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US (United States) Code. Title 26. Subtitle B: Estate and Gift Taxes. Chapter 11: Estate tax

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-CITE-

26 USC CHAPTER 11 - ESTATE TAX 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

-HEAD-

CHAPTER 11 - ESTATE TAX

-MISC1-

Subchapter Sec.(!1)

A. Estates of citizens or residents 2001

B. Estates of nonresidents not citizens 2101

C. Miscellaneous 2201

-SECREF-

CHAPTER REFERRED TO IN OTHER SECTIONS

This chapter is referred to in sections 529, 646, 664, 667, 1014,

1040, 2519, 2612, 2624, 2642, 2651, 2652, 2661, 2663, 2701, 6103,

6161, 6163, 6212, 6314, 6324, 6324A, 6501, 6601, 6662, 6871, 6901,

6905, 7269, 7404, 7463, 7481, 7517, 7851, 7872 of this title.

-FOOTNOTE-

(!1) Section numbers editorially supplied.

-End-

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26 USC Subchapter A - Estates of Citizens or Residents 01/06/03

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TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

-HEAD-

SUBCHAPTER A - ESTATES OF CITIZENS OR RESIDENTS

-MISC1-

Part

I. Tax imposed.

II. Credits against tax.

III. Gross estate.

IV. Taxable estate.

-End-

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26 USC PART I - TAX IMPOSED 01/06/03

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TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART I - TAX IMPOSED

-HEAD-

PART I - TAX IMPOSED

-MISC1-

Sec.

2001. Imposition and rate of tax.

2002. Liability for payment.

AMENDMENTS

1976 - Pub. L. 94-455, title XX, Sec. 2001(c)(1)(N)(i), Oct. 4,

1976, 90 Stat. 1853, substituted "Imposition and rate of tax" for

"Rate of tax" in item 2001.

-End-

-CITE-

26 USC Sec. 2001 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART I - TAX IMPOSED

-HEAD-

Sec. 2001. Imposition and rate of tax

-STATUTE-

(a) Imposition

A tax is hereby imposed on the transfer of the taxable estate of

every decedent who is a citizen or resident of the United States.

(b) Computation of tax

The tax imposed by this section shall be the amount equal to the

excess (if any) of -

(1) a tentative tax computed under subsection (c) on the sum of

(A) the amount of the taxable estate, and

(B) the amount of the adjusted taxable gifts, over

(2) the aggregate amount of tax which would have been payable

under chapter 12 with respect to gifts made by the decedent after

December 31, 1976, if the provisions of subsection (c) (as in

effect at the decedent's death) had been applicable at the time

of such gifts.

For purposes of paragraph (1)(B), the term "adjusted taxable gifts"

means the total amount of the taxable gifts (within the meaning of

section 2503) made by the decedent after December 31, 1976, other

than gifts which are includible in the gross estate of the

decedent.

(1) In general

If the amount with The tentative tax is:

respect to which the

tentative tax to be

computed is:

--------------------------------------------------------------------

Not over $10,000 18 percent of such amount.

Over $10,000 but not over $1,800, plus 20 percent of the

$20,000 excess of such amount over $10,000.

Over $20,000 but not over $3,800, plus 22 percent of the

$40,000 excess of such amount over $20,000.

Over $40,000 but not over $8,200 plus 24 percent of the

$60,000 excess of such amount over $40,000.

Over $60,000 but not over $13,000, plus 26 percent of the

$80,000 excess of such amount over $60,000.

Over $80,000 but not over $18,200, plus 28 percent of the

$100,000 excess of such amount over $80,000.

Over $100,000 but not over $23,800, plus 30 percent of the

$150,000 excess of such amount over $100,000.

Over $150,000 but not over $38,800, plus 32 percent of the

$250,000 excess of such amount over $150,000.

Over $250,000 but not over $70,800, plus 34 percent of the

$500,000 excess of such amount over $250,000.

Over $500,000 but not over $155,800, plus 37 percent of the

$750,000 excess of such amount over $500,000.

Over $750,000 but not over $248,300, plus 39 percent of the

$1,000,000 excess of such amount over $750,000.

Over $1,000,000 but not $345,800, plus 41 percent of the

over $1,250,000 excess of such amount over

$1,000,000.

Over $1,250,000 but not $448,300, plus 43 percent of the

over $1,500,000 excess of such amount over

$1,250,000.

Over $1,500,000 but not $555,800, plus 45 percent of the

over $2,000,000 excess of such amount over

$1,500,000.

Over $2,000,000 but not $780,800, plus 49 percent of the

over $2,500,000 excess of such amount over

$2,000,000.

Over $2,500,000 $1,025,800, plus 50% of the excess

over $2,500,000.

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(2) Phasedown of maximum rate of tax

(A) In general

In the case of estates of decedents dying, and gifts made, in

calendar years after 2002 and before 2010, the tentative tax

under this subsection shall be determined by using a table

prescribed by the Secretary (in lieu of using the table

contained in paragraph (1)) which is the same as such table;

except that -

(i) the maximum rate of tax for any calendar year shall be

determined in the table under subparagraph (B), and

(ii) the brackets and the amounts setting forth the tax

shall be adjusted to the extent necessary to reflect the

adjustments under subparagraph (A).

(B) Maximum rate

The maximum

In calendar year: rate is:

2003 49 percent

2004 48 percent

2005 47 percent

2006 46 percent

2007, 2008, and 2009 45 percent.

(d) Adjustment for gift tax paid by spouse

For purposes of subsection (b)(2), if -

(1) the decedent was the donor of any gift one-half of which

was considered under section 2513 as made by the decedent's

spouse, and

(2) the amount of such gift is includible in the gross estate

of the decedent,

any tax payable by the spouse under chapter 12 on such gift (as

determined under section 2012(d)) shall be treated as a tax payable

with respect to a gift made by the decedent.

(e) Coordination of sections 2513 and 2035

If -

(1) the decedent's spouse was the donor of any gift one-half of

which was considered under section 2513 as made by the decedent,

and

(2) the amount of such gift is includible in the gross estate

of the decedent's spouse by reason of section 2035,

such gift shall not be included in the adjusted taxable gifts of

the decedent for purposes of subsection (b)(1)(B), and the

aggregate amount determined under subsection (b)(2) shall be

reduced by the amount (if any) determined under subsection (d)

which was treated as a tax payable by the decedent's spouse with

respect to such gift.

(f) Valuation of gifts

(1) In general

If the time has expired under section 6501 within which a tax

may be assessed under chapter 12 (or under corresponding

provisions of prior laws) on -

(A) the transfer of property by gift made during a preceding

calendar period (as defined in section 2502(b)); or

(B) an increase in taxable gifts required under section

2701(d),

the value thereof shall, for purposes of computing the tax under

this chapter, be the value as finally determined for purposes of

chapter 12.

(2) Final determination

For purposes of paragraph (1), a value shall be treated as

finally determined for purposes of chapter 12 if -

(A) the value is shown on a return under such chapter and

such value is not contested by the Secretary before the

expiration of the time referred to in paragraph (1) with

respect to such return;

(B) in a case not described in subparagraph (A), the value is

specified by the Secretary and such value is not timely

contested by the taxpayer; or

settlement agreement with the Secretary.

For purposes of subparagraph (A), the value of an item shall be

treated as shown on a return if the item is disclosed in the

return, or in a statement attached to the return, in a manner

adequate to apprise the Secretary of the nature of such item.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 373; Pub. L. 94-455, title XX,

Sec. 2001(a)(1), Oct. 4, 1976, 90 Stat. 1846; Pub. L. 95-600, title

VII, Sec. 702(h)(1), Nov. 6, 1978, 92 Stat. 2930; Pub. L. 97-34,

title IV, Sec. 402(a)-(c), Aug. 13, 1981, 95 Stat. 300; Pub. L.

98-369, div. A, title I, Sec. 21(a), July 18, 1984, 98 Stat. 506;

Pub. L. 100-203, title X, Sec. 10401(a)-(b)(2)(A), Dec. 22, 1987,

101 Stat. 1330-430, 1330-431; Pub. L. 103-66, title XIII, Sec.

13208(a)-(b)(2), Aug. 10, 1993, 107 Stat. 469; Pub. L. 105-34,

title V, Secs. 501(a)(1)(D), 506(a), Aug. 5, 1997, 111 Stat. 845,

855; Pub. L. 105-206, title VI, Sec. 6007(e)(2)(B), July 22, 1998,

112 Stat. 810; Pub. L. 105-277, div. J, title IV, Sec. 4003(c),

Oct. 21, 1998, 112 Stat. 2681-909; Pub. L. 107-16, title V, Sec.

511(a)-(c), June 7, 2001, 115 Stat. 70.)

-STATAMEND-

AMENDMENT OF SECTION

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

see Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

AMENDMENTS

2001 - Subsec. (c)(1). Pub. L. 107-16, Secs. 511(a), 901,

temporarily substituted in table provisions that if the amount on

which the tax is computed is over $2,500,000, then the tentative

tax is $1,025,800, plus 50% of the excess over $2,500,000 for

provisions that if the amount on which the tax is computed is over

$2,500,000 but not over $3,000,000, then the tentative tax is

$1,025,800, plus 53% of the excess over $2,500,000, and if the

amount on which the tax is computed is over $3,000,000, then the

tentative tax is $1,290,800, plus 55% of the excess over

$3,000,000. See Effective and Termination Dates of 2001 Amendment

note below.

Subsec. (c)(2). Pub. L. 107-16, Secs. 511(c), 901, temporarily

added par. (2). See Effective and Termination Dates of 2001

Amendment note below.

Pub. L. 107-16, Secs. 511(b), 901, temporarily struck out heading

and text of par. (2). Text read as follows: "The tentative tax

determined under paragraph (1) shall be increased by an amount

equal to 5 percent of so much of the amount (with respect to which

the tentative tax is to be computed) as exceeds $10,000,000 but

does not exceed the amount at which the average tax rate under this

section is 55 percent." See Effective and Termination Dates of 2001

Amendment note below.

1998 - Subsec. (f). Pub. L. 105-206, Sec. 6007(e)(2)(B),

reenacted heading without change and amended text generally. Prior

to amendment, text read as follows: "If -

"(1) the time has expired within which a tax may be assessed

under chapter 12 (or under corresponding provisions of prior

laws) on the transfer of property by gift made during a preceding

calendar period (as defined in section 2502(b)), and

"(2) the value of such gift is shown on the return for such

preceding calendar period or is disclosed in such return, or in a

statement attached to the return, in a manner adequate to apprise

the Secretary of the nature of such gift,

the value of such gift shall, for purposes of computing the tax

under this chapter, be the value of such gift as finally determined

for purposes of chapter 12."

Subsec. (f)(2). Pub. L. 105-277 inserted concluding provisions.

1997 - Subsec. (c)(2). Pub. L. 105-34, Sec. 501(a)(1)(D),

substituted "the amount at which the average tax rate under this

section is 55 percent" for "$21,040,000".

Subsec. (f). Pub. L. 105-34, Sec. 506(a), added subsec. (f).

1993 - Subsec. (c)(1). Pub. L. 103-66, Sec. 13208(a), substituted

in table provisions that if the amount on which the tax is computed

is over $2,500,000 but not over $3,000,000, then the tentative tax

is $1,025,800, plus 53% of the excess over $2,500,000 and if the

amount on which the tax is computed is over $3,000,000, then the

tentative tax is $1,290,800, plus 55% of the excess over $3,000,000

for provisions that if the amount on which the tax is computed is

over $2,500,000, then the tentative tax is $1,025,800, plus 50% of

the excess over $2,500,000.

Subsec. (c)(2), (3). Pub. L. 103-66, Sec. 13208(b)(1), (2),

redesignated par. (3) as (2), struck out "($18,340,000 in the case

of decedents dying, and gifts made, after 1992)" after "exceed

$21,040,000", and struck out former par. (2) which related to the

rates of tax on estates under this section for the years 1982 to

1992.

1987 - Subsec. (b)(1). Pub. L. 100-203, Sec. 10401(b)(2)(A)(i),

substituted "under subsection (c)" for "in accordance with the rate

schedule set forth in subsection (c)".

Subsec. (b)(2). Pub. L. 100-203, Sec. 10401(b)(2)(A)(ii),

substituted "the provisions of subsec. (c)" for "the rate schedule

set forth in subsection (c)".

Subsec. (c)(2)(A). Pub. L. 100-203, Sec. 10401(a)(1), substituted

"1993" for "1988".

Subsec. (c)(2)(D). Pub. L. 100-203, Sec. 10401(a)(2), (3),

substituted in heading "After 1983 and before 1993" for "For 1984,

1985, 1986, or 1987", and in text "after 1983 and before 1993" for

"in 1984, 1985, 1986, or 1987".

Subsec. (c)(3). Pub. L. 100-203, Sec. 10401(b)(1), added par.

(3).

1984 - Subsec. (c)(2)(A), (D). Pub. L. 98-369 substituted "1988"

for "1985" in subpar. (A) and substituted "1984, 1985, 1986, or

1987" for "1984" in heading and text of subpar. (D).

1981 - Subsec. (b)(2). Pub. L. 97-34, Sec. 402(c), inserted

"which would have been" before "payable" and ", if the rate

schedule set forth in subsection (c) (as in effect at the

decedent's death) had been applicable at the time of such gifts"

after "December 31, 1976,".

Subsec. (c). Pub. L. 97-34, Sec. 402(a), (b)(1), designated

existing provision as par. (1), inserted heading "In general" and

substituted in table provision that if the amount computed is over

$2,500,000 then the tentative tax is $1,025,800 plus 50% of the

excess over $2,500,000 for provisions that if the amount computed

is over $2,500,000 but not over $3,000,000, then the tentative tax

is $1,025,800 plus 53% of the excess over $2,500,000, over

$3,000,000 but not over $3,500,000 then the tentative tax is

$1,290,000 plus 57% of the excess over $3,000,000, over $3,500,000

but not over $4,000,000 then the tentative tax is $1,575,800 plus

61% of the excess over $3,500,000, over $4,000,000 but not over

$4,500,000 then the tentative tax is $1,880,800 plus 65% of the

excess over $4,000,000, over $4,500,000 but not over $5,000,000

then the tentative tax is $2,205,800 plus 69% of the excess over

$4,500,000, over $5,000,000 then the tentative tax is $2,550,800

plus 70% of the excess over $5,000,000, and added par. (2).

1978 - Subsec. (e). Pub. L. 95-600 added subsec. (e).

1976 - Pub. L. 94-455 substituted provisions setting a unified

rate schedule for estate and gift taxes ranging from 18 percent for

the first $10,000 in taxable transfers to 70 percent of taxable

transfers in excess of $5,000,000, with provision for adjustments

for gift taxes paid by spouses, for provisions setting an estate

tax of 3 percent of the first $5,000 of the taxable estate to 77

percent of the taxable estate in excess of $10,000,000.

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

Pub. L. 107-16, title V, Sec. 511(f)(1), (2), June 7, 2001, 115

Stat. 71, provided that:

"(1) Subsections (a) and (b). - The amendments made by

subsections (a) and (b) [amending this section] shall apply to

estates of decedents dying, and gifts made, after December 31,

2001.

"(2) Subsection (c). - The amendment made by subsection (c)

[amending this section] shall apply to estates of decedents dying,

and gifts made, after December 31, 2002."

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 AMENDMENTS

Amendment by Pub. L. 105-277 effective as if included in the

provision of the Taxpayer Relief Act of 1997, Pub. L. 105-34, to

which such amendment relates, see section 4003(l) of Pub. L.

105-277, set out as a note under section 86 of this title.

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

Section 501(f) of Pub. L. 105-34, as amended by Pub. L. 105-206,

title VI, Sec. 6007(a)(2), July 22, 1998, 112 Stat. 807, provided

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

and sections 2010, 2032A, 2102, 2503, 2505, 2631, 6018, and 6601 of

this title] (other than the amendment made by subsection (d)

[amending section 2631 of this title]) shall apply to the estates

of decedents dying, and gifts made, after December 31, 1997."

Section 506(e)(1) of Pub. L. 105-34, as amended by Pub. L.

105-206, title VI, Sec. 6007(e)(1), July 22, 1998, 112 Stat. 809,

provided that: "The amendments made by subsections (a), (c), and

(d) [enacting section 7477 of this title and amending this section

and section 2504 of this title] shall apply to gifts made after the

date of the enactment of this Act [Aug. 5, 1997]."

EFFECTIVE DATE OF 1993 AMENDMENT

Section 13208(c) of Pub. L. 103-66 provided that: "The amendments

made by this section [amending this section and section 2101 of

this title] shall apply in the case of decedents dying and gifts

made after December 31, 1992."

EFFECTIVE DATE OF 1987 AMENDMENT

Section 10401(c) of Pub. L. 100-203 provided that: "The

amendments made by this section [amending this section and section

2502 of this title] shall apply in the case of decedents dying, and

gifts made, after December 31, 1987."

EFFECTIVE DATE OF 1984 AMENDMENT

Section 21(b) of Pub. L. 98-369 provided that: "The amendments

made by subsection (a) [amending this section] shall apply to the

estates of decedents dying after, and gifts made after, December

31, 1983."

EFFECTIVE DATE OF 1981 AMENDMENT

Section 402(d) of Pub. L. 97-34 provided that: "The amendments

made by this section [amending this section] shall apply to estates

of decedents dying after, and gifts made after, December 31, 1981."

EFFECTIVE DATE OF 1978 AMENDMENT

Section 702(h)(3) of Pub. L. 95-600 provided that: "The

amendments made by this subsection [amending this section and

section 2602 of this title] shall apply with respect to the estates

of decedents dying after December 31, 1976, except that such

amendments shall not apply to transfers made before January 1,

1977."

EFFECTIVE DATE OF 1976 AMENDMENT

Section 2001(d)(1) of Pub. L. 94-455 provided that: "The

amendments made by subsections (a) [enacting section 2010, amending

this section and sections 2012 and 2035, and repealing section 2052

of this title] and (c)(1) [amending sections 2011, 2012, 2013,

2014, 2038, 2044, 2101, 2102, 2104, 2106, 2107, 2206, 2207, and

6018 of this title] shall apply to the estates of decedents dying

after December 31, 1976; except that the amendments made by

subsection (a)(5) [amending section 2035 of this title] and

subparagraphs (K) and (L) of subsection (c)(1) [amending sections

2038 and 2104 of this title] shall not apply to transfers made

before January 1, 1977."

SHORT TITLE

Pub. L. 91-614, Sec. 1(a), Dec. 31, 1970, 84 Stat. 1836, provided

that: "This Act [enacting section 6905 of this title, section 1232a

of Title 15, Commerce and Trade, and section 1033 of former Title

31, Money and Finance, amending sections 56, 1015, 1223, 2012,

2032, 2055, 2204, 2501, 2502, 2503, 2504, 2512, 2513, 2515, 2521,

2522, 2523, 4061, 4063, 4216, 4251, 4491, 6019, 6040, 6075, 6091,

6161, 6212, 6214, 6324, 6412, 6416, 6501, 6504, and 6512 of this

title, and enacting provisions set out as notes under sections 56,

2032, 2204, 2501, 4063, 4216, 4251, 4491, and 6905 of this title]

may be cited as the 'Excise, Estate, and Gift Tax Adjustment Act of

1970'."

CLARIFICATION OF TREATMENT OF CERTAIN EXEMPTIONS FOR PURPOSES OF

FEDERAL ESTATE AND GIFT TAXES

Section 641 of Pub. L. 98-369, as amended by Pub. L. 99-514, Sec.

2, Oct. 22, 1986, 100 Stat. 2095, provided that:

"(a) General Rule. - Nothing in any provision of law exempting

any property (or interest therein) from taxation shall exempt the

transfer of such property (or interest therein) from Federal

estate, gift, and generation-skipping transfer taxes. In the case

of any provision of law enacted after the date of the enactment of

this Act [July 18, 1984], such provision shall not be treated as

exempting the transfer of property from Federal estate, gift, and

generation-skipping transfer taxes unless it refers to the

appropriate provisions of the Internal Revenue Code of 1986

[formerly I.R.C. 1954].

"(b) Effective Date. -

"(1) In general. - The provisions of subsection (a) shall apply

to the estates of decedents dying, gifts made, and transfers made

on or after June 19, 1984.

"(2) Treatment of certain transfers treated as taxable. - The

provisions of subsection (a) shall also apply in the case of any

transfer of property (or interest therein) if at any time there

was filed an estate or gift tax return showing such transfer as

subject to Federal estate or gift tax.

"(3) No inference. - No inference shall arise from paragraphs

(1) and (2) that any transfer of property (or interest therein)

before June 19, 1984, is exempt from Federal estate and gift

taxes."

REPORTS WITH TRANSFERS OF PUBLIC HOUSING BONDS

Section 642 of Pub. L. 98-369 provided that:

"(a) General Rule. - With respect to transfers of public housing

bonds occurring after December 31, 1983, and before June 19, 1984,

the taxpayer shall report the date and amount of such transfer and

such other information as the Secretary of the Treasury or his

delegate shall prescribe by regulations to allow the determination

of the tax and interest due if it is ultimately determined that

such transfers are subject to estate, gift, or generation-skipping

tax.

"(b) Penalty for Failure to Report. - Any taxpayer failing to

provide the information required by subsection (a) shall be liable

for a penalty equal to 25 percent of the excess of (1) the estate,

gift, or generation-skipping tax that is payable assuming that such

transfers are subject to tax, over (2) the tax payable assuming

such transfers are not so subject."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 163, 691, 1016, 2010,

2011, 2012, 2013, 2014, 2015, 2031, 2032A, 2051, 2053, 2054, 2055,

2056, 2056A, 2057, 2058, 2101, 2107, 2201, 2502, 2504, 2641, 2642,

2661, 6018, 6019, 6166, 6601, 7422, 7481 of this title.

-End-

-CITE-

26 USC Sec. 2002 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART I - TAX IMPOSED

-HEAD-

Sec. 2002. Liability for payment

-STATUTE-

The tax imposed by this chapter shall be paid by the executor.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 374; Pub. L. 98-369, div. A,

title V, Sec. 544(b)(1), July 18, 1984, 98 Stat. 894; Pub. L.

101-239, title VII, Sec. 7304(b)(2)(A), Dec. 19, 1989, 103 Stat.

2353.)

-MISC1-

AMENDMENTS

1989 - Pub. L. 101-239 substituted "The" for "Except as provided

in section 2210, the".

1984 - Pub. L. 98-369 inserted exception phrase.

EFFECTIVE DATE OF 1989 AMENDMENT

Section 7304(b)(3) of Pub. L. 101-239 provided that: "The

amendments made by this subsection [amending this section and

section 6018 of this title and repealing section 2210 of this

title] shall apply to estates of decedents dying after July 12,

1989."

EFFECTIVE DATE OF 1984 AMENDMENT

Section 544(d) of Pub. L. 98-369 provided that: "The amendments

made by this section [enacting section 2210 of this title and

amending this section and sections 6018 and 6166 of this title]

shall apply to those estates of decedents which are required to

file returns on a date (including any extensions) after the date of

enactment of this Act [July 18, 1984]."

-End-

-CITE-

26 USC PART II - CREDITS AGAINST TAX 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART II - CREDITS AGAINST TAX

-HEAD-

PART II - CREDITS AGAINST TAX

-MISC1-

Sec.

2010. Unified credit against estate tax.

2011. Credit for State death taxes.

2012. Credit for gift tax.

2013. Credit for tax on prior transfers.

2014. Credit for foreign death taxes.

2015. Credit for death taxes on remainders.

2016. Recovery of taxes claimed as credit.

AMENDMENTS

1976 - Pub. L. 94-455, title XX, Sec. 2001(c)(1)(N)(ii), Oct. 4,

1976, 90 Stat. 1853, added item 2010.

-End-

-CITE-

26 USC Sec. 2010 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART II - CREDITS AGAINST TAX

-HEAD-

Sec. 2010. Unified credit against estate tax

-STATUTE-

(a) General rule

A credit of the applicable credit amount shall be allowed to the

estate of every decedent against the tax imposed by section 2001.

(b) Adjustment to credit for certain gifts made before 1977

The amount of the credit allowable under subsection (a) shall be

reduced by an amount equal to 20 percent of the aggregate amount

allowed as a specific exemption under section 2521 (as in effect

before its repeal by the Tax Reform Act of 1976) with respect to

gifts made by the decedent after September 8, 1976.

For purposes of this section, the applicable credit amount is the

amount of the tentative tax which would be determined under the

rate schedule set forth in section 2001(c) if the amount with

respect to which such tentative tax is to be computed were the

applicable exclusion amount determined in accordance with the

following table:

In the case of estates of decedents The applicable

dying during: exclusion amount

is:

2002 and 2003 $1,000,000

2004 and 2005 $1,500,000

2006, 2007, and 2008 $2,000,000

2009 $3,500,000.

(d) Limitation based on amount of tax

The amount of the credit allowed by subsection (a) shall not

exceed the amount of the tax imposed by section 2001.

-SOURCE-

(Added Pub. L. 94-455, title XX, Sec. 2001(a)(2), Oct. 4, 1976, 90

Stat. 1848; amended Pub. L. 97-34, title IV, Sec. 401(a)(1),

(2)(A), Aug. 13, 1981, 95 Stat. 299; Pub. L. 101-508, title XI,

Sec. 11801(a)(39), (c)(19)(A), Nov. 5, 1990, 104 Stat. 1388-521,

1388-528; Pub. L. 105-34, title V, Sec. 501(a)(1)(A), (B), Aug. 5,

1997, 111 Stat. 845; Pub. L. 107-16, title V, Sec. 521(a), June 7,

2001, 115 Stat. 71.)

-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.

-REFTEXT-

REFERENCES IN TEXT

The Tax Reform Act of 1976, referred to in subsec. (b), is Pub.

L. 94-455, Oct. 4, 1976, 90 Stat. 1520, as amended. For complete

classification of this Act to the Code, see Tables.

Section 2521 of this title, referred to in subsec. (b), was

repealed by section 2001(b)(3) of Pub. L. 94-455, applicable to

gifts made after Dec. 31, 1976.

-MISC1-

AMENDMENTS

2001 - Subsec. (c). Pub. L. 107-16, Secs. 521(a), 901, in table,

temporarily substituted provision that in the case of estates of

decedents dying during the years 2002 and 2003, the years 2004 and

2005, the years 2006, 2007, and 2008, and the year 2009, the

applicable exclusion amount is $1,000,000, $1,500,000, $2,000,000,

and $3,500,000, respectively, for provision that in the case of

decedents dying, and gifts made, during the year 1998, the year

1999, the years 2000 and 2001, the years 2002 and 2003, the year

2004, the year 2005, and the year 2006 or thereafter, the

applicable exclusion amount is $625,000, $650,000, $675,000,

$700,000, $850,000, $950,000, and $1,000,000, respectively. See

Effective and Termination Dates of 2001 Amendment note below.

1997 - Subsec. (a). Pub. L. 105-34, Sec. 501(a)(1)(A),

substituted "the applicable credit amount" for "$192,800".

Subsecs. (c), (d). Pub. L. 105-34, Sec. 501(a)(1)(B), added

subsec. (c) and redesignated former subsec. (c) as (d).

1990 - Subsecs. (b) to (d). Pub. L. 101-508 redesignated subsecs.

subsec. (b) which provided for a phase-in of the unified credit

against estate tax.

1981 - Subsec. (a). Pub. L. 97-34, Sec. 401(a)(1), substituted

"$192,800" for "$47,000".

Subsec. (b). Pub. L. 97-34, Sec. 401(a)(2)(A), struck out

"$47,000" before "credit" from heading and in text substituted in

subsec. (a) substitutions for "$192,800" amounts of "$62,800",

"$79,300", "$96,300", "$121,800", and "$155,800" in the case of

decedents dying in 1982, 1983, 1984, 1985, and 1986, respectively,

for subsec. (a) substitutions for "$47,000" amounts of "$30,000",

"$34,000", "$38,000", and "$42,500" in the case of decedents dying

in 1977, 1978, 1979, and 1980, respectively.

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

Pub. L. 107-16, title V, Sec. 521(e), June 7, 2001, 115 Stat. 72,

provided that:

"(1) In general. - Except as provided in paragraphs (2) and (3),

the amendments made by this section [amending this section and

sections 2057, 2505, and 2631 of this title] shall apply to estates

of decedents dying, and gifts made, after December 31, 2001.

"(2) Subsection (b)(2). - The amendments made by subsection

(b)(2) [amending section 2505 of this title] shall apply to gifts

made after December 31, 2009.

"(3) Subsections (c) and (d). - The amendments made by

subsections (c) and (d) [amending sections 2057 and 2631 of this

title] shall apply to estates of decedents dying, and

generation-skipping transfers, after December 31, 2003."

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 1997 AMENDMENT

Amendment by Pub. L. 105-34 applicable to estates of decedents

dying, and gifts made, after Dec. 31, 1997, see section 501(f) of

Pub. L. 105-34, set out as a note under section 2001 of this title.

EFFECTIVE DATE OF 1981 AMENDMENT

Section 401(c)(1) of Pub. L. 97-34 provided that: "The amendments

made by subsection (a) [amending this section and section 6018 of

this title] shall apply to the estates of decedents dying after

December 31, 1981".

SAVINGS PROVISION

For provisions that nothing in amendment by Pub. L. 101-508 be

construed to affect treatment of certain transactions occurring,

property acquired, or items of income, loss, deduction, or credit

taken into account prior to Nov. 5, 1990, for purposes of

determining liability for tax for periods ending after Nov. 5,

1990, see section 11821(b) of Pub. L. 101-508, set out as a note

under section 29 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2011, 2012, 2013, 2014,

2056A, 2057, 2102, 2107, 2201, 2505, 2631, 6018, 6601 of this

title.

-End-

-CITE-

26 USC Sec. 2011 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART II - CREDITS AGAINST TAX

-HEAD-

Sec. 2011. Credit for State death taxes

-STATUTE-

(a) In general

The tax imposed by section 2001 shall be credited with the amount

of any estate, inheritance, legacy, or succession taxes actually

paid to any State or the District of Columbia, in respect of any

property included in the gross estate (not including any such taxes

paid with respect to the estate of a person other than the

decedent).

(b) Amount of credit

(1) In general

Except as provided in paragraph (2), the credit allowed by this

section shall not exceed the appropriate amount stated in the

following table:

If the adjusted taxable The maximum tax credit

estate is: shall be:

--------------------------------------------------------------------

Not over $90,000 8/10 ths of 1% of the amount by

which the taxable estate exceeds

$40,000.

Over $90,000 but not over $400 plus 1.6% of the excess over

$140,000 $90,000.

Over $140,000 but not over $1,200 plus 2.4% of the excess over

$240,000 $140,000.

Over $240,000 but not over $3,600 plus 3.2% of the excess over

$440,000 $240,000.

Over $440,000 but not over $10,000 plus 4% of the excess over

$640,000 $440,000.

Over $640,000 but not over $18,000 plus 4.8% of the excess

$840,000 over $640,000.

Over $840,000 but not over $27,600 plus 5.6% of the excess

$1,040,000 over $840,000.

Over $1,040,000 but not $38,800 plus 6.4% of the excess

over $1,540,000 over $1,040,000.

Over $1,540,000 but not $70,800 plus 7.2% of the excess

over $2,040,000 over $1,540,000.

Over $2,040,000 but not $106,800 plus 8% of the excess over

over $2,540,000 $2,040,000.

Over $2,540,000 but not $146,800 plus 8.8% of the excess

over $3,040,000 over $2,540,000

Over $3,040,000 but not $190,800 plus 9.6% of the excess

over $3,540,000 over $3,040,000.

Over $3,540,000 but not $238,800 plus 10.4% of the excess

over $4,040,000 over $3,540,000.

Over $4,040,000 but not $290,800 plus 11.2% of the excess

over $5,040,000 over $4,040,000.

Over $5,040,000 but not $402,800 plus 12% of the excess

over $6,040,000 over $5,040,000.

Over $6,040,000 but not $522,800 plus 12.8% of the excess

over $7,040,000 over $6,040,000.

Over $7,040,000 but not $650,800 plus 13.6% of the excess

over $8,040,000 over $7,040,000.

Over $8,040,000 but not $786,800 plus 14.4% of the excess

over $9,040,000 over $8,040,000.

Over $9,040,000 but not $930,800 plus 15.2% of the excess

over $10,040,000 over $9,040,000.

Over $10,040,000 $1,082,800 plus 16% of the excess

over $10,040,000.

--------------------------------------------------------------------

(2) Reduction of maximum credit

(A) In general

In the case of estates of decedents dying after December 31,

2001, the credit allowed by this section shall not exceed the

applicable percentage of the credit otherwise determined under

paragraph (1).

(B) Applicable percentage

In the case of estates of decedents The applicable

dying during: percentage is:

2002 75 percent

2003 50 percent

2004 25 percent.

(3) Adjusted taxable estate

For purposes of this section, the term "adjusted taxable

estate" means the taxable estate reduced by $60,000.

The credit allowed by this section shall include only such taxes

as were actually paid and credit therefor claimed within 4 years

after the filing of the return required by section 6018, except

that -

(1) If a petition for redetermination of a deficiency has been

filed with the Tax Court within the time prescribed in section

6213(a), then within such 4-year period or before the expiration

of 60 days after the decision of the Tax Court becomes final.

(2) If, under section 6161 or 6166, an extension of time has

been granted for payment of the tax shown on the return, or of a

deficiency, then within such 4-year period or before the date of

the expiration of the period of the extension.

(3) If a claim for refund or credit of an overpayment of tax

imposed by this chapter has been filed within the time prescribed

in section 6511, then within such 4-year period or before the

expiration of 60 days from the date of mailing by certified mail

or registered mail by the Secretary to the taxpayer of a notice

of the disallowance of any part of such claim, or before the

expiration of 60 days after a decision by any court of competent

jurisdiction becomes final with respect to a timely suit

instituted upon such claim, whichever is later.

Refund based on the credit may (despite the provisions of sections

6511 and 6512) be made if claim therefor is filed within the period

above provided. Any such refund shall be made without interest.

(d) Limitation in cases involving deduction under section 2053(d)

In any case where a deduction is allowed under section 2053(d)

for an estate, succession, legacy, or inheritance tax imposed by a

State or the District of Columbia upon a transfer for public,

charitable, or religious uses described in section 2055 or

2106(a)(2), the allowance of the credit under this section shall be

subject to the following conditions and limitations:

(1) The taxes described in subsection (a) shall not include any

estate, succession, legacy, or inheritance tax for which such

deduction is allowed under section 2053(d).

(2) The credit shall not exceed the lesser of -

(A) the amount stated in subsection (b) on an adjusted

taxable estate determined by allowing such deduction authorized

by section 2053(d), or

(B) that proportion of the amount stated in subsection (b) on

an adjusted taxable estate determined without regard to such

deduction authorized by section 2053(d) as (i) the amount of

the taxes described in subsection (a), as limited by the

provisions of paragraph (1) of this subsection, bears to (ii)

the amount of the taxes described in subsection (a) before

applying the limitation contained in paragraph (1) of this

subsection.

(3) If the amount determined under subparagraph (B) of

paragraph (2) is less than the amount determined under

subparagraph (A) of that paragraph, then for purposes of

subsection (d) such lesser amount shall be the maximum credit

provided by subsection (b).

(e) Limitation based on amount of tax

The credit provided by this section shall not exceed the amount

of the tax imposed by section 2001, reduced by the amount of the

unified credit provided by section 2010.

(f) Termination

This section shall not apply to the estates of decedents dying

after December 31, 2004.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 374; Feb. 20, 1956, ch. 63, Sec.

3, 70 Stat. 24; Pub. L. 85-866, title I, Secs. 65(a), 102(c)(1),

Sept. 2, 1958, 72 Stat. 1657, 1674; Pub. L. 86-175, Sec. 3, Aug.

21, 1959, 73 Stat. 397; Pub. L. 94-455, title XIX, Secs.

1902(a)(12)(B), 1906(b)(13)(A), title XX, Secs. 2001(c)(1)(A),

2004(f)(3), Oct. 4, 1976, 90 Stat. 1806, 1834, 1849, 1872; Pub. L.

97-34, title IV, Sec. 422(e)(2), Aug. 13, 1981, 95 Stat. 316; Pub.

L. 107-16, title V, Secs. 531(a), 532(a), June 7, 2001, 115 Stat.

72, 73; Pub. L. 107-134, title I, Sec. 103(b)(1), Jan. 23, 2002,

115 Stat. 2431.)

-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

2002 - Subsecs. (d) to (g). Pub. L. 107-134 redesignated subsecs.

(e) to (g) as (d) to (f), respectively, and struck out heading and

text of former subsec. (d). Text read as follows: "The basic estate

tax and the estate tax imposed by the Revenue Act of 1926 shall be

125 percent of the amount determined to be the maximum credit

provided by subsection (b). The additional estate tax shall be the

difference between the tax imposed by section 2001 or 2101 and the

basic estate tax."

2001 - Subsec. (b). Pub. L. 107-16, Secs. 531(a), 901,

temporarily designated existing provisions as pars. (1) and (3),

inserted headings, in par. (1) substituted "Except as provided in

paragraph (2), the credit allowed" for "The credit allowed", and

added par. (2). See Effective and Termination Dates of 2001

Amendment note below.

Subsec. (g). Pub. L. 107-16, Secs. 532(a), 901, temporarily added

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

note below.

1981 - Subsec. (c)(2). Pub. L. 97-34 struck out reference to

section 6166A.

1976 - Subsec. (a). Pub. L. 94-455, Sec. 1902(a)(12)(B), struck

out "or Territory" after "State".

Subsec. (b). Pub. L. 94-455, Sec. 2001(c)(1)(A)(i), (ii),

substituted "adjusted taxable estate" for "taxable estate" and

inserted provision that, for purposes of this section "adjusted

taxable estate" means the taxable estate reduced by $60,000.

Subsec. (c)(2). Pub. L. 94-455, Sec. 2004(f)(3), substituted

"section 6161, 6166, or 6166A" for "section 6161".

Subsec. (c)(3). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out

"or his delegate" after "Secretary".

Subsec. (e). Pub. L. 94-455, Secs. 1902(a)(12)(B),

2001(c)(1)(A)(iii), substituted "adjusted taxable estate" for

"taxable estate" in par. (2) and struck out "or Territory" after

"imposed by a State" in provisions preceding par. (1).

Subsec. (f). Pub. L. 94-455, Sec. 2001(c)(1)(A)(iv), added

subsec. (f).

1959 - Subsec. (e). Pub. L. 86-175 substituted "imposed by a

State or Territory or the District of Columbia upon a transfer" for

"imposed upon a transfer" in introduction, "such deduction" for "a

deduction" in par. (1) and "such deduction" for "the deduction" in

two places in par. (2).

1958 - Subsec. (a). Pub. L. 85-866, Sec. 102(c)(1), struck out

"or any possession of the United States," after "District of

Columbia,".

Subsec. (c)(3). Pub. L. 85-866, Sec. 65(a), added par. (3).

1956 - Subsec. (e). Act Feb. 20, 1956, added subsec. (e).

EFFECTIVE DATE OF 2002 AMENDMENT

Pub. L. 107-134, title I, Sec. 103(d), Jan. 23, 2002, 115 Stat.

2431, provided that:

"(1) Effective date. - The amendments made by this section

[amending this section and sections 2053 and 2201 of this title]

shall apply to estates of decedents -

"(A) dying on or after September 11, 2001; and

"(B) in the case of individuals dying as a result of the April

19, 1995, terrorist attack, dying on or after April 19, 1995.

"(2) Waiver of limitations. - If refund or credit of any

overpayment of tax resulting from the amendments made by this

section is prevented at any time before the close of the 1-year

period beginning on the date of the enactment of this Act [Jan. 23,

2002] by the operation of any law or rule of law (including res

judicata), such refund or credit may nevertheless be made or

allowed if claim therefor is filed before the close of such

period."

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

Pub. L. 107-16, title V, Sec. 531(b), June 7, 2001, 115 Stat. 73,

provided that: "The amendments made by this subsection [probably

means this section, amending this section] shall apply to estates

of decedents dying after December 31, 2001."

Pub. L. 107-16, title V, Sec. 532(d), June 7, 2001, 115 Stat. 75,

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

section 2058 of this title and amending this section and sections

2012 to 2016, 2053, 2056A, 2102, 2106, 2107, 2201, 2604, 6511, and

6612 of this title] shall apply to estates of decedents dying, and

generation-skipping transfers, after December 31, 2004."

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 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.

EFFECTIVE DATE OF 1976 AMENDMENT

Section 1902(c)(1) of Pub. L. 94-455, as amended by Pub. L.

95-600, title VII, Sec. 703(j)(12), Nov. 6, 1978, 92 Stat. 2942,

provided that: "The amendments made by paragraphs (1) through (8),

and paragraphs (12)(A), (B), and (C), of subsection (a) and by

subsection (b) [amending this section and sections 2012, 2013,

2016, 2038, 2053, 2055, 2056, 2106, 2107, 2108, 2201, 6167, and

6503 of this title, repealing section 2202 of this title, and

enacting provisions set out as a note under section 2201 of this

title] shall apply in the case of estates of decedents dying after

the date of the enactment of this Act [Oct. 4, 1976], and the

amendment made by paragraph (9) of subsection (a) [amending section

2204 of this title] shall apply in the case of estates of decedents

dying after December 31, 1970."

Amendment by section 1902(a)(12)(B) of Pub. L. 94-455 applicable

with respect to gifts made after Dec. 31, 1976, see section

1902(c)(2) of Pub. L. 94-455, set out as a note under section 2501

of this title.

Amendment by section 2001(c)(1)(A) of Pub. L. 94-455 applicable

to estates of decedents dying after Dec. 31, 1976, see section

2001(d)(1) of Pub. L. 94-455, set out as a note under section 2001

of this title.

Amendment by section 2004(f)(3) of Pub. L. 94-455 applicable to

estates of decedents dying after Dec. 31, 1976, see section 2004(g)

of Pub. L. 94-455, set out as an Effective Date note under section

6166 of this title.

EFFECTIVE DATE OF 1959 AMENDMENT

Amendment by Pub. L. 86-175 applicable with respect to estates of

decedents dying on or after July 1, 1955, see section 4 of Pub. L.

86-175, set out as a note under section 2053 of this title.

EFFECTIVE DATE OF 1958 AMENDMENT

Section 65(c) of Pub. L. 85-866 provided that: "The amendment

made by subsection (a) [amending this section] shall apply with

respect to estates of decedents dying after August 16, 1954. The

amendment made by subsection (b) [amending this section] shall

apply with respect to estates of decedents dying after February 10,

1939, and on or before August 16, 1954."

Section 102(d) of Pub. L. 85-866 provided that: "The amendments

made by this section (other than by subsection (b)) [enacting

section 2208 of this title and amending this section and sections

2104 and 2053 of this title] shall apply to the estates of

decedents dying after the date of the enactment of this Act [Sept.

2, 1958]. The amendment made by subsection (b) [amending section

2501 of this title] shall apply to gifts made after the date of the

enactment of this Act."

EFFECTIVE DATE OF 1956 AMENDMENT

Amendment by act Feb. 20, 1956, applicable to the estates of all

decedents dying after Dec. 31, 1953, see section 4 of act Feb. 20,

1956, set out as a note under section 2053 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2012, 2013, 2014, 2015,

2016, 2053, 2056A, 2102, 2106, 2107, 6511, 6612 of this title.

-End-

-CITE-

26 USC Sec. 2012 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART II - CREDITS AGAINST TAX

-HEAD-

Sec. 2012. Credit for gift tax

-STATUTE-

(a) In general

If a tax on a gift has been paid under chapter 12 (sec. 2501 and

following), or under corresponding provisions of prior laws, and

thereafter on the death of the donor any amount in respect of such

gift is required to be included in the value of the gross estate of

the decedent for purposes of this chapter, then there shall be

credited against the tax imposed by section 2001 the amount of the

tax paid on a gift under chapter 12, or under corresponding

provisions of prior laws, with respect to so much of the property

which constituted the gift as is included in the gross estate,

except that the amount of such credit shall not exceed an amount

which bears the same ratio to the tax imposed by section 2001

(after deducting from such tax the credit for State death taxes

provided by section 2011 and the unified credit provided by section

2010) as the value (at the time of the gift or at the time of the

death, whichever is lower) of so much of the property which

constituted the gift as is included in the gross estate bears to

the value of the entire gross estate reduced by the aggregate

amount of the charitable and marital deductions allowed under

sections 2055, 2056, and 2106(a)(2).

(b) Valuation reductions

In applying, with respect to any gift, the ratio stated in

subsection (a), the value at the time of the gift or at the time of

the death, referred to in such ratio, shall be reduced -

(1) by such amount as will properly reflect the amount of such

gift which was excluded in determining (for purposes of section

2503(a)), or of corresponding provisions of prior laws, the total

amount of gifts made during the calendar quarter (or calendar

year if the gift was made before January 1, 1971) in which the

gift was made;

(2) if a deduction with respect to such gift is allowed under

section 2056(a) (relating to marital deduction), then by the

amount of such value, reduced as provided in paragraph (1); and

(3) if a deduction with respect to such gift is allowed under

sections 2055 or 2106(a)(2) (relating to charitable deduction),

then by the amount of such value, reduced as provided in

paragraph (1) of this subsection.

Where the decedent was the donor of the gift but, under the

provisions of section 2513, or corresponding provisions of prior

laws, the gift was considered as made one-half by his spouse -

(1) the term "the amount of the tax paid on a gift under

chapter 12", as used in subsection (a), includes the amounts paid

with respect to each half of such gift, the amount paid with

respect to each being computed in the manner provided in

subsection (d); and

(2) in applying, with respect to such gift, the ratio stated in

subsection (a), the value at the time of the gift or at the time

of the death, referred to in such ratio, includes such value with

respect to each half of such gift, each such value being reduced

as provided in paragraph (1) of subsection (b).

(d) Computation of amount of gift tax paid

(1) Amount of tax

For purposes of subsection (a), the amount of tax paid on a

gift under chapter 12, or under corresponding provisions of prior

laws, with respect to any gift shall be an amount which bears the

same ratio to the total tax paid for the calendar quarter (or

calendar year if the gift was made before January 1, 1971) in

which the gift was made as the amount of such gift bears to the

total amount of taxable gifts (computed without deduction of the

specific exemption) for such quarter or year.

(2) Amount of gift

For purposes of paragraph (1), the "amount of such gift" shall

be the amount included with respect to such gift in determining

(for the purposes of section 2503(a), or of corresponding

provisions of prior laws) the total amount of gifts made during

such quarter or year, reduced by the amount of any deduction

allowed with respect to such gift under section 2522, or under

corresponding provisions of prior laws (relating to charitable

deduction), or under section 2523 (relating to marital

deduction).

(e) Section inapplicable to gifts made after December 31, 1976

No credit shall be allowed under this section with respect to the

amount of any tax paid under chapter 12 on any gift made after

December 31, 1976.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 375; Pub. L. 91-614, title I,

Sec. 102(d)(2), Dec. 31, 1970, 84 Stat. 1841; Pub. L. 94-455, title

XIX, Sec. 1902(a)(1), title XX, Sec. 2001(a)(3), (c)(1)(B), Oct. 4,

1976, 90 Stat. 1804, 1848, 1850; Pub. L. 97-34, title IV, Sec.

403(a)(2)(A), Aug. 13, 1981, 95 Stat. 301; Pub. L. 107-16, title V,

Sec. 532(c)(1), June 7, 2001, 115 Stat. 73.)

-STATAMEND-

AMENDMENT OF SUBSECTION (A)

Pub. L. 107-16, title V, Sec. 532(c)(1), (d), title IX, Sec. 901,

June 7, 2001, 115 Stat. 73, 75, 150, provided that, applicable to

estates of decedents dying, and generation-skipping transfers,

after Dec. 31, 2004, subsection (a) of this section is temporarily

amended by striking out "the credit for State death taxes provided

by section 2011 and" before "the unified credit". See Effective and

Termination Dates of 2001 Amendment note below.

-MISC1-

AMENDMENTS

1981 - Subsec. (b)(2). Pub. L. 97-34 substituted "the amount of

such value, reduced as provided in paragraph (1)" for "an amount

which bears the same ratio to such value (reduced as provided in

paragraph (1) of this subsection) as the aggregate amount of the

marital deductions allowed under section 2056(a) bears to the

aggregate amount of such marital deductions computed without regard

to subsection (c) thereof".

1976 - Subsec. (a). Pub. L. 94-455, Sec. 2001(c)(1)(B),

substituted "provided by section 2011 and the unified credit

provided by section 2010" for "provided by section 2011".

Subsec. (b). Pub. L. 94-455, Sec. 1902(a)(1)(A), added heading

and substituted a comma for a dash after "deduction)" in pars. (2)

and (3).

Subsec. (c). Pub. L. 94-455, Sec. 1902(a)(1)(B), added heading.

Subsec. (d). Pub. L. 94-455, Sec. 1902(a)(1)(C), (D), added

headings for subsec. (d) and for pars. (1) and (2).

Subsec. (e). Pub. L. 94-455, Sec. 2001(a)(3), added subsec. (e).

1970 - Subsec. (b)(1). Pub. L. 91-614, Sec. 102(d)(2)(A),

substituted "the calendar quarter (or calendar year if the gift was

made before January 1, 1971)" for "the year".

Subsec. (d). Pub. L. 91-614, Sec. 102(d)(2)(B), substituted "such

quarter or year" for "such year" in two places.

Subsec. (d)(1). Pub. L. 91-614, Sec. 102(d)(2)(A), substituted

"the calendar quarter (or calendar year if the gift was made before

January 1, 1971)" for "the year".

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 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 1976 AMENDMENT

Amendment by section 1902(a)(1) of Pub. L. 94-455 applicable to

estates of decedents dying after Oct. 4, 1976, see section

1902(c)(1) of Pub. L. 94-455, set out as a note under section 2011

of this title.

Amendment by section 2001(a)(3), (c)(1)(B) of Pub. L. 94-455

applicable to estates of decedents dying after Dec. 31, 1976, see

section 2001(d)(1) of Pub. L. 94-455, set out as a note under

section 2001 of this title.

EFFECTIVE DATE OF 1970 AMENDMENT

Amendment by Pub. L. 91-614 applicable with respect to gifts made

after Dec. 31, 1970, see section 102(e) of Pub. L. 91-614, set out

as a note under section 2501 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2001, 2013, 2014, 2102,

2107 of this title.

-End-

-CITE-

26 USC Sec. 2013 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART II - CREDITS AGAINST TAX

-HEAD-

Sec. 2013. Credit for tax on prior transfers

-STATUTE-

(a) General rule

The tax imposed by section 2001 shall be credited with all or a

part of the amount of the Federal estate tax paid with respect to

the transfer of property (including property passing as a result of

the exercise or non-exercise of a power of appointment) to the

decedent by or from a person (herein designated as a "transferor")

who died within 10 years before, or within 2 years after, the

decedent's death. If the transferor died within 2 years of the

death of the decedent, the credit shall be the amount determined

under subsections (b) and (c). If the transferor predeceased the

decedent by more than 2 years, the credit shall be the following

percentage of the amount so determined -

(1) 80 percent, if within the third or fourth years preceding

the decedent's death;

(2) 60 percent, if within the fifth or sixth years preceding

the decedent's death;

(3) 40 percent, if within the seventh or eighth years preceding

the decedent's death; and

(4) 20 percent, if within the ninth or tenth years preceding

the decedent's death.

(b) Computation of credit

Subject to the limitation prescribed in subsection (c), the

credit provided by this section shall be an amount which bears the

same ratio to the estate tax paid (adjusted as indicated

hereinafter) with respect to the estate of the transferor as the

value of the property transferred bears to the taxable estate of

the transferor (determined for purposes of the estate tax)

decreased by any death taxes paid with respect to such estate. For

purposes of the preceding sentence, the estate tax paid shall be

the Federal estate tax paid increased by any credits allowed

against such estate tax under section 2012, or corresponding

provisions of prior laws, on account of gift tax, and for any

credits allowed against such estate tax under this section on

account of prior transfers where the transferor acquired property

from a person who died within 10 years before the death of the

decedent.

(1) In general

The credit provided in this section shall not exceed the amount

by which -

(A) the estate tax imposed by section 2001 or section 2101

(after deducting the credits provided for in sections 2010,

2011, 2012, and 2014) computed without regard to this section,

exceeds

(B) such tax computed by excluding from the decedent's gross

estate the value of such property transferred and, if

applicable, by making the adjustment hereinafter indicated.

If any deduction is otherwise allowable under section 2055 or

section 2106(a)(2) (relating to charitable deduction) then, for

the purpose of the computation indicated in subparagraph (B), the

amount of such deduction shall be reduced by that part of such

deduction which the value of such property transferred bears to

the decedent's entire gross estate reduced by the deductions

allowed under sections 2053 and 2054, or section 2106(a)(1)

(relating to deduction for expenses, losses, etc.). For purposes

of this section, the value of such property transferred shall be

the value as provided for in subsection (d) of this section.

(2) Two or more transferors

If the credit provided in this section relates to property

received from 2 or more transferors, the limitation provided in

paragraph (1) of this subsection shall be computed by aggregating

the value of the property so transferred to the decedent. The

aggregate limitation so determined shall be apportioned in

accordance with the value of the property transferred to the

decedent by each transferor.

(d) Valuation of property transferred

The value of property transferred to the decedent shall be the

value used for the purpose of determining the Federal estate tax

liability of the estate of the transferor but -

(1) there shall be taken into account the effect of the tax

imposed by section 2001 or 2101, or any estate, succession,

legacy, or inheritance tax, on the net value to the decedent of

such property;

(2) where such property is encumbered in any manner, or where

the decedent incurs any obligation imposed by the transferor with

respect to such property, such encumbrance or obligation shall be

taken into account in the same manner as if the amount of a gift

to the decedent of such property was being determined; and

(3) if the decedent was the spouse of the transferor at the

time of the transferor's death, the net value of the property

transferred to the decedent shall be reduced by the amount

allowed under section 2056 (relating to marital deductions), as a

deduction from the gross estate of the transferor.

(e) Property defined

For purposes of this section, the term "property" includes any

beneficial interest in property, including a general power of

appointment (as defined in section 2041).

(f) Treatment of additional tax imposed under section 2032A

If section 2032A applies to any property included in the gross

estate of the transferor and an additional tax is imposed with

respect to such property under section 2032A(c) before the date

which is 2 years after the date of the decedent's death, for

purposes of this section -

(1) the additional tax imposed by section 2032A(c) shall be

treated as a Federal estate tax payable with respect to the

estate of the transferor; and

(2) the value of such property and the amount of the taxable

estate of the transferor shall be determined as if section 2032A

did not apply with respect to such property.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 377; Pub. L. 94-455, title XIX,

Sec. 1902(a)(2), title XX, Secs. 2001(c)(1)(C), 2003(c),

2006(b)(2), Oct. 4, 1976, 90 Stat. 1804, 1850, 1862, 1888; Pub. L.

99-514, title XIV, Sec. 1432(c)(2), Oct. 22, 1986, 100 Stat. 2730;

Pub. L. 100-647, title I, Sec. 1011A(g)(7), Nov. 10, 1988, 102

Stat. 3481; Pub. L. 105-34, title X, Sec. 1073(b)(2), Aug. 5, 1997,

111 Stat. 948; Pub. L. 107-16, title V, Sec. 532(c)(2), June 7,

2001, 115 Stat. 74.)

-STATAMEND-

AMENDMENT OF SUBSECTION (C)(1)(A)

Pub. L. 107-16, title V, Sec. 532(c)(2), (d), title IX, Sec. 901,

June 7, 2001, 115 Stat. 74, 75, 150, provided that, applicable to

estates of decedents dying, and generation-skipping transfers,

after Dec. 31, 2004, subsection (c)(1)(A) of this section is

temporarily amended by striking out "2011," after "sections 2010,".

See Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

AMENDMENTS

1997 - Subsec. (g). Pub. L. 105-34 struck out heading and text of

subsec. (g). Prior to amendment, text read as follows: "For

purposes of this section, the estate tax paid shall not include any

portion of such tax attributable to section 4980A(d)."

1988 - Subsec. (g). Pub. L. 100-647 added subsec. (g).

1986 - Subsec. (g). Pub. L. 99-514 struck out subsec. (g) which

provided for treatment of tax imposed on certain

generation-skipping transfers.

1976 - Subsec. (b). Pub. L. 94-455, Sec. 2001(c)(1)(C)(i), struck

out "and increased by the exemption provided for by section 2052 or

section 2106(a)(3), or the corresponding provisions of prior laws,

in determining the taxable estate of the transferor for purposes of

the estate tax" after "death taxes paid with respect to such

estate".

Subsec. (c)(1)(A). Pub. L. 94-455, Sec. 2001(c)(1)(C)(ii),

substituted "credits provided for in sections 2010, 2011, 2012, and

2014) computed" for "credits for State death taxes, gift tax, and

foreign death taxes provided for in sections 2011, 2012, and 2014)

computed".

Subsec. (d)(3). Pub. L. 94-455, Sec. 1902(a)(2), struck out ", or

the corresponding provision of prior law," after "marital

deductions)".

Subsec. (f). Pub. L. 94-455, Sec. 2003(c), added subsec. (f).

Subsec. (g). Pub. L. 94-455, Sec. 2006(b)(2), added subsec. (g).

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 OF 1997 AMENDMENT

Amendment by Pub. L. 105-34 applicable to estates of decedents

dying after Dec. 31, 1996, see section 1073(c) of Pub. L. 105-34,

set out as an Effective Date of Repeal note under section 4980A 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 OF 1986 AMENDMENT

Amendment by Pub. L. 99-514 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 an Effective Date note under section

2601 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2056, 2102, 2107 of this

title.

-End-

-CITE-

26 USC Sec. 2014 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART II - CREDITS AGAINST TAX

-HEAD-

Sec. 2014. Credit for foreign death taxes

-STATUTE-

(a) In general

The tax imposed by section 2001 shall be credited with the amount

of any estate, inheritance, legacy, or succession taxes actually

paid to any foreign country in respect of any property situated

within such foreign country and included in the gross estate (not

including any such taxes paid with respect to the estate of a

person other than the decedent). The determination of the country

within which property is situated shall be made in accordance with

the rules applicable under subchapter B (sec. 2101 and following)

in determining whether property is situated within or without the

United States.

(b) Limitations on credit

The credit provided in this section with respect to such taxes

paid to any foreign country -

(1) shall not, with respect to any such tax, exceed an amount

which bears the same ratio to the amount of such tax actually

paid to such foreign country as the value of property which is -

(A) situated within such foreign country,

(B) subjected to such tax, and

bears to the value of all property subjected to such tax; and

(2) shall not, with respect to all such taxes, exceed an amount

which bears the same ratio to the tax imposed by section 2001

(after deducting from such tax the credits provided by sections

2010, 2011, and 2012) as the value of property which is -

(A) situated within such foreign country,

(B) subjected to the taxes of such foreign country, and

bears to the value of the entire gross estate reduced by the

aggregate amount of the deductions allowed under sections 2055

and 2056.

(1) The values referred to in the ratio stated in subsection

(b)(1) are the values determined for purposes of the tax imposed by

such foreign country.

(2) The values referred to in the ratio stated in subsection

(b)(2) are the values determined under this chapter; but, in

applying such ratio, the value of any property described in

subparagraphs (A), (B), and (C) thereof shall be reduced by such

amount as will properly reflect, in accordance with regulations

prescribed by the Secretary, the deductions allowed in respect of

such property under sections 2055 and 2056 (relating to charitable

and marital deductions).

(d) Proof of credit

The credit provided in this section shall be allowed only if the

taxpayer establishes to the satisfaction of the Secretary -

(1) the amount of taxes actually paid to the foreign country,

(2) the amount and date of each payment thereof,

(3) the description and value of the property in respect of

which such taxes are imposed, and

(4) all other information necessary for the verification and

computation of the credit.

(e) Period of limitation

The credit provided in this section shall be allowed only for

such taxes as were actually paid and credit therefor claimed within

4 years after the filing of the return required by section 6018,

except that -

(1) If a petition for redetermination of a deficiency has been

filed with the Tax Court within the time prescribed in section

6213(a), then within such 4-year period or before the expiration

of 60 days after the decision of the Tax Court becomes final.

(2) If, under section 6161, an extension of time has been

granted for payment of the tax shown on the return, or of a

deficiency, then within such 4-year period or before the date of

the expiration of the period of the extension.

Refund based on such credit may (despite the provisions of sections

6511 and 6512) be made if claim therefor is filed within the period

above provided. Any such refund shall be made without interest.

(f) Additional limitation in cases involving a deduction under

section 2053(d)

In any case where a deduction is allowed under section 2053(d)

for an estate, succession, legacy, or inheritance tax imposed by

and actually paid to any foreign country upon a transfer by the

decedent for public, charitable, or religious uses described in

section 2055, the property described in subparagraphs (A), (B), and

shall not include any property in respect of which such deduction

is allowed under section 2053(d).

(g) Possession of United States deemed a foreign country

For purposes of the credits authorized by this section, each

possession of the United States shall be deemed to be a foreign

country.

(h) Similar credit required for certain alien residents

Whenever the President finds that -

(1) a foreign country, in imposing estate, inheritance, legacy,

or succession taxes, does not allow to citizens of the United

States resident in such foreign country at the time of death a

credit similar to the credit allowed under subsection (a),

(2) such foreign country, when requested by the United States

to do so has not acted to provide such a similar credit in the

case of citizens of the United States resident in such foreign

country at the time of death, and

(3) it is in the public interest to allow the credit under

subsection (a) in the case of citizens or subjects of such

foreign country only if it allows such a similar credit in the

case of citizens of the United States resident in such foreign

country at the time of death,

the President shall proclaim that, in the case of citizens or

subjects of such foreign country dying while the proclamation

remains in effect, the credit under subsection (a) shall be allowed

only if such foreign country allows such a similar credit in the

case of citizens of the United States resident in such foreign

country at the time of death.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 378; Pub. L. 85-866, title I,

Sec. 102(c)(2), Sept. 2, 1958, 72 Stat. 1674; Pub. L. 86-175, Sec.

2, Aug. 21, 1959, 73 Stat. 397; Pub. L. 89-809, title I, Sec.

106(b)(3), Nov. 13, 1966, 80 Stat. 1570; Pub. L. 94-455, title XIX,

Sec. 1906(b)(13)(A), title XX, Sec. 2001(c)(1)(G), Oct. 4, 1976, 90

Stat. 1834, 1852; Pub. L. 107-16, title V, Sec. 532(c)(3), June 7,

2001, 115 Stat. 74.)

-STATAMEND-

AMENDMENT OF SUBSECTION (B)(2)

Pub. L. 107-16, title V, Sec. 532(c)(3), (d), title IX, Sec. 901,

June 7, 2001, 115 Stat. 74, 75, 150, provided that, applicable to

estates of decedents dying, and generation-skipping transfers,

after Dec. 31, 2004, subsection (b)(2) of this section is

temporarily amended by striking out ", 2011," after "sections

2010". See Effective and Termination Dates of 2001 Amendment note

below.

-MISC1-

AMENDMENTS

1976 - Subsec. (b)(2). Pub. L. 94-455, Sec. 2001(c)(1)(G),

inserted reference to section 2010 in introductory provisions.

Subsecs. (c), (d). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck

out "or his delegate" after "Secretary".

1966 - Subsec. (a). Pub. L. 89-809 struck out provision that, if

the decedent at the time of his death was not a citizen of the

United States, credit would not be allowed under this section

unless the foreign country of which the decedent was a citizen or

subject, in imposing estate, inheritance, legacy, or succession

taxes, allows a similar credit in the case of a citizen of the

United States resident in such country.

Subsec. (h). Pub. L. 89-809 added subsec. (h).

1959 - Subsecs. (f), (g). Pub. L. 86-175 added subsec. (f) and

redesignated former subsec. (f) as (g).

1958 - Subsec. (f). Pub. L. 85-866 added subsec. (f).

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 OF 1966 AMENDMENT

Amendment by Pub. L. 89-809 applicable with respect to estates of

decedents dying after Nov. 13, 1966, see section 106(b)(4) of Pub.

L. 89-809, set out as a note under section 901 of this title.

EFFECTIVE DATE OF 1959 AMENDMENT

Amendment by Pub. L. 86-175 applicable with respect to estates of

decedents dying on or after July 1, 1955, see section 4 of Pub. L.

86-175, set out as a note under section 2053 of this title.

EFFECTIVE DATE OF 1958 AMENDMENT

Amendment by Pub. L. 85-866 applicable to estates of decedents

dying after Sept. 2, 1958, see section 102(d) of Pub. L. 85-866,

set out as a note under section 2011 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2013, 2015, 2016, 2053,

2056A, 6511, 6612 of this title.

-End-

-CITE-

26 USC Sec. 2015 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART II - CREDITS AGAINST TAX

-HEAD-

Sec. 2015. Credit for death taxes on remainders

-STATUTE-

Where an election is made under section 6163(a) to postpone

payment of the tax imposed by section 2001, or 2101, such part of

any estate, inheritance, legacy, or succession taxes allowable as a

credit under section 2011 or 2014, as is attributable to a

reversionary or remainder interest may be allowed as a credit

against the tax attributable to such interest, subject to the

limitations on the amount of the credit contained in such sections,

if such part is paid, and credit therefor claimed, at any time

before the expiration of the time for payment of the tax imposed by

section 2001 or 2101 as postponed and extended under section 6163.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 379; Pub. L. 85-866, title I,

Sec. 66(a)(1), Sept. 2, 1958, 72 Stat. 1657; Pub. L. 107-16, title

V, Sec. 532(c)(4), June 7, 2001, 115 Stat. 74.)

-STATAMEND-

AMENDMENT OF SECTION

Pub. L. 107-16, title V, Sec. 532(c)(4), (d), title IX, Sec. 901,

June 7, 2001, 115 Stat. 74, 75, 150, provided that, applicable to

estates of decedents dying, and generation-skipping transfers,

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

striking out "2011 or" before "2014". See Effective and Termination

Dates of 2001 Amendment note below.

-MISC1-

AMENDMENTS

1958 - Pub. L. 85-866 substituted "the time for payment of the

tax imposed by section 2001 or 2101 as postponed and extended under

section 6163" for "60 days after the termination of the precedent

interest or interests in the property".

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 OF 1958 AMENDMENT

Section 66(a)(3) of Pub. L. 85-866 provided that: "The amendments

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

927 of I.R.C. 1939] shall apply in the case of any reversionary or

remainder interest in property only if the precedent interest or

interests in the property did not terminate before the beginning of

the 60-day period which ends on the date of the enactment of this

Act [Sept. 2, 1958]."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 6511 of this title.

-End-

-CITE-

26 USC Sec. 2016 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART II - CREDITS AGAINST TAX

-HEAD-

Sec. 2016. Recovery of taxes claimed as credit

-STATUTE-

If any tax claimed as a credit under section 2011 or 2014 is

recovered from any foreign country, the executor, or any other

person or persons recovering such amount, shall give notice of such

recovery to the Secretary at such time and in such manner as may be

required by regulations prescribed by him, and the Secretary shall

(despite the provisions of section 6501) redetermine the amount of

the tax under this chapter and the amount, if any, of the tax due

on such redetermination, shall be paid by the executor or such

person or persons, as the case may be, on notice and demand. No

interest shall be assessed or collected on any amount of tax due on

any redetermination by the Secretary resulting from a refund to the

executor of tax claimed as a credit under section 2014, for any

period before the receipt of such refund, except to the extent

interest was paid by the foreign country on such refund.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 380; Pub. L. 94-455, title XIX,

Secs. 1902(a)(12)(C), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1806,

1834; Pub. L. 107-16, title V, Sec. 532(c)(4), June 7, 2001, 115

Stat. 74; Pub. L. 107-147, title IV, Sec. 411(h), Mar. 9, 2002, 116

Stat. 46.)

-STATAMEND-

AMENDMENT OF SECTION

Pub. L. 107-16, title V, Sec. 532(c)(4), (d), title IX, Sec. 901,

June 7, 2001, 115 Stat. 74, 75, 150, provided that, applicable to

estates of decedents dying, and generation-skipping transfers,

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

striking out "2011 or" before "2014 is recovered". See Effective

and Termination Dates of 2001 Amendment note below.

-MISC1-

AMENDMENTS

2002 - Pub. L. 107-147 struck out "any State, any possession of

the United States, or the District of Columbia," after "any foreign

country,".

1976 - Pub. L. 94-455 struck out "Territory or" after "any State,

any" and "or his delegate" after "Secretary".

EFFECTIVE DATE OF 2002 AMENDMENT

Amendment by Pub. L. 107-147 effective as if included in the

provisions of the Economic Growth and Tax Relief Reconciliation Act

of 2001, Pub. L. 107-16, to which such amendment relates, see

section 411(x) of Pub. L. 107-147, set out as a note under section

25B of this title.

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

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

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

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 6040, 6213, 6501 of this

title.

-End-

-CITE-

26 USC PART III - GROSS ESTATE 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART III - GROSS ESTATE

-HEAD-

PART III - GROSS ESTATE

-MISC1-

Sec.

2031. Definition of gross estate.

2032. Alternate valuation.

2032A. Valuation of certain farm, etc., real property.

2033. Property in which the decedent had an interest.

[2033A. Repealed.]

2034. Dower or curtesy interests.

2035. Adjustments for certain gifts made within 3 years of

decedent's death.

2036. Transfers with retained life estate.

2037. Transfers taking effect at death.

2038. Revocable transfers.

2039. Annuities.

2040. Joint interests.

2041. Powers of appointment.

2042. Proceeds of life insurance.

2043. Transfers for insufficient consideration.

2044. Certain property for which marital deduction was

previously allowed.

2045. Prior interests.

2046. Disclaimers.

AMENDMENTS

1998 - Pub. L. 105-206, title VI, Sec. 6007(b)(1)(E), July 22,

1998, 112 Stat. 808, struck out item 2033A "Family-owned business

exclusion".

1997 - Pub. L. 105-34, title V, Sec. 502(b), title XIII, Sec.

1310(b), Aug. 5, 1997, 111 Stat. 852, 1044, added item 2033A and

substituted "certain gifts" for "gifts" in item 2035.

1981 - Pub. L. 97-34, title IV, Sec. 403(d)(3)(A)(ii), Aug. 13,

1981, 95 Stat. 304, added item 2044 and redesignated former items

2044 and 2045 as items 2045 and 2046, respectively.

1976 - Pub. L. 94-455, title XX, Secs. 2001(c)(1)(N)(iii),

2003(d)(1), 2009(b)(3)(B), Oct. 4, 1976, 90 Stat. 1853, 1862, 1894,

added items 2032A and 2045 and substituted "Adjustments for gifts

made within 3 years of decedent's death" for "Transactions in

contemplation of death" in item 2035.

-End-

-CITE-

26 USC Sec. 2031 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART III - GROSS ESTATE

-HEAD-

Sec. 2031. Definition of gross estate

-STATUTE-

(a) General

The value of the gross estate of the decedent shall be determined

by including to the extent provided for in this part, the value at

the time of his death of all property, real or personal, tangible

or intangible, wherever situated.

(b) Valuation of unlisted stock and securities

In the case of stock and securities of a corporation the value of

which, by reason of their not being listed on an exchange and by

reason of the absence of sales thereof, cannot be determined with

reference to bid and asked prices or with reference to sales

prices, the value thereof shall be determined by taking into

consideration, in addition to all other factors, the value of stock

or securities of corporations engaged in the same or a similar line

of business which are listed on an exchange.

conservation easement

(1) In general

If the executor makes the election described in paragraph (6),

then, except as otherwise provided in this subsection, there

shall be excluded from the gross estate the lesser of -

(A) the applicable percentage of the value of land subject to

a qualified conservation easement, reduced by the amount of any

deduction under section 2055(f) with respect to such land, or

(B) the exclusion limitation.

(2) Applicable percentage

For purposes of paragraph (1), the term "applicable percentage"

means 40 percent reduced (but not below zero) by 2 percentage

points for each percentage point (or fraction thereof) by which

the value of the qualified conservation easement is less than 30

percent of the value of the land (!1) (determined without regard

to the value of such easement and reduced by the value of any

retained development right (as defined in paragraph (5)). The

values taken into account under the preceding sentence shall be

such values as of the date of the contribution referred to in

paragraph (8)(B).

(3) Exclusion limitation

For purposes of paragraph (1), the exclusion limitation is the

limitation determined in accordance with the following table:

In the case of estates of The exclusion

decedents dying during: limitation is:

1998 $100,000

1999 $200,000

2000 $300,000

2001 $400,000

2002 or thereafter $500,000.

(4) Treatment of certain indebtedness

(A) In general

The exclusion provided in paragraph (1) shall not apply to

the extent that the land is debt-financed property.

(B) Definitions

For purposes of this paragraph -

(i) Debt-financed property

The term "debt-financed property" means any property with

respect to which there is an acquisition indebtedness (as

defined in clause (ii)) on the date of the decedent's death.

(ii) Acquisition indebtedness

The term "acquisition indebtedness" means, with respect to

debt-financed property, the unpaid amount of -

(I) the indebtedness incurred by the donor in acquiring

such property,

(II) the indebtedness incurred before the acquisition of

such property if such indebtedness would not have been

incurred but for such acquisition,

(III) the indebtedness incurred after the acquisition of

such property if such indebtedness would not have been

incurred but for such acquisition and the incurrence of

such indebtedness was reasonably foreseeable at the time of

such acquisition, and

(IV) the extension, renewal, or refinancing of an

acquisition indebtedness.

(5) Treatment of retained development right

(A) In general

Paragraph (1) shall not apply to the value of any development

right retained by the donor in the conveyance of a qualified

conservation easement.

(B) Termination of retained development right

If every person in being who has an interest (whether or not

in possession) in the land executes an agreement to extinguish

permanently some or all of any development rights (as defined

in subparagraph (D)) retained by the donor on or before the

date for filing the return of the tax imposed by section 2001,

then any tax imposed by section 2001 shall be reduced

accordingly. Such agreement shall be filed with the return of

the tax imposed by section 2001. The agreement shall be in such

form as the Secretary shall prescribe.

Any failure to implement the agreement described in

subparagraph (B) not later than the earlier of -

(i) the date which is 2 years after the date of the

decedent's death, or

(ii) the date of the sale of such land subject to the

qualified conservation easement,

shall result in the imposition of an additional tax in the

amount of the tax which would have been due on the retained

development rights subject to such agreement. Such additional

tax shall be due and payable on the last day of the 6th month

following such date.

(D) Development right defined

For purposes of this paragraph, the term "development right"

means any right to use the land subject to the qualified

conservation easement in which such right is retained for any

commercial purpose which is not subordinate to and directly

supportive of the use of such land as a farm for farming

purposes (within the meaning of section 2032A(e)(5)).

(6) Election

The election under this subsection shall be made on or before

the due date (including extensions) for filing the return of tax

imposed by section 2001 and shall be made on such return. Such an

election, once made, shall be irrevocable.

(7) Calculation of estate tax due

An executor making the election described in paragraph (6)

shall, for purposes of calculating the amount of tax imposed by

section 2001, include the value of any development right (as

defined in paragraph (5)) retained by the donor in the conveyance

of such qualified conservation easement. The computation of tax

on any retained development right prescribed in this paragraph

shall be done in such manner and on such forms as the Secretary

shall prescribe.

(8) Definitions

For purposes of this subsection -

(A) Land subject to a qualified conservation easement

The term "land subject to a qualified conservation easement"

means land -

(i) which is located in the United States or any possession

of the United States,

(ii) which was owned by the decedent or a member of the

decedent's family at all times during the 3-year period

ending on the date of the decedent's death, and

(iii) with respect to which a qualified conservation

easement has been made by an individual described in

subparagraph (C), as of the date of the election described in

paragraph (6).

(B) Qualified conservation easement

The term "qualified conservation easement" means a qualified

conservation contribution (as defined in section 170(h)(1)) of

a qualified real property interest (as defined in section

170(h)(2)(C)), except that clause (iv) of section 170(h)(4)(A)

shall not apply, and the restriction on the use of such

interest described in section 170(h)(2)(C) shall include a

prohibition on more than a de minimis use for a commercial

recreational activity.

An individual is described in this subparagraph if such

individual is -

(i) the decedent,

(ii) a member of the decedent's family,

(iii) the executor of the decedent's estate, or

(iv) the trustee of a trust the corpus of which includes

the land to be subject to the qualified conservation

easement.

(D) Member of family

The term "member of the decedent's family" means any member

of the family (as defined in section 2032A(e)(2)) of the

decedent.

(9) Treatment of easements granted after death

In any case in which the qualified conservation easement is

granted after the date of the decedent's death and on or before

the due date (including extensions) for filing the return of tax

imposed by section 2001, the deduction under section 2055(f) with

respect to such easement shall be allowed to the estate but only

if no charitable deduction is allowed under chapter 1 to any

person with respect to the grant of such easement.

(10) Application of this section to interests in partnerships,

corporations, and trusts

This section shall apply to an interest in a partnership,

corporation, or trust if at least 30 percent of the entity is

owned (directly or indirectly) by the decedent, as determined

under the rules described in section 2057(e)(3).

(d) Cross reference

For executor's right to be furnished on request a statement

regarding any valuation made by the Secretary within the gross

estate, see section 7517.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 380; Pub. L. 87-834, Sec.

18(a)(1), Oct. 16, 1962, 76 Stat. 1052; Pub. L. 94-455, title XX,

Sec. 2008(a)(2)(A), Oct. 4, 1976, 90 Stat. 1891; Pub. L. 105-34,

title V, Sec. 508(a), Aug. 5, 1997, 111 Stat. 857; Pub. L. 105-206,

title VI, Sec. 6007(g), July 22, 1998, 112 Stat. 810; Pub. L.

105-277, div. J, title IV, Sec. 4006(c)(3), Oct. 21, 1998, 112

Stat. 2681-913; Pub. L. 107-16, title V, Sec. 551(a), (b), June 7,

2001, 115 Stat. 86.)

-STATAMEND-

AMENDMENT OF SECTION

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

see Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

AMENDMENTS

2001 - Subsec. (c)(2). Pub. L. 107-16, Secs. 551(b), 901,

temporarily inserted at end "The values taken into account under

the preceding sentence shall be such values as of the date of the

contribution referred to in paragraph (8)(B)." See Effective and

Termination Dates of 2001 Amendment note below.

Subsec. (c)(8)(A)(i). Pub. L. 107-16, Secs. 551(a), 901,

temporarily amended cl. (i) generally. Prior to amendment, cl. (i)

read as follows: "which is located -

"(I) in or within 25 miles of an area which, on the date of the

decedent's death, is a metropolitan area (as defined by the

Office of Management and Budget),

"(II) in or within 25 miles of an area which, on the date of

the decedent's death, is a national park or wilderness area

designated as part of the National Wilderness Preservation System

(unless it is determined by the Secretary that land in or within

25 miles of such a park or wilderness area is not under

significant development pressure), or

"(III) in or within 10 miles of an area which, on the date of

the decedent's death, is an Urban National Forest (as designated

by the Forest Service),".

See Effective and Termination Dates of 2001 Amendment note below.

1998 - Subsec. (c)(6). Pub. L. 105-206, Sec. 6007(g)(2),

substituted "on or before the due date (including extensions) for

filing the return of tax imposed by section 2001 and shall be made

on such return." for "on the return of the tax imposed by section

2001."

Subsec. (c)(9). Pub. L. 105-206, Sec. 6007(g)(1), added par. (9).

Former par. (9) redesignated (10).

Subsec. (c)(10). Pub. L. 105-277, Sec. 4006(c)(3), substituted

"section 2057(e)(3)" for "section 2033A(e)(3)".

Pub. L. 105-206, Sec. 6007(g)(1), redesignated par. (9) as (10).

1997 - Subsecs. (c), (d). Pub. L. 105-34 added subsec. (c) and

redesignated former subsec. (c) as (d).

1976 - Subsec. (c). Pub. L. 94-455 added subsec. (c).

1962 - Subsec. (a). Pub. L. 87-834 struck out provisions which

excepted real property situated outside the United States.

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

Pub. L. 107-16, title V, Sec. 551(c), June 7, 2001, 115 Stat. 86,

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

section] shall apply to estates of decedents dying 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 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 to estates of decedents

dying after Dec. 31, 1997, see section 508(e)(1) of Pub. L. 105-34,

set out as a note under section 1014 of this title.

EFFECTIVE DATE OF 1962 AMENDMENT

Section 18(b) of Pub. L. 87-834 provided that:

"(1) Except as provided in paragraph (2), the amendments made by

subsection (a) [amending this section and sections 2033, 2034,

2035, 2036, 2037, 2038, 2040, and 2041 of this title] shall apply

to the estates of decedents dying after the date of the enactment

of this Act [Oct. 16, 1962].

"(2) In the case of a decedent dying after the date of the

enactment of this Act [Oct. 16, 1962] and before July 1, 1964, the

value of real property situated outside of the United States shall

not be included in the gross estate (as defined in section 2031(a))

of the decedent -

"(A) under section 2033, 2034, 2035(a), 2036(a), 2037(a), or

2038(a) to the extent the real property, or the decedent's

interest in it, was acquired by the decedent before February 1,

1962;

"(B) under section 2040 to the extent such property or interest

was acquired by the decedent before February 1, 1962, or was held

by the decedent and the survivor in a joint tenancy or tenancy by

the entirety before February 1, 1962; or

"(C) under section 2041(a) to the extent that before February

1, 1962, such property or interest was subject to a general power

of appointment (as defined in section 2041) possessed by the

decedent.

In the case of real property, or an interest therein, situated

outside of the United States (including a general power of

appointment in respect of such property or interest, and including

property held by the decedent and the survivor in a joint tenancy

or tenancy by the entirety) which was acquired by the decedent

after January 31, 1962, by gift within the meaning of section 2511,

or from a prior decedent by devise or inheritance, or by reason of

death, form of ownership, or other conditions (including the

exercise or nonexercise of a power of appointment), for purposes of

this paragraph such property or interest therein shall be deemed to

have been acquired by the decedent before February 1, 1962, if

before that date the donor or prior decedent had acquired the

property or his interest therein or had possessed a power of

appointment in respect of the property or interest."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1014, 2103, 7520 of this

title; title 43 section 1620.

-FOOTNOTE-

(!1) So in original. No closing parenthesis was enacted.

-End-

-CITE-

26 USC Sec. 2032 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART III - GROSS ESTATE

-HEAD-

Sec. 2032. Alternate valuation

-STATUTE-

(a) General

The value of the gross estate may be determined, if the executor

so elects, by valuing all the property included in the gross estate

as follows:

(1) In the case of property distributed, sold, exchanged, or

otherwise disposed of, within 6 months after the decedent's death

such property shall be valued as of the date of distribution,

sale, exchange, or other disposition.

(2) In the case of property not distributed, sold, exchanged,

or otherwise disposed of, within 6 months after the decedent's

death such property shall be valued as of the date 6 months after

the decedent's death.

(3) Any interest or estate which is affected by mere lapse of

time shall be included at its value as of the time of death

(instead of the later date) with adjustment for any difference in

its value as of the later date not due to mere lapse of time.

(b) Special rules

No deduction under this chapter of any item shall be allowed if

allowance for such items is in effect given by the alternate

valuation provided by this section. Wherever in any other

subsection or section of this chapter reference is made to the

value of property at the time of the decedent's death, such

reference shall be deemed to refer to the value of such property

used in determining the value of the gross estate. In case of an

election made by the executor under this section, then -

(1) for purposes of the charitable deduction under section 2055

or 2106(a)(2), any bequest, legacy, devise, or transfer

enumerated therein, and

(2) for the purpose of the marital deduction under section

2056, any interest in property passing to the surviving spouse,

shall be valued as of the date of the decedent's death with

adjustment for any difference in value (not due to mere lapse of

time or the occurrence or nonoccurrence of a contingency) of the

property as of the date 6 months after the decedent's death

(substituting, in the case of property distributed by the executor

or trustee, or sold, exchanged, or otherwise disposed of, during

such 6-month period, the date thereof).

No election may be made under this section with respect to an

estate unless such election will decrease -

(1) the value of the gross estate, and

(2) the sum of the tax imposed by this chapter and the tax

imposed by chapter 13 with respect to property includible in the

decedent's gross estate (reduced by credits allowable against

such taxes).

(d) Election

(1) In general

The election provided for in this section shall be made by the

executor on the return of the tax imposed by this chapter. Such

election, once made, shall be irrevocable.

(2) Exception

No election may be made under this section if such return is

filed more than 1 year after the time prescribed by law

(including extensions) for filing such return.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 381; Pub. L. 91-614, title I,

Sec. 101(a), Dec. 31, 1970, 84 Stat. 1836; Pub. L. 98-369, div. A,

title X, Secs. 1023(a), 1024(a), July 18, 1984, 98 Stat. 1030; Pub.

L. 99-514, title XIV, Sec. 1432(c)(1), Oct. 22, 1986, 100 Stat.

2730.)

-MISC1-

AMENDMENTS

1986 - Subsec. (c)(2). Pub. L. 99-514 amended par. (2) generally.

Prior to amendment, par. (2) read as follows: "the amount of the

tax imposed by this chapter (reduced by credits allowable against

such tax)."

1984 - Subsec. (c). Pub. L. 98-369, Sec. 1023(a), added subsec.

(c). Former subsec. (c) redesignated (d).

Subsec. (d). Pub. L. 98-369, Sec. 1024(a), substituted "Election"

for "Time of election" in heading, designated existing text as par.

(1), inserted heading "In general", substituted "shall be made by

the executor on the return of the tax imposed by this chapter" for

"shall be exercised by the executor on his return if filed within

the time prescribed by law or before the expiration of any

extension of time granted pursuant to law for the filing of the

return", inserted sentence providing that an election, once made,

is irrevocable, and added par. (2).

Pub. L. 98-369, Sec. 1023(a), redesignated subsec. (c) as (d).

1970 - Pub. L. 91-614 substituted "6 months" for "1 year" in four

places and substituted "6-month" for "1-year".

EFFECTIVE DATE OF 1986 AMENDMENT

Amendment by Pub. L. 99-514 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 an Effective Date note under section

2601 of this title.

EFFECTIVE DATE OF 1984 AMENDMENT

Section 1023(b) of Pub. L. 98-369 provided that: "The amendments

made by subsection (a) [amending this section] shall apply with

respect to estates of decedents dying after the date of the

enactment of this Act [July 18, 1984]."

Section 1024(b) of Pub. L. 98-369, as amended by Pub. L. 99-514,

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

"(1) In general. - The amendment made by subsection (a) [amending

this section] shall apply to estates of decedents dying after the

date of the enactment of this Act [July 18, 1984].

"(2) Transitional rule. - In the case of an estate of a decedent

dying before the date of the enactment of this Act [July 18, 1984]

if -

"(A) a credit or refund of the tax imposed by chapter 11 of the

Internal Revenue Code of 1986 [formerly I.R.C. 1954] is not

prevented on the date of the enactment of this Act by the

operation of any law or rule of law,

"(B) the election under section 2032 of the Internal Revenue

Code of 1986 would have met the requirements of such section (as

amended by this section and section 1023) had the decedent died

after the date of enactment of this Act, and

"(C) a claim for credit or refund of such tax with respect to

such estate is filed not later than the 90th day after the date

of the enactment of this Act,

then such election shall be treated as a valid election under such

section 2032. The statutory period for the assessment of any

deficiency which is attributable to an election under this

paragraph shall not expire before the close of the 2-year period

beginning on the date of the enactment of this Act."

EFFECTIVE DATE OF 1970 AMENDMENT

Section 101(j) of Pub. L. 91-614 provided that: "The amendments

made by this section [enacting section 6905 of this title, amending

this section and sections 1223, 2055, 2204, 6040, 6075, 6091, 6161,

6314, 6324, and 6504 of this title, and enacting provisions set out

as notes under this section and sections 2204 and 6905 of this

title] (other than subsection (f)) [amending sections 2204 and 6905

of this title] shall apply with respect to decedents dying after

December 31, 1970."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 996, 1014, 1016, 2055,

2056A, 2106, 2624 of this title.

-End-

-CITE-

26 USC Sec. 2032A 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART III - GROSS ESTATE

-HEAD-

Sec. 2032A. Valuation of certain farm, etc., real property

-STATUTE-

(a) Value based on use under which property qualifies

(1) General rule

If -

(A) the decedent was (at the time of his death) a citizen or

resident of the United States, and

(B) the executor elects the application of this section and

files the agreement referred to in subsection (d)(2),

then, for purposes of this chapter, the value of qualified real

property shall be its value for the use under which it qualifies,

under subsection (b), as qualified real property.

(2) Limitation on aggregate reduction in fair market value

The aggregate decrease in the value of qualified real property

taken into account for purposes of this chapter which results

from the application of paragraph (1) with respect to any

decedent shall not exceed $750,000.

(3) Inflation adjustment

In the case of estates of decedents dying in a calendar year

after 1998, the $750,000 amount contained in paragraph (2) shall

be increased by an amount equal to -

(A) $750,000, multiplied by

(B) the cost-of-living adjustment determined under section

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

1997" for "calendar year 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.

(b) Qualified real property

(1) In general

For purposes of this section, the term "qualified real

property" means real property located in the United States which

was acquired from or passed from the decedent to a qualified heir

of the decedent and which, on the date of the decedent's death,

was being used for a qualified use by the decedent or a member of

the decedent's family, but only if -

(A) 50 percent or more of the adjusted value of the gross

estate consists of the adjusted value of real or personal

property which -

(i) on the date of the decedent's death, was being used for

a qualified use by the decedent or a member of the decedent's

family, and

(ii) was acquired from or passed from the decedent to a

qualified heir of the decedent.

(B) 25 percent or more of the adjusted value of the gross

estate consists of the adjusted value of real property which

meets the requirements of subparagraphs (A)(ii) and (C),

decedent's death there have been periods aggregating 5 years or

more during which -

(i) such real property was owned by the decedent or a

member of the decedent's family and used for a qualified use

by the decedent or a member of the decedent's family, and

(ii) there was material participation by the decedent or a

member of the decedent's family in the operation of the farm

or other business, and

(D) such real property is designated in the agreement

referred to in subsection (d)(2).

(2) Qualified use

For purposes of this section, the term "qualified use" means

the devotion of the property to any of the following:

(A) use as a farm for farming purposes, or

(B) use in a trade or business other than the trade or

business of farming.

(3) Adjusted value

For purposes of paragraph (1), the term "adjusted value" means

(A) in the case of the gross estate, the value of the gross

estate for purposes of this chapter (determined without regard

to this section), reduced by any amounts allowable as a

deduction under paragraph (4) of section 2053(a), or

(B) in the case of any real or personal property, the value

of such property for purposes of this chapter (determined

without regard to this section), reduced by any amounts

allowable as a deduction in respect of such property under

paragraph (4) of section 2053(a).

(4) Decedents who are retired or disabled

(A) In general

If, on the date of the decedent's death, the requirements of

paragraph (1)(C)(ii) with respect to the decedent for any

property are not met, and the decedent -

(i) was receiving old-age benefits under title II of the

Social Security Act for a continuous period ending on such

date, or

(ii) was disabled for a continuous period ending on such

date,

then paragraph (1)(C)(ii) shall be applied with respect to such

property by substituting "the date on which the longer of such

continuous periods began" for "the date of the decedent's

death" in paragraph (1)(C).

(B) Disabled defined

For purposes of subparagraph (A), an individual shall be

disabled if such individual has a mental or physical impairment

which renders him unable to materially participate in the

operation of the farm or other business.

For purposes of subsection (c)(6)(B)(i), if the requirements

of paragraph (1)(C)(ii) are met with respect to any decedent by

reason of subparagraph (A), the period ending on the date on

which the continuous period taken into account under

subparagraph (A) began shall be treated as the period

immediately before the decedent's death.

(5) Special rules for surviving spouses

(A) In general

If property is qualified real property with respect to a

decedent (hereinafter in this paragraph referred to as the

"first decedent") and such property was acquired from or passed

from the first decedent to the surviving spouse of the first

decedent, for purposes of applying this subsection and

subsection (c) in the case of the estate of such surviving

spouse, active management of the farm or other business by the

surviving spouse shall be treated as material participation by

such surviving spouse in the operation of such farm or

business.

(B) Special rule

For the purposes of subparagraph (A), the determination of

whether property is qualified real property with respect to the

first decedent shall be made without regard to subparagraph (D)

of paragraph (1) and without regard to whether an election

under this section was made.

In any case in which to do so will enable the requirements of

paragraph (1)(C)(ii) to be met with respect to the surviving

spouse, this subsection and subsection (c) shall be applied by

taking into account any application of paragraph (4).

use

(1) Imposition of additional estate tax

If, within 10 years after the decedent's death and before the

death of the qualified heir -

(A) the qualified heir disposes of any interest in qualified

real property (other than by a disposition to a member of his

family), or

(B) the qualified heir ceases to use for the qualified use

the qualified real property which was acquired (or passed) from

the decedent,

then, there is hereby imposed an additional estate tax.

(2) Amount of additional tax

(A) In general

The amount of the additional tax imposed by paragraph (1)

with respect to any interest shall be the amount equal to the

lesser of -

(i) the adjusted tax difference attributable to such

interest, or

(ii) the excess of the amount realized with respect to the

interest (or, in any case other than a sale or exchange at

arm's length, the fair market value of the interest) over the

value of the interest determined under subsection (a).

(B) Adjusted tax difference attributable to interest

For purposes of subparagraph (A), the adjusted tax difference

attributable to an interest is the amount which bears the same

ratio to the adjusted tax difference with respect to the estate

(determined under subparagraph (C)) as -

(i) the excess of the value of such interest for purposes

of this chapter (determined without regard to subsection (a))

over the value of such interest determined under subsection

(a), bears to

(ii) a similar excess determined for all qualified real

property.

For purposes of subparagraph (B), the term "adjusted tax

difference with respect to the estate" means the excess of what

would have been the estate tax liability but for subsection (a)

over the estate tax liability. For purposes of this

subparagraph, the term "estate tax liability" means the tax

imposed by section 2001 reduced by the credits allowable

against such tax.

(D) Partial dispositions

For purposes of this paragraph, where the qualified heir

disposes of a portion of the interest acquired by (or passing

to) such heir (or a predecessor qualified heir) or there is a

cessation of use of such a portion -

(i) the value determined under subsection (a) taken into

account under subparagraph (A)(ii) with respect to such

portion shall be its pro rata share of such value of such

interest, and

(ii) the adjusted tax difference attributable to the

interest taken into account with respect to the transaction

involving the second or any succeeding portion shall be

reduced by the amount of the tax imposed by this subsection

with respect to all prior transactions involving portions of

such interest.

(E) Special rule for disposition of timber

In the case of qualified woodland to which an election under

subsection (e)(13)(A) applies, if the qualified heir disposes

of (or severs) any standing timber on such qualified woodland -

(i) such disposition (or severance) shall be treated as a

disposition of a portion of the interest of the qualified

heir in such property, and

(ii) the amount of the additional tax imposed by paragraph

(1) with respect to such disposition shall be an amount equal

to the lesser of -

(I) the amount realized on such disposition (or, in any

case other than a sale or exchange at arm's length, the

fair market value of the portion of the interest disposed

or severed), or

(II) the amount of additional tax determined under this

paragraph (without regard to this subparagraph) if the

entire interest of the qualified heir in the qualified

woodland had been disposed of, less the sum of the amount

of the additional tax imposed with respect to all prior

transactions involving such woodland to which this

subparagraph applied.

For purposes of the preceding sentence, the disposition of a

right to sever shall be treated as the disposition of the

standing timber. The amount of additional tax imposed under

paragraph (1) in any case in which a qualified heir disposes of

his entire interest in the qualified woodland shall be reduced

by any amount determined under this subparagraph with respect

to such woodland.

(3) Only 1 additional tax imposed with respect to any 1 portion

In the case of an interest acquired from (or passing from) any

decedent, if subparagraph (A) or (B) of paragraph (1) applies to

any portion of an interest, subparagraph (B) or (A), as the case

may be, of paragraph (1) shall not apply with respect to the same

portion of such interest.

(4) Due date

The additional tax imposed by this subsection shall become due

and payable on the day which is 6 months after the date of the

disposition or cessation referred to in paragraph (1).

(5) Liability for tax; furnishing of bond

The qualified heir shall be personally liable for the

additional tax imposed by this subsection with respect to his

interest unless the heir has furnished bond which meets the

requirements of subsection (e)(11).

(6) Cessation of qualified use

For purposes of paragraph (1)(B), real property shall cease to

be used for the qualified use if -

(A) such property ceases to be used for the qualified use set

forth in subparagraph (A) or (B) of subsection (b)(2) under

which the property qualified under subsection (b), or

(B) during any period of 8 years ending after the date of the

decedent's death and before the date of the death of the

qualified heir, there had been periods aggregating more than 3

years during which -

(i) in the case of periods during which the property was

held by the decedent, there was no material participation by

the decedent or any member of his family in the operation of

the farm or other business, and

(ii) in the case of periods during which the property was

held by any qualified heir, there was no material

participation by such qualified heir or any member of his

family in the operation of the farm or other business.

(7) Special rules

(A) No tax if use begins within 2 years

If the date on which the qualified heir begins to use the

qualified real property (hereinafter in this subparagraph

referred to as the commencement date) is before the date 2

years after the decedent's death -

(i) no tax shall be imposed under paragraph (1) by reason

of the failure by the qualified heir to so use such property

before the commencement date, and

(ii) the 10-year period under paragraph (1) shall be

extended by the period after the decedent's death and before

the commencement date.

(B) Active management by eligible qualified heir treated as

material participation

For purposes of paragraph (6)(B)(ii), the active management

of a farm or other business by -

(i) an eligible qualified heir, or

(ii) a fiduciary of an eligible qualified heir described in

clause (ii) or (iii) of subparagraph (C),

shall be treated as material participation by such eligible

qualified heir in the operation of such farm or business. In

the case of an eligible qualified heir described in clause

(ii), (iii), or (iv) of subparagraph (C), the preceding

sentence shall apply only during periods during which such heir

meets the requirements of such clause.

For purposes of this paragraph, the term "eligible qualified

heir" means a qualified heir who -

(i) is the surviving spouse of the decedent,

(ii) has not attained the age of 21,

(iii) is disabled (within the meaning of subsection

(b)(4)(B)), or

(iv) is a student.

(D) Student

For purposes of subparagraph (C), an individual shall be

treated as a student with respect to periods during any

calendar year if (and only if) such individual is a student

(within the meaning of section 151(c)(4)) for such calendar

year.

(E) Certain rents treated as qualified use

For purposes of this subsection, a surviving spouse or lineal

descendant of the decedent shall not be treated as failing to

use qualified real property in a qualified use solely because

such spouse or descendant rents such property to a member of

the family of such spouse or descendant on a net cash basis.

For purposes of the preceding sentence, a legally adopted child

of an individual shall be treated as the child of such

individual by blood.

(8) Qualified conservation contribution is not a disposition

A qualified conservation contribution (as defined in section

170(h)) by gift or otherwise shall not be deemed a disposition

under subsection (c)(1)(A).

(d) Election; agreement

(1) Election

The election under this section shall be made on the return of

the tax imposed by section 2001. Such election shall be made in

such manner as the Secretary shall by regulations prescribe. Such

an election, once made, shall be irrevocable.

(2) Agreement

The agreement referred to in this paragraph is a written

agreement signed by each person in being who has an interest

(whether or not in possession) in any property designated in such

agreement consenting to the application of subsection (c) with

respect to such property.

(3) Modification of election and agreement to be permitted

The Secretary shall prescribe procedures which provide that in

any case in which the executor makes an election under paragraph

(1) (and submits the agreement referred to in paragraph (2))

within the time prescribed therefor, but -

(A) the notice of election, as filed, does not contain all

required information, or

(B) signatures of 1 or more persons required to enter into

the agreement described in paragraph (2) are not included on

the agreement as filed, or the agreement does not contain all

required information,

the executor will have a reasonable period of time (not exceeding

90 days) after notification of such failures to provide such

information or signatures.

(e) Definitions; special rules

For purposes of this section -

(1) Qualified heir

The term "qualified heir" means, with respect to any property,

a member of the decedent's family who acquired such property (or

to whom such property passed) from the decedent. If a qualified

heir disposes of any interest in qualified real property to any

member of his family, such member shall thereafter be treated as

the qualified heir with respect to such interest.

(2) Member of family

The term "member of the family" means, with respect to any

individual, only -

(A) an ancestor of such individual,

(B) the spouse of such individual,

individual's spouse, or of a parent of such individual, or

(D) the spouse of any lineal descendant described in

subparagraph (C).

For purposes of the preceding sentence, a legally adopted child

of an individual shall be treated as the child of such individual

by blood.

(3) Certain real property included

In the case of real property which meets the requirements of

subparagraph (C) of subsection (b)(1), residential buildings and

related improvements on such real property occupied on a regular

basis by the owner or lessee of such real property or by persons

employed by such owner or lessee for the purpose of operating or

maintaining such real property, and roads, buildings, and other

structures and improvements functionally related to the qualified

use shall be treated as real property devoted to the qualified

use.

(4) Farm

The term "farm" includes stock, dairy, poultry, fruit,

furbearing animal, and truck farms, plantations, ranches,

nurseries, ranges, greenhouses or other similar structures used

primarily for the raising of agricultural or horticultural

commodities, and orchards and woodlands.

(5) Farming purposes

The term "farming purposes" means -

(A) cultivating the soil or raising or harvesting any

agricultural or horticultural commodity (including the raising,

shearing, feeding, caring for, training, and management of

animals) on a farm;

(B) handling, drying, packing, grading, or storing on a farm

any agricultural or horticultural commodity in its

unmanufactured state, but only if the owner, tenant, or

operator of the farm regularly produces more than one-half of

the commodity so treated; and

(C)(i) the planting, cultivating, caring for, or cutting of

trees, or

(ii) the preparation (other than milling) of trees for

market.

(6) Material participation

Material participation shall be determined in a manner similar

to the manner used for purposes of paragraph (1) of section

1402(a) (relating to net earnings from self-employment).

(7) Method of valuing farms

(A) In general

Except as provided in subparagraph (B), the value of a farm

for farming purposes shall be determined by dividing -

(i) the excess of the average annual gross cash rental for

comparable land used for farming purposes and located in the

locality of such farm over the average annual State and local

real estate taxes for such comparable land, by

(ii) the average annual effective interest rate for all new

Federal Land Bank loans.

For purposes of the preceding sentence, each average annual

computation shall be made on the basis of the 5 most recent

calendar years ending before the date of the decedent's death.

(B) Value based on net share rental in certain cases

(i) In general

If there is no comparable land from which the average

annual gross cash rental may be determined but there is

comparable land from which the average net share rental may

be determined, subparagraph (A)(i) shall be applied by

substituting "average annual net share rental" for "average

annual gross cash rental".

(ii) Net share rental

For purposes of this paragraph, the term "net share rental"

means the excess of -

(I) the value of the produce received by the lessor of

the land on which such produce is grown, over

(II) the cash operating expenses of growing such produce

which, under the lease, are paid by the lessor.

The formula provided by subparagraph (A) shall not be used -

(i) where it is established that there is no comparable

land from which the average annual gross cash rental may be

determined, or

(ii) where the executor elects to have the value of the

farm for farming purposes determined and that there is no

comparable land from which the average net share rental may

be determined under paragraph (8).

(8) Method of valuing closely held business interests, etc.

In any case to which paragraph (7)(A) does not apply, the

following factors shall apply in determining the value of any

qualified real property:

(A) The capitalization of income which the property can be

expected to yield for farming or closely held business purposes

over a reasonable period of time under prudent management using

traditional cropping patterns for the area, taking into account

soil capacity, terrain configuration, and similar factors,

(B) The capitalization of the fair rental value of the land

for farm land or closely held business purposes,

differential or use value assessment law for farmland or

closely held business,

(D) Comparable sales of other farm or closely held business

land in the same geographical area far enough removed from a

metropolitan or resort area so that nonagricultural use is not

a significant factor in the sales price, and

(E) Any other factor which fairly values the farm or closely

held business value of the property.

(9) Property acquired from decedent

Property shall be considered to have been acquired from or to

have passed from the decedent if -

(A) such property is so considered under section 1014(b)

(relating to basis of property acquired from a decedent),

(B) such property is acquired by any person from the estate,

the extent such property is includible in the gross estate of

the decedent).

(10) Community property

If the decedent and his surviving spouse at any time held

qualified real property as community property, the interest of

the surviving spouse in such property shall be taken into account

under this section to the extent necessary to provide a result

under this section with respect to such property which is

consistent with the result which would have obtained under this

section if such property had not been community property.

(11) Bond in lieu of personal liability

If the qualified heir makes written application to the

Secretary for determination of the maximum amount of the

additional tax which may be imposed by subsection (c) with

respect to the qualified heir's interest, the Secretary (as soon

as possible, and in any event within 1 year after the making of

such application) shall notify the heir of such maximum amount.

The qualified heir, on furnishing a bond in such amount and for

such period as may be required, shall be discharged from personal

liability for any additional tax imposed by subsection (c) and

shall be entitled to a receipt or writing showing such discharge.

(12) Active management

The term "active management" means the making of the management

decisions of a business (other than the daily operating

decisions).

(13) Special rules for woodlands

(A) In general

In the case of any qualified woodland with respect to which

the executor elects to have this subparagraph apply, trees

growing on such woodland shall not be treated as a crop.

(B) Qualified woodland

The term "qualified woodland" means any real property which -

(i) is used in timber operations, and

(ii) is an identifiable area of land such as an acre or

other area for which records are normally maintained in

conducting timber operations.

The term "timber operations" means -

(i) the planting, cultivating, caring for, or cutting of

trees, or

(ii) the preparation (other than milling) of trees for

market.

(D) Election

An election under subparagraph (A) shall be made on the

return of the tax imposed by section 2001. Such election shall

be made in such manner as the Secretary shall by regulations

prescribe. Such an election, once made, shall be irrevocable.

(14) Treatment of replacement property acquired in section 1031

or 1033 transactions

(A) In general

In the case of any qualified replacement property, any period

during which there was ownership, qualified use, or material

participation with respect to the replaced property by the

decedent or any member of his family shall be treated as a

period during which there was such ownership, use, or material

participation (as the case may be) with respect to the

qualified replacement property.

(B) Limitation

Subparagraph (A) shall not apply to the extent that the fair

market value of the qualified replacement property (as of the

date of its acquisition) exceeds the fair market value of the

replaced property (as of the date of its disposition).

For purposes of this paragraph -

(i) Qualified replacement property

The term "qualified replacement property" means any real

property which is -

(I) acquired in an exchange which qualifies under section

1031, or

(II) the acquisition of which results in the

nonrecognition of gain under section 1033.

Such term shall only include property which is used for the

same qualified use as the replaced property was being used

before the exchange.

(ii) Replaced property

The term "replaced property means -

(I) the property transferred in the exchange which

qualifies under section 1031, or

(II) the property compulsorily or involuntarily converted

(within the meaning of section 1033).

(f) Statute of limitations

If qualified real property is disposed of or ceases to be used

for a qualified use, then -

(1) the statutory period for the assessment of any additional

tax under subsection (c) attributable to such disposition or

cessation shall not expire before the expiration of 3 years from

the date the Secretary is notified (in such manner as the

Secretary may by regulations prescribe) of such disposition or

cessation (or if later in the case of an involuntary conversion

or exchange to which subsection (h) or (i) applies, 3 years from

the date the Secretary is notified of the replacement of the

converted property or of an intention not to replace or of the

exchange of property), and

(2) such additional tax may be assessed before the expiration

of such 3-year period notwithstanding the provisions of any other

law or rule of law which would otherwise prevent such assessment.

(g) Application of this section and section 6324B to interests in

partnerships, corporations, and trusts

The Secretary shall prescribe regulations setting forth the

application of this section and section 6324B in the case of an

interest in a partnership, corporation, or trust which, with

respect to the decedent, is an interest in a closely held business

(within the meaning of paragraph (1) of section 6166(b)). For

purposes of the preceding sentence, an interest in a discretionary

trust all the beneficiaries of which are qualified heirs shall be

treated as a present interest.

(h) Special rules for involuntary conversions of qualified real

property

(1) Treatment of converted property

(A) In general

If there is an involuntary conversion of an interest in

qualified real property -

(i) no tax shall be imposed by subsection (c) on such

conversion if the cost of the qualified replacement property

equals or exceeds the amount realized on such conversion, or

(ii) if clause (i) does not apply, the amount of the tax

imposed by subsection (c) on such conversion shall be the

amount determined under subparagraph (B).

(B) Amount of tax where there is not complete reinvestment

The amount determined under this subparagraph with respect to

any involuntary conversion is the amount of the tax which (but

for this subsection) would have been imposed on such conversion

reduced by an amount which -

(i) bears the same ratio to such tax, as

(ii) the cost of the qualified replacement property bears

to the amount realized on the conversion.

(2) Treatment of replacement property

For purposes of subsection (c) -

(A) any qualified replacement property shall be treated in

the same manner as if it were a portion of the interest in

qualified real property which was involuntarily converted;

except that with respect to such qualified replacement property

the 10-year period under paragraph (1) of subsection (c) shall

be extended by any period, beyond the 2-year period referred to

in section 1033(a)(2)(B)(i), during which the qualified heir

was allowed to replace the qualified real property,

(B) any tax imposed by subsection (c) on the involuntary

conversion shall be treated as a tax imposed on a partial

disposition, and

(i) by not taking into account periods after the

involuntary conversion and before the acquisition of the

qualified replacement property, and

(ii) by treating material participation with respect to the

converted property as material participation with respect to

the qualified replacement property.

(3) Definitions and special rules

For purposes of this subsection -

(A) Involuntary conversion

The term "involuntary conversion" means a compulsory or

involuntary conversion within the meaning of section 1033.

(B) Qualified replacement property

The term "qualified replacement property" means -

(i) in the case of an involuntary conversion described in

section 1033(a)(1), any real property into which the

qualified real property is converted, or

(ii) in the case of an involuntary conversion described in

section 1033(a)(2), any real property purchased by the

qualified heir during the period specified in section

1033(a)(2)(B) for purposes of replacing the qualified real

property.

Such term only includes property which is to be used for the

qualified use set forth in subparagraph (A) or (B) of subsection

(b)(2) under which the qualified real property qualified under

subsection (a).

(4) Certain rules made applicable

The rules of the last sentence of section 1033(a)(2)(A) shall

apply for purposes of paragraph (3)(B)(ii).

(i) Exchanges of qualified real property

(1) Treatment of property exchanged

(A) Exchanges solely for qualified exchange property

If an interest in qualified real property is exchanged solely

for an interest in qualified exchange property in a transaction

which qualifies under section 1031, no tax shall be imposed by

subsection (c) by reason of such exchange.

(B) Exchanges where other property received

If an interest in qualified real property is exchanged for an

interest in qualified exchange property and other property in a

transaction which qualifies under section 1031, the amount of

the tax imposed by subsection (c) by reason of such exchange

shall be the amount of tax which (but for this subparagraph)

would have been imposed on such exchange under subsection

(c)(1), reduced by an amount which -

(i) bears the same ratio to such tax, as

(ii) the fair market value of the qualified exchange

property bears to the fair market value of the qualified real

property exchanged.

For purposes of clause (ii) of the preceding sentence, fair

market value shall be determined as of the time of the

exchange.

(2) Treatment of qualified exchange property

For purposes of subsection (c) -

(A) any interest in qualified exchange property shall be

treated in the same manner as if it were a portion of the

interest in qualified real property which was exchanged,

(B) any tax imposed by subsection (c) by reason of the

exchange shall be treated as a tax imposed on a partial

disposition, and

treating material participation with respect to the exchanged

property as material participation with respect to the

qualified exchange property.

(3) Qualified exchange property

For purposes of this subsection, the term "qualified exchange

property" means real property which is to be used for the

qualified use set forth in subparagraph (A) or (B) of subsection

(b)(2) under which the real property exchanged therefor

originally qualified under subsection (a).

-SOURCE-

(Added Pub. L. 94-455, title XX, Sec. 2003(a), Oct. 4, 1976, 90

Stat. 1856; amended Pub. L. 95-472, Sec. 4(a), (c), Oct. 17, 1978,

92 Stat. 1334, 1336; Pub. L. 95-600, title VII, Sec. 702(d)(1),

(2), (4), (5), Nov. 6, 1978, 92 Stat. 2928, 2929; Pub. L. 97-34,

title IV, Sec. 421(a)-(d)(2)(A), (e), (f), (h)-(j)(2)(A), (3), (4),

Aug. 13, 1981, 95 Stat. 306-313; Pub. L. 97-448, title I, Sec.

104(b)(1), (2), Jan. 12, 1983, 96 Stat. 2381; Pub. L. 98-369, div.

A, title X, Sec. 1025(a), July 18, 1984, 98 Stat. 1030; Pub. L.

99-514, title I, Sec. 104(b)(3), Oct. 22, 1986, 100 Stat. 2105;

Pub. L. 100-647, title VI, Sec. 6151(a), Nov. 10, 1988, 102 Stat.

3724; Pub. L. 101-508, title XI, Sec. 11802(f)(5), Nov. 5, 1990,

104 Stat. 1388-530; Pub. L. 105-34, title V, Secs. 501(b), 504(a),

(b), 508(c), title XIII, Sec. 1313(a), Aug. 5, 1997, 111 Stat. 845,

853, 854, 860, 1045.)

-STATAMEND-

ADJUSTMENT OF DECREASE IN VALUE OF QUALIFIED REAL PROPERTY FOR

DECEDENTS DYING IN CALENDAR YEAR 2003

For adjustment of aggregate decrease in value of qualified real

property resulting from election under this section for estates of

decedents dying in calendar year 2003, see section 3.23 of Revenue

Procedure 2002-70, set out as a note under section 1 of this title.

-REFTEXT-

REFERENCES IN TEXT

The Social Security Act, referred to in subsec. (b)(4)(A)(i), is

act Aug. 14, 1935, ch. 531, 49 Stat. 620, as amended. Title II of

the Social Security Act is classified generally to subchapter II

(Sec. 401 et seq.) of chapter 7 of Title 42, The Public Health and

Welfare. For complete classification of this Act to the Code, see

section 1305 of Title 42 and Tables.

-MISC1-

AMENDMENTS

1997 - Subsec. (a)(3). Pub. L. 105-34, Sec. 501(b), added par.

(3).

Subsec. (b)(5)(A). Pub. L. 105-34, Sec. 504(b), struck out at end

"For purposes of subsection (c), such surviving spouse shall not be

treated as failing to use such property in a qualified use solely

because such spouse rents such property to a member of such

spouse's family on a net cash basis."

Subsec. (c)(7)(E). Pub. L. 105-34, Sec. 504(a), added subpar.

(E).

Subsec. (c)(8). Pub. L. 105-34, Sec. 508(c), added par. (8).

Subsec. (d)(3). Pub. L. 105-34, Sec. 1313(a), amended heading and

text of par. (3) generally. Prior to amendment, text read as

follows: "The Secretary shall prescribe procedures which provide

that in any case in which -

"(A) the executor makes an election under paragraph (1) within

the time prescribed for filing such election, and

"(B) substantially complies with the regulations prescribed by

the Secretary with respect to such election, but -

"(i) the notice of election, as filed, does not contain all

required information, or

"(ii) signatures of 1 or more persons required to enter into

the agreement described in paragraph (2) are not included on

the agreement as filed, or the agreement does not contain all

required information,

the executor will have a reasonable period of time (not exceeding

90 days) after notification of such failures to provide such

information or agreements."

1990 - Subsec. (a)(2). Pub. L. 101-508 amended par. (2)

generally, substituting present provisions for provisions which

established graduated increase in applicable limit on aggregate

reduction in fair market value from $600,000 in the case of

decedents dying in 1981 to $750,000 in the case of decedents dying

in 1983 or thereafter.

1988 - Subsec. (b)(5)(A). Pub. L. 100-647 inserted at end "For

purposes of subsection (c), such surviving spouse shall not be

treated as failing to use such property in a qualified use solely

because such spouse rents such property to a member of such

spouse's family on a net cash basis."

1986 - Subsec. (c)(7)(D). Pub. L. 99-514 substituted "section

151(c)(4)" for "section 151(e)(4)".

1984 - Subsec. (d)(3). Pub. L. 98-369 added par. (3).

1983 - Subsec. (b)(5)(C). Pub. L. 97-448, Sec. 104(b)(1), added

subpar. (C).

Subsec. (i)(1)(B)(ii). Pub. L. 97-448, Sec. 104(b)(2)(A),

substituted "the qualified exchange property" for "the other

property".

Subsec. (i)(3). Pub. L. 97-448, Sec. 104(b)(2)(B), substituted

"subparagraph (A) or (B)" for "subparagraph (A), (B), or (C)".

1981 - Subsec. (a)(2). Pub. L. 97-34, Sec. 421(a), substituted

"Limit on aggregate reduction in fair market value" for

"Limitation" in heading "shall not exceed the applicable limit set

forth in the following table:" for "shall not exceed $500,000" in

text, and inserted table.

Subsec. (b)(1). Pub. L. 97-34, Sec. 421(b)(1), substituted

"qualified use by the decedent or a member of the decedent's

family" for "qualified use" in provision preceding subpar. (A), and

in subpars. (A)(i) and (C)(i).

Subsec. (b)(4), (5). Pub. L. 97-34, Sec. 421(b)(2), added pars.

(4) and (5).

Subsec. (c)(1). Pub. L. 97-34, Sec. 421(c)(1)(A), substituted "10

years" for "15 years".

Subsec. (c)(2)(E). Pub. L. 97-34, Sec. 421(h)(2), added subpar.

(E).

Subsec. (c)(3). Pub. L. 97-34, Sec. 421(c)(1)(B)(i), redesignated

par. (4) as (3) and struck out former par. (3), which provided for

a phaseout of additional tax between the 10th and 15th years.

Subsec. (c)(4), (5). Pub. L. 97-34, Sec. 421(c)(1)(B)(i),

redesignated pars. (5) and (6) as (4) and (5), respectively. Former

par. (4) redesignated (3).

Subsec. (c)(6). Pub. L. 97-34, Sec. 421(c)(2)(B)(ii), in subpar.

(B) substituted "more than 3 years" for "3 years or more".

Pub. L. 97-34, Sec. 421(c)(1)(B)(i), redesignated par. (7) as

(6). Former par. (6) redesignated (5).

Subsec. (c)(7). Pub. L. 97-34, Sec. 421(c)(1)(B)(i), (2)(A),

added par. (7). Former par. (7) redesignated (6).

Subsec. (d)(1). Pub. L. 97-34, Sec. 421(j)(3), substituted "The

election under this section shall be made on the return of the tax

imposed by section 2001. Such election shall be made in such manner

as the Secretary shall by regulations prescribe. Such an election,

once made, shall be irrevocable." for "The election under this

section shall be made not later than the time prescribed by section

6075(a) for filing the return of tax imposed by section 2001

(including extensions thereof), and shall be made in such manner as

the Secretary shall by regulations prescribe."

Subsec. (e)(2). Pub. L. 97-34, Sec. 421(i), substituted

provisions designated subpars. (A) through (D) for "such

individual's ancestor or lineal descendant, a lineal descendant of

a grandparent of such individual, the spouse of such individual, or

the spouse of any such descendant".

Subsec. (e)(7). Pub. L. 97-34, Sec. 421(f), added subpar. (B),

redesignated former subpar. (B) as (C), and inserted "and that

there is no comparable land from which the average net share rental

may be determined" after "determined" in subpar. (C), without

specifying whether the language was to be inserted in cl. (i) or

(ii) of subpar. (C). In view of H. Rept. No. 97-201, 97th Cong.,

July 14, 1981, p. 492, the language was inserted in cl. (ii) as the

probable intent of Congress.

Subsec. (e)(9). Pub. L. 97-34, Sec. 421(j)(2)(A), struck out from

subpar. (B) "in satisfaction of the right of such person to a

pecuniary bequest" after "from the estate" and in subpar. (C)

substituted "(to the extent such property is includible in the

gross estate of the decedent)" for "in satisfaction of a right

(which such person has by reason of the death of the decedent) to

receive from the trust a specific dollar amount which is the

equivalent of a pecuniary bequest".

Subsec. (e)(12). Pub. L. 97-34, Sec. 421(c)(2)(B)(i), added par.

(12).

Subsec. (e)(13), (14). Pub. L. 97-34, Sec. 421(h)(1), (j)(4),

added pars. (13) and (14).

Subsec. (f)(1). Pub. L. 97-34, Sec. 421(e)(2), substituted "to

which subsection (h)" for "to which an election under subsection

(h)".

Pub. L. 97-34, Sec. 421(d)(2)(A), substituted "conversion or

exchange", "(h) or (i)", and "replace or of the exchange of

property" for "conversion", "(h)", and "replace".

Subsec. (g). Pub. L. 97-34, Sec. 421(j)(1), inserted provision

that for purposes of the preceding sentence, an interest in a

discretionary trust all the beneficiaries of which are qualified

heirs shall be treated as a present interest.

Subsec. (h)(1)(A). Pub. L. 97-34, Sec. 421(e)(1)(A), struck out

"and the qualified heir makes an election under this subsection"

after "qualified real property".

Subsec. (h)(2)(A). Pub. L. 97-34, Sec. 421(c)(1)(B)(ii),

substituted "; except that" for ", except that" and "the 10-year

period" for "the 15-year period", deleted cl. (i) designation, and

struck out cl. (ii), which provided the phaseout period under par.

(3) of subsec. (c) be appropriately adjusted to take into account

the extension referred to in cl. (i).

Subsec. (h)(2)(C). Pub. L. 97-34, Sec. 421(c)(1)(B)(iii),

substituted "(6)" for "(7)" in provisions preceding cl. (i).

Subsec. (h)(5). Pub. L. 97-34, Sec. 421(e)(1)(B), struck out par.

(5) which provided for making a subsec. (h) election at such time

and in such manner as the Secretary may by regulations prescribe.

Subsec. (i). Pub. L. 97-34, Sec. 421(d)(1), added subsec. (i).

1978 - Subsec. (b)(1). Pub. L. 95-600, Sec. 702(d)(1), inserted

"which was acquired from or passed from the decedent to a qualified

heir of the decedent and" after "located in the United States".

Subsec. (c)(6). Pub. L. 95-600, Sec. 702(d)(5)(A), inserted

"unless the heir has furnished bond which meets the requirements of

subsection (e)(11)" after "respect to his interest".

Subsec. (e)(9). Pub. L. 95-600, Sec. 702(d)(2), added par. (9).

Subsec. (e)(10). Pub. L. 95-600, Sec. 702(d)(4), added par. (10).

Subsec. (e)(11). Pub. L. 95-600, Sec. 702(d)(5)(B), added par.

(11).

Subsec. (f)(1). Pub. L. 95-472, Sec. 4(c), inserted provision

relating to the expiration of the statutory period for the

assessment of additional tax due under subsec. (c) in the case of

an involuntary conversion to which an election under subsec. (h) is

applicable.

Subsec. (h). Pub. L. 95-472, Sec. 4(a), added subsec. (h).

EFFECTIVE DATE OF 1997 AMENDMENT

Amendment by section 501(b) of Pub. L. 105-34 applicable to

estates of decedents dying, and gifts made, after Dec. 31, 1997,

see section 501(f) of Pub. L. 105-34, set out as a note under

section 2001 of this title.

Section 504(c) of Pub. L. 105-34 provided that: "The amendments

made by this section [amending this section] shall apply with

respect to leases entered into after December 31, 1976."

Amendment by section 508(c) of Pub. L. 105-34 applicable to

easements granted after Dec. 31, 1997, see section 508(e)(2) of

Pub. L. 105-34, set out as a note under section 170 of this title.

Section 1313(b) of Pub. L. 105-34 provided that: "The amendment

made by subsection (a) [amending this section] shall apply to the

estates of decedents dying after the date of the enactment of this

Act [Aug. 5, 1997]."

EFFECTIVE DATE OF 1988 AMENDMENT

Section 6151(b) of Pub. L. 100-647 provided that:

"(1) In general. - The amendment made by subsection (a) [amending

this section] shall apply with respect to rentals occurring after

December 31, 1976.

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

enactment of this Act [Nov. 10, 1988] (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 the amendment made by

subsection (a) is barred by any law or rule of law, refund or

credit of such overpayment shall, nevertheless, be made or allowed

if claim therefore is filed before the date 1 year after the date

of the enactment of this Act."

EFFECTIVE DATE OF 1986 AMENDMENT

Amendment by Pub. L. 99-514 applicable to taxable years beginning

after Dec. 31, 1986, see section 151(a) of Pub. L. 99-514, set out

as a note under section 1 of this title.

EFFECTIVE DATE OF 1984 AMENDMENT

Section 1025(b) of Pub. L. 98-369, as amended by Pub. L. 99-514,

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

"(1) In general. - The amendment made by this section [amending

this section] shall apply to estates of decedents dying after

December 31, 1976.

"(2) Refund or credit of overpayment barred by statute of

limitations. - Notwithstanding section 6511(a) of the Internal

Revenue Code of 1986 [formerly I.R.C. 1954] or any other period of

limitation or lapse of time, a claim for credit or refund of

overpayment of the tax imposed by such Code which arises by reason

of this section may be filed by any person at any time within the

1-year period beginning on the date of the enactment of this Act

[July 18, 1984]. Sections 6511(b) and 6514 of such Code shall not

apply to any claim for credit or refund filed under this subsection

within such 1-year period."

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-448 effective, except as otherwise

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

Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such

amendment relates, see section 109 of Pub. L. 97-448, set out as a

note under section 1 of this title.

EFFECTIVE DATE OF 1981 AMENDMENT

Section 421(k) of Pub. L. 97-34, as amended by Pub. L. 97-448,

title I, Sec. 104(b)(4), Jan. 12, 1983, 96 Stat. 2382; Pub. L.

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

"(1) In general. - Except as otherwise provided in this

subsection, the amendments made by this section [amending this

section and sections 1016, 1040, and 6324B of this title] shall

apply with respect to the estates of decedents dying after December

31, 1981.

"(2) Increase in limitation. - The amendment made by subsection

(a) [amending this section] shall apply with respect to the estates

of decedents dying after December 31, 1980.

"(3) Subsection (d). - The amendments made by subsection (d)

[amending this section and section 6324B of this title] shall apply

with respect to exchanges after December 31, 1981.

"(4) Subsection (e). - The amendments made by subsection (e)

[amending this section] shall apply with respect to involuntary

conversions after December 31, 1981.

"(5) Certain amendments made retroactive to 1976. -

"(A) In general. - The amendments made by subsections (b)(1),

(j)(1), and (j)(2) [amending this section and section 1040 of

this title] and the provisions of subparagraph (A) of section

2032A(c)(7) of the Internal Revenue Code of 1986 [formerly I.R.C.

1954] (as added by subsection (c)(2)) shall apply with respect to

the estates of decedents dying after December 31, 1976.

"(B) Timely election required. - Subparagraph (A) shall only

apply in the case of an estate if a timely election under section

2032A was made with respect to such estate. If the estate of any

decedent would not qualify under section 2032A of the Internal

Revenue Code of 1986 but for the amendments described in

subparagraph (A) and the time for making an election under

section 2032A with respect to such estate would (but for this

sentence) expire after July 28, 1980, the time for making such

election shall not expire before the close of February 16, 1982.

"(C) Reinstatement of elections. - If any election under

section 2032A was revoked before the date of the enactment of

this Act [Aug. 13, 1981], such election may be reinstated at any

time before February 17, 1982.

"(D) Statute of limitations. - If on the date of the enactment

of this Act [Aug. 13, 1981] (or at any time before February 17,

1982) the making of a credit or refund of any overpayment of tax

resulting from the amendments described in subparagraph (A) is

barred by any law or rule of law, such credit or refund shall

nevertheless be made if claim therefor is made before February

17, 1982."

EFFECTIVE DATE OF 1978 AMENDMENTS

Section 702(d)(6) of Pub. L. 95-600 provided that: "The

amendments made by this subsection [amending this section and

section 1040 of this title] shall apply to the estates of decedents

dying after December 31, 1976."

Amendment of section by Pub. L. 95-472 applicable with respect to

involuntary conversions after Dec. 31, 1976, see section 4(d) of

Pub. L. 95-472, set out as a note under section 1016 of this title.

EFFECTIVE DATE

Section 2003(e) of Pub. L. 94-455 provided that: "The amendments

made by this section [enacting this section and section 6324B of

this title and amending section 2013 of this title] shall apply to

the estates of decedents dying after December 31, 1976."

SAVINGS PROVISION

For provisions that nothing in amendment by Pub. L. 101-508 be

construed to affect treatment of certain transactions occurring,

property acquired, or items of income, loss, deduction, or credit

taken into account prior to Nov. 5, 1990, for purposes of

determining liability for tax for periods ending after Nov. 5,

1990, see section 11821(b) of Pub. L. 101-508, set out as a note

under section 29 of this title.

WAIVER OF STATUTE OF LIMITATION FOR TAXES ON CERTAIN FARM

VALUATIONS

Pub. L. 107-16, title V, Sec. 581, June 7, 2001, 115 Stat. 93,

provided that: "If on the date of the enactment of this Act [June

7, 2001] (or at any time within 1 year after the date of the

enactment) a refund or credit of any overpayment of tax resulting

from the application of section 2032A(c)(7)(E) of the Internal

Revenue Code of 1986 is barred by any law or rule of law, the

refund or credit of such overpayment shall, nevertheless, be made

or allowed if claim therefor is filed before the date 1 year after

the date of the enactment of this Act."

INFORMATION NECESSARY FOR VALID SPECIAL USE VALUATION ELECTION

Section 1421 of Pub. L. 99-514, as amended by Pub. L. 100-647,

title I, Sec. 1014(f), Nov. 10, 1988, 102 Stat. 3562, provided

that:

"(a) In General. - In the case of any decedent dying before

January 1, 1986, if the executor -

"(1) made an election under section 2032A of the Internal

Revenue Code of 1954 [now 1986] on the return of tax imposed by

section 2001 of such Code, and

"(2) provided substantially all the information with respect to

such election required on such return of tax,

such election shall be a valid election for purposes of section

2032A of such Code.

"(b) Executor Must Provide Information. - An election described

in subsection (a) shall not be valid if the Secretary of the

Treasury or his delegate after the date of the enactment of this

Act [Oct. 22, 1986] requests information from the executor with

respect to such election and the executor does not provide such

information within 90 days of receipt of such request.

"(c) Effective Date. - The provisions of this section shall not

apply to the estate of any decedent if before the date of the

enactment of this Act [Oct. 22, 1986] the statute of limitations

has expired with respect to -

"(1) the return of tax imposed by section 2001 of the Internal

Revenue Code of 1954 [now 1986], and

"(2) the period during which a claim for credit or refund may

be timely filed.

"(d) Special Rule for Certain Estate. - Notwithstanding

subsection (a)(2), the provisions of this section shall apply to

the estate of an individual who died on January 30, 1984, and with

respect to which -

"(1) a Federal estate tax return was filed on October 30, 1984,

electing current use valuation, and

"(2) the agreement required under section 2032A was filed on

November 9, 1984."

LAND DIVERTED UNDER 1983 PAYMENT-IN-KIND PROGRAM

Land diverted from production of agricultural commodities under a

1983 payment-in-kind program to be treated, for purposes of this

section, as used during the 1983 crop year by qualified taxpayers

in the active conduct of the trade or business of farming, with

qualified taxpayers who materially participate in the diversion and

devotion to conservation uses under a 1983 payment-in-kind program

to be treated as materially participating in the operation of such

land during the 1983 crop year, see section 3 of Pub. L. 98-4, set

out as a note under section 61 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 263A, 453, 453A, 469,

664, 1014, 1016, 1040, 1223, 1396, 1397C, 2013, 2031, 2035, 2056A,

2057, 2624, 2663, 6324B of this title.

-End-

-CITE-

26 USC Sec. 2033 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART III - GROSS ESTATE

-HEAD-

Sec. 2033. Property in which the decedent had an interest

-STATUTE-

The value of the gross estate shall include the value of all

property to the extent of the interest therein of the decedent at

the time of his death.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 381; Pub. L. 87-834, Sec.

18(a)(2)(A), Oct. 16, 1962, 76 Stat. 1052.)

-MISC1-

AMENDMENTS

1962 - Pub. L. 87-834 struck out provisions which excepted real

property situated outside of the United States.

EFFECTIVE DATE OF 1962 AMENDMENT

Amendment by Pub. L. 87-834 applicable to estates of decedents

dying after Oct. 16, 1962, except as otherwise provided, see

section 18(b) of Pub. L. 87-834, set out as a note under section

2031 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2056 of this title; title

43 section 1620.

-End-

-CITE-

26 USC [Sec. 2033A 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART III - GROSS ESTATE

-HEAD-

[Sec. 2033A. Renumbered Sec. 2057]

-STATUTE-

-End-

-CITE-

26 USC Sec. 2034 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART III - GROSS ESTATE

-HEAD-

Sec. 2034. Dower or curtesy interests

-STATUTE-

The value of the gross estate shall include the value of all

property to the extent of any interest therein of the surviving

spouse, existing at the time of the decedent's death as dower or

curtesy, or by virtue of a statute creating an estate in lieu of

dower or curtesy.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 381; Pub. L. 87-834, Sec.

18(a)(2)(B), Oct. 16, 1962, 76 Stat. 1052.)

-MISC1-

AMENDMENTS

1962 - Pub. L. 87-834 struck out provisions which excepted real

property situated outside of the United States.

EFFECTIVE DATE OF 1962 AMENDMENT

Amendment by Pub. L. 87-834 applicable to estates of decedents

dying after Oct. 16, 1962, except as otherwise provided, see

section 18(b) of Pub. L. 87-834, set out as a note under section

2031 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2045, 6324 of this title.

-End-

-CITE-

26 USC Sec. 2035 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART III - GROSS ESTATE

-HEAD-

Sec. 2035. Adjustments for certain gifts made within 3 years of

decedent's death

-STATUTE-

(a) Inclusion of certain property in gross estate

If -

(1) the decedent made a transfer (by trust or otherwise) of an

interest in any property, or relinquished a power with respect to

any property, during the 3-year period ending on the date of the

decedent's death, and

(2) the value of such property (or an interest therein) would

have been included in the decedent's gross estate under section

2036, 2037, 2038, or 2042 if such transferred interest or

relinquished power had been retained by the decedent on the date

of his death,

the value of the gross estate shall include the value of any

property (or interest therein) which would have been so included.

(b) Inclusion of gift tax on gifts made during 3 years before

decedent's death

The amount of the gross estate (determined without regard to this

subsection) shall be increased by the amount of any tax paid under

chapter 12 by the decedent or his estate on any gift made by the

decedent or his spouse during the 3-year period ending on the date

of the decedent's death.

(1) In general

For purposes of -

(A) section 303(b) (relating to distributions in redemption

of stock to pay death taxes),

(B) section 2032A (relating to special valuation of certain

farms, etc., real property), and

the value of the gross estate shall include the value of all

property to the extent of any interest therein of which the

decedent has at any time made a transfer, by trust or otherwise,

during the 3-year period ending on the date of the decedent's

death.

(2) Coordination with section 6166

An estate shall be treated as meeting the 35 percent of

adjusted gross estate requirement of section 6166(a)(1) only if

the estate meets such requirement both with and without the

application of subsection (a).

(3) Marital and small transfers

Paragraph (1) shall not apply to any transfer (other than a

transfer with respect to a life insurance policy) made during a

calendar year to any donee if the decedent was not required by

section 6019 (other than by reason of section 6019(2)) to file

any gift tax return for such year with respect to transfers to

such donee.

(d) Exception

Subsection (a) and paragraph (1) of subsection (c) shall not

apply to any bona fide sale for an adequate and full consideration

in money or money's worth.

(e) Treatment of certain transfers from revocable trusts

For purposes of this section and section 2038, any transfer from

any portion of a trust during any period that such portion was

treated under section 676 as owned by the decedent by reason of a

power in the grantor (determined without regard to section 672(e))

shall be treated as a transfer made directly by the decedent.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 381; Pub. L. 87-834, Sec.

18(a)(2)(C), Oct. 16, 1962, 76 Stat. 1052; Pub. L. 94-455, title

XX, Sec. 2001(a)(5), Oct. 4, 1976, 90 Stat. 1848; Pub. L. 95-600,

title VII, Sec. 702(f)(1), Nov. 6, 1978, 92 Stat. 2930; Pub. L.

97-34, title IV, Secs. 403(b)(3)(B), 424(a), Aug. 13, 1981, 95

Stat. 301, 317; Pub. L. 97-448, title I, Sec. 104(a)(9), (d)(1)(A),

(C), (2), Jan. 12, 1983, 96 Stat. 2381, 2383; Pub. L. 105-34, title

XIII, Sec. 1310(a), Aug. 5, 1997, 111 Stat. 1043; Pub. L. 106-554,

Sec. 1(a)(7) [title III, Sec. 319(14)], Dec. 21, 2000, 114 Stat.

2763, 2763A-646.)

-MISC1-

AMENDMENTS

2000 - Subsec. (c)(2). Pub. L. 106-554, Sec. 1(a)(7) [title III,

Sec. 319(14)(A)], substituted "subsection (a)" for "paragraph (1)".

Subsec. (d). Pub. L. 106-554, Sec. 1(a)(7) [title III, Sec.

319(14)(B)], inserted "and paragraph (1) of subsection (c)" after

"Subsection (a)".

1997 - Pub. L. 105-34 amended section catchline and text

generally. Prior to amendment, section consisted of subsecs. (a) to

(d) relating to adjustments for gifts made within 3 years of

decedent's death.

1983 - Subsec. (b)(2). Pub. L. 97-448, Sec. 104(a)(9),

substituted "section 6019(2)" for "section 6019(a)(2)".

Subsec. (d)(2). Pub. L. 97-448, Sec. 104(d)(2), inserted "of this

subsection and paragraph (2) of subsection (b)" after "Paragraph

(1)", and struck out "2041," after "2038,".

Subsec. (d)(3)(C), (D). Pub. L. 97-448, Sec. 104(d)(1)(C),

redesignated subpar. (D) as (C). Former subpar. (C), which referred

to section 6166 (relating to extension of time for payment of

estate tax where estate consists largely of interest in closely

held business), was struck out.

Subsec. (d)(4). Pub. L. 97-448, Sec. 104(d)(1)(A), added par.

(4).

1981 - Subsec. (b)(2). Pub. L. 97-34, Sec. 403(b)(3)(B), inserted

"(other than by reason of section 6019(a)(2))" after "section

6019".

Subsec. (d). Pub. L. 97-34, Sec. 424(a), added subsec. (d).

1978 - Subsec. (b). Pub. L. 95-600 substituted in par. (2)

provisions relating to gifts for which donee was not required by

section 6019 to file gift tax returns for provisions relating to

gifts excludable in computing taxable gifts by reason of section

2503(b) and inserted provisions following par. (2) relating to

inapplicability of par. (2) to transfers respecting life insurance

policies.

1976 - Pub. L. 94-455 substituted provisions covering adjustments

for gifts made within 3 years of decedent's death for provisions

under which transfers by the decedent within 3 years of the

decedent's death were deemed to have been made in contemplation of

death and included in the value of the gross estate.

1962 - Subsec. (a). Pub. L. 87-834 struck out provisions which

excepted real property situated outside of the United States.

EFFECTIVE DATE OF 1997 AMENDMENT

Section 1310(c) of Pub. L. 105-34 provided that: "The amendments

made by this section [amending this section] shall apply to the

estates of decedents dying after the date of the enactment of this

Act [Aug. 5, 1997]."

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-448 effective, except as otherwise

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

Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such

amendment relates, see section 109 of Pub. L. 97-448, set out as a

note under section 1 of this title.

EFFECTIVE DATE OF 1981 AMENDMENT

Amendment by section 403(b)(3)(B) of Pub. L. 97-34 applicable to

estates of decedents dying after Dec. 31, 1981, see section 403(e)

of Pub. L. 97-34, set out as a note under section 2056 of this

title.

Section 424(b) of Pub. L. 97-34 provided that: "The amendment

made by subsection (a) [amending this section] shall apply to the

estates of decedents dying after December 31, 1981."

EFFECTIVE DATE OF 1978 AMENDMENT

Section 702(f)(2) of Pub. L. 95-600 provided that: "The amendment

made by paragraph (1) [amending this section] shall apply to the

estates of decedents dying after December 31, 1976, except that it

shall not apply to transfers made before January 1, 1977."

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by Pub. L. 94-455 applicable to estates of decedents

dying after Dec. 31, 1976, but not to transfers made before Jan. 1,

1977, see section 2001(d)(1) of Pub. L. 94-455, set out as a note

under section 2001 of this title.

EFFECTIVE DATE OF 1962 AMENDMENT

Amendment by Pub. L. 87-834 applicable to estates of decedents

dying after Oct. 16, 1962, except as otherwise provided, see

section 18(b) of Pub. L. 87-834, set out as a note under section

2031 of this title.

TRANSFERS MADE BY DECEDENT DURING 1977; ELECTION AVAILABLE TO

EXECUTOR ON OR BEFORE DUE DATE FOR FILING ESTATE TAX RETURN

Pub. L. 96-222, title I, Sec. 107(a)(2)(F), Apr. 1, 1980, 94

Stat. 223, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100

Stat. 2095, provided that:

"(i) If the executor elects the benefits of this subparagraph

with respect to any estate, section 2035(b) of the Internal

Revenue Code of 1986 [formerly I.R.C. 1954] (relating to

adjustments for gifts made within 3 years of decedent's death)

shall be applied with respect to transfers made by the decedent

during 1977 as if paragraph (2) of such section 2035(b) read as

follows:

" '(2) to any gift to a donee made during 1977 to the extent of

the amount of such gift which was excludable in computing taxable

gifts by reason of section 2503(b) (relating to $3,000 annual

exclusion for purposes of the gift tax) determined without regard

to section 2513(a).'

"(ii) The election under clause (i) with respect to any estate

shall be made on or before the later of -

"(I) the due date for filing the estate tax return, or

"(II) the day which is 120 days after the date of the

enactment of this Act [Apr. 1, 1980]."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2001, 2036, 2041, 2043,

2045, 2056, 2104, 2107, 2642, 6166, 6324 of this title.

-End-

-CITE-

26 USC Sec. 2036 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART III - GROSS ESTATE

-HEAD-

Sec. 2036. Transfers with retained life estate

-STATUTE-

(a) General rule

The value of the gross estate shall include the value of all

property to the extent of any interest therein of which the

decedent has at any time made a transfer (except in case of a bona

fide sale for an adequate and full consideration in money or

money's worth), by trust or otherwise, under which he has retained

for his life or for any period not ascertainable without reference

to his death or for any period which does not in fact end before

his death -

(1) the possession or enjoyment of, or the right to the income

from, the property, or

(2) the right, either alone or in conjunction with any person,

to designate the persons who shall possess or enjoy the property

or the income therefrom.

(b) Voting rights

(1) In general

For purposes of subsection (a)(1), the retention of the right

to vote (directly or indirectly) shares of stock of a controlled

corporation shall be considered to be a retention of the

enjoyment of transferred property.

(2) Controlled corporation

For purposes of paragraph (1), a corporation shall be treated

as a controlled corporation if, at any time after the transfer of

the property and during the 3-year period ending on the date of

the decedent's death, the decedent owned (with the application of

section 318), or had the right (either alone or in conjunction

with any person) to vote, stock possessing at least 20 percent of

the total combined voting power of all classes of stock.

(3) Coordination with section 2035

For purposes of applying section 2035 with respect to paragraph

(1), the relinquishment or cessation of voting rights shall be

treated as a transfer of property made by the decedent.

This section shall not apply to a transfer made before March 4,

1931; nor to a transfer made after March 3, 1931, and before June

7, 1932, unless the property transferred would have been includible

in the decedent's gross estate by reason of the amendatory language

of the joint resolution of March 3, 1931 (46 Stat. 1516).

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 382; Pub. L. 87-834, Sec.

18(a)(2)(D), Oct. 16, 1962, 76 Stat. 1052; Pub. L. 94-455, title

XX, Sec. 2009(a), Oct. 4, 1976, 90 Stat. 1893; Pub. L. 95-600,

title VII, Sec. 702(i)(1), (2), Nov. 6, 1978, 92 Stat. 2931; Pub.

L. 100-203, title X, Sec. 10402(a), Dec. 22, 1987, 101 Stat.

1330-431; Pub. L. 100-647, title III, Sec. 3031(a)(1), (b)-(e),

(g), Nov. 10, 1988, 102 Stat. 3634-3638; Pub. L. 101-508, title XI,

Sec. 11601(a), Nov. 5, 1990, 104 Stat. 1388-490.)

-MISC1-

AMENDMENTS

1990 - Subsecs. (c), (d). Pub. L. 101-508 redesignated subsec.

(d) as (c) and struck out former subsec. (c) which enunciated a

rule that retention of retained interest would be considered to be

a retention of enjoyment of transferred property if a person held a

substantial interest in an enterprise, and such person in effect

transferred after Dec. 17, 1987, property having a

disproportionately large share of the potential appreciation in

such person's interest in the enterprise while retaining an

interest in the income of, or rights in, the enterprise.

1988 - Subsec. (c)(1)(B). Pub. L. 100-647, Sec. 3031(e),

substituted "an interest" for "a disproportionately large share"

after "whole retaining".

Subsec. (c)(2). Pub. L. 100-647, Sec. 3031(g)(1), substituted

"consideration furnished by" for "sales to" in heading, and amended

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

exception contained in subsection (a) for a bona fide sale shall

not apply to a transfer described in paragraph (1) if such transfer

is to a member of the transferor's family."

Subsec. (c)(3)(C). Pub. L. 100-647, Sec. 3031(d), substituted

"Except as provided in regulations, an" for "An".

Subsec. (c)(4). Pub. L. 100-647, Sec. 3031(a)(1), amended par.

(4) generally, substituting provisions relating to treatment of

certain transfers for provisions relating to coordination with

section 2035.

Subsec. (c)(5). Pub. L. 100-647, Sec. 3031(g)(2), amended par.

(5) generally, substituting provisions relating to the making of

appropriate adjustments in amounts included in gross estate for

provisions relating to coordination with section 2043.

Subsec. (c)(6). Pub. L. 100-647, Sec. 3031(b), added par. (6).

Subsec. (c)(7), (8). Pub. L. 100-647, Sec. 3031(b)[(c)], added

pars. (7) and (8).

1987 - Subsecs. (c), (d). Pub. L. 100-203 added subsec. (c) and

redesignated former subsec. (c) as (d).

1978 - Subsec. (a). Pub. L. 95-600, Sec. 702(i)(2), struck out

provision following par. (2) relating to the retention of voting

rights in retained stock.

Subsecs. (b), (c). Pub. L. 95-600, Sec. 702(i)(1), added subsec.

(b) and redesignated former subsec. (b) as (c).

1976 - Subsec. (a). Pub. L. 94-455 provided that, for purposes of

par. (1), the retention of voting rights in retained stock be

considered to be a retention of the enjoyment of that stock.

1962 - Subsec. (a). Pub. L. 87-834 struck out provisions which

excepted real property situated outside of the United States.

EFFECTIVE DATE OF 1990 AMENDMENT

Section 11601(c) of Pub. L. 101-508 provided that: "The

amendments made by this section [amending this section and sections

2207B and 2501 of this title] shall apply in the case of property

transferred after December 17, 1987."

EFFECTIVE DATE OF 1988 AMENDMENT

Section 3031(h) of Pub. L. 100-647 provided that:

"(1) In general. - Except as provided in this subsection, any

amendment made by this section [enacting section 2207B of this

title and amending this section and section 2501 of this title]

shall take effect as if included in the provisions of the Revenue

Act of 1987 [Pub. L. 100-203, title X] to which such amendment

relates.

"(2) Subsection (a). - The amendments made by subsection (a)

[amending this section and section 2501 of this title] shall apply

in cases where the transfer referred to in section 2036(c)(1)(B) of

the 1986 Code is on or after June 21, 1988.

"(3) Subsection (f). - If an amount is included in the gross

estate of a decedent under section 2036 of the 1986 Code other than

solely by reason of section 2036(c) of the 1986 Code, the

amendments made by subsection (f) [enacting section 2207B of this

title] shall apply to such amount only with respect to property

transferred after the date of the enactment of this Act [Nov. 10,

1988].

"(4) Correction period. - If section 2036(c)(1) of the 1986 Code

would (but for this paragraph) apply to any interest arising from a

transaction entered into during the period beginning after December

17, 1987, and ending before January 1, 1990, such section shall not

apply to such interest if -

"(A) during such period, such actions are taken as are

necessary to have such section 2036(c)(1) not apply to such

transaction (and any such interest), or

"(B) the original transferor and his spouse on January 1, 1990

(or, if earlier, the date of the original transferor's death),

does not hold any interest in the enterprise involved.

"(5) Clarification of effective date. - For purposes of section

10402(b) of the Revenue Act of 1987 [Pub. L. 100-203, set out as an

Effective Date of 1987 Amendment note below], with respect to

property transferred on or before December 17, 1987 -

"(A) any failure to exercise a right of conversion,

"(B) any failure to pay dividends, and

"(c) [sic] failures to exercise other rights specified in

regulations,

shall not be treated as a subsequent transfer."

EFFECTIVE DATE OF 1987 AMENDMENT

Section 10402(b) of Pub. L. 100-203 provided that: "The amendment

made by subsection (a) [amending this section] shall apply with

respect to estates of decedents dying after December 31, 1987, but

only in the case of property transferred after December 17, 1987."

[For clarification of this note, see section 3031(h)(5) of Pub. L.

100-647, set out as an Effective Date of 1988 Amendment note

above.]

EFFECTIVE DATE OF 1978 AMENDMENT

Section 702(i)(3) of Pub. L. 95-600 provided that: "The

amendments made by this subsection [amending this section] shall

apply to transfers made after June 22, 1976."

EFFECTIVE DATE OF 1976 AMENDMENT

Section 2009(e)(1) of Pub. L. 94-455 provided that: "The

amendment made by subsection (a) [amending this section] shall

apply to transfers made after June 22, 1976."

EFFECTIVE DATE OF 1962 AMENDMENT

Amendment by Pub. L. 87-834 applicable to estates of decedents

dying after Oct. 16, 1962, except as otherwise provided, see

section 18(b) of Pub. L. 87-834, set out as a note under section

2031 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2035, 2041, 2043, 2045,

2104, 2107, 2207B, 2501, 6324 of this title.

-End-

-CITE-

26 USC Sec. 2037 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART III - GROSS ESTATE

-HEAD-

Sec. 2037. Transfers taking effect at death

-STATUTE-

(a) General rule

The value of the gross estate shall include the value of all

property to the extent of any interest therein of which the

decedent has at any time after September 7, 1916, made a transfer

(except in case of a bona fide sale for an adequate and full

consideration in money or money's worth), by trust or otherwise, if

(1) possession or enjoyment of the property can, through

ownership of such interest, be obtained only by surviving the

decedent, and

(2) the decedent has retained a reversionary interest in the

property (but in the case of a transfer made before October 8,

1949, only if such reversionary interest arose by the express

terms of the instrument of transfer), and the value of such

reversionary interest immediately before the death of the

decedent exceeds 5 percent of the value of such property.

(b) Special rules

For purposes of this section, the term "reversionary interest"

includes a possibility that property transferred by the decedent -

(1) may return to him or his estate, or

(2) may be subject to a power of disposition by him,

but such term does not include a possibility that the income alone

from such property may return to him or become subject to a power

of disposition by him. The value of a reversionary interest

immediately before the death of the decedent shall be determined

(without regard to the fact of the decedent's death) by usual

methods of valuation, including the use of tables of mortality and

actuarial principles, under regulations prescribed by the

Secretary. In determining the value of a possibility that property

may be subject to a power of disposition by the decedent, such

possibility shall be valued as if it were a possibility that such

property may return to the decedent or his estate. Notwithstanding

the foregoing, an interest so transferred shall not be included in

the decedent's gross estate under this section if possession or

enjoyment of the property could have been obtained by any

beneficiary during the decedent's life through the exercise of a

general power of appointment (as defined in section 2041) which in

fact was exercisable immediately before the decedent's death.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 382; Pub. L. 87-834, Sec.

18(a)(2)(E), Oct. 16, 1962, 76 Stat. 1052; Pub. L. 94-455, title

XIX, Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

-MISC1-

AMENDMENTS

1976 - Subsec. (b). Pub. L. 94-455 struck out "or his delegate"

after "Secretary".

1962 - Subsec. (a). Pub. L. 87-834 struck out provisions which

excepted real property situated outside of the United States.

EFFECTIVE DATE OF 1962 AMENDMENT

Amendment by Pub. L. 87-834 applicable to estates of decedents

dying after Oct. 16, 1962, except as otherwise provided, see

section 18(b) of Pub. L. 87-834, set out as a note under section

2031 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2035, 2041, 2043, 2045,

2104, 2107, 6324 of this title.

-End-

-CITE-

26 USC Sec. 2038 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART III - GROSS ESTATE

-HEAD-

Sec. 2038. Revocable transfers

-STATUTE-

(a) In general

The value of the gross estate shall include the value of all

property -

(1) Transfers after June 22, 1936

To the extent of any interest therein of which the decedent has

at any time made a transfer (except in case of a bona fide sale

for an adequate and full consideration in money or money's

worth), by trust or otherwise, where the enjoyment thereof was

subject at the date of his death to any change through the

exercise of a power (in whatever capacity exercisable) by the

decedent alone or by the decedent in conjunction with any other

person (without regard to when or from what source the decedent

acquired such power), to alter, amend, revoke, or terminate, or

where any such power is relinquished during the 3 year period

ending on the date of the decedent's death.

(2) Transfers on or before June 22, 1936

To the extent of any interest therein of which the decedent has

at any time made a transfer (except in case of a bona fide sale

for an adequate and full consideration in money or money's

worth), by trust or otherwise, where the enjoyment thereof was

subject at the date of his death to any change through the

exercise of a power, either by the decedent alone or in

conjunction with any person, to alter, amend, or revoke, or where

the decedent relinquished any such power during the 3 year period

ending on the date of the decedent's death. Except in the case of

transfers made after June 22, 1936, no interest of the decedent

of which he has made a transfer shall be included in the gross

estate under paragraph (1) unless it is includible under this

paragraph.

(b) Date of existence of power

For purposes of this section, the power to alter, amend, revoke,

or terminate shall be considered to exist on the date of the

decedent's death even though the exercise of the power is subject

to a precedent giving of notice or even though the alteration,

amendment, revocation, or termination takes effect only on the

expiration of a stated period after the exercise of the power,

whether or not on or before the date of the decedent's death notice

has been given or the power has been exercised. In such cases

proper adjustment shall be made representing the interests which

would have been excluded from the power if the decedent had lived,

and for such purpose, if the notice has not been given or the power

has not been exercised on or before the date of his death, such

notice shall be considered to have been given, or the power

exercised, on the date of his death.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 383; Pub. L. 86-141, Sec. 1,

Aug. 7, 1959, 73 Stat. 288; Pub. L. 87-834, Sec. 18(a)(2)(F), Oct.

16, 1962, 76 Stat. 1052; Pub. L. 94-455, title XIX, Sec. 1902

(a)(3), title XX, Sec. 2001(c)(1)(K), Oct. 4, 1976, 90 Stat. 1804,

1852.)

-MISC1-

AMENDMENTS

1976 - Subsec. (a)(1). Pub. L. 94-455, Sec. 2001(c)(1)(K)(i),

substituted "during the 3-year period ending on the date of the

decedent's death" for "in contemplation of decedent's death".

Subsec. (a)(2). Pub. L. 94-455, Sec. 2001(c)(1)(K)(ii),

substituted "during the 3-year period ending on the date of the

decedent's death" for "in contemplation of his death".

Subsec. (c). Pub. L. 94-455, Sec. 1902(a)(3), struck out subsec.

relating a mental disability to relinquish a power to a power, the

relinquishment of which would be deemed not to be a transfer for

purposes of chapter 4 of the Internal Revenue Code of 1939.

1962 - Subsec. (a). Pub. L. 87-834 struck out provisions which

excepted real property situated outside of the United States.

1959 - Subsec. (c). Pub. L. 86-141 added subsec. (c).

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by section 1902(a)(3) of Pub. L. 94-455 applicable to

estates of decedents dying after Oct. 4, 1976, see section

1902(c)(1) of Pub. L. 94-455, set out as a note under section 2011

of this title.

Amendment by section 2001(c)(1)(K)(i), (ii) of Pub. L. 94-455

applicable to estates of decedents dying after Dec. 31, 1976 but

not to transfers made before Jan. 1, 1977, see section 2001(d)(1)

of Pub. L. 94-455, set out as a note under section 2001 of this

title.

EFFECTIVE DATE OF 1962 AMENDMENT

Amendment by Pub. L. 87-834 applicable to estates of decedents

dying after Oct. 16, 1962, except as otherwise provided, see

section 18(b) of Pub. L. 87-834, set out as a note under section

2031 of this title.

EFFECTIVE DATE OF 1959 AMENDMENT

Section 2 of Pub. L. 86-141 provided that: "The amendment made by

the first section of this Act [amending this section] shall apply

only with respect to estates of decedents dying after August 16,

1954. No interest shall be allowed or paid on any overpayment

resulting from the application of the amendment made by the first

section of this Act with respect to any payment made before the

date of the enactment of this Act [Aug. 7, 1959]."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2035, 2041, 2043, 2045,

2104, 2107, 6324 of this title.

-End-

-CITE-

26 USC Sec. 2039 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART III - GROSS ESTATE

-HEAD-

Sec. 2039. Annuities

-STATUTE-

(a) General

The gross estate shall include the value of an annuity or other

payment receivable by any beneficiary by reason of surviving the

decedent under any form of contract or agreement entered into after

March 3, 1931 (other than as insurance under policies on the life

of the decedent), if, under such contract or agreement, an annuity

or other payment was payable to the decedent, or the decedent

possessed the right to receive such annuity or payment, either

alone or in conjunction with another for his life or for any period

not ascertainable without reference to his death or for any period

which does not in fact end before his death.

(b) Amount includible

Subsection (a) shall apply to only such part of the value of the

annuity or other payment receivable under such contract or

agreement as is proportionate to that part of the purchase price

therefor contributed by the decedent. For purposes of this section,

any contribution by the decedent's employer or former employer to

the purchase price of such contract or agreement (whether or not to

an employee's trust or fund forming part of a pension, annuity,

retirement, bonus or profit sharing plan) shall be considered to be

contributed by the decedent if made by reason of his employment.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 384; Pub. L. 85-866, title I,

Secs. 23(e), 67(a), Sept. 2, 1958, 72 Stat. 1622, 1658; Pub. L.

87-792, Sec. 7(i), Oct. 10, 1962, 76 Stat. 830; Pub. L. 89-365,

Sec. 2(a), Mar. 8, 1966, 80 Stat. 33; Pub. L. 91-172, title I, Sec.

101(j)(23), Dec. 30, 1969, 83 Stat. 528; Pub. L. 92-580, Sec. 2(a),

Oct. 27, 1972, 86 Stat. 1276; Pub. L. 93-406, title II, Sec.

2007(b)(4), Sept. 2, 1974, 88 Stat. 994; Pub. L. 94-455, title XX,

Sec. 2009(c)(1)-(3), Oct. 4, 1976, 90 Stat. 1894, 1895; Pub. L.

95-600, title I, Secs. 142(a), (b), 156(c)(4), title VII, Sec.

702(j)(1), Nov. 6, 1978, 92 Stat. 2796, 2803, 2931; Pub. L. 96-222,

title I, Sec. 101(a)(8)(B), Apr. 1, 1980, 94 Stat. 201; Pub. L.

97-34, title III, Secs. 311(d)(1), (h)(4), 313(b)(3), Aug. 13,

1981, 95 Stat. 280, 282, 286; Pub. L. 97-248, title II, Sec.

245(a), (b), Sept. 3, 1982, 96 Stat. 524; Pub. L. 97-448, title I,

Sec. 103(c)(9), Jan. 12, 1983, 96 Stat. 2377; Pub. L. 98-369, div.

A, title IV, Sec. 491(d)(34), title V, Sec. 525(a), July 18, 1984,

98 Stat. 851, 873; Pub. L. 99-514, title XVIII, Secs. 1848(d),

1852(e)(1)(A), Oct. 22, 1986, 100 Stat. 2857, 2868.)

-MISC1-

AMENDMENTS

1986 - Subsec. (c). Pub. L. 99-514, Sec. 1852(e)(1), struck out

subsec. (c) which provided an exclusion from gross estate of

certain annuity interests created by community property laws.

Subsec. (e). Pub. L. 99-514, Sec. 1848(d), struck out "or a bond

described in paragraph (3)" after "an annuity described in

paragraph (2)" in concluding provisions as such provisions were

applicable to obligations issued after Dec. 31, 1983, and prior to

repeal of subsec. (e) by Pub. L. 98-369, Sec. 525(a), see Effective

Date of 1984 Amendment note below.

1984 - Subsec. (c). Pub. L. 98-369, Sec. 525(a), substituted

provisions relating to exception of certain annuity interests

created by community property laws for provisions which related to

exemption of annuities under certain trusts and plans.

Subsec. (d). Pub. L. 98-369, Sec. 525(a), struck out subsec. (d)

which related to exemption of certain annuity interests created by

community property laws. See subsec. (c) of this section.

Subsec. (e). Pub. L. 98-369, Sec. 525(a), struck out subsec. (e)

which related to exclusion of individual retirement accounts.

Pub. L. 98-369, Sec. 491(d)(34), inserted "or" at end of par.

(1), substituted a period for ", or" at end of par. (2), struck out

par. (3) which excluded from the value of the gross estate the

value of an annuity receivable by any beneficiary, other than the

executor, under a retirement bond described in section 409(a), and

substituted in provision following par. (2) "or 408(d)(3)" for

"405(d)(3), 408(d)(3), or 409(b)(3)(C)", and substituted "or

annuity" for ", annuity, or bond" wherever appearing.

Subsecs. (f), (g). Pub. L. 98-369, Sec. 525(a), struck out

subsec. (f) which related to lump sum distributions and an

exception where the recipient elects not to take 10-year averaging,

and subsec. (g) which related to a $100,000 limitation on the

exclusions under subsecs. (c) and (e).

1983 - Subsec. (f)(1). Pub. L. 97-448, Sec. 103(c)(9)(A),

designated existing provisions as subpar. (A), substituted "without

regard to the third sentence of section 402(e)(4)(A))" for "without

regard to the next to the last sentence of section 402(e)(4)(A)" in

subpar. (A) as so designated, and added subpar. (B).

Subsec. (f)(2). Pub. L. 97-448, Sec. 103(c)(9)(B), substituted

"An amount described" for "A lump sum distribution described".

1982 - Subsec. (c). Pub. L. 97-248, Sec. 245(b), substituted

"Subject to the limitation of subsection (g), notwithstanding any

other provision of this section" for "Notwithstanding the

provisions of this section".

Subsec. (e). Pub. L. 97-248, Sec. 245(b), substituted "Subject to

the limitation of subsection (g), notwithstanding any other

provision of this section" for "Notwithstanding the provisions of

this section".

Subsec. (g). Pub. L. 97-248, Sec. 245(a), added subsec. (g).

1981 - Subsec. (c). Pub. L. 97-34, Sec. 311(d)(1), provided that

for purposes of subsec. (c), any deductible employee contributions,

within the meaning of par. (5) of section 72(o), shall be

considered as made by a person other than the decedent.

Subsec. (e). Pub. L. 97-34, Sec. 313(b)(3), inserted reference to

rollover contribution described in section 405(d)(3).

Pub. L. 97-34, Sec. 311(h)(4), substituted "section 219" for

"section 219 or 220".

1980 - Subsec. (f)(2). Pub. L. 96-222 substituted "(without the

application of paragraph (2) thereof), except to the extent that

section 402(e)(4)(J) applies to such distribution" for "without the

application of paragraph (2) thereof".

1978 - Subsec. (c). Pub. L. 95-600, Sec. 142(a), substituted

"(other than an amount described in subsection (f))" for "(other

than a lump sum distribution described in section 402(e)(4),

determined without regard to the next to the last sentence of

section 402(e)(4)(A))" in provisions preceding par. (1).

Subsec. (e). Pub. L. 95-600, Secs. 156(c)(4), 702(j)(1), inserted

"section 403(b)(8) (but only to the extent such contribution is

attributed to a distribution from a contract described in

subsection (c)(3))," after "403(a)(4)" and inserted "or 220" after

"section 219" wherever appearing in provisions following par. (3).

Subsec. (f). Pub. L. 95-600, Sec. 142(b), added subsec. (f).

1976 - Subsec. (c). Pub. L. 94-455, Sec. 2009(c)(2), (3),

substituted "other payment (other than a lump sum distribution

described in section 402(e)(4), determined without regard to the

next to the last sentence of section 402(e)(4)(A)) receivable by

any beneficiary" for "other payment receivable by any beneficiary"

in provisions preceding par. (1) and substituted "For purposes of

this subsection, contributions or payments on behalf of the

decedent while he was an employee within the meaning of section

401(c)(1) made under a trust or plan described in paragraph (1) or

(2) shall, to the extent allowable as a deduction under section

404, be considered to be made by a person other than the decedent

and, to the extent not so allowable, shall be considered to be made

by the decedent" for "For purposes of this subsection,

contributions or payments on behalf of the decedent while he was an

employee within the meaning of section 401(c)(1) made under a trust

or plan described in paragraph (1) or (2) shall be considered to be

contributions or payments made by the decedent" in provisions

following par. (4).

Subsec. (e). Pub. L. 94-455, Sec. 2009(c)(1), added subsec. (e).

1974 - Subsec. (c). Pub. L. 93-406 inserted reference to section

1452(d) in provisions following par. (4).

1972 - Subsec. (d). Pub. L. 92-580 added subsec. (d).

1969 - Subsec. (c)(3). Pub. L. 91-172 substituted "section

170(b)(1)(A)(ii) or (vi), or which is a religious organization

(other than a trust)," for "section 503(b) (1), (2), or (3),".

1966 - Subsec. (c). Pub. L. 89-365 added par. (4), inserted

reference to chapter 73 of title 10 of the United States Code in

the enumeration of the plans and contracts set out in the

prohibition against allowance of exclusion for that part of the

value of the amount payable under the plan or contract in the

proportion that the total payments or contributions made by the

decedent bear to the total payments or contributions made, and

provided that, for purposes of this section, amounts payable under

chapter 73 of title 10 are attributable to payments or

contributions made by the decedent only to the extent of amounts

deposited by him pursuant to section 1438 of title 10.

1962 - Subsec. (c). Pub. L. 87-792 substituted "was a plan

described in section 403(a)" for "met the requirements of section

401(a)(3), (4), (5), and (6)" in par. (2), and inserted sentence

providing, for purposes of this subsection, that contributions or

payments on behalf of the decedent while he was an employee within

the meaning of section 401(c)(1) made under a trust or plan

described in paragraph (1) or (2) shall be considered to be

contributions or payments made by the decedent.

1958 - Subsec. (c)(2). Pub. L. 85-866, Sec. 67(a), inserted "(4),

(5), and (6)" after "section 401(a)(3)".

Subsec. (c)(3) and closing sentences. Pub. L. 85-866, Sec. 23(e),

added par. (3), inserted "or under contract described in paragraph

(3)" in second sentence of subsec. (c) and substituted "paragraph

(1) or (2) shall not be considered to be contributed by the

decedent, and contributions or payments made by the decedent's

employer or former employer toward the purchase of an annuity

contract described in paragraph (3) shall, to the extent excludable

from gross income under section 403(b)," for "this subsection

shall" in third sentence of subsec. (c).

EFFECTIVE DATE OF 1986 AMENDMENT

Section 1852(e)(1)(B) of Pub. L. 99-514 provided that: "The

amendment made by subparagraph (A) [amending this section] shall

apply to estates of decedents dying after the date of the enactment

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

Amendment by section 1848(d) of Pub. L. 99-514 effective, except

as otherwise provided, as if included in the provisions of the Tax

Reform Act of 1984, Pub. L. 98-369, div. A, to which such amendment

relates, see section 1881 of Pub. L. 99-514, set out as a note

under section 48 of this title.

EFFECTIVE DATE OF 1984 AMENDMENT

Amendment by section 491(d)(34) of Pub. L. 98-369 applicable to

obligations issued after Dec. 31, 1983, see section 491(f)(1) of

Pub. L. 98-369, set out as a note under section 62 of this title.

Section 525(b)(1), (2), (4) of Pub. L. 98-369, as amended by Pub.

L. 99-514, title XVIII, Sec. 1852(e)(3), Oct. 22, 1986, 100 Stat.

2868, provided that:

"(1) In general. - The amendments made by this section [amending

this section] shall apply to the estates of decedents dying after

December 31, 1984.

"(2) Exception for participants in pay status. - The amendments

made by this section shall not apply to the estate of any decedent

who -

"(A) was a participant in any plan who was in pay status on

December 31, 1984, and

"(B) irrevocably elected the form of the benefit before the

date of the enactment of this Act [July 18, 1984].

"(4) Irrevocable election. - For purposes of paragraph (2) [set

out above] and section 245(c) of the Tax Equity and Fiscal

Responsibility Act of 1982 [see Effective Date of 1982 Amendment

note below], an individual who -

"(A) separated from service before January 1, 1985, with

respect to paragraph (2), or January 1, 1983, with respect to

section 245(c) of the Tax Equity and Fiscal Responsibility Act of

1982, and

"(B) meets the requirements of such paragraph or such section

other than the requirement that there be an irrevocable election,

and that the individual be in pay status,

shall be treated as having made an irrevocable election and as

being in pay status within the time prescribed with respect to a

form of benefit if such individual does not change such form of

benefit before death."

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-448 effective, except as otherwise

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

Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such

amendment relates, see section 109 of Pub. L. 97-448, set out as a

note under section 1 of this title.

EFFECTIVE DATE OF 1982 AMENDMENT

Section 245(c) of Pub. L. 97-248, as amended by Pub. L. 98-369,

div. A, title V, Sec. 525(b)(3), July 18, 1984, 98 Stat. 874,

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

section] shall apply to the estates of decedents dying after

December 31, 1982, except that such amendments shall not apply to

the estate of any decedent who was a participant in any plan who

was in pay status on December 31, 1982, and irrevocably elected

before January 1, 1983, the form of benefit."

EFFECTIVE DATE OF 1981 AMENDMENT

Amendment by section 311(d)(1), (h)(4) of Pub. L. 97-34

applicable to taxable years beginning after Dec. 31, 1981, see

section 311(i)(1) of Pub. L. 97-34, set out as a note under section

219 of this title.

Amendment by section 313(b)(3) of Pub. L. 97-34 applicable to

redemptions after Aug. 13, 1981, in taxable years ending after such

date, see section 313(c) of Pub. L. 97-34, set out as a note under

section 219 of this title.

EFFECTIVE DATE OF 1980 AMENDMENT

Amendment by Pub. L. 96-222 applicable with respect to the

estates of decedents dying after Apr. 1, 1980, see section

101(b)(1)(D) of Pub. L. 96-222, set out as a note under section 691

of this title.

EFFECTIVE DATE OF 1978 AMENDMENT

Section 142(c) of Pub. L. 95-600 provided that: "The amendments

made by this section [amending this section] shall apply with

respect to the estates of decedents dying after December 31, 1978."

Amendment by section 156(c)(4) of Pub. L. 95-600 applicable to

distributions or transfers made after Dec. 31, 1977, in taxable

years beginning after such date, see section 156(d) of Pub. L.

95-600, set out as a note under section 403 of this title.

Section 702(j)(3)(A) of Pub. L. 95-600 provided that: "The

amendment made by paragraph (1) [amending this section] shall apply

to the estates of decedents dying after December 31, 1976."

EFFECTIVE DATE OF 1976 AMENDMENT

Section 2009(e)(3)(A) of Pub. L. 94-455 provided that: "The

amendments made by paragraphs (1), (2), and (3) of subsection (c)

[amending this section] shall apply to the estates of decedents

dying after December 31, 1976."

EFFECTIVE DATE OF 1974 AMENDMENT

Amendment by Pub. L. 93-406 applicable to taxable years ending on

or after Sept. 21, 1972, with respect to individuals dying on or

after Sept. 21, 1972, see section 2007(c) of Pub. L. 93-406, set

out as a note under section 122 of this title.

EFFECTIVE DATE OF 1972 AMENDMENT

Section 2(b) of Pub. L. 92-580, as amended by Pub. L. 99-514,

Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "The

amendment made by subsection (a) [amending this section] shall

apply with respect to estate of decedents for which the period

prescribed by the Internal Revenue Code of 1986 [formerly I.R.C.

1954] for filing of a claim for credit or refund of an overpayment

of estate tax ends on or after the date of enactment of this Act

[Oct. 27, 1972]. No interest shall be allowed or paid on any

overpayment of estate tax resulting from the application of the

amendment made by subsection (a) for any period prior to the

expiration of the one hundred and eightieth day following the date

of the enactment of this Act."

EFFECTIVE DATE OF 1969 AMENDMENT

Amendment by Pub. L. 91-172 effective Jan. 1, 1970, see section

101(k)(1) of Pub. L. 91-172, set out as an Effective Date note

under section 4940 of this title.

EFFECTIVE DATE OF 1966 AMENDMENT

Section 2(c) of Pub. L. 89-365 provided that: "The amendments

made by subsection (a) [amending this section] shall apply with

respect to decedents dying after December 31, 1965. The amendments

made by subsection (b) [amending section 2517 of this title] shall

apply with respect to calendar years after 1965."

EFFECTIVE DATE OF 1962 AMENDMENT

Amendment by Pub. L. 87-792 applicable to taxable years beginning

after Dec. 31, 1962, see section 8 of Pub. L. 87-792, set out as a

note under section 22 of this title.

EFFECTIVE DATE OF 1958 AMENDMENT

Amendment by section 23(e) of Pub. L. 85-866 applicable with

respect to estates of decedents dying after Dec. 31, 1957, see

section 23(g) of Pub. L. 85-866, set out as a note under section

403 of this title.

Section 67(b) of Pub. L. 85-866 provided that: "The amendment

made by subsection (a) [amending this section] shall apply with

respect to estates of decedents dying after December 31, 1953."

PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989

For provisions directing that if any amendments made by subtitle

A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or

title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an

amendment to any plan, such plan amendment shall not be required to

be made before the first plan year beginning on or after Jan. 1,

1989, see section 1140 of Pub. L. 99-514, as amended, set out as a

note under section 401 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 406, 407, 2045, 2056,

6324 of this title.

-End-

-CITE-

26 USC Sec. 2040 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART III - GROSS ESTATE

-HEAD-

Sec. 2040. Joint interests

-STATUTE-

(a) General rule

The value of the gross estate shall include the value of all

property to the extent of the interest therein held as joint

tenants with right of survivorship by the decedent and any other

person, or as tenants by the entirety by the decedent and spouse,

or deposited, with any person carrying on the banking business, in

their joint names and payable to either or the survivor, except

such part thereof as may be shown to have originally belonged to

such other person and never to have been received or acquired by

the latter from the decedent for less than an adequate and full

consideration in money or money's worth: Provided, That where such

property or any part thereof, or part of the consideration with

which such property was acquired, is shown to have been at any time

acquired by such other person from the decedent for less than an

adequate and full consideration in money or money's worth, there

shall be excepted only such part of the value of such property as

is proportionate to the consideration furnished by such other

person: Provided further, That where any property has been acquired

by gift, bequest, devise, or inheritance, as a tenancy by the

entirety by the decedent and spouse, then to the extent of one-half

of the value thereof, or, where so acquired by the decedent and any

other person as joint tenants with right of survivorship and their

interests are not otherwise specified or fixed by law, then to the

extent of the value of a fractional part to be determined by

dividing the value of the property by the number of joint tenants

with right of survivorship.

(b) Certain joint interests of husband and wife

(1) Interests of spouse excluded from gross estate

Notwithstanding subsection (a), in the case of any qualified

joint interest, the value included in the gross estate with

respect to such interest by reason of this section is one-half of

the value of such qualified joint interest.

(2) Qualified joint interest defined

For purposes of paragraph (1), the term "qualified joint

interest" means any interest in property held by the decedent and

the decedent's spouse as -

(A) tenants by the entirety, or

(B) joint tenants with right of survivorship, but only if the

decedent and the spouse of the decedent are the only joint

tenants.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 385; Pub. L. 87-834, Sec.

18(a)(2)(G), Oct. 16, 1962, 76 Stat. 1052; Pub. L. 94-455, title

XX, Sec. 2002(c)(1), (3), Oct. 4, 1976, 90 Stat. 1855, 1856; Pub.

L. 95-600, title V, Sec. 511(a), title VII, Sec. 702(k)(2), Nov. 6,

1978, 92 Stat. 2881, 2932; Pub. L. 96-222, title I, Sec. 105(a)(3),

Apr. 1, 1980, 94 Stat. 218; Pub. L. 97-34, title IV, Sec.

403(c)(1)-(3)(A), Aug. 13, 1981, 95 Stat. 301, 302.)

-MISC1-

AMENDMENTS

1981 - Subsec. (a). Pub. L. 97-34, Sec. 403(c)(2), substituted

"joint tenants with right of survivorship" for "joint tenants" in

three places.

Subsec. (b)(2). Pub. L. 97-34, Sec. 403(c)(1), in redefining

"qualified joint interest" substituted provision defining term as

meaning any interest in property held by the decedent and the

decedent's spouse as tenants by the entirety, or joint tenants with

right of survivorship, but only if the decedent and the spouse of

the decedent are the only joint tenants for provision defining the

term as meaning any interest in property held by the decedent and

the decedent's spouse as joint tenants or as tenants by the

entirety, but only if such joint interest was created by the

decedent, the decedent's spouse, or both, in the case of personal

property, the creation of such joint interest constituted in whole

or in part a gift for purposes of chapter 12, or in the case of

real property, an election under section 2515 applies with respect

to the creation of such joint interest, and in the case of a joint

tenancy, only the decedent and the decedent's spouse are joint

tenants.

Subsecs. (c) to (e). Pub. L. 97-34, Sec. 403(c)(3)(A), repealed

subsec. (c) respecting value where spouse of decedent materially

participated in farm or other business, subsec. (d) relating to

joint interests of husband and wife created before 1977, and

subsec. (e) covering treatment of certain post-1976 terminations.

1980 - Subsec. (c)(1). Pub. L. 96-222, Sec. 105(a)(3)(B),

substituted "subsection (a)" for "subsections (a)".

Subsec. (c)(2)(C). Pub. L. 96-222, Sec. 105(a)(3)(A), added

subpar. (C).

1978 - Subsec. (c). Pub. L. 95-600, Sec. 511(a), added subsec.

(c).

Subsecs. (d), (e). Pub. L. 95-600, Sec. 702(k)(2), added subsecs.

(d) and (e).

1976 - Pub. L. 94-455 designated existing provisions as subsec.

(a), added heading for subsec. (a), and added subsec. (b).

1962 - Pub. L. 87-834 struck out provisions which excepted real

property outside of the United States.

EFFECTIVE DATE OF 1981 AMENDMENT

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

dying after Dec. 31, 1981, see section 403(e) of Pub. L. 97-34, set

out as a note under section 2056 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 511(b) of Pub. L. 95-600 provided that: "The amendment

made by subsection (a) [amending this section] shall apply with

respect to estates of decedents dying after December 31, 1978."

EFFECTIVE DATE OF 1976 AMENDMENT

Section 2002(d)(3) of Pub. L. 94-455 provided that: "The

amendment made by subsection (c) [amending this section and section

2515 of this title] shall apply to joint interests created after

December 31, 1976."

EFFECTIVE DATE OF 1962 AMENDMENT

Amendment by Pub. L. 87-834 applicable to estates of decedents

dying after Oct. 16, 1962, except as otherwise provided, see

section 18(b) of Pub. L. 87-834, set out as a note under section

2031 of this title.

CONSIDERATION GIVEN BEFORE JULY 14, 1988 BY DECEDENT TO NONCITIZEN

SPOUSE TREATED AS ORIGINALLY BELONGING TO SPOUSE

Pub. L. 101-239, title VII, Sec. 7815(d)(16), Dec. 19, 1989, 103

Stat. 2419, as amended by Pub. L. 101-508, title XI, Sec.

11701(l)(3), Nov. 5, 1990, 104 Stat. 1388-513, provided that: "For

purposes of applying section 2040(a) of the Internal Revenue Code

of 1986 with respect to any joint interest to which section 2040(b)

of such Code does not apply solely by reason of section

2056(d)(1)(B) of such Code, any consideration furnished before July

14, 1988, by the decedent for such interest to the extent treated

as a gift to the spouse of the decedent for purposes of chapter 12

of such Code (or would have been so treated if the donor were a

citizen of the United States) shall be treated as consideration

originally belonging to such spouse and never acquired by such

spouse from the decedent."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1023, 2045, 2056, 6324 of

this title.

-End-

-CITE-

26 USC Sec. 2041 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART III - GROSS ESTATE

-HEAD-

Sec. 2041. Powers of appointment

-STATUTE-

(a) In general

The value of the gross estate shall include the value of all

property -

(1) Powers of appointment created on or before October 21, 1942

To the extent of any property with respect to which a general

power of appointment created on or before October 21, 1942, is

exercised by the decedent -

(A) by will, or

(B) by a disposition which is of such nature that if it were

a transfer of property owned by the decedent, such property

would be includible in the decedent's gross estate under

sections 2035 to 2038, inclusive;

but the failure to exercise such a power or the complete release

of such a power shall not be deemed an exercise thereof. If a

general power of appointment created on or before October 21,

1942, has been partially released so that it is no longer a

general power of appointment, the exercise of such power shall

not be deemed to be the exercise of a general power of

appointment if -

(i) such partial release occurred before November 1, 1951,

(ii) the donee of such power was under a legal disability

to release such power on October 21, 1942, and such partial

release occurred not later than 6 months after the

termination of such legal disability.

(2) Powers created after October 21, 1942

To the extent of any property with respect to which the

decedent has at the time of his death a general power of

appointment created after October 21, 1942, or with respect to

which the decedent has at any time exercised or released such a

power of appointment by a disposition which is of such nature

that if it were a transfer of property owned by the decedent,

such property would be includible in the decedent's gross estate

under sections 2035 to 2038, inclusive. For purposes of this

paragraph (2), the power of appointment shall be considered to

exist on the date of the decedent's death even though the

exercise of the power is subject to a precedent giving of notice

or even though the exercise of the power takes effect only on the

expiration of a stated period after its exercise, whether or not

on or before the date of the decedent's death notice has been

given or the power has been exercised.

(3) Creation of another power in certain cases

To the extent of any property with respect to which the

decedent -

(A) by will, or

(B) by a disposition which is of such nature that if it were

a transfer of property owned by the decedent such property

would be includible in the decedent's gross estate under

section 2035, 2036, or 2037,

exercises a power of appointment created after October 21, 1942,

by creating another power of appointment which under the

applicable local law can be validly exercised so as to postpone

the vesting of any estate or interest in such property, or

suspend the absolute ownership or power of alienation of such

property, for a period ascertainable without regard to the date

of the creation of the first power.

(b) Definitions

For purposes of subsection (a) -

(1) General power of appointment

The term "general power of appointment" means a power which is

exercisable in favor of the decedent, his estate, his creditors,

or the creditors of his estate; except that -

(A) A power to consume, invade, or appropriate property for

the benefit of the decedent which is limited by an

ascertainable standard relating to the health, education,

support, or maintenance of the decedent shall not be deemed a

general power of appointment.

(B) A power of appointment created on or before October 21,

1942, which is exercisable by the decedent only in conjunction

with another person shall not be deemed a general power of

appointment.

October 21, 1942, which is exercisable by the decedent only in

conjunction with another person -

(i) If the power is not exercisable by the decedent except

in conjunction with the creator of the power - such power

shall not be deemed a general power of appointment.

(ii) If the power is not exercisable by the decedent except

in conjunction with a person having a substantial interest in

the property, subject to the power, which is adverse to

exercise of the power in favor of the decedent - such power

shall not be deemed a general power of appointment. For the

purposes of this clause a person who, after the death of the

decedent, may be possessed of a power of appointment (with

respect to the property subject to the decedent's power)

which he may exercise in his own favor shall be deemed as

having an interest in the property and such interest shall be

deemed adverse to such exercise of the decedent's power.

(iii) If (after the application of clauses (i) and (ii))

the power is a general power of appointment and is

exercisable in favor of such other person - such power shall

be deemed a general power of appointment only in respect of a

fractional part of the property subject to such power, such

part to be determined by dividing the value of such property

by the number of such persons (including the decedent) in

favor of whom such power is exercisable.

For purposes of clauses (ii) and (iii), a power shall be deemed

to be exercisable in favor of a person if it is exercisable in

favor of such person, his estate, his creditors, or the

creditors of his estate.

(2) Lapse of power

The lapse of a power of appointment created after October 21,

1942, during the life of the individual possessing the power

shall be considered a release of such power. The preceding

sentence shall apply with respect to the lapse of powers during

any calendar year only to the extent that the property, which

could have been appointed by exercise of such lapsed powers,

exceeded in value, at the time of such lapse, the greater of the

following amounts:

(A) $5,000, or

(B) 5 percent of the aggregate value, at the time of such

lapse, of the assets out of which, or the proceeds of which,

the exercise of the lapsed powers could have been satisfied.

(3) Date of creation of power

For purposes of this section, a power of appointment created by

a will executed on or before October 21, 1942, shall be

considered a power created on or before such date if the person

executing such will dies before July 1, 1949, without having

republished such will, by codicil or otherwise, after October 21,

1942.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 385; Pub. L. 87-834, Sec.

18(a)(2)(H), Oct. 16, 1962, 76 Stat. 1052; Pub. L. 94-455, title

XX, Sec. 2009(b)(4)(A), Oct. 4, 1976, 90 Stat. 1894.)

-MISC1-

AMENDMENTS

1976 - Subsec. (a)(2). Pub. L. 94-455 struck out provision that a

disclaimer or renunciation of a power of appointment not be deemed

a release of that power.

1962 - Subsec. (a). Pub. L. 87-834 struck out provisions which

excepted real property situated outside of the United States.

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by Pub. L. 94-455 applicable to transfers creating an

interest in person disclaiming made after Dec. 31, 1976, see

section 2009(e)(2) of Pub. L. 94-455, set out as a note under

section 2518 of this title.

EFFECTIVE DATE OF 1962 AMENDMENT

Amendment by Pub. L. 87-834 applicable to estates of decedents

dying after Oct. 16, 1962, except as otherwise provided, see

section 18(b) of Pub. L. 87-834, set out as a note under section

2031 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2013, 2037, 2043, 2045,

2055, 2106, 2207, 6324 of this title.

-End-

-CITE-

26 USC Sec. 2042 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART III - GROSS ESTATE

-HEAD-

Sec. 2042. Proceeds of life insurance

-STATUTE-

The value of the gross estate shall include the value of all

property -

(1) Receivable by the executor

To the extent of the amount receivable by the executor as

insurance under policies on the life of the decedent.

(2) Receivable by other beneficiaries

To the extent of the amount receivable by all other

beneficiaries as insurance under policies on the life of the

decedent with respect to which the decedent possessed at his

death any of the incidents of ownership, exercisable either alone

or in conjunction with any other person. For purposes of the

preceding sentence, the term "incident of ownership" includes a

reversionary interest (whether arising by the express terms of

the policy or other instrument or by operation of law) only if

the value of such reversionary interest exceeded 5 percent of the

value of the policy immediately before the death of the decedent.

As used in this paragraph, the term "reversionary interest"

includes a possibility that the policy, or the proceeds of the

policy, may return to the decedent or his estate, or may be

subject to a power of disposition by him. The value of a

reversionary interest at any time shall be determined (without

regard to the fact of the decedent's death) by usual methods of

valuation, including the use of tables of mortality and actuarial

principles, pursuant to regulations prescribed by the Secretary.

In determining the value of a possibility that the policy or

proceeds thereof may be subject to a power of disposition by the

decedent, such possibility shall be valued as if it were a

possibility that such policy or proceeds may return to the

decedent or his estate.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 387; Pub. L. 94-455, title XIX,

Sec. 1906(b)(13) (A), Oct. 4, 1976, 90 Stat. 1834.)

-MISC1-

AMENDMENTS

1976 - Pub. L. 94-455 struck out "or his delegate" after

"Secretary".

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2035, 2045, 6324 of this

title.

-End-

-CITE-

26 USC Sec. 2043 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART III - GROSS ESTATE

-HEAD-

Sec. 2043. Transfers for insufficient consideration

-STATUTE-

(a) In general

If any one of the transfers, trusts, interests, rights, or powers

enumerated and described in sections 2035 to 2038, inclusive, and

section 2041 is made, created, exercised, or relinquished for a

consideration in money or money's worth, but is not a bona fide

sale for an adequate and full consideration in money or money's

worth, there shall be included in the gross estate only the excess

of the fair market value at the time of death of the property

otherwise to be included on account of such transaction, over the

value of the consideration received therefor by the decedent.

(b) Marital rights not treated as consideration

(1) In general

For purposes of this chapter, a relinquishment or promised

relinquishment of dower or curtesy, or of a statutory estate

created in lieu of dower or curtesy, or of other marital rights

in the decedent's property or estate, shall not be considered to

any extent a consideration "in money or money's worth".

(2) Exception

For purposes of section 2053 (relating to expenses,

indebtedness, and taxes), a transfer of property which satisfies

the requirements of paragraph (1) of section 2516 (relating to

certain property settlements) shall be considered to be made for

an adequate and full consideration in money or money's worth.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 388; Pub. L. 98-369, div. A,

title IV, Sec. 425(a)(1), July 18, 1984, 98 Stat. 803.)

-MISC1-

AMENDMENTS

1984 - Subsec. (b). Pub. L. 98-369 amended subsec. (b) generally,

designating existing provisions as par. (1) and adding par. (2).

EFFECTIVE DATE OF 1984 AMENDMENT

Section 425(c)(1) of Pub. L. 98-369 provided that: "The

amendments made by subsection (a) [amending this section and

section 2053 of this title] shall apply to estates of decedents

dying after the date of the enactment of this Act [July 18, 1984]."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2053 of this title.

-End-

-CITE-

26 USC Sec. 2044 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART III - GROSS ESTATE

-HEAD-

Sec. 2044. Certain property for which marital deduction was

previously allowed

-STATUTE-

(a) General rule

The value of the gross estate shall include the value of any

property to which this section applies in which the decedent had a

qualifying income interest for life.

(b) Property to which this section applies

This section applies to any property if -

(1) a deduction was allowed with respect to the transfer of

such property to the decedent -

(A) under section 2056 by reason of subsection (b)(7)

thereof, or

(B) under section 2523 by reason of subsection (f) thereof,

and

(2) section 2519 (relating to dispositions of certain life

estates) did not apply with respect to a disposition by the

decedent of part or all of such property.

For purposes of this chapter and chapter 13, property includible

in the gross estate of the decedent under subsection (a) shall be

treated as property passing from the decedent.

-SOURCE-

(Added Pub. L. 97-34, title IV, Sec. 403(d)(3)(A)(i), Aug. 13,

1981, 95 Stat. 304; amended Pub. L. 97-448, title I, Sec.

104(a)(1)(B), Jan. 12, 1983, 96 Stat. 2380.)

-MISC1-

PRIOR PROVISIONS

A prior section 2044 was renumbered section 2045 of this title.

AMENDMENTS

1983 - Subsec. (c). Pub. L. 97-448 added subsec. (c).

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-448 effective, except as otherwise

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

Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such

amendment relates, see section 109 of Pub. L. 97-448, set out as a

note under section 1 of this title.

EFFECTIVE DATE

Section applicable to estates of decedents dying after Dec. 31,

1981, see section 403(e) of Pub. L. 97-34, set out as an Effective

Date of 1981 Amendment note under section 2056 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1014, 2053, 2207A, 2523,

2642 of this title.

-End-

-CITE-

26 USC Sec. 2045 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART III - GROSS ESTATE

-HEAD-

Sec. 2045. Prior interests

-STATUTE-

Except as otherwise specifically provided by law, sections 2034

to 2042, inclusive, shall apply to the transfers, trusts, estates,

interests, rights, powers, and relinquishment of powers, as

severally enumerated and described therein, whenever made, created,

arising, existing, exercised, or relinquished.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 388, Sec. 2044; Pub. L. 94-455,

title XX, Sec. 2001(c)(1)(M), Oct. 4, 1976, 90 Stat. 1853;

renumbered Sec. 2045, Pub. L. 97-34, title IV, Sec.

403(d)(3)(A)(i), Aug. 13, 1981, 95 Stat. 304.)

-MISC1-

PRIOR PROVISIONS

A prior section 2045 was renumbered section 2046 of this title.

AMENDMENTS

1976 - Pub. L. 94-455 substituted "specifically provided by law"

for "specifically provided therein".

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by Pub. L. 94-455 applicable to estates of decedents

dying after Dec. 31, 1976, see section 2001(d) of Pub. L. 94-455,

set out as a note under section 2001 of this title.

-End-

-CITE-

26 USC Sec. 2046 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART III - GROSS ESTATE

-HEAD-

Sec. 2046. Disclaimers

-STATUTE-

For provisions relating to the effect of a qualified

disclaimer for purposes of this chapter, see section 2518.

-SOURCE-

(Added Pub. L. 94-455, title XX, Sec. 2009(b)(2), Oct. 4, 1976, 90

Stat. 1893, Sec. 2045; renumbered Sec. 2046, Pub. L. 97-34, title

IV, Sec. 403(d)(3)(A)(i), Aug. 13, 1981, 95 Stat. 304.)

-MISC1-

EFFECTIVE DATE

Section applicable to transfers creating an interest in person

disclaiming made after Dec. 31, 1976, see section 2009(e)(2) of

Pub. L. 94-455, set out as a note under section 2518 of this title.

-End-

-CITE-

26 USC PART IV - TAXABLE ESTATE 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART IV - TAXABLE ESTATE

-HEAD-

PART IV - TAXABLE ESTATE

-MISC1-

Sec.

2051. Definition of taxable estate.

[2052. Repealed.]

2053. Expenses, indebtedness, and taxes.

2054. Losses.

2055. Transfers for public, charitable, and religious uses.

2056. Bequests, etc., to surviving spouse.

2056A. Qualified domestic trust.

2057. Family-owned business interests.

2058. State death taxes.

AMENDMENTS

2001 - Pub. L. 107-16, title V, Sec. 532(c)(14), June 7, 2001,

115 Stat. 75, added item 2058.

1998 - Pub. L. 105-206, title VI, Sec. 6006(b)(1)(F), July 22,

1998, 112 Stat. 808, added item 2057.

1990 - Pub. L. 101-508, title XI, Sec. 11704(a)(39), Nov. 5,

1990, 104 Stat. 1388-520, amended directory language of section

5033(a)(3) of Pub. L. 100-647. See 1988 Amendment note below.

Pub. L. 101-508, title XI, Sec. 11704(a)(16), Nov. 5, 1990, 104

Stat. 1388-518, substituted "trust" for "trusts" in item 2056A.

1989 - Pub. L. 101-239, title VII, Sec. 7304(a)(2)(E), Dec. 19,

1989, 103 Stat. 2353, struck out item 2057 "Sales of employer

securities to employee stock ownership plans or worker-owned

cooperatives".

1988 - Pub. L. 100-647, title V, Sec. 5033(a)(3), Nov. 10, 1988,

102 Stat. 3672, as amended by Pub. L. 101-508, title XI, Sec.

11704(a)(39), Nov. 5, 1990, 104 Stat. 1388-520, added item 2056A.

1986 - Pub. L. 99-514, title XI, Sec. 1172(b)(3), Oct. 22, 1986,

100 Stat. 2515, added item 2057.

1981 - Pub. L. 97-34, title IV, Sec. 427(b), Aug. 13, 1981, 95

Stat. 318, struck out item 2057 "Bequests, etc., to certain minor

children".

1976 - Pub. L. 94-455, title XX, Secs. 2001(c)(1)(N)(iv),

2007(b), Oct. 4, 1976, 90 Stat. 1853, 1890, added item 2057 and

struck out item 2052 "Exemption".

-End-

-CITE-

26 USC Sec. 2051 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART IV - TAXABLE ESTATE

-HEAD-

Sec. 2051. Definition of taxable estate

-STATUTE-

For purposes of the tax imposed by section 2001, the value of the

taxable estate shall be determined by deducting from the value of

the gross estate the deductions provided for in this part.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 388; Pub. L. 95-600, title VII,

Sec. 702(r)(2), Nov. 6, 1978, 92 Stat. 2938.)

-MISC1-

AMENDMENTS

1978 - Pub. L. 95-600 struck out "exemption and" after "gross

estate the".

EFFECTIVE DATE OF 1978 AMENDMENT

Section 702(r)(5) of Pub. L. 95-600 provided that: "The

amendments made by this subsection [amending this section and

sections 1016, 6324B, and 6698A of this title] shall apply to

estates of decedents dying after December 31, 1976."

-End-

-CITE-

26 USC [Sec. 2052 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART IV - TAXABLE ESTATE

-HEAD-

[Sec. 2052. Repealed. Pub. L. 94-455, title XX, Sec. 2001(a)(4),

Oct. 4, 1976, 90 Stat. 1848]

-MISC1-

Section, act Aug. 16, 1954, ch. 736, 68A Stat. 389, provided for

an exemption of $60,000 to be deducted from gross estate in

determining value of taxable estate.

EFFECTIVE DATE OF REPEAL

Repeal applicable to estates of decedents dying after Dec. 31,

1976, see section 2001(d)(1) of Pub. L. 94-455, set out as an

Effective Date of 1976 Amendment note under section 2001 of this

title.

-End-

-CITE-

26 USC Sec. 2053 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART IV - TAXABLE ESTATE

-HEAD-

Sec. 2053. Expenses, indebtedness, and taxes

-STATUTE-

(a) General rule

For purposes of the tax imposed by section 2001, the value of the

taxable estate shall be determined by deducting from the value of

the gross estate such amounts -

(1) for funeral expenses,

(2) for administration expenses,

(3) for claims against the estate, and

(4) for unpaid mortgages on, or any indebtedness in respect of,

property where the value of the decedent's interest therein,

undiminished by such mortgage or indebtedness, is included in the

value of the gross estate,

as are allowable by the laws of the jurisdiction, whether within or

without the United States, under which the estate is being

administered.

(b) Other administration expenses

Subject to the limitations in paragraph (1) of subsection (c),

there shall be deducted in determining the taxable estate amounts

representing expenses incurred in administering property not

subject to claims which is included in the gross estate to the same

extent such amounts would be allowable as a deduction under

subsection (a) if such property were subject to claims, and such

amounts are paid before the expiration of the period of limitation

for assessment provided in section 6501.

(1) Limitations applicable to subsections (a) and (b)

(A) Consideration for claims

The deduction allowed by this section in the case of claims

against the estate, unpaid mortgages, or any indebtedness

shall, when founded on a promise or agreement, be limited to

the extent that they were contracted bona fide and for an

adequate and full consideration in money or money's worth;

except that in any case in which any such claim is founded on a

promise or agreement of the decedent to make a contribution or

gift to or for the use of any donee described in section 2055

for the purposes specified therein, the deduction for such

claims shall not be so limited, but shall be limited to the

extent that it would be allowable as a deduction under section

2055 if such promise or agreement constituted a bequest.

(B) Certain taxes

Any income taxes on income received after the death of the

decedent, or property taxes not accrued before his death, or

any estate, succession, legacy, or inheritance taxes, shall not

be deductible under this section.

No deduction shall be allowed under this section for a claim

against the estate by a remainderman relating to any property

described in section 2044.

(D) Section 6166 interest

No deduction shall be allowed under this section for any

interest payable under section 6601 on any unpaid portion of

the tax imposed by section 2001 for the period during which an

extension of time for payment of such tax is in effect under

section 6166.

(2) Limitations applicable only to subsection (a)

In the case of the amounts described in subsection (a), there

shall be disallowed the amount by which the deductions specified

therein exceed the value, at the time of the decedent's death, of

property subject to claims, except to the extent that such

deductions represent amounts paid before the date prescribed for

the filing of the estate tax return. For purposes of this

section, the term "property subject to claims" means property

includible in the gross estate of the decedent which, or the

avails of which, would under the applicable law, bear the burden

of the payment of such deductions in the final adjustment and

settlement of the estate, except that the value of the property

shall be reduced by the amount of the deduction under section

2054 attributable to such property.

(d) Certain State and foreign death taxes

(1) General rule

Notwithstanding the provisions of subsection (c)(1)(B) of this

section, for purposes of the tax imposed by section 2001 the

value of the taxable estate may be determined, if the executor so

elects before the expiration of the period of limitation for

assessment provided in section 6501, by deducting from the value

of the gross estate the amount (as determined in accordance with

regulations prescribed by the Secretary) of -

(A) Any estate, succession, legacy, or inheritance tax

imposed by a State or the District of Columbia upon a transfer

by the decedent for public, charitable, or religious uses

described in section 2055 or 2106(a)(2), and

(B) any estate, succession, legacy, or inheritance tax

imposed by and actually paid to any foreign country, in respect

of any property situated within such foreign country and

included in the gross estate of a citizen or resident of the

United States, upon a transfer by the decedent for public,

charitable, or religious uses described in section 2055.

The determination under subparagraph (B) of the country within

which property is situated shall be made in accordance with the

rules applicable under subchapter B (sec. 2101 and following) in

determining whether property is situated within or without the

United States. Any election under this paragraph shall be

exercised in accordance with regulations prescribed by the

Secretary.

(2) Condition for allowance of deduction

No deduction shall be allowed under paragraph (1) for a State

death tax or a foreign death tax specified therein unless the

decrease in the tax imposed by section 2001 which results from

the deduction provided in paragraph (1) will inure solely for the

benefit of the public, charitable, or religious transferees

described in section 2055 or section 2106(a)(2). In any case

where the tax imposed by section 2001 is equitably apportioned

among all the transferees of property included in the gross

estate, including those described in sections 2055 and 2106(a)(2)

(taking into account any exemptions, credits, or deductions

allowed by this chapter), in determining such decrease, there

shall be disregarded any decrease in the Federal estate tax which

any transferees other than those described in sections 2055 and

2106(a)(2) are required to pay.

(3) Effect on credits for State and foreign death taxes of

deduction under this subsection

(A) Election

An election under this subsection shall be deemed a waiver of

the right to claim a credit, against the Federal estate tax,

under a death tax convention with any foreign country for any

tax or portion thereof in respect of which a deduction is taken

under this subsection.

(B) Cross references

See section 2011(d) for the effect of a deduction taken under

this subsection on the credit for State death taxes, and see

section 2014(f) for the effect of a deduction taken under this

subsection on the credit for foreign death taxes.

(e) Marital rights

For provisions treating certain relinquishments of marital

rights as consideration in money or money's worth, see section

2043(b)(2).

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 389; Feb. 20, 1956, ch. 63, Sec.

2, 70 Stat. 23; Pub. L. 85-866, title I, Sec. 102(c)(3), Sept. 2,

1958, 72 Stat. 1674; Pub. L. 86-175, Sec. 1, Aug. 21, 1959, 73

Stat. 396; Pub. L. 94-455, title XIX, Secs. 1902(a)(12) (B),

1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1806, 1834; Pub. L. 98-369,

div. A, title IV, Sec. 425(a)(2), title X, Sec. 1027(b), July 18,

1984, 98 Stat. 804, 1031; Pub. L. 100-647, title I, Sec.

1011A(g)(11), Nov. 10, 1988, 102 Stat. 3482; Pub. L. 105-34, title

V, Sec. 503(b)(1), title X, Sec. 1073(b)(3), Aug. 5, 1997, 111

Stat. 853, 948; Pub. L. 107-16, title V, Sec. 532(c)(5), June 7,

2001, 115 Stat. 74; Pub. L. 107-134, title I, Sec. 103(b)(2), Jan.

23, 2002, 115 Stat. 2431.)

-STATAMEND-

AMENDMENT OF SUBSECTION (D)

Pub. L. 107-16, title V, Sec. 532(c)(5), (d), title IX, Sec. 901,

June 7, 2001, 115 Stat. 74, 75, 901, provided that, applicable to

estates of decedents dying, and generation-skipping transfers,

after Dec. 31, 2004, subsection (d) of this section is temporarily

amended to read as follows:

(d) Certain foreign death taxes

(1) In general

Notwithstanding the provisions of subsection (c)(1)(B), for

purposes of the tax imposed by section 2001, the value of the

taxable estate may be determined, if the executor so elects

before the expiration of the period of limitation for assessment

provided in section 6501, by deducting from the value of the

gross estate the amount (as determined in accordance with

regulations prescribed by the Secretary) of any estate,

succession, legacy, or inheritance tax imposed by and actually

paid to any foreign country, in respect of any property situated

within such foreign country and included in the gross estate of a

citizen or resident of the United States, upon a transfer by the

decedent for public, charitable, or religious uses described in

section 2055. The determination under this paragraph of the

country within which property is situated shall be made in

accordance with the rules applicable under subchapter B (sec.

2101 and following) in determining whether property is situated

within or without the United States. Any election under this

paragraph shall be exercised in accordance with regulations

prescribed by the Secretary.

(2) Condition for allowance of deduction

No deduction shall be allowed under paragraph (1) for a foreign

death tax specified therein unless the decrease in the tax

imposed by section 2001 which results from the deduction provided

in paragraph (1) will inure solely for the benefit of the public,

charitable, or religious transferees described in section 2055 or

section 2106(a)(2). In any case where the tax imposed by section

2001 is equitably apportioned among all the transferees of

property included in the gross estate, including those described

in sections 2055 and 2106(a)(2) (taking into account any

exemptions, credits, or deductions allowed by this chapter), in

determining such decrease, there shall be disregarded any

decrease in the Federal estate tax which any transferees other

than those described in sections 2055 and 2106(a)(2) are required

to pay.

(3) Effect on credit for foreign death taxes of deduction under

this subsection

(A) Election

An election under this subsection shall be deemed a waiver of

the right to claim a credit, against the Federal estate tax,

under a death tax convention with any foreign country for any

tax or portion thereof in respect of which a deduction is taken

under this subsection.

(B) Cross reference

See section 2014(f) for the effect of a deduction taken under

this paragraph on the credit for foreign death taxes.

See Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

AMENDMENTS

2002 - Subsec. (d)(3)(B). Pub. L. 107-134 substituted "section

2011(d)" for "section 2011(e)".

1997 - Subsec. (c)(1)(B). Pub. L. 105-34, Sec. 1073(b)(3), struck

out at end "This subparagraph shall not apply to any increase in

the tax imposed by this chapter by reason of section 4980A(d)."

Subsec. (c)(1)(D). Pub. L. 105-34, Sec. 503(b)(1), added subpar.

(D).

1988 - Subsec. (c)(1)(B). Pub. L. 100-647, inserted at end "This

subparagraph shall not apply to any increase in the tax imposed by

this chapter by reason of section 4980A(d)."

1984 - Subsec. (c)(1)(C). Pub. L. 98-369, Sec. 1027(b), added

subpar. (C).

Subsec. (e). Pub. L. 98-369, Sec. 425(a)(2), substituted "For

provisions treating certain relinquishments of marital rights as

consideration in money or money's worth, see section 2043(b)(2)"

for "For provisions that relinquishment of marital rights shall not

be deemed a consideration 'in money or money's worth,' see section

2043(b)."

1976 - Subsec. (d)(1). Pub. L. 94-455 struck out "or his

delegate" after "Secretary" in provisions preceding subpar. (A) and

following subpar. (B) and struck out "or Territory" after "a State"

in subpar. (A).

1959 - Subsec. (d). Pub. L. 86-175 inserted a reference to

foreign death taxes in heading of subsection and par. (3) and in

text of par. (2), redesignated provisions of par. (1) as par.

(1)(A) and sentence pertaining to exercise of privilege of

election, added par. (2) and sentence for determining location of

property, redesignated provisions of par. (3) as par. (3)(B) in

part, and added par. (3)(A) and the part of (B) relating to foreign

death taxes.

1958 - Subsec. (d)(1). Pub. L. 85-866 struck out "or any

possession of the United States," after "District of Columbia,".

1956 - Subsecs. (d), (e). Act Feb. 20, 1956, added subsec. (d)

and redesignated former subsec. (d) as (e).

EFFECTIVE DATE OF 2002 AMENDMENT

Amendment by Pub. L. 107-134 applicable to estates of decedents

dying on or after Sept. 11, 2001, and, in the case of individuals

dying as a result of the Apr. 19, 1995, terrorist attack, dying on

or after Apr. 19, 1995, with provisions relating to waiver of

limitations, see section 103(d) of Pub. L. 107-134, set out as a

note under section 2011 of this title.

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

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

dying, and generation-skipping transfers, after Dec. 31, 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 OF 1997 AMENDMENT

Amendment by section 503(b)(1) of Pub. L. 105-34 applicable to

estates of decedents dying after Dec. 31, 1997, with special rule

in case of estate of any decedent dying before Jan. 1, 1998, with

respect to which there is an election under section 6166 of this

title, see section 503(d) of Pub. L. 105-34, set out as a note

under section 163 of this title.

Amendment by section 1073(b)(3) of Pub. L. 105-34 applicable to

estates of decedents dying after Dec. 31, 1996, see section 1073(c)

of Pub. L. 105-34, set out as an Effective Date of Repeal note

under section 4980A 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 OF 1984 AMENDMENT

Amendment by section 425(a)(2) of Pub. L. 98-369 applicable to

estates of decedents dying after July 18, 1984, see section

425(c)(1) of Pub. L. 98-369, set out as a note under section 2043

of this title.

Section 1027(c) of Pub. L. 98-369 provided that: "The amendments

made by this section [amending this section and section 2056 of

this title] shall take effect as if included in the amendment made

by section 403 of the Economic Recovery Tax Act of 1981 [section

403 of Pub. L. 97-34, see Effective Date of 1981 Amendment note set

out under section 2056 of this title]."

EFFECTIVE DATE OF 1959 AMENDMENT

Section 4 of Pub. L. 86-175 provided that: "The amendments made

by the preceding sections of this Act [amending this section and

sections 2011 and 2014 of this title] shall apply with respect to

the estates of decedents dying on or after July 1, 1955."

EFFECTIVE DATE OF 1958 AMENDMENT

Amendment by Pub. L. 85-866 applicable to estates of decedents

dying after Sept. 2, 1958, see section 102(d) of Pub. L. 85-866,

set out as a note under section 2011 of this title.

EFFECTIVE DATE OF 1956 AMENDMENT

Section 4 of act Feb. 20, 1956, as amended by act Oct. 22, 1986,

Pub. L. 99-514, Sec. 2, 100 Stat. 2095, provided that: "The

amendments to the Internal Revenue Code of 1986 [formerly I.R.C.

1954] made by sections 2 and 3 of this Act [amending this section

and section 2011 of this title], and provisions having the same

effect as this amendment, which shall be considered to be included

in chapter 3 of the Internal Revenue Code of 1939, shall apply to

the estates of all decedents dying after December 31, 1953."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 213, 303, 642, 2011,

2013, 2014, 2032A, 2043, 2057, 2106, 2622, 6166, 7481 of this

title.

-End-

-CITE-

26 USC Sec. 2054 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART IV - TAXABLE ESTATE

-HEAD-

Sec. 2054. Losses

-STATUTE-

For purposes of the tax imposed by section 2001, the value of the

taxable estate shall be determined by deducting from the value of

the gross estate losses incurred during the settlement of estates

arising from fires, storms, shipwrecks, or other casualties, or

from theft, when such losses are not compensated for by insurance

or otherwise.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 390.)

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 303, 642, 2013, 2053,

2106, 6166 of this title.

-End-

-CITE-

26 USC Sec. 2055 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART IV - TAXABLE ESTATE

-HEAD-

Sec. 2055. Transfers for public, charitable, and religious uses

-STATUTE-

(a) In general

For purposes of the tax imposed by section 2001, the value of the

taxable estate shall be determined by deducting from the value of

the gross estate the amount of all bequests, legacies, devises, or

transfers -

(1) to or for the use of the United States, any State, any

political subdivision thereof, or the District of Columbia, for

exclusively public purposes;

(2) to or for the use of any corporation organized and operated

exclusively for religious, charitable, scientific, literary, or

educational purposes, including the encouragement of art, or to

foster national or international amateur sports competition (but

only if no part of its activities involve the provision of

athletic facilities or equipment), and the prevention of cruelty

to children or animals, no part of the net earnings of which

inures to the benefit of any private stockholder or individual,

which is not disqualified for tax exemption under section

501(c)(3) by reason of attempting to influence legislation, and

which does not participate in, or intervene in (including the

publishing or distributing of statements), any political campaign

on behalf of (or in opposition to) any candidate for public

office;

(3) to a trustee or trustees, or a fraternal society, order, or

association operating under the lodge system, but only if such

contributions or gifts are to be used by such trustee or

trustees, or by such fraternal society, order, or association,

exclusively for religious, charitable, scientific, literary, or

educational purposes, or for the prevention of cruelty to

children or animals, such trust, fraternal society, order, or

association would not be disqualified for tax exemption under

section 501(c)(3) by reason of attempting to influence

legislation, and such trustee or trustees, or such fraternal

society, order, or association, does not participate in, or

intervene in (including the publishing or distributing of

statements), any political campaign on behalf of (or in

opposition to) any candidate for public office;

(4) to or for the use of any veterans' organization

incorporated by Act of Congress, or of its departments or local

chapters or posts, no part of the net earnings of which inures to

the benefit of any private shareholder or individual; or

(5) to an employee stock ownership plan if such transfer

qualifies as a qualified gratuitous transfer of qualified

employer securities within the meaning of section 664(g).

For purposes of this subsection, the complete termination before

the date prescribed for the filing of the estate tax return of a

power to consume, invade, or appropriate property for the benefit

of an individual before such power has been exercised by reason of

the death of such individual or for any other reason shall be

considered and deemed to be a qualified disclaimer with the same

full force and effect as though he had filed such qualified

disclaimer. Rules similar to the rules of section 501(j) shall

apply for purposes of paragraph (2).

(b) Powers of appointment

Property includible in the decedent's gross estate under section

2041 (relating to powers of appointment) received by a donee

described in this section shall, for purposes of this section, be

considered a bequest of such decedent.

If the tax imposed by section 2001, or any estate, succession,

legacy, or inheritance taxes, are, either by the terms of the will,

by the law of the jurisdiction under which the estate is

administered, or by the law of the jurisdiction imposing the

particular tax, payable in whole or in part out of the bequests,

legacies, or devises otherwise deductible under this section, then

the amount deductible under this section shall be the amount of

such bequests, legacies, or devises reduced by the amount of such

taxes.

(d) Limitation on deduction

The amount of the deduction under this section for any transfer

shall not exceed the value of the transferred property required to

be included in the gross estate.

(e) Disallowance of deductions in certain cases

(1) No deduction shall be allowed under this section for a

transfer to or for the use of an organization or trust described in

section 508(d) or 4948(c)(4) subject to the conditions specified in

such sections.

(2) Where an interest in property (other than an interest

described in section 170(f)(3)(B)) passes or has passed from the

decedent to a person, or for a use, described in subsection (a),

and an interest (other than an interest which is extinguished upon

the decedent's death) in the same property passes or has passed

(for less than an adequate and full consideration in money or

money's worth) from the decedent to a person, or for a use, not

described in subsection (a), no deduction shall be allowed under

this section for the interest which passes or has passed to the

person, or for the use, described in subsection (a) unless -

(A) in the case of a remainder interest, such interest is in a

trust which is a charitable remainder annuity trust or a

charitable remainder unitrust (described in section 664) or a

pooled income fund (described in section 642(c)(5)), or

(B) in the case of any other interest, such interest is in the

form of a guaranteed annuity or is a fixed percentage distributed

yearly of the fair market value of the property (to be determined

yearly).

(3) Reformations to comply with paragraph (2). -

(A) In general. - A deduction shall be allowed under subsection

(a) in respect of any qualified reformation.

(B) Qualified reformation. - For purposes of this paragraph,

the term "qualified reformation" means a change of a governing

instrument by reformation, amendment, construction, or otherwise

which changes a reformable interest into a qualified interest but

only if -

(i) any difference between -

(I) the actuarial value (determined as of the date of the

decedent's death) of the qualified interest, and

(II) the actuarial value (as so determined) of the

reformable interest,

does not exceed 5 percent of the actuarial value (as so

determined) of the reformable interest,

(ii) in the case of -

(I) a charitable remainder interest, the nonremainder

interest (before and after the qualified reformation)

terminated at the same time, or

(II) any other interest, the reformable interest and the

qualified interest are for the same period, and

(iii) such change is effective as of the date of the

decedent's death.

A nonremainder interest (before reformation) for a term of years

in excess of 20 years shall be treated as satisfying subclause

(I) of clause (ii) if such interest (after reformation) is for a

term of 20 years.

(i) In general. - The term "reformable interest" means any

interest for which a deduction would be allowable under

subsection (a) at the time of the decedent's death but for

paragraph (2).

(ii) Beneficiary's interest must be fixed. - The term

"reformable interest" does not include any interest unless,

before the remainder vests in possession, all payments to

persons other than an organization described in subsection (a)

are expressed either in specified dollar amounts or a fixed

percentage of the fair market value of the property. For

purposes of determining whether all such payments are expressed

as a fixed percentage of the fair market value of the property,

section 664(d)(3) shall be taken into account.

(iii) Special rule where timely commencement of reformation.

- Clause (ii) shall not apply to any interest if a judicial

proceeding is commenced to change such interest into a

qualified interest not later than the 90th day after -

(I) if an estate tax return is required to be filed, the

last date (including extensions) for filing such return, or

(II) if no estate tax return is required to be filed, the

last date (including extensions) for filing the income tax

return for the 1st taxable year for which such a return is

required to be filed by the trust.

(iv) Special rule for will executed before january 1, 1979,

etc. - In the case of any interest passing under a will

executed before January 1, 1979, or under a trust created

before such date, clause (ii) shall not apply.

(D) Qualified interest. - For purposes of this paragraph, the

term "qualified interest" means an interest for which a deduction

is allowable under subsection (a).

(E) Limitation. - The deduction referred to in subparagraph (A)

shall not exceed the amount of the deduction which would have

been allowable for the reformable interest but for paragraph (2).

(F) Special rule where income beneficiary dies. - If (by reason

of the death of any individual, or by termination or distribution

of a trust in accordance with the terms of the trust instrument)

by the due date for filing the estate tax return (including any

extension thereof) a reformable interest is in a wholly

charitable trust or passes directly to a person or for a use

described in subsection (a), a deduction shall be allowed for

such reformable interest as if it had met the requirements of

paragraph (2) on the date of the decedent's death. For purposes

of the preceding sentence, the term "wholly charitable trust"

means a charitable trust which, upon the allowance of a

deduction, would be described in section 4947(a)(1).

(G) Statute of limitations. - The period for assessing any

deficiency of any tax attributable to the application of this

paragraph shall not expire before the date 1 year after the date

on which the Secretary is notified that such reformation (or

other proceeding pursuant to subparagraph (J) (!1) has occurred.

(H) Regulations. - The Secretary shall prescribe such

regulations as may be necessary to carry out the purposes of this

paragraph, including regulations providing such adjustments in

the application of the provisions of section 508 (relating to

special rules relating to section 501(c)(3) organizations),

subchapter J (relating to estates, trusts, beneficiaries, and

decedents), and chapter 42 (relating to private foundations) as

may be necessary by reason of the qualified reformation.

(I) Reformations permitted in case of remainder interests in

residence or farm, pooled income funds, etc. - The Secretary

shall prescribe regulations (consistent with the provisions of

this paragraph) permitting reformations in the case of any

failure -

(i) to meet the requirements of section 170(f)(3)(B)

(relating to remainder interests in personal residence or farm,

etc.), or

(ii) to meet the requirements of section 642(c)(5).

(J) Void or reformed trust in cases of insufficient remainder

interests. - In the case of a trust that would qualify (or could

be reformed to qualify pursuant to subparagraph (B)) but for

failure to satisfy the requirement of paragraph (1)(D) or (2)(D)

of section 664(d), such trust may be -

(i) declared null and void ab initio, or

(ii) changed by reformation, amendment, or otherwise to meet

such requirement by reducing the payout rate or the duration

(or both) of any noncharitable beneficiary's interest to the

extent necessary to satisfy such requirement,

pursuant to a proceeding that is commenced within the period

required in subparagraph (C)(iii). In a case described in clause

(i), no deduction shall be allowed under this title for any

transfer to the trust and any transactions entered into by the

trust prior to being declared void shall be treated as entered

into by the transferor.

(4) Works of art and their copyrights treated as separate

properties in certain cases. -

(A) In general. - In the case of a qualified contribution of a

work of art, the work of art and the copyright on such work of

art shall be treated as separate properties for purposes of

paragraph (2).

(B) Work of art defined. - For purposes of this paragraph, the

term "work of art" means any tangible personal property with

respect to which there is a copyright under Federal law.

paragraph, the term "qualified contribution" means any transfer

of property to a qualified organization if the use of the

property by the organization is related to the purpose or

function constituting the basis for its exemption under section

501.

(D) Qualified organization defined. - For purposes of this

paragraph, the term "qualified organization" means any

organization described in section 501(c)(3) other than a private

foundation (as defined in section 509). For purposes of the

preceding sentence, a private operating foundation (as defined in

section 4942(j)(3)) shall not be treated as a private foundation.

(f) Special rule for irrevocable transfers of easements in real

property

A deduction shall be allowed under subsection (a) in respect of

any transfer of a qualified real property interest (as defined in

section 170(h)(2)(C)) which meets the requirements of section

170(h) (without regard to paragraph (4)(A) thereof).

(g) Cross references

(1) For option as to time for valuation for purpose of

deduction under this section, see section 2032.

(2) For treatment of certain organizations providing child

care, see section 501(k).

(3) For exemption of gifts and bequests to or for the benefit

of Library of Congress, see section 5 of the Act of March 3,

1925, as amended (2 U.S.C. 161).

(4) For treatment of gifts and bequests for the benefit of

the Naval Historical Center as gifts or bequests to or for the

use of the United States, see section 7222 of title 10, United

States Code.

(5) For treatment of gifts and bequests to or for the benefit

of National Park Foundation as gifts or bequests to or for the

use of the United States, see section 8 of the Act of December

18, 1967 (16 U.S.C. 191).

(6) For treatment of gifts, devises, or bequests accepted by

the Secretary of State, the Director of the International

Communication Agency, or the Director of the United States

International Development Cooperation Agency as gifts, devises,

or bequests to or for the use of the United States, see section

25 of the State Department Basic Authorities Act of 1956.

(7) For treatment of gifts or bequests of money accepted by

the Attorney General for credit to "Commissary Funds, Federal

Prisons," as gifts or bequests to or for the use of the United

States, see section 4043 of title 18, United States Code.

(8) For payment of tax on gifts and bequests of United States

obligations to the United States, see section 3113(e) of title

31, United States Code.

(9) For treatment of gifts and bequests for benefit of the

Naval Academy as gifts or bequests to or for the use of the

United States, see section 6973 of title 10, United States

Code.

(10) For treatment of gifts and bequests for benefit of the

Naval Academy Museum as gifts or bequests to or for the use of

the United States, see section 6974 of title 10, United States

Code.

(11) For exemption of gifts and bequests received by National

Archives Trust Fund Board, see section 2308 of title 44, United

States Code.

(12) For treatment of gifts and bequests to or for the use of

Indian tribal governments (or their subdivisions), see section

7871.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 390; Aug. 6, 1956, ch. 1020,

Sec. 1, 70 Stat. 1075; Pub. L. 85-866, title I, Sec. 30(d), Sept.

2, 1958, 72 Stat. 1631; Pub. L. 91-172, title II, Sec. 201(d)(1),

(4)(A), Dec. 30, 1969, 83 Stat. 560, 561; Pub. L. 91-614, title I,

Sec. 101(c), Dec. 31, 1970, 84 Stat. 1836; Pub. L. 93-483, Sec.

3(a), Oct. 26, 1974, 88 Stat. 1457; Pub. L. 94-455, title XIII,

Secs. 1304(a), 1307(d)(1)(B)(ii), (C), 1313(b)(2), title XIX, Secs.

1902(a)(4), (12)(A), 1906(b)(13)(A), title XX, Sec. 2009(b)(4)(B),

(C), title XXI, Sec. 2124(e)(2), Oct. 4, 1976, 90 Stat. 1715, 1727,

1730, 1804, 1805, 1834, 1894, 1919; Pub. L. 95-600, title V, Sec.

514(a), Nov. 6, 1978, 92 Stat. 2883; Pub. L. 96-222, title I, Sec.

105(a)(4)(A), Apr. 1, 1980, 94 Stat. 219; Pub. L. 96-465, title II,

Sec. 2206(e)(4), Oct. 17, 1980, 94 Stat. 2163; Pub. L. 96-605,

title III, Sec. 301(a), Dec. 28, 1980, 94 Stat. 3530; Pub. L.

97-34, title IV, Sec. 423(a), Aug. 13, 1981, 95 Stat. 316; Pub. L.

97-248, title II, Sec. 286(b)(2), Sept. 3, 1982, 96 Stat. 570; Pub.

L. 97-258, Sec. 3(f)(1), (2), Sept. 13, 1982, 96 Stat. 1064; Pub.

L. 97-473, title II, Sec. 202(b)(5), Jan. 14, 1983, 96 Stat. 2610;

Pub. L. 98-369, div. A, title X, Secs. 1022(a), 1032(b)(2), July

18, 1984, 98 Stat. 1026, 1033; Pub. L. 99-514, title XIV, Sec.

1422(a), Oct. 22, 1986, 100 Stat. 2716; Pub. L. 100-203, title X,

Sec. 10711(a)(3), Dec. 22, 1987, 101 Stat. 1330-464; Pub. L.

104-201, div. A, title X, Sec. 1073(b)(3), Sept. 23, 1996, 110

Stat. 2657; Pub. L. 105-34, title X, Sec. 1089(b)(3), (5), title

XV, Sec. 1530(c)(7), Aug. 5, 1997, 111 Stat. 960, 961, 1078.)

-REFTEXT-

REFERENCES IN TEXT

Section 25 of the State Department Basic Authorities Act of 1956,

referred to in subsec. (g)(6), is classified to section 2697 of

Title 22, Foreign Relations and Intercourse.

-MISC1-

AMENDMENTS

1997 - Subsec. (a)(5). Pub. L. 105-34, Sec. 1530(c)(7), added

par. (5).

Subsec. (e)(3)(G). Pub. L. 105-34, Sec. 1089(b)(5), inserted "(or

other proceeding pursuant to subparagraph (J)" after "reformation".

Subsec. (e)(3)(J). Pub. L. 105-34, Sec. 1089(b)(3), added subpar.

(J).

1996 - Subsec. (g)(4). Pub. L. 104-201 amended par. (4)

generally, substituting reference to Naval Historical Center for

reference to Office of Naval Records and History.

1987 - Subsec. (a)(2), (3). Pub. L. 100-203 inserted "(or in

opposition to)" after "on behalf of".

1986 - Subsecs. (f), (g). Pub. L. 99-514 added subsec. (f) and

redesignated former subsec. (f) as (g).

1984 - Subsec. (e)(3). Pub. L. 98-369, Sec. 1022(a), amended par.

(3) generally, substituting provisions relating to reformations to

comply with par. (2), defining "qualified reformation", "reformable

interest", and "qualified interest", and setting forth limitations

on the deduction, a special rule where the income beneficiary dies,

statute of limitations, regulations prescribed by the Secretary,

and reformations permitted in the case of remainder interests in a

residence or farm, pooled income funds, etc., for former par. (3),

which provided: "In the case of a will executed before December 31,

1978, or a trust created before such date, if a deduction is not

allowable at the time of the decedent's death because of the

failure of an interest in property which passes from the decedent

to a person, or for a use, described in subsection (a) to meet the

requirements of subparagraph (A) or (B) of paragraph (2) of this

subsection, and if the governing instrument is amended or conformed

on or before December 31, 1981, or, if later, on or before the 30th

day after the date on which judicial proceedings begun on or before

December 31, 1981, (which are required to amend or conform the

governing instrument), become final, so that the interest is in a

trust which meets the requirements of such subparagraph (A) or (B)

(as the case may be), a deduction shall nevertheless be allowed.

The Secretary may, by regulation, provide for the application of

the provisions of this paragraph to trusts whose governing

instruments are amended or conformed in accordance with this

paragraph, and such regulations may provide for any adjustments in

the application of the provisions of section 508 (relating to

special rules with respect to section 501(c)(3) organizations),

subchapter J (relating to estates, trusts, beneficiaries, and

decedents), and chapter 42 (relating to private foundations), to

such trusts made necessary by the application of this paragraph.

If, by the due date for the filing of an estate tax return

(including any extension thereof), the interest is in a charitable

trust which, upon allowance of a deduction, would be described in

section 4947(a)(1), or the interest passes directly to a person or

for a use described in subsection (a), a deduction shall be allowed

as if the governing instrument was amended or conformed under this

paragraph. If the amendment or conformation of the governing

instrument is made after the due date for the filing of the estate

tax return (including any extension thereof), the deduction shall

be allowed upon the filing of a timely claim for credit or refund

(as provided for in section 6511) of an overpayment resulting from

the application of this paragraph. In the case of a credit or

refund as a result of an amendment or conformation made pursuant to

this paragraph, no interest shall be allowed for the period prior

to the expiration of the 180th day after the date on which the

claim for credit or refund is filed."

Subsec. (f)(2). Pub. L. 98-369, Sec. 1032(b)(2), added par. (2),

and redesignated former pars. (2) to (11) as pars. (3) to (12),

respectively.

1983 - Subsec. (f)(11). Pub. L. 97-473 added par. (11).

1982 - Subsec. (a). Pub. L. 97-248 inserted provision that rules

similar to the rules of section 501(j) of this title shall apply

for purposes of par. (2).

Subsec. (f)(6). Pub. L. 97-258, Sec. 3(f)(1), substituted

"section 4043 of title 18, United States Code" for "section 2 of

the Act of May 15, 1952, as amended by the Act of July 9, 1952 (31

U.S.C. 725s-4)".

Subsec. (f)(7). Pub. L. 97-258, Sec. 3(f)(2), substituted

"section 3113(e) of title 31, United States Code" for "section 24

of the Second Liberty Bond Act (31 U.S.C. 757e)".

1981 - Subsec. (e)(4). Pub. L. 97-34 added par. (4).

1980 - Subsec. (e)(3). Pub. L. 96-605 substituted "December 31,

1978" for "December 31, 1977" and "December 31, 1981" for "December

31, 1978" in two places.

Pub. L. 96-222 substituted "such subparagraph (A) or (B)" for

"such subparagraph (a) or (B)" and "so that the interest" for "so

that interest".

Subsec. (f)(5). Pub. L. 96-465, among other changes, inserted

references to the Director of the International Communication

Agency and the Director of the United States International

Development Cooperation Agency and substituted reference to section

25 of the State Department Basic Authorities Act of 1956 for

reference to section 1021(e) of the Foreign Service Act of 1946.

1978 - Subsec. (e)(3). Pub. L. 95-600 inserted "or (B)" before

"of paragraph (2)", substituted "on or before December 31, 1978"

for "on or before December 31, 1977" wherever appearing and "which

meets the requirements of such subparagraph (a) or (B) (as the case

may be)," for "which is a charitable remainder annuity trust, a

charitable remainder unitrust (described in section 664), or a

pooled income fund (described in section 642(c)(5)),".

1976 - Subsec. (a). Pub. L. 94-455, Secs. 1307(d)(1)(B)(ii), (C),

1313(b)(2), 1902(a)(12)(A), 2009(b)(4)(B), (C), struck out

"(including the interest which falls into any such bequest, legacy,

devise, or transfer as a result of an irrevocable disclaimer of a

bequest, legacy, devise, transfer, or power, if the disclaimer is

made before the date prescribed for the filing of the estate tax

return)" after "or transfers" in provisions preceding par. (1),

struck out "Territory," after "State," in par. (1), inserted ", or

to foster national or international amateur sports competition (but

only if no part of its activities involve the provision of athletic

facilities or equipment)," after "encouragement of art" and

substituted "which is not disqualified for tax exemption under

section 501(c)(3) by reason of attempting to influence

legislation," for "no substantial part of the activities of which

is carrying on propaganda, or otherwise attempting to influence

legislation," in par. (2), substituted "such trust, fraternal

society, order, or association would not be disqualified for tax

exemption under section 501(c)(3) by reason of attempting to

influence legislation," for "no substantial part of the activities

of such trustee or trustees, or of such fraternal society, order,

or association, is carrying on propaganda, or otherwise attempting,

to influence legislation," in par. (3), and, in provisions

following par. (4), substituted "a qualified disclaimer" for "an

irrevocable disclaimer" and "such qualified disclaimer" for "such

irrevocable disclaimer".

Subsec. (b). Pub. L. 94-455, Sec. 1902(a)(4)(A), struck out

provisions under which a bequest in trust, if the surviving spouse

of the decedent was entitled for life to all of the net income from

the trust and the surviving spouse had a power of appointment over

the corpus of that trust exercisable by will in favor of, among

others, organizations described in subsec. (a)(2), could be deemed

a transfer to the organization by the decedent under certain

conditions.

Subsec. (e)(2). Pub. L. 94-455, Sec. 2124(e)(2), substituted

"(other than an interest described in section 170(f)(3)(B))" for

"(other than a remainder interest in a personal residence or farm

or an undivided portion of the decedent's entire interest in

property)" in provisions preceding subpar. (A).

Subsec. (e)(3). Pub. L. 94-455, Sec. 1304(a), Sec.

1906(b)(13)(A), substituted "will executed before December 31,

1977," for "will executed before September 21, 1974," and "amended

or conformed on or before December 31, 1977, or, if later, on or

before the 30th day after the date on which judicial proceedings

begun on or before December 31, 1977" for "amended or conformed on

or before December 31, 1975, or, if later, on or before the 30th

day after the date on which judicial proceedings begun on or before

December 31, 1975" and struck out "or his delegate" after

"Secretary".

Subsec. (f). Pub. L. 94-455, Sec. 1902(a)(4)(B), extended par.

(2) by inserting reference to gifts, struck out par. (3) which made

a cross reference to section 2 of the Act of Aug. 8, 1946 (60 Stat.

924; 5 U.S.C. 393) for construction of bequests for benefit of the

library of the Post Office Department as bequests to or for the use

of the United States, redesignated pars. (4)-(11) as (3)-(10),

respectively, substituted "For treatment of gifts and bequests for

the benefit of the Office of Naval Records and History as gifts or

bequests to or for the use of the United States, see section 7222

of title 10, United States Code" for "For exemption of bequests for

benefit of Office of Naval Records and Library, Navy Department,

see section 2 of the Act of March 4, 1937 (50 Stat. 25; 5 U.S.C.

419b)" in par. (3) as so redesignated, substituted "For treatment

of gifts and bequests to or for the benefit of National Park

Foundation as gifts or bequests to or for the use of the United

States, see section 8 of the Act of December 18, 1967 (16 U.S.C.

191)" for "For exemption of bequests to or for benefit of National

Park Service, see section 5 of the Act of July 10, 1935 (49 Stat.

478; 16 U.S.C. 19c)" in par. (4) as so redesignated, and corrected

obsolete and inaccurate references in pars. (5)-(10) as so

redesignated.

1974 - Subsec. (e)(3). Pub. L. 93-483 added par. (3).

1970 - Subsec. (b)(2)(C). Pub. L. 91-614 substituted "6 months"

for "one year".

1969 - Subsec. (a)(2). Pub. L. 91-172, Sec. 201(d)(4)(A) (i),

inserted non-participation and non-intervention in political

campaigns as an additional qualification.

Subsec. (a)(3). Pub. L. 91-172, Sec. 201(d)(4)(A)(ii), inserted

non-participation and non-intervention in political campaigns as an

additional qualification.

Subsec. (e). Pub. L. 91-172, Sec. 201(d)(1), substituted

substantive provisions for simple reference to sections 503 and 681

of this title in which such substantive provisions were formerly

set out.

1958 - Subsec. (e). Pub. L. 85-866 substituted "503" for "504".

1956 - Subsec. (b). Act Aug. 6, 1956, designated existing

provisions as par. (1) and added par. (2).

-CHANGE-

CHANGE OF NAME

International Communication Agency, and Director thereof,

redesignated United States Information Agency, and Director

thereof, by section 303 of Pub. L. 97-241, title III, Aug. 24,

1982, 96 Stat. 291, set out as a note under section 1461 of Title

22, Foreign Relations and Intercourse. United States Information

Agency (other than Broadcasting Board of Governors and

International Broadcasting Bureau) abolished and functions

transferred to Secretary of State, see sections 6531 and 6532 of

Title 22.

-MISC2-

EFFECTIVE DATE OF 1997 AMENDMENT

Amendment by section 1089(b)(3), (5) of Pub. L. 105-34 applicable

to transfers in trust after July 28, 1997, with special rule for

certain decedents, see section 1089(b)(6) of Pub. L. 105-34, set

out as a note under section 664 of this title.

Amendment by section 1530(c)(7) of Pub. L. 105-34 applicable to

transfers made by trusts to, or for the use of, an employee stock

ownership plan after Aug. 5, 1997, see section 1530(d) of Pub. L.

105-34, set out as a note under section 401 of this title.

EFFECTIVE DATE OF 1987 AMENDMENT

Amendment by Pub. L. 100-203 applicable with respect to

activities after Dec. 22, 1987, see section 10711(c) of Pub. L.

100-203, set out as a note under section 170 of this title.

EFFECTIVE DATE OF 1986 AMENDMENT

Section 1422(e) of Pub. L. 99-514 provided that: "The amendments

made by this section [amending this section and sections 2106 and

2522 of this title] shall apply to transfers and contributions made

after December 31, 1986."

EFFECTIVE DATE OF 1984 AMENDMENT

Section 1022(e) of Pub. L. 98-369, as amended by Pub. L. 99-514,

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

"(1) Subsections (a), (b), and (c). - The amendments made by

subsections (a), (b), and (c) [amending this section and sections

170 and 2522 of this title] shall apply to reformations after

December 31, 1978; except that such amendments shall not apply to

any reformation to which section 2055(e)(3) of the Internal Revenue

Code of 1986 [formerly I.R.C. 1954] (as in effect on the day before

the date of the enactment of this Act [July 18, 1984]) applies. For

purposes of applying clause (iii) of section 2055(e)(3)(C) of such

Code (as amended by this section), the 90th day described in such

clause shall be treated as not occurring before the 90th day after

the date of the enactment of this Act.

"(2) Subsection (d). - The amendment made by subsection (d)

[amending section 664 of this title] shall apply to transfers after

December 31, 1978.

"(3) Statute of limitations. -

"(A) In general. - If on the date of the enactment of this Act

[July 18, 1984] (or at any time before the date 1 year after such

date of enactment), credit or refund of any overpayment of tax

attributable to the amendments made by this section is barred by

any law or rule of law, such credit or refund of such overpayment

may nevertheless be made if claim therefor is filed before the

date 1 year after the date of the enactment of this Act.

"(B) No interest where statute closed on date of enactment. -

In any case where the making of the credit or refund of the

overpayment described in subparagraph (A) is barred on the date

of the enactment of this Act [July 18, 1984], no interest shall

be allowed with respect to such overpayment (or any related

adjustment) for the period before the date 180 days after the

date on which the Secretary of the Treasury (or his delegate) is

notified that the reformation has occurred."

Amendment by section 1032(b)(2) of Pub. L. 98-369 applicable to

taxable years beginning after July 18, 1984, see section 1032(c) of

Pub. L. 98-369, set out as a note under section 170 of this title.

EFFECTIVE DATE OF 1983 AMENDMENT

For effective date of amendment by Pub. L. 97-473, see section

204(3) of Pub. L. 97-473, set out as an Effective Date note under

section 7871 of this title.

EFFECTIVE DATE OF 1982 AMENDMENT

Amendment by Pub. L. 97-248 effective Oct. 5, 1976, see section

286(c) of Pub. L. 97-248, set out as a note under section 501 of

this title.

EFFECTIVE DATE OF 1981 AMENDMENT

Section 423(c)(1) of Pub. L. 97-34 provided that: "The amendment

made by subsection (a) [amending this section] shall apply to the

estates of decedents dying after December 31, 1981."

EFFECTIVE DATE OF 1980 AMENDMENTS

Section 301(b)(1) of Pub. L. 96-605 provided that: "The amendment

made by subsection (a) [amending this section] shall apply in the

case of decedents dying after December 31, 1969."

Amendment by Pub. L. 96-465 effective Feb. 15, 1981, except as

otherwise provided, see section 2403 of Pub. L. 96-465, set out as

an Effective Date note under section 3901 of Title 22, Foreign

Relations and Intercourse.

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.

EXTENSION OF 1978 AMENDMENT; CHARITABLE LEAD TRUSTS AND CHARITABLE

REMAINDER TRUSTS IN CASE OF INCOME AND GIFT TAXES

Section 301(b)(2) of Pub. L. 96-605 provided that: "Section

514(b) [section 514(b) of Pub. L. 95-600, set out below] (and

section 514(c) [section 514(c) of Pub. L. 95-600, set out below]

insofar as it relates to section 514(b)) of the Revenue Act of 1978

shall be applied as if the amendment made by subsection (a)

[amending this section] had been included in the amendment made by

section 514(a) of such Act [section 514(a) of Pub. L. 95-600,

amending this section]."

EFFECTIVE DATE OF 1978 AMENDMENT; CHARITABLE LEAD TRUSTS AND

CHARITABLE REMAINDER TRUSTS IN CASE OF INCOME AND GIFT TAXES

Section 514(c) of Pub. L. 95-600, as added by Pub. L. 96-222,

title I, Sec. 105(a)(4)(B), Apr. 1, 1980, 94 Stat. 219; amended

Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided

that:

"(1) For subsection (a). - The amendment made by subsection (a)

[amending this section] shall apply in the case of decedents dying

after December 31, 1969.

"(2) For subsection (b). - Subsection (b) [section 514(b) of Pub.

L. 95-600, set out below] -

"(A) insofar as it relates to section 170 of the Internal

Revenue Code of 1986 [formerly I.R.C. 1954] shall apply to

transfers in trust and contributions made after July 31, 1969,

and

"(B) insofar as it relates to section 2522 of the Internal

Revenue Code of 1986 shall apply to transfers made after December

31, 1969."

EFFECTIVE DATE OF 1976 AMENDMENT

Section 1304(c) of Pub. L. 94-455 provided that: "The amendments

made by this section [amending this section] shall apply in the

case of decedents dying after December 31, 1969."

Amendment by section 1307(d)(1)(B)(ii), (C) of Pub. L. 94-455,

applicable to estates of decedents dying after Dec. 31, 1976, see

section 1307(e) of Pub. L. 94-455, set out as a note under section

501 of this title.

Amendment by section 1313(b)(2) of Pub. L. 94-455 applicable on

day following Oct. 4, 1976, see section 1313(d) of Pub. L. 94-455,

set out as a note under section 501 of this title.

Amendment by section 1902(a)(4) of Pub. L. 94-455 applicable in

the case of estates of decedents dying after Oct. 4, 1976, see

section 1902(c)(1) of Pub. L. 94-455, set out as a note under

section 2011 of this title.

Amendment by section 1902(a)(12)(A) of Pub. L. 94-455 applicable

with respect to gifts made after Dec. 31, 1976, see section

1902(c)(2) of Pub. L. 94-455, set out as a note under section 2501

of this title.

Amendment by section 2009(b)(4)(B), (C) of Pub. L. 94-455

applicable with respect to transfers creating an interest in person

disclaiming made after Dec. 31, 1976, see section 2009(e)(2) of

Pub. L. 94-455, set out as a note under section 2518 of this title.

Amendment by section 2124(e)(2) of Pub. L. 94-455 applicable with

respect to contributions or transfers made after June 13, 1976, see

section 2124(e)(4) of Pub. L. 94-455, set out as a note under

section 170 of this title.

EFFECTIVE DATE OF 1974 AMENDMENT

Section 3(b) of Pub. L. 93-483 provided that: "The amendment made

by subsection (a) [amending this section] shall apply with respect

to estates of decedents dying after December 31, 1969."

EFFECTIVE DATE OF 1970 AMENDMENT

Amendment by Pub. L. 91-614 applicable with respect to decedents

dying after Dec. 31, 1970, see section 101(j) of Pub. L. 91-614,

set out as an Effective Date note under section 2032 of this title.

EFFECTIVE DATE OF 1969 AMENDMENT

Amendment by section 201(d)(1) of Pub. L. 91-172 applicable in

the case of decedents dying after Dec. 31, 1969, with specified

exceptions, see section 201(g)(4) of Pub. L. 91-172, set out as a

note under section 170 of this title.

Amendment by section 201(d)(4)(A) of Pub. L. 91-172 applicable to

gifts and transfers made after Dec. 31, 1969, see section

201(g)(4)(E) of Pub. L. 91-172, set out as a note under section 170

of this title.

EFFECTIVE DATE OF 1956 AMENDMENT

Section 3 of act Aug. 6, 1956, provided that: "The amendments

made by this Act [amending this section and section 6503 of this

title] shall apply in the case of decedents dying after August 16,

1954."

-TRANS-

TRANSFER OF FUNCTIONS

United States International Development Cooperation Agency (other

than Agency for International Development and Overseas Private

Investment Corporation) abolished and functions and authorities

transferred, see sections 6561 and 6562 of Title 22, Foreign

Relations and Intercourse.

-MISC3-

SPECIAL DONATIONS

Section 1422(d) of Pub. L. 99-514 provided that: "If the

Secretary of the Interior acquires by donation after December 31,

1986, a conservation easement (within the meaning of section 2(h)

of S. 720, 99th Congress, 1st Session, as in effect on August 16,

1986) [see Pub. L. 99-420, Sept. 25, 1986, Sec. 102(h), 99 Stat.

955, 957], such donation shall qualify for treatment under section

2055(f) or 2522(d) of the Internal Revenue Code of 1954 [now 1986],

as added by this section."

CHARITABLE LEAD TRUSTS AND CHARITABLE REMAINDER TRUSTS IN CASE OF

INCOME AND GIFT TAXES

Section 514(b) of Pub. L. 95-600, as amended by Pub. L. 99-514,

Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "Under

regulations prescribed by the Secretary of the Treasury or his

delegate, in the case of trusts created before December 31, 1977,

provisions comparable to section 2055(e)(3) of the Internal Revenue

Code of 1986 [formerly I.R.C. 1954] (as amended by subsection (a))

shall be deemed to be included in sections 170 and 2522 of the

Internal Revenue Code of 1986."

EXTENSION OF PERIOD FOR FILING CLAIM FOR REFUND

Section 1304(b) of Pub. L. 94-455, as amended by Pub. L. 99-514,

Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "A claim for

refund or credit of an overpayment of the tax imposed by section

2001 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]

allowable under section 2055(e)(3) of such Code (as amended by

subsection (a)) shall not be denied because of the expiration of

the time for filing such a claim under section 6511(a) if such

claim is filed not later than June 30, 1978."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 170, 501, 508, 2011,

2012, 2013, 2014, 2031, 2032, 2053, 2056A, 2106, 2522, 2642, 2652,

4947, 4948, 7871 of this title; title 12 section 3051; title 15

section 80a-3; title 22 section 3307.

-FOOTNOTE-

(!1) So in original. Probably should be followed by an additional

closing parenthesis.

-End-

-CITE-

26 USC Sec. 2056 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART IV - TAXABLE ESTATE

-HEAD-

Sec. 2056. Bequests, etc., to surviving spouse

-STATUTE-

(a) Allowance of marital deduction

For purposes of the tax imposed by section 2001, the value of the

taxable estate shall, except as limited by subsection (b), be

determined by deducting from the value of the gross estate an

amount equal to the value of any interest in property which passes

or has passed from the decedent to his surviving spouse, but only

to the extent that such interest is included in determining the

value of the gross estate.

(b) Limitation in the case of life estate or other terminable

interest

(1) General rule

Where, on the lapse of time, on the occurrence of an event or

contingency, or on the failure of an event or contingency to

occur, an interest passing to the surviving spouse will terminate

or fail, no deduction shall be allowed under this section with

respect to such interest -

(A) if an interest in such property passes or has passed (for

less than an adequate and full consideration in money or

money's worth) from the decedent to any person other than such

surviving spouse (or the estate of such spouse); and

(B) if by reason of such passing such person (or his heirs or

assigns) may possess or enjoy any part of such property after

such termination or failure of the interest so passing to the

surviving spouse;

and no deduction shall be allowed with respect to such interest

(even if such deduction is not disallowed under subparagraphs (A)

and (B)) -

spouse, pursuant to directions of the decedent, by his executor

or by the trustee of a trust.

For purposes of this paragraph, an interest shall not be

considered as an interest which will terminate or fail merely

because it is the ownership of a bond, note, or similar

contractual obligation, the discharge of which would not have the

effect of an annuity for life or for a term.

(2) Interest in unidentified assets

Where the assets (included in the decedent's gross estate) out

of which, or the proceeds of which, an interest passing to the

surviving spouse may be satisfied include a particular asset or

assets with respect to which no deduction would be allowed if

such asset or assets passed from the decedent to such spouse,

then the value of such interest passing to such spouse shall, for

purposes of subsection (a), be reduced by the aggregate value of

such particular assets.

(3) Interest of spouse conditional on survival for limited period

For purposes of this subsection, an interest passing to the

surviving spouse shall not be considered as an interest which

will terminate or fail on the death of such spouse if -

(A) such death will cause a termination or failure of such

interest only if it occurs within a period not exceeding 6

months after the decedent's death, or only if it occurs as a

result of a common disaster resulting in the death of the

decedent and the surviving spouse, or only if it occurs in the

case of either such event; and

(B) such termination or failure does not in fact occur.

(4) Valuation of interest passing to surviving spouse

In determining for purposes of subsection (a) the value of any

interest in property passing to the surviving spouse for which a

deduction is allowed by this section -

(A) there shall be taken into account the effect which the

tax imposed by section 2001, or any estate, succession, legacy,

or inheritance tax, has on the net value to the surviving

spouse of such interest; and

(B) where such interest or property is encumbered in any

manner, or where the surviving spouse incurs any obligation

imposed by the decedent with respect to the passing of such

interest, such encumbrance or obligation shall be taken into

account in the same manner as if the amount of a gift to such

spouse of such interest were being determined.

(5) Life estate with power of appointment in surviving spouse

In the case of an interest in property passing from the

decedent, if his surviving spouse is entitled for life to all the

income from the entire interest, or all the income from a

specific portion thereof, payable annually or at more frequent

intervals, with power in the surviving spouse to appoint the

entire interest, or such specific portion (exercisable in favor

of such surviving spouse, or of the estate of such surviving

spouse, or in favor of either, whether or not in each case the

power is exercisable in favor of others), and with no power in

any other person to appoint any part of the interest, or such

specific portion, to any person other than the surviving spouse -

(A) the interest or such portion thereof so passing shall,

for purposes of subsection (a), be considered as passing to the

surviving spouse, and

(B) no part of the interest so passing shall, for purposes of

paragraph (1)(A), be considered as passing to any person other

than the surviving spouse.

This paragraph shall apply only if such power in the surviving

spouse to appoint the entire interest, or such specific portion

thereof, whether exercisable by will or during life, is

exercisable by such spouse alone and in all events.

(6) Life insurance or annuity payments with power of appointment

in surviving spouse

In the case of an interest in property passing from the

decedent consisting of proceeds under a life insurance,

endowment, or annuity contract, if under the terms of the

contract such proceeds are payable in installments or are held by

the insurer subject to an agreement to pay interest thereon

(whether the proceeds, on the termination of any interest

payments, are payable in a lump sum or in annual or more frequent

installments), and such installment or interest payments are

payable annually or at more frequent intervals, commencing not

later than 13 months after the decedent's death, and all amounts,

or a specific portion of all such amounts, payable during the

life of the surviving spouse are payable only to such spouse, and

such spouse has the power to appoint all amounts, or such

specific portion, payable under such contract (exercisable in

favor of such surviving spouse, or of the estate of such

surviving spouse, or in favor of either, whether or not in each

case the power is exercisable in favor of others), with no power

in any other person to appoint such amounts to any person other

than the surviving spouse -

(A) such amounts shall, for purposes of subsection (a), be

considered as passing to the surviving spouse, and

(B) no part of such amounts shall, for purposes of paragraph

(1)(A), be considered as passing to any person other than the

surviving spouse.

This paragraph shall apply only if, under the terms of the

contract, such power in the surviving spouse to appoint such

amounts, whether exercisable by will or during life, is

exercisable by such spouse alone and in all events.

(7) Election with respect to life estate for surviving spouse

(A) In general

In the case of qualified terminable interest property -

(i) for purposes of subsection (a), such property shall be

treated as passing to the surviving spouse, and

(ii) for purposes of paragraph (1)(A), no part of such

property shall be treated as passing to any person other than

the surviving spouse.

(B) Qualified terminable interest property defined

For purposes of this paragraph -

(i) In general

The term "qualified terminable interest property" means

property -

(I) which passes from the decedent,

(II) in which the surviving spouse has a qualifying

income interest for life, and

(III) to which an election under this paragraph applies.

(ii) Qualifying income interest for life

The surviving spouse has a qualifying income interest for

life if -

(I) the surviving spouse is entitled to all the income

from the property, payable annually or at more frequent

intervals, or has a usufruct interest for life in the

property, and

(II) no person has a power to appoint any part of the

property to any person other than the surviving spouse.

Subclause (II) shall not apply to a power exercisable only at

or after the death of the surviving spouse. To the extent

provided in regulations, an annuity shall be treated in a

manner similar to an income interest in property (regardless

of whether the property from which the annuity is payable can

be separately identified).

(iii) Property includes interest therein

The term "property" includes an interest in property.

(iv) Specific portion treated as separate property

A specific portion of property shall be treated as separate

property.

(v) Election

An election under this paragraph with respect to any

property shall be made by the executor on the return of tax

imposed by section 2001. Such an election, once made, shall

be irrevocable.

In the case of an annuity included in the gross estate of the

decedent under section 2039 (or, in the case of an interest in

an annuity arising under the community property laws of a

State, included in the gross estate of the decedent under

section 2033) where only the surviving spouse has the right to

receive payments before the death of such surviving spouse -

(i) the interest of such surviving spouse shall be treated

as a qualifying income interest for life, and

(ii) the executor shall be treated as having made an

election under this subsection with respect to such annuity

unless the executor otherwise elects on the return of tax

imposed by section 2001.

An election under clause (ii), once made, shall be irrevocable.

(8) Special rule for charitable remainder trusts

(A) In general

If the surviving spouse of the decedent is the only

beneficiary of a qualified charitable remainder trust who is

not a charitable beneficiary nor an ESOP beneficiary, paragraph

(1) shall not apply to any interest in such trust which passes

or has passed from the decedent to such surviving spouse.

(B) Definitions

For purposes of subparagraph (A) -

(i) Charitable beneficiary

The term "charitable beneficiary" means any beneficiary

which is an organization described in section 170(c).

(ii) ESOP beneficiary

The term "ESOP beneficiary" means any beneficiary which is

an employee stock ownership plan (as defined in section

4975(e)(7)) that holds a remainder interest in qualified

employer securities (as defined in section 664(g)(4)) to be

transferred to such plan in a qualified gratuitous transfer

(as defined in section 664(g)(1)).

(iii) Qualified charitable remainder trust

The term "qualified charitable remainder trust" means a

charitable remainder annuity trust or a charitable remainder

unitrust (described in section 664).

(9) Denial of double deduction

Nothing in this section or any other provision of this chapter

shall allow the value of any interest in property to be deducted

under this chapter more than once with respect to the same

decedent.

(10) Specific portion

For purposes of paragraphs (5), (6), and (7)(B)(iv), the term

"specific portion" only includes a portion determined on a

fractional or percentage basis.

For purposes of this section, an interest in property shall be

considered as passing from the decedent to any person if and only

if -

(1) such interest is bequeathed or devised to such person by

the decedent;

(2) such interest is inherited by such person from the

decedent;

(3) such interest is the dower or curtesy interest (or

statutory interest in lieu thereof) of such person as surviving

spouse of the decedent;

(4) such interest has been transferred to such person by the

decedent at any time;

(5) such interest was, at the time of the decedent's death,

held by such person and the decedent (or by them and any other

person) in joint ownership with right of survivorship;

(6) the decedent had a power (either alone or in conjunction

with any person) to appoint such interest and if he appoints or

has appointed such interest to such person, or if such person

takes such interest in default on the release or nonexercise of

such power; or

(7) such interest consists of proceeds of insurance on the life

of the decedent receivable by such person.

Except as provided in paragraph (5) or (6) of subsection (b), where

at the time of the decedent's death it is not possible to ascertain

the particular person or persons to whom an interest in property

may pass from the decedent, such interest shall, for purposes of

subparagraphs (A) and (B) of subsection (b)(1), be considered as

passing from the decedent to a person other than the surviving

spouse.

(d) Disallowance of marital deduction where surviving spouse not

United States citizen

(1) In general

Except as provided in paragraph (2), if the surviving spouse of

the decedent is not a citizen of the United States -

(A) no deduction shall be allowed under subsection (a), and

(B) section 2040(b) shall not apply.

(2) Marital deduction allowed for certain transfers in trust

(A) In general

Paragraph (1) shall not apply to any property passing to the

surviving spouse in a qualified domestic trust.

(B) Special rule

If any property passes from the decedent to the surviving

spouse of the decedent, for purposes of subparagraph (A), such

property shall be treated as passing to such spouse in a

qualified domestic trust if -

(i) such property is transferred to such a trust before the

date on which the return of the tax imposed by this chapter

is made, or

(ii) such property is irrevocably assigned to such a trust

under an irrevocable assignment made on or before such date

which is enforceable under local law.

(3) Allowance of credit to certain spouses

If -

(A) property passes to the surviving spouse of the decedent

(hereinafter in this paragraph referred to as the "first

decedent"),

(B) without regard to this subsection, a deduction would be

allowable under subsection (a) with respect to such property,

and

surviving spouse is subject to the tax imposed by this chapter,

the Federal estate tax paid (or treated as paid under section

2056A(b)(7)) by the first decedent with respect to such property

shall be allowed as a credit under section 2013 to the estate of

such surviving spouse and the amount of such credit shall be

determined under such section without regard to when the first

decedent died and without regard to subsection (d)(3) of such

section.

(4) Special rule where resident spouse becomes citizen

Paragraph (1) shall not apply if -

(A) the surviving spouse of the decedent becomes a citizen of

the United States before the day on which the return of the tax

imposed by this chapter is made, and

(B) such spouse was a resident of the United States at all

times after the date of the death of the decedent and before

becoming a citizen of the United States.

(5) Reformations permitted

(A) In general

In the case of any property with respect to which a deduction

would be allowable under subsection (a) but for this

subsection, the determination of whether a trust is a qualified

domestic trust shall be made -

(i) as of the date on which the return of the tax imposed

by this chapter is made, or

(ii) if a judicial proceeding is commenced on or before the

due date (determined with regard to extensions) for filing

such return to change such trust into a trust which is a

qualified domestic trust, as of the time when the changes

pursuant to such proceeding are made.

(B) Statute of limitations

If a judicial proceeding described in subparagraph (A)(ii) is

commenced with respect to any trust, the period for assessing

any deficiency of tax attributable to any failure of such trust

to be a qualified domestic trust shall not expire before the

date 1 year after the date on which the Secretary is notified

that the trust has been changed pursuant to such judicial

proceeding or that such proceeding has been terminated.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 392; Pub. L. 89-621, Sec. 1(a),

Oct. 4, 1966, 80 Stat. 872; Pub. L. 94-455, title XIX, Sec.

1902(a)(12)(A), title XX, Secs. 2002(a), 2009(b)(4)(D), (E), Oct.

4, 1976, 90 Stat. 1805, 1854, 1894; Pub. L. 95-600, title VII, Sec.

702(g)(1), (2), Nov. 6, 1978, 92 Stat. 2930; Pub. L. 97-34, title

IV, Sec. 403(a)(1), (d)(1), Aug. 13, 1981, 95 Stat. 301, 302; Pub.

L. 97-448, title I, Sec. 104(a)(2)(A), (8), Jan. 12, 1983, 96 Stat.

2380, 2381; Pub. L. 98-369, div. A, title X, Sec. 1027(a), July 18,

1984, 98 Stat. 1031; Pub. L. 100-647, title V, Sec. 5033(a)(1),

title VI, Sec. 6152(a), Nov. 10, 1988, 102 Stat. 3670, 3725; Pub.

L. 101-239, title VII, Sec. 7815(d)(4)(A), (5), (6), (8), 7816(q),

Dec. 19, 1989, 103 Stat. 2415, 2416, 2423; Pub. L. 101-508, title

XI, Secs. 11701(l)(1), 11702(g)(5), Nov. 5, 1990, 104 Stat.

1388-513, 1388-516; Pub. L. 102-486, title XIX, Sec. 1941(a), Oct.

24, 1992, 106 Stat. 3036; Pub. L. 105-34, title XIII, Sec. 1311(a),

title XV, Sec. 1530(c)(8), Aug. 5, 1997, 111 Stat. 1044, 1078.)

-MISC1-

AMENDMENTS

1997 - Subsec. (b)(7)(C). Pub. L. 105-34, Sec. 1311(a), inserted

"(or, in the case of an interest in an annuity arising under the

community property laws of a State, included in the gross estate of

the decedent under section 2033)" after "section 2039".

Subsec. (b)(8). Pub. L. 105-34, Sec. 1530(c)(8), amended par. (8)

generally. Prior to amendment, par. (8) read as follows:

"(8) Special rule for charitable remainder trusts. -

"(A) In general. - If the surviving spouse of the decedent is

the only noncharitable beneficiary of a qualified charitable

remainder trust, paragraph (1) shall not apply to any interest in

such trust which passes or has passed from the decedent to such

surviving spouse.

"(B) Definitions. - For purposes of subparagraph (A) -

"(i) Noncharitable beneficiary. - The term 'noncharitable

beneficiary' means any beneficiary of the qualified charitable

remainder trust other than an organization described in section

170(c).

"(ii) Qualified charitable remainder trust. - The term

'qualified charitable remainder trust' means a charitable

remainder annuity trust or charitable remainder unitrust

(described in section 664)."

1992 - Subsec. (b)(10). Pub. L. 102-486 added par. (10).

1990 - Subsec. (d)(3). Pub. L. 101-508, Sec. 11702(g)(5),

substituted "section 2056A(b)(7)" for "section 2056A(b)(6)".

Subsec. (d)(4), (5). Pub. L. 101-508, Sec. 11701(l)(1),

redesignated par. (4) relating to reformations permitted as par.

(5).

1989 - Subsec. (b)(7)(C). Pub. L. 101-239, Sec. 7816(q), inserted

"included in the gross estate of the decedent under section 2039"

after "an annuity".

Subsec. (d)(2)(B). Pub. L. 101-239, Sec. 7815(d)(4)(A),

substituted "Special rule" for "Property passing outside of probate

estate" in heading and amended text generally. Prior to amendment,

text read as follows: "If any property passes from the decedent to

the surviving spouse of the decedent outside of the decedent's

probate estate, for purposes of subparagraph (A), such property

shall be treated as passing to such spouse in a qualified domestic

trust if such property is transferred to such a trust before the

day on which the return of the tax imposed by section 2001 is

made."

Subsec. (d)(3). Pub. L. 101-239, Sec. 7815(d)(6), substituted

"this chapter" for "section 2001" in subpar. (C) and inserted "and

without regard to subsection (d)(3) of such section" after "first

decedent died" in concluding provisions.

Subsec. (d)(4). Pub. L. 101-239, Sec. 7815(d)(8), added par. (4)

relating to reformations permitted.

Pub. L. 101-239, Sec. 7815(d)(5), added par. (4) relating to

special rule where resident spouse becomes citizen.

1988 - Subsec. (b)(7)(C). Pub. L. 100-647, Sec. 6152(a), added

subpar. (C).

Subsec. (d). Pub. L. 100-647, Sec. 5033(a)(1), added subsec. (d).

1984 - Subsec. (b)(7)(B)(ii)(I). Pub. L. 98-369 inserted ", or

has a usufruct interest for life in the property".

1983 - Subsec. (b)(7)(B)(ii). Pub. L. 97-448, Sec. 104(a)(8),

inserted provision that an annuity shall be treated in a manner

similar to an income interest in property (regardless of whether

the property from which the annuity is payable can be separately

identified).

Subsec. (b)(9). Pub. L. 97-448, Sec. 104(a)(2)(A), added par.

(9).

1981 - Subsec. (a). Pub. L. 97-34, Sec. 403(a)(1)(B), substituted

"subsection (b)" for "subsections (b) and (c)".

Subsec. (b)(7), (8). Pub. L. 97-34, Sec. 403(d)(1), added pars.

(7) and (8).

Subsecs. (c), (d). Pub. L. 97-34, Sec. 403(a)(1)(A), redesignated

subsec. (d) as (c) and struck out former subsec. (c) relating to

limitation on aggregate of deductions.

1978 - Subsec. (c)(1)(B). Pub. L. 95-600 inserted in cl. (ii)

"required to be included in a gift tax return" after "with respect

to any gift" and inserted following cl. (ii) "For purposes of this

subparagraph, a gift which is includible in the gross estate of the

donor by reason of section 2035 shall not be taken into account".

1976 - Subsec. (a). Pub. L. 94-455, Sec. 2009(b)(4)(E),

substituted "subsections (b) and (c)" for "subsections (b), (c),

and (d)".

Subsec. (c)(1). Pub. L. 94-455, Sec. 2002(a), designated existing

provisions as subpar. (A), substituted provisions that the

aggregate amount of the deductions allowed under this section

(computed without regard to this subsection) shall not exceed the

greater of $250,000 or 50 percent of the value of the adjusted

gross estate as defined in par. (2) for provisions that the

aggregate amount of the deductions allowed under this section

(computed without regard to this subsection) shall not exceed 50

percent of the value of the adjusted gross estate as defined in

par. (2), and added subpars. (B) and (C).

Subsec. (c)(2)(B). Pub. L. 94-455, Sec. 1902(a)(12)(A), struck

out "Territory," after "State," in provisions preceding cl. (i).

Subsecs. (d), (e). Pub. L. 94-455, Sec. 2009(b)(4)(D),

redesignated subsec. (e) as (d). Former subsec. (d), which related

to disclaimers by the surviving spouse or by other persons, was

struck out.

1966 - Subsec. (d)(2). Pub. L. 89-621 provided that if the

disclaimer is made by the person before the date prescribed for the

filing of the estate tax return and if the person does not accept

the interest before making the disclaimer, the interest shall, for

purposes of this section, be considered as passing from the

decedent to the surviving spouse.

EFFECTIVE DATE OF 1997 AMENDMENT

Section 1311(b) of Pub. L. 105-34 provided that: "The amendment

made by this section [amending this section] shall apply to estates

of decedents dying after the date of the enactment of this Act

[Aug. 5, 1997]."

Amendment by section 1530(c)(8) of Pub. L. 105-34 applicable to

transfers made by trusts to, or for the use of, an employee stock

ownership plan after Aug. 5, 1997, see section 1530(d) of Pub. L.

105-34, set out as a note under section 401 of this title.

EFFECTIVE DATE OF 1992 AMENDMENT

Section 1941(c) of Pub. L. 102-486 provided that:

"(1) Subsection (a). -

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

amendment made by subsection (a) [amending this section] shall

apply to the estates of decedents dying after the date of the

enactment of this Act [Oct. 24, 1992].

"(B) Exception. - The amendment made by subsection (a) shall

not apply to any interest in property which passes (or has

passed) to the surviving spouse of the decedent pursuant to a

will (or revocable trust) in existence on the date of the

enactment of this Act if -

"(i) the decedent dies on or before the date 3 years after

such date of enactment, or

"(ii) the decedent was, on such date of enactment, under a

mental disability to change the disposition of his property and

did not regain his competence to dispose of such property

before the date of his death.

The preceding sentence shall not apply if such will (or revocable

trust) is amended at any time after such date of enactment in any

respect which will increase the amount of the interest which so

passes or alters the terms of the transfer by which the interest

so passes.

"(2) Subsection (b). - The amendments made by subsection (b)

[amending section 2523 of this title] shall apply to gifts made

after the date of the enactment of this Act [Oct. 24, 1992]."

EFFECTIVE DATE OF 1990 AMENDMENT

Amendment by section 11701(l)(1) of Pub. L. 101-508 effective,

except as otherwise provided, as if included in the provision of

the Revenue Reconciliation Act of 1989, Pub. L. 101-239, title VII,

to which such amendment relates, see section 11701(n) of Pub. L.

101-508, set out as a note under section 42 of this title.

Amendment by section 11702(g)(5) of Pub. L. 101-508 effective 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 11702(j) of Pub. L. 101-508, set out as a note

under section 59 of this title.

EFFECTIVE DATE OF 1989 AMENDMENT

Section 7815(d)(4)(B) of Pub. L. 101-239 provided that: "In the

case of the estate of a decedent dying before the date of the

enactment of this Act [Dec. 19, 1989], the period during which the

transfer (or irrevocable assignment) referred to in section

2056(d)(2)(B) of the Internal Revenue Code of 1986 (as amended by

subparagraph (A)) may be made shall not expire before the date 1

year after such date of enactment."

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 5033(d)(1) of Pub. L. 100-647 provided that: "The

amendments made by subsections (a) and (c) [enacting section 2056A

of this title and amending this section and section 2106 of this

title] shall apply to estates of the decedents dying after the date

of the enactment of this Act [Nov. 10, 1988]."

Section 6152(c) of Pub. L. 100-647 provided that:

"(1) In general. - Except as otherwise provided in this

subsection -

"(A) the amendment made by subsection (a) [amending this

section] shall apply with respect to decedents dying after

December 31, 1981, and

"(B) the amendment made by subsection (b) [amending section

2523 of this title] shall apply to transfers after December 31,

1981.

"(2) Not to apply to extent inconsistent with prior return. - In

the case of any estate or gift tax return filed before the date of

the enactment of this Act [Nov. 10, 1988], the amendments made by

this section [amending this section and section 2523 of this title]

shall not apply to the extent such amendments would be inconsistent

with the treatment of the annuity on such return unless the

executor or donor (as the case may be) otherwise elects under this

paragraph before the day 2 years after the date of the enactment of

this Act.

"(3) Extension of time for election out. - The time for making an

election under section 2056(b)(7)(C)(ii) or 2523(f)(6)(B) of the

1986 Code (as added by this subsection) shall not expire before the

day 2 years after the date of the enactment of this Act (and, if

such election is made within the time permitted under this

paragraph, the requirement of such section 2056(b)(7)(C)(ii) that

it be made on the return shall not apply)."

EFFECTIVE DATE OF 1984 AMENDMENT

Amendment by Pub. L. 98-369 effective as if included in the

amendment made by section 403 of the Economic Recovery Tax Act of

1981 [Pub. L. 97-34, see Effective Date of 1981 Amendment note

below], see section 1027(c) of Pub. L. 98-369, set out as a note

under section 2053 of this title.

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-448 effective, except as otherwise

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

Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such

amendment relates, see section 109 of Pub. L. 97-448, set out as a

note under section 1 of this title.

EFFECTIVE DATE OF 1981 AMENDMENT

Section 403(e) of Pub. L. 97-34, as amended by Pub. L. 97-448,

title I, Sec. 104(a)(10), Jan. 12, 1983, 96 Stat. 2381; Pub. L.

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

"(1) Except as otherwise provided in this subsection, the

amendments made by this section [enacting sections 2044 and 2207A

of this title, amending this section and sections 691, 2012, 2035,

2040, 2045, 2046, 2519, 2523, 2602, and 6019 of this title, and

repealing sections 2515 and 2515A of this title] shall apply to the

estates of decedents dying after December 31, 1981.

"(2) The amendments made by paragraphs (1), (2), and (3)(A) of

subsection (b) [amending sections 2523 and 6019 of this title],

subparagraphs (B) and (C) of subsection (c)(3) [amending section

6019 of this title and repealing sections 2515 and 2515A of this

title], and paragraphs (2) and (3)(B) of subsection (d), and

paragraph (4)(A) of subsection (d) (to the extent related to the

tax imposed by chapter 12 of the Internal Revenue Code of 1986

[formerly I.R.C. 1954]) [enacting sections 2207A and 2519 of this

title and amending section 2523 of this title] shall apply to gifts

made after December 31, 1981.

"(3) If -

"(A) the decedent dies after December 31, 1981,

"(B) by reason of the death of the decedent property passes

from the decedent or is acquired from the decedent under a will

executed before the date which is 30 days after the date of the

enactment of this Act [Aug. 13, 1981], or a trust created before

such date, which contains a formula expressly providing that the

spouse is to receive the maximum amount of property qualifying

for the marital deduction allowable by Federal law,

"(C) the formula referred to in subparagraph (B) was not

amended to refer specifically to an unlimited marital deduction

at any time after the date which is 30 days after the date of

enactment of this Act [Aug. 13, 1981], and before the death of

the decedent, and

"(D) the State does not enact a statute applicable to such

estate which construes this type of formula as referring to the

marital deduction allowable by Federal law as amended by

subsection (a),

then the amendment made by subsection (a) shall not apply to the

estate of such decedent."

EFFECTIVE DATE OF 1978 AMENDMENT

Section 702(g)(3) of Pub. L. 95-600 provided that: "The amendment

made by this subsection [amending this section] shall apply to the

estates of decedents dying after December 31, 1976."

EFFECTIVE DATE OF 1976 AMENDMENT

Section 2002(d)(1) of Pub. L. 94-455 provided that:

"(1)(A) Except as provided in subparagraph (B), the amendment

made by subsection (a) [amending this section] shall apply with

respect to the estates of decedents dying after December 31, 1976.

"(B) If -

"(i) the decedent dies after December 31, 1976, and before

January 1, 1979,

"(ii) by reason of the death of the decedent property passes

from the decedent or is acquired from the decedent under a will

executed before January 1, 1977, or a trust created before such

date, which contains a formula expressly providing that the

spouse is to receive the maximum amount of property qualifying

for the marital deduction allowable by Federal law,

"(iii) the formula referred to in clause (ii) was not amended

at any time after December 31, 1976, and before the death of the

decedent, and

"(iv) the State does not enact a statute applicable to such

estate which construes this type of formula as referring to the

marital deduction allowable by Federal law as amended by

subsection (a),

then the amendment made by subsection (a) shall not apply to the

estate of such decedent."

Amendment by section 2009(b)(4)(D), (E) of Pub. L. 94-455

applicable with respect to transfers creating an interest in person

disclaiming made after Dec. 31, 1976, see section 2009(e)(2) of

Pub. L. 94-455, set out as an Effective Date note under section

2518 of this title.

EFFECTIVE DATE OF 1966 AMENDMENT

Section 1(b) of Pub. L. 89-621 provided that: "The amendment made

by subsection (a) [amending this section] shall apply with respect

to estates of decedents dying on or after the date of the enactment

of this Act [Oct. 4, 1966]."

COMMENCEMENT OF JUDICIAL PROCEEDING TO REFORM TRUST

Section 11701(l)(2) of Pub. L. 101-508 provided that: "The period

during which a proceeding may be commenced under section

2056(d)(5)(A)(ii) of the Internal Revenue Code of 1986 (as

redesignated by paragraph (1)) shall not expire before the date 6

months after the date of the enactment of this Act [Nov. 5, 1990]."

APPLICATION OF AMENDMENTS BY SECTION 5033 OF PUB. L. 100-647 TO

ESTATES OF, OR GIFTS BY, NONCITIZEN AND NONRESIDENT INDIVIDUALS

Section 7815(d)(14) of Pub. L. 101-239 provided that: "In the

case of the estate of, or gift by, an individual who was not a

citizen or resident of the United States but was a resident of a

foreign country with which the United States has a tax treaty with

respect to estate, inheritance, or gift taxes, the amendments made

by section 5033 of the 1988 Act [Pub. L. 100-647, enacting section

2056A of this title and amending this section and sections 2106 and

2523 of this title] shall not apply to the extent such amendments

would be inconsistent with the provisions of such treaty relating

to estate, inheritance, or gift tax marital deductions. In the case

of the estate of an individual dying before the date 3 years after

the date of the enactment of this Act [Dec. 19, 1989], or a gift by

an individual before the date 3 years after the date of the

enactment of this Act, the requirement of the preceding sentence

that the individual not be a citizen or resident of the United

States shall not apply."

DISCLAIMER OF INTEREST ARISING FROM ESTATES OF PERSONS DYING BEFORE

OCT. 4, 1966, HAVING ESTATE TAX RETURN FILING DATE ON OR AFTER JAN.

1, 1965

Section 1(c) of Pub. L. 89-621 provided that in the case of a

decedent dying before Oct. 4, 1966, for which the date prescribed

for filing estate tax return was on or after Jan. 1, 1965, and as a

result of a disclaimer, the surviving spouse became entitled to

receive such interest, then such interest was to be considered as

having passed from the decedent to the surviving spouse under

certain conditions, with a limit on the amount of deductions

allowed.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2012, 2013, 2014, 2032,

2044, 2056A, 2106, 2206, 2207, 2519, 2523, 2652, 2701 of this

title.

-End-

-CITE-

26 USC Sec. 2056A 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART IV - TAXABLE ESTATE

-HEAD-

Sec. 2056A. Qualified domestic trust

-STATUTE-

(a) Qualified domestic trust defined

For purposes of this section and section 2056(d), the term

"qualified domestic trust" means, with respect to any decedent, any

trust if -

(1) the trust instrument -

(A) except as provided in regulations prescribed by the

Secretary, requires that at least 1 trustee of the trust be an

individual citizen of the United States or a domestic

corporation, and

(B) provides that no distribution (other than a distribution

of income) may be made from the trust unless a trustee who is

an individual citizen of the United States or a domestic

corporation has the right to withhold from such distribution

the tax imposed by this section on such distribution,

(2) such trust meets such requirements as the Secretary may by

regulations prescribe to ensure the collection of any tax imposed

by subsection (b), and

(3) an election under this section by the executor of the

decedent applies to such trust.

(b) Tax treatment of trust

(1) Imposition of estate tax

There is hereby imposed an estate tax on -

(A) any distribution before the date of the death of the

surviving spouse from a qualified domestic trust, and

(B) the value of the property remaining in a qualified

domestic trust on the date of the death of the surviving

spouse.

(2) Amount of tax

(A) In general

In the case of any taxable event, the amount of the estate

tax imposed by paragraph (1) shall be the amount equal to -

(i) the tax which would have been imposed under section

2001 on the estate of the decedent if the taxable estate of

the decedent had been increased by the sum of -

(I) the amount involved in such taxable event, plus

(II) the aggregate amount involved in previous taxable

events with respect to qualified domestic trusts of such

decedent, reduced by

(ii) the tax which would have been imposed under section

2001 on the estate of the decedent if the taxable estate of

the decedent had been increased by the amount referred to in

clause (i)(II).

(B) Tentative tax where tax of decedent not finally determined

(i) In general

If the tax imposed on the estate of the decedent under

section 2001 is not finally determined before the taxable

event, the amount of the tax imposed by paragraph (1) on such

event shall be determined by using the highest rate of tax in

effect under section 2001 as of the date of the decedent's

death.

(ii) Refund of excess when tax finally determined

If -

(I) the amount of the tax determined under clause (i),

exceeds

(II) the tax determined under subparagraph (A) on the

basis of the final determination of the tax imposed by

section 2001 on the estate of the decedent,

such excess shall be allowed as a credit or refund (with

interest) if claim therefor is filed not later than 1 year

after the date of such final determination.

domestic trust

If there is more than 1 qualified domestic trust with respect

to any decedent, the amount of the tax imposed by paragraph (1)

with respect to such trusts shall be determined by using the

highest rate of tax in effect under section 2001 as of the date

of the decedent's death (and the provisions of paragraph (3)(B)

shall not apply) unless, pursuant to a designation made by the

decedent's executor, there is 1 person -

(i) who is an individual citizen of the United States or a

domestic corporation and is responsible for filing all

returns of tax imposed under paragraph (1) with respect to

such trusts and for paying all tax so imposed, and

(ii) who meets such requirements as the Secretary may by

regulations prescribe.

(3) Certain lifetime distributions exempt from tax

(A) Income distributions

No tax shall be imposed by paragraph (1)(A) on any

distribution of income to the surviving spouse.

(B) Hardship exemption

No tax shall be imposed by paragraph (1)(A) on any

distribution to the surviving spouse on account of hardship.

(4) Tax where trust ceases to qualify

If any qualified domestic trust ceases to meet the requirements

of paragraphs (1) and (2) of subsection (a), the tax imposed by

paragraph (1) shall apply as if the surviving spouse died on the

date of such cessation.

(5) Due date

(A) Tax on distributions

The estate tax imposed by paragraph (1)(A) shall be due and

payable on the 15th day of the 4th month following the calendar

year in which the taxable event occurs; except that the estate

tax imposed by paragraph (1)(A) on distributions during the

calendar year in which the surviving spouse dies shall be due

and payable not later than the date on which the estate tax

imposed by paragraph (1)(B) is due and payable.

(B) Tax at death of spouse

The estate tax imposed by paragraph (1)(B) shall be due and

payable on the date 9 months after the date of such death.

(6) Liability for tax

Each trustee shall be personally liable for the amount of the

tax imposed by paragraph (1). Rules similar to the rules of

section 2204 shall apply for purposes of the preceding sentence.

(7) Treatment of tax

For purposes of section 2056(d), any tax paid under paragraph

(1) shall be treated as a tax paid under section 2001 with

respect to the estate of the decedent.

(8) Lien for tax

For purposes of section 6324, any tax imposed by paragraph (1)

shall be treated as an estate tax imposed under this chapter with

respect to a decedent dying on the date of the taxable event (and

the property involved shall be treated as the gross estate of

such decedent).

(9) Taxable event

The term "taxable event" means the event resulting in tax being

imposed under paragraph (1).

(10) Certain benefits allowed

(A) In general

If any property remaining in the qualified domestic trust on

the date of the death of the surviving spouse is includible in

the gross estate of such spouse for purposes of this chapter

(or would be includible if such spouse were a citizen or

resident of the United States), any benefit which is allowable

(or would be allowable if such spouse were a citizen or

resident of the United States) with respect to such property to

the estate of such spouse under section 2011, 2014, 2032,

2032A, 2055, 2056, or 6166 shall be allowed for purposes of the

tax imposed by paragraph (1)(B).

(B) Section 303

If the estate of the surviving spouse meets the requirements

of section 303 with respect to any property described in

subparagraph (A), for purposes of section 303, the tax imposed

by paragraph (1)(B) with respect to such property shall be

treated as a Federal estate tax payable with respect to the

estate of the surviving spouse.

The provisions of section 6161(a)(2) shall apply with respect

to the tax imposed by paragraph (1)(B), and the reference in

such section to the executor shall be treated as a reference to

the trustees of the trust.

(11) Special rule where distribution tax paid out of trust

For purposes of this subsection, if any portion of the tax

imposed by paragraph (1)(A) with respect to any distribution is

paid out of the trust, an amount equal to the portion so paid

shall be treated as a distribution described in paragraph (1)(A).

(12) Special rule where spouse becomes citizen

If the surviving spouse of the decedent becomes a citizen of

the United States and if -

(A) such spouse was a resident of the United States at all

times after the date of the death of the decedent and before

such spouse becomes a citizen of the United States,

(B) no tax was imposed by paragraph (1)(A) with respect to

any distribution before such spouse becomes such a citizen, or

(i) to treat any distribution on which tax was imposed by

paragraph (1)(A) as a taxable gift made by such spouse for

purposes of -

(I) section 2001, and

(II) determining the amount of the tax imposed by section

2501 on actual taxable gifts made by such spouse during the

year in which the spouse becomes a citizen or any

subsequent year, and

(ii) to treat any reduction in the tax imposed by paragraph

(1)(A) by reason of the credit allowable under section 2010

with respect to the decedent as a credit allowable to such

surviving spouse under section 2505 for purposes of

determining the amount of the credit allowable under section

2505 with respect to taxable gifts made by the surviving

spouse during the year in which the spouse becomes a citizen

or any subsequent year,

paragraph (1)(A) shall not apply to any distributions after

such spouse becomes such a citizen (and paragraph (1)(B) shall

not apply).

(13) Coordination with section 1015

For purposes of section 1015, any distribution on which tax is

imposed by paragraph (1)(A) shall be treated as a transfer by

gift, and any tax paid under paragraph (1)(A) shall be treated as

a gift tax.

(14) Coordination with terminable interest rules

Any interest in a qualified domestic trust shall not be treated

as failing to meet the requirements of paragraph (5) or (7) of

section 2056(b) merely by reason of any provision of the trust

instrument permitting the withholding from any distribution of an

amount to pay the tax imposed by paragraph (1) on such

distribution.

(15) No tax on certain distributions

No tax shall be imposed by paragraph (1) on any distribution to

the surviving spouse to the extent such distribution is to

reimburse such surviving spouse for any tax imposed by subtitle A

on any item of income of the trust to which such surviving spouse

is not entitled under the terms of the trust.

For purposes of this section -

(1) Property includes interest therein

The term "property" includes an interest in property.

(2) Income

Except as provided in regulations, the term "income" has the

meaning given to such term by section 643(b).

(3) Trust

To the extent provided in regulations prescribed by the

Secretary, the term "trust" includes other arrangements which

have substantially the same effect as a trust.

(d) Election

An election under this section with respect to any trust shall be

made by the executor on the return of the tax imposed by section

2001. Such an election, once made, shall be irrevocable. No

election may be made under this section on any return if such

return is filed more than one year after the time prescribed by law

(including extensions) for filing such return.

(e) Regulations

The Secretary shall prescribe such regulations as may be

necessary or appropriate to carry out the purposes of this section,

including regulations under which there may be treated as a

qualified domestic trust any annuity or other payment which is

includible in the decedent's gross estate and is by its terms

payable for life or a term of years.

-SOURCE-

(Added Pub. L. 100-647, title V, Sec. 5033(a)(2), Nov. 10, 1988,

102 Stat. 3670; amended Pub. L. 101-239, title VII, Sec.

7815(d)(7), (9)-(13), (15), Dec. 19, 1989, 103 Stat. 2415-2418;

Pub. L. 101-508, title XI, Secs. 11702(g)(2)(A), (B), (3)(A), (4),

11704(a)(15), Nov. 5, 1990, 104 Stat. 1388-515, 1388-516, 1388-518;

Pub. L. 105-34, title XIII, Secs. 1312(a), 1314(a), Aug. 5, 1997,

111 Stat. 1044, 1045; Pub. L. 107-16, title V, Sec. 532(c)(6), June

7, 2001, 115 Stat. 74.)

-STATAMEND-

AMENDMENT OF SUBSECTION (B)(10)(A)

Pub. L. 107-16, title V, Sec. 532(c)(6), (d), title IX, Sec. 901,

June 7, 2001, 115 Stat. 74, 75, 150, provided that, applicable to

estates of decedents dying, and generation-skipping transfers,

after Dec. 31, 2004, subsection (b)(10)(A) of this section is

temporarily amended -

(1) by striking out "2011," before "2014,", and

(2) by inserting "2058," after "2056,".

See Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

AMENDMENTS

1997 - Subsec. (a)(1)(A). Pub. L. 105-34, Sec. 1314(a), inserted

"except as provided in regulations prescribed by the Secretary,"

before "requires".

Subsec. (c)(3). Pub. L. 105-34, Sec. 1312(a), added par. (3).

1990 - Subsec. (a)(1). Pub. L. 101-508, Sec. 11702(g)(2)(A),

amended par. (1) generally. Prior to amendment, par. (1) read as

follows: "the trust instrument requires that at least 1 trustee of

the trust be an individual citizen of the United States or a

domestic corporation and that no distribution from the trust may be

made without the approval of such a trustee,".

Subsec. (b)(2)(B)(ii). Pub. L. 101-508, Sec. 11704(a)(15),

substituted "therefor" for "therefore" in concluding provisions.

Subsec. (b)(10)(A). Pub. L. 101-508, Sec. 11702(g)(4),

substituted "section 2011, 2014, 2032" for "section 2032".

Subsec. (b)(14), (15). Pub. L. 101-508, Sec. 11702(g)(2)(B),

added pars. (14) and (15).

Subsec. (d). Pub. L. 101-508, Sec. 11702(g)(3)(A), inserted at

end "No election may be made under this section on any return if

such return is filed more than one year after the time prescribed

by law (including extensions) for filing such return."

1989 - Subsec. (a)(1). Pub. L. 101-239, Sec. 7815(d)(7)(A)(i),

amended par. (1) generally. Prior to amendment, par. (1) read as

follows: "the trust instrument requires that all trustees of the

trust be individual citizens of the United States or domestic

corporations,".

Subsec. (a)(2) to (4). Pub. L. 101-239, Sec. 7815(d)(7)(A)(ii),

redesignated pars. (3) and (4) as (2) and (3), respectively, and

struck out former par. (2) which read as follows: "the surviving

spouse of the decedent is entitled to all the income from the

property in such trust, payable annually or at more frequent

intervals,".

Subsec. (b)(1)(A). Pub. L. 101-239, Sec. 7815(d)(7)(C), struck

out "other than a distribution of income required under subsection

(a)(2)" after "qualified domestic trust".

Subsec. (b)(2)(B)(ii). Pub. L. 101-239, Sec. 7815(d)(11),

inserted "(with interest)" after "credit or refund".

Subsec. (b)(2)(C). Pub. L. 101-239, Sec. 7815(d)(12), added

subpar. (C).

Subsec. (b)(3). Pub. L. 101-239, Sec. 7815(d)(7)(B), added par.

(3). Former par. (3) redesignated (4).

Subsec. (b)(4). Pub. L. 101-239, Sec. 7815(d)(7)(D), amended par.

(4) generally. Prior to amendment, par. (4) read as follows: "If

any person other than an individual citizen of the United States or

a domestic corporation becomes a trustee of a qualified domestic

trust (or such trust ceases to meet the requirements of subsection

(a)(3)), the tax imposed by paragraph (1) shall apply as if the

surviving spouse died on the date on which such person became such

a trustee or the date of such cessation, as the case may be."

Pub. L. 101-239, Sec. 7815(d)(7)(B), redesignated par. (3) as

(4). Former par. (4) redesignated (5).

Subsec. (b)(5). Pub. L. 101-239, Sec. 7815(d)(15), amended par.

(5) generally. Prior to amendment, par. (5) read as follows: "The

estate tax imposed by paragraph (1) shall be due and payable on the

15th day of the 4th month following the calendar year in which the

taxable event occurs."

Pub. L. 101-239, Sec. 7815(d)(7)(B), redesignated par. (4) as

(5). Former par. (5) redesignated (6).

Subsec. (b)(6) to (9). Pub. L. 101-239, Sec. 7815(d)(7)(B),

redesignated pars. (5) to (8) as (6) to (9), respectively.

Subsec. (b)(10) to (13). Pub. L. 101-239, Sec. 7815(d)(9), added

pars. (10) to (13).

Subsec. (c)(2). Pub. L. 101-239, Sec. 7815(d)(10), substituted

"Except as provided in regulations, the term" for "The term".

Subsec. (e). Pub. L. 101-239, Sec. 7815(d)(13), added subsec.

(e).

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 OF 1997 AMENDMENT

Section 1312(b) of Pub. L. 105-34 provided that: "The amendment

made by this section [amending this section] shall apply to estates

of decedents dying after the date of the enactment of this Act

[Aug. 5, 1997]."

Section 1314(b) of Pub. L. 105-34 provided that: "The amendment

made by this section [amending this section] shall apply to estates

of decedents dying after the date of the enactment of this Act

[Aug. 5, 1997]."

EFFECTIVE DATE OF 1990 AMENDMENT

Amendment by section 11702(g)(2), (4) of Pub. L. 101-508

effective 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 11702(j) of Pub. L. 101-508, set out

as a note under section 59 of this title.

Section 11702(g)(3)(B) of Pub. L. 101-508 provided that: "The

amendment made by subparagraph (A) [amending this section] shall

not apply to any election made before the date 6 months after the

date of the enactment of this Act [Nov. 5, 1990]."

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

Section applicable to estates of decedents dying after Nov. 10,

1988, see section 5033(d)(1) of Pub. L. 100-647, set out as an

Effective Date of 1988 Amendment note under section 2056 of this

title.

TRANSITIONAL RULE

Section 1303 of Pub. L. 105-34 provided that:

"(a) General Rule. - In the case of any trust created under an

instrument executed before the date of the enactment of the Revenue

Reconciliation Act of 1990 [Nov. 5, 1990], such trust shall be

treated as meeting the requirements of paragraph (1) of section

2056A(a) of the Internal Revenue Code of 1986 if the trust

instrument requires that all trustees of the trust be individual

citizens of the United States or domestic corporations.

"(b) Effective Date. - The provisions of subsection (a) shall

take effect as if included in the provisions of section 11702(g) of

the Revenue Reconciliation Act of 1990 [Pub. L. 101-508]."

APPLICATION OF AMENDMENTS BY SECTION 5033 OF PUB. L. 100-647 TO

ESTATES OF, OR GIFTS BY, NONCITIZEN AND NONRESIDENT INDIVIDUALS

For provisions directing that in the case of the estate of, or

gift by, an individual who was not a citizen or resident of the

United States but was a resident of a foreign country with which

the United States has a tax treaty with respect to estate,

inheritance, or gift taxes, this section shall not apply to the

extent such section would be inconsistent with the provisions of

such treaty relating to estate, inheritance, or gift tax marital

deductions, but that in the case of the estate of an individual

dying before the date 3 years after Dec. 19, 1989, or a gift by an

individual before the date 3 years after Dec. 19, 1989, the

requirement of the preceding provision that the individual not be a

citizen or resident of the United States shall not apply, see

section 7815(d)(14) of Pub. L. 101-239, set out as a note under

section 2056 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2056, 2210 of this title.

-End-

-CITE-

26 USC Sec. 2057 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART IV - TAXABLE ESTATE

-HEAD-

Sec. 2057. Family-owned business interests

-STATUTE-

(a) General rule

(1) Allowance of deduction

For purposes of the tax imposed by section 2001, in the case of

an estate of a decedent to which this section applies, the value

of the taxable estate shall be determined by deducting from the

value of the gross estate the adjusted value of the qualified

family-owned business interests of the decedent which are

described in subsection (b)(2).

(2) Maximum deduction

The deduction allowed by this section shall not exceed

$675,000.

(3) Coordination with unified credit

(A) In general

Except as provided in subparagraph (B), if this section

applies to an estate, the applicable exclusion amount under

section 2010 shall be $625,000.

(B) Increase in unified credit if deduction is less than

$675,000

If the deduction allowed by this section is less than

$675,000, the amount of the applicable exclusion amount under

section 2010 shall be increased (but not above the amount which

would apply to the estate without regard to this section) by

the excess of $675,000 over the amount of the deduction

allowed.

(b) Estates to which section applies

(1) In general

This section shall apply to an estate if -

(A) the decedent was (at the date of the decedent's death) a

citizen or resident of the United States,

(B) the executor elects the application of this section and

files the agreement referred to in subsection (h),

(i) the adjusted value of the qualified family-owned

business interests described in paragraph (2), plus

(ii) the amount of the gifts of such interests determined

under paragraph (3),

exceeds 50 percent of the adjusted gross estate, and

(D) during the 8-year period ending on the date of the

decedent's death there have been periods aggregating 5 years or

more during which -

(i) such interests were owned by the decedent or a member

of the decedent's family, and

(ii) there was material participation (within the meaning

of section 2032A(e)(6)) by the decedent or a member of the

decedent's family in the operation of the business to which

such interests relate.

(2) Includible qualified family-owned business interests

The qualified family-owned business interests described in this

paragraph are the interests which -

(A) are included in determining the value of the gross

estate, and

(B) are acquired by any qualified heir from, or passed to any

qualified heir from, the decedent (within the meaning of

section 2032A(e)(9)).

(3) Includible gifts of interests

The amount of the gifts of qualified family-owned business

interests determined under this paragraph is the sum of -

(A) the amount of such gifts from the decedent to members of

the decedent's family taken into account under section

2001(b)(1)(B), plus

(B) the amount of such gifts otherwise excluded under section

2503(b),

to the extent such interests are continuously held by members of

such family (other than the decedent's spouse) between the date

of the gift and the date of the decedent's death.

For purposes of this section, the term "adjusted gross estate"

means the value of the gross estate -

(1) reduced by any amount deductible under paragraph (3) or (4)

of section 2053(a), and

(2) increased by the excess of -

(A) the sum of -

(i) the amount of gifts determined under subsection (b)(3),

plus

(ii) the amount (if more than de minimis) of other

transfers from the decedent to the decedent's spouse (at the

time of the transfer) within 10 years of the date of the

decedent's death, plus

(iii) the amount of other gifts (not included under clause

(i) or (ii)) from the decedent within 3 years of such date,

other than gifts to members of the decedent's family

otherwise excluded under section 2503(b), over

(B) the sum of the amounts described in clauses (i), (ii),

and (iii) of subparagraph (A) which are otherwise includible in

the gross estate.

For purposes of the preceding sentence, the Secretary may provide

that de minimis gifts to persons other than members of the

decedent's family shall not be taken into account.

(d) Adjusted value of the qualified family-owned business interests

For purposes of this section, the adjusted value of any qualified

family-owned business interest is the value of such interest for

purposes of this chapter (determined without regard to this

section), reduced by the excess of -

(1) any amount deductible under paragraph (3) or (4) of section

2053(a), over

(2) the sum of -

(A) any indebtedness on any qualified residence of the

decedent the interest on which is deductible under section

163(h)(3), plus

(B) any indebtedness to the extent the taxpayer establishes

that the proceeds of such indebtedness were used for the

payment of educational and medical expenses of the decedent,

the decedent's spouse, or the decedent's dependents (within the

meaning of section 152), plus

(B), to the extent such indebtedness does not exceed $10,000.

(e) Qualified family-owned business interest

(1) In general

For purposes of this section, the term "qualified family-owned

business interest" means -

(A) an interest as a proprietor in a trade or business

carried on as a proprietorship, or

(B) an interest in an entity carrying on a trade or business,

if -

(i) at least -

(I) 50 percent of such entity is owned (directly or

indirectly) by the decedent and members of the decedent's

family,

(II) 70 percent of such entity is so owned by members of

2 families, or

(III) 90 percent of such entity is so owned by members of

3 families, and

(ii) for purposes of subclause (II) or (III) of clause (i),

at least 30 percent of such entity is so owned by the

decedent and members of the decedent's family.

For purposes of the preceding sentence, a decedent shall be

treated as engaged in a trade or business if any member of the

decedent's family is engaged in such trade or business.

(2) Limitation

Such term shall not include -

(A) any interest in a trade or business the principal place

of business of which is not located in the United States,

(B) any interest in an entity, if the stock or debt of such

entity or a controlled group (as defined in section 267(f)(1))

of which such entity was a member was readily tradable on an

established securities market or secondary market (as defined

by the Secretary) at any time within 3 years of the date of the

decedent's death,

section 542(c)(2), if more than 35 percent of the adjusted

ordinary gross income of such trade or business for the taxable

year which includes the date of the decedent's death would

qualify as personal holding company income (as defined in

section 543(a) without regard to paragraph (2)(B) thereof) if

such trade or business were a corporation,

(D) that portion of an interest in a trade or business that

is attributable to -

(i) cash or marketable securities, or both, in excess of

the reasonably expected day-to-day working capital needs of

such trade or business, and

(ii) any other assets of the trade or business (other than

assets used in the active conduct of a trade or business

described in section 542(c)(2)), which produce, or are held

for the production of, personal holding company income (as

defined in subparagraph (C)) or income described in section

954(c)(1) (determined without regard to subparagraph (A)

thereof and by substituting "trade or business" for

"controlled foreign corporation").

In the case of a lease of property on a net cash basis by the

decedent to a member of the decedent's family, income from such

lease shall not be treated as personal holding company income for

purposes of subparagraph (C), and such property shall not be

treated as an asset described in subparagraph (D)(ii), if such

income and property would not be so treated if the lessor had

engaged directly in the activities engaged in by the lessee with

respect to such property.

(3) Rules regarding ownership

(A) Ownership of entities

For purposes of paragraph (1)(B) -

(i) Corporations

Ownership of a corporation shall be determined by the

holding of stock possessing the appropriate percentage of the

total combined voting power of all classes of stock entitled

to vote and the appropriate percentage of the total value of

shares of all classes of stock.

(ii) Partnerships

Ownership of a partnership shall be determined by the

owning of the appropriate percentage of the capital interest

in such partnership.

(B) Ownership of tiered entities

For purposes of this section, if by reason of holding an

interest in a trade or business, a decedent, any member of the

decedent's family, any qualified heir, or any member of any

qualified heir's family is treated as holding an interest in

any other trade or business -

(i) such ownership interest in the other trade or business

shall be disregarded in determining if the ownership interest

in the first trade or business is a qualified family-owned

business interest, and

(ii) this section shall be applied separately in

determining if such interest in any other trade or business

is a qualified family-owned business interest.

For purposes of this section, an interest owned, directly or

indirectly, by or for an entity described in paragraph (1)(B)

shall be considered as being owned proportionately by or for

the entity's shareholders, partners, or beneficiaries. A person

shall be treated as a beneficiary of any trust only if such

person has a present interest in such trust.

(f) Tax treatment of failure to materially participate in business

or dispositions of interests

(1) In general

There is imposed an additional estate tax if, within 10 years

after the date of the decedent's death and before the date of the

qualified heir's death -

(A) the material participation requirements described in

section 2032A(c)(6)(B) are not met with respect to the

qualified family-owned business interest which was acquired (or

passed) from the decedent,

(B) the qualified heir disposes of any portion of a qualified

family-owned business interest (other than by a disposition to

a member of the qualified heir's family or through a qualified

conservation contribution under section 170(h)),

(within the meaning of section 877) or with respect to whom an

event described in subparagraph (A) or (B) of section 877(e)(1)

occurs, and such heir does not comply with the requirements of

subsection (g), or

(D) the principal place of business of a trade or business of

the qualified family-owned business interest ceases to be

located in the United States.

(2) Additional estate tax

(A) In general

The amount of the additional estate tax imposed by paragraph

(1) shall be equal to -

(i) the applicable percentage of the adjusted tax

difference attributable to the qualified family-owned

business interest, plus

(ii) interest on the amount determined under clause (i) at

the underpayment rate established under section 6621 for the

period beginning on the date the estate tax liability was due

under this chapter and ending on the date such additional

estate tax is due.

(B) Applicable percentage

For purposes of this paragraph, the applicable percentage

shall be determined under the following table:

If the event described in

paragraph (1) occurs in

the following year of The applicable

material participation: percentage is:

1 through 6 100

7 80

8 60

9 40

10 20.

For purposes of subparagraph (A) -

(i) In general

The adjusted tax difference attributable to a qualified

family-owned business interest is the amount which bears the

same ratio to the adjusted tax difference with respect to the

estate (determined under clause (ii)) as the value of such

interest bears to the value of all qualified family-owned

business interests described in subsection (b)(2).

(ii) Adjusted tax difference with respect to the estate

For purposes of clause (i), the term "adjusted tax

difference with respect to the estate" means the excess of

what would have been the estate tax liability but for the

election under this section over the estate tax liability.

For purposes of this clause, the term "estate tax liability"

means the tax imposed by section 2001 reduced by the credits

allowable against such tax.

(3) Use in trade or business by family members

A qualified heir shall not be treated as disposing of an

interest described in subsection (e)(1)(A) by reason of ceasing

to be engaged in a trade or business so long as the property to

which such interest relates is used in a trade or business by any

member of such individual's family.

(g) Security requirements for noncitizen qualified heirs

(1) In general

Except upon the application of subparagraph (F) of subsection

(i)(3), if a qualified heir is not a citizen of the United

States, any interest under this section passing to or acquired by

such heir (including any interest held by such heir at a time

described in subsection (f)(1)(C)) shall be treated as a

qualified family-owned business interest only if the interest

passes or is acquired (or is held) in a qualified trust.

(2) Qualified trust

The term "qualified trust" means a trust -

(A) which is organized under, and governed by, the laws of

the United States or a State, and

(B) except as otherwise provided in regulations, with respect

to which the trust instrument requires that at least 1 trustee

of the trust be an individual citizen of the United States or a

domestic corporation.

(h) Agreement

The agreement referred to in this subsection is a written

agreement signed by each person in being who has an interest

(whether or not in possession) in any property designated in such

agreement consenting to the application of subsection (f) with

respect to such property.

(i) Other definitions and applicable rules

For purposes of this section -

(1) Qualified heir

The term "qualified heir" -

(A) has the meaning given to such term by section

2032A(e)(1), and

(B) includes any active employee of the trade or business to

which the qualified family-owned business interest relates if

such employee has been employed by such trade or business for a

period of at least 10 years before the date of the decedent's

death.

(2) Member of the family

The term "member of the family" has the meaning given to such

term by section 2032A(e)(2).

(3) Applicable rules

Rules similar to the following rules shall apply:

(A) Section 2032A(b)(4) (relating to decedents who are

retired or disabled).

(B) Section 2032A(b)(5) (relating to special rules for

surviving spouses).

dispositions).

(D) Section 2032A(c)(3) (relating to only 1 additional tax

imposed with respect to any 1 portion).

(E) Section 2032A(c)(4) (relating to due date).

(F) Section 2032A(c)(5) (relating to liability for tax;

furnishing of bond).

(G) Section 2032A(c)(7) (relating to no tax if use begins

within 2 years; active management by eligible qualified heir

treated as material participation).

(H) Paragraphs (1) and (3) of section 2032A(d) (relating to

election; agreement).

(I) Section 2032A(e)(10) (relating to community property).

(J) Section 2032A(e)(14) (relating to treatment of

replacement property acquired in section 1031 or 1033

transactions).

(K) Section 2032A(f) (relating to statute of limitations).

(L) Section 2032A(g) (relating to application to interests in

partnerships, corporations, and trusts).

(M) Subsections (h) and (i) of section 2032A.

(N) Section 6166(b)(3) (relating to farmhouses and certain

other structures taken into account).

(O) Subparagraphs (B), (C), and (D) of section 6166(g)(1)

(relating to acceleration of payment).

(P) Section 6324B (relating to special lien for additional

estate tax).

-SOURCE-

(Added Pub. L. 105-34, title V, Sec. 502(a), Aug. 5, 1997, 111

Stat. 847, Sec. 2033A; renumbered Sec. 2057 and amended Pub. L.

105-206, title VI, Sec. 6007(b)(1)(A)-(D), (2)-(7), July 22, 1998,

112 Stat. 807-809; Pub. L. 107-16, title V, Sec. 521(d), June 7,

2001, 115 Stat. 72.)

-STATAMEND-

AMENDMENT OF SECTION

Pub. L. 107-16, title V, Sec. 521(d), (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 by adding

at the end the following new subsection:

(j) Termination

This section shall not apply to the estates of decedents dying

after December 31, 2003.

See Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

PRIOR PROVISIONS

A prior section 2057, added Pub. L. 99-514, title XI, Sec.

1172(a), Oct. 22, 1986, 100 Stat. 2513; amended Pub. L. 100-203,

title X, Secs. 10411(a), 10412(a), Dec. 22, 1987, 101 Stat.

1330-432, 1330-433; Pub. L. 100-647, title I, Sec. 1011B(g)(3),

Nov. 10, 1988, 102 Stat. 3490, related to sales of employer

securities to employee stock ownership plans or worker-owned

cooperatives, prior to repeal by Pub. L. 101-239, title VII, Sec.

7304(a)(1), (3), Dec. 19, 1989, 103 Stat. 2352, 2353, applicable to

estates of decedents dying after Dec. 19, 1989.

Another prior section 2057, added Pub. L. 94-455, title XX, Sec.

2007(a), Oct. 4, 1976, 90 Stat. 1890; amended Pub. L. 95-600, title

VII, Sec. 702(l)(1), (2), Nov. 6, 1978, 92 Stat. 2934, 2935,

related to bequests, etc., to certain minor children, prior to

repeal by Pub. L. 97-34, title IV, Sec. 427(a), (c), Aug. 13, 1981,

95 Stat. 3181, applicable to estates of decedents dying after Dec.

31, 1981.

AMENDMENTS

1998 - Pub. L. 105-206, Sec. 6007(b)(1)(A), (B), renumbered

section 2033A of this title as this section and substituted

"interests" for "exclusion" in section catchline.

Subsec. (a). Pub. L. 105-206, Sec. 6007(b)(1)(B), substituted

"General rule" for "In general" in heading and amended text

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

of an estate of a decedent to which this section applies, the value

of the gross estate shall not include the lesser of -

"(1) the adjusted value of the qualified family-owned business

interests of the decedent otherwise includible in the estate, or

"(2) the excess of $1,300,000 over the applicable exclusion

amount under section 2010(c) with respect to such estate."

Subsec. (b)(2)(A). Pub. L. 105-206, Sec. 6007(b)(1)(C), struck

out "(without regard to this section)" after "gross estate".

Subsec. (b)(3). Pub. L. 105-206, Sec. 6007(b)(2), reenacted

heading without change and amended text generally. Prior to

amendment, text read as follows: "The amount of the gifts of

qualified family-owned business interests determined under this

paragraph is the excess of -

"(A) the sum of -

"(i) the amount of such gifts from the decedent to members of

the decedent's family taken into account under subsection

2001(b)(1)(B), plus

"(ii) the amount of such gifts otherwise excluded under

section 2503(b),

to the extent such interests are continuously held by members of

such family (other than the decedent's spouse) between the date

of the gift and the date of the decedent's death, over

"(B) the amount of such gifts from the decedent to members of

the decedent's family otherwise included in the gross estate."

Subsec. (c). Pub. L. 105-206, Sec. 6007(b)(1)(D), struck out

"(determined without regard to this section)" after "the gross

estate" in introductory provisions.

Subsec. (e)(1). Pub. L. 105-206, Sec. 6007(b)(5)(A), inserted

concluding provisions.

Subsec. (e)(2). Pub. L. 105-206, Sec. 6007(b)(3)(C), inserted

concluding provisions.

Subsec. (e)(2)(C). Pub. L. 105-206, Sec. 6007(b)(3)(A),

substituted "(as defined in section 543(a) without regard to

paragraph (2)(B) thereof) if such trade or business were a

corporation" for "(as defined in section 543(a))".

Subsec. (e)(2)(D)(ii). Pub. L. 105-206, Sec. 6007(b)(3)(B),

substituted "personal holding company income (as defined in

subparagraph (C)) or income described" for "income of which is

described in section 543(a) or".

Subsec. (f)(2)(A)(i). Pub. L. 105-206, Sec. 6007(b)(4)(A), struck

out "(as determined under rules similar to the rules of section

2032A(c)(2)(B))" after "business interest".

Subsec. (f)(2)(C). Pub. L. 105-206, Sec. 6007(b)(4)(B), added

subpar. (C).

Subsec. (f)(3). Pub. L. 105-206, Sec. 6007(b)(5)(B), added par.

(3).

Subsec. (g)(1). Pub. L. 105-206, Sec. 6007(b)(6), struck out "or

(M)" after "subparagraph (F)".

Subsec. (i)(3)(L) to (P). Pub. L. 105-206, Sec. 6007(b)(7), added

subpars. (L) and (M) and redesignated former subpars. (L) to (N) as

(N) to (P), respectively.

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

made by this section [enacting this section] shall apply to estates

of decedents dying after December 31, 1997."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2031 of this title.

-End-

-CITE-

26 USC Sec. 2058 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter A - Estates of Citizens or Residents

PART IV - TAXABLE ESTATE

-HEAD-

Sec. 2058. State death taxes

-STATUTE-

(a) Allowance of deduction

For purposes of the tax imposed by section 2001, the value of the

taxable estate shall be determined by deducting from the value of

the gross estate the amount of any estate, inheritance, legacy, or

succession taxes actually paid to any State or the District of

Columbia, in respect of any property included in the gross estate

(not including any such taxes paid with respect to the estate of a

person other than the decedent).

(b) Period of limitations

The deduction allowed by this section shall include only such

taxes as were actually paid and deduction therefor claimed before

the later of -

(1) 4 years after the filing of the return required by section

6018, or

(2) if -

(A) a petition for redetermination of a deficiency has been

filed with the Tax Court within the time prescribed in section

6213(a), the expiration of 60 days after the decision of the

Tax Court becomes final,

(B) an extension of time has been granted under section 6161

or 6166 for payment of the tax shown on the return, or of a

deficiency, the date of the expiration of the period of the

extension, or

imposed by this chapter has been filed within the time

prescribed in section 6511, the latest of the expiration of -

(i) 60 days from the date of mailing by certified mail or

registered mail by the Secretary to the taxpayer of a notice

of the disallowance of any part of such claim,

(ii) 60 days after a decision by any court of competent

jurisdiction becomes final with respect to a timely suit

instituted upon such claim, or

(iii) 2 years after a notice of the waiver of disallowance

is filed under section 6532(a)(3).

Notwithstanding sections 6511 and 6512, refund based on the

deduction may be made if the claim for refund is filed within the

period provided in the preceding sentence. Any such refund shall be

made without interest.

-SOURCE-

(Added Pub. L. 107-16, title V, Sec. 532(b), June 7, 2001, 115

Stat. 73.)

-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 estates of decedents dying, and

generation-skipping transfers, after Dec. 31, 2004, see section

532(d) of Pub. L. 107-16, set out as an Effective and Termination

Dates of 2001 Amendment note under section 2011 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.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2056A of this title.

-End-

-CITE-

26 USC Subchapter B - Estates of Nonresidents Not

Citizens 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter B - Estates of Nonresidents Not Citizens

-HEAD-

SUBCHAPTER B - ESTATES OF NONRESIDENTS NOT CITIZENS

-MISC1-

Sec.

2101. Tax imposed.

2102. Credits against tax.

2103. Definition of gross estate.

2104. Property within the United States.

2105. Property without the United States.

2106. Taxable estate.

2107. Expatriation to avoid tax.

2108. Application of pre-1967 estate tax provisions.

AMENDMENTS

1966 - Pub. L. 89-809, title I, Sec. 108(h), Nov. 13, 1966, 80

Stat. 1574, added items 2107 and 2108.

-SECREF-

SUBCHAPTER REFERRED TO IN OTHER SECTIONS

This subchapter is referred to in sections 2014, 2053 of this

title.

-End-

-CITE-

26 USC Sec. 2101 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter B - Estates of Nonresidents Not Citizens

-HEAD-

Sec. 2101. Tax imposed

-STATUTE-

(a) Imposition

Except as provided in section 2107, a tax is hereby imposed on

the transfer of the taxable estate (determined as provided in

section 2106) of every decedent nonresident not a citizen of the

United States.

(b) Computation of tax

The tax imposed by this section shall be the amount equal to the

excess (if any) of -

(1) a tentative tax computed under section 2001(c) on the sum

of -

(A) the amount of the taxable estate, and

(B) the amount of the adjusted taxable gifts, over

(2) a tentative tax computed under section 2001(c) on the

amount of the adjusted taxable gifts.

(1) Adjusted taxable gifts defined

For purposes of this section, the term "adjusted taxable gifts"

means the total amount of the taxable gifts (within the meaning

of section 2503 as modified by section 2511) made by the decedent

after December 31, 1976, other than gifts which are includible in

the gross estate of the decedent.

(2) Adjustment for certain gift tax

For purposes of this section, the rules of section 2001(d)

shall apply.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 397; Pub. L. 89-809, title I,

Sec. 108(a), Nov. 13, 1966, 80 Stat. 1571; Pub. L. 94-455, title

XX, Sec. 2001(c)(1)(D), Oct. 4, 1976, 90 Stat. 1850; Pub. L.

100-647, title V, Sec. 5032(a), (c), Nov. 10, 1988, 102 Stat. 3669;

Pub. L. 101-239, title VII, Sec. 7815(c), Dec. 19, 1989, 103 Stat.

2415; Pub. L. 103-66, title XIII, Sec. 13208(b)(3), Aug. 10, 1993,

107 Stat. 469; Pub. L. 107-147, title IV, Sec. 411(g)(2), Mar. 9,

2002, 116 Stat. 46.)

-MISC1-

AMENDMENTS

2002 - Subsec. (b). Pub. L. 107-147 struck out concluding

provisions which read as follows: "For purposes of the preceding

sentence, there shall be appropriate adjustments in the application

of section 2001(c)(2) to reflect the difference between the amount

of the credit provided under section 2102(c) and the amount of the

credit provided under section 2010."

1993 - Subsec. (b). Pub. L. 103-66 substituted "section

2001(c)(2)" for "section 2001(c)(3)" in last sentence.

1989 - Subsec. (b). Pub. L. 101-239 inserted at end "For purposes

of the preceding sentence, there shall be appropriate adjustments

in the application of section 2001(c)(3) to reflect the difference

between the amount of the credit provided under section 2102(c) and

the amount of the credit provided under section 2010."

1988 - Subsec. (b). Pub. L. 100-647, Sec. 5032(a), substituted "a

tentative tax computed under section 2001(c)" for "a tentative tax

computed in accordance with the rate schedule set forth in

subsection (d)" in pars. (1) and (2).

Subsec. (d). Pub. L. 100-647, Sec. 5032(c), struck out subsec.

(d) which provided a rate schedule.

1976 - Pub. L. 94-455 redesignated existing provisions as (a) to

(d), inserted provisions for adjustments for taxable gifts, revised

the tax rate schedule, and struck out provisions relating to

property held by Alien Property Custodian.

1966 - Subsec. (a). Pub. L. 89-809 substituted table to be used

in computing the tax imposed on transfer of taxable estate,

determined as provided in section 2106, of every decedent

nonresident not a citizen of the United States for provisions

sending taxpayer to table in section 2001 for computation of tax

imposed.

EFFECTIVE DATE OF 2002 AMENDMENT

Amendment by Pub. L. 107-147 effective as if included in the

provisions of the Economic Growth and Tax Relief Reconciliation Act

of 2001, Pub. L. 107-16, to which such amendment relates, see

section 411(x) of Pub. L. 107-147, set out as a note under section

25B of this title.

EFFECTIVE DATE OF 1993 AMENDMENT

Amendment by Pub. L. 103-66 applicable in the case of decedents

dying and gifts made after Dec. 31, 1992, see section 13208(c) of

Pub. L. 103-66, set out as a note under section 2001 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

Section 5032(d) of Pub. L. 100-647 provided that: "The amendments

made by this section [amending this section and section 2102 of

this title] shall apply to the estates of decedents dying after the

date of the enactment of this Act [Nov. 10, 1988]."

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by Pub. L. 94-455 applicable to estates of decedents

dying after Dec. 31, 1976, see section 2001(d)(1) of Pub. L.

94-455, set out as a note under section 2001 of this title.

EFFECTIVE DATE OF 1966 AMENDMENT

Section 108(i) of Pub. L. 89-809 provided that: "The amendments

made by this section [amending this section and sections 2102,

2104, 2105, 2106, and 6018 of this title and enacting sections 2107

and 2108 of this title] shall apply with respect to estates of

decedents dying after the date of the enactment of this Act [Nov.

13, 1966]."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 691, 2013, 2014, 2015,

2102, 2103, 2106, 2107, 2108, 2201 of this title.

-End-

-CITE-

26 USC Sec. 2102 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter B - Estates of Nonresidents Not Citizens

-HEAD-

Sec. 2102. Credits against tax

-STATUTE-

(a) In general

The tax imposed by section 2101 shall be credited with the

amounts determined in accordance with sections 2011 to 2013,

inclusive (relating to State death taxes, gift tax, and tax on

prior transfers), subject to the special limitation provided in

subsection (b).

(b) Special limitation

The maximum credit allowed under section 2011 against the tax

imposed by section 2101 for State death taxes paid shall be an

amount which bears the same ratio to the credit computed as

provided in section 2011(b) as the value of the property, as

determined for purposes of this chapter, upon which State death

taxes were paid and which is included in the gross estate under

section 2103 bears to the value of the total gross estate under

section 2103. For purposes of this subsection, the term "State

death taxes" means the taxes described in section 2011(a).

(1) In general

A credit of $13,000 shall be allowed against the tax imposed by

section 2101.

(2) Residents of possessions of the United States

In the case of a decedent who is considered to be a

"nonresident not a citizen of the United States" under section

2209, the credit under this subsection shall be the greater of -

(A) $13,000, or

(B) that proportion of $46,800 which the value of that part

of the decedent's gross estate which at the time of his death

is situated in the United States bears to the value of his

entire gross estate wherever situated.

(3) Special rules

(A) Coordination with treaties

To the extent required under any treaty obligation of the

United States, the credit allowed under this subsection shall

be equal to the amount which bears the same ratio to the

applicable credit amount in effect under section 2010(c) for

the calendar year which includes the date of death as the value

of the part of the decedent's gross estate which at the time of

his death is situated in the United States bears to the value

of his entire gross estate wherever situated. For purposes of

the preceding sentence, property shall not be treated as

situated in the United States if such property is exempt from

the tax imposed by this subchapter under any treaty obligation

of the United States.

(B) Coordination with gift tax unified credit

If a credit has been allowed under section 2505 with respect

to any gift made by the decedent, each dollar amount contained

in paragraph (1) or (2) or subparagraph (A) of this paragraph

(whichever applies) shall be reduced by the amount so allowed.

(4) Limitation based on amount of tax

The credit allowed under this subsection shall not exceed the

amount of the tax imposed by section 2101.

(5) Application of other credits

For purposes of subsection (a), sections 2011 to 2013,

inclusive, shall be applied as if the credit allowed under this

subsection were allowed under section 2010.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 397; Pub. L. 89-809, title I,

Sec. 108(b), Nov. 13, 1966, 80 Stat. 1572; Pub. L. 94-455, title

XX, Sec. 2001(c)(1)(E)(i), Oct. 4, 1976, 90 Stat. 1851; Pub. L.

100-647, title V, Sec. 5032(b), Nov. 10, 1988, 102 Stat. 3669; Pub.

L. 104-188, title I, Sec. 1704(f)(1), Aug. 20, 1996, 110 Stat.

1879; Pub. L. 105-34, title V, Sec. 501(a)(1)(E), Aug. 5, 1997, 111

Stat. 845; Pub. L. 107-16, title V, Sec. 532(c)(7), June 7, 2001,

115 Stat. 75.)

-STATAMEND-

AMENDMENT OF SECTION

Pub. L. 107-16, title V, Sec. 532(c)(7), (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 as

follows:

(1) by amending subsection (a) to read as follows:

"(a) In general

"The tax imposed by section 2101 shall be credited with the

amounts determined in accordance with sections 2012 and 2013

(relating to gift tax and tax on prior transfers).";

(2) by striking out subsection (b) and by redesignating

subsection (c) as subsection (b); and

(3) in subsection (b)(5), by substituting "2012 and 2013" for

"2011 to 2013, inclusive,".

See Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

AMENDMENTS

1997 - Subsec. (c)(3)(A). Pub. L. 105-34 substituted "the

applicable credit amount in effect under section 2010(c) for the

calendar year which includes the date of death" for "$192,800".

1996 - Subsec. (c)(3)(A). Pub. L. 104-188 inserted at end "For

purposes of the preceding sentence, property shall not be treated

as situated in the United States if such property is exempt from

the tax imposed by this subchapter under any treaty obligation of

the United States."

1988 - Subsec. (c)(1). Pub. L. 100-647, Sec. 5032(b)(1)(A),

substituted "$13,000" for "$3,600".

Subsec. (c)(2). Pub. L. 100-647, Sec. 5032(b)(1), substituted

"$13,000" for "$3,600" in subpar. (A) and "$46,800" for "$15,075"

in subpar. (B).

Subsec. (c)(3). Pub. L. 100-647, Sec. 5032(b)(2), amended par.

(3) generally, substituting provision relating to special rules for

coordination with treaties and with gift tax unified tax credit for

provision relating to a phase-in of the par. (2)(B) amount for

decedents dying during 1977, 1978, 1979, and 1980.

1976 - Subsec. (c). Pub. L. 94-455 added subsec. (c).

1966 - Pub. L. 89-809 redesignated existing provisions as subsec.

(a), inserted reference to special limitation provided in subsec.

(b), and added subsec. (b).

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 OF 1997 AMENDMENT

Amendment by Pub. L. 105-34 applicable to estates of decedents

dying, and gifts made, after Dec. 31, 1997, see section 501(f) of

Pub. L. 105-34, set out as a note under section 2001 of this title.

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-647 applicable to estates of decedents

dying after Nov. 10, 1988, see section 5032(d) of Pub. L. 100-647,

set out as a note under section 2101 of this title.

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by Pub. L. 94-455 applicable to estates of decedents

dying after Dec. 31, 1976, see section 2001(d)(1) of Pub. L.

94-455, set out as a note under section 2001 of this title.

EFFECTIVE DATE OF 1966 AMENDMENT

Amendment by Pub. L. 89-809 applicable with respect to estates of

decedents dying after Nov. 13, 1966, see section 108(i) of Pub. L.

89-809, set out as a note under section 2101 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2107, 2108 of this title.

-End-

-CITE-

26 USC Sec. 2103 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter B - Estates of Nonresidents Not Citizens

-HEAD-

Sec. 2103. Definition of gross estate

-STATUTE-

For the purpose of the tax imposed by section 2101, the value of

the gross estate of every decedent nonresident not a citizen of the

United States shall be that part of his gross estate (determined as

provided in section 2031) which at the time of his death is

situated in the United States.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 397.)

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2102, 2106, 2107 of this

title.

-End-

-CITE-

26 USC Sec. 2104 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter B - Estates of Nonresidents Not Citizens

-HEAD-

Sec. 2104. Property within the United States

-STATUTE-

(a) Stock in corporation

For purposes of this subchapter shares of stock owned and held by

a nonresident not a citizen of the United States shall be deemed

property within the United States only if issued by a domestic

corporation.

(b) Revocable transfers and transfers within 3 years of death

For purposes of this subchapter, any property of which the

decedent has made a transfer, by trust or otherwise, within the

meaning of sections 2035 to 2038, inclusive, shall be deemed to be

situated in the United States, if so situated either at the time of

the transfer or at the time of the decedent's death.

For purposes of this subchapter, debt obligations of -

(1) a United States person, or

(2) the United States, a State or any political subdivision

thereof, or the District of Columbia,

owned and held by a nonresident not a citizen of the United States

shall be deemed property within the United States. With respect to

estates of decedents dying after December 31, 1969, deposits with a

domestic branch of a foreign corporation, if such branch is engaged

in the commercial banking business, shall, for purposes of this

subchapter, be deemed property within the United States. This

subsection shall not apply to a debt obligation to which section

2105(b) applies or to a debt obligation of a domestic corporation

if any interest on such obligation, were such interest received by

the decedent at the time of his death, would be treated by reason

of section 861(a)(1)(A) as income from sources without the United

States.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 397; Pub. L. 89-809, title I,

Sec. 108(c), Nov. 13, 1966, 80 Stat. 1572; Pub. L. 91-172, title

IV, Sec. 435(b), Dec. 30, 1969, 83 Stat. 625; Pub. L. 93-17, Sec.

3(a)(1), Apr. 10, 1973, 87 Stat. 12; Pub. L. 93-625, Sec. 9(b),

Jan. 3, 1975, 88 Stat. 2116; Pub. L. 94-455, title XX, Sec.

2001(c)(1)(L), Oct. 4, 1976, 90 Stat. 1853; Pub. L. 100-647, title

I, Sec. 1012(q)(11), Nov. 10, 1988, 102 Stat. 3525; Pub. L.

104-188, title I, Sec. 1704(t)(38), Aug. 20, 1996, 110 Stat. 1889.)

-MISC1-

AMENDMENTS

1996 - Subsec. (c). Pub. L. 104-188 substituted "section

861(a)(1)(A)" for "subparagraph (A), (C), or (D) of section

861(a)(1)" in concluding provisions.

1988 - Subsec. (c). Pub. L. 100-647 substituted "subparagraph

(A), (C), or (D) of section 861(a)(1)" for "section 861(a)(1)(B),

section 861(a)(1)(G), or section 861(a)(1)(H)".

1976 - Subsec. (b). Pub. L. 94-455 substituted "and transfers

within 3 years of death" for "and transfers in contemplation of

death" after "Revocable transfers".

1975 - Subsec. (c). Pub. L. 93-625 inserted reference to section

861(a)(1)(H) of this title in last sentence.

1973 - Subsec. (c). Pub. L. 93-17 made subsec. (c) inapplicable

to debt obligations where interest on such obligations is treated

as income from sources without the United States by reason of

section 861(a)(1)(G) of this title.

1969 - Subsec. (c). Pub. L. 91-172 substituted "December 31,

1969" for "December 31, 1972" in provisions deeming deposit with a

domestic branch of a foreign corporation if such branch is engaged

in the commercial banking business to be property within the United

States.

1966 - Subsec. (c). Pub. L. 89-809 added subsec. (c).

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 1976 AMENDMENT

Amendment by Pub. L. 94-455 not applicable to transfers made

before Jan. 1, 1977, see section 2001(d)(1) of Pub. L. 94-455, set

out as a note under section 2001 of this title.

EFFECTIVE DATE OF 1975 AMENDMENT

Amendment by Pub. L. 93-625 applicable with respect to estates of

decedents dying after Jan. 3, 1975, see section 9(c) of Pub. L.

93-625, set out as a note under section 861 of this title.

EFFECTIVE DATE OF 1973 AMENDMENT

Section 3(a)(2) of Pub. L. 93-17 provided that: "The amendment

made by paragraph (1) [amending this section] shall apply with

respect to estates of decedents dying after December 31, 1972,

except that in the case of the assumption of a debt obligation of a

foreign corporation which is treated as issued under section

4912(c)(2) after December 31, 1972, and before January 1, 1974, the

amendment made by paragraph (1) [amending this section] shall apply

with respect to estates of decedents dying after December 31,

1973."

EFFECTIVE DATE OF 1966 AMENDMENT

Amendment by Pub. L. 89-809 applicable with respect to estates of

decedents dying after Nov. 13, 1966, see section 108(i) of Pub. L.

89-809, set out as a note under section 2101 of this title.

SHORT TITLE OF 1973 AMENDMENT

Section 1(a) of Pub. L. 93-17 provided that: "This Act [enacting

sections 4922 and 6689 of this title, amending this section and

sections 4911, 4912, 4914, 4915, 4916, 4918, 4919, 4920, and 6611

of this title, and enacting provisions set out as notes under this

section] may be cited as the 'Interest Equalization Tax Extension

Act of 1973'."

-End-

-CITE-

26 USC Sec. 2105 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter B - Estates of Nonresidents Not Citizens

-HEAD-

Sec. 2105. Property without the United States

-STATUTE-

(a) Proceeds of life insurance

For purposes of this subchapter, the amount receivable as

insurance on the life of a nonresident not a citizen of the United

States shall not be deemed property within the United States.

(b) Bank deposits and certain other debt obligations

For purposes of this subchapter, the following shall not be

deemed property within the United States -

(1) amounts described in section 871(i)(3), if any interest

thereon would not be subject to tax by reason of section

871(i)(1) were such interest received by the decedent at the time

of his death,

(2) deposits with a foreign branch of a domestic corporation or

domestic partnership, if such branch is engaged in the commercial

banking business,

(3) debt obligations, if, without regard to whether a statement

meeting the requirements of section 871(h)(5) has been received,

any interest thereon would be eligible for the exemption from tax

under section 871(h)(1) were such interest received by the

decedent at the time of his death, and

(4) obligations which would be original issue discount

obligations as defined in section 871(g)(1) but for subparagraph

(B)(i) thereof, if any interest thereon (were such interest

received by the decedent at the time of his death) would not be

effectively connected with the conduct of a trade or business

within the United States.

Notwithstanding the preceding sentence, if any portion of the

interest on an obligation referred to in paragraph (3) would not be

eligible for the exemption referred to in paragraph (3) by reason

of section 871(h)(4) if the interest were received by the decedent

at the time of his death, then an appropriate portion (as

determined in a manner prescribed by the Secretary) of the value

(as determined for purposes of this chapter) of such debt

obligation shall be deemed property within the United States.

For purposes of this subchapter, works of art owned by a

nonresident not a citizen of the United States shall not be deemed

property within the United States if such works of art are -

(1) imported into the United States solely for exhibition

purposes,

(2) loaned for such purposes, to a public gallery or museum, no

part of the net earnings of which inures to the benefit of any

private stockholder or individual, and

(3) at the time of the death of the owner, on exhibition, or en

route to or from exhibition, in such a public gallery or museum.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 397; Pub. L. 89-809, title I,

Sec. 108(d), Nov. 13, 1966, 80 Stat. 1572; Pub. L. 98-369, div. A,

title I, Sec. 127(d), July 18, 1984, 98 Stat. 651; Pub. L. 100-647,

title I, Sec. 1012(g)(4), Nov. 10, 1988, 102 Stat. 3501; Pub. L.

103-66, title XIII, Sec. 13237(b), Aug. 10, 1993, 107 Stat. 508;

Pub. L. 105-34, title XIII, Sec. 1304(a), Aug. 5, 1997, 111 Stat.

1040.)

-MISC1-

AMENDMENTS

1997 - Subsec. (b)(4). Pub. L. 105-34 added par. (4).

1993 - Subsec. (b). Pub. L. 103-66 substituted "this subchapter,

the following shall not be deemed property within the United

States" for "this subchapter" in introductory provisions, added

par. (3) and concluding provisions, and struck out former par. (3)

and concluding provisions which read as follows:

"(3) debt obligations, if, without regard to whether a

statement meeting the requirements of section 871(h)(4) has been

received, any interest thereon would be eligible for the

exemption from tax under section 871(h)(1) were such interest

received by the decedent at the time of his death,

shall not be deemed property within the United States."

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

871(i)(3), if any interest thereon would not be subject to tax by

reason of section 871(i)(1)" for "section 861(c), if any interest

thereon would be treated by reason of section 861(a)(1)(A) as

income from sources without the United States".

1984 - Subsec. (b). Pub. L. 98-369, amended subsec. (b)

generally, substituting "Bank deposits and certain other debt

obligations" for "Certain bank deposits, etc." in heading and ", if

any interest thereon would be treated by reason of section

861(a)(1)(A) as income from sources without the United States were

such interest received by the decedent at the time of his death,"

for "if any interest thereon, were such interest received by the

decedent at the time of his death, would be treated by reason of

section 861(a)(1)(A) as income from sources without the United

States, and" in par. (1), inserting "and" after "business," in par.

(2), and adding par. (3).

1966 - Subsec. (b). Pub. L. 89-809 substituted amounts described

in section 861(c) if any interest thereon, were such interest

received by the decedent at the time of his death, would be treated

by reason of section 861(a)(1)(A) as income from sources without

the United States, and deposits with a foreign branch of a domestic

corporation or domestic partnership, if such branch is engaged in

the commercial banking business for moneys deposited with any

person carrying on the banking business by or for a nonresident not

a citizen of the United States who was not engaged in business in

the United States at the time of his death as the property not to

be deemed property within the United States for purposes of this

subchapter.

EFFECTIVE DATE OF 1997 AMENDMENT

Section 1304(b) of Pub. L. 105-34 provided that: "The amendment

made by this section [amending this section] shall apply to estates

of decedents dying after the date of the enactment of this Act

[Aug. 5, 1997]."

EFFECTIVE DATE OF 1993 AMENDMENT

Amendment by Pub. L. 103-66 applicable to the estates of

decedents dying after Dec. 31, 1993, see section 13237(d) of Pub.

L. 103-66, set out as a note under section 871 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 OF 1984 AMENDMENT

Amendment by Pub. L. 98-369 applicable to obligations issued

after July 18, 1984, with respect to the estates of decedents dying

after such date, see section 127(g)(2) of Pub. L. 98-369, set out

as a note under section 871 of this title.

EFFECTIVE DATE OF 1966 AMENDMENT

Amendment by Pub. L. 89-809 applicable with respect to estates of

decedents dying after Nov. 13, 1966, see section 108(i) of Pub. L.

89-809, set out as a note under section 2101 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2104 of this title.

-End-

-CITE-

26 USC Sec. 2106 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter B - Estates of Nonresidents Not Citizens

-HEAD-

Sec. 2106. Taxable estate

-STATUTE-

(a) Definition of taxable estate

For purposes of the tax imposed by section 2101, the value of the

taxable estate of every decedent nonresident not a citizen of the

United States shall be determined by deducting from the value of

that part of his gross estate which at the time of his death is

situated in the United States -

(1) Expenses, losses, indebtedness, and taxes

That proportion of the deductions specified in sections 2053

and 2054 (other than the deductions described in the following

sentence) which the value of such part bears to the value of his

entire gross estate, wherever situated. Any deduction allowable

under section 2053 in the case of a claim against the estate

which was founded on a promise or agreement but was not

contracted for an adequate and full consideration in money or

money's worth shall be allowable under this paragraph to the

extent that it would be allowable as a deduction under paragraph

(2) if such promise or agreement constituted a bequest.

(2) Transfers for public, charitable, and religious uses

(A) In general

The amount of all bequests, legacies, devises, or transfers

(including the interest which falls into any such bequest,

legacy, devise, or transfer as a result of an irrevocable

disclaimer of a bequest, legacy, devise, transfer, or power, if

the disclaimer is made before the date prescribed for the

filing of the estate tax return) -

(i) to or for the use of the United States, any State, any

political subdivision thereof, or the District of Columbia,

for exclusively public purposes;

(ii) to or for the use of any domestic corporation

organized and operated exclusively for religious, charitable,

scientific, literary, or educational purposes, including the

encouragement of art and the prevention of cruelty to

children or animals, no part of the net earnings of which

inures to the benefit of any private stockholder or

individual, which is not disqualified for tax exemption under

section 501(c)(3) by reason of attempting to influence

legislation, and which does not participate in, or intervene

in (including the publishing or distributing of statements),

any political campaign on behalf of (or in opposition to) any

candidate for public office; or

(iii) to a trustee or trustees, or a fraternal society,

order, or association operating under the lodge system, but

only if such contributions or gifts are to be used within the

United States by such trustee or trustees, or by such

fraternal society, order, or association, exclusively for

religious, charitable, scientific, literary, or educational

purposes, or for the prevention of cruelty to children or

animals, such trust, fraternal society, order, or association

would not be disqualified for tax exemption under section

501(c)(3) by reason of attempting to influence legislation,

and such trustee or trustees, or such fraternal society,

order, or association, does not participate in, or intervene

in (including the publishing or distributing of statements),

any political campaign on behalf of (or in opposition to) any

candidate for public office;

(B) Powers of appointment

Property includible in the decedent's gross estate under

section 2041 (relating to powers of appointment) received by a

donee described in this paragraph shall, for purposes of this

paragraph, be considered a bequest of such decedent.

If the tax imposed by section 2101, or any estate,

succession, legacy, or inheritance taxes, are, either by the

terms of the will, by the law of the jurisdiction under which

the estate is administered, or by the law of the jurisdiction

imposing the particular tax, payable in whole or in part out of

the bequests, legacies, or devises otherwise deductible under

this paragraph, then the amount deductible under this paragraph

shall be the amount of such bequests, legacies, or devises

reduced by the amount of such taxes.

(D) Limitation on deduction

The amount of the deduction under this paragraph for any

transfer shall not exceed the value of the transferred property

required to be included in the gross estate.

(E) Disallowance of deductions in certain cases

The provisions of section 2055(e) shall be applied in the

determination of the amount allowable as a deduction under this

paragraph.

(F) Cross references

(i) For option as to time for valuation for purposes of

deduction under this section, see section 2032.

(ii) For exemption of certain bequests for the benefit of

the United States and for rules of construction for certain

bequests, see section 2055(g).

(iii) For treatment of gifts and bequests to or for the use

of Indian tribal governments (or their subdivisions), see

section 7871.

(3) Marital deduction

The amount which would be deductible with respect to property

situated in the United States at the time of the decedent's death

under the principles of section 2056.

(b) Condition of allowance of deductions

No deduction shall be allowed under paragraphs (1) and (2) of

subsection (a) in the case of a nonresident not a citizen of the

United States unless the executor includes in the return required

to be filed under section 6018 the value at the time of his death

of that part of the gross estate of such nonresident not situated

in the United States.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 398; Pub. L. 85-866, title I,

Sec. 30(d), Sept. 2, 1958, 72 Stat. 1631; Pub. L. 86-779, Sec.

4(c), Sept. 14, 1960, 74 Stat. 1000; Pub. L. 89-809, title I, Sec.

108(e), Nov. 13, 1966, 80 Stat. 1572; Pub. L. 91-172, title II,

Sec. 201(d)(2), (4)(B), Dec. 30, 1969, 83 Stat. 561; Pub. L.

94-455, title XIII, Sec. 1307(d)(1)(B)(iii), (C), title XIX, Sec.

1902(a)(5), (12)(A), title XX, Sec. 2001(c)(1)(F), Oct. 4, 1976,

90 Stat. 1727, 1805, 1852; Pub. L. 97-473, title II, Sec.

202(b)(6), Jan. 14, 1983, 96 Stat. 2610; Pub. L. 99-514, title XIV,

Sec. 1422(c), Oct. 22, 1986, 100 Stat. 2717; Pub. L. 100-203, title

X, Sec. 10711(a)(4), Dec. 22, 1987, 101 Stat. 1330-464; Pub. L.

100-647, title V, Sec. 5033(c), Nov. 10, 1988, 102 Stat. 3672; Pub.

L. 101-239, title VII, Sec. 7815(d)(3), Dec. 19, 1989, 103 Stat.

2415; Pub. L. 107-16, title V, Sec. 532(c)(8), June 7, 2001, 115

Stat. 75.)

-STATAMEND-

AMENDMENT OF SUBSECTION (A)

Pub. L. 107-16, title V, Sec. 532(c)(8), (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, subsection (a) of this section is temporarily

amended by adding at the end the following new paragraph:

(4) State death taxes

The amount which bears the same ratio to the State death taxes

as the value of the property, as determined for purposes of this

chapter, upon which State death taxes were paid and which is

included in the gross estate under section 2103 bears to the

value of the total gross estate under section 2103. For purposes

of this paragraph, the term "State death taxes" means the taxes

described in section 2011(a).

See Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

AMENDMENTS

1989 - Subsec. (a)(3). Pub. L. 101-239 struck out "allowed where

spouse is citizen" after "deduction" in heading.

1988 - Subsec. (a)(3). Pub. L. 100-647 added par. (3).

1987 - Subsec. (a)(2)(A)(ii), (iii). Pub. L. 100-203 inserted

"(or in opposition to)" after "on behalf of".

1986 - Subsec. (a)(2)(F)(ii). Pub. L. 99-514 substituted "section

2055(g)" for "section 2055(f)".

1983 - Subsec. (a)(2)(F). Pub. L. 97-473 substituted "(i)" and

"(ii)" for "(1)" and "(2)", respectively, and added cl. (iii).

1976 - Subsec. (a)(2)(A)(i). Pub. L. 94-455, Sec. 1902

(a)(12)(A), struck out "Territory" after "any State".

Subsec. (a)(2)(A)(ii). Pub. L. 94-455, Sec. 1307(d)(1)(B)(iii),

substituted "which is not disqualified for tax exemption under

section 501(c)(3) by reason of attempting to influence legislation"

for "no substantial part of the activities of which is carrying on

propaganda, or otherwise attempting, to influence legislation"

after "stockholder or individual".

Subsec. (a)(2)(A)(iii). Pub. L. 94-455, Sec. 1307(d)(1)(C),

substituted "such trust, fraternal society, order, or association

would not be disqualified for tax exemption under section 501(c)(3)

by reason of attempting to influence legislation" for "no

substantial part of the activities of such trustee or trustees, or

of such fraternal society, order, or association, is carrying on

propaganda, or otherwise attempting, to influence legislation"

after "children or animals".

Subsec. (a)(2)(F). Pub. L. 94-455, Sec. 1902(a)(5)(A),

substituted "Cross references" for "Other cross references" after

"(F)", in cl. (1) "purposes of deduction under this section" for

"purpose of deduction under this paragraph" after "valuation for",

in cl. (2) provision for exemption of certain bequests for benefit

of United States and for rules of construction for certain

bequests, for provisions of cls. (2) to (11) relating to bequests

to; Library of Congress, Post Office Department, Office of Naval

Records and Library, National Park Service, Department of State,

Department of Justice, payment of tax on bequests of United States

obligations, Naval Academy, Naval Academy Museum, and National

Archives Trust Fund Board, respectively.

Subsec. (a)(3). Pub. L. 94-455, Sec. 2001(c)(1)(F), struck out

par. (3) relating to specific exemption in case of decedents

nonresidents not citizens.

Subsec. (c). Pub. L. 94-455, Sec. 1902(a)(5)(B), struck out

subsec. (c) relating to treatment of United States bonds in

determining gross estate of a decedent who was not engaged in

business in the United States at the time of his death.

1969 - Subsec. (a)(2)(A)(ii), (iii). Pub. L. 91-172, Sec.

201(d)(4)(B), inserted non-participation and non-intervention in

political campaigns as an additional qualification.

Subsec. (a)(2)(E). Pub. L. 91-172, Sec. 201(d)(2), substituted

substantive provisions for simple reference to sections 503 and 681

of this title in which such substantive provisions were formerly

set out.

1966 - Subsec. (a)(3). Pub. L. 89-809 substituted "$30,000" for

"$2,000" as size of exemption in subpar. (A) and "$30,000" for

"$2,000" as item (i) in formula set out in subpar. (B).

1960 - Subsec. (a)(3). Pub. L. 86-779 designated existing

provisions as subpar. (A) and added subpar. (B).

1958 - Subsec. (a)(2)(E). Pub. L. 85-866 substituted "503" for

"504".

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 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 applicable to estates of decedents

dying after Nov. 10, 1988, see section 5033(d)(1) of Pub. L.

100-647, set out as a note under section 2056 of this title.

EFFECTIVE DATE OF 1987 AMENDMENT

Amendment by Pub. L. 100-203 applicable with respect to

activities after Dec. 22, 1987, see section 10711(c) of Pub. L.

100-203, set out as a note under section 170 of this title.

EFFECTIVE DATE OF 1986 AMENDMENT

Amendment by Pub. L. 99-514 applicable to transfers and

contributions made after Dec. 31, 1986, see section 1422(e) of Pub.

L. 99-514, set out as a note under section 2055 of this title.

EFFECTIVE DATE OF 1983 AMENDMENT

For effective date of amendment by Pub. L. 97-473, see section

204(3) of Pub. L. 97-473, set out as an Effective Date note under

section 7871 of this title.

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by section 1902(a)(5) of Pub. L. 94-455 applicable in

the case of estates of decedents dying after Oct. 4, 1976, see

section 1902(c)(1) of Pub. L. 94-455, set out as a note under

section 2011 of this title.

Amendment by section 2001(c)(1)(F) of Pub. L. 94-455 applicable

to estates of decedents dying after Dec. 31, 1976, see section

2001(d)(1) of Pub. L. 94-455, set out as a note under section 2001

of this title.

EFFECTIVE DATE OF 1969 AMENDMENT

Amendment by section 201(d)(2) of Pub. L. 91-172 applicable in

the case of decedents dying after Dec. 31, 1969, with specified

exceptions, see section 201(g)(4) of Pub. L. 91-172, set out as a

note under section 170 of this title.

Amendment by section 201(d)(4)(B) of Pub. L. 91-172 applicable to

gifts and transfers made after Dec. 31, 1969, see section 201(g)(4)

of Pub. L. 91-172, set out as a note under section 170 of this

title.

EFFECTIVE DATE OF 1966 AMENDMENT

Amendment by Pub. L. 89-809 applicable with respect to estates of

decedents dying after Nov. 13, 1966, see section 108(i) of Pub. L.

89-809, set out as a note under section 2101 of this title.

EFFECTIVE DATE OF 1960 AMENDMENT

Section 4(e)(2) of Pub. L. 86-779 provided that: "The amendments

made by subsections (b) and (c) [enacting section 2209 of this

title and amending this section] shall apply with respect to

estates of decedents dying after the date of the enactment of this

Act [Sept. 14, 1960]."

APPLICATION OF AMENDMENTS BY SECTION 5033 OF PUB. L. 100-647 TO

ESTATES OF, OR GIFTS BY, NONCITIZEN AND NONRESIDENT INDIVIDUALS

For provisions directing that in the case of the estate of, or

gift by, an individual who was not a citizen or resident of the

United States but was a resident of a foreign country with which

the United States has a tax treaty with respect to estate,

inheritance, or gift taxes, the amendments made by section 5033 of

Pub. L. 100-647 shall not apply to the extent such amendments would

be inconsistent with the provisions of such treaty relating to

estate, inheritance, or gift tax marital deductions, but that in

the case of the estate of an individual dying before the date 3

years after Dec. 19, 1989, or a gift by an individual before the

date 3 years after Dec. 19, 1989, the requirement of the preceding

provision that the individual not be a citizen or resident of the

United States shall not apply, see section 7815(d)(14) of Pub. L.

101-239, set out as a note under section 2056 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 170, 303, 508, 2011,

2012, 2013, 2032, 2053, 2101, 2107, 2108, 2701, 4947, 4948, 7871 of

this title; title 22 section 3307.

-End-

-CITE-

26 USC Sec. 2107 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter B - Estates of Nonresidents Not Citizens

-HEAD-

Sec. 2107. Expatriation to avoid tax

-STATUTE-

(a) Treatment of expatriates

(1) Rate of tax

A tax computed in accordance with the table contained in

section 2001 is hereby imposed on the transfer of the taxable

estate, determined as provided in section 2106, of every decedent

nonresident not a citizen of the United States if, within the

10-year period ending with the date of death, such decedent lost

United States citizenship, unless such loss did not have for one

of its principal purposes the avoidance of taxes under this

subtitle or subtitle A.

(2) Certain individuals treated as having tax avoidance purpose

(A) In general

For purposes of paragraph (1), an individual shall be treated

as having a principal purpose to avoid such taxes if such

individual is so treated under section 877(a)(2).

(B) Exception

Subparagraph (A) shall not apply to a decedent meeting the

requirements of section 877(c)(1).

(b) Gross estate

For purposes of the tax imposed by subsection (a), the value of

the gross estate of every decedent to whom subsection (a) applies

shall be determined as provided in section 2103, except that -

(1) if such decedent owned (within the meaning of section

958(a)) at the time of his death 10 percent or more of the total

combined voting power of all classes of stock entitled to vote of

a foreign corporation, and

(2) if such decedent owned (within the meaning of section

958(a)), or is considered to have owned (by applying the

ownership rules of section 958(b)), at the time of his death,

more than 50 percent of -

(A) the total combined voting power of all classes of stock

entitled to vote of such corporation, or

(B) the total value of the stock of such corporation,

then that proportion of the fair market value of the stock of such

foreign corporation owned (within the meaning of section 958(a)) by

such decedent at the time of his death, which the fair market value

of any assets owned by such foreign corporation and situated in the

United States, at the time of his death, bears to the total fair

market value of all assets owned by such foreign corporation at the

time of his death, shall be included in the gross estate of such

decedent. For purposes of the preceding sentence, a decedent shall

be treated as owning stock of a foreign corporation at the time of

his death if, at the time of a transfer, by trust or otherwise,

within the meaning of sections 2035 to 2038, inclusive, he owned

such stock.

(1) Unified credit

(A) In general

A credit of $13,000 shall be allowed against the tax imposed

by subsection (a).

(B) Limitation based on amount of tax

The credit allowed under this paragraph shall not exceed the

amount of the tax imposed by subsection (a).

(2) Credit for foreign death taxes

(A) In general

The tax imposed by subsection (a) shall be credited with the

amount of any estate, inheritance, legacy, or succession taxes

actually paid to any foreign country in respect of any property

which is included in the gross estate solely by reason of

subsection (b).

(B) Limitation on credit

The credit allowed by subparagraph (A) for such taxes paid to

a foreign country shall not exceed the lesser of -

(i) the amount which bears the same ratio to the amount of

such taxes actually paid to such foreign country as the value

of the property subjected to such taxes by such foreign

country and included in the gross estate solely by reason of

subsection (b) bears to the value of all property subjected

to such taxes by such foreign country, or

(ii) such property's proportionate share of the excess of -

(I) the tax imposed by subsection (a), over

(II) the tax which would be imposed by section 2101 but

for this section.

In the case of property which is included in the gross estate

solely by reason of subsection (b), such property's

proportionate share is the percentage which the value of such

property bears to the total value of all property included in

the gross estate solely by reason of subsection (b).

(3) Other credits

The tax imposed by subsection (a) shall be credited with the

amounts determined in accordance with subsections (a) and (b) of

section 2102. For purposes of subsection (a) of section 2102,

sections 2011 to 2013, inclusive, shall be applied as if the

credit allowed under paragraph (1) were allowed under section

2010.

(d) Burden of proof

If the Secretary establishes that it is reasonable to believe

that an individual's loss of United States citizenship would, but

for this section, result in a substantial reduction in the estate,

inheritance, legacy, and succession taxes in respect of the

transfer of his estate, the burden of proving that such loss of

citizenship did not have for one of its principal purposes the

avoidance of taxes under this subtitle or subtitle A shall be on

the executor of such individual's estate.

(e) Cross reference

For comparable treatment of long-term lawful permanent

residents who ceased to be taxed as residents, see section

877(e).

-SOURCE-

(Added Pub. L. 89-809, title I, Sec. 108(f), Nov. 13, 1966, 80

Stat. 1573; amended Pub. L. 94-455, title XIX, Secs. 1902(a)(6),

1906(b)(13)(A), title XX, Sec. 2001(c)(1)(E)(ii), Oct. 4, 1976, 90

Stat. 1805, 1834, 1851; Pub. L. 104-191, title V, Sec. 511(e)(1),

(f)(2)(A), Aug. 21, 1996, 110 Stat. 2097, 2099; Pub. L. 105-34,

title XVI, Sec. 1602(g)(6), Aug. 5, 1997, 111 Stat. 1095; Pub. L.

107-16, title V, Sec. 532(c)(7)(C), June 7, 2001, 115 Stat. 75.)

-STATAMEND-

AMENDMENT OF SUBSECTION (C)(3)

Pub. L. 107-16, title V, Sec. 532(c)(7)(C), (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, subsection (c)(3) of this section is

temporarily amended by substituting "2012 and 2013" for "2011 to

2013, inclusive,". See Effective and Termination Dates of 2001

Amendment note below.

-MISC1-

AMENDMENTS

1997 - Subsec. (c)(2)(B)(i). Pub. L. 105-34, Sec. 1602(g)(6)(A),

substituted "such foreign country as the value of the property

subjected to such taxes by such foreign country and" for "such

foreign country in respect of property included in the gross estate

as the value of the property".

Subsec. (c)(2)(C). Pub. L. 105-34, Sec. 1602(g)(6)(B), amended

heading and text of subpar. (C) generally. Prior to amendment, text

read as follows: "For purposes of subparagraph (B), a property's

proportionate share is the percentage of the value of the property

which is included in the gross estate solely by reason of

subsection (b) bears to the total value of the gross estate."

1996 - Subsec. (a). Pub. L. 104-191, Sec. 511(e)(1)(A),

substituted "Treatment of expatriates" for "Rate of tax" in heading

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

follows: "A tax computed in accordance with the table contained in

section 2001 is hereby imposed on the transfer of the taxable

estate, determined as provided in section 2106, of every decedent

nonresident not a citizen of the United States dying after November

13, 1966, if after March 8, 1965, and within the 10-year period

ending with the date of death such decedent lost United States

citizenship, unless such loss did not have for one of its principal

purposes the avoidance of taxes under this subtitle or subtitle A."

Subsec. (b)(2). Pub. L. 104-191, Sec. 511(e)(1)(C), substituted

"more than 50 percent of - " for "more than 50 percent of the total

combined voting power of all classes of stock entitled to vote of

such foreign corporation," and added subpars. (A) and (B).

Subsec. (c)(2), (3). Pub. L. 104-191, Sec. 511(e)(1)(B), added

par. (2) and redesignated former par. (2) as (3).

Subsec. (d). Pub. L. 104-191, Sec. 511(f)(2)(A), redesignated

subsec. (e) as (d) and struck out former subsec. (d) which read as

follows:

"(d) Exception for Loss of Citizenship for Certain Causes. -

Subsection (a) shall not apply to the transfer of the estate of a

decedent whose loss of United States citizenship resulted from the

application of section 301(b), 350, or 355 of the Immigration and

Nationality Act, as amended (8 U.S.C. 1401(b), 1482, or 1487)."

Subsec. (e). Pub. L. 104-191, Sec. 511(f)(2)(A), added subsec.

(e). Former subsec. (e) redesignated (d).

1976 - Subsec. (a). Pub. L. 94-455, Sec. 1902(a)(6), substituted

"November 13, 1966" for "the date of enactment of this section"

after "dying after".

Subsec. (c). Pub. L. 94-455, Sec. 2001(c)(1)(E)(ii), substituted

provisions relating to unified credit for "The tax imposed by

subsection (a) shall be credited with the amounts determined in

accordance with section 2102."

Subsec. (e). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out "or

his delegate" after "Secretary".

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 OF 1997 AMENDMENT

Amendment by Pub. L. 105-34 effective as if included in the

provisions of the Health Insurance Portability and Accountability

Act of 1996, Pub. L. 104-191, to which such amendment relates, see

section 1602(i) of Pub. L. 105-34, set out as a note under section

26 of this title.

EFFECTIVE DATE OF 1996 AMENDMENT

Amendment by Pub. L. 104-191 applicable to individuals losing

United States citizenship on or after Feb. 6, 1995, and to

long-term residents of the United States with respect to whom an

event described in section 877(e)(1)(A) or (B) of this title occurs

on or after Feb. 6, 1995, with special rule for certain individuals

who performed an act of expatriation specified in section

1481(a)(1)-(4) of Title 8, Aliens and Nationality, before Feb. 6,

1995, see section 511(g) of Pub. L. 104-191, set out as a note

under section 877 of this title.

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by section 1902(a)(6) of Pub. L. 94-455 applicable in

the case of estates of decedents dying after Oct. 4, 1976, see

section 1902(c)(1) of Pub. L. 94-455, set out as a note under

section 2011 of this title.

Amendment by section 2001(c)(1)(E)(ii) of Pub. L. 94-455

applicable to estates of decedents dying after Dec. 31, 1976, see

section 2001(d)(1) of Pub. L. 94-455, set out as a note under

section 2001 of this title.

EFFECTIVE DATE

Section applicable with respect to estates of decedents dying

after Nov. 13, 1966, see section 108(i) of Pub. L. 89-809, set out

as an Effective Date of 1966 Amendment note under section 2101 of

this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 877, 2101 of this title.

-End-

-CITE-

26 USC Sec. 2108 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter B - Estates of Nonresidents Not Citizens

-HEAD-

Sec. 2108. Application of pre-1967 estate tax provisions

-STATUTE-

(a) Imposition of more burdensome tax by foreign country

Whenever the President finds that -

(1) under the laws of any foreign country, considering the tax

system of such foreign country, a more burdensome tax is imposed

by such foreign country on the transfer of estates of decedents

who were citizens of the United States and not residents of such

foreign country than the tax imposed by this subchapter on the

transfer of estates of decedents who were residents of such

foreign country,

(2) such foreign country, when requested by the United States

to do so, has not acted to revise or reduce such tax so that it

is no more burdensome than the tax imposed by this subchapter on

the transfer of estates of decedents who were residents of such

foreign country, and

(3) it is in the public interest to apply pre-1967 tax

provisions in accordance with this section to the transfer of

estates of decedents who were residents of such foreign country,

the President shall proclaim that the tax on the transfer of the

estate of every decedent who was a resident of such foreign country

at the time of his death shall, in the case of decedents dying

after the date of such proclamation, be determined under this

subchapter without regard to amendments made to sections 2101

(relating to tax imposed), 2102 (relating to credits against tax),

2106 (relating to taxable estate), and 6018 (relating to estate tax

returns) on or after November 13, 1966.

(b) Alleviation of more burdensome tax

Whenever the President finds that the laws of any foreign country

with respect to which the President has made a proclamation under

subsection (a) have been modified so that the tax on the transfer

of estates of decedents who were citizens of the United States and

not residents of such foreign country is no longer more burdensome

than the tax imposed by this subchapter on the transfer of estates

of decedents who were residents of such foreign country, he shall

proclaim that the tax on the transfer of the estate of every

decedent who was a resident of such foreign country at the time of

his death shall, in the case of decedents dying after the date of

such proclamation, be determined under this subchapter without

regard to subsection (a).

No proclamation shall be issued by the President pursuant to this

section unless, at least 30 days prior to such proclamation, he has

notified the Senate and the House of Representatives of his

intention to issue such proclamation.

(d) Implementation by regulations

The Secretary shall prescribe such regulations as may be

necessary or appropriate to implement this section.

-SOURCE-

(Added Pub. L. 89-809, title I, Sec. 108(f), Nov. 13, 1966, 80

Stat. 1573; amended Pub. L. 94-455, title XIX, Secs. 1902(a)(6),

1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1805, 1834.)

-MISC1-

AMENDMENTS

1976 - Subsec. (a). Pub. L. 94-455, Sec. 1902(a)(6), substituted

"November 13, 1976" for "the date of enactment of this section"

after "on or after".

Subsec. (d). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out "or

his delegate" after "Secretary".

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by section 1902(a)(6) of Pub. L. 94-455 applicable in

the case of estates of decedents dying after Oct. 4, 1976, see

section 1902(c)(1) of Pub. L. 94-455, set out as a note under

section 2011 of this title.

EFFECTIVE DATE

Section applicable with respect to estates of decedents dying

after Nov. 13, 1966, see section 108(i) of Pub. L. 89-809, set out

as an Effective Date of 1966 Amendment note under section 2101 of

this title.

-End-

-CITE-

26 USC Subchapter C - Miscellaneous 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter C - Miscellaneous

-HEAD-

SUBCHAPTER C - MISCELLANEOUS

-MISC1-

Sec.

2201. Combat zone-related deaths of members of the Armed

Forces and deaths of victims of certain terrorist

attacks.

[2202. Repealed.]

2203. Definition of executor.

2204. Discharge of fiduciary from personal liability.

2205. Reimbursement out of estate.

2206. Liability of life insurance beneficiaries.

2207. Liability of recipient of property over which decedent

had power of appointment.

2207A. Right of recovery in the case of certain marital

deduction property.

2207B. Right of recovery where decedent retained interest.

2208. Certain residents of possessions considered citizens

of the United States.

2209. Certain residents of possessions considered

nonresidents not citizens of the United States.

2210. Termination.

AMENDMENTS

2002 - Pub. L. 107-134, title I, Sec. 103(c), Jan. 23, 2002, 115

Stat. 2431, substituted "Combat zone-related deaths of members of

the Armed Forces and deaths of victims of certain terrorist

attacks." for "Members of the Armed Forces dying in combat zone or

by reason of combat-zone-incurred wounds, etc." in item 2201.

2001 - Pub. L. 107-16, title V, Sec. 501(c)(1), June 7, 2001, 115

Stat. 69, added item 2210.

1989 - Pub. L. 101-239, title VII, Sec. 7304(b)(2)(C), Dec. 19,

1989, 103 Stat. 2353, struck out item 2210 "Liability for payment

in case of transfer of employer securities to an employee stock

ownership plan or a worker-owned cooperative".

1988 - Pub. L. 100-647, title III, Sec. 3031(f)(2), Nov. 10,

1988, 102 Stat. 3638, added item 2207B.

1984 - Pub. L. 98-369, div. A, title V, Sec. 544(b)(2), July 18,

1984, 98 Stat. 894, added item 2210.

1981 - Pub. L. 97-34, title IV, Sec. 403(d)(4)(B), Aug. 13, 1981,

95 Stat. 305, added item 2207A.

1976 - Pub. L. 94-455, title XIX, Sec. 1902(b)(1), Oct. 4, 1976,

90 Stat. 1806, struck out item 2202 "Missionaries in foreign

service".

1975 - Pub. L. 93-597, Sec. 6(b)(3), Jan. 2, 1975, 88 Stat. 1953,

substituted "Members of the Armed Forces dying in combat zone or by

reason of combat-zone-incurred wounds, etc." for "Members of the

Armed Forces dying during an induction period." in item 2201.

1970 - Pub. L. 91-614, title I, Sec. 101(d)(3), Dec. 31, 1970, 84

Stat. 1837, substituted "Discharge of fiduciary from personal

liability" for "Discharge of executor from personal liability" in

item 2204.

1960 - Pub. L. 86-779, Sec. 4(b)(2), Sept. 14, 1960, 74 Stat.

1000, added item 2209.

1958 - Pub. L. 85-866, title I, Sec. 102(c)(4), Sept. 2, 1958, 72

Stat. 1675, added item 2208.

-End-

-CITE-

26 USC Sec. 2201 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter C - Miscellaneous

-HEAD-

Sec. 2201. Combat zone-related deaths of members of the Armed

Forces and deaths of victims of certain terrorist attacks

-STATUTE-

(a) In general

Unless the executor elects not to have this section apply, in

applying sections 2001 and 2101 to the estate of a qualified

decedent, the rate schedule set forth in subsection (c) shall be

deemed to be the rate schedule set forth in section 2001(c).

(b) Qualified decedent

For purposes of this section, the term "qualified decedent" means

(1) any citizen or resident of the United States dying while in

active service of the Armed Forces of the United States, if such

decedent -

(A) was killed in action while serving in a combat zone, as

determined under section 112(c), or

(B) died as a result of wounds, disease, or injury suffered

while serving in a combat zone (as determined under section

112(c)), and while in the line of duty, by reason of a hazard

to which such decedent was subjected as an incident of such

service, and

(2) any specified terrorist victim (as defined in section

692(d)(4)).

If the amount with respect The tentative tax is:

to which the tentative tax

to be computed is:

--------------------------------------------------------------------

Not over $150,000 1 percent of the amount by which

such amount exceeds $100,000.

Over $150,000 but not over $500 plus 2 percent of the excess

$200,000 over $150,000.

Over $200,000 but not over $1,500 plus 3 percent of the excess

$300,000 over $200,000.

Over $300,000 but not over $4,500 plus 4 percent of the excess

$500,000 over $300,000.

Over $500,000 but not over $12,500 plus 5 percent of the

$700,000 excess over $500,000.

Over $700,000 but not over $22,500 plus 6 percent of the

$900,000 excess over $700,000.

Over $900,000 but not over $34,500 plus 7 percent of the

$1,100,000 excess over $900,000.

Over $1,100,000 but not $48,500 plus 8 percent of the

over $1,600,000 excess over $1,100,000.

Over $1,600,000 but not $88,500 plus 9 percent of the

over $2,100,000 excess over $1,600,000.

Over $2,100,000 but not $133,500 plus 10 percent of the

over $2,600,000 excess over $2,100,000.

Over $2,600,000 but not $183,500 plus 11 percent of the

over $3,100,000 excess over $2,600,000.

Over $3,100,000 but not $238,500 plus 12 percent of the

over $3,600,000 excess over $3,100,000.

Over $3,600,000 but not $298,500 plus 13 percent of the

over $4,100,000 excess over $3,600,000.

Over $4,100,000 but not $363,500 plus 14 percent of the

over $5,100,000 excess over $4,100,000.

Over $5,100,000 but not $503,500 plus 15 percent of the

over $6,100,000 excess over $5,100,000.

Over $6,100,000 but not $653,500 plus 16 percent of the

over $7,100,000 excess over $6,100,000.

Over $7,100,000 but not $813,500 plus 17 percent of the

over $8,100,000 excess over $7,100,000.

Over $8,100,000 but not $983,500 plus 18 percent of the

over $9,100,000 excess over $8,100,000.

Over $9,100,000 but not $1,163,500 plus 19 percent of the

over $10,100,000 excess over $9,100,000.

Over $10,100,000 $1,353,500 plus 20 percent of the

excess over $10,100,000.

--------------------------------------------------------------------

(d) Determination of unified credit

In the case of an estate to which this section applies,

subsection (a) shall not apply in determining the credit under

section 2010.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 401; Pub. L. 93-597, Sec.

6(b)(1), (2), Jan. 2, 1975, 88 Stat. 1953; Pub. L. 94-455, title

XIX, Sec. 1902(a)(7)(A), Oct. 4, 1976, 90 Stat. 1805; Pub. L.

107-16, title V, Sec. 532(c)(9), June 7, 2001, 115 Stat. 75; Pub.

L. 107-134, title I, Sec. 103(a), (b)(3), Jan. 23, 2002, 115 Stat.

2430, 2431.)

-MISC1-

AMENDMENTS

2002 - Pub. L. 107-134 amended section catchline and text of

section generally, substituting present provisions for provisions

which had stated that the additional estate tax as defined in

former section 2011(d) should not apply to the transfer of the

taxable estate of a citizen or resident of the United States dying

while in active service as a member of the Armed Forces of the

United States, if such decedent was killed in action while serving

in a combat zone, as determined under section 112(c), or died as a

result of wounds, disease, or injury suffered, while serving in a

combat zone (as determined under section 112(c)), and while in line

of duty, by reason of a hazard to which he was subjected as an

incident of such service.

2001 - Pub. L. 107-16, Secs. 532(c)(9)(B), 901, which temporarily

added concluding provisions which read as follows: "For purposes of

this section, the additional estate tax is the difference between

the tax imposed by section 2001 or 2101 and the amount equal to 125

percent of the maximum credit provided by section 2011(b), as in

effect before its repeal by the Economic Growth and Tax Relief

Reconciliation Act of 2001.", was repealed by Pub. L. 107-134, Sec.

103(b)(3). See Effective and Termination Dates of 2001 Amendment

and Effective Date of 2002 Amendment notes below.

Pub. L. 107-16, Secs. 532(c)(9)(A), 901, which temporarily struck

out "as defined in section 2011(d)" after "The additional estate

tax" in introductory provisions, was repealed by Pub. L. 107-134,

Sec. 103(b)(3). See Effective and Termination Dates of 2001

Amendment and Effective Date of 2002 Amendment notes below.

1975 - Pub. L. 93-597, as amended by Pub. L. 94-455, Sec.

1902(a)(7)(A), struck out "during an induction period (as defined

in section 112(c)(5))" after "resident of the United States dying",

and substituted "Members of the Armed Forces dying in combat zone

or by reason of combat-zone-incurred wounds, etc." for "Members of

the Armed Forces dying during an induction period" in section

catchline.

EFFECTIVE DATE OF 2002 AMENDMENT

Amendment by Pub. L. 107-134 applicable to estates of decedents

dying on or after Sept. 11, 2001, and, in the case of individuals

dying as a result of the Apr. 19, 1995, terrorist attack, dying on

or after Apr. 19, 1995, with provisions relating to waiver of

limitations, see section 103(d) of Pub. L. 107-134, set out as a

note under section 2011 of this title.

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

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

dying, and generation-skipping transfers, after Dec. 31, 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 OF 1976 AMENDMENT

Section 1902(a)(7)(B) of Pub. L. 94-455 provided that: "The

amendment made by subsection (A) [amending section 6(b)(1) of Pub.

L. 93-597] is effective July 1, 1973."

EFFECTIVE DATE OF 1975 AMENDMENT

Section 6(c) of Pub. L. 93-597 provided that: "The amendments

made by this section [amending this section and section 1034 of

this title] shall take effect on July 1, 1973."

-End-

-CITE-

26 USC [Sec. 2202 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter C - Miscellaneous

-HEAD-

[Sec. 2202. Repealed. Pub. L. 94-455, title XIX, Sec. 1902(a)(8),

Oct. 4, 1976, 90 Stat. 1805]

-MISC1-

Section, acts Aug. 16, 1954, ch. 736, 68A Stat. 401; June 25,

1959, Pub. L. 86-70, Sec. 22(a), 73 Stat. 146; July 12, 1960, Pub.

L. 86-624, Sec. 18(b), 74 Stat. 416, related to the presumption

that missionaries duly commissioned and serving under boards of

foreign missions are residents of the State or the District of

Columbia wherein they resided at the time of their commission and

departure for service.

EFFECTIVE DATE OF REPEAL

Repeal applicable to estates of decedents dying after Oct. 4,

1976, see section 1902(c)(1) of Pub. L. 94-455, set out as an

Effective Date of 1976 Amendment note under section 2011 of this

title.

-End-

-CITE-

26 USC Sec. 2203 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter C - Miscellaneous

-HEAD-

Sec. 2203. Definition of executor

-STATUTE-

The term "executor" wherever it is used in this title in

connection with the estate tax imposed by this chapter means the

executor or administrator of the decedent, or, if there is no

executor or administrator appointed, qualified, and acting within

the United States, then any person in actual or constructive

possession of any property of the decedent.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 401.)

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2652, 6036 of this title.

-End-

-CITE-

26 USC Sec. 2204 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter C - Miscellaneous

-HEAD-

Sec. 2204. Discharge of fiduciary from personal liability

-STATUTE-

(a) General rule

If the executor makes written application to the Secretary for

determination of the amount of the tax and discharge from personal

liability therefor, the Secretary (as soon as possible, and in any

event within 9 months after the making of such application, or, if

the application is made before the return is filed, then within 9

months after the return is filed, but not after the expiration of

the period prescribed for the assessment of the tax in section

6501) shall notify the executor of the amount of the tax. The

executor, on payment of the amount of which he is notified (other

than any amount the time for payment of which is extended under

sections 6161, 6163, or 6166), and on furnishing any bond which may

be required for any amount for which the time for payment is

extended, shall be discharged from personal liability for any

deficiency in tax thereafter found to be due and shall be entitled

to a receipt or writing showing such discharge.

(b) Fiduciary other than the executor

If a fiduciary (not including a fiduciary in respect of the

estate of a nonresident decedent) other than the executor makes

written application to the Secretary for determination of the

amount of any estate tax for which the fiduciary may be personally

liable, and for discharge from personal liability therefor, the

Secretary upon the discharge of the executor from personal

liability under subsection (a), or upon the expiration of 6 months

after the making of such application by the fiduciary, if later,

shall notify the fiduciary (1) of the amount of such tax for which

it has been determined the fiduciary is liable, or (2) that it has

been determined that the fiduciary is not liable for any such tax.

Such application shall be accompanied by a copy of the instrument,

if any, under which such fiduciary is acting, a description of the

property held by the fiduciary, and such other information for

purposes of carrying out the provisions of this section as the

Secretary may require by regulations. On payment of the amount of

such tax for which it has been determined the fiduciary is liable

(other than any amount the time for payment of which has been

extended under section 6161, 6163, or 6166), and on furnishing any

bond which may be required for any amount for which the time for

payment has been extended, or on receipt by him of notification of

a determination that he is not liable for any such tax, the

fiduciary shall be discharged from personal liability for any

deficiency in such tax thereafter found to be due and shall be

entitled to a receipt or writing evidencing such discharge.

For purposes of the second sentence of subsection (a) and the

last sentence of subsection (b), an agreement which meets the

requirements of section 6324A (relating to special lien for estate

tax deferred under section 6166) shall be treated as the furnishing

of bond with respect to the amount for which the time for payment

has been extended under section 6166.

(d) Good faith reliance on gift tax returns

If the executor in good faith relies on gift tax returns

furnished under section 6103(e)(3) for determining the decedent's

adjusted taxable gifts, the executor shall be discharged from

personal liability with respect to any deficiency of the tax

imposed by this chapter which is attributable to adjusted taxable

gifts which -

(1) are made more than 3 years before the date of the

decedent's death, and

(2) are not shown on such returns.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 401; Pub. L. 91-614, title I,

Sec. 101(d)(1), (f), Dec. 31, 1970, 84 Stat. 1836, 1838; Pub. L.

94-455, title XIX, Secs. 1902(a)(9), 1906(b)(13)(A), title XX, Sec.

2004(d)(2), (f)(4), (6), Oct. 4, 1976, 90 Stat. 1805, 1834, 1870,

1872; Pub. L. 95-600, title VII, Sec. 702(p)(1), Nov. 6, 1978, 92

Stat. 2937; Pub. L. 97-34, title IV, Sec. 422(e)(1), (3), Aug. 13,

1981, 95 Stat. 316.)

-MISC1-

AMENDMENTS

1981 - Subsecs. (a) to (c). Pub. L. 97-34, Sec. 422(e)(1), (3),

struck out reference to section 6166A in subsecs. (a) and (b), and

two such references in subsec. (c).

1978 - Subsec. (d). Pub. L. 95-600 added subsec. (d).

1976 - Subsec. (a). Pub. L. 94-455, Secs. 1906(b)(13)(A),

2004(f)(6), substituted "6166 or 6166A" for "or 6166" after "6161,

6163" and struck out "or his delegate" in two places after

"Secretary".

Subsec. (b). Pub. L. 94-455, Secs. 1902(a)(9), 1906(b)(13)(A),

2004(f)(4), (6), substituted "6166 or 6166A" for "or 6166" after

"6161, 6163", "has been" for "has not been" after "payment of

which", and struck out "or his delegate" after "Secretary".

Subsec. (c). Pub. L. 94-455, Sec. 2004(d)(2), added subsec. (c).

1970 - Pub. L. 91-614, Sec. 101(d)(1)(A), substituted "fiduciary"

for "executor" in section catchline.

Subsec. (a). Pub. L. 91-614, Secs. 101(d)(1)(B), (C), (f),

designated existing provisions as subsec. (a), inserted "General

Rule - " immediately preceding first sentence and permitted a

discharge of the executor even where an extension of time has been

granted under sections 6161, 6163, or 6166 of this title, where a

bond, if required, is provided to assure payment of taxes for which

the extension was granted, and substituted "9 months" for "1 year"

in two places.

Subsec. (b). Pub. L. 91-614, Sec. 101(d)(1)(D), added subsec.

(b).

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.

EFFECTIVE DATE OF 1978 AMENDMENT

Section 702(p)(2) of Pub. L. 95-600 provided that: "The amendment

made by paragraph (1) [amending this section] shall apply with

respect to the estates of decedents dying after December 31, 1976."

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by section 1902(a)(9) of Pub. L. 94-455 applicable in

the case of estates of decedents dying after Dec. 31, 1970, see

section 1902(c)(1) of Pub. L. 94-455, set out as a note under

section 2011 of this title.

Amendment by section 2004(d)(4) of Pub. L. 94-455 applicable to

estates of decedents dying after Dec. 31, 1976, see section 2004(g)

of Pub. L. 94-455, set out as a note under section 6166 of this

title.

EFFECTIVE DATE OF 1970 AMENDMENT

Amendment by section 101(d)(1) of Pub. L. 91-614 applicable with

respect to decedents dying after Dec. 31, 1970, see section 101(j)

of Pub. L. 91-614, set out as a note under section 2032 of this

title.

Section 101(f) of Pub. L. 91-614 provided that the amendment made

by that section is effective with respect to the estates of

decedents dying after Dec. 31, 1973.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2056A, 6040, 6314, 6324,

6324A, 6504, 6905 of this title.

-End-

-CITE-

26 USC Sec. 2205 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter C - Miscellaneous

-HEAD-

Sec. 2205. Reimbursement out of estate

-STATUTE-

If the tax or any part thereof is paid by, or collected out of,

that part of the estate passing to or in the possession of any

person other than the executor in his capacity as such, such person

shall be entitled to reimbursement out of any part of the estate

still undistributed or by a just and equitable contribution by the

persons whose interest in the estate of the decedent would have

been reduced if the tax had been paid before the distribution of

the estate or whose interest is subject to equal or prior liability

for the payment of taxes, debts, or other charges against the

estate, it being the purpose and intent of this chapter that so far

as is practicable and unless otherwise directed by the will of the

decedent the tax shall be paid out of the estate before its

distribution.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 402.)

-End-

-CITE-

26 USC Sec. 2206 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter C - Miscellaneous

-HEAD-

Sec. 2206. Liability of life insurance beneficiaries

-STATUTE-

Unless the decedent directs otherwise in his will, if any part of

the gross estate on which tax has been paid consists of proceeds of

policies of insurance on the life of the decedent receivable by a

beneficiary other than the executor, the executor shall be entitled

to recover from such beneficiary such portion of the total tax paid

as the proceeds of such policies bear to the taxable estate. If

there is more than one such beneficiary, the executor shall be

entitled to recover from such beneficiaries in the same ratio. In

the case of such proceeds receivable by the surviving spouse of the

decedent for which a deduction is allowed under section 2056

(relating to marital deduction), this section shall not apply to

such proceeds except as to the amount thereof in excess of the

aggregate amount of the marital deductions allowed under such

section.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 402; Pub. L. 94-455, title XX,

Sec. 2001(c)(1)(H), Oct. 4, 1976, 90 Stat. 1852.)

-MISC1-

AMENDMENTS

1976 - Pub. L. 94-455 substituted "the taxable estate" for "the

sum of the taxable estate and the amount of the exemption allowed

in computing the taxable estate, determined under section 2051"

after "policies bear to".

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by Pub. L. 94-455 applicable to estates of decedents

dying after Dec. 31, 1976, see section 2001(d)(1) of Pub. L.

94-455, set out as a note under section 2001 of this title.

-End-

-CITE-

26 USC Sec. 2207 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter C - Miscellaneous

-HEAD-

Sec. 2207. Liability of recipient of property over which decedent

had power of appointment

-STATUTE-

Unless the decedent directs otherwise in his will, if any part of

the gross estate on which the tax has been paid consists of the

value of property included in the gross estate under section 2041,

the executor shall be entitled to recover from the person receiving

such property by reason of the exercise, nonexercise, or release of

a power of appointment such portion of the total tax paid as the

value of such property bears to the taxable estate. If there is

more than one such person, the executor shall be entitled to

recover from such persons in the same ratio. In the case of such

property received by the surviving spouse of the decedent for which

a deduction is allowed under section 2056 (relating to marital

deduction), this section shall not apply to such property except as

to the value thereof reduced by an amount equal to the excess of

the aggregate amount of the marital deductions allowed under

section 2056 over the amount of proceeds of insurance upon the life

of the decedent receivable by the surviving spouse for which

proceeds a marital deduction is allowed under such section.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 402; Pub. L. 94-455, title XX,

Sec. 2001(c)(1)(I), Oct. 4, 1976, 90 Stat. 1852.)

-MISC1-

AMENDMENTS

1976 - Pub. L. 94-455 substituted "the taxable estate" for "the

sum of the taxable estate and the amount of the exemption allowed

in computing the taxable estate, determined under section 2052, or

section 2106(a), as the case may be" after "property bears to".

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by Pub. L. 94-455 applicable to estates of decedents

dying after Dec. 31, 1976, see section 2001(d)(1) of Pub. L.

94-455, set out as a note under section 2001 of this title.

-End-

-CITE-

26 USC Sec. 2207A 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter C - Miscellaneous

-HEAD-

Sec. 2207A. Right of recovery in the case of certain marital

deduction property

-STATUTE-

(a) Recovery with respect to estate tax

(1) In general

If any part of the gross estate consists of property the value

of which is includible in the gross estate by reason of section

2044 (relating to certain property for which marital deduction

was previously allowed), the decedent's estate shall be entitled

to recover from the person receiving the property the amount by

which -

(A) the total tax under this chapter which has been paid,

exceeds

(B) the total tax under this chapter which would have been

payable if the value of such property had not been included in

the gross estate.

(2) Decedent may otherwise direct

Paragraph (1) shall not apply with respect to any property to

the extent that the decedent in his will (or a revocable trust)

specifically indicates an intent to waive any right of recovery

under this subchapter with respect to such property.

(b) Recovery with respect to gift tax

If for any calendar year tax is paid under chapter 12 with

respect to any person by reason of property treated as transferred

by such person under section 2519, such person shall be entitled to

recover from the person receiving the property the amount by which

(1) the total tax for such year under chapter 12, exceeds

(2) the total tax which would have been payable under such

chapter for such year if the value of such property had not been

taken into account for purposes of chapter 12.

For purposes of this section, if there is more than one person

receiving the property, the right of recovery shall be against each

such person.

(d) Taxes and interest

In the case of penalties and interest attributable to additional

taxes described in subsections (a) and (b), rules similar to

subsections (a), (b), and (c) shall apply.

-SOURCE-

(Added Pub. L. 97-34, title IV, Sec. 403(d)(4)(A), Aug. 13, 1981,

95 Stat. 304; amended Pub. L. 105-34, title XIII, Sec. 1302(a),

Aug. 5, 1997, 111 Stat. 1039.)

-MISC1-

AMENDMENTS

1997 - Subsec. (a)(2). Pub. L. 105-34 amended heading and text of

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

"Paragraph (1) shall not apply if the decedent otherwise directs by

will."

EFFECTIVE DATE OF 1997 AMENDMENT

Section 1302(c) of Pub. L. 105-34 provided that: "The amendments

made by this section [amending this section and section 2207B of

this title] shall apply with respect to the estates of decedents

dying after the date of the enactment of this Act [Aug. 5, 1997]."

EFFECTIVE DATE

Section applicable to estates of decedents dying after Dec. 31,

1981, see section 403(e) of Pub. L. 97-34, set out as an Effective

Date of 1981 Amendment note under section 2056 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2519 of this title.

-End-

-CITE-

26 USC Sec. 2207B 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter C - Miscellaneous

-HEAD-

Sec. 2207B. Right of recovery where decedent retained interest

-STATUTE-

(a) Estate tax

(1) In general

If any part of the gross estate on which tax has been paid

consists of the value of property included in the gross estate by

reason of section 2036 (relating to transfers with retained life

estate), the decedent's estate shall be entitled to recover from

the person receiving the property the amount which bears the same

ratio to the total tax under this chapter which has been paid as

(A) the value of such property, bears to

(B) the taxable estate.

(2) Decedent may otherwise direct

Paragraph (1) shall not apply with respect to any property to

the extent that the decedent in his will (or a revocable trust)

specifically indicates an intent to waive any right of recovery

under this subchapter with respect to such property.

(b) More than one recipient

For purposes of this section, if there is more than 1 person

receiving the property, the right of recovery shall be against each

such person.

In the case of penalties and interest attributable to the

additional taxes described in subsection (a), rules similar to the

rules of subsections (a) and (b) shall apply.

(d) No right of recovery against charitable remainder trusts

No person shall be entitled to recover any amount by reason of

this section from a trust to which section 664 applies (determined

without regard to this section).

-SOURCE-

(Added Pub. L. 100-647, title III, Sec. 3031(f)(1), Nov. 10, 1988,

102 Stat. 3637; amended Pub. L. 101-508, title XI, Sec.

11601(b)(1), Nov. 5, 1990, 104 Stat. 1388-490; Pub. L. 105-34,

title XIII, Sec. 1302(b), Aug. 5, 1997, 111 Stat. 1039.)

-MISC1-

AMENDMENTS

1997 - Subsec. (a)(2). Pub. L. 105-34 amended heading and text of

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

"Paragraph (1) shall not apply if the decedent otherwise directs in

a provision of his will (or a revocable trust) specifically

referring to this section."

1990 - Subsec. (b). Pub. L. 101-508, Sec. 11601(b)(1)(A),

redesignated former subsec. (c) as (b) and struck out former

subsec. (b) which read as follows: "If for any calendar year tax is

paid under chapter 12 with respect to any person by reason of

property treated as transferred by such person under section

2036(c)(4), such person shall be entitled to recover from the

original transferee (as defined in section 2036(c)(4)(C)(ii)) the

amount which bears the same ratio to the total tax for such year

under chapter 12 as -

"(1) the value of such property for purposes of chapter 12,

bears to

"(2) the total amount of the taxable gifts for such year."

Subsec. (c). Pub. L. 101-508, Sec. 11601(b)(1), redesignated

subsec. (d) as (c) and substituted "subsection (a)" for

"subsections (a) and (b)" and "subsections (a) and (b)" for

"subsections (a), (b), and (c)". Former subsec. (c) redesignated

(b).

Subsecs. (d), (e). Pub. L. 101-508, Sec. 11601(b)(1)(A),

redesignated subsecs. (d) and (e) as (c) and (d), respectively.

Former subsec. (d) redesignated (c).

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 1302(c) of Pub. L.

105-34, set out as a note under section 2207A of this title.

EFFECTIVE DATE OF 1990 AMENDMENT

Amendment by Pub. L. 101-508 applicable in the case of property

transferred after Dec. 17, 1987, see section 11601(c) of Pub. L.

101-508, set out as a note under section 2036 of this title.

EFFECTIVE DATE

Section effective as if included in provisions of Revenue Act of

1987, Pub. L. 100-203, title X, except that if an amount is

included in the gross estate of a decedent under section 2036 of

this title other than solely by reason of section 2036(c) of this

title, section applicable to such amount only with respect to

property transferred after Nov. 10, 1988, see section 3031(h)(1),

(3) of Pub. L. 100-647, set out as an Effective Date of 1988

Amendment note under section 2036 of this title.

-End-

-CITE-

26 USC Sec. 2208 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter C - Miscellaneous

-HEAD-

Sec. 2208. Certain residents of possessions considered citizens of

the United States

-STATUTE-

A decedent who was a citizen of the United States and a resident

of a possession thereof at the time of his death shall, for

purposes of the tax imposed by this chapter, be considered a

"citizen" of the United States within the meaning of that term

wherever used in this title unless he acquired his United States

citizenship solely by reason of (1) his being a citizen of such

possession of the United States, or (2) his birth or residence

within such possession of the United States.

-SOURCE-

(Added Pub. L. 85-866, title I, Sec. 102(a), Sept. 2, 1958, 72

Stat. 1674.)

-MISC1-

EFFECTIVE DATE

Section applicable to estates of decedents dying after Sept. 2,

1958, see section 102(d) of Pub. L. 85-866, set out as an Effective

Date of 1958 Amendment note under section 2011 of this title.

-End-

-CITE-

26 USC Sec. 2209 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter C - Miscellaneous

-HEAD-

Sec. 2209. Certain residents of possessions considered nonresidents

not citizens of the United States

-STATUTE-

A decedent who was a citizen of the United States and a resident

of a possession thereof at the time of his death shall, for

purposes of the tax imposed by this chapter, be considered a

"nonresident not a citizen of the United States" within the meaning

of that term wherever used in this title, but only if such person

acquired his United States citizenship solely by reason of (1) his

being a citizen of such possession of the United States, or (2) his

birth or residence within such possession of the United States.

-SOURCE-

(Added Pub. L. 86-779, Sec. 4(b)(1), Sept. 14, 1960, 74 Stat. 999.)

-MISC1-

EFFECTIVE DATE

Section applicable with respect to estates of decedents dying

after Sept. 14, 1960, see section 4(e)(2) of Pub. L. 86-779, set

out as an Effective Date of 1960 Amendment note under section 2106

of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2102 of this title.

-End-

-CITE-

26 USC Sec. 2210 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 11 - ESTATE TAX

Subchapter C - Miscellaneous

-HEAD-

Sec. 2210. Termination

-STATUTE-

(a) In general

Except as provided in subsection (b), this chapter shall not

apply to the estates of decedents dying after December 31, 2009.

(b) Certain distributions from qualified domestic trusts

In applying section 2056A with respect to the surviving spouse of

a decedent dying before January 1, 2010 -

(1) section 2056A(b)(1)(A) shall not apply to distributions

made after December 31, 2020, and

(2) section 2056A(b)(1)(B) shall not apply after December 31,

2009.

-SOURCE-

(Added Pub. L. 107-16, title V, Sec. 501(a), 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-

PRIOR PROVISIONS

A prior section 2210, added Pub. L. 98-369, div. A, title V, Sec.

544(a), July 18, 1984, 98 Stat. 892; amended Pub. L. 99-514, title

XVIII, Secs. 1854(d)(1)(A), (2)-(6), 1899A(37), Oct. 22, 1986, 100

Stat. 2879, 2880, 2960, related to liability for payment in case of

transfer of employer securities to an employee stock ownership plan

or a worker-owned cooperative, prior to repeal by Pub. L. 101-239,

title VII, Sec. 7304(b)(1), (3), Dec. 19, 1989, 103 Stat. 2353,

applicable to estates of decedents dying after July 12, 1989.

EFFECTIVE AND TERMINATION DATES

Pub. L. 107-16, title V, Sec. 501(d), June 7, 2001, 115 Stat. 69,

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

section and section 2664 of this title] shall apply to the estates

of decedents dying, and generation-skipping transfers, after

December 31, 2009."

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 an Effective and

Termination Dates of 2001 Amendment note under section 1 of this

title.

-End-

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