019(a) of Pub. L. 100-647, set out as a note under section 1 of

this title.

EFFECTIVE DATE OF 1986 AMENDMENT

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 6166 of this title.

-End-

-CITE-

26 USC Sec. 2613 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter B - Generation-Skipping Transfers

-HEAD-

Sec. 2613. Skip person and non-skip person defined

-STATUTE-

(a) Skip person

For purposes of this chapter, the term "skip person" means -

(1) a natural person assigned to a generation which is 2 or

more generations below the generation assignment of the

transferor, or

(2) a trust -

(A) if all interests in such trust are held by skip persons,

or

(B) if -

(i) there is no person holding an interest in such trust,

and

(ii) at no time after such transfer may a distribution

(including distributions on termination) be made from such

trust to a nonskip person.

(b) Non-skip person

For purposes of this chapter, the term "non-skip person" means

any person who is not a skip person.

-SOURCE-

(Added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4, 1976, 90

Stat. 1884; amended Pub. L. 95-600, title VII, Sec. 702(n)(2), (3),

Nov. 6, 1978, 92 Stat. 2935, 2936; Pub. L. 96-222, title I, Sec.

107(a)(2)(B), Apr. 1, 1980, 94 Stat. 222; Pub. L. 99-514, title

XIV, Sec. 1431(a), Oct. 22, 1986, 100 Stat. 2720; Pub. L. 100-647,

title I, Sec. 1014(g)(5)(A), Nov. 10, 1988, 102 Stat. 3564.)

-MISC1-

AMENDMENTS

1988 - Subsec. (a)(1). Pub. L. 100-647 inserted "natural" before

"person".

1986 - Pub. L. 99-514 amended section generally, substituting

definitions of "skip person" and "non-skip person" for former

provisions which defined and applied the terms "taxable

distribution", "taxable termination", "younger generation

beneficiary", and "related or subordinate trustee".

1980 - Subsec. (e)(2)(A)(i). Pub. L. 96-222, Sec.

107(a)(2)(B)(i), inserted "(other than as a potential appointee

under a power of appointment held by another)" after "trust".

Subsec. (e)(2)(B). Pub. L. 96-222, Sec. 107(a)(2)(B)(ii),

redesignated cls. (iii) to (v) as (iv) to (vi), added cl. (iii),

and struck out cl. (vi) which related to an employee of a

corporation in which the grantor or any beneficiary of the trust is

an executive.

1978 - Subsec. (b)(2)(B). Pub. L. 95-600, Sec. 702(n)(3),

substituted "a present interest and a present power" for "an

interest and a power" and "present interest or present power" for

"interest or power" wherever appearing.

Subsec. (e). Pub. L. 95-600, Sec. 702(n)(2), inserted provisions

relating to powers of independent trustees and definition of a

related or subordinate trustee.

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-647 effective, except as otherwise

provided, as if included in the provision of the Tax Reform Act of

1986, Pub. L. 99-514, to which such amendment relates, see section

1019(a) of Pub. L. 100-647, set out as a note under section 1 of

this title.

EFFECTIVE DATE OF 1986 AMENDMENT

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

EFFECTIVE DATE OF 1980 AMENDMENT

Amendment by Pub. L. 96-222 effective, except as otherwise

provided, as if it had been included in the provisions of the

Revenue Act of 1978, Pub. L. 95-600, to which such amendment

relates, see section 201 of Pub. L. 96-222, set out as a note under

section 32 of this title.

EFFECTIVE DATE OF 1978 AMENDMENT

Section 702(n)(5) of Pub. L. 95-600, as amended by Pub. L.

99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:

"(A) Except as provided in subparagraph (B), the amendments made

by this subsection [amending this section, section 2602 of this

title, and provisions set out as a note under section 2601 of this

title] shall take effect as if included in chapter 13 of the

Internal Revenue Code of 1986 [formerly I.R.C. 1954] as added by

section 2006 of the Tax Reform Act of 1976 [Pub. L. 94-455, title

XX, Sec. 2006, Oct. 4, 1976, 90 Stat. 1879].

"(B) The amendment made by paragraph (1) [amending provisions set

out as a note under section 2601 of this title] shall take effect

on October 4, 1976."

-End-

-CITE-

26 USC [Sec. 2614 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter B - Generation-Skipping Transfers

-HEAD-

[Sec. 2614. Omitted]

-COD-

CODIFICATION

Section, added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4,

1976, 90 Stat. 1887; amended Pub. L. 95-600, title VII, Sec.

702(c)(1)(B), Nov. 6, 1978, 92 Stat. 2926; Pub. L. 96-223, title

IV, Sec. 401(c)(3), Apr. 2, 1980, 94 Stat. 300, related to special

rules for generation-skipping transfers, prior to the general

revision of this chapter by Pub. L. 99-514, Sec. 1431(a).

-End-

-CITE-

26 USC Subchapter C - Taxable Amount 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter C - Taxable Amount

-HEAD-

SUBCHAPTER C - TAXABLE AMOUNT

-MISC1-

Sec.

2621. Taxable amount in case of taxable distribution.

2622. Taxable amount in case of taxable termination.

2623. Taxable amount in case of direct skip.

2624. Valuation.

AMENDMENTS

1986 - Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986,

100 Stat. 2720, substituted "Taxable Amount" for "Administration"

in subchapter heading, substituted "Taxable amount in case of

taxable distribution" for "Administration" in item 2621 and

"Taxable amount in case of taxable termination" for "Regulations"

in item 2622, and added items 2623 and 2624.

-SECREF-

SUBCHAPTER REFERRED TO IN OTHER SECTIONS

This subchapter is referred to in section 2602 of this title.

-End-

-CITE-

26 USC Sec. 2621 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter C - Taxable Amount

-HEAD-

Sec. 2621. Taxable amount in case of taxable distribution

-STATUTE-

(a) In general

For purposes of this chapter, the taxable amount in the case of

any taxable distribution shall be -

(1) the value of the property received by the transferee,

reduced by

(2) any expense incurred by the transferee in connection with

the determination, collection, or refund of the tax imposed by

this chapter with respect to such distribution.

(b) Payment of GST tax treated as taxable distribution

For purposes of this chapter, if any of the tax imposed by this

chapter with respect to any taxable distribution is paid out of the

trust, an amount equal to the portion so paid shall be treated as a

taxable distribution.

-SOURCE-

(Added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4, 1976, 90

Stat. 1887; amended Pub. L. 97-34, title IV, Sec. 422(e)(4), Aug.

13, 1981, 95 Stat. 316; Pub. L. 99-514, title XIV, Sec. 1431(a),

Oct. 22, 1986, 100 Stat. 2720.)

-MISC1-

AMENDMENTS

1986 - Pub. L. 99-514 amended section generally, substituting

provisions relating to taxable amount in case of a taxable

distribution for former provisions which related generally to

administration of this chapter. See section 2661 of this title.

1981 - Subsec. (b). Pub. L. 97-34 substituted "Section 6166" for

"Sections 6166 and 6166A" in heading and "section 6166 (relating to

extension of time" for "sections 6166 and 6166A (relating to

extensions of time" in text.

EFFECTIVE DATE OF 1986 AMENDMENT

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

EFFECTIVE DATE OF 1981 AMENDMENT

Amendment by Pub. L. 97-34 applicable to estates of decedents

dying after Dec. 31, 1981, see section 422(f)(1) of Pub. L. 97-34,

set out as a note under section 6166 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 642 of this title.

-End-

-CITE-

26 USC Sec. 2622 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter C - Taxable Amount

-HEAD-

Sec. 2622. Taxable amount in case of taxable termination

-STATUTE-

(a) In general

For purposes of this chapter, the taxable amount in the case of a

taxable termination shall be -

(1) the value of all property with respect to which the taxable

termination has occurred, reduced by

(2) any deduction allowed under subsection (b).

(b) Deduction for certain expenses

For purposes of subsection (a), there shall be allowed a

deduction similar to the deduction allowed by section 2053

(relating to expenses, indebtedness, and taxes) for amounts

attributable to the property with respect to which the taxable

termination has occurred.

-SOURCE-

(Added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4, 1976, 90

Stat. 1888; amended Pub. L. 99-514, title XIV, Sec. 1431(a), Oct.

22, 1986, 100 Stat. 2720.)

-MISC1-

AMENDMENTS

1986 - Pub. L. 99-514 amended section generally, substituting

provisions relating to taxable amount in case of a taxable

termination for former provisions which authorized the Secretary to

promulgate regulations. See section 2663 of this title.

EFFECTIVE DATE OF 1986 AMENDMENT

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 642 of this title.

-End-

-CITE-

26 USC Sec. 2623 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter C - Taxable Amount

-HEAD-

Sec. 2623. Taxable amount in case of direct skip

-STATUTE-

For purposes of this chapter, the taxable amount in the case of a

direct skip shall be the value of the property received by the

transferee.

-SOURCE-

(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100

Stat. 2721.)

-MISC1-

EFFECTIVE DATE

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

-End-

-CITE-

26 USC Sec. 2624 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter C - Taxable Amount

-HEAD-

Sec. 2624. Valuation

-STATUTE-

(a) General rule

Except as otherwise provided in this chapter, property shall be

valued as of the time of the generation-skipping transfer.

(b) Alternate valuation and special use valuation elections apply

to certain direct skips

In the case of any direct skip of property which is included in

the transferor's gross estate, the value of such property for

purposes of this chapter shall be the same as its value for

purposes of chapter 11 (determined with regard to sections 2032 and

2032A).

(c) Alternate valuation election permitted in the case of taxable

terminations occurring at death

If 1 or more taxable terminations with respect to the same trust

occur at the same time as and as a result of the death of an

individual, an election may be made to value all of the property

included in such terminations in accordance with section 2032.

(d) Reduction for consideration provided by transferee

For purposes of this chapter, the value of the property

transferred shall be reduced by the amount of any consideration

provided by the transferee.

-SOURCE-

(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100

Stat. 2721.)

-MISC1-

EFFECTIVE DATE

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

-End-

-CITE-

26 USC Subchapter D - GST Exemption 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter D - GST Exemption

-HEAD-

SUBCHAPTER D - GST EXEMPTION

-MISC1-

Sec.

2631. GST exemption.

2632. Special rules for allocation of GST exemption.

-End-

-CITE-

26 USC Sec. 2631 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter D - GST Exemption

-HEAD-

Sec. 2631. GST exemption

-STATUTE-

(a) General rule

For purposes of determining the inclusion ratio, every individual

shall be allowed a GST exemption of $1,000,000 which may be

allocated by such individual (or his executor) to any property with

respect to which such individual is the transferor.

(b) Allocations irrevocable

Any allocation under subsection (a), once made, shall be

irrevocable.

(c) Inflation adjustment

(1) In general

In the case of any calendar year after 1998, the $1,000,000

amount contained in subsection (a) shall be increased by an

amount equal to -

(A) $1,000,000, 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 1992" in subparagraph (B) thereof.

If any amount as adjusted under the preceding sentence is not a

multiple of $10,000, such amount shall be rounded to the next

lowest multiple of $10,000.

(2) Allocation of increase

Any increase under paragraph (1) for any calendar year shall

apply only to generation-skipping transfers made during or after

such calendar year; except that no such increase for calendar

years after the calendar year in which the transferor dies shall

apply to transfers by such transferor.

-SOURCE-

(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100

Stat. 2721; amended Pub. L. 105-34, title V, Sec. 501(d), Aug. 5,

1997, 111 Stat. 846; Pub. L. 105-206, title VI, Sec. 6007(a)(1),

July 22, 1998, 112 Stat. 806; Pub. L. 107-16, title V, Sec. 521(c),

June 7, 2001, 115 Stat. 72.)

-STATAMEND-

ADJUSTMENT OF GENERATION-SKIPPING TRANSFER TAX EXEMPTION FOR

CALENDAR YEAR 2003

For adjustment of generation-skipping transfer tax exemption

under this section for calendar year 2003, see section 3.25 of

Revenue Procedure 2002-70, set out as a note under section 1 of

this title.

AMENDMENT OF SECTION

Pub. L. 107-16, title V, Sec. 521(c), (e)(3), title IX, Sec. 901,

June 7, 2001, 115 Stat. 72, 150, provided that, applicable to

estates of decedents dying, and generation-skipping transfers,

after Dec. 31, 2003, this section is temporarily amended as

follows:

(1) in subsection (a), by substituting "amount" for "of

$1,000,000"; and

(2) by amending subsection (c) to read as follows:

(c) GST exemption amount

For purposes of subsection (a), the GST exemption amount for any

calendar year shall be equal to the applicable exclusion amount

under section 2010(c) for such calendar year.

See Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

AMENDMENTS

1998 - Subsec. (c). Pub. L. 105-206 reenacted heading without

change and amended text generally. Prior to amendment, text read as

follows: "In the case of an individual who dies in any calendar

year after 1998, the $1,000,000 amount contained in subsection (a)

shall be increased by an amount equal to -

"(1) $1,000,000, multiplied by

"(2) the cost-of-living adjustment determined under section

1(f)(3) for such calendar year by substituting 'calendar year

1997' for 'calendar year 1992' in subparagraph (B) thereof.

If any amount as adjusted under the preceding sentence is not a

multiple of $10,000, such amount shall be rounded to the next

lowest multiple of $10,000."

1997 - Subsec. (c). Pub. L. 105-34 added subsec. (c).

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

Amendment by Pub. L. 107-16 applicable to estates of decedents

dying, and generation-skipping transfers, after Dec. 31, 2003, see

section 521(e)(3) of Pub. L. 107-16, set out as a note under

section 2010 of this title.

Amendment by Pub. L. 107-16 inapplicable to estates of decedents

dying, gifts made, or generation skipping transfers, after Dec. 31,

2010, and the Internal Revenue Code of 1986 to be applied and

administered to such estates, gifts, and transfers as if such

amendment had never been enacted, see section 901 of Pub. L.

107-16, set out as a note under section 1 of this title.

EFFECTIVE DATE OF 1998 AMENDMENT

Amendment by Pub. L. 105-206 effective, except as otherwise

provided, as if included in the provisions of the Taxpayer Relief

Act of 1997, Pub. L. 105-34, to which such amendment relates, see

section 6024 of Pub. L. 105-206, set out as a note under section 1

of this title.

EFFECTIVE DATE

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2632 of this title.

-End-

-CITE-

26 USC Sec. 2632 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter D - GST Exemption

-HEAD-

Sec. 2632. Special rules for allocation of GST exemption

-STATUTE-

(a) Time and manner of allocation

(1) Time

Any allocation by an individual of his GST exemption under

section 2631(a) may be made at any time on or before the date

prescribed for filing the estate tax return for such individual's

estate (determined with regard to extensions), regardless of

whether such a return is required to be filed.

(2) Manner

The Secretary shall prescribe by forms or regulations the

manner in which any allocation referred to in paragraph (1) is to

be made.

(b) Deemed allocation to certain lifetime direct skips

(1) In general

If any individual makes a direct skip during his lifetime, any

unused portion of such individual's GST exemption shall be

allocated to the property transferred to the extent necessary to

make the inclusion ratio for such property zero. If the amount of

the direct skip exceeds such unused portion, the entire unused

portion shall be allocated to the property transferred.

(2) Unused portion

For purposes of paragraph (1), the unused portion of an

individual's GST exemption is that portion of such exemption

which has not previously been allocated by such individual (or

treated as allocated under paragraph (1) or subsection (c)(1)).

(3) Subsection not to apply in certain cases

An individual may elect to have this subsection not apply to a

transfer.

(c) Deemed allocation to certain lifetime transfers to GST trusts

(1) In general

If any individual makes an indirect skip during such

individual's lifetime, any unused portion of such individual's

GST exemption shall be allocated to the property transferred to

the extent necessary to make the inclusion ratio for such

property zero. If the amount of the indirect skip exceeds such

unused portion, the entire unused portion shall be allocated to

the property transferred.

(2) Unused portion

For purposes of paragraph (1), the unused portion of an

individual's GST exemption is that portion of such exemption

which has not previously been -

(A) allocated by such individual,

(B) treated as allocated under subsection (b) with respect to

a direct skip occurring during or before the calendar year in

which the indirect skip is made, or

(C) treated as allocated under paragraph (1) with respect to

a prior indirect skip.

(3) Definitions

(A) Indirect skip

For purposes of this subsection, the term "indirect skip"

means any transfer of property (other than a direct skip)

subject to the tax imposed by chapter 12 made to a GST trust.

(B) GST trust

The term "GST trust" means a trust that could have a

generation-skipping transfer with respect to the transferor

unless -

(i) the trust instrument provides that more than 25 percent

of the trust corpus must be distributed to or may be

withdrawn by one or more individuals who are non-skip persons

-

(I) before the date that the individual attains age 46,

(II) on or before one or more dates specified in the

trust instrument that will occur before the date that such

individual attains age 46, or

(III) upon the occurrence of an event that, in accordance

with regulations prescribed by the Secretary, may

reasonably be expected to occur before the date that such

individual attains age 46,

(ii) the trust instrument provides that more than 25

percent of the trust corpus must be distributed to or may be

withdrawn by one or more individuals who are non-skip persons

and who are living on the date of death of another person

identified in the instrument (by name or by class) who is

more than 10 years older than such individuals,

(iii) the trust instrument provides that, if one or more

individuals who are non-skip persons die on or before a date

or event described in clause (i) or (ii), more than 25

percent of the trust corpus either must be distributed to the

estate or estates of one or more of such individuals or is

subject to a general power of appointment exercisable by one

or more of such individuals,

(iv) the trust is a trust any portion of which would be

included in the gross estate of a non-skip person (other than

the transferor) if such person died immediately after the

transfer,

(v) the trust is a charitable lead annuity trust (within

the meaning of section 2642(e)(3)(A)) or a charitable

remainder annuity trust or a charitable remainder unitrust

(within the meaning of section 664(d)), or

(vi) the trust is a trust with respect to which a deduction

was allowed under section 2522 for the amount of an interest

in the form of the right to receive annual payments of a

fixed percentage of the net fair market value of the trust

property (determined yearly) and which is required to pay

principal to a non-skip person if such person is alive when

the yearly payments for which the deduction was allowed

terminate.

For purposes of this subparagraph, the value of transferred

property shall not be considered to be includible in the gross

estate of a non-skip person or subject to a right of withdrawal

by reason of such person holding a right to withdraw so much of

such property as does not exceed the amount referred to in

section 2503(b) with respect to any transferor, and it shall be

assumed that powers of appointment held by non-skip persons

will not be exercised.

(4) Automatic allocations to certain GST trusts

For purposes of this subsection, an indirect skip to which

section 2642(f) applies shall be deemed to have been made only at

the close of the estate tax inclusion period. The fair market

value of such transfer shall be the fair market value of the

trust property at the close of the estate tax inclusion period.

(5) Applicability and effect

(A) In general

An individual -

(i) may elect to have this subsection not apply to -

(I) an indirect skip, or

(II) any or all transfers made by such individual to a

particular trust, and

(ii) may elect to treat any trust as a GST trust for

purposes of this subsection with respect to any or all

transfers made by such individual to such trust.

(B) Elections

(i) Elections with respect to indirect skips

An election under subparagraph (A)(i)(I) shall be deemed to

be timely if filed on a timely filed gift tax return for the

calendar year in which the transfer was made or deemed to

have been made pursuant to paragraph (4) or on such later

date or dates as may be prescribed by the Secretary.

(ii) Other elections

An election under clause (i)(II) or (ii) of subparagraph

(A) may be made on a timely filed gift tax return for the

calendar year for which the election is to become effective.

(d) Retroactive allocations

(1) In general

If -

(A) a non-skip person has an interest or a future interest in

a trust to which any transfer has been made,

(B) such person -

(i) is a lineal descendant of a grandparent of the

transferor or of a grandparent of the transferor's spouse or

former spouse, and

(ii) is assigned to a generation below the generation

assignment of the transferor, and

(C) such person predeceases the transferor,

then the transferor may make an allocation of any of such

transferor's unused GST exemption to any previous transfer or

transfers to the trust on a chronological basis.

(2) Special rules

If the allocation under paragraph (1) by the transferor is made

on a gift tax return filed on or before the date prescribed by

section 6075(b) for gifts made within the calendar year within

which the non-skip person's death occurred -

(A) the value of such transfer or transfers for purposes of

section 2642(a) shall be determined as if such allocation had

been made on a timely filed gift tax return for each calendar

year within which each transfer was made,

(B) such allocation shall be effective immediately before

such death, and

(C) the amount of the transferor's unused GST exemption

available to be allocated shall be determined immediately

before such death.

(3) Future interest

For purposes of this subsection, a person has a future interest

in a trust if the trust may permit income or corpus to be paid to

such person on a date or dates in the future.

(e) Allocation of unused GST exemption

(1) In general

Any portion of an individual's GST exemption which has not been

allocated within the time prescribed by subsection (a) shall be

deemed to be allocated as follows -

(A) first, to property which is the subject of a direct skip

occurring at such individual's death, and

(B) second, to trusts with respect to which such individual

is the transferor and from which a taxable distribution or a

taxable termination might occur at or after such individual's

death.

(2) Allocation within categories

(A) In general

The allocation under paragraph (1) shall be made among the

properties described in subparagraph (A) thereof and the trusts

described in subparagraph (B) thereof, as the case may be, in

proportion to the respective amounts (at the time of

allocation) of the nonexempt portions of such properties or

trusts.

(B) Nonexempt portion

For purposes of subparagraph (A), the term "nonexempt

portion" means the value (at the time of allocation) of the

property or trust, multiplied by the inclusion ratio with

respect to such property or trust.

-SOURCE-

(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100

Stat. 2721; amended Pub. L. 100-647, title I, Sec. 1014(g)(16),

Nov. 10, 1988, 102 Stat. 3566; Pub. L. 107-16, title V, Sec.

561(a), (b), June 7, 2001, 115 Stat. 86, 89.)

-STATAMEND-

AMENDMENT OF SECTION

For termination of amendment by section 901 of Pub. L. 107-16,

see Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

AMENDMENTS

2001 - Subsec. (b)(2). Pub. L. 107-16, Secs. 561(b), 901,

temporarily substituted "or subsection (c)(1)" for "with respect to

a prior direct skip". See Effective and Termination Dates of 2001

Amendment note below.

Subsecs. (c) to (e). Pub. L. 107-16, Secs. 561(a), 901,

temporarily added subsecs. (c) and (d) and redesignated former

subsec. (c) as (e). See Effective and Termination Dates of 2001

Amendment note below.

1988 - Subsec. (b)(2). Pub. L. 100-647 substituted "paragraph (1)

with respect to a prior direct skip)" for "paragraph (1)) with

respect to a prior direct skip".

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

Pub. L. 107-16, title V, Sec. 561(c), June 7, 2001, 115 Stat. 89,

provided that:

"(1) Deemed allocation. - Section 2632(c) of the Internal Revenue

Code of 1986 (as added by subsection (a)), and the amendment made

by subsection (b) [amending this section], shall apply to transfers

subject to chapter 11 or 12 made after December 31, 2000, and to

estate tax inclusion periods ending after December 31, 2000.

"(2) Retroactive allocations. - Section 2632(d) of the Internal

Revenue Code of 1986 (as added by subsection (a)) shall apply to

deaths of non-skip persons occurring after December 31, 2000."

Amendment by Pub. L. 107-16 inapplicable to estates of decedents

dying, gifts made, or generation skipping transfers, after Dec. 31,

2010, and the Internal Revenue Code of 1986 to be applied and

administered to such estates, gifts, and transfers as if such

amendment had never been enacted, see section 901 of Pub. L.

107-16, set out as a note under section 1 of this title.

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-647 effective, except as otherwise

provided, as if included in the provision of the Tax Reform Act of

1986, Pub. L. 99-514, to which such amendment relates, see section

1019(a) of Pub. L. 100-647, set out as a note under section 1 of

this title.

EFFECTIVE DATE

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2642 of this title.

-End-

-CITE-

26 USC Subchapter E - Applicable Rate; Inclusion Ratio 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter E - Applicable Rate; Inclusion Ratio

-HEAD-

SUBCHAPTER E - APPLICABLE RATE; INCLUSION RATIO

-MISC1-

Sec.

2641. Applicable rate.

2642. Inclusion ratio.

-SECREF-

SUBCHAPTER REFERRED TO IN OTHER SECTIONS

This subchapter is referred to in section 2602 of this title.

-End-

-CITE-

26 USC Sec. 2641 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter E - Applicable Rate; Inclusion Ratio

-HEAD-

Sec. 2641. Applicable rate

-STATUTE-

(a) General rule

For purposes of this chapter, the term "applicable rate" means,

with respect to any generation-skipping transfer, the product of -

(1) the maximum Federal estate tax rate, and

(2) the inclusion ratio with respect to the transfer.

(b) Maximum Federal estate tax rate

For purposes of subsection (a), the term "maximum Federal estate

tax rate" means the maximum rate imposed by section 2001 on the

estates of decedents dying at the time of the taxable distribution,

taxable termination, or direct skip, as the case may be.

-SOURCE-

(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100

Stat. 2722.)

-MISC1-

EFFECTIVE DATE

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

-End-

-CITE-

26 USC Sec. 2642 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter E - Applicable Rate; Inclusion Ratio

-HEAD-

Sec. 2642. Inclusion ratio

-STATUTE-

(a) Inclusion ratio defined

For purposes of this chapter -

(1) In general

Except as otherwise provided in this section, the inclusion

ratio with respect to any property transferred in a

generation-skipping transfer shall be the excess (if any) of 1

over -

(A) except as provided in subparagraph (B), the applicable

fraction determined for the trust from which such transfer is

made, or

(B) in the case of a direct skip, the applicable fraction

determined for such skip.

(2) Applicable fraction

For purposes of paragraph (1), the applicable fraction is a

fraction -

(A) the numerator of which is the amount of the GST exemption

allocated to the trust (or in the case of a direct skip,

allocated to the property transferred in such skip), and

(B) the denominator of which is -

(i) the value of the property transferred to the trust (or

involved in the direct skip), reduced by

(ii) the sum of -

(I) any Federal estate tax or State death tax actually

recovered from the trust attributable to such property, and

(II) any charitable deduction allowed under section 2055

or 2522 with respect to such property.

(3) Severing of trusts

(A) In general

If a trust is severed in a qualified severance, the trusts

resulting from such severance shall be treated as separate

trusts thereafter for purposes of this chapter.

(B) Qualified severance

For purposes of subparagraph (A) -

(i) In general

The term "qualified severance" means the division of a

single trust and the creation (by any means available under

the governing instrument or under local law) of two or more

trusts if -

(I) the single trust was divided on a fractional basis,

and

(II) the terms of the new trusts, in the aggregate,

provide for the same succession of interests of

beneficiaries as are provided in the original trust.

(ii) Trusts with inclusion ratio greater than zero

If a trust has an inclusion ratio of greater than zero and

less than 1, a severance is a qualified severance only if the

single trust is divided into two trusts, one of which

receives a fractional share of the total value of all trust

assets equal to the applicable fraction of the single trust

immediately before the severance. In such case, the trust

receiving such fractional share shall have an inclusion ratio

of zero and the other trust shall have an inclusion ratio of

1.

(iii) Regulations

The term "qualified severance" includes any other severance

permitted under regulations prescribed by the Secretary.

(C) Timing and manner of severances

A severance pursuant to this paragraph may be made at any

time. The Secretary shall prescribe by forms or regulations the

manner in which the qualified severance shall be reported to

the Secretary.

(b) Valuation rules, etc.

Except as provided in subsection (f) -

(1) Gifts for which gift tax return filed or deemed allocation

made

If the allocation of the GST exemption to any transfers of

property is made on a gift tax return filed on or before the date

prescribed by section 6075(b) for such transfer or is deemed to

be made under section 2632(b)(1) or (c)(1) -

(A) the value of such property for purposes of subsection (a)

shall be its value as finally determined for purposes of

chapter 12 (within the meaning of section 2001(f)(2)), or, in

the case of an allocation deemed to have been made at the close

of an estate tax inclusion period, its value at the time of the

close of the estate tax inclusion period, and

(B) such allocation shall be effective on and after the date

of such transfer, or, in the case of an allocation deemed to

have been made at the close of an estate tax inclusion period,

on and after the close of such estate tax inclusion period.

(2) Transfers and allocations at or after death

(A) Transfers at death

If property is transferred as a result of the death of the

transferor, the value of such property for purposes of

subsection (a) shall be its value as finally determined for

purposes of chapter 11; except that, if the requirements

prescribed by the Secretary respecting allocation of post-death

changes in value are not met, the value of such property shall

be determined as of the time of the distribution concerned.

(B) Allocations to property transferred at death of transferor

Any allocation to property transferred as a result of the

death of the transferor shall be effective on and after the

date of the death of the transferor.

(3) Allocations to inter vivos transfers not made on timely filed

gift tax return

If any allocation of the GST exemption to any property not

transferred as a result of the death of the transferor is not

made on a gift tax return filed on or before the date prescribed

by section 6075(b) and is not deemed to be made under section

2632(b)(1) -

(A) the value of such property for purposes of subsection (a)

shall be determined as of the time such allocation is filed

with the Secretary, and

(B) such allocation shall be effective on and after the date

on which such allocation is filed with the Secretary.

(4) QTIP trusts

If the value of property is included in the estate of a spouse

by virtue of section 2044, and if such spouse is treated as the

transferor of such property under section 2652(a), the value of

such property for purposes of subsection (a) shall be its value

for purposes of chapter 11 in the estate of such spouse.

(c) Treatment of certain direct skips which are nontaxable gifts

(1) In general

In the case of a direct skip which is a nontaxable gift, the

inclusion ratio shall be zero.

(2) Exception for certain transfers in trust

Paragraph (1) shall not apply to any transfer to a trust for

the benefit of an individual unless -

(A) during the life of such individual, no portion of the

corpus or income of the trust may be distributed to (or for the

benefit of) any person other than such individual, and

(B) if the trust does not terminate before the individual

dies, the assets of such trust will be includible in the gross

estate of such individual.

Rules similar to the rules of section 2652(c)(3) shall apply for

purposes of subparagraph (A).

(3) Nontaxable gift

For purposes of this subsection, the term "nontaxable gift"

means any transfer of property to the extent such transfer is not

treated as a taxable gift by reason of -

(A) section 2503(b) (taking into account the application of

section 2513), or

(B) section 2503(e).

(d) Special rules where more than 1 transfer made to trust

(1) In general

If a transfer of property is made to a trust in existence

before such transfer, the applicable fraction for such trust

shall be recomputed as of the time of such transfer in the manner

provided in paragraph (2).

(2) Applicable fraction

In the case of any such transfer, the recomputed applicable

fraction is a fraction -

(A) the numerator of which is the sum of -

(i) the amount of the GST exemption allocated to property

involved in such transfer, plus

(ii) the nontax portion of such trust immediately before

such transfer, and

(B) the denominator of which is the sum of -

(i) the value of the property involved in such transfer

reduced by the sum of -

(I) any Federal estate tax or State death tax actually

recovered from the trust attributable to such property, and

(II) any charitable deduction allowed under section 2055

or 2522 with respect to such property, and

(ii) the value of all of the property in the trust

(immediately before such transfer).

(3) Nontax portion

For purposes of paragraph (2), the term "nontax portion" means

the product of -

(A) the value of all of the property in the trust, and

(B) the applicable fraction in effect for such trust.

(4) Similar recomputation in case of certain late allocations

If -

(A) any allocation of the GST exemption to property

transferred to a trust is not made on a timely filed gift tax

return required by section 6019, and

(B) there was a previous allocation with respect to property

transferred to such trust,

the applicable fraction for such trust shall be recomputed as of

the time of such allocation under rules similar to the rules of

paragraph (2).

(e) Special rules for charitable lead annuity trusts

(1) In general

For purposes of determining the inclusion ratio for any

charitable lead annuity trust, the applicable fraction shall be a

fraction -

(A) the numerator of which is the adjusted GST exemption, and

(B) the denominator of which is the value of all of the

property in such trust immediately after the termination of the

charitable lead annuity.

(2) Adjusted GST exemption

For purposes of paragraph (1), the adjusted GST exemption is an

amount equal to the GST exemption allocated to the trust

increased by interest determined -

(A) at the interest rate used in determining the amount of

the deduction under section 2055 or 2522 (as the case may be)

for the charitable lead annuity, and

(B) for the actual period of the charitable lead annuity.

(3) Definitions

For purposes of this subsection -

(A) Charitable lead annuity trust

The term "charitable lead annuity trust" means any trust in

which there is a charitable lead annuity.

(B) Charitable lead annuity

The term "charitable lead annuity" means any interest in the

form of a guaranteed annuity with respect to which a deduction

was allowed under section 2055 or 2522 (as the case may be).

(4) Coordination with subsection (d)

Under regulations, appropriate adjustments shall be made in the

application of subsection (d) to take into account the provisions

of this subsection.

(f) Special rules for certain inter vivos transfers

Except as provided in regulations -

(1) In general

For purposes of determining the inclusion ratio, if -

(A) an individual makes an inter vivos transfer of property,

and

(B) the value of such property would be includible in the

gross estate of such individual under chapter 11 if such

individual died immediately after making such transfer (other

than by reason of section 2035),

any allocation of GST exemption to such property shall not be

made before the close of the estate tax inclusion period (and the

value of such property shall be determined under paragraph (2)).

If such transfer is a direct skip, such skip shall be treated as

occurring as of the close of the estate tax inclusion period.

(2) Valuation

In the case of any property to which paragraph (1) applies, the

value of such property shall be -

(A) if such property is includible in the gross estate of the

transferor (other than by reason of section 2035), its value

for purposes of chapter 11, or

(B) if subparagraph (A) does not apply, its value as of the

close of the estate tax inclusion period (or, if any allocation

of GST exemption to such property is not made on a timely filed

gift tax return for the calendar year in which such period

ends, its value as of the time such allocation is filed with

the Secretary).

(3) Estate tax inclusion period

For purposes of this subsection, the term "estate tax inclusion

period" means any period after the transfer described in

paragraph (1) during which the value of the property involved in

such transfer would be includible in the gross estate of the

transferor under chapter 11 if he died. Such period shall in no

event extend beyond the earlier of -

(A) the date on which there is a generation-skipping transfer

with respect to such property, or

(B) the date of the death of the transferor.

(4) Treatment of spouse

Except as provided in regulations, any reference in this

subsection to an individual or transferor shall be treated as

including a reference to the spouse of such individual or

transferor.

(5) Coordination with subsection (d)

Under regulations, appropriate adjustments shall be made in the

application of subsection (d) to take into account the provisions

of this subsection.

(g) Relief provisions

(1) Relief from late elections

(A) In general

The Secretary shall by regulation prescribe such

circumstances and procedures under which extensions of time

will be granted to make -

(i) an allocation of GST exemption described in paragraph

(1) or (2) of subsection (b), and

(ii) an election under subsection (b)(3) or (c)(5) of

section 2632.

Such regulations shall include procedures for requesting

comparable relief with respect to transfers made before the

date of the enactment of this paragraph.

(B) Basis for determinations

In determining whether to grant relief under this paragraph,

the Secretary shall take into account all relevant

circumstances, including evidence of intent contained in the

trust instrument or instrument of transfer and such other

factors as the Secretary deems relevant. For purposes of

determining whether to grant relief under this paragraph, the

time for making the allocation (or election) shall be treated

as if not expressly prescribed by statute.

(2) Substantial compliance

An allocation of GST exemption under section 2632 that

demonstrates an intent to have the lowest possible inclusion

ratio with respect to a transfer or a trust shall be deemed to be

an allocation of so much of the transferor's unused GST exemption

as produces the lowest possible inclusion ratio. In determining

whether there has been substantial compliance, all relevant

circumstances shall be taken into account, including evidence of

intent contained in the trust instrument or instrument of

transfer and such other factors as the Secretary deems relevant.

-SOURCE-

(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100

Stat. 2722; amended Pub. L. 100-647, title I, Sec. 1014(g)(3)(A),

(4), (17)(A), (B), (18), Nov. 10, 1988, 102 Stat. 3563, 3566, 3567;

Pub. L. 101-239, title VII, Sec. 7811(j)(4), Dec. 19, 1989, 103

Stat. 2411; Pub. L. 101-508, title XI, Secs. 11703(c)(1), (2),

11704(a)(17), (36), Nov. 5, 1990, 104 Stat. 1388-517, 1388-519;

Pub. L. 107-16, title V, Secs. 562(a), 563(a), (b), 564(a), June 7,

2001, 115 Stat. 89-91.)

-STATAMEND-

AMENDMENT OF SECTION

For termination of amendment by section 901 of Pub. L. 107-16,

see Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

AMENDMENTS

2001 - Subsec. (a)(3). Pub. L. 107-16, Secs. 562(a), 901,

temporarily added par. (3). See Effective and Termination Dates of

2001 Amendment note below.

Subsec. (b)(1). Pub. L. 107-16, Secs. 563(a), 901, temporarily

reenacted heading without change and amended text of par. (1)

generally. Prior to amendment, text read as follows: "If the

allocation of the GST exemption to any property is made on a gift

tax return filed on or before the date prescribed by section

6075(b) or is deemed to be made under section 2632(b)(1) -

"(A) the value of such property for purposes of subsection (a)

shall be its value for purposes of chapter 12, and

"(B) such allocation shall be effective on and after the date

of such transfer."

See Effective and Termination Dates of 2001 Amendment note below.

Subsec. (b)(2)(A). Pub. L. 107-16, Secs. 563(b), 901, temporarily

reenacted heading without change and amended text of subpar. (A)

generally. Prior to amendment, text read as follows: "If property

is transferred as a result of the death of the transferor, the

value of such property for purposes of subsection (a) shall be its

value for purposes of chapter 11; except that, if the requirements

prescribed by the Secretary respecting allocation of post-death

changes in value are not met, the value of such property shall be

determined as of the time of the distribution concerned." See

Effective and Termination Dates of 2001 Amendment note below.

Subsec. (g). Pub. L. 107-16, Secs. 564(a), 901, temporarily added

subsec. (g). See Effective and Termination Dates of 2001 Amendment

note below.

1990 - Subsec. (b)(3). Pub. L. 101-508, Sec. 11704(a)(36),

amended Pub. L. 100-647, Sec. 1014(g)(4)(F)(ii). See 1988 Amendment

note below.

Subsec. (c)(2). Pub. L. 101-508, Sec. 11703(c)(2), inserted at

end: "Rules similar to the rules of section 2652(c)(3) shall apply

for purposes of subparagraph (A)."

Subsec. (c)(2)(B). Pub. L. 101-508, Sec. 11703(c)(1), substituted

"the trust does not terminate before the individual dies" for "such

individual dies before the trust is terminated".

Subsec. (d)(2)(B)(i)(I). Pub. L. 101-508, Sec. 11704(a)(17),

substituted "State" for "state".

1989 - Subsec. (b)(1), (3). Pub. L. 101-239 substituted "a gift

tax return filed on or before the date prescribed by section

6075(b)" for "a timely filed gift tax return required by section

6019" in introductory provisions.

1988 - Subsec. (a)(2). Pub. L. 100-647, Sec. 1014(g)(4)(B),

struck out at end "Except as provided in paragraphs (3) and (4) of

subsection (b), the value determined under subparagraph (B)(i)

shall be of the property as of the time of the transfer to the

trust (or the direct skip)."

Subsec. (b). Pub. L. 100-647, Sec. 1014(g)(4)(D), inserted

"Except as provided in subsection (f) - " as introductory

provision.

Subsec. (b)(2)(A). Pub. L. 100-647, Sec. 1014(g)(4)(C), inserted

before period at end "; except that, if the requirements prescribed

by the Secretary respecting allocation of post-death changes in

value are not met, the value of such property shall be determined

as of the time of the distribution concerned."

Subsec. (b)(2)(B). Pub. L. 100-647, Sec. 1014(g)(4)(E),

substituted "to property transferred at death" for "at or after

death" in heading and "to property transferred as a result of the

death of the transferor" for "at or after the death of the

transferor" in text.

Subsec. (b)(3). Pub. L. 100-647, Sec. 1014(g)(4)(F)(ii), as

amended by Pub. L. 101-508, Sec. 11704(a)(36), substituted

"Allocations to inter vivos transfers" for "Inter vivos

allocations" in heading.

Pub. L. 100-647, Sec. 1014(g)(4)(F)(i), substituted "to any

property not transferred as a result of the death of the transferor

is" for "to any property is made during the life of the transferor

but is".

Subsec. (c). Pub. L. 100-647, Sec. 1014(g)(17)(A), inserted

"direct skips which are" in heading and amended text generally.

Prior to amendment, text read as follows:

"(1) Direct skips. - In the case of any direct skip which is a

nontaxable gift, the inclusion ratio shall be zero.

"(2) Treatment of nontaxable gifts made to trusts. -

"(A) In general. - Except as provided in subparagraph (B), any

nontaxable gift which is not a direct skip and which is made to a

trust shall not be taken into account under subsection (a)(2)(B).

"(B) Determination of 1st transfer to trust. - In the case of

any nontaxable gift referred to in subparagraph (A) which is the

1st transfer to the trust, the inclusion ratio for such trust

shall be zero.

"(3) Nontaxable gift. - For purposes of this section, the term

'nontaxable gift' means any transfer of property to the extent such

transfer is not treated as a taxable gift by reason of -

"(A) section 2503(b) (taking into account the application of

section 2513), or

"(B) section 2503(e)."

Subsec. (d)(1). Pub. L. 100-647, Sec. 1014(g)(17)(B), struck out

"(other than a nontaxable gift)" after "transfer of property".

Subsec. (d)(2)(B)(i). Pub. L. 100-647, Sec. 1014(g)(18), amended

cl. (i) generally. Prior to amendment, cl. (i) read as follows:

"the value of the property involved in such transfer, reduced by

any charitable deduction allowed under section 2055 or 2522 with

respect to such property, and".

Subsec. (e). Pub. L. 100-647, Sec. 1014(g)(3)(A), added subsec.

(e).

Subsec. (f). Pub. L. 100-647, Sec. 1014(g)(4)(A), added subsec.

(f).

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

Pub. L. 107-16, title V, Sec. 562(b), June 7, 2001, 115 Stat. 90,

provided that: "The amendment made by this section [amending this

section] shall apply to severances after December 31, 2000."

Pub. L. 107-16, title V, Sec. 563(c), June 7, 2001, 115 Stat. 91,

provided that: "The amendments made by this section [amending this

section] shall apply to transfers subject to chapter 11 or 12 of

the Internal Revenue Code of 1986 made after December 31, 2000."

Pub. L. 107-16, title V, Sec. 564(b), June 7, 2001, 115 Stat. 91,

provided that:

"(1) Relief from late elections. - Section 2642(g)(1) of the

Internal Revenue Code of 1986 (as added by subsection (a)) shall

apply to requests pending on, or filed after, December 31, 2000.

"(2) Substantial compliance. - Section 2642(g)(2) of such Code

(as so added) shall apply to transfers subject to chapter 11 or 12

of the Internal Revenue Code of 1986 made after December 31, 2000.

No implication is intended with respect to the availability of

relief from late elections or the application of a rule of

substantial compliance on or before such date."

Amendment by Pub. L. 107-16 inapplicable to estates of decedents

dying, gifts made, or generation skipping transfers, after Dec. 31,

2010, and the Internal Revenue Code of 1986 to be applied and

administered to such estates, gifts, and transfers as if such

amendment had never been enacted, see section 901 of Pub. L.

107-16, set out as a note under section 1 of this title.

EFFECTIVE DATE OF 1990 AMENDMENT

Section 11703(c)(4) of Pub. L. 101-508 provided that: "The

amendments made by paragraphs (1) and (2) [amending this section]

shall apply to transfers after March 31, 1988."

EFFECTIVE DATE OF 1989 AMENDMENT

Amendment by Pub. L. 101-239 effective, except as otherwise

provided, as if included in the provision of the Technical and

Miscellaneous Revenue Act of 1988, Pub. L. 100-647, to which such

amendment relates, see section 7817 of Pub. L. 101-239, set out as

a note under section 1 of this title.

EFFECTIVE DATE OF 1988 AMENDMENT

Section 1014(g)(3)(B) of Pub. L. 100-647 provided that: "The

amendment made by subparagraph (A) [amending this section] shall

apply for purposes of determining the inclusion ratio with respect

to property transferred after October 13, 1987."

Section 1014(g)(17)(C) of Pub. L. 100-647 provided that: "The

amendments made by this paragraph [amending this section] shall

apply to transfers after March 31, 1988."

Amendment by section 1014(g)(4), (18) of Pub. L. 100-647

effective, except as otherwise provided, as if included in the

provision of the Tax Reform Act of 1986, Pub. L. 99-514, to which

such amendment relates, see section 1019(a) of Pub. L. 100-647, set

out as a note under section 1 of this title.

EFFECTIVE DATE

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2632, 2654 of this title.

-End-

-CITE-

26 USC Subchapter F - Other Definitions and Special Rules 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter F - Other Definitions and Special Rules

-HEAD-

SUBCHAPTER F - OTHER DEFINITIONS AND SPECIAL RULES

-MISC1-

Sec.

2651. Generation assignment.

2652. Other definitions.

2653. Taxation of multiple skips.

2654. Special rules.

-End-

-CITE-

26 USC Sec. 2651 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter F - Other Definitions and Special Rules

-HEAD-

Sec. 2651. Generation assignment

-STATUTE-

(a) In general

For purposes of this chapter, the generation to which any person

(other than the transferor) belongs shall be determined in

accordance with the rules set forth in this section.

(b) Lineal descendants

(1) In general

An individual who is a lineal descendant of a grandparent of

the transferor shall be assigned to that generation which results

from comparing the number of generations between the grandparent

and such individual with the number of generations between the

grandparent and the transferor.

(2) On spouse's side

An individual who is a lineal descendant of a grandparent of a

spouse (or former spouse) of the transferor (other than such

spouse) shall be assigned to that generation which results from

comparing the number of generations between such grandparent and

such individual with the number of generations between such

grandparent and such spouse.

(3) Treatment of legal adoptions, etc.

For purposes of this subsection -

(A) Legal adoptions

A relationship by legal adoption shall be treated as a

relationship by blood.

(B) Relationships by half-blood

A relationship by the half-blood shall be treated as a

relationship of the whole-blood.

(c) Marital relationship

(1) Marriage to transferor

An individual who has been married at any time to the

transferor shall be assigned to the transferor's generation.

(2) Marriage to other lineal descendants

An individual who has been married at any time to an individual

described in subsection (b) shall be assigned to the generation

of the individual so described.

(d) Persons who are not lineal descendants

An individual who is not assigned to a generation by reason of

the foregoing provisions of this section shall be assigned to a

generation on the basis of the date of such individual's birth with

-

(1) an individual born not more than 12 1/2 years after the

date of the birth of the transferor assigned to the transferor's

generation,

(2) an individual born more than 12 1/2 years but not more

than 37 1/2 years after the date of the birth of the transferor

assigned to the first generation younger than the transferor, and

(3) similar rules for a new generation every 25 years.

(e) Special rule for persons with a deceased parent

(1) In general

For purposes of determining whether any transfer is a

generation-skipping transfer, if -

(A) an individual is a descendant of a parent of the

transferor (or the transferor's spouse or former spouse), and

(B) such individual's parent who is a lineal descendant of

the parent of the transferor (or the transferor's spouse or

former spouse) is dead at the time the transfer (from which an

interest of such individual is established or derived) is

subject to a tax imposed by chapter 11 or 12 upon the

transferor (and if there shall be more than 1 such time, then

at the earliest such time),

such individual shall be treated as if such individual were a

member of the generation which is 1 generation below the lower of

the transferor's generation or the generation assignment of the

youngest living ancestor of such individual who is also a

descendant of the parent of the transferor (or the transferor's

spouse or former spouse), and the generation assignment of any

descendant of such individual shall be adjusted accordingly.

(2) Limited application of subsection to collateral heirs

This subsection shall not apply with respect to a transfer to

any individual who is not a lineal descendant of the transferor

(or the transferor's spouse or former spouse) if, at the time of

the transfer, such transferor has any living lineal descendant.

(f) Other special rules

(1) Individuals assigned to more than 1 generation

Except as provided in regulations, an individual who, but for

this subsection, would be assigned to more than 1 generation

shall be assigned to the youngest such generation.

(2) Interests through entities

Except as provided in paragraph (3), if an estate, trust,

partnership, corporation, or other entity has an interest in

property, each individual having a beneficial interest in such

entity shall be treated as having an interest in such property

and shall be assigned to a generation under the foregoing

provisions of this subsection.

(3) Treatment of certain charitable organizations and

governmental entities

Any -

(A) organization described in section 511(a)(2),

(B) charitable trust described in section 511(b)(2), and

(C) governmental entity,

shall be assigned to the transferor's generation.

-SOURCE-

(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100

Stat. 2725; amended Pub. L. 100-647, title I, Sec. 1014(g)(11),

(19), Nov. 10, 1988, 102 Stat. 3565, 3567; Pub. L. 105-34, title V,

Sec. 511(a), Aug. 5, 1997, 111 Stat. 860.)

-MISC1-

AMENDMENTS

1997 - Subsecs. (e), (f). Pub. L. 105-34 added subsec. (e) and

redesignated former subsec. (e) as (f).

1988 - Subsec. (b)(2). Pub. L. 100-647, Sec. 1014(g)(19),

inserted "(or former spouse)" after "a spouse".

Subsec. (e)(3). Pub. L. 100-647, Sec. 1014(g)(11), amended par.

(3) generally, including governmental entities among the

organizations to be assigned to transferor's generation.

EFFECTIVE DATE OF 1997 AMENDMENT

Amendment by Pub. L. 105-34 applicable to terminations,

distributions, and transfers occurring after Dec. 31, 1997, see

section 511(c) of Pub. L. 105-34, set out as a note under section

2612 of this title.

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-647 effective, except as otherwise

provided, as if included in the provision of the Tax Reform Act of

1986, Pub. L. 99-514, to which such amendment relates, see section

1019(a) of Pub. L. 100-647, set out as a note under section 1 of

this title.

EFFECTIVE DATE

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 529, 2612, 2653 of this

title.

-End-

-CITE-

26 USC Sec. 2652 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter F - Other Definitions and Special Rules

-HEAD-

Sec. 2652. Other definitions

-STATUTE-

(a) Transferor

For purposes of this chapter -

(1) In general

Except as provided in this subsection or section 2653(a), the

term "transferor" means -

(A) in the case of any property subject to the tax imposed by

chapter 11, the decedent, and

(B) in the case of any property subject to the tax imposed by

chapter 12, the donor.

An individual shall be treated as transferring any property with

respect to which such individual is the transferor.

(2) Gift-splitting by married couples

If, under section 2513, one-half of a gift is treated as made

by an individual and one-half of such gift is treated as made by

the spouse of such individual, such gift shall be so treated for

purposes of this chapter.

(3) Special election for qualified terminable interest property

In the case of -

(A) any trust with respect to which a deduction is allowed to

the decedent under section 2056 by reason of subsection (b)(7)

thereof, and

(B) any trust with respect to which a deduction to the donor

spouse is allowed under section 2523 by reason of subsection

(f) thereof,

the estate of the decedent or the donor spouse, as the case may

be, may elect to treat all of the property in such trust for

purposes of this chapter as if the election to be treated as

qualified terminable interest property had not been made.

(b) Trust and trustee

(1) Trust

The term "trust" includes any arrangement (other than an

estate) which, although not a trust, has substantially the same

effect as a trust.

(2) Trustee

In the case of an arrangement which is not a trust but which is

treated as a trust under this subsection, the term "trustee"

shall mean the person in actual or constructive possession of the

property subject to such arrangement.

(3) Examples

Arrangements to which this subsection applies include

arrangements involving life estates and remainders, estates for

years, and insurance and annuity contracts.

(c) Interest

(1) In general

A person has an interest in property held in trust if (at the

time the determination is made) such person -

(A) has a right (other than a future right) to receive income

or corpus from the trust,

(B) is a permissible current recipient of income or corpus

from the trust and is not described in section 2055(a), or

(C) is described in section 2055(a) and the trust is -

(i) a charitable remainder annuity trust,

(ii) a charitable remainder unitrust within the meaning of

section 664, or

(iii) a pooled income fund within the meaning of section

642(c)(5).

(2) Certain interests disregarded

For purposes of paragraph (1), an interest which is used

primarily to postpone or avoid any tax imposed by this chapter

shall be disregarded.

(3) Certain support obligations disregarded

The fact that income or corpus of the trust may be used to

satisfy an obligation of support arising under State law shall be

disregarded in determining whether a person has an interest in

the trust, if -

(A) such use is discretionary, or

(B) such use is pursuant to the provisions of any State law

substantially equivalent to the Uniform Gifts to Minors Act.

(d) Executor

For purposes of this chapter, the term "executor" has the meaning

given such term by section 2203.

-SOURCE-

(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100

Stat. 2726; amended Pub. L. 100-647, title I, Sec. 1014(g)(6), (8),

(9), (14), (20), Nov. 10, 1988, 102 Stat. 3565-3567; Pub. L.

105-34, title XIII, Sec. 1305(b), Aug. 5, 1997, 111 Stat. 1040;

Pub. L. 105-206, title VI, Sec. 6013(a)(3), (4)(A), July 22, 1998,

112 Stat. 819.)

-MISC1-

AMENDMENTS

1998 - Subsec. (b)(1). Pub. L. 105-206, Sec. 6013(a)(4)(A),

struck out at end "Such term shall not include any trust during any

period the trust is treated as part of an estate under section

645."

Pub. L. 105-206, Sec. 6013(a)(3), substituted "section 645" for

"section 646".

1997 - Subsec. (b)(1). Pub. L. 105-34 inserted at end "Such term

shall not include any trust during any period the trust is treated

as part of an estate under section 646."

1988 - Subsec. (a)(1). Pub. L. 100-647, Sec. 1014(g)(9),

substituted "any property" for "a transfer of a kind" in subpars.

(A) and (B) and inserted at end "An individual shall be treated as

transferring any property with respect to which such individual is

the transferor."

Subsec. (a)(3). Pub. L. 100-647, Sec. 1014(g)(14), substituted

"any trust" for "any property" in subpars. (A) and (B) and "may

elect to treat all of the property in such trust" for "may elect to

treat such property" in closing provisions.

Subsec. (c)(2). Pub. L. 100-647, Sec. 1014(g)(8), struck out

"nominal" before "interests" in heading and substituted "any tax"

for "the tax" in text.

Subsec. (c)(3). Pub. L. 100-647, Sec. 1014(g)(6), added par. (3).

Subsec. (d). Pub. L. 100-647, Sec. 1014(g)(20), added subsec.

(d).

EFFECTIVE DATE OF 1998 AMENDMENT

Amendment by Pub. L. 105-206 effective, except as otherwise

provided, as if included in the provisions of the Taxpayer Relief

Act of 1997, Pub. L. 105-34, to which such amendment relates, see

section 6024 of Pub. L. 105-206, set out as a note under section 1

of this title.

EFFECTIVE DATE OF 1997 AMENDMENT

Amendment by Pub. L. 105-34 applicable with respect to estates of

decedents dying after Aug. 5, 1997, see section 1305(d) of Pub. L.

105-34, set out as an Effective Date note under section 645 of this

title.

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-647 effective, except as otherwise

provided, as if included in the provision of the Tax Reform Act of

1986, Pub. L. 99-514, to which such amendment relates, see section

1019(a) of Pub. L. 100-647, set out as a note under section 1 of

this title.

EFFECTIVE DATE

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2642, 2663 of this title.

-End-

-CITE-

26 USC Sec. 2653 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter F - Other Definitions and Special Rules

-HEAD-

Sec. 2653. Taxation of multiple skips

-STATUTE-

(a) General rule

For purposes of this chapter, if -

(1) there is a generation-skipping transfer of any property,

and

(2) immediately after such transfer such property is held in

trust,

for purposes of applying this chapter (other than section 2651) to

subsequent transfers from the portion of such trust attributable to

such property, the trust will be treated as if the transferor of

such property were assigned to the first generation above the

highest generation of any person who has an interest in such trust

immediately after the transfer.

(b) Trust retains inclusion ratio

(1) In general

Except as provided in paragraph (2), the provisions of

subsection (a) shall not affect the inclusion ratio determined

with respect to any trust. Under regulations prescribed by the

Secretary, notwithstanding the preceding sentence, proper

adjustment shall be made to the inclusion ratio with respect to

such trust to take into account any tax under this chapter borne

by such trust which is imposed by this chapter on the transfer

described in subsection (a).

(2) Special rule for pour-over trust

(A) In general

If the generation-skipping transfer referred to in subsection

(a) involves the transfer of property from 1 trust to another

trust (hereinafter in this paragraph referred to as the

"pour-over trust"), the inclusion ratio for the pour-over trust

shall be determined by treating the nontax portion of such

distribution as if it were a part of a GST exemption allocated

to such trust.

(B) Nontax portion

For purposes of subparagraph (A), the nontax portion of any

distribution is the amount of such distribution multiplied by

the applicable fraction which applies to such distribution.

-SOURCE-

(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100

Stat. 2727.)

-MISC1-

EFFECTIVE DATE

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2652 of this title.

-End-

-CITE-

26 USC Sec. 2654 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter F - Other Definitions and Special Rules

-HEAD-

Sec. 2654. Special rules

-STATUTE-

(a) Basis adjustment

(1) In general

Except as provided in paragraph (2), if property is transferred

in a generation-skipping transfer, the basis of such property

shall be increased (but not above the fair market value of such

property) by an amount equal to that portion of the tax imposed

by section 2601 (computed without regard to section 2604) with

respect to the transfer which is attributable to the excess of

the fair market value of such property over its adjusted basis

immediately before the transfer. The preceding shall be applied

after any basis adjustment under section 1015 with respect to the

transfer.

(2) Certain transfers at death

If property is transferred in a taxable termination which

occurs at the same time as and as a result of the death of an

individual, the basis of such property shall be adjusted in a

manner similar to the manner provided under section 1014(a);

except that, if the inclusion ratio with respect to such property

is less than 1, any increase or decrease in basis shall be

limited by multiplying such increase or decrease (as the case may

be) by the inclusion ratio.

(b) Certain trusts treated as separate trusts

For purposes of this chapter -

(1) the portions of a trust attributable to transfers from

different transferors shall be treated as separate trusts, and

(2) substantially separate and independent shares of different

beneficiaries in a trust shall be treated as separate trusts.

Except as provided in the preceding sentence, nothing in this

chapter shall be construed as authorizing a single trust to be

treated as 2 or more trusts. For purposes of this subsection, a

trust shall be treated as part of an estate during any period that

the trust is so treated under section 645.

(c) Disclaimers

For provisions relating to the effect of a qualified

disclaimer for purposes of this chapter, see section 2518.

(d) Limitation on personal liability of trustee

A trustee shall not be personally liable for any increase in the

tax imposed by section 2601 which is attributable to the fact that

-

(1) section 2642(c) (relating to exemption of certain

nontaxable gifts) does not apply to a transfer to the trust which

was made during the life of the transferor and for which a gift

tax return was not filed, or

(2) the inclusion ratio with respect to the trust is greater

than the amount of such ratio as computed on the basis of the

return on which was made (or was deemed made) an allocation of

the GST exemption to property transferred to such trust.

The preceding sentence shall not apply if the trustee has knowledge

of facts sufficient reasonably to conclude that a gift tax return

was required to be filed or that the inclusion ratio was erroneous.

-SOURCE-

(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100

Stat. 2727; amended Pub. L. 100-647, title I, Sec. 1014(g)(12),

(13), Nov. 10, 1988, 102 Stat. 3565, 3566; Pub. L. 101-239, title

VII, Sec. 7811(j)(2), Dec. 19, 1989, 103 Stat. 2411; Pub. L.

105-206, title VI, Sec. 6013(a)(4)(B), July 22, 1998, 112 Stat.

819.)

-MISC1-

AMENDMENTS

1998 - Subsec. (b). Pub. L. 105-206 inserted at end "For purposes

of this subsection, a trust shall be treated as part of an estate

during any period that the trust is so treated under section 645."

1989 - Subsec. (a)(1). Pub. L. 101-239 inserted at end "The

preceding shall be applied after any basis adjustment under section

1015 with respect to the transfer."

1988 - Subsec. (a)(2). Pub. L. 100-647, Sec. 1014(g)(12),

inserted "or decrease" after "any increase" and "or decrease (as

the case may be)" after "such increase".

Subsec. (b). Pub. L. 100-647, Sec. 1014(g)(13), substituted

"Certain trusts" for "Separate shares" in heading and amended text

generally. Prior to amendment, text read as follows: "Substantially

separate and independent shares of different beneficiaries in a

trust shall be treated as separate trusts."

EFFECTIVE DATE OF 1998 AMENDMENT

Amendment by Pub. L. 105-206 effective, except as otherwise

provided, as if included in the provisions of the Taxpayer Relief

Act of 1997, Pub. L. 105-34, to which such amendment relates (see

section 1305 of Pub. L. 105-34), see section 6024 of Pub. L.

105-206, set out as a note under section 1 of this title.

EFFECTIVE DATE OF 1989 AMENDMENT

Amendment by Pub. L. 101-239 effective, except as otherwise

provided, as if included in the provision of the Technical and

Miscellaneous Revenue Act of 1988, Pub. L. 100-647, to which such

amendment relates, see section 7817 of Pub. L. 101-239, set out as

a note under section 1 of this title.

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-647 effective, except as otherwise

provided, as if included in the provision of the Tax Reform Act of

1986, Pub. L. 99-514, to which such amendment relates, see section

1019(a) of Pub. L. 100-647, set out as a note under section 1 of

this title.

EFFECTIVE DATE

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

-End-

-CITE-

26 USC Subchapter G - Administration 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter G - Administration

-HEAD-

SUBCHAPTER G - ADMINISTRATION

-MISC1-

Sec.

2661. Administration.

2662. Return requirements.

2663. Regulations.

2664. Termination.

AMENDMENTS

2001 - Pub. L. 107-16, title V, Sec. 501(c)(2), June 7, 2001, 115

Stat. 69, added item 2664.

-End-

-CITE-

26 USC Sec. 2661 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter G - Administration

-HEAD-

Sec. 2661. Administration

-STATUTE-

Insofar as applicable and not inconsistent with the provisions of

this chapter -

(1) except as provided in paragraph (2), all provisions of

subtitle F (including penalties) applicable to the gift tax, to

chapter 12, or to section 2501, are hereby made applicable in

respect of the generation-skipping transfer tax, this chapter, or

section 2601, as the case may be, and

(2) in the case of a generation-skipping transfer occurring at

the same time as and as a result of the death of an individual,

all provisions of subtitle F (including penalties) applicable to

the estate tax, to chapter 11, or to section 2001 are hereby made

applicable in respect of the generation-skipping transfer tax,

this chapter, or section 2601 (as the case may be).

-SOURCE-

(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100

Stat. 2728.)

-MISC1-

EFFECTIVE DATE

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2603 of this title.

-End-

-CITE-

26 USC Sec. 2662 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter G - Administration

-HEAD-

Sec. 2662. Return requirements

-STATUTE-

(a) In general

The Secretary shall prescribe by regulations the person who is

required to make the return with respect to the tax imposed by this

chapter and the time by which any such return must be filed. To the

extent practicable, such regulations shall provide that -

(1) the person who is required to make such return shall be the

person liable under section 2603(a) for payment of such tax, and

(2) the return shall be filed -

(A) in the case of a direct skip (other than from a trust),

on or before the date on which an estate or gift tax return is

required to be filed with respect to the transfer, and

(B) in all other cases, on or before the 15th day of the 4th

month after the close of the taxable year of the person

required to make such return in which such transfer occurs.

(b) Information returns

The Secretary may by regulations require a return to be filed

containing such information as he determines to be necessary for

purposes of this chapter.

-SOURCE-

(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100

Stat. 2728.)

-MISC1-

EFFECTIVE DATE

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

-End-

-CITE-

26 USC Sec. 2663 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter G - Administration

-HEAD-

Sec. 2663. Regulations

-STATUTE-

The Secretary shall prescribe such regulations as may be

necessary or appropriate to carry out the purposes of this chapter,

including -

(1) such regulations as may be necessary to coordinate the

provisions of this chapter with the recapture tax imposed under

section 2032A(c),

(2) regulations (consistent with the principles of chapters 11

and 12) providing for the application of this chapter in the case

of transferors who are nonresidents not citizens of the United

States, and

(3) regulations providing for such adjustments as may be

necessary to the application of this chapter in the case of any

arrangement which, although not a trust, is treated as a trust

under section 2652(b).

-SOURCE-

(Added Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 100

Stat. 2729; amended Pub. L. 100-647, title I, Sec. 1014(g)(10),

Nov. 10, 1988, 102 Stat. 3565.)

-MISC1-

AMENDMENTS

1988 - Par. (3). Pub. L. 100-647 added par. (3).

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-647 effective, except as otherwise

provided, as if included in the provision of the Tax Reform Act of

1986, Pub. L. 99-514, to which such amendment relates, see section

1019(a) of Pub. L. 100-647, set out as a note under section 1 of

this title.

EFFECTIVE DATE

Section applicable to generation-skipping transfers (within the

meaning of section 2611 of this title) made after Oct. 22, 1986,

except as otherwise provided, see section 1433 of Pub. L. 99-514,

set out as a note under section 2601 of this title.

-End-

-CITE-

26 USC Sec. 2664 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS

Subchapter G - Administration

-HEAD-

Sec. 2664. Termination

-STATUTE-

This chapter shall not apply to generation-skipping transfers

after December 31, 2009.

-SOURCE-

(Added Pub. L. 107-16, title V, Sec. 501(b), June 7, 2001, 115

Stat. 69.)

-STATAMEND-

TERMINATION OF SECTION

For termination of section by section 901 of Pub. L. 107-16, see

Effective and Termination Dates note below.

-MISC1-

EFFECTIVE AND TERMINATION DATES

Section applicable to the estates of decedents dying, and

generation-skipping transfers, after December 31, 2009, see section

501(d) of Pub. L. 107-16, set out as a note under section 2210 of

this title.

Section inapplicable to estates of decedents dying, gifts made,

or generation skipping transfers, after Dec. 31, 2010, and the

Internal Revenue Code of 1986 to be applied and administered to

such estates, gifts, and transfers as if it had never been enacted,

see section 901 of Pub. L. 107-16, set out as a note under section

1 of this title.

-End-